Remarkably, the man who was driven out of politics not once but twice for embarrassing personal scandals is proving to be even worse as a pundit than he was as a politician. In his first post as newly hired writer for Business Insider, Weiner has penned a terrible article on Tesla’s fight against political protectionism from car dealerships. In his post, Weiner ironically complains about Tesla’s defenders ”simplistic” arguments and then goes on to provide analysis that is as simplistic and poorly reasoned as the dealership lobbyists and PR people we’ve been hearing from.
He starts by providing the reasons he thinks these laws might be good ideas:
Why would you want to have laws that require a car be purchased through a local dealer? Perhaps to protect a purchaser’s rights to easily enforce the warranty. To ensure the state’s ability to enforce the reams of unique state legal requirements that govern automobile sales, service and even disposal maybe. Or, it might just be a run-of-the-mill instinct for local rather than federal regulations to govern what, for many Americans, is the biggest purchase of their lives.
I guess his point here is that when a manufacturer opens up a store and sells directly to customers they are de facto above the law and unable to be regulated? That Tesla, whose cars can cost over $100,000, might find it profitable to not abide by warranties, or break laws, while local dealers won’t? There’s simply no argument here. It’s a baseless assumption, and in fact it’s disproven by a variety of manufacturer direct sales by expensive and important products like Apple computers.
He continues, appealing to the wisdom and reasonableness of politicians:
Another issue with Tesla’s push to establish direct sales is that there isn’t an element of the current structure that regulators and lawmakers didn’t contemplate when these restrictions were implemented…
….Reasonable people may think regulations that get in the way of tech companies are all just bad laws. In Tesla’s case, some might consider bans on direct auto sales to be part of a protectionist regime set up by a powerful lobby — neighborhood car dealers — and unchallenged by a lazy industry that didn’t want to antagonize its sales force. Still, dismissing all existing regulations out of hand without recognizing them as the product of reasoning and careful consideration isn’t the answer.
The point here seems to be entirely that “trust me, politicians thought hard about this”. He hasn’t even come close to establishing these laws are in fact a good idea. And almost every reasonable person who is not either a politician or paid by the industry that has actually considered the economics of this issue has concluded that the arguments for the protectionists laws are wrong. In contrast, those making the case for these laws are hardly demonstrating “reasoning and careful consideration” but are either as badly argued as Weiner’s piece or, like this from the President of the Greater New York Automobile Dealers Association, even worse:
“You go from dealer to dealer, working out the best price,” he said. “If you’re dealing with a monopoly, the way Tesla is… they can raise the price to whatever they want to raise it.”
This is completely at odds with basic economics. Making downstream businesses competitive doesn’t do anything to alleviate an upstream monopoly. In fact, these laws risk the problem of double marginalization where you have market power for manufacturers and retailers. But then again, politicians have been saying this for a long time so by Weiner’s reasoning I guess it must be true.
The piece, in short, is terrible. The entire content consists of 1) bad reasoning about these laws, and 2) assurances that we should trust politicians ability to reason carefully about these laws. The only value of the piece is that his first argument entirely disproves the second. Next time a politician wants to defend the wisdom of politicians he should choose an example where he can actually argue that a law they’ve passed is not a terrible idea.
Source: Forbes Business