'Cash for clunkers' programs institutionalizing planned obsolescence

Planned obsolescence is something our current world leadership has aggressively campaigned against -- if you were to judge solely on the sound bites, it would give one the impression that the world's presidents and prime ministers were sponsored by The Story of Stuff. Sound bites, unfortunately, are much like damned lies and statistics. It is deep within the policies that we can see the truth. And the truth lies, not in tidy phrases or gushing descriptions, but in the incentives.

And thus, let us examine the auto industry. For the time being, we will ignore the gigantic loans and the virtual nationalization of the auto manufacturers and focus on the incentives. Specifically, the "cash for clunkers" program, which would pay an incentive to consumers who traded in a clunker for a hybrid or fuel-efficient vehicle. Two cash-for-clunker bills are currently before the House and the Senate, and President Obama has expressed his support for the concept. These would pay between $2,500 and $5,000 toward the purchase of a new car, depending on the age of the clunker and just how inefficient it was. The House version would pay consumers who purchase U.S.-made cars more than those who purchase foreign-made, but more efficient ones; whereas the Senate version pays more for relatively "younger" clunkers.

Germany is the model for governments around the western world, where February car sales were up 21 percent. Implementations in Texas and California -- several other states have pilot programs -- have, indeed, spurred new car sales. The U.K. is considering it, pleased as punch that a program can be both environmentally-conscious and good for struggling auto makers and dealers!

But something troubles: the program is not, by most reasonable analyses, very good for the environment. Steven Levitt argues that the incentives are all wrong; the House version might encourage car owners to drive their gas-guzzlers longer to score the bigger cash bonus. George Monbiot looks at consulting data coming out of the U.K. and does his own analysis; how much would the government pay to save a ton of carbon emissions? He comes up with a terrible number and castigates the idea as "hand-outs for the car firms, resprayed green to fool the incautious buyer" and decides "you'd get almost as much value for money by reclassifying ten-pound notes as biomass and burning them in power stations."

Monbiot reserves no charity for the consultants who prepared the analysis. "I would have liked to give you some transport comparisons, but McKinsey doesn't publish figures for public transport or for promoting walking or cycling (a McKinsey consultant wouldn't be seen dead on a bus). Nor, as far as I can discover, does the government. The carbon payback for other projects -- creating better cycle lanes in towns and coach lanes on motorways, helping children to walk to school, better enforcement of speed limits, better timetabling for buses -- is likely to be hundreds or thousands of times higher than any returns from the scrappage scam," he writes.

So it's not green, and it doesn't really make sense financially. It's pure handouts for the auto manufacturers. But does it hurt anything? Well, yes. Scrappage connotes scrapping, and throwing away one's car when it ages into the incentive system. What will the government do with the cars? No one knows, though it's safe to say they won't be re-sold to other Americans; sold for parts and scrap metal, perhaps, or stuck in a giant pile of smushed cars somewhere. It reminds me of the digital TV conversion: let's relegate millions of analog televisions, pierced with toxic heavy metals, to the trash heap by mandating digital signals! What a great idea! Only this law would make a new crop of cars obsolete, and ready for the scrap yard, every year, endlessly refreshing our waste stream and putting money in the pockets of the most profligate consumers to do it again.

This whole concept is the institutionalization of planned obsolescence; you'd think we would have learned.

Read Full Story
  • DJI26823.24-202.64-0.75%
  • NIKKEI 22522492.6840.820.18%
    Hang Seng26719.58-128.91-0.48%
  • USD (PER EUR)1.120.00360.32%
    USD (PER CHF)1.020.00290.29%
    JPY (PER USD)108.43-0.1850-0.17%
    GBP (PER USD)1.290.00550.43%