Walter Olson brings back the “Cash For Clunkers is why used cars have become so expensive” argument:

Guess what’s the newest trouble to hit the car business? As news outlets around the country are reporting, the price of used cars has lately soared to a modern-day record, with some cars commanding more used than they sold for when new. News accounts commonly finger the Japanese earthquake and high gas prices as reasons, but there are some problems fitting either reason to the case. While the earthquake affected the supply of new cars, it’s the previously driven kind that has scored the more impressive price jump. And while the rise in gas prices would explain a relative shift in buyer demand from SUVs and trucks toward smaller vehicles — which has indeed happened — the strength of the used-vehicle market lately has been such that even the thirstier vehicles have advanced in price, $4 gas or no.

No doubt there are multiple reasons for the price spike, including the severe general slump in new-auto sales in recent years, which has reduced the volume of newer cars coming onto the resale market. But — as Washington scrambles to take undeserved credit for whatever passes for normalization in the auto business these days — it’s worth remembering that an artificial scarcity of used cars isn’t just bad for the poor as a group: it’s bad in particular for the upwardly mobile poor, since in most of the country landing a job means needing to line up transportation to get to that job. When it suddenly costs $6,000 instead of $3,000 to get wheels, the move from unemployment to a paying job faces a new and discouraging barrier.

At least he points out that there are “multiple reasons,” which is something that a lot of C4C critics have glided over in the past. Even so, he acts like C4C is the driving factor when there is comparatively little reason to believe it’s more than just a contributor. I wrote about C4C here and here. My basic view is that Cash For Clunkers was an idiotic proposal, a poor way to go about reducing emissions and destroying a lot of capital along the way, but that it’s hard to blame all – or most – of the increased cost of used cars on the law. I previously pointed out that some of the cars where the price increase is the highest, late-model used cars for instance, were not the ones taken off the road. While it’s possible that there is a cascading effect (people can’t buy a targeted, fuel-inefficient vehicle and instead buys an ineligible care taking that one off the road) you would still see the biggest impact on the cars that were targeted and more impact on cars from that period and not more recent cars. Instead, it’s the other way around, suggesting that the biggest reduction in used car availability (where increased demand is meeting decreased supply) is a result of people buying late-model used rather than new vehicles and – more likely – holding on to the car that they have.

Olson cites this article, among others:

Bill Visnic, analyst and senior editor at Edmunds.com, said the auto industry went from selling 16.5 million new cars annually before the recession, down to 10.5 million in the depths of the crisis. He said the average age of a used vehicle on the road today is in excess of ten years old, as well, meaning that overall more consumers are keeping their older cars.

“About five million people or so dropped out of the market,” Visnic said. “A vast number of those people would have been trading in a used car when they bought a new one. That’s a big whammy when the replacement rate has been lagging so much.”

Consumers looking to buy used cars will find that prices are up markedly, Visnic said. The Wall Street Journal reports that prices for used cars are up 5% this year at wholesale auto house Manheim. He said the Car Allowance Rebate System, which was introduced in 2009, also set off the price hike in the used market. The government program dubbed “Cash for Clunkers” offers economic incentives to U.S. consumers for turning in their used cars for a newer, more fuel-efficient vehicle. In turn, instead of ending up on the used car lots across the country, those vehicles went to junkyard graves.

So there has been a reduction of 6 million car sales per annum. Cash for Clunkers may be responsible for – at maximum – 1/7th of that. That assumes that everyone who totaled their car in 2009 would have sold it in 2010. Given that a frequent (and valid!) criticism of C4C is that it didn’t even increase the sale of new cars because it merely time-shifted purchasing (they bought in 2009 what they might have waited a couple years to get rid of), it seems likely that a lot of them would still have the car.

Be that as it may, it is likely that it is contributing to the problem to at least some extent. The “lost capital” that I lament is going to have some effect. And it is another reason to dislike this bit of free pudding policymaking. But there are a lot of other factors at work (an economy that went to hell, primarily) that swamp the effects of the policy.

