Adam Smith -- yeah, that appears to be his real name -- reports on a smart initiative that's helping Germany kickstart its ailing auto industry.Amid the gruesome headlines generated by the world's auto industry these days, it almost read like a typo: new car registrations in Germany rose 21% year-on-year in February, the country's Association of the Automotive Industry (VDA) announced March 3. This, though, was no error. The 278,000 cars put on the road, crowed Matthias Wissmann, VDA's president, amounted to "the highest level of sales in the month of February for ten years."Why the splurge? German drivers have latched onto a juicy new deal. Under a scheme started in January, car owners who trade in a vehicle more than nine years old for a new, greener model can expect $3,172 from the German government as well as a break from paying road tax for at least a year. Similar "scrapping schemes" have been launched in recent months in France, Italy and Spain. Now motor manufacturers in Britain are pleading with its government to follow suit.
The idea here is simple: Old cars emit the most carbon. So take them off the road. Similar legislation has been floating around Congress for awhile. The problem with a policy like this is that, in practice, it would end up stimulating sales for Japanese auto makers as people turned in their aging Seville and drove off the lot with a Civic. But if you didn't mind being a bit protectionist, you could certainly target the subsidy at American auto makers (in practice, it's no more protectionist than supporting them with massive federal loans). If the legislation worked, it would aid an ailing industry, stimulate the economy, and reduce our carbon emissions. And if it didn't, it wouldn't matter, because it would mean no one was using the subsidies and thus the taxpayer wasn't being charged for anything.
