Cash for Clunkers: The Environmental Cost of a New Car

By on August 18, 2009

The short answer: 31,362 Btus per pound. That’s the average energy cost for constructing a modern motor vehicle —rubber, fluids, glass, metal and battery. Can that number tell you if it’s better, environmentally speaking, to keep your ’85 Renault Fuego or pick up a Honda Insight? That’s a longer answer full of scary science and scarier math. The U.S. Department of Energy’s Argonne National Lab has attempted to analyze the energy consumed manufacturing vehicles. Their creation is called Greenhouse gases, Regulated Emissions and Energy use in Transportation models. GREET. No really.

Argonne broke automobiles down to discrete parts, then measured the energy required to mine, make and move those parts. They assess in British thermal units, the amount of energy needed to raise the temperature of one pound of water one degree Fahrenheit.

Applying the GREET model, it takes 100.391 million Btus to make a 3,201-pound vehicle. Not all cars are created equal, but the model accounts for the differences. For instance, the batteries in a hybrid render a different formula.  According to GREET, a Prius comes in at 38,650 Btus per pound. A 2009 BMW M3, with its light carbon fiber roof screws things up. Just ignore it. For the 90 percent of the vehicles on the road, it’s 31,362 Btus per pound.

So, a 1996 Mitsubishi Montero weighing in at 4,290 pounds used 135,542,980 Btus for construction. Which is much too cumbersome and abstract a number. Put a more digestible way, it took 1,850 gallons of gasoline to make the Montero. (113,500 Btus in a gallon of gas.)

A 1996 Montero is rated at about 14 mpg. If my intention is to be kind to the planet and send this beast off to the scrap yard, perhaps I’d consider a 2010 Outlander. (A legitimate, C.A.R.S. sanctioned transaction worth \$4,500.) The engine is smaller, but mileage jumps to 22 combined. Cool. Because in my old Montero, I’m driving 12,000 miles a year, using 857 gallons of gas annually. In my new Outlander, I’ll only be using 545. Saving 313 gallons of fuel a year, three years from now the energy cost of building the new car will be erased and I really will be reducing my carbon footprint.

That was an easy one. Now lets say you still have the 1996 Honda Civic you bought when you graduated. It weighs in at 2,303 pounds and gets about 31 mpg. It took 636 gallons of gas to build this car, which uses 387 gallons per year (figuring 12,000 miles annually.)

A 2009 Honda Civic is 300 pounds heavier and gets a combined 29 mpg. This car took 715 gallons of gas to create and consumes 413 gallons of gas a year. It won’t ever be better for the environment than your ’96. The government’s cash for clunker’s program would not offer you any incentive to make this deal. Their web site is actually quite good at comparing vehicles and wringing the best it can out of a transaction.  In terms of carbon dioxide, anyway.  When it comes to environmental costs, miles per gallon is not the whole story.

GREET tracks other car-born noxious fumes in addition to CO2: Methane and nitrous oxide are two other green house offenders. Volatile organic compounds, carbon monoxide, nitrogen oxide, particulate matter with size smaller than 10 micron particulate matter with size smaller than 2.5 micron and sulfur oxides are pollutants that don’t necessarily make the planet hotter. They don’t make us live longer and feel better either.

A number of new vehicles on the road are considered partial, ultra or super low emissions vehicles because they spew out considerably less pollution, though not necessarily through stellar gas mileage. They absorb evaporating fuel, prevent leaks and don better catalytic converters to clear out a lot of the stuff mentioned above. They’re good for the air, just not the carbon content.

There are reasons to buy a new car other than environmental friendliness. New cars are, in general, much safer than those than came before them. Air bags, anti-lock brakes, crumple zones and child seat hooks add up to an improvement to your personal environment should you hit a patch of black ice, followed by a guardrail. New cars also spend less time in the shop than their 16-year-old counterparts. (Most, anyway.) And, just as it took energy to make original parts, replacement parts don’t pop out of thin air either.

Ultimately, deciding on a new car vs. holding on to old one needs to be case by case. A bromide like “the best car for the environment is the one you already have” is too broad to be true. Good natives of Earth will need to find a few numbers, multiply and divide, and then choose between the spanking new and the trusty old.

