Corrupt Politicians on the Take (Another Addition to the Law of Bad Ideas); Losing Respect for Governor Christie

Governor Chris Christie is damaged goods. Revelations regarding lane closures on the Washington Bridge peaked with a ‘Very Sad’ Chris Christie Apology. Yet, I suspect the final chapter on that sorry saga is not written.

To refresh your memory, as political revenge, a Christie aide ordered the closings of traffic lanes on the bridge, during rush hour, as political payback. Traffic was snarled for days. NewJersey.Com reports Fort Lee woman died as GWB closures delayed medical help.

Christie No Free Market Advocate

I do like how Christie has handled unions, but other Christie ideas have me shaking my head. For example, Tesla, NJ Governor Christie clash over direct sales to customers.

Tesla Motors Inc said New Jersey Governor Chris Christie's administration was pushing forward with a regulation that would hamper sales in the state by forcing the electric-car company to use dealers instead of selling directly to customers.

Tesla said on Tuesday the administration was undermining its model of selling cars, while the administration says Tesla has long known the company needed a law change to accommodate its sales model.

The New Jersey Motor Vehicle Commission introduced a rule in October that made explicit the need to have a franchise license to sell cars in the state, and that rule was due to be approved on Tuesday.

New Jersey would effectively be the third state to bar Tesla from selling its cars directly, along with Arizona and Texas, according to Tesla.

Why Franchises?

Why should anyone need a franchise to sell anything? If Tesla, Ford, GM, or any car maker wants to sell cars on Ebay, through Amazon, or their own online site, why should anyone care?

If the buyer and seller think it's OK, of what business is it to the state of New Jersey, Texas, or Arizona.

"It seems like Chris Christie is intent on driving traffic into New York with this decision," Northland Capital Markets senior analyst Colin Rusch told CNBC. "We're going to see folks coming into Pennsylvania or into New York." 

Texas is certainly peculiar. What the hell are these states thinking?

Corrupt Politicians on the Take

As some may have guessed in advance, the answer is political cash contributions from car dealers.

Tesla doesn’t use car dealerships.  They sell directly to the consumer. No haggling, no upselling, no commission for employees, and uniform prices at every store.  You just point to the car, say “I want that,” and you buy it. It makes a lot of sense for Tesla.  Customers don’t like car dealers, and car dealers don’t like electric cars, so why would you try to sell an electric car to a customer through a car dealership?  It is capitalism – a producer of a good is responding to the incentives of the market.

But the car dealerships feared, perhaps correctly, that if Tesla Motors could sell cars directly to consumers, there would be no way to stop other car companies from selling directly to consumers.  And they got their way because they bought the laws they wanted, laws which prop up their outdated business model at the expense of Texas consumers and innovative entrepreneurs.

Why? Well, the Texas Automobile Dealers Association lobbied hard against letting Tesla sell cars in Texas, spending $278,750 on Texas political campaigns – about 75% to Republicans.

In addition to the $278,750 from the TX Auto Dealers Assoc. Pac, the Texans for Public Justice website, shows $453,324 from Thomas Dan Friedkin of Gulf State Toyota, the $331,310 from Gulf States Toyota PAC, and $306,500 from B.J. 'Red' McCombs, of the Red McCombs Auto Group.

Corollary Seven to Law of Bad Ideas

I have no idea how much car dealers donated to Chris Christie. But I do know a bad idea when I see one.

And the above articles shows exactly how and why some bad ideas get implemented: campaign contribution bribes and political revenge.

It's time for another corollary to the Law of Bad Ideas.

Law of Bad Ideas Corollary Seven: Coercion, threats, bribes, political revenge, and campaign contributions to corrupt politicians on the take explain how some bad ideas become law.

For corollary six to the "Law of Bad Ideas", please see Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com