Starting early next year, the government will initiate Cash for Clunkers Extreme Home Appliance Edition.
Supported by $300 million from the economic stimulus, the program will offer rebates to consumers who buy energy-efficient refrigerators, dishwashers, air conditioners and other appliances to replace their older models.
The appliances program may be destined to continue the debate. For when it comes to stimulus, timing can be critical, and the implementation of the effort has dragged on, possibly diminishing its usefulness.
Although the $787 billion stimulus program was signed by Obama in February of 2009, much of the cash-for-appliances money won’t hit the streets until next February, March or April.
The government wants to stimulate the economy by shifting consumption from the future to the present. But they are telling folks that if they just hold out until next year, they will get paid for replacing their old appliances. Sounds like a sure-fire way to suppress consumption to me.
James Hamilton notes that the logic behind Cash for Applicances goes far beyond even John Maynard Keynes’s most intentionally outrageous statements about stimulus:
Keynes wrote in his General Theory of Employment, Interest and Money:
“If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
Destroying durable goods in order to build new ones goes beyond even this colorful recommendation from Keynes.
It would be as if the Treasury were to give banknotes to anyone who destroyed the bottles that happened to be lying around their house.