62 Comments on “Cash for Clunkers: The Environmental Cost of a New Car...”

• John Horner

Thank you for an excellent and well balanced article Mr. Martineck.

Based on the reports that the new vehicles being purchased under the CARS program average 60% or so better fuel economy compared to those being scrapped, it would seem that in the majority of cases the CO2 reduction from running the new vehicles will indeed exceed that released in building them. Not in every case, but in the majority of cases.

• jkross22

@ John Horner:

C4C is subsidizing consumption of a product that pollutes the environment, with the intended impact (I guess… since there are no metrics to determine the success of this program unless you count running out of money as success) of getting even worse polluters off the road?

If that was really the goal, why not limit the C4C program to the 10% worst polluters, say cars or trucks that earn a combined mileage of 15mpg and see 100% or more improvements in fuel economy?

C4C is really about the economy… not about emissions. Sure, Obama and the other DC folk talk about the green credentials of this legislation, but it’s really just about an auto bailout by another name.

• Matt51

More proof that China/Korea with dirty coal generated electricity, will always be able to produce for lower cost than Japan, which is 100% nuclear.

• 86er

Is that a Crown Vic in the dumpster? For shame.

• jeremy cohn

So let’s say you traded that 1996 Montero in on a 2010 Civic. Even though I’m horrible at maths, it seems like you’re cutting your yearly gallon count in half.

I think that a lot of people who had similar SUVs, for no other reason than just to have an SUV, might be using this program in a similar fashion. If, say, 1,000 people made similar transactions, it adds up.

And I don’t think of this as another bailout. They’re stimulating demand from the bottom up. Yes the money is being funneled back into the auto industry, but you don’t have to buy a Ford or GM car. You can go buy a Nissan Cube, a car made in Japan by a Japanese automaker (is this where we start the argument about how much energy it took to get it here and factor that into that car’s individual equation?). If the rules stipulated that you were only allowed to buy American, or American made cars, that would be different.

• quasimondo

Unless automakers have ramped up production specificially to take advantage of this program, the logic is flawed. Whether this program existed or not, the cars were already being built and the energy was already being consumed. The only difference between having this program and not having it is that these cars are on the road replacing cars that emitted more carbon and not collecting dust on a dealer’s lot.

If anything, this program should be expanded to include vehicles that have failed a recent emissions test, provided there’s no obvious evidence of ampering with any emissions equipment.

And no, that’s a Lincoln Continental. Oh, how I weep over the death of that torquey 3.8.

• John Horner

@jkross22: The point is that some people have posted arguments saying that keeping an older vehicle on the road is a net CO2 win over buying anything new because they believed that the energy consumed (and therefor CO2 emitted) in manufacturing a vehicle was far greater than any savings which would be realized from using less fuel to run the new vehicle as compared to the old.

While that argument may be true in some very special cases, in general the numbers say that particular argument is false.

• jmo

John,

the energy consumed (and therefor CO2 emitted) in manufacturing a vehicle was far greater than any savings which would be realized from using less fuel

Hah – I know. I had posited that it took 800 gallons of gas worth to build a Civic. I was told I was off by orders of magnitude. I’m thinking – it takes the equivalent of 8000 gallons of gas? It takes \$24,000 worth of energy to make a \$16,000 car?

• So let’s say you traded that 1996 Montero in on a 2010 Civic. Even though I’m horrible at maths, it seems like you’re cutting your yearly gallon count in half.

A vehicle that gets 22 mpg combined pays for itself in 3 years but one that gets 29 and is only slightly heavier never will? I’m lost.

John

• P71_CrownVic

Still…C4C has been a horrid program from day one.

• RF, remember when I was telling you how great numbers are? This is terrific! I rest my case.

• dingram01

Still…C4C has been a horrid program from day one.

As horrid government programs go, this is nowhere near as bad as, say, a 13-billion-dollar missile shield program that doesn’t work. Or maybe a half-baked two-trillion-and-counting military operation. And on and on and on.

This “horrid program” at least appears to have met a couple of its goals. You could at least holster that “I hates me some gummint” reactionary pap long enough to watch and wait.

