Cash for Clunkers

Well, summer's over, and I have renewed my promise to pay more attention to this blog.  I have been catching up with Harvard economics professor Greg Mankiw's blog, and found this reference to an article by Jeff Jacoby, a Boston Globe columnist about the Obama Cash for Clunkers program.

The program not only advanced the timing of purchases that would have been made anyway to receive a government subsidy, it also required the destruction of the thousands of used cars that were turned in.  As a result, the price of used cars had increased because of the reduction in their supply .  Edmunds estimated that the price of a three year old used car had increased by more than 10%.  A classic case of a regulatory folly.