In his book
Military Blunders - The how and why of military failure Saul David dedicates the third of five chapters to examples of politicians messing up military operations.
Bannockburn, Sedan, St Valéry, North Africa '40/'41, Stalingrad, Goose Green.
At the moment people in Germany can witness politicians messing up economics.The automotive industry is among those that are suffering from the global recession. Fewer people were buying cars and our government came to the conclusion that they had
to do something about it.
Now, when a certain product is not bought, what can you do about this?First you have to analyse why it isn't bought. Is it because the product is unattractive or too expensive or because the people lack the money to buy it? Well, right now there's not a single car in the showrooms that is as good as mine as far as my requirements are concerned. But most people in Germany are less picky, so we can rule out 'unattractive'.
That leaves 'too expensive' and 'lack of money' which are not interchangeable. People could have the money and still not buy German cars, because other makers offer a comparable product for a lower price. On the other hand, German cars could be cheap and the people could still lack the money to buy them. Ergo, either they are to expensive teh people are lacking the money.
Both is true.
Too expensive: Compare the price of a Audi/BMW/Mercedes/VW made in Germany on the German and the American market. Compare the price of comparable German and Japanses cars on the German market.
Lack of money: Raising unemployment and short-time work, increased taxes and social contributions with the need to take private precautions for health care and pension.
Logical solutionLower the prices of the goods: lower VAT, lower wage costs.
Leave the working people more of the money they earn: lower income tax, lower social contributions.
The government's solution - a scrappage premiumScrap a nine-year-old car, get a €2500 subsidy when buying a new one!
Of course it's the usual 'take from all, give back to some'-plot. It's funded by all tax payers but its benefit is limited to those who...
- have a car that's at least nine years old
- and was registered to their name for a certain time (to prevent abuse)
- and is worth less than €2500
and who have the money to buy a new car - which is at least EU4-clean (no maximum CO2 emission, as in other European countries with similar schemes)
- and who are willing to buy a new car
My car is just five years old and I wouldn't be willing to scrap it anyway, so in fact I'm subsidising someone else's car and thereby have less money to spend.
DrawbacksBesides this very personal drawback of the scrapping premium, there are several more:
- How sensible is it to give people money for destroying value?
- Producing a new car uses more resources than using an existing one.
- How many people will buy a new car in the next years, now that many people advanced the purchase of a new car they'd otherwise have bought in 1,2,3 years? Will we just have a bigger problem later?
- What kind of car will people buy to replace a used car that was worth less than €2500? Probably not an expensive German car but rather an inexpensive Italian, French, East European, Japanese or Korean car.
- What is the effect on the used-car market?
- What about independent garages?
- What about criminals forging the papers needed to document that a car was indeed scrapped and not sold to Africa?
5 billion Euro have been allocated for this - or an average €61 from each of the 82 million living in Germany. Assuming an average family size of three, that means that thirteen families will have to pay to subsidize the car of the fourteenth.
Shouldn't thirteen fourteenth of the people vote against the government in the next election? For taking their money away to give it to others who are definitely not needy (if they were needy they couldn't afford a new car).
Well, they might soon BECOME needy. How many do you think will raise a credit to buy a new car, just to take advantage of the scrapping premium? How many will overreach themselves?
Dear politicians,
Congratulations for screwing up again! Next time, just leave me and my money alone!
Sixtyone Euro, hmm, four mags for my x-esse, 400rds of 9mm Geco, a nice evening with my girlfriend, 60L of diesel,...
Labels: angry, cars, economics, politics