• carlos.negros

First they want to pay us to turn in our old clunkers; the next thing you know, they’ll provide incentives to pull the plug on grandma.

Socialism is a slippery slope starting with fluoride in the water.

• imag

“Thank you for an excellent and well balanced article Mr. Martineck.”

+1

This article shows that things can be informative without being snarky and/or mean-spirited. I kept expecting the article to jump into snark (rather than over it), but instead it just provided interesting information about a question that is often quibbled about.

Thanks twice today, TTAC!

• PeteMoran

Socialism is a slippery slope starting with fluoride in the water.

It occurs earlier than the Fluoride poison, or vacination, or the dropping of Bible class from schools. As such, I personally think the ultimate expression of Utopian Capitalism is Slavery.

The abolishment of Slavery was the end of pure market Capitalism and the beginning of the current decline into the US Anarcho-Socialist-Commune.

• Vega

“Socialism is a slippery slope starting with fluoride in the water.” +1

Jack D. Ripper: ‘You know when fluoridation first began? Nineteen hundred and forty-six. Nineteen forty-six, Mandrake. How does that coincide with your post-war Commie conspiracy, huh? It’s incredibly obvious, isn’t it? A foreign substance is introduced into our precious bodily fluids without the knowledge of the individual. Certainly without any choice. That’s the way your hard-core Commie works.’

Kubrick was a visionary.

• Martin Schwoerer

Yes indeed, a very fine article! Thanks, Michael.

I’m with the other commentators — TTAC is great when it’s long on facts and short on snark.

Boring: an article that would say C4C sucks, because all government programs suck, and because global warming is a swindle. I don’t need to read an article with that conclusion, because you can sum it up in one sentence.

Interesting: an article that states its premise in a transparent fashion, namely: that resources are scarce. And then provides detailed data to allow each intelligent reader to make up his own mind whether to apply for C4C funds, or not.

• rpn453

Mr. Martineck, do you have a link to the study?

• agenthex

First they want to pay us to turn in our old clunkers; the next thing you know, they’ll provide incentives to pull the plug on grandma.

I bet it’s a free clunker.

• George B

Good article. However, the logic is flawed in that it assumes that the euthanized trucks are either driven 12,000 miles a year or junked. The middle ground market solution is old trucks become infrequently driven second vehicles or a source of parts at the junkyard. I’d love to buy an old F-150 for \$2000, but the federal government is outbiding me. Instead of allowing truck and SUV engines to be sent off to engine rebuilders, the engines have to be destroyed. Politically incorrect trucks last longer than cars so the government has to use my money to kill them.

• Dr. Remulac

I like the article.

Someone posted a link here when I first started visiting this site a couple of years ago that I think others who enjoyed this article will appreciate.

http://www.tinaja.com/glib/energfun.pdf

One premise explored is that energy and the economy are intertwined to the extent that we could interchange \$ for btu’s or gallons of gasoline, and barring government intervention, the relationships will always remain similar.

• Michael.Martineck

The study and model can be found at
http://www.transportation.anl.gov/modeling_simulation/GREET/

George B – I don’t believe my logic is flawed. My conclusion is there’s no blanket answer. You’re right about the old F-150s. There are different levels of utility. Of course, you could look for a pre-1984 truck, which gets no incentive from CARS.

• Rod Panhard

That’s excellent. I’ve been wondering about that number, and now I know.

• dingram01

Instead of allowing truck and SUV engines to be sent off to engine rebuilders, the engines have to be destroyed.

Another red herring. The number of F150 (and similar) vehicles’ engines being destroyed under this program is TINY in relation to the number of available engines already in boneyards’ inventories. This inventory already serves a tiny market. Many of these engines would ordinarily be scrapped anyway, just to clear space on warehouse shelves, because of oversupply.

• YotaCarFan

I’m no fan of Gov’t meddling in the economy and I don’t subscribe to the theory that CO2 (what we exhale and trees “breathe”) is killing the planet, but… If we’re going to have the C4C program, it would really make sense to allow cars that pollute substantially more than average (as in spew visible smoke, fail emissions tests, burn oil, were built before emission control systems having a certain efficacy were mandated, etc.) get clunked. It would be interesting to see statistics on what contributes most to urban pollution: the well-maintained and < 10 yo cars that get < 18mpg, or the presumably smaller fleet of cars of any age / fuel efficiency rating that have faulty emissions systems, engine problems, are “souped up”, etc.

