Final Word from Thursday, April 9, 2009

As crisis-response measures go, the scrap subsidy is a fairly minor matter. Even in Germany, where €5bn is going toward it, there are issues that are much more consequential, such as whether the EU should inflate the money supply through quantitative easing. The scrap bonus gets outsized attention because it's an easily understood, direct benefit to a single sector of the economy. It clearly saves jobs and promotes spending in the short term. The existential aspect of it is overlooked, though, and it's in this sense that the subsidy is indeed significant. It speaks volumes about the willingness of Western society to deal with the causes of the current crisis. The subsidy is based on decommissioning and crushing cars that are old but fully operational. This is merely a turbocharged version of the planned obsolescence that is already the lifeblood of economic growth. Almost everyone agrees that we've been living beyond our means, but for some reason we still suffer from the illusion that wealth can be created by destroying wealth.[Czech Republic European Union printing money inflation hyperinflation cash for clunkers]

Glossary of difficult words

consequential - important, significant;

quantitative easing - an economic euphemism for printing money;

outsized - exceptionally large; disproportionate to its importance;

existential - of or relating to existence;

to speak volumes - to be good evidence for something;

to decommission - to withdraw from service;

turbocharged - having had speed or energy added;

planned obsolescence - a policy of producing consumer goods that rapidly become obsolete and therefore require replacing;

lifeblood - the indispensable factor or influence that gives something its strength and vitality.


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FS Final Word