Banning sales to protect sales

[s_stabeler]

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.

They are shoring up an outmoded business model because it provides them with more revenue than the new one. Or is it short-sighted to try to protect their tax base?

[Andara Bledin]

They are shoring up an outmoded business model because it provides them with more revenue than the new one. Or is it short-sighted to try to protect their tax base?

It is when it's unsustainable.

Sure, it might work for them in the short-term, but it's costing them money now, and it will cost more later when it all collapses because the rest of the world has moved on.

It's especially short-sighted when it's not going to stop the activity they want to stop in the first place and merely move it to another state.

[D_Yeti_Esquire]

It's short sighted if they see where they can channel those people into a newer industry based in NC. That I would absolutely agree with. I think the question is, do they have that industry or will they just have a bunch of systemically unemployed.

[Andara Bledin]

Those people will be unemployed whether they protect an outmoded model or not. It's merely a matter of time and degree. The longer they fight against it, the more severe the reaction will eventually be.

It would be in everybody's best interests to allow the market to change gradually, allowing people to move to new industries as they are inclined rather than being left with a sudden change at the end of the cycle.

I do have to wonder, however, who, precisely, is going to be unemployable because a dealership closes. Who is it they're really protecting?

[D_Yeti_Esquire]

I do have to wonder, however, who, precisely, is going to be unemployable because a dealership closes. Who is it they're really protecting?

The problem is we don't really have manufacturing jobs anymore and it's not just car sales jobs that went away. It's a lot of sales jobs that disappeared too. So the ability to just find something quickly these people are trained for isn't there. Most of what is in the American economy tends to be skilled and service based. And often in those cases, simply retraining leaves you in the relatively screwed category of "unexperienced."

Systemically unemployable doesn't mean unable to work. It means through shifting in the economy they find themselves out of work and will probably take longer to rejoin the workforce. And in that process, quite often there's a predictable number that go bankrupt and the state has to retrain them and/or pay them welfare.

[Andara Bledin]

So, we should keep training people for jobs that are only not obsolete because of a governmental mandate? How is that an improvement to letting the jobs shift over time, as they will in any industry?

There is no long-term advantage to protecting the auto-dealership industry. There will be a short term benefit to the owners, and perhaps some of the workers, but over the long-term, those same workers will be harmed when the industry has changed enough that the protection ceases to be popular and dries up overnight as opposed to over the course of years.

[Nekojin]

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.

This is an outrageously hand-wavy argument, made for no other reason than to prop up your own position. The largest dealership in the world (located here in California!) doesn't have 50 people on staff (around 30, IIRC). The dealership that I worked for certainly didn't - we had about 20 people, between sales staff, management, mechanical, and financial. And that was a big-time Chrysler dealership, not a luxury dealership (which Tesla, starting at $60k for the low-end model, is). I'd estimate no more than 15 people on staff at such a dealership - that is, unless they contracted out to an established auto dealership, and added Teslas to their offerings, in which case, the number of additional employees would be... let's see here... zero.

Then there's the other end of your argument, the amount of sales Tesla makes. $10m is a laughably low figure. Teslas range from $60k to around 120k (the exact price on the Model X Signature isn't publicly available). If they only sold the Model S (their "low-end" car), it would take a mere 167 Model S's to reach the 10 million you're estimating. Any dealership that didn't sell at least a car a day on average would be out of business in short order. So your figure is at least 50% too low, and probably much more.

And that's to say nothing of the disingenuous nature of comparing the total income of the employees to the tax collected on the sales of the car - the entire money spent on the car is circulated in the economy, not just the tax.

So let's work with the revised figures here. Instead of 50 employees at 50k, we're looking at zero to 15 jobs. We'll go with the 15 figure, just to play it safe. That's 750k per annum. And for the car sales, we're looking at ~75k x 360 days, which is 27 million dollars.

Or we can compare the tax benefits to the state. Those employees making 50k in North Carolina pay 7% in tax, or $52,500. The taxes on 27 million at your quoted 5% comes to 1.35 million.

Which one benefits the state and the people of the state more, again?

[D_Yeti_Esquire]

This is an outrageously hand-wavy argument, made for no other reason than to prop up your own position.

Outrageously? I'm not sure if I'm head-scratching more at the use of that word in this context (oh who am I kidding, I love hyperbole!) or the fact you turned a scenario meant to illustrate how numbers would have to be put into it which could in fact build a negative case against allowing Tesla to operate into something worth debunking.

So while going back and forth could be fun over the exact numbers (the article puts Tesla at only 80 customers so 167 sales would be a stretch) would be fun, I'm not sure I'm willing to invest that kind of time since you actually did get my point and are willing to put numbers to the problem. How would a legislator potentially look at this issue? What is in it for NC? The exact numbers would be useful to them, my point is THEY are looking at it.

And that's to say nothing of the disingenuous nature of comparing the total income of the employees to the tax collected on the sales of the car - the entire money spent on the car is circulated in the economy, not just the tax.

It's really not. That's just economics except I've made the macro entity North Carolina and not the United States since they are the ones making the decision. C+I+G+(X-M) [Consumption+Investment+Government spending+ (Exports-Imports)] for North Carolina WOULD count the jobs in NC in C or I. It would count any sales tax from either scenario in G. But the Teslas being purchased but not produced in NC would count as M and would get pulled out of the GDP of NC. You just can't count them unless those Teslas are producing more jobs OR being produced domestically (in which case they're creating jobs obviously).

I'm not sure why you think the argument is about tax base. The state making money (GDP) and the state generating and spending taxes (G) are two different things.

[mikoyan29]

These people are the same ilk that basically told GM and Chrysler to go fuck themselves. So I say the same to them. To me losing GM and Chrysler would have sent serious ripples through the economy because they would have dragged a couple of their suppliers with them. Since many auto suppliers supply other companies, it might have sent Ford over the edge too. This would leave us with no US Auto Industry. The people that build the cars have been told to adapt over the years...why can't we do the same for the people that sell them?

[Panacea]

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.

Look, I live in North Carolina. Pay to play is a big part of the political system here. The car dealers don't want the dealer system to go away. This is about protecting car dealers, not the statewide economy. They aren't afraid of Tesla. They're afraid Honda, or GM might like the model and decide to implement it if consumers are attracted by the 3-4 grand savings from skipping the middle man. That savings is magnified when you consider that most people have to finance their vehicles.

The problem is we don't really have manufacturing jobs anymore and it's not just car sales jobs that went away.

That's not a valid reason to keep an employment system that systematically screws over the public when it comes to buying cars. Industries change all the time; they die all the time. Propping up a failing model is never the right answer.