• AWESOME, TTAC!

This is the kind of calcset I’ve been waiting for. -Thank you.

.

+For the hell of it, I just looked up the equation for gas combustion and it puts out roughly 18 lbs. of CO2 for every gallon of gas burned.

->So: Our hypothetical 3201 lb. new car has put at least ~15,921 lbs. of CO2 into the atmosphere before it has even been driven.

• wsn

A 2009 Honda Civic is 300 pounds heavier and gets a combined 29 mpg. This car took 715 gallons of gas to create and consumes 413 gallons of gas a year.

—————————————

If a new Civic only needs 715 gallons of gas to create, how about I pay you 715×3= \$2145 for a new Civic?

It just doesn’t happen. Because there are lots of other resources put in, such as metal and labor, that if not wasted here can help the economy in better ways.

This whole scheme of getting a new car would have been perfect, if the new cars are given to us by Martians for free. But it is not.

A new Civic is perhaps \$15,000 more expensive than the car it replaced. The same \$15,000 spent elsewhere could have a more fundamental impact.

It’s like you have a balance on credit card for 20% per year and a mortgage at 6%. Now that you receive a pay of \$10,000. Where you do put it? Of course the credit card. If someone tell you to pay off mortgage first because it save you interest, I would call that BS.

If the \$ and energy spent on new cars can do X amount to help the environment, it’s still BS, if the same amount of \$ can achieve 10X amount of effect by upgrading coal-powered generator or planting trees.

• @wsn: I would remember Michael’s comment about Scarier Math.

In the sciences there’s a saying:
“In math, 1+1=2. In biology, 1+1=5.”
(personally, I’d probably change it to something between 9 and 135 depending on what you consider)

The complete, systemwide, economist+evolutionary technoclimatologist calcs are probably mind-bending.

.
Ex: Global Shading is also a phenomenon in addition to global warming.
After 9/11 when jets flew much less, the planet actually got measurably warmer because they weren’t creating the transient umbrellas of contrails and particulates.
(to which, coal-fired powerstations do contribute a small amount)

• doctorv8

Is that a Crown Vic in the dumpster? For shame.

86er,

That’s no Crown Vic, but rather the V6 FWD Taurus based Lincoln Continental from 1988-93.

• doctorv8

GREET tracks other car-born noxious fumes in addition to CO2: Methane and nitrous oxide are two other green house offenders.

Nitrous oxide? Does that mean we can plumb the exhaust back into the intake for an N2O power boost?

;-) I kid….it’s a great article. Very well written and informative, aside from that one common error.

• agenthex

If a new Civic only needs 715 gallons of gas to create, how about I pay you 715×3= \$2145 for a new Civic?

That’s only the energy use component. Really, it’s pathetic you’ve already figured this out and still try to use pass this misinformation.

It just doesn’t happen. Because there are lots of other resources put in, such as metal and labor, that if not wasted here can help the economy in better ways.

The problem is it’s NOT helping the economy at all because it’s just lying there if no one is spending to pay for it. That’s why it’s called a stimulus.

• George B

# Michael.Martineck :
August 19th, 2009 at 8:20 am

The study and model can be found at
http://www.transportation.anl.gov/modeling_simulation/GREET/

George B – I don’t believe my logic is flawed. My conclusion is there’s no blanket answer. You’re right about the old F-150s. There are different levels of utility. Of course, you could look for a pre-1984 truck, which gets no incentive from CARS.

So the augument is it’s better on a total energy consumption basis to recycle an old truck into new fuel efficient cars than to build fuel efficient cars from other resources and keep the old truck around but just not drive it much? The problem is the ability to haul stuff utility of the old truck is lost if it is replaced by a small car and potential fuel savings are lost if the old truck is replaced by a somewhat more fuel efficient new truck. I’d rather have both a small car AND an old truck.

