Banning sales to protect sales

[Panacea]

After all, the railroads would never have been nationalized if it weren't for the anti dog eat dog rule being in place first.

Our railroads are not nationalized. They are private companies. Even Amtrak, though heavily taxpayer subsidized, is a private company. And there are other commuter lines that are private. They have agreements with the freight companies to use their lines.

I wonder just what strings the car dealerships are now going to find tied around them because they invited interference.

Now that's a good question, but since it's state government not federal, I think the answer is "not much." Local politicians will be content to take their cut of the pie and leave it at that.

[smileyeagle1021]

I was referring to the scenario presented in Atlas Shrugged. I am well aware that our railroads are not nationalized. The whole plot though of Atlas Shrugged is following Dagny Taggart's struggle against her brother's crony friends who first put in place protectionist bullshit rules and when that doesn't work nationalize the railroads, then when that doesn't work allow it to completely collapse.

[Panacea]

I was referring to the scenario presented in Atlas Shrugged. I am well aware that our railroads are not nationalized. The whole plot though of Atlas Shrugged is following Dagny Taggart's struggle against her brother's crony friends who first put in place protectionist bullshit rules and when that doesn't work nationalize the railroads, then when that doesn't work allow it to completely collapse.

Ah, gotcha. That wasn't clear from your previous post.

However, the scenario is completely implausible. No businessman, however, incompetent, is going to give away his business to the government or let it collapse simply to "protect" their industry. Let it collapse while taking the money and run, sure. But that's not Rand's story. Rand's story is her fantasy about productive members of society withholding their knowledge, skill, and expertise to force a radical social change. It's a highly unlikely scenario, which is why I could never get through her novel or the movies. It's one thing to suspend disbelief, it's another to surrender common sense in terms of what really motivates people.

[D_Yeti_Esquire]

I tend to have a different view of it than most. I do love buying things on the internet but...

In the end, my guess is that this has nothing to do with payola. It's simply that franchise dealerships in North Carolina are jobs. My guess is, combined they represent a few thousand jobs or in that vicinity. Tesla has no showroom in NC, doesn't plan on building one, and maybe 10 jobs at a single service center for the entire state. Protectionist? A bit. But we are seeing the blowback of every politician knowing what this business model does. Not every person who loses a retail job can go work in a distribution center. And when the market resettles, many actually hate their local retail store because the selection then sucks and they pay so little for employees that you don't need them. Not that Tesla by itself will cause this. But it would beg the question to every other major automaker, "why aren't you doing it THIS way?"

I'm also going to guess that this "model" avoids sales tax entirely because the point of sale is elsewhere. In that sense, it is payola but only in the since there's about 6+ million in sales that isn't helping the local budget.

I think I'm probably conflicted on this issue because I can absolutely see the protectionist bent to it. But after watching the end result of several iterations of no protectionism in multiple supply chains, I would honestly ask myself if I like the end result. And in some cases I do, and in some cases I really would have rather payed more money for local expertise which is no longer affordable at a brick and mortar. I don't have an answer, I just think it's more complex than we're making it.

[Andara Bledin]

My guess is, combined they represent a few thousand jobs or in that vicinity. Tesla has no showroom in NC, doesn't plan on building one, and maybe 10 jobs at a single service center for the entire state.

Irrelevant. It sucks to be involved in a shrinking industry, but we shouldn't deny people the right to do business purely on the basis that it threatens the status quo.

By that thinking, the car itself should have been banned to protect the makers and resellers of buggies and buggy whips.

I'm also going to guess that this "model" avoids sales tax entirely because the point of sale is elsewhere. In that sense, it is payola but only in the since there's about 6+ million in sales that isn't helping the local budget.

Most people don't know and/or observe this, but even if you buy items from out of state, you are required to pay tax on them, provided your state collects sales tax. Sales tax is the responsibility of the purchaser, despite the fact that states mandate that the retailers participate in the collection of it.

For a purchase the size of a Tesla, it would be downright foolish for a buyer to fail to declare it and pay the relevant taxes.

[D_Yeti_Esquire]

Irrelevant.

Actually no. This is Musk not choosing to change his business model. It's not particularly any different that a construction company choosing not to work in a Unionized area. He could play the game, but he's not going to. He can sell all the Tesla's he likes but he's unwilling to franchise out the sales in NC. It's his choice and it's the choice of the legislature of NC. And yes, a democratically elected legislature is going to find jobs lost vs. jobs gained an extremely relevant set of statistics. You know... reality. You might not agree with it, but unless you are voting it's not your call.

