The Law Of Supply And Demand Unexpectedly Remains In Force

Remember cash for clunkers?  It was one of the Obama Administration’s green initiatives, where new car buyers were given (borrowed) tax dollars if they traded up a few miles per gallon and their used cars were then destroyed. 

The program was touted by the Obama Administration and the media as being wildly popular and therefore successful.  It never seemed to dawn on the Administration or the media that any program that gives one group of people another group’s money will be pretty popular among the group receiving the money.  Anyway, that’s old news.

This isn’t: Edmund’s reports that the  “average price of a three-year old car is 11.1 percent higher than it was last year – the highest year-over-year increase since Edmund’s began keeping records in 2004.”  Unexpected!  Not exactly.

Anyone who has heard of a novel concept called “supply and demand” knows that, if you reduce supply, but demand remains the same, the price increases.  Apparently, no one in the Obama Administration is familiar with the concept.

Let’s not forget who won and who now loses as a result of the cash for clunkers fiasco.  The people who received tax incentives had enough money or sufficient income to go buy a new car.  The people now stuck paying higher prices are those who can only afford to buy used.

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Published in: on August 25, 2010 at 12:11 pm  Leave a Comment  

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