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Transportation Politics

How Car Dealership Lobbyists Successfully Banned Tesla Motors From Texas 688

Posted by Soulskill
from the don't-mess-with-texas-unless-you-can-float-some-benjamins dept.
Funksaw writes "In a political op-ed on his blog, long time Slashdot reader and contributor Brian Boyko (the guy who did that animated Windows 8 video) — now a candidate for state representative — explains how lobbyists from car dealerships successfully banned Tesla Motors from selling cars in Texas. From the article: 'Tesla Motors doesn't just present a case study of why a lack of campaign finance reform blocks meaningful reform on the issues that Democrats care about, like climate change and health care. A lack of campaign finance reform blocks reforms on both the Left and the Right. Here's the big elephant in the room I'd like to point out to all the "elephants" in the room: With a Republican-controlled legislature, a Republican executive, and many conservatives in our judiciary, why the hell don't we have free markets in Texas? Isn't it the very core of economic-conservative theory that the invisible hand of the free market determines who gets what resources? Doesn't the free market have the ability to direct resources to where they can most efficiently be used? I'm not saying the conservatives are right in these assumptions; but I am saying that our broken campaign finance system makes a mockery of them.'"
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How Car Dealership Lobbyists Successfully Banned Tesla Motors From Texas

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  • More (Score:5, Informative)

    by Geoffrey.landis (926948) on Tuesday September 10, 2013 @04:27PM (#44812275) Homepage
  • by james_shoemaker (12459) on Tuesday September 10, 2013 @04:30PM (#44812321)

    I read the laws tesla is lobbying for on their website, it's a rather specific exemption from the dealership law for basically them:

    "a manufacturer of only all electric-powered or all battery-powered motor vehicles, or a distributor of only all electric-powered or all battery-powered motor vehicles, that (i) owned and operated a new motor vehicle dealership in the United States on or before March 1, 2013, and (ii) has never sold its line make in the United States through an independent franchised new motor vehicle dealership, may own or operate a dealer or dealership, or act in the capacity of a dealer, at any location within the state and may obtain a dealer general distinguishing number under Section 503.029 of the Transportation Code."

          "let's write ourselves an exemption, but slam the door on anyone coming after us"

  • by dhalsim2 (626618) on Tuesday September 10, 2013 @04:31PM (#44812355)

    This isn't a Republican vs Democrat thing, but it _is_ very political. Planet Money had an explanation of the economics of car dealerships and how dealerships and politicians prevent sales directly to consumers.

    http://www.npr.org/blogs/money/2013/02/19/172402376/why-buying-a-car-never-changes [npr.org]

  • by Acapulco (1289274) on Tuesday September 10, 2013 @04:36PM (#44812419)

    I have come to believe that "the invisible hand of the free market" is an euphemism for "MY invisible hand ON the free market"

  • Re:Free market, LOL! (Score:5, Informative)

    by sjames (1099) on Tuesday September 10, 2013 @04:52PM (#44812635) Homepage

    The Ds are what most countries would call 'the right'. They are nowhere near Socialism.,/p>

  • Re:Free market, LOL! (Score:5, Informative)

    by RazzleFrog (537054) on Tuesday September 10, 2013 @05:02PM (#44812751)

    That's what most Americans don't get. "Liberals" in the US would be conservatives in most other countries. We are so far at the bottom of the "socialist" rating scale that we might as well be eliminated as an anomaly.

  • Re:Big oil (Score:3, Informative)

    by Iniamyen (2440798) on Tuesday September 10, 2013 @05:24PM (#44813027)
    There are car dealerships around here (Seattle area) that do "bottom line" or "lowest everyday" prices, but they are still above invoice. Car dealerships will even sometimes sell new cars at below invoice prices, because it's in their interests to move product and they will make that money back on manufacturer discounts, service, etc...

    In my opinion, the root of the problem is that dealerships are an additional cost which affects the price of a car, and a good argument can be made that in a hyper-regulated industry with lemon laws, the cost isn't a necessary one.
  • Re:Wrong party (Score:4, Informative)

    by kajsocc (2955535) on Tuesday September 10, 2013 @05:29PM (#44813071)

    The problem is that Libertarians want corporations to be unencumbered by regulations to the extent that they can harm people and the environment without oversight.

    Nonsense. Nobody, whether Republican, Democrat, Libertarian, Green, Socialist, whatever, wants individuals to be able to freely harm others.

    Libertarians and Republicans frequently call for less regulation. I'm neither, but I still believe I can explain the argument they're making: they don't want complete deregulation, they just want less of a monopoly on regulation. Government regulation is a monopoly on regulation, and regulatory monopolies lead to regulatory capture [wikipedia.org] (basically, corruption), as we've seen all over the US. Private regulation, on the other hand, means something like having insurance companies "internalize the externalities". If you just now took "private regulation" to mean companies voluntarily regulating themselves without any monetary incentive to do so, I agree, it sounds absurd. But that's not what it means.