There may be a regional difference of opinion regarding the utility of old pickup trucks. Here near Dallas, TX and further south and west you just don’t see old cars with severe body cancer. Paint oxidies in the sun and mechanical parts wear out, but a pickup truck can lead a long and productive life, especially with an engine swap. Killing a pickup truck feels like sending a horse to the slaughterhouse.

• agenthex

So the augument is it’s better on a total energy consumption basis to recycle an old truck into new fuel efficient cars than to build fuel efficient cars from other resources and keep the old truck around but just not drive it much?

The argument is that C4C represents a very small fraction of available vehicles and whatever arguments about its specific secondary effects, right or wrong, are going to be minor.

• wsn

# agenthex :
August 19th, 2009 at 2:29 pm

The problem is it’s NOT helping the economy at all because it’s just lying there if no one is spending to pay for it. That’s why it’s called a stimulus.

——————————————-

No, it’s not lying there. It’s lying there if the US of A have a savings account to withdraw idle money from. But it doesn’t.

The money is taken away from the pocket and plate of the average Joe. It’s extracted away from an operating economy.

By collecting money from the public, the government de-stimulate the economy first. And then re-stimulate the economy by giving that money to certain groups.

The net effect for those groups may be positive, but not for the entire country, considering the overhead.

• brandloyalty

For years I’ve been commenting on the “embedded energy” aspect of C4C programs, so it’s great to see some credible information on that subject.

BUT, I still think this is silly fiddling around compared to simply raising gas taxes. No costly bureaucracy, and it too would encourage sales of new cars. Bar coding could be used to index tax level to vehicle type. Taxing gas more would also encourage people to use their vehicles more efficiently and appropriately. C4C does not do that.

C4C also does not address the issue of shifting reasonable condition older vehicles to people who drive infrequently. C4C could also have a program to put better power plants in used cars instead of scrapping the whole vehicles.

wsn’s point about best use of capital also deserves serious consideration.

And I can’t make sense of the fact I can get thousands of dollars to buy a new car, but no one will give me anything to buy a bicycle. Except the mistaken abusive mythology from motorists that cyclists don’t pay taxes.

• wsn

agenthex :
August 19th, 2009 at 2:29 pm

That’s only the energy use component. Really, it’s pathetic you’ve already figured this out and still try to use pass this misinformation.

———————————————

It’s pathetic that you couldn’t comprehend an idea that took more than one sentence to describe.

The quoted sentence of mine needs to be read together with the next one.

• agenthex

By collecting money from the public, the government de-stimulate the economy first. And then re-stimulate the economy by giving that money to certain groups.

Ignoring the more nuanced errors with this, the money wasn’t being spent, which is the entire problem in the first place, so there was no “de-stimulating”.

Again, the “free marketers” keep making the fundamentally wrong assumption that the “market”, which is nothing but random people making whatever decisions, will always produce optimal results.

Really, this is all a waste of time unless they can figure out how stupid this POV is.

• agenthex

It’s pathetic that you couldn’t comprehend an idea that took more than one sentence to describe.

The quoted sentence of mine needs to be read together with the next one.

It’s pretty clear the first sentence doesn’t make any sense in light of the second, which is why I pointed it out.

So tell us, why did you write that first sentence given that everyone already knows energy input is but one component of production?

• wsn

duplicate

• wsn

agenthex :
August 19th, 2009 at 4:27 pm

So tell us, why did you write that first sentence given that everyone already knows energy input is but one component of production?

———————————————-

Maybe you know that. But the author of this article certainly didn’t take it into consideration.

The title is “The Environmental Cost of a New Car,” not “The Energy Cost of a New Car.”

I merely points out that other components of the cost (such as metal, labor) are missing from the analysis. If you understand that, great. But there’s no need to refute me, because my post was directed at the editorial, not you.

• agenthex

Really, it’s pathetic that you didn’t notice the question mark, which is actually a rebuttal to the misinformation from the original article.

The article (and the original study) addresses the energy input to build a car, which was being wildly exaggerated by ignorant wingers (ie, more “gas” is being used to make it than it saves, etc).

That you read it to mean that a civic is equivalent to several hundred gallons of gas is your own mistake in comprehension, which is why it was pretty dumb of you to further display that mistake by trying to refute an assertion that only exists in your head.

