Welcome to the Free Market: Christie and Regulatory Capture
The Tesla Model S is universally acclaimed as one of the best cars ever made. It is truly a marvel of engineering boasting the best safety rating of any car ever tested by the NHTSA, the ability to out accelerate a Ferrari, gets the EPA rated equivalent of over 90 MPG, all wrapped stylish body and luxurious interior punctuated by a 17 inch touch screen. It was the 2013 Car and Driver car of the year, the highest rated car ever in Consumer Reports, Automobile Magazine’s 2013 Car of the Year in addition to countless other awards. Despite the many accolades, the state of New Jersey and the Christie Administration do not think that Tesla should be allowed to sell its vehicle in the state.
Christie’s Beef with Tesla
The Christie Administration’s issue is not with the car itself but with the method of sale. Tesla sells its cars directly to the consumer while the state of New Jersey requires car manufacturers to sell cars to middlemen who then sells cars to consumers. The purported purpose of this regulation is to protect consumers from price gouging car companies, but Tesla’s 0$ vs the New Jersey Coalition of Automobile Retailers $696,740 political contributions to state representatives certainly did not help its cause. The Christie administration “made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law.” This is a pretty amazing statement coming from a Republican governor who claims to be a champion of free markets. In most cases politicians will try and sneak regulations through in more nefarious ways, but the Christie administration is actually being forthright about their desire for the government to stifle competition in the auto market and deny its citizens the right to buy the best car currently on the market.
Will the Real Chris Christie Please Stand Up
Last week Chris Christie told CPAC that “we have an opportunity problem in this country because government’s trying to control the free market.” It would seem that the governor is correct and that his administration is a part of the opportunity problem. On the heels of the government having to invest billions of dollars to bailout the auto industry, one would think that a Republican presidential candidate would be extolling the virtues of an innovative auto startup that in a few short years, through innovation and excellence, has blazed its own path creating a car unlike anything ever created. Instead this so called champion of free markets has sided with the New Jersey Coalition of Automotive Retailers and is using his public office to put up roadblocks to Tesla’s expansion.
This problem, which is widespread across all government regulated industries and is enthusiastically perpetrated by both parties, is known as regulatory capture. Regulatory capture is when businesses use government influence to stifle competition and maintain their market position instead of trying to win in the free market. It is a form of government corruption that spans all industries in which regulations act in the interest of a few private companies instead of the interests of the public regulations are designed to protect. Even regulations written by well intentioned legislators are often captured and twisted by special interests. Stifling free market innovations is bad whenever it happens, but when a so called conservative free marketer is the perpetrator, the hypocrisy makes the stink that much more pungent.