If you’re looking for a defender of Cash for Clunkers, you’re not going to find it with me. I’m not against it in theory if I thought that it could do what its supporters said it would do. I don’t like the idea of taking functional cars off the road and I think that the money would have been better spent elsewhere. However, there is one argument against C4C encapsulated in this article that I consider to be pretty problematic: The notion that it has made el cheap-o entry-level cars too expensive for people without much money:

The Manheim Used Vehicle Value Index reported that prices reached record highs in September. The consulting firm that publishes the index blamed low inventories.

That’s bad news in Berks, where many shoppers seek inexpensive, used vehicles, especially during difficult economic times, said George Tabakelis, general manager of Perry Auto Service & Sales on Route 61 in Perry Township.

“Customers used to be able to find a good car for their son or daughter to take to college for $2,000 or $3,000, but now that same car may cost $5,000,” Tabakelis said. “It’s sad.”

He, too, blames cash for clunkers, which has led to fewer vehicles being available at used-car auctions, and the recession.

The cars that C4C is taking off the road are those that are old and get less than 18mpg. So for people looking for cheap, entry-level, high-mileage old cars with poor mileage, their hunt got a little bit tougher and more expensive. So for bigger cars, trucks, SUVs, and low-mileage muscle cars, C4C has become tougher. However, those aren’t college student outfitters (except perhaps bigger cars). This article (as well as numerous conservative, libertarian, and anti-Obama commentators) implies that this applies to the most basic of entry-level cars. Like the old Dodge Colt or Chrysler LeBaron that I used to drive. Those aren’t being scrapped.

The LeBaron got around 25 miles to the gallon and the Colt got 30 until the day it died. The only vehicles in our family history that would be eligible would be the vans and the convertible, neither of which are “college cars” (and I have my doubts that the convertible would have been eligible because even though it got very poor mileage, I think the model itself got good mileage and I think that eligibility is determined by model and year).

The only really good argument that C4C made college cars more expensive is that by taking old SUVs and station wagons off the road, it forced people that would buy those to instead buy smaller cars, increasing demand on those cars and driving the price up. I’m not really sure how much of a factor that is, though. People that get low-mileage vehicles typically do so for a reason. When it’s necessitated by extra cargo space or passenger capacity, smaller vehicles don’t do them any good and so they’ll likely bite the bullet and get something a little more expensive. It’s a bit murkier with people that wanted a 1990 Ford Mustang or Taurus but instead must make due with an Escort. Those people may drive the price of Escorts up a little bit, but you can still get a 90’s Ford Escort for $2,500. Clint got an early-90’s Toyota Corolla for less than $1,000 and it runs great. Even if Crayola, my late-90’s Ford Escort, were running well, I wouldn’t expect more than a couple thousand for it.

For those noticing an uptick in the cost of entry-level used vehicles, it’s possible that C4C is playing a marginal role in it through a cascading effect, but to that extent so is the economy as a whole on models completely unaffected by the program. The article above actually points out that fewer new car sales are making barely-used car sales more expensive. As I’ve been car shopping for the last several months, I’ve noticed the price differential between low-usage used cars and new cars has shrunk to become pretty marginal (and I say this as someone that never intended to buy new).

Back to the original point, as much as I’d like to blame a government program that I never really liked for an undesirable turn of events, I’m afraid I just don’t buy into the notion that Cash for Clunkers, despite its various flaws, has priced people out of the entry-level cars that they need. It may have priced them out of the entry-level cars that they want, if they wanted a Ford Taurus or a truck of some sort, but for the poor cash-strapped college student depicted in the article, they have other options.

I previously wrote a superficial review of Atlas Shrugged. Today, I want to talk about my emotional reaction to two scenes. There are no spoilers here beyond the first third of the book.

Early on, Taggart Transcontinental Railroad’s CEO, Jim Taggart, pulled the levers of the trade group to force a regional rival, Dan Conway, to cease operation of a superior competing line, the Phoenix-Durango. The program for Taggart was that their own line, the Rio Del Norte, had fallen into disrepair and was not ready to carry magnate Ellis Wyatt’s cargo out of Colorado. Though Conway agreed to cease operations, he declined to turn his existing lines over to Taggart.

Later on, Ellis Wyatt makes the decision to join the other Makers in Galt’s Gulch. The last straw for Wyatt is a series of regulations that were tailor designed to soak every extra bit of productivity out of him for everybody else (the “common good”). Rather than simply disappear, or take what capital he could with him, he essentially destroyed his mines in a blaze of glory.

