Junk Yard Logic

Here in my car
I feel safest of all
I can lock all my doors
It's the only way to live
In cars
--Gary Numan

Caroline Baum is one of the sharper journalists on The Street. Her Bloomberg piece today illustrates the folly behind the Cash for Clunkers program.

She draws from the writings of Frederic Bastiat, a French economist from the mid 1800s. Bastiat famously dismissed any government program that destroyed existing goods to create new demand. Standard of living does not rise in such an instance. In the short run, a 'special interest' group may benefit, but at the expense of others over the long run.

Ms Baum rightly draws parallels to Depressionary programs where the State sponsored crop burnings to reduce supply and prop up ag prices.

The logical extension to these programs is for everyone to destroy all their property. Imagine the economic stimulus!

position in ags