Thursday, April 4, 2013

Texas is pro-business...provided that you're a Texas business (and Kristofferson's Law of Economics)

Tad Donaghe recently shared a story from Motor Trend about the difficulties that Tesla Motors is encountering when trying to do business in Texas.

Tesla Motors is no stranger to resistance from state dealer associations, which oppose the electric automaker’s factory-owned store approach....

[I]n order to comply with current state franchise law, [Tesla] representatives cannot initiate or complete a sales transaction or deliver a vehicle on-site. Customers must contact a representative in California to complete the sales transaction, as well as arrange their own transport and delivery arrangements....

To combat the contorted, Goldbergian work-arounds to sell and service vehicles in the state, Tesla is backing a bill in the Texas legislature that would change the states inflexible franchise laws to make it easier to operate factory-owned dealerships and service centers. But the state dealer association has been actively lobbying legislators....

Now such anti-business tactics (or pro-business tactics, depending upon your point of view) are not unique to Texas, as the Motor Trend article notes. But when I was reading about Tesla's struggles in Texas, I remembered another company that had struggles in Texas a number of years ago.

When I started my working career just out of college, the company where I worked used United Parcel Service (UPS) for its deliveries. From reading the fine print in the UPS guides, I discovered that UPS could deliver anywhere in the country - unless you were in Texas. If you were in Texas, UPS could not be used to deliver a package to another point in Texas.

This abstract of a 1986 New York Times article briefly recounts UPS' twenty-year struggle to be approved for intrastate deliveries.

The Texas Railroad Commission, which for years held it had no jurisdiction in the matter, has opened the way for the parcel company to begin intrastate operations.

Who opposed UPS' bid? I'll give you one guess:

But Texas package carriers, which maintain that the huge shipping company would cut deeply into their business, have promised to continue the battle....

Again, this is not limited to Texas - and it is not surprising.

A business is going to pursue its own self-interests, and if a company's self-interest is promoted by keeping other companies out of the market, then the company will obviously pursue that objective.

And even when a business organization talks about "freedom," that freedom is couched in a certain manner. Take this excerpt from the Ohio Chamber of Commerce:

What is economic freedom? It’s the ability to decide how to produce, sell and consume without unnecessary government interference. Economic freedom powers prosperity and is the key to greater opportunity, more jobs and a better quality of life for all Ohioans.

Since 1893, the Ohio Chamber of Commerce has been aggressively championing free enterprise, economic competitiveness and growth for the benefit of all Ohioans. Our united voice in the state’s legislative matters speaks for the thousands of individual businesses that we represent, thus strengthening the business climate in Ohio.

There's a lot of "in Ohio" language in there that suggests that the Ohio Chamber of Commerce supports Ohio business - as it should. So would the Ohio Chamber of Commerce - and other Chambers of Commerce - support candidates who oppose government regulation? - at least not in 2009:

[A] column in the Washington Examiner ... noted in the U.S. Chamber of Commerce’s congressional ratings: “Texas libertarian GOPer Rep. Ron Paul — the most steadfast congressional opponent of regulation, taxation, and any sort of government intervention in business — scored lower than 90% of Democrats last year on the Chamber’s scorecard.”

Indeed, Congressman Ron Paul has top ratings from the American Conservative Union, the National Taxpayer’s Union and The New American’s own Freedom Index (FI). He earned a perfect 100 percent in 2007-08 for the Freedom Index (FI), but rated only a 47 percent on the Chamber of Commerce’s ratings. Meanwhile, Massachusetts liberal Democrat Barney Frank earned a 61 percent rating from the chamber....

Rep. Paul and Senator [Jim] DeMint lost points twice for voting against the wasteful $700 billion federal bailout that created the wasteful TARP and once for voting against expanded federal educational spending. The Chamber seems to believe that learning should flow from Washington, and that the Chamber would assist “in developing long-term solutions to expand the pool of educated and qualified American workers and improve excellence in education.”

Whatever one may claim about the benefits of federal educational spending, it's not "freedom" in terms of laissez faire. Do higher taxes to promote education provide "the ability to decide how to produce, sell and consume without unnecessary government interference?" No.

So what is freedom? According to Rhodes scholar Kris Kristofferson, "freedom's just another word for nothing left to lose." And if you as a business are receiving government handouts, and if the government is helping keep competitors out of your market, then you do have something left to lose.

And you are not free.

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