The Hindered Invisible Hand

Many consumers have found it increasingly difficult to purchase a used car as a result of the government’s cash for clunkers program.  The generous subsidy offered by the government has created a shortage of old cars that is affecting the economy in unexpected ways.

One group that has been particularly affected is that of demolition-derby drivers.  Many an old car has met with retirement at the hands of such a driver, but rising prices on used cars is creating a hardship for these daredevils.

According to an article in Time magazine:

“Obama is an anti-demo-derby guy,” says Tory Schutte, head of the Demolition Derby Drivers Association. “He’s targeting the cars we’ve been using.”

Also contributing to the 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 kid with demo-derby dreams.”

Several billion dollars have already been used towards paying dealers an incentive to accept older trade-ins.  While an effective means of creating artificial demand for dealers, this program has hurt those that traditionally buy used cars by driving prices up.

photo credit: ThreadedThoughts