Friday, March 14, 2014

Murray Sabrin Attacks Crony Capitalism in New Jersey

The Murray Sabrin campaign has released the following statement:

"New Jersey is using crony capitalism to stack the deck against Tesla Motors by rigging the state's car-sales rules to prevent the luxury electric vehicle manufacturer from doing business in the Garden State," said U.S. SenateCandidate Murray Sabrin. But that's not the half of it since Tesla's very existence is dependent upon federal and state crony-capital largesse.

On Tuesday, New Jersey's motor vehicle commission unanimously enacted a regulation restricting the Palo Alto, Calif.-based Tesla from selling its product directly to consumers through company-owned retail outlets. Instead, it will be required to market them exclusively through franchised dealers.

"The exact purposes of the requirement remains murky at best, but suffice to say it's a boon to every new car and truck dealer in the state since it means the government has insulated them from any innovation in how their products are marketed and sold and protects them from direct-to-consumer competition," said Sabrin.

In other words, Tesla is being blocked by a classic barrier to entry common to many industries from car dealers to hair braiders to casket sellers to interior decorators, the purpose of which isn't to protect consumers from the marketplace abuses, but rather to protect certain types of abuses from competition from the marketplace.

It's a form of crony capitalism, which, for Tesla, is where the wicket gets sticky because the company's hands are by no means clean on that score.

As one commentator said of Tesla:

"It is a company built on loan guarantees, sustained on subsidies and profitable only through a system of credits designed to benefit electric car manufacturers at the expense of their competitors. Take away all of the recent hype surrounding Tesla's recent loan repayment, and you are left with a company built to cash in on the privilege and favors from politicians."

Without government help, support, subsidies and dubious tax-avoidance schemes, Tesla wouldn't exist. As part of the so-called "green energy" effort backed heavily by the Obama administration and Senate