The Broken Windshield Fallacy: A Libertarian Argument Against Cash For Clunkers

The US Cash For Clunkers program may be over, but Germany is still running its own version. In an editorial for Wall Street Journal Europe, the Cato Institute’s Swaminathan S. Anklesaria Aiyar exposes the program’s misconceptions.

The crux of Aiyar’s argument centers around the immorality of denying perfectly good cars to people in less fortunate areas of the world, while allowing criminals to enrich themselves by reselling cars meant for the crusher:

Germany’s police union, the Bund Deutscher Kriminalbeamter, estimates that about 50,000 cars destined for the scrap yard under Berlin’s trade-in scheme have been illegally resold to Africa and Eastern Europe. The government had paid around €125 million [$180 million] for these vehicles to be destroyed so that people would buy new, more fuel-efficient cars. German environmental group Deutsche Umwelthilfe predicts a doubling of illicit exports by the end of the year. It’s probably only a matter of time before American clunkers will likewise find their illegal way to the streets of Mexico and beyond. And humanity would be better off if they did.

Imagine if the Salvation Army were ordered to destroy all the used clothing and furniture it receives instead of distributing it to the poor. No doubt this would be considered an outrage. But it is no less economically foolish and morally repugnant to deny poor people in the developing world access to these old cars.

Read the rest at the Cato Institute’s home.

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