SIAM - Another Bunch of Selfish Manufacturers: Take #2

The Society of Indian Automobile Manufacturers (SIAM) has petitioned our The State with a prayer: please dear State, scrap cars over 15 years old.


Of course, it is our The State that drives junk - Ambassadors. 

But SIAM's prayer is nothing but the “broken window fallacy” – which I have explained here. Thus, the guy who is FORCED to replace his old car may not be able to replace his old fridge or old TV. One industry’s gain will be another's loss.

Then there is the question of vehicle quality. All cars do not have the same life. German cars live forever, for example. Japanese cars die fast. Why have the same scrapping date for all?

And what about maintenance? Some people maintain their cars well – and these could become prize vintage cars 30 years hence.

Indeed, SIAM ought to have petitioned our The State for better roads – so that our cars, which they make, last longer. In which case, as Say’s Law indicates, we will have money left over for other goods – and people in these industries will have money to buy cars. Say's Law teaches you that you must promote the health of industries that do not compete with you - for they are the source of all your demand. The State is NOT the source of demand - and "funny money" destroys demand by generating inflation.

Thus, Destruction of Property is Never a Good Idea.

I think our The State should also be asked to regulate traffic scientifically – so that pollution is lessened, so that cars don't get smashed, so that people live.

All things considered, SIAM’s demand is anti-people. Cars are a big-budget consumer durable for us poor Indians – and those who manufacture them have NO BUSINESS asking for scrapping of old cars. In poor countries, used cars in reasonably good working condition are what people need. These ought to be imported duty-free. Imported old cars are bound to be in better condition than old Indian cars – because they have been driven on good roads.

Many new Indian vehicles are JUNK – like Bajaj auto-rickshaws. These, like the East German Trabant, are creatures of socialist autarky. It is these that should be junked – as they also spook traffic discipline and slow everyone else down. All Ambassador and Premier taxis should be junked. All pygmy trucks, too - especially since they destroy roads. 

Finally, a nation can have policies designed either for consumers or for producers – but not for both. It is high time our nation had policies for consumers – and consumers alone. Producers – as this example of SIAM shows – are a greedy, selfish lot, hell bent on pursuing their own interests at the public cost. The way out is duty-free used car, bus and truck imports. Let us have old Mercedes and Toyota taxis instead of Ambassador and Fiats (and auto-rickshaws) - as in Kathmandu of old.

• Duty free used car, bus and truck imports are what India needs.

• Local governments must fix the roads and put in place scientific traffic regulation.

• SIAM should be told to go to hell.