    The canonical example is pollution. The argument against free markets goes something like this: without regulation, companies will pollute the skies and dump toxic waste into rivers, since it is less costly than handling the waste. In other words, the market won't price in the externalities.

    The counterargument: if companies did so, they would actually be hurting people--people who breathe pollution are more likely to get cancer, fishing businesses cannot catch uncontaminated fish, etc. These individuals would then have legal standing to sue in court, and have a really good case to boot. If you also had some tort reform such as loser pays + claimants can receive third-party funding for their cases, such claimants could actually win judgments in court, rather than settling out of court for a measly $2k or simply being out-funded into oblivion.

    Under this system, companies would buy liability insurance to protect themselves against such large judgments, or else risk destroying their business entirely. (And who is going to invest in that?) As a condition for continued coverage, they would be required by their insurers to submit to regular audits and comply with certain safety and waste handling procedures, etc. If the company won't submit to these regulations, insurers just jack up the rates--it's riskier to insure them, after all. The audits and other compliance are cheaper by design, so companies will go that route.

    This system provides a balance between the interests of the companies affected by the regulation, and the people who would be affected without it. Insurers don't want to impose onerous regulations lest the company choose a different, better insurer. But insurers don't want to do too little, else they're liable to be mispricing their insurance and end up losing a bunch of money. And corruption is gone, because there's no sense in letting a company you're insuring change your auditing procedures when you believe that's going to cost you money. Better yet, the regulations put in place are preventative rather than reactionary. While a monopolistic regulator motivated primarily by politics may simply react to events that have already occurred and put in place regulations to ensure they don't happen again, insurers actually have an incentive to imagine the worst-case scenarios and design policy to prevent them in the first place.

    Would this work? You decide. But at least get your opponents' arguments straight, first. Otherwise we're never going to get anywhere.

  • Re:Wrong party (Score:4, Informative)

    by CanHasDIY (1672858) on Tuesday September 10, 2013 @05:44PM (#44813265) Homepage Journal

    There are lots of problems the free market cannot solve, just like there are lots of problems collective rule cannot solve. That's why it is important to choose the right solution for every problem. People who think there is only one true path will end up with lots of bad and inefficient solutions that often just make the problems worse.

    This paragraph is brilliantly insightful, for those of you who can't tell.

  • Re:Free market, LOL! (Score:4, Informative)

    by Alomex (148003) on Tuesday September 10, 2013 @06:28PM (#44813857) Homepage

    Sweden, Germany, Denmark, your pick.

  • Re:Holy Fuck People! (Score:5, Informative)

    by lgw (121541) on Tuesday September 10, 2013 @08:11PM (#44814743) Journal

    I will also say right now I don't see why Tesla does not work with existing high end dealers in Texas. There are several that are extremely reputable that work with a number of high end cars(lotus, maybach) and are specifically able to deal with the clientele that Tesla wants. Recall that the original gliders were supplied by Lotus.

    Lotus had to stop selling cars in the US for the most part for about a year IIRC (I guess they're back now). Maybach is dead. That's probably just it: this is not the model Tesla wants.

    It's an incredible amount of work to create a dealership program (you have to invent training programs and survey programs and police the heck out of the dealerships, but in terms of customer experience and financial auditing). Tesla is selling cars as fast as they can build them as is.

    The Texas government has reversed in the past on car-related regulations that pissed people off - it's fairly responsive to the people when it comes to that. If people want Teslas, the government will act. It will actually be pretty interesting to watch this play out.

  • Re:Wrong party (Score:4, Informative)

    by brianerst (549609) on Tuesday September 10, 2013 @10:06PM (#44815465) Homepage

    No, libertarians argue that the problem is conceptually hard not that it doesn't exist. Liberals generally feel the problem is fairly easy conceptually (just regulate it) but hard politically.

    The problem is that there is no one simple answer (as the linked video acknowledges - straight from the mouth of libertarians). Some commons problems are amenable to privatization schemes (land and fisheries ownership - Ronald Coase did a lot of work on this idea) while others work more smoothly based on cooperative communities (Elinor Ostrom won the Nobel for her work on this tactic). Both of these tactics are well respected in libertarian circles because they use locality to solve the knowledge problem.

    Where it gets truly complicated is in open-access resources that don't lend themselves to either method (air and water being two common examples). In this area, there may be areas where regulation is necessary but it should try to be as locally and market focused as possible. Which is why libertarians have put a lot of thought behind ways to get pricing into those types of markets. Libertarians like Jonathan Adler [reason.com] have been advocating carbon taxes for years and the entire Summer 2013 [cato.org] issue of Cato's Regulations magazine features deeply researched and well argued cases for implementing carbon taxes and how best to price them for maximum gain at reasonable cost.

    I think you are arguing against straw man libertarians rather than real ones.

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