Cash for Clunkers revisited

I had convinced myself to overcome some doubts and suggest that Cash for Clunkers may have been a modestly successful stimulus. Then comes this post. The Everyday Economist reports that costs exceed benefits by $2000. Evidently the role government played did not push transportation to a more efficienct relationship with the other parts of the economy.

What would I want from Cash for Clunkers? Imagine that new cars had the electronic device that could report mile usage to our insurance agents by simply driving by his office. Each month, or more often, I drive buy his office, and he records my mileage. In that case, the new technology would allow my insurance agent to simply charge me insurance by the mile. I suspect the average gains in car insurance for new car buyers could easily exceed the $3000 in three years.

My new car could easily be used for congestion pricing, reducing my congestion time on important trips by an hour or so, resulting in nearly $40 in savings on important trips into town. Probably another savings.

So, in the ideal world, government, playing an expected role in traffic management, could have produced a "loss leader" that would have moved the motorist to a more efficient technology faster. This would be standard stimulus theory, using monopoly power to move the market to a more efficient system of production.