Obama's Car Policy Ruining Auto Industry

The Obama administration has made three fundamental errors with respect to auto policy. 1) Cash for Clunkers. 2) Creating a car czar. 3) Bailout / Takeover of GM.

Cash for Clunkers

This was a policy disguised as pro-Environment to appease the green movement. It encouraged people with a gas guzzling clunker to turn it in and get a $3500 rebate towards the purchase of a brand new car. American consumers are already in over their heads, they don't need the government to encourage taking on new debt in the form of a car loan. Second the last thing the auto industry needed was a government induced distortion that took money away from used car dealers towards new car dealers. This was really just a scheme to transfer taxpayer money into the hands of the new car industry. Third, perfectly good cars were destroyed. So those who would ordinarily purchase these cars on the used market were unable to do so and ultimately forced to pay more for a car than they ordinarily would.

In summary, they

1. encouraged more bad debt
2. distorted the market by taking away consumers from the used car market towards new cars
3. destroyed perfectly good running cars that could have been placed in the market
4. funneled taxpayer money to a privileged industry

Car Czar

What is the purpose of a car czar anyways? The only way innovation will take place in the car industry is if it done in the private sector. The thought that a bureaucrat in a suit (likely heading the post for political reasons) will do the best job is ridiculous. The only way to have a boisterous car industry in America is to let consumers decide which cars are successful and which ones are not.

Government Take-over of GM

By taking a financial stake in GM, the government crossed a line. It is called corporatism when government and corporations get in bed with each other. The Volt was deemed a huge failure and a massive recall is in place. Government central planners decided they wanted the Volt to be an electrical vehicle and altered the market and engineering towards that "political" objective. A shift to electrical vehicles should be done by innovations in engineering and demand by consumers... not because the government said so.