Monday, April 13, 2015

Texas House Tesla Hearing: Cronies Gotta Crony


"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Proverbs 11:1

[Author's Note I: If you can stand the wretched economics, you can view the hearing here.]

[Author's Note II: We weren't originally planning on writing about this hearing; then they pissed us off.  Thus we didn't take notes.  This post is from memory.]

In a thinly disguised act of political backscratching, legacy Republicans tonight colluded with legacy auto-dealers to restrict options for Texas' automobile consumers.

HB 1653 would legalize (within numerous limits) direct to consumer automobile sales.  Commonly known as the Tesla bill, the proposed changes could help incubate the next generation of transportation solutions.  The Texas House Committee on Licencing and Administrative procedure, however, clearly telegraphed that they would rather protect middlemen from competition than allow entrepreneurs and consumers to flourish.

We knew this committee was bad news when we learned Charlie Geren was on it.  The committee chairman, Wayne Smith, got a 31 on Empower Texans scorecard last session (fifth lowest score of any Republican).  The vice chair is a Democrat from Joe Straus' home county.  The Democrat who harassed Attorney General Paxton at a restaurant two weeks ago is also on the committee.  At least Geren appeared to be sober.

The hearing opened with a Tesla representative explaining the company's current operation in Texas.  While they have the equivalent of showrooms here, they cannot conduct any part of a commercial transaction in this state.  This leads to situations where company representatives cannot discuss the price of a vehicle with customers.  This legal environment hurts Tesla's ability to serve its customers.  New local free-market think-tank, the R Street institute, joined Tesla in supporting the measure.

The opposition was a cross between Atlas Shrugged and the bar scene in Star Wars.  Predictably, Bill Hammond of the Texas Association of Business opposed the bill.  Hammond was joined by representatives from various trade associations and dealerships.  These legacy industrialists objected to an alleged "carve out" for Tesla that would be available to any competitor who chose to mimic Tesla's business model.  The opposition touted jobs they allegedly create while ignoring the deadweight loss to Texas' economy from inefficiently allocating capital.  We were particularly galled by one GM (yes, THAT GM) dealer who lectured about the rule of law and free market.  Big "charity" also got in on the act, with the Easter Seals testifying that the sky would collapse if auto dealers were forced to work for a living.

The most revealing moment of the hearing came when chairman Wayne Smith "disclosed" that one of the auto dealers testifying against the bill was a member of the same Rotary club as him. In another act of chutzpah masquerading as disclosure, Chairman Smith told the committee he was friends the spouse of another witness.  Not wanting to miss out on the action, representative Doug Miller (Straus Lieutenant) also bragged about his family's history running auto dealerships.

Barring Divine intervention, this bill is dead.  The makeup of the relevant committee guarantees it.  Nonetheless, the willingness of legacy Republicans to disregard the interests of consumers and entrepreneurs to protect legacy industrial interests remains a site to behold.

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Chairman Wayne Smith: (512) 463-0733

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The Trib has more here.

1 comment:

  1. I totally agree. It was a very disappointing hearing. The worst was the dealers 'asking' the woman from Easter Seals to testify who basically implied the dealers would stop donating or would donate less should the bill pass. This is pretty terrible using their charitable donations as a stick to force the charities to stand up. I'd never heard so many red herring arguments in my life. The dealers themselves helped to write these laws and then turn around and try to say that everyone needs to play by the same rules--they rules they themselves wrote! Fisker and Coda tried that and they both failed. A pitiful display of democracy all around. I guess Tesla will have to sue the state. I have news for the dealers--if Tesla does this and they win, the dealers are going to be in a much worse position than they are now.

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