Opinion

Regulatory Robbery: Car dealers try to crush Tesla dealerships

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Beltway Confidential,Opinion,Timothy P. Carney,Electric Vehicles,Tesla

In many states around the country, it's illegal for automakers to sell cars directly to people.

The credulous liberal argument is that it's about consumer protection. Deborah Dorman supports a bill in New York State to explicitly ban automakers from selling direct to consumers.

Scott Waldman at Capital New York reports that Dorman,

... said the bill was designed to protect consumers because it required companies to create a storefront in the state and was not directed at Tesla because it sold electric vehicles. Some environmentalists have claimed the bill unfairly targets electric car manufacturers.

That sounds a bit weak, and it just screams out the cynical libertarian explanation: Regulators and politicians just want to aggregate power. They want all sellers to operate under their jurisdiction. Car dealers, being small businessmen, will be at the mercy of state-level regulators. Automakers can tell any one state to buzz off.

But Dorman is no politician or bureaucrat. She's the top lobbyist for car dealers. And she accidentally let the mask slip. It seems some greenies accused the regulation's supporters of bearing some animus towards electric cars. To defend her industry against this charge of hating the planet, Dorman said:

Everyone is selling electric cars, it has nothing to do with that. ... If you allow someone to come into the market with no overhead, that's an unfair advantage.

Again, that's her defense -- that she's trying to regulate away a potential competitor's advantage. Restaurants in El Paso were equally forthcoming about restrictions on street vendors. “We wanted this ordinance in place to help established restaurants keep their business," the local restaurant lobby explained. Kind of refreshing, this honesty.

So when you see a proposed regulation, never buy the credulous consumer-protection explanation. That's probably part of the motivation of supporters, but you also need to consider how the regulation protects incumbent businesses and empowers government officials. I think Matt Yglesias (through whom I found this story) put it well at Slate:

Precise practices vary from place to place, but the general spirit of the regulations is that instead of a manufacturer selling cars to consumers, they should sell cars to dealers who mark them up and then divide the profits with state legislators.

A final note: I've criticized Tesla owner Elon Musk before for seeking subsidies and taxpayer loot, but his lobbying agenda here is for economic freedom. In all cases -- in his lobbying for subsidies for plug-in cars or solar panels; and his car dealer lobbying -- Musk is lobbying for policies that will bring him profit. But it's pretty clear to me that his subsidy seeking ought to be viewed more negatively than his auto dealer lobbying. Read my recent article in Reason where I navigate the landscape of free-market ethics in an age of crony capitalism.

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