Crony Politicians “Protect” Michigan from Free Markets (And Tesla Motors)

Michael Schaus
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Posted: Oct 18, 2014 12:01 AM
Crony Politicians “Protect” Michigan from Free Markets (And Tesla Motors)

The Michigan Legislature has put a bill on Governor Rick Snyder’s desk that would, essentially, kick Tesla Motors Inc. out of the state. The home of Government General Motors, it seems, is still home to big-government coercion and cronyism. The bill, which is awaiting the Gov’s signature, would ban direct sales from a car company (Tesla) to individual consumers. (Coincidentally, this just happens to be Tesla’s business model.) The legislation was put forward because… well, I guess that buying things directly from producers and manufacturers is bad for you, or something.

The National Automobile Dealers Association must have been less than thrilled that they weren’t getting a slice of Tesla’s sales, so they did what any good crony-capitalist would do: They marched down to their friendly (cash-strapped) political campaign, and proposed a law that would outlaw their competition. According to Bloomberg:

The bill prohibits automakers from selling a vehicle “directly to a retail customer other than through franchised dealers,” with exceptions for nonprofit organizations and government agencies.

Right… Because obviously government deserves an exemption to the law, right? (I guess some animals are more equal than others.) Truthfully, Tesla’s direct-sales business model is a major disruption to an industry that has gone decades without substantial evolution. The Dealers Association, apparently, believes it will be easier to engage in a little big-government cronyism than innovate, adapt, or compete.

Of course, they’re defending this is a consumer “protection” scheme. (I can only assume they are using the term “protection” the same way Al Capone routinely employed the phrase.):

“States are fully within their rights to protect consumers by choosing the way cars are sold and serviced,” Charles Cyrill, a spokesman [from The National Automobile Dealers Association], said in an e-mailed statement.

Yeah… I mean, why let businesses and consumer figure it out on their own, right? A little government intervention always helps (heck, just look at Healthcare.gov). Sarcasm aside, it’s pretty interesting that he immediately defends the “states” right to limit how a private enterprise interfaces with their potential consumers. What about the rights of the business? Of course, he went on:

“Fierce competition between local dealers in any given market drives down prices both in and across brands.”

Maybe I’m missing something, but I don’t really notice any “race to the bottom” in modern car prices. While things like TVs, computers, electronics, and even household appliances have become more affordable than ever, the average price of a new car seems on a steady upward trend. Sure, dealerships might help drive some competition within a brand… But, in case you haven’t noticed, we have far more than three automakers nowadays. If you don’t like the price of a Tesla, go buy yourself a Toyota, Ford, or (heaven forbid) one of the other numerous makes on the street.

The bill is quite obviously not about protecting the consumer. It is entirely about protecting an industry that still sells cars like it is 1950. In the name of defending dealers, Tesla is essentially being stripped of any sense of ownership over their very own property and products. After all, if it is truly their property, the way in which they chose to deliver it to a demanding public should not be dictated by the whims of an outdated industry of salesmen and franchise owners.

And, make no mistake, the automobile industry’s common practice of storing thousands of cars in giant lots with soaring overhead is most certainly outdated. It almost seems like a government mandate that (basically) requires a middleman (the dealer) for any car purchase, preserves an environment where add-on costs are a fact of life. (C’mon… We’ve all paid those dealership fees.) Tesla, aside from toying with the concept of luxury electric automobiles, is a pioneer in reimagining the auto-industry. But, according to the politically-connected Dealer Association, it is audacious and outrageous that a private company would get away with selling their product in a free and completely voluntary business model.

Innovation is bound to spur a little cronyist angst among the old guards of any given industry. Heck, even Amazon.com has had to fight lobbyists who are focused on restricting the internet retailer’s consumer-driven innovations. And, like Amazon, Tesla is in the process of stirring up an industry that is desperate to cling to last century’s business model.

Of course, we’ll know things are really changing as soon as Tesla offers to deliver their Model S by drone.