Why Not Import Used Cars?

The question that stirred Adam Smith's mind in the backward Scotland of the 1750s was this: What constitutes the "wealth of a nation"?

If you get your mind destroyed by your "Indian Economics" textbook, you will think that the wealth of India consists of Nehru's steel plants.

Adam Smith, way back then, said that the wealth of a nation consists of the Properties of all the Individuals who constitute that nation. He therefore called for free trade and the "system of natural liberty."

Think about it:

If we make an inventory of all the possessions of all Indian today, and if we declare unilateral free trade tomorrow, and then we total up their possessions again a year later, will these show a marked fall or a marked rise?

So, when we look at the bizarre traffic on our city streets and hopeless highways, let us never forget that this is an "artificial order," created by the force of The State - customs men use guns - and not the "natural order" of a FREE MARKET, which always works in the "consumer interest" and never the "producer interest."

The answer to the traffic mayhem is used car imports. Kathmandu, when I first went there in 1980, had used Japanese cars as taxis - and they were a much better ride than our Ambassadors. Kathmandu also has a tramway.

And there was "Freak Street"!

Yes. Indians are poor. They lack Capital. But then the solution to individual transport taken by The State makes NO SENSE whatsoever, for they say:

Let us force all poor Indians to buy brand new cars made in India.

Today, there are many MNCs receiving "protection," and they are now producing behind tariff walls themselves. Nonsense!

The profusion of two-wheelers is also because of this "artificial order." Socialist and autarkic nations always made guinea pigs out of their people in the area of personal transportation. Just as the Chinese of old only had bicycles, our people now own motorcycles and scooters "made in India." Just as the Chinese of old had a huge bicycle industry, we have a big motorcycle and scooter industry.

But the question is NOT how to build modern factories in India - like Nehru's steel plants. The real question is how to increase the Properties and the consumption of all poor Indians.

Modern technology is specialized "knowledge" developed abroad but easily made available to all unlettered Indians through free trade - like the mobile phones that anyone and everyone possesses today. Same with cars. Same with trams. Same with airliners. Foreign trade is meant for IMPORTING, not exporting. We then obtain what we cannot produce ourselves, things we value much more than local produce. Modern technological knowledge is best obtained by free trade - not setting up IITs behind tariff walls. All the IITs cannot produce a car, or a mobile phone. As yet.

There was a comment to yesterday's post on "auto-rickshaw economics" that spoke of Thailand and her tuk-tuks and strange boats. And I was reminded that the boats we use in India today suck real bad. Here again, we need imports. I think our trucks and buses suck too. We need a revolution in transportation technology - and we must import.

Recommended read: My Four Wheels For All, available here, and used car imports are discussed in depth there.