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Best Article I Read Today →
“Still Crazy After All These Years” via the Economist. I do love a good conspiracy theory.
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The Week
Per Nick’s recommendation, I just subscribed to The Week. It’s a magazine that aggregates columns and opinions on current issues from various news outlets. It provides a glimpse of all viewpoints, which I really value.
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Go Bears! AB’s new Bud Light Fan Cans stir up some controversy. Colleges are enraged, but I think it’s a pretty good campaign.
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Cash for ___________ [insert floundering industry here]
The cash for clunkers program ended last night and I have to say, I’m not quite sure what I think about it. In one way, it’s very strategic – which I like. When something needs a boost, you offer a promotion. A “timely, targeted and temporary” as well as “speedy, substantial and sustained” incentive, as Larry Summers so alliteratively put it. It certainly helped the automakers - they just about doubled production from the second quarter. Not to mention the dealers, scrapyards, and other auto industry constituents. For now, at least.
On the other hand, it’s very manipulative – which I don’t like. It plays upon “behavioral economics,” that is, the straying from rational economic behavior. The government is like a car salesman in those cheesy commercials, but on the grandest scale. (Aside: Has anyone made a spoof with Obama, a car salesman, on the lot yelling, “Our first rebates were used in a week, so we decided to do it again!! Buy now and get a $3,500 voucher! Get yours before these rebates go OUT THE DOOR!!”) And, as any good sales promotion would, it worked. In fact, it turns out that potentially 40% of the 635,186 cars sold were to people that did not initially WANT a new car and wouldn’t have purchased one this calendar year, but just fell into the trap. That’s per the National Automobile Dealers Association economist Paul Taylor. Talk about irrational behavior. Even more interesting is the promotion attracted those that didn’t even qualify for the rebate, but bought cars anyway. GM spokesperson John McDonald says GM estimates 30% of its sales fall into this category.
Anyway, the program appears to have worked to bring a short term stimulus to the auto industry. What that will mean for future auto demand, for used car dealerships, and for the budget balancing of the 635,186 Americans that participated in the program, I do not know. Next up: cash for appliances.
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Okay, Big Brother
“If you get an email or see something on the web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.”
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