There are similarities between the two events, in that they were both examples of successful industry injured significantly by interference in the markets by outside forces (a trade group for Conway, the government for Wyatt).

There were differences, too, that lead me to view the two cases so differently. To the point that I was happy with Conway’s decisions, and angry with Wyatt’s.

The less important difference between the two was that Conway was quite directly forced out of business. After losing his line, he had no business to operate. He could have gotten a job elsewhere, but he was displaced. For Wyatt, the expectation was that he would continue operations. He had operations to continue.

The big difference, though, was that Conway tore up the lines and sold them. That he refused to sell them to the place where they were most needed bothers me less because it’s the people who most needed it that played the central role in killing his business.

Wyatt, though, simply destroyed everything in site. He left a note saying that was basically leaving everything as he found it. I’m sure Rand saw some justice in that, and perhaps there was. I had an enormous amount of difficulty seeing anything other than needless destruction.

It’s one thing to prevent somebody from having something by keeping it or deliberately giving it to someone else. In the Trumwill Way of thinking, though, it’s another to destroy it to keep them from having it.

Most likely, though, it’s my own visceral reaction to destruction itself. Though I have defended Cash for Clunkers at Hit Coffee for not being particularly responsible for the rise in used car prices, I could only look at the whole process with dismay. I understand the environmental rationale for it, but the whole thing was dedicated to taking something useful and putting it out of the reach of the people who could actually have used it.

Presumably, like Conway’s tracks, there was a recycling and re-purposing of the metal. But there are people all across the country who could use cars in good working order, and there we were destroying them. Better that they should without than that they pollute the environment with it, while large numbers of middle class Americans got a new car at a reduced price.

Whether one considers my response to C4C to be right or wrong, I do admit that this reaction of mine does go to the almost certainly irrational. While tearing something down to build something new over it isn’t really a problem for me, I get that twinge of resistance when I see something torn down because it can’t be re-used and has been declared unsightly or (less unreasonably) a hazard. But if we’re not going to do anything with the building, it really shouldn’t matter. I just don’t seem to care.

In my own personal life, this relates to my historic inability to throw away old computers if there is even a semblance of functionality. There are very, very few uses I can imagine for a Pentium laptop, but by heavens it works so how do I throw it away or turn it into the recycler? It’s something I have struggled with enormously.

Logic did finally prevail earlier this year when I spent several hours trying to get a couple of old, single-core processor machines working. I mean, that’s not when logic prevailed. Logic prevailed when, after having done so, I realized how utterly useless these computers were and did dispose of them with prejudice.

Even then, it’s amazing how hard it is. It turns on! It works! It takes twenty minutes to open up an email but… functionality! In theory, anyway.

Presumably, had Wyatt simply left the mines in tact, the “looters” would have run it into uselessness anyway as they did with the society that they were left. In the context of the story it did make sense to hurry the process along because progress in Randverse was more-or-less predicated on the collapse of civilization. Burning the village to save in and all that.

Matt Yglesias and Kevin Drum explain why pot is illegal everywhere in the world.

So apparently, Patrick Dempsey has purchased Tully’s Coffee. There was one back in Zaulem where we used to live. There are actually a lot of places out west that serve their coffee and have their logo in the window, though they’re not part of the chain.

AndroidCentral recommends against getting the 8GB Nexus 4 because that’s not enough space. Of course, this wouldn’t even be an issue if they had a MicroSD slot.

I think Apple’s move towards cheaper smartphones is – while good for cheapskates like me (if I were an Applyte) actually a mistake.

They’re also considering multiple colors. As a consumer, I’m not a fan of the idea (there is no reason ever to deviate from black or silver). As a business matter, I don’t know that it really matters.

William Pesek writes on the road China has ahead of it. It touches on the demographics problem, as well as one of my issues (they’re not going to want to make our cheap stuff forever).

This is probably a hat-tip to my freakishness, but I think “PC City” in this Vizio ad looks blissfully practical and efficient (except for a disk drive coming out of a building and such). It’s probably no coincidence that I like the basic look of Thinkpads and standard tower computers. I want to live in PC City. (Which apparently was made from models.)

