CNN Money Poll Re: Cash for Clunkers

I tried to respond to CNN Money's question about Cash for Clunkers. I do not seem to be smart enough to understand how to log into Facebook, which they requitre. So I will post my comment here:

As far as stimulus, this is an example of the broken window fallacy (See “Economics in One Lesson” http://jim.com/econ/chap02p1.html). Essentially, you do not cause net economic gain by destroying property in the hope of stimulating the industry that replaces it. That is because the resources expended would have been used elsewhere anyway. I suppose that if you have a favored industry (e.g. government owned or political supporters), such a policy could stimulate it at the expense of other industries and the economy as a whole. Taken to the extreme, all of the destruction of war can be seen as economic “stimulus” according to the Clunker theory.

The argument that holds water, a little, is that cash for clunkers helps reduce dependence on foreign oil sources by increasing the fleet turn over rate toward newer, higher mileage vehicles. (That is assuming that the owners of the newer cars won’t just drive more – as I would.)