Last spring I sold my 1993 Toyota Camry with only 77,000 miles to CarMax for $1700. CarMax sold it to another dealer, who then sold it to an immigrant family in the Washington DC area. I know the sales chain, because we received a phone call from the immigrant family over a duplicate registration issue.
After the various markups, I imagine that for about $3000 the family purchased my reliable, scrupulously maintained, and very low-mileage car. For that family it may have been a blessing to be able to buy a reliable car for that sum of money. That’s what makes a marketplace—both parties in a voluntary transaction believe they will be made better off.
Would the country have been better off if I would have destroyed my Camry in exchange for a tax credit? Apparently some of our dedicated public servants in Congress think doing exactly that will stimulate the economy. CNNMoney reports that:
Under a bill introduced by Sen. Dianne Feinstein, D.-Calif., owners of older cars would get vouchers worth thousands of dollars toward the purchase of newer, more fuel-efficient vehicle. For the customer to get that cash, the car dealer would have to certify that the trade-in was getting scrapped and not resold. The car’s vehicle identification number (VIN) would be tracked to make sure it never shows up on a vehicle registration again.
I assume the family bought my Camry because they could not afford a new car. Perhaps they needed money for basics such as food or clothing and were satisfied with a used car. Or, perhaps they valued a private education for their children. Or, perhaps they were saving for a trip to their home country or a down payment on a house. Unfortunately, politicians like Feinstein think they know better how others should spend their money
Let’s make no mistake—destroying used cars harms the nation’s wealth and it makes us worse off. Feinstein may be chauffeured around in a limousine, but for some families the alternative to buying my used Camry is going without a car. Many of the Feinstein-type thinkers of the world are OK with this outcome too—they dream of a world where the masses are forced into public transportation and the roads are wide open for themselves. Sort of like the former Soviet Union or today’s North Korea where broad and empty boulevards whisk the Commissars around.
The idea that destruction can improve an economy was debunked in the 19th Century by the French economist Frederic Bastiat in his classic essay “What is Seen and What is Not Seen.” The essay, first published in 1848, demonstrated how a “society loses the value of objects unnecessarily destroyed.” Bastiat wrote: “To break, to destroy, to dissipate is not to encourage national employment, or more briefly: Destruction is not profitable.”
Is it too much to expect our lawmakers to research, rediscover, and put to use knowledge that mankind had already developed by 1848? Apparently so—pathetic ignorance is not a disqualification for serving in Congress.