A documentary-maker on fracking is accusing Matt Damon’s new anti-fracking movie of being a liar. In the interest of fairness, it’s starting to look like resource exploitation in Alberta is doing a number on the water there.

When all of the flaws of Cash for Clunkers were pointed out, a counterargument was that aside from the economics, it was about the environmental benefit. Maybe not. I may not agree with the premise that C4C was a primary… errr… driver in the raising of used car prices, but what a stupid program.

Cosmic radiation could be causing Alzheimer’s in astronauts. Speaking of astronauts, anyone up for a one-way trip to Mars?

Ezra Klein writes an ode to Biden and explains that he really could be a presidential contender in 2016.

Japanese scientists have located a giant squid in the Pacific Ocean.

I consider Obama’s presidency to be a mixed bag. There are things he has done that I support (Ending DADT, credit card reform) and things that I oppose (PPACA, Cash For Clunkers, GM Bailout, increasing CAFE Standards, offshore drilling moratorium). A lot of the things that really inflame fellow Leaguers (drone attacks) don’t particularly inflame me. There is at least one thing he has done that has sent me through the roof, however. Not because it’s of tantamount importance in the greater scheme of things, but because of how unnecessary it was and how I simply cannot put a positive spin on it.

I speak of the Administration going from “As a general matter, [we] should not focus federal resources individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.” and “We limit our enforcement efforts to those individuals, organizations that are acting out of conformity…with state laws.” to “The intertwined subjects of medical marijuana, Montana law and medical necessity have no relevance to determining whether the government has proven the crimes charged in the indictment … Marijuana is a Schedule I controlled substance under federal law … and can’t be dispensed under a prescription.”

I don’t expect much from Democrats when it comes to pot legalization. I expect less from Republicans not named Gary Johnson. The most that can be said is that McCain would have raided more dispensaries than Obama did. Yet, even if this is true, it’s not the raids themselves that have me up in arms about this. It’s the announcement that encouraged the businesses to form in the first place only to have the founders arrested later on. Enforce the law (which is legally right) or don’t enforce the law (which is morally right), but it’s very important that everybody is clear on which route you’re going to go.

If there is any confusion as to the relationship between the Ogden Memo, which suggested that enforcement would not occur, and the proliferation of the dispensaries that garnered exceptional legal liability, this is from the Great Falls Tribune:

Many people in the medical marijuana community believed the Ogden memo demonstrated that President Barack Obama had fulfilled his 2007 campaign promise to “not have the Justice Department prosecuting and raiding medical marijuana users.” {…}

In the span of just two years, the number of medical marijuana patients skyrocketed from 3,921 in September 2009 to more than 28,000 by the time the Legislature convened in January 2011. During that same period, the number of Montana caregivers authorized to grow marijuana for patients jumped from 1,403 to 4,833.

The problems that were occurring under Montana’s Medical Marijuana law shouldn’t be understated. They were significant and well known throughout the Mountain West region. So much so that the debate within Montana – a state in which MedMar passed a public vote by a substantial margin – was whether it should be mended or ended. The raids occurred while this debate was happening – literally, while a state senate panel was voting, the DEA was arming up.

Montana’s first registered dispenser died in prison about six weeks ago. His son is serving a five year sentence, his wife is serving two (for bookkeeping).

Being the federalist that I am, my view is that even if Montana law was spinning out of control it should have been allowed to remain a Montana issue. If the federal government was unwilling to allow it to continue, however, I would have understood that to if an announcement had been made to that effect. But whatever should have happened, this should not have happened. Maybe we should have a completely black and white view of the law and if it’s illegal it should be illegal. Maybe there’s room for gray. But the rules, official or unofficial, should not be changed after legitimate business licenses are allowed to be issued.

Theoretically, science is science and political motivations should be set aside. In reality, it almost never works that way. Whether we accept scientific conclusions or not depends, in good part, on whether the results conform to how Americans should or should not live.

Global Warming wasn’t the imminent catastrophe when I was growing up than it is now. Yet, almost everything we’re talking about doing because of global warming, were things that we were taught to do before global warming was the primary ecological threat of our lifetime (or was framed as such). I do not consider this a coincidence.

