- The car franchise law is bad, and it basically only benefits car dealers, who are politically active. But it's the law.
- Philip Morris supported Obama's 2009 tobacco regulation bill, which crushes smaller competitors.
- Mattel supported the 2008 toy safety law, which cripples artisan toymakers and toy-sellers.
- Obama crafted a rule, along with H&R Block, that threatened to regulate small-time tax preparers out of existence.
- Here's hoping NJ's legislature changes its stupid law, and that liberals keep up their skepticism of regulation.
We knew Chris Christie could reach across the aisle, but who would have guessed he could turn the liberal commentariat into free-market libertarians?
The secret: enforcing regulations that get between rich New York-area consumers and their luxury electric cars.
Tesla manufactures plug-in electric cars that cost $70,000 or more. In recent years, the company has opened show rooms around the country, including two in New Jersey. The problem: Many states have laws requiring automakers to sell their cars through franchisees, rather than directly.
Specifically, New Jersey's law on “unfair business practices” forbids any “franchisor” (that is, carmaker) from selling cars, except through a “franchisee” (that is, car dealer).
The relevant portion of the law, dating back to 1985, reads: “It shall be a violation of this act for any motor vehicle franchisor, directly or indirectly … to offer to sell or sell motor vehicles, to a consumer, other than an employee of the franchisor, except through a motor vehicle franchisee.”
Why was Tesla ever allowed to open showrooms? Because of legal ambiguity. The section of New Jersey law covering car dealer licensing didn’t include this franchisee requirement. Christie’s Motor Vehicle Commission (MVC) last October proposed a rule clarifying that “any applicant” for a car dealer license “intending to sell new motor vehicles must meet the requirements” of the franchisee law.
This law is bad, and it basically only benefits car dealers, who are politically active. But it's the law. When Tesla begged New Jersey for mercy, Christie said, to the applause of the car dealer lobby: Get the legislature to change the law. On March 11, the MVC finalized the rule, effectively outlawing Tesla's showrooms.
Opprobrium poured onto Christie from all directions — notably from the Left. Liberal MSNBC host Chris Hayes is a friend of mine who has had me on his show a dozen times. After the New Jersey vote, I felt like I was finally getting through to him:
“Why is the head of the Republican Governors Association using the heavy hand of the state to strangle free enterprise?” Hayes asked on his show. “The Christie administration sided with regulation over free-market progress and innovation.”
“In New Jersey," Hayes lamented, "a powerful cartel of auto dealers are the only ones who get to sell cars.”
Across the Left, the reaction was the same.
This is progress. Liberals increasingly see this side of regulation: Enacted in the name of protecting the little guy, regulation often just protects politically connected incumbent businesses from innovative challengers, thus harming consumers.
Recall the progressive outcry on behalf of Uber when Washington, D.C., tried to regulate the smartphone-powered car service out of the District. From Portland to Brooklyn, Obama-voting hipsters have fought against food truck regulations that protect brick-and-mortar restaurants.
But it's not only lobster rolls and luxury cars threatened by protectionist regulations. Here are some cases from recent years:
Philip Morris supported Obama's 2009 tobacco regulation bill, which crushes smaller competitors. Mattel supported the 2008 toy safety law, which cripples artisan toymakers and toy-sellers. Large investors, during the debate over the 2012 JOBS Act, defended regulations that limit crowd-funding. Obama crafted a rule, along with H&R Block, that threatened to regulate small-time tax preparers out of existence. Harry Reid has pushed rules to give big casinos an oligopoly on online gambling.
Go back to Teddy Roosevelt, and you find the big meatpackers supporting mandatory inspection rules whose biggest impact was curbing small business.
So why does Christie’s ruling get so much of the Left’s ire?
For one thing, he heads the Republican Governors Association and is seen as a leading presidential contender in 2016.
Also, Tesla – like Uber and food trucks – is beloved by chic tastemakers in a way part-time tax preparers and small tobacco growers might not be. Tesla is an environmentally friendly car. It’s a luxury car. Company founder Elon Musk is a six-figure Obama donor and a dealer in solar panels.
While Musk spends much of his effort hustling for government contracts, tax credits, loan guarantees, and other subsidies, here he’s on the free-market side of things — and so is the Left.
Here's hoping New Jersey's legislature changes its stupid law — and that our liberal friends keep up their skepticism of regulation.