• wsn

agenthex :
August 19th, 2009 at 4:24 pm

Ignoring the more nuanced errors with this, the money wasn’t being spent, which is the entire problem in the first place, so there was no “de-stimulating”.

——————————————–

How do you know that money wasn’t being spent?

If most Americans have \$100k in bank, fine, tax them to stimulate the economy. But the reality is that most Americans have a shit load of debt.

The average Joe may have a \$300k mortgage and \$20k credit card loan. If you tax him an extra \$100, that money will have to come from his next food purchase or something like that.

• 86er

doctorV8:

That’s no Crown Vic, but rather the V6 FWD Taurus based Lincoln Continental from 1988-93.

Oh well then, who cares!

Rookie mistake: checking out the trim and taillight placement made me think 95-97 CV, but a quick glance at the exposed undercarriage reveals no rear axle!

• wsn

agenthex :
August 19th, 2009 at 4:37 pm

The article (and the original study) addresses the energy input to build a car, which was being wildly exaggerated by ignorant wingers.

——————————————–

Again, read the title please. Environmental Cost is not the same as Energy Cost.

The title and the content doesn’t match. And all I did was to point that out:

1) The author didn’t use a proper title, OR
2) The author intentionally tried to mislead by equating the two different concepts. That’s a trick used all too often by Obama & Co. to justify certain policies.

• agenthex

Ok, it’s fair to point out that other materials are involved. But again, they weren’t going to be used anyway, which is rather the issue in a down economy. Perhaps in the interest of conservation they could’ve found less materialistic ways of stimulus, but then again this was convenient, pertinent to a depressed industry, and found to be effective elsewhere.

• agenthex

Environmental Cost is not the same as Energy Cost.

Ok, they should change the title then. Again, I’m not saying you have no point. Part of problem with unstable business cycles and the car industry in general is that it’s very inefficient to idle anything. It’s best to ramp slowly. In that sense much of that material (and energy) is going to be used sooner or later anyway since cars are mostly durable goods. In other words, timing matters.

While we’re nitpicking, the article actually compares the potential energy (btu’s) in a gallon of gas, to the net energy used in the car’s production. That conversion is rarely perfectly efficient so the # of “gallons of gas used in production” is underreported.

How do you know that money wasn’t being spent?

If most Americans have \$100k in bank, fine, tax them to stimulate the economy. But the reality is that most Americans have a shit load of debt.

It doesn’t matter. If they don’t start spending again, it’s Game Over. The whole economy (and all modern economies) is predicated on maintaining employment. That’s what’s given us all that progress for much of this century. It may be a fair point that the leverage is dangerous (and nobody said it wasn’t, given the level of responsible governance necessary), but thus far the game’s taken us really really far, and why would anyone place the significance of an accounting game over all human livelihood anyway?

• wsn

agenthex :
August 19th, 2009 at 5:11 pm

It doesn’t matter. If they don’t start spending again, it’s Game Over.

——————————————-

1) Spending more than one makes is the very cause that lead the economy into the shit hole. I thought the old saying was “if you are in a hole, the first thing to do is stop digging.”

2) OK, say, let them spend. But does the average Joe (with shitload of debt) increase his spending? No. Previously, his \$3000 income pays \$2000 interest and \$1000 food. Now that it’s \$2000 interest, \$100 new tax and \$900 food.

The “make them spend” idea may work on people who actually save. But for someone who already spends the last cent every month (and that’s the majority), the spending is not increased.

• rpn453

Michael.Martineck : The study and model can be found at http://www.transportation.anl.gov/modeling_simulation/GREET/

Thanks for the link, however I already checked there and could not find a breakdown of all the energy components taken into consideration. Maybe I didn’t look hard enough. I’m really interested in what portion of the energy needs to build a car is consumed by all the seemingly little details like the marketing department; R&D department; employee and management company-related transportation; dealership building, operation, and maintenance; lifestyle extravagances of employees and management; etc. Basically, I need to see a convincing argument to get me out of the mental rut I’m in where I see total energy usage as being proportional to cost (with some deviation due to government agendas, of course, but not as much as this study implies).

