“Cash For Appliances”: Get Ready To Dump That Old Fridge

Earlier today Michael Mandel. BusinessWeek’s economist, proposed with his tongue firmly implanted in his cheek a “cash for clunker computers” program.

Here is the gist of his proposal:

What we need is a new government program: “Cash for Clunker Computers”. All you people with old Gateways and IBM Thinkpads in your attic or closet need to turn them in for faster and spiffier new models.

Just like the Cash for Clunker program, we’ll need rules. Your “Clunker Computer” will have to meet some minimum requirements: Too little RAM, slow microprocessor, too few USB ports, Windows 98. In return, you will get a rebate to purchase a new computer that will let you roam the Internet at will, downloading all sorts of video and multimedia (Advertisers will love it).

People will storm Best Buy, demanding to trade in their old hardware for the latest fastest model. And the bonus: Those old computers will be disposed off in an environmentally sound fashion, rather than spreading dangerous materials around.

But here’s the big question. Should the “Cash for Clunker Computer” rebate apply to any new computer, or only computers with a specified amount of domestic content—say 50%? After all, since the New Economy boom ended, high-tech employment has fallen just as far as auto industry jobs.

It was a mildly amusing takeoff on the auto program and after scanning it I didn’t give it a further thought, until I read this in the WSJ this evening:

Appliance manufacturers are counting on a “cash for clunkers”-type rebate program to revive slumping sales of refrigerators, washing machines and dishwashers.

Beginning late this fall, federal rebates will be available for purchasers of high-efficiency household appliances, furnaces and air-conditioning systems. Congress authorized $300 million for the program earlier this year as part of the federal economic-stimulus bill.

After seeing the recent surge in new-car orders attributed to the federally funded clunkers program, appliance industry executives are hoping to lure consumers back into appliance store showrooms with rebates that are expected to reach $200 on some types of appliances.

“It’s a good way for the consumer to get back into the marketplace,” said J.B. Hoyt, director of governmental relations for Whirlpool Corp., the world’s largest producer of household appliances by revenue. “Clearly, anything that boosts business is good for us.”

Whirlpool has been pushing for such a program for years. The 2005 energy bill included an authorization for $300 million over six years for energy-efficiency rebates on appliances. That authorization was never funded, but in the 2009 stimulus bill, the entire $300 million was authorized.

Appliances covered by the program include dishwashers, washing machines and refrigerators. They must carry Energy Star ratings, indicating they meet energy-efficiency standards set by the Environmental Protection Agency and Department of Energy. To qualify for rebates, buyers won’t have to trade in older, less-efficient models, which is a key component of the car program. Appliances made by companies based overseas will be eligible for the rebates if they have the Energy Star label.

Someone remarked that “cash for clunkers” turned out to be nothing so much as a good leading indicator of car purchases for the next 90 days. I suspect that “cash for appliances” will be nothing more. An economy that needs this sort of goosing is a sick economy indeed.

The Chinese use their stimulus to build roads, bridges, ports and other infrastructure. We use ours to induce consumers to do what got us into this mess. Any questions about who might be winning this race?

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