A long while back, I was advancing my theory that increased gasoline costs might actually lead to a solidifying in the suburbs if employers end up relocating closer to employees rather than vice-versa. She exclaimed “That would defeat the purpose of global warming!”

The purpose of global warming, in her mind, being a rationale through which we should be rearranging society. I’m not arguing that’s what global warming is about for all or even most of those who are saying that we need to combat it. I do think, however, it is a lot easier to accept the science when the result is people living in a way that you think they ought to. I do not find it to be a coincidence that those who believe in the imminent disaster of global warming are also inclined to believe that Peak Oil is right around the corner. One way or another, we’re going to get them out of their SUVs dagnabbit, our of their suburbs, and living the way they ought.

Not a single word of the above has any effect on whether (a) AGW is occuring and will continue to do so or (b) whether we need to do something about it. It is or it isn’t, we should or we shouldn’t. It does, however, complicate the discussion. It prevents us from approaching global warming as a thing and outside of the political lens.

CAFE standards are not a particular effective way to combat global warming, in my view, because it focuses on one aspect at the expense of another. The mileage your car gets only matters if you hold the number of miles driven as a constant. The end result is that we punish people who have low-mileage cars who drive short distances while we let skate people who have high-mileage cars but actually burn more fuel. I went through far, far more fuel in my compact than I presently do in my crossover SUV. I say all this to say that when I say all this, it comes across as “I don’t care about the environment.” It’s a political issue that I am on the wrong side of. The goal – at least for some – is not just to get people to use less gas (though I agree that’s a big part of it) but also to drive the right kind of car.

I support carbon taxes. Or rather, I support the right carbon taxes. Ideally, comparatively revenue-neutral ones. Ones that take the money raised and disperse it back. Not put aside for grants, not going to education. Not going to health care. Not going to toxic waste clean-up. Winners and losers should be picked precisely on how much carbon they are responsible for. In one hand, out the other (more or less). From there, let people drive whatever car they want, live in whatever kind of neighborhood they want, and make choices on that basis.

This, to me, is far preferable than using global warming as a rationale to change our lives or push is in specific ways. Not only because the freedom of personal choice, but because it’s most conducive to finding a way to cut emissions while living the way we want to live, which in turn means it will more likely be successful. And in turn, I will have more confidence that it is about reducing emissions than it is about the appropriate cosmetics and living the “right way.”

Given the stakes, we simply shouldn’t care if it’s nuclear power or renewable. We shouldn’t care if people reduce emissions by getting a more fuel-efficient car or by driving less. We shouldn’t care all that much whether they drive less because they moved to the city or because their employer relocated to the suburbs. The degree to which all of these things continue to matter… it becomes apparent as a political rather than purely scientific issue.

Australia recently passed a carbon tax to go into effect. I will be interested to see how it works out. Hopefully that, rather than CAFE, Cash-for-Clunkers, and light bulb bans, will provide the most useful blueprint.

The Big Money’s Matthew DeBord wonders what happened to the family car:

To put it bluntly, even big sedans aren’t big enough to haul around the bevy of sports gear, pets, and offspring that now make up many American families. In the 1990s, families began replacing their Buicks and Ford Tauruses with SUVs, and now they’ve moved on to a combination of SUVs and so-called “crossover” vehicles, which are essentially five- and seven-passenger SUVs built not on truck, but on car platforms, for better handling and fuel-efficiency. They’re the modern-day station wagons.

The family sedan, meanwhile, has gone the way of the Dodo. But sedans are still in play. One of Ford’s most popular vehicles—one that sold like gangbusters during Cash for Clunkers—is the Focus. It’s a small sedan, however. So what does Ford do when it’s time to move that customer up to a larger car? {…}

Slip into a Ford Taurus today, however, and you can see my dad’s era rapidly receding. What you get instead is the latest iteration of the BMW experience. When BMW began bringing its “sport” sedans to the U.S. in the 1970s and ’80s, buyers immediately noticed that they were both more compact than American family sedans, and also more organized around the driving experience. (They were, after all “the ultimate driving machine.”) You sat in a snug cockpit, bolstered into your seat, with instruments arrayed around you as if you’d been dropped into a fighter plane.

