Day at the ballpark will drive away blues

Even though we are in the midst of the Great Recession, it is important to make some quality time with the family. As spring approaches, a nice day out at the ballpark always gives me a sense of joy. Similar to us New Yorkers, people in the Mahoning Valley have the option of seeing the American League or the National League — a Tribe or Pirates game. But a day at those parks can really add up, so thankfully there is the Mahoning Valley Scrappers as a lower cost option (one day I am going to go watch the Scrappers when they come here to Brooklyn – every year I look at the schedule the week after they were here). The Scrappers have been good to the psyche and the economy of the Mahoning Valley. But maybe it’s the real scrappers of America that can also be a benefit to the Valley.

Of all the economic stimulus programs introduced throughout the world by various countries, the one that has caught my eye is a program in Germany where the government will pay you money to scrap your old car and buy a new one. The program has been so successful that Volkswagen and GM’s Opel have actually run low on certain small cars. I think the U.S. should be adopting a similar program pronto. If I were the car czar (I’ve sent my resume in, but President Obama must be busy as he hasn’t called yet), I would structure the program in the following way.

Economic rationale

First, I would keep the age of the car being scrapped the same as Germany’s requirement of nine years. There is economic rationale to it. Most nine year-old cars are near zero in value, so the government buyback of that car for roughly $3,000 creates true economic incentive. Second, if a car is 5-7 years of age, a $3,000 scrap incentive may lower residuals across the board, thus hurting people who may decide to sell a car down the road. According to RL Polk & Co., the average age of cars in America is 9.4 years, so there are plenty of people who would look to this as an opportunity to trade in their old jalopy.

Second, I would limit the new car being purchased to any car that is manufactured in North America. Being a believer in the free market, its hard for me to think this way. But I do not believe there would be an outcry from foreign countries, because the Germans, Japanese, and Koreans are already making a vast majority of their cars in North America and they would still benefit. And my next provision will be a natural limiter on which models get sold.

And that provision is that I would limit the cars being purchased to vehicles that get 30 mpg highway, based on EPA estimates. According to mpgomatic.com, there were fifty 2008 models sold in the U.S. that get 30 mpg highway (and just by eyeballing the list I would say three fourths of those cars are made in North America). So selection will not be a problem. Besides, if the Obama administration is to enact this plan and the taxpayers will pay for it, it should have a long lasting positive effect on the economy. And creating a culture of fuel efficiency is essential these days so as to limit our thirst for foreign oil. Further, on average any car that gets this mileage tends to be a smaller car, which can stimulate the economy from it being sold but would also be a more affordable car to finance. We don’t need to go further in debt as a country to buy a new car.

Short-term program

Lastly, I would only keep this program in effect for 2 to 3 months. Why so short? While we certainly all want to see the metal get moved to help revive the economy, we do not want to simply push forward auto sales so much that the sales in 2010 and 2011 will be painful. Lordstown has seen this effect. When gas was $4, Cobalt sales were all pushed forward. When gas dropped, and the economy worsened, sales disappeared. Essentially, everybody in America who wanted a Cobalt already owned one. We don’t need to replicate this phenomenon on a national scale. This idea could be revisited in 2010 if successful.

Instead of Congress drawing ideological lines on whether the Big 3 should be bailed out, they should spend their time thinking of constructive solutions to reinvigorate the economy. The country that brought to the world 500 types of sausage now brings an idea that is worth replicating. So the next time you order a dog at a Scrappers game, get sauerkraut on it — it will be a small way to say “Danke Schon!”

X Eric Planey, a Mahoning Valley native, is a bank vice president who lives and works in New York City.