Rick Perry: The Pros Of Tesla Selling Direct To Customers Outweigh The Cons | Hacker News Reader

Rick Perry: The Pros Of Tesla Selling Direct To Customers Outweigh The Cons

siliconbeat.com

62 pointsbane22 comments

I personally find it absurd that there are such laws protecting car dealerships, but then again given the history of the industry, there does need to be some regulation. Where it seems to go wrong is the idea that a company couldn't sell their product direct to consumer. It's sort of like saying that Apple stores can't exist and Apple has to sell everything via Best Buy, Target, and Wal-Mart. Somehow, it seems that is how the car dealership racket has been legislated.

There is probably some kind of middle ground where Tesla should be able to sell direct, while there should probably be a possibility of dealerships trying to cut a deal with Tesla.

The real quagmire of unintended consequences here seems to be in how trading 6500 factory jobs for however many thousand dealership jobs. I don't know how it shakes out on either the jobs or tax income end for Texas, but whenever you are talking large change like this, the unintended consequences are usually worse than predicted in one direction or another.

Is it not possible for Tesla to somehow create a non-profit(?) they have no stake in that just goes around these states setting up Tesla friendly dealerships that basically mimic Tesla's own showrooms?

I'm sure 6-12 months down the road - there'd be a scathing expose about how Tesla is abusing a non-profit status to steal business from legitimate neighborhood dealerships.

A lot of industries have had "protect the middleman" laws, so it's not really a car only thing.

Gov. Perry sees the way the wind is blowing and probably believes (at least from the last couple of interviews) that the model will change so he might as well get the factories. The auto folks will still have some local people.

This corruption is known as regulatory capture. https://en.wikipedia.org/wiki/Regulatory_capture

> Regulatory capture is a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure; it creates an opening for firms to behave in ways injurious to the public (e.g., producing negative externalities). The agencies are called "captured agencies".

Manufacturing is different than other industries in that it's recognized to have a large multiplier effect. Historically, the estimate has been that for every manufacturing job created, 1.5 - 4 other jobs are created in the surrounding area, so it's really a lot more than 6500 jobs at stake.

Rockwell Automation published a study a few years ago claiming that it might be as high as 16x in some cases. They have an inherent bias since they sell equipment to other manufacturing companies, but they made some interesting arguments. Their paper can read here: https://www.rockwellautomation.com/resources/downloads/rockw...

    "The real quagmire of unintended consequences here seems to be 
    in how trading 6500 factory jobs for however many thousand 
    dealership jobs."

Tesla going direct to consumer in most states is really only a matter of time. Assuming this is true, that eventually dealers are going to go the way of the dodo. And if that is the case, wouldn't if be best to bet on 6500 jobs that are likely to stick around in the future and keep bringing in revenue for the state, than let another state get that factory and one day you have neither the dealership jobs or the factory jobs in your state. Plus, it's not like those dealership jobs are going to disappear overnight.

Texas makes tesla direct sales illegal. Tesla bribes Texas governor with factory in Texas. Texas governor decides to change law. Perry runs for president in 2016 as a "job creator".

Good old American corruption

I really enjoy that it's so open and honest, and because of that, nobody knows it's happening!

Is it still a bribe if benefit is for the state and not an individual?

It's not really a bribe - I think a better word is "competition" since Tesla hasn't decided where to build it.

How is this a bad thing?

I'll take the "corruption" that leads to economic efficiency any day.

If a small company trying something disruptive needs to do favors to the government or face restrictions, that's a large barrier to entry and less economic efficiency.

Opening a car factory is not cheap. For an auto startup one mistake like this can destroy the company. Texas of course stands to gain millions in tax revenue + good press.

The system is so corrupt that even an honest business that just wants to make healthy profit by serving customers have to dirty their hands with politicians and legislators to run a legitimate business.

Asked to detail the pros of Tesla selling direct to consumers, Governor Perry answered without hesitation, "Commerce, Education and Energy."

Brave thing to say when the Texas state legislature isn't in session to actually do something about this...

Rick Perry always has a lot of brave things to say when the legislature isn't in session. Funny that the only time he has come out in support of an environmentally friendly industry is when he stands to gain a 6500 job windfall at the end of his term...

Theoretically he could still sign a bill relating to Tesla, even in regular session. The next meeting of the Legislature starts on 13 Jan 2015 and his term ends on 20 Jan 2015. Though expecting anything to get past 1st, 2nd, and 3rd reading in both the House and Senate in under 6 days is almost certainly a doomed expectation.

the headline should really be: "politicians willing to do or say anything to get a few middle class jobs"

A few?!

What's wrong with that? Would you rather Texas leave the ban in place and not employ anyone at all?

Nothing wrong ... in the short term. Will perform indecent act for every potential employer while bending over backwards - that mentality does not create a stable foundation for future growth and prosperity.

You should have policies first, deals second and not change the policy to get the deal.

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