Well, obviously, a Ford driver that wants to move into a large car gets either the mid-size Fusion or full-size Taurus. The problem for Ford is that neither of these cars stack up particularly well against their foreign counterparts, the Toyota Camry and Honda Accord. Both of those cars, last I checked, were selling pretty well. And both are pretty big sedans and getting bigger with each remodel. So part of the problem is that sedans are something that Ford (and its American rivals) simply have not been doing a very good job of engineering, producing, and marketing their larger vehicles in comparison with its Japanese rivals.

DeBord comments that bringing back the Taurus name, but the real question is why they ever got rid of it. Ford fans were really displeased with that development and the answer to that question is a monumentally stupid one. Basically, they wanted all of their cars to start with the letter “F” the same way that their SUV series starts with the letter “E” (Explorer, Escape, Expedition, Edge, etc). So they dropped the Escort and the Taurus and replaced them with the Focus, the Fusion, and the Five Hundred. The Fusion was technically the replacement for the Taurus, though the Five Hundred was considered to be. Interestingly, now that the Taurus is coming back, it’s coming back as a full-size rather than mid-size Sedan. The Honda Accord made the leap last year. The Camry did a number of years back. I find this interesting because, despite what DeBord says, the auto-makers are making their marquee cars larger rather than smaller.

That’s not to say DeBord is wrong. In fact, I think it goes to show that he’s right. People are looking for more space. The engineers are doing a good job of cramming more space into a smaller-seeming car. My wife’s Camry has an astonishing amount of cargo space and until 2005 the full-size Toyota Avalon was not much larger. I used to drive a 1976 Chevy Caprice that I called The Trawler because it was like a boat on wheels. That’s what a full-size car used to be like and it’s no surprise that once other high-storage, roomy vehicles became available, that the full-size boat-car market cratered. If you’re going to drive something that large, why not drive a truck? The BMW model that DeBord cites sort of changed that as car designers have sought to make larger cars easier to handle (and not quite so large). There’s recently been a similar move on the compact and subcompact front, with cars like the Nissan Versa being both small and boasting some serious interior space. In other words, models are moving towards making smaller cars seem larger from the inside with more space for what matters (people and cargo).

But ultimately, I think that people like me are who DeBord is looking at when he says that people are less interested in full-size (or even mid-size) sedans. I look at a lot of those cars and I wonder “What’s really the point?” Clancy wants to replace her current Camry with another Camry and there’s no really good reason not to accommodate that unless we determine that we need all-wheel drive. But the cost of a Camry is not all that much less than that of a light-SUV (and the cost of an Avalon is more). There’s no AWD option (except on the super-expensive hybrid). No roof-rack. Lower safety scores. And yet it costs about the same as a Mitsubishi Outlander and only a couple thousand less than a Toyota RAV or Honda CR-V. The Camry in particular (in opposition to the Taurus and other full-size sedans) does boast phenomenal reliability ratings (one of the reasons that Clancy wants another Camry is that her mid-90’s model is running like a sprinting ninja), but the Accord’s ratings are similar to the Outlander’s (though the Accord’s safety ratings are comparable to the Outlander’s and better than the Camry’s).

I don’t have time to go through every model and do a comparison, and I know at least some mid-size and full-size sedans (Subaru Impreza, Mercury Milan) do offer AWD, though I should note that they only do so at the highest trims. The SUVs, except Subarus, will charge you more, but they won’t reserve AWD for the trims where you also have to get Bluetooth and GPS standard.

Ultimately, of course, it comes down to personal preference. Clancy doesn’t understand how a big guy like me can prefer tiny little cars over full-size sedans (or crossover SUVs), but for the me answer is improved mileage (though that’s less of an issue when I’m not commuting 60-110 miles a day) and mostly improved maneuverability. When I drive the Camry, I feel like “Gosh, I might as well be driving a low-riding SUV.” But obviously cars like the Camry do have something going for them because they remain prevalent. That’s changing somewhat, though I really don’t expect the larger family cars to go anywhere. They’re no longer really good family cars, though they’re still fine for secondary family vehicles that want two cars that can fit in car seats and the like. And as childless people that move around a lot, the Camry has proven to be much more helpful than the Escort has been or its successor the Focus would be.