Thursday, March 13, 2014
Tesla smackdown by New Jersey sounds anti-competitive and protectionistic, but there really are two sides
So is New Jersey’s move to forbid Elon Musk and Tesla from selling directly to consumers after April 1 anti-libertarian and anti-competitive?
There are a couple of opposing perspectives, such as Todd Wasserman’s on Masable, “New Jersey’s smackdown on Tesla is fair, bur dumb here (sounds like Suze Orman!), Elon Mush’s own blog posting here (which Jimmy Wales tweeted) and Charles Lane “Tesla takes on car dealers in fight to the death” (or “Tesla v. the dealerships” in print, p. A17, Thursday, March 13, 2014, here).
My first reaction is that a law that requires auto manufacturers to sell only through franchised dealers (as in New Jersey, Texas, and Arizona) smacks of protectionism. It would be like saying I can’t sell my own self-published books without some sort of “licensed” distributor. I remember debates like this fifteen years ago when I was active in the Libertarian Party of Minnesota. All kinds of side issues, such as home-based businesses come to mind. This sort of thinking has affected writers before, such as when writers in New Jersey, Illinois, and even Los Angeles were chased with fines in the 1990s for working at home.
I recall, when working for a Blue Cross consortium in Dallas in 1980, that a coworker bragged he would start selling cars part time because he had to feed his babies. That remark seemed directed at me because I didn’t have children.
Some argue that the franchise dealer system is better for consumers, because it gives them an intermediary, local to the consumer, to perform service.
I can throw into the discussion my own experience with cars. After moving to Dallas from NYC in 1979, I bought a Chevette. It had two differentials fail in 40000 miles., one of them on the off-ramp from Stemmons Freeway. Then I bought a Colt in 1983. It had two clutches fail. But in 1986 I bought a regular Ford Escort. Ever since the mid 1980s, with a few years of Reaganism, I have found American cars orders of magnitude more reliable than they had been before. Competition has something to do with it.
And there is also the issue of salesmen’s jobs. The dealer system is said to improve sales as a whole. But there is an argument that with the automobile industry, like so much else, the Internet changes everything. My own father made a comfortable living in sales as a manufacturer’s representative, although he sold only wholesale, to buyers. In the Internet age, the idea of sales as a career has come to be seen by many (including me) as hucksterism or parasitism, for people not smart enough to make things or create their own content. At the same time, sales by email, cold calling or telemarketing are consistently resisted by consumers (including me), partly because of spam and even home security problems. Life insurance companies say they cannot find people who are both technically skilled and temperamentally suited to careers as agents. You see where all this is headed. All those robocalls reek of desperation. And that is not good.