Early in my engineering career I learned that often you waste direct forms of energy because it’s cheaper than upgrading equipment, and sometimes you regularly destroy and replace equipment because it’s cheaper than a permanent upgrade. It seemed horribly wasteful to me at the time, but I justified it to myself by mentally breaking down where all that money went. In the end, it seemed to be energy. If our economic system is so flawed that we are all wasting energy and resources because of economics, we need serious economic reform. If Honda Civics truly require so little energy to create compared to operating an older vehicle with poor fuel economy, despite the relative low cost of using the older vehicle, our economic system is broken.

• agenthex

1) Spending more than one makes is the very cause that lead the economy into the shit hole. I thought the old saying was “if you are in a hole, the first thing to do is stop digging.”

First of all, that’s not true, and generally it’s a good thing that economies are not run on proverbs.

Debt is the mechanism through which all of that you see around you is possible, that’s right, none of it is built on cash. Debt, it makes the first world possible.

2) OK, say, let them spend. But does the average Joe (with shitload of debt) increase his spending? No. Previously, his \$3000 income pays \$2000 interest and \$1000 food. Now that it’s \$2000 interest, \$100 new tax and \$900 food.

He’s going to find it a LOT harder when he’s out of a job when nobody’s spending to buy whatever he’s making.

Also, as an aside, he’s not the one on 3k a month paying \$100 for c4c.

• agenthex

I’m really interested in what portion of the energy needs to build a car is consumed by all the seemingly little details like the marketing department; R&D department; employee and management company-related transportation;

Then you also need to consider the cost of maintaining that old clunker, etc.

What’s also not considered is how much of that “energy” for new car production can come from cleaner or more efficient sources than the car mileage difference which is by definition on hydrocarbons.

• rpn453

agenthex : Then you also need to consider the cost of maintaining that old clunker, etc.

What’s also not considered is how much of that “energy” for new car production can come from cleaner or more efficient sources than the car mileage difference which is by definition on hydrocarbons.

If a person drives an old clunker even when a new vehicle would be cheaper to operate, they would need a serious lesson on money management! Old cars don’t have to be prone to breakdowns or expensive maintenance if they are well cared for.

Unfortunately, we only have enough “clean” energy for a small fraction of our energy consumption. The only way to increase that fraction is to develop cleaner energy sources or reduce our personal energy consumption. Right now, developing those cleaner energy sources usually uses more energy than will be gained from them, at least according to our current economic system. Does our economic system need radical change to reflect the true cost of our energy usage? Maybe so.

• wsn

agenthex :
August 19th, 2009 at 6:08 pm

Debt is the mechanism through which all of that you see around you is possible, that’s right, none of it is built on cash. Debt, it makes the first world possible.
——————————————

Market economy is what makes the first world possible. Of course, in a market economy, there are willing burrowers and lenders to take risks and make money. The debt is the cost of an investment.

But the debt we were talking about is forced upon citizens by the government. It’s not an investment, but a tax instead.

• wsn

agenthex :
August 19th, 2009 at 6:08 pm

He’s going to find it a LOT harder when he’s out of a job when nobody’s spending to buy whatever he’s making.

———————————————

Yes, that’s exactly what I tried to convince you. If every customer of Joe (or his employer) has to pay \$100 extra tax, these people cannot afford to buy as much from Joe. Joe will more likely to be out of a job.

• agenthex

If every customer of Joe (or his employer) has to pay \$100 extra tax, these people will spend less.

Maybe you haven’t been paying attention, but no one is actually being tax extra for this right now, which is the whole point in poor conditions.

Market economy is what makes the first world possible. Of course, in a market economy, there are willing burrowers and lenders to take risks and make money.

Too bad that’s not what actually happens. The amount of overall lending that occurs is more or less dictated by the central bank anyway.

That’s really no surprise since the “free market” message is essential built on ignorance of how econ already works out in the real world anyway.

• wsn

agenthex :
August 20th, 2009 at 2:11 pm

Maybe you haven’t been paying attention, but no one is actually being tax extra for this right now, which is the whole point in poor conditions.
————————————————

That money is not from the personal savings account of Obama or any of the senators. It has to come from the tax payers.

