Clunkers in Practice

Today's Wall St. Journal points out that "cash for clunkers" hasn't been a great success, despite the administration's claims. New car sales for September are down 25% from a year earlier. Some 700,000 cars were sold in the summer under a program that gave buyers $4,500 to do what they would have done anyway. All the program did is steal those sales from the future, exactly as critics predicted.

The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing, productive assets. The journal quotes Henry Hazlitt's classic "Economics in One Lesson," but Hazlitt was borrowing from Frédéric Bastiat's "Parable of the Broken Window." You can't raise living standards by breaking windows so some people can get jobs repairing them.

If this is Washington's idea of a program that works, heaven help us when they get their hands on our health care.