Cash for Clunkers

Cash for Clunkers is a prime example of the law of unintended consequences in action. It reduced the supply of running used cars at a time when recession-minded buyers increased the demand for used cars. Anyone understanding the simple economic principle of supply and demand could foresee an increase in used car prices as a result.

It was also a colossal waste of real assets and highly destructive to the environment.

Whoops—'Cash for Clunkers' Actually Hurt the Environment - Takepart.com

Back in 2009, President Obama’s “Cash for Clunkers” program was supposed to be a boon for the environment and the economy. During a limited time, consumers could trade in an old gas-guzzling used car for up to $4,500 cash back towards the purchase of a fuel-efficient new car. It seemed like a win for everyone: the environment, the gasping auto industry and cash-strapped consumers.

Though almost a million people poured into car dealerships eager to exchange their old jalopies for something shiny and new, recent reports indicate the entire program may have actually hurt the environment far more than it helped.

According to E Magazine, the “Clunkers” program, which is officially known as the Car Allowance Rebates System (CARS), produced tons of unnecessary waste while doing little to curb greenhouse gas emissions.

The program's first mistake seems to have been its focus on car shredding, instead of car recycling. With 690,000 vehicles traded in, that's a pretty big mistake.