Printing money = taxation. It dilutes whatever positive asset out there. It makes your monthly income worth less.

• agenthex

Borrowing in most cases IS printing money, it’s ALL printed money in a fundamental sense. Again, it would do all “free marketers” great wonders to drop the religious ignorance and learn about how money exist in the economy. These juvenile assumptions that it’s conserved or whatever are ALL wrong.

What’s sort of ironic is that often “free marketers” would assume borrowing is exactly the same as taxation because of “conservation”, when they’re trying to change a system that is NOT conserved to be conserved. It’s hilarious because they don’t even know what they’re after.

-
Well, actually that not fair, because there’s no real end goal for the “free market”. It’s largely a bunch of conservative whiners making stuff up so you can’t exactly hold them to any one standard since making stuff up is somewhat inconsistent.

• wsn

agenthex :
August 20th, 2009 at 4:22 pm

What’s sort of ironic is that often “free marketers” would assume borrowing is exactly the same as taxation because of “conservation”, when they’re trying to change a system that is NOT conserved to be conserved. It’s hilarious because they don’t even know what they’re after.

——————————————–

You are right in that the existing system is not designed for conserving the dollar’s worth. It’s designed for taxation. Just more masterfully done than what the English monarch did.

Not all taxation is necessarily evil, only taxation without representation is. If the tax is used to protect the nation, fine. But if the tax is used to serve the tyranny and his minions, it’s not fine.

Just one more note for those in support of “printer economy”: human beings learned the art of agriculture, language, use of fire, use of metal and many other stuff before there is paper money. You can print money, but you cannot print wealth.

• agenthex

You are right in that the existing system is not designed for conserving the dollar’s worth. It’s designed for taxation.

Did you read that off the free market corn flakes box? The system is created for growth (and grow it does, along with mildly inflate).

Otherwise, everyone’ll be spending the few gold coins that’ve been passed down from their ancestors. Since you’re from china, you should know this from the history of the agrarian society, or did you miss that, too?

You can print money, but you cannot print wealth.

If “printing” money has been definitively shown to promote wealth creation over decades of history, what difference does it make?

• carlos.negros

Many new cars are made from recycled old cars. The cost of using recycled materials is less than the cost of mining and extracting ore and making steel. I don’t see point this reflected in the article.

• Kevin Kluttz

Looks like more of a Lincoln in the trash bin. I’d be a lot less sorrowful.

• wsn

agenthex :
August 21st, 2009 at 4:02 pm

Did you read that off the free market corn flakes box? The system is created for growth (and grow it does, along with mildly inflate).

Otherwise, everyone’ll be spending the few gold coins that’ve been passed down from their ancestors. Since you’re from china, you should know this from the history of the agrarian society, or did you miss that, too?

———————————————
Well, if you had any knowledge about Chinese history, you would know that, for the most part, China didn’t use gold coins in the past. Most Chinese farmer never saw real gold in their lifetime.

Instead, Chinese started using bronze coins since like 1000 B.C. The face value of the bronze coins far exceeded the manufacturing cost. And thus, in a way, bronze coins are “semi” paper money. And yes, inflation erupted and governments overthrown and emperors beheaded. And the new emperor would learn the lesson by limiting his own greed and expense, not forging as many coins and not taxing as much and everything would be fine until his sons forgot about it.

The “growth” were not caused by forging bronze coins or printing paper money. It’s a result of human invention and entrepreneurship. And that happens in a gold coin economy all the same.

• agenthex

You may want to brush up on your history. A variety of coinage types and paper money were used, including significant silver, and bronze money not since the imperial system established a few thousand year ago.
-
The “growth” were not caused by forging bronze coins or printing paper money. It’s a result of human invention and entrepreneurship.

China has remained mostly an agrarian society until quite recently with the introduction of modern banking and money from overseas’ modern banks.

Do you own a house? Did you pay for it all cash money from your years of saving up inventiveness and entrepreneurship? Or did the bank loan you almost all of it based on nothing but a promise to repay and your earning “potential”, thus also stimulating productivity for everyone involved in building that house, all based on nothing but an accounting trick? That bootstrap process is the seed of modern growth.

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