Friday, November 27, 2009

Cash for Good Spending Ideas

The "Cash for Clunkers" program gave Americans generous rebates for trading in their old cars for newer and more efficient cars.  Hot on its heels is a new program that will give rebate incentives for Americans to replace their old appliances.

The idea behind these programs is to bring forward major household purchases from some future point in time (presumably when the car/applicance needs replacing) to the present (when the car/appliance is working fine.)  The goal is to stimulate the economy by incentivizing consumers to replace the car/dishwasher when they would not do so otherwise....hence creating jobs in building those appliances/cars. 

These programs are wrapped in a veneer of environmentalism by replacing an older (presumably less energy efficient model) with a shiny new model that is more energy efficient.  However I haven't seen any studies being quoted to suggest that replacing large vehicles/appliances before their time has any useful net environmental benefit.  (It may well be that the carbon emissions during the production phase of the newer appliances will outstrip the benefits of lower future energy use.)

It makes sense that no environmental studies are being quoted because the point of these programs isn't the environment.  The point is to stimulate demand and jobs.  There is no question that increased demand will create jobs in the short term.  The dearth of future demand as the market gets sated early might well cost more jobs....but hey maybe then the recession will be over anyways.

It is truly bizarre that the federal government is now subsidizing the purchase of cars, dishwashers, refrigerators and dryers.  So widespread is this stimulus spending that one wonders if anyone is spending any of their own money to buy things?  So what will happen when the trillion dollar deficits being used to fund these programs create a national debt that future generations have to pay for??

Would you be happy knowing that you bought a new dryer that your grandchildren will still be paying for into their middle age?  If not then i suppose you could comfort yourself by knowing that buying a new energy efficient dryer that will save energy for the next 20 years will help to ensure that the planet is saved for future generations.

Of course that only holds true if you don't replace that 5 year old dryer and 5 yr old car when the next recession (and stimulus package) hits in 5 years.....or less!

1 comment:

  1. the government has done this for years--but overall you're right. The embodied energy in existing products (i.e. that expended to retrieve and process the raw materials, manufacture it, and then ship it to the retailer/consumer) is typically much greater than any lifetime savings achieved by purchasing a slightly more efficient, newer product. Buy something, run it into the ground, replace it when you have to and at that point get an energy-efficient model.

    It also doesn't account for the rebound effect, when a consumer takes the money saved (either because an energy-efficient product has inherent electricity savings or because of a rebate programme, or both) and spends it on something else, like a big-screen TV, thus completely negating any possible environmental benefit.

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