Most people don't know and/or observe this, but even if you buy items from out of state, you are required to pay tax on them, provided your state collects sales tax. Sales tax is the responsibility of the purchaser, despite the fact that states mandate that the retailers participate in the collection of it.

For a purchase the size of a Tesla, it would be downright foolish for a buyer to fail to declare it and pay the relevant taxes.

Well I'm sure then it's certainly not a problem that a legislator would worry about. You know, except for what happens in reality which is most of them do. This is capitalist blue sky thinking. People by and large do what they can get away with either within the law or slightly outside of it. That really hasn't changed for as long as we've had the system. Some people will and some people won't. The odds of a state checking your sales tax records as a private individual? Well that's actually exceedingly low and it would depend on whether or not Tesla is turning over it's sales to the NC government which it has no reason to since it does not sell cars on NC soil. I suppose you could go by auto registrations. Still, it's not really something you see prosecuted fairly often and the abuse of that law tends to be pretty rampant.

[Kheldarson]

Ah, gotcha. That wasn't clear from your previous post.

However, the scenario is completely implausible. No businessman, however, incompetent, is going to give away his business to the government or let it collapse simply to "protect" their industry. Let it collapse while taking the money and run, sure. But that's not Rand's story. Rand's story is her fantasy about productive members of society withholding their knowledge, skill, and expertise to force a radical social change. It's a highly unlikely scenario, which is why I could never get through her novel or the movies. It's one thing to suspend disbelief, it's another to surrender common sense in terms of what really motivates people.

Well, in her defense, it was a fairly logical move by the guy who started the movement. He (*spoilers if anybody cares*) had his idea grabbed and sold from under him, preventing the betterment of business and humanity for the sake of keeping the status quo. Everything falls from that.

[Andara Bledin]

People by and large do what they can get away with either within the law or slightly outside of it. That really hasn't changed for as long as we've had the system.

Well, then, we'd better pass some more laws that people are going to go around rather than, you know, actually enforcing the laws already on the books.

This isn't about tax revenue or fair business practices: This is about supporting a middleman. A dealer is neither the buyer nor a seller. The appeal to tradition ("that's the way we've always done it") is never a good argument.

While most dealerships add value to the transaction in exchange for their fees, it should be up to the consumer to decide whether that value is worth the price, not the government. Considering that my fiance worked for a dealership for a while, I'm not sure I'd be willing to give one my business, regardless.

[Kheldarson]

Actually no. This is Musk not choosing to change his business model. It's not particularly any different that a construction company choosing not to work in a Unionized area. He could play the game, but he's not going to. He can sell all the Tesla's he likes but he's unwilling to franchise out the sales in NC. It's his choice and it's the choice of the legislature of NC. And yes, a democratically elected legislature is going to find jobs lost vs. jobs gained an extremely relevant set of statistics. You know... reality. You might not agree with it, but unless you are voting it's not your call.

But why should he? He has no need for a middle man currently. He has no desire for one. It does not fit in with his premise. He will either succeed or fail as the market demands. A car dealership is not a union. It's an agreement with certain companies to sell cars that the manufacturers don't want to take the time to sell themselves so they can focus on making cars.

Tesla says they can do both and is making a profit. Why would the legislature, which would get more money from a booming business that it could then sink into other job creation programs, want to waste that?

[D_Yeti_Esquire]

Well, then, we'd better pass some more laws that people are going to go around rather than, you know, actually enforcing the laws already on the books.

What in the wide, wide, world of false dichotomies is this? It's not either/or because you can absolutely do both. And they may be laws that people ignore, but you can't prosecute people for laws you don't have. You've essentially removed the entire point of governmental process if people ignoring the law is sufficient reason to not bother with it.

This isn't about tax revenue or fair business practices: This is about supporting a middleman. A dealer is neither the buyer nor a seller. The appeal to tradition ("that's the way we've always done it") is never a good argument.

The problem is, we have done it. We know what the endgame is for internet mail order. And like WalMart finding itself barred from certain townships, it's not up for me to decide what what Hermann Missouri chooses to do. But if they want to show up in Brooklyn? Yes, I can absolutely deny them that right through the government which brings me to...

While most dealerships add value to the transaction in exchange for their fees, it should be up to the consumer to decide whether that value is worth the price, not the government.

So the government is not elected by the consumers? I really wish I could find the where this idea comes from that a democratically elected government is NOT the damn fault of its own electorate and then club them over the head with the dead baby seal that passed away of a broken heart. Baby seals hate lack of responsibility.

