Cash for Clunkers had three primary goals: Help the auto industry, help the environment, help the poor. It failed on all three, thanks to the U.S. government’s mishandling of the whole affair.
This damning review comes from Harvard Business School marketing expert John Quelch, in a blog post on Harvard Business Publishing.
“The Federal government should not be in the business of initiating and administering short-term incentive programs designed to shape consumer purchase behavior. It has no experience in such initiatives and proved itself incapable of forecasting demand associated with different incentive levels.”
Where did government fail? Quelch says the size of the rebate, up to $4,500, was way too large and resulted in taxpayers subsidizing car deals that would have occurred anyway. And government-imposed bureacuracy means administration costs might reach 10 percent of program costs.
Read Quelch’s entire critique How Cash For Clunkers Failed American Taxpayers. You can also look at my previous post supporting the program. Then come back here to debate this question:
Is Cash for Clunkers an exemplar of the good government can do for its people, or an illustration of why government should stay out of private enterprise? Short on time? Take our poll.
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