A Parable

by Azreel | August 9th, 2009

There’s a very old parable about windows and unintended consequences. I’m pretty sure it holds some insights that we can glean from it and learn a little about the cash for clunkers program.

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

It appears that the proponents of Cash for Clunkers were not students of history nor were they philosophers familiar with the laws of unintended consequences.

The cash for clunkers program is not stimulating anything. In fact, it’s actually making things worse. The program is successful if the goal is to get inefficient vehicles off of the road. It may even be successful if the goal was to take money that the average consumer would have spent on car repairs and other necessities and instead give it all to the car companies. But as important is the fact that the program is putting thousands of consumers deeper into debt. Debt restricts freedom, and this program is horrifyingly effective at increasing the levels of personal debt for those trading in their car.

With our economy in the dire situation it is, trading in cars that run fine for new cars and a pile of debt is not the smart move, but the impact does not just affect the mechanic who is no longer paid to maintain the family sedan. As our parable shows, the money spent on monthly payments is money that the consumer is no longer able to spend on other goods and services, and it is also money that is not being put aside into savings, retirement, or other investments.

Money and transportation provide one thing very well: freedom. Without money total freedom is difficult to attain. But even without a steady income, if you have enough money for fuel and insurance, then you can hop in your car and head on down the highway to where opportunity abounds.  The freedom that the car provides quickly evaporates if the consumer is unable to make the car payment and the car is repossessed. A person laid off from their job may soon find their car repossessed, and without that car their ability to travel to work is seriously curtailed.

The majority of the people trading in their car under cash for clunkers are trading in a functional and, more importantly, paid off car for a car that puts them (deeper) in debt at time when most people should be actively reducing the amount of debt they carry. If money brings freedom, debt brings slavery.

PapaDeltaBravo says it best here:

To own a car is to reduce your personal limits and restrictions. You no longer are limited to the mere distance you can comfortably walk to seek a job or food or entertainment. A person with a car does not have to make do with what’s next door. A person with a car has hope, real hope, because as long as he has the keys and enough money in his pocket for a tank of gas, he can go anywhere else if it’s not working out here.

It is no coincidence that America is the country of the personal automobile and thus Leftists have always hated cars. They’re too wasteful, they permit too much consumption, cars allow people to escape the miserable inner-city hellholes leftists inadvertently create as they try to mold the new Soviet man.

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