Follow by Email

Wednesday, March 19, 2014

So-Called Capitalists and the Free Market

Have you noticed that capitalists are often the most ardent promoters of the free market except when they're not? The makers of Tesla, the high-end electric-powered car, is discovering this as it seeks to expand its market across the United States. The states of Texas, Arizona, and most recently New Jersey have found a way to prevent Tesla from selling its vehicles in their states. Dealers in these states have used laws that prevent manufacturers from selling directly to customers (rather than selling through dealers) to keep Tesla out.

As a recent NPR "Planet Money" podcast notes ("Why Buying A Car Is So Awful"), these laws were originally put into place in order to protect local dealers from the predatory practices of the big three automobile makers: General Motors, Ford, and Chrysler. But times have changed, and now these laws essentially protect local monopolies controlled by dealers that add, on average, about $1,800 to every car that we buy. Thus, it's quite understandable why dealers are reluctant to alter the status quo and let Telsa in. It's also an example of how some of the biggest supporters of the free market aren't when it threatens their bottom line.

1 comment: