Tesla vs. the Regulatory Status Quo in NJ


Via Geoffrey Manne, who teaches law at Lewis & Clark University in Portland, Oregon, comes this open letter about New Jersey's riidiculous ban on direct sales of Tesla cars. For more on Garden State awfulness regarding the sale of luxury electric cars, read Ed Krayewski.

The Motor Vehicle Commission's regulation was aimed specifically at stopping one company, Tesla Motors, from directly distributing its electric cars. But the regulation would apply equally to any other innovative manufacturer trying to bring a new automobile to market, as well. There is no justification on any rational economic or public policy grounds for such a restraint of commerce. Rather, the upshot of the regulation is to reduce competition in New Jersey's automobile market for the benefit of its auto dealers and to the detriment of its consumers. It is protectionism for auto dealers, pure and simple….

In sum, we have not heard a single argument for a direct distribution ban that makes any sense. To the contrary, these arguments simply bolster our belief that the regulations in question are motivated by economic protectionism that favors dealers at the expense of consumers and innovative technologies. It is discouraging to see this ban being used to block a company that is bringing dynamic and environmentally friendly products to market. We strongly encourage you to repeal it, by new legislation if necessary.

The letter is signed by more than 70 economists and law profs (full text and signatories here).

I wrote about attempts to ban or restrict new-model businesses such as Tesla, Uber, and Airbnb for Time recently. Read that here. 

The move by New Jersey's legislature to heap even more restrictions on new ways of doing business is appalling and should be denounced as such. The upside, though, is that such anti-business activity forces legislators and "poltiical entrepreneurs" (to use Burton W. Folsom's excellent phrase) to defend an indefensbile status quo. If the only argument you can make against liberalizing a market (or social practice, such as gay marriage) is essentially to say, "We've always done it this way," or "My profit will suffer," change is on the horizon. It may take a while—and it typically takes way too long—but such empty, self-interested, and unpersuasive defenses of an exclusionary and highly self-interested status quo ultimately start tumbling down the minute they have to be articulated in public debate.

Speaking of cars and Jersey, here's a jolt of what Garden State DJs inevitably—and somewhat disturbingly—called "Bruce Juice" to get your engines running this Hump Day morning: