I was talking to a smart reporter today and he was telling me that he supports the Cash for Clunkers program saying that it not only benefits Detroit but also helps a variety of new car dealers who are more broadly scattered across the country. He got a pinch upset with me when I told him that if our sole goal is to stimulate new car sales then a more cost effective policy would be to release auto thieves from prison and let them get back to work.
A wise man has some ideas for how to allocate our cash. He would invest more in kids and less in clunkers.
"In times of economic adversity, governments look for temporary stimulus packages, be it cash for clunkers or shovel-ready jobs filling potholes. More often than not, they overlook America’s best economic stimulus package with lasting benefits long after the money is spent—investing in the youngest among us and producing significant economic and social benefits with rates of return that are comparable to the high return on stocks over the long run. That is why it is heartening to see the federal government seriously considering large investments in early childhood education from birth to age five." quote from Jim Heckman's essay .