Value: Creation and Destruction


There are three things that you can do with money:

  1. Make more of it
  2. Trade it for something you value
  3. Piss it away

Mostly I want smaller government because I’m afraid that the government is worse at 1 and 2 than I am.  More often than not, they’re Pissing it Away.  Either for votes, or, if they really ARE trying to make things better, they just don’t know how.  [‘Cause serious, if they knew how, they’d be out doin’ it and not subjecting themselves to government].

I know there are things we need a government to do; I know that.

But there are other things that a government SHOULDN’T do; and THEY should know that as well.

And marketing cars is one of those things.

Cash for clunkers, right?  The idea is to increase the demand for cars so that people begin to buy them, creating a need to make more of ’em, so that car companies hire more employees and on and on and on….

But check it out, car sales are elastic.  That is, I can almost always extend the time I buy a new car or move forward the time I buy a new car any number of arbitrary months.  That is, if I think I wanna new car today, I’ll sit down and think about when the best time to buy the new car is.

Maybe it’s in 4 months, right after I get a bonus.  Maybe it’s in 3 months, right after I pay off a credit card.  Or maybe it’s 8 months, right after I pay off the new roof.  Whatever, it’s there and I can affect the date.

So when someone comes up and offers my $4,000 to buy that new car today rather than in 8 months, it’s easy, EASY, for me to accelerate that date.

So, wanna know what happens when the government offers 4k to folks to buy a new car?

The government’s “cash for clunkers” program boosted auto sales by 360,000 during the two months it was in place…

This should not surprise anyone.  Not any single one.

Nor should this:

…in the seven months that followed, sales were down by 360,000 compared with what they would have been without the program…

People pulled forward their demand by 7 months and bought “today” rather than “tomorrow”.

And ya know what spending $3 billion for zero value is called?

Pissing it away.

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