Here's the economic reality. There are quite a few things that exist (an odd funfact is car insurance is one of them) where if something is allowed, through the natural course of the market it will dominate. Efficiency wins more often then not. That's why car insurance is legally enforced everywhere. The economic principal is that it will always be in the financial best interest of safe drivers to not buy it. After the prices readjust, it makes more sense for even more drivers to not own it until eventually only the worst drivers own it. However, because wrecks still happen on average to everyone, it becomes a societal ill as people continually go bankrupt or find themselves unable to rehab. So, PEOPLE as a whole essentially say, "we will deny you the right to your economic efficiency." That's absolutely an electorate's choice.

[D_Yeti_Esquire]

Tesla says they can do both and is making a profit. Why would the legislature, which would get more money from a booming business that it could then sink into other job creation programs, want to waste that?

Because NC is not seeing that money. It's not any deeper than that. Lets just pretend it costs the jobs of ... 50 people with an average salary of 50,000. That's a loss to the economy of NC of 2.5 million. Now lets say Tesla is taxed on 10,000,000 on sales. Rounding up on the tax rate to 5% that means an income of 500K. So NC loses 2 million and has to retrain and find jobs for 50 people.

As I said with my construction company/Union analogy. Musk doesn't have to change a thing. But NC isn't required to allow him the right to do business if they deem that it hurts the state economically. This is just a case of two sides being rationally correct. It is not North Carolina's business to make Tesla money.

[Andara Bledin]

And they may be laws that people ignore, but you can't prosecute people for laws you don't have.

They're laws that those charged with enforcing them ignore. Why should they be any more interested in enforcing yet another law that doesn't fix the underlying problem?

If the issue is collecting taxes, a new law requiring a dealership in the state won't really change anything, as those with the money can still have their shiny new car delivered somewhere more agreeable and transfer it in.

The problem is, we have done it. We know what the endgame is for internet mail order.

We do? What is that end game you speak of?

And like WalMart finding itself barred from certain townships, it's not up for me to decide what what Hermann Missouri chooses to do

And this has what, exactly, to do with the issue raised?

Honestly, I have no idea what the entire rest of your post is trying to say or what it has to do with denying Tesla the ability to sell their cars without planting a dealership within the state.

[s_stabeler]

Andara, what he is trying to say is that Yes, Tesla shouldn't have to sell cars through dealerships in North Carolina. However, North Carolina is under no obligation to allow them to sell cars without going through a dealership.

in short, North Carolina is allowed to tell Tesla that unless they do X, they can't do business in the state. It is a requirement imposed on every carmaker, and is thus fair.

[Andara Bledin]

I never said they couldn't.

I said that it was stupid, short-sighted, and counter-productive for them to do so. They're shoring up an outmoded business model to protect it against the natural change of the increased reach that technology allows for.

But I never said they couldn't do it. Just that they shouldn't.

[D_Yeti_Esquire]

We do? What is that end game you speak of?

That's in my first post.

If the issue is collecting taxes, a new law requiring a dealership in the state won't really change anything, as those with the money can still have their shiny new car delivered somewhere more agreeable and transfer it in.

I told you what may a contributing factor and you're making it my argument. It isn't. That chasing sales tax is an additional annoyance they may take on does not change the fact there is no positive economic impact we're discussing for NC.

And this has what, exactly, to do with the issue raised?

Honestly, I have no idea what the entire rest of your post is trying to say or what it has to do with denying Tesla the ability to sell their cars without planting a dealership within the state.

This does not shock me as a majority of your post indicates you do not believe the government has any business doing much of anything as it relates to how business operates. My contention is that it has every right not explicitly denied to it by the constitution to work for what will be in the economic best interest of the town/state/country. We, not being from NC have absolutely nothing to say about it. That is every areas right to self determination just as the supplier has the right to play by those rules, just as the potential customers angry about it have the right to move or advocate as necessary.

What I just gave you was the rationale as to why governments become involved in in the free market and how certain behaviors of the market are absolutely predictable. The insurance scenario was just an example and is just the lemon law (the economics phenomenon) that provides the basis for the actual government intervention we see in that market. Likewise, the effect of direct sales on an industry like retail is becoming fairly well known. At this point, groups of people are not required to allow it if they feel the unfair advantage will destroy the local market. And in a country where unemployment is getting better but is still high, not everyone's going to jump at efficiency when they know the cost will be domestic jobs.

For the record, I'm not sure whom I agree with on this issue (again in my first post.) But I do realize there are two very distinct sides to it and that I'm not sure what Tesla expects if they won't open a location on NC soil OR franchise one if they don't want the risk. They're choosing not to play ball. It's their right. And all that's an issue if and only if NC actually passes the law which they may not.