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Clunkers…Cash or Crash

October 12, 2009

A couple of weeks ago I met a friend for breakfast at The Skillet. He lamented the fact that he missed out on the Cash for Clunkers deal. He is the proud owner of a 1992 Chevrolet. When he attempted to get in on the government program he was told his car did not qualify because his model got too many miles per gallon of gas.

“They didn’t take into account all of the oil that rattletrap burns,” he despaired.

Another fellow raised a question. “Looks to me like the government messed everything up. If all these clunkers are crushed for scrap metal the price of steel is going to fall through the floor. General Motors wants to get back to work and start making new cars. The question is who are they making them for? Anyone in the market for a new car has already bought one. Who is going to buy all the new cars?”

Did Cash for Clunkers succeed? The government’s auto-revitalization plan ran through $3 billion of stimulus money in a matter of weeks. As far as economic theory goes, it was a perfect stimulus. It targeted a failing industry. It was timely since it came mid-recession. It was temporary because the money’s gone. Was it helpful to our ailing economy?

Auto retail sales in August were the highest for any month in three years. The hero was clearly Cash for Clunkers. Would three billion dollars added to the economy during a recovery prove to be a good thing?

Jonathan Adler writing in The Economists’ Voice concludes that the cost of the Cash for Clunkers program exceeded the benefits by approximately $2000 per vehicle.

Maybe Cash for Clunkers has succeeded in ways that go beyond the stimulus stats. Maybe it boosted morale among automakers or got Americans in the spending mood. I have noticed a lot of ads by car companies offering their own Cash for Clunkers deals.

Only time will tell.
In the September 3, 2009, issue of Time magazine, Ada Calhoun reports that there’s one group of people who are glad Cash for Clunkers is over. Demolition Derby drivers found the program damaging to their sport. Participants in these events smash into one another until there’s only one car running. They don’t enjoy the sight of old cars going out of commission without making a stop at the county fairground.

Most Demolition Derbies are held on dirt tracks or in open fields that are usually soaked with water. This causes the competition area to become muddy, which in turn helps to further slow the vehicles. Some drivers use both the front and rear of the vehicle to ram the other competitors. Others tend to use only the rear end of the vehicle, to help protect the engine compartment from damage.

In a Demolition Derby, racers do not race against each other. Their goal is to destroy the other cars. The typical Demolition Derby event consists of five or more drivers competing by deliberately ramming their vehicles into one another. The last driver whose vehicle is still operational claims victory and is awarded the prize money.

Tory Schutte, head of the Demolition Derby Drivers Association, says that now there is a shortage of derby-worthy cars. Scrap metal prices have doubled in the past two years, leading more owners to sell their cars to the junkyard instead of to a local guy who enters derbies.

Since the 1950s, Demolition Derbies have offered cheap entertainment. A bunch of banged up cars sputtering along on their rims in the mud can draw a crowd. There are an estimated 3,500 Demolition Derbies in the United States each year. They are often the main attraction at county fairs.

In South Carolina, there are two annual Demolition Derbies. One was in Greenville in September. The advertisement read, “All the thrills, spills, smashes, and crashes of the annual Upper South Carolina State Fair Demolition Derby will take place on September 11 in the Entertainment Venue. It’s always a Fair favorite as competitors smash ’em, crash ’em, and bash ’em for the title of King or Queen of the Upper South Carolina State Fair.”

A second Derby is October 28, 29, and 31 at the Aiken/ Western Carolina Fair.

Much preparation goes into crashing these clunkers. Cars are stripped of all extraneous parts, including all glass and chrome. Gas tanks must be moved to the backseat and covered with scrap metal. Doors must be welded or chained shut. Drivers have to wear helmets, and they are not allowed to ram driver’s side doors. Many also accessorize with neck braces.

During our sophomore year in college, a classmate bought a 1949 Ford for eight dollars. The car had no forward gears. It would only move in reverse. He backed the clunker all the way from the used car lot to the Furman campus.

“What are you going to do with a car that won’t go forward?” I asked.

“I’m going to enter a Demolition Derby, “ he said.

He towed the car to the Greenville-Pickens Speedway. He loaded the trunk with concrete blocks. Backing his way around the muddy infield, he smashed every competitor. The old Ford was the last car running.

In those days, the prize money was fifty dollars.

“What will you do with the money?” I inquired.

Taking a drag on his cigarette, he said, “Buy a heavier car.”

There’s a stimulus plan!

Kirk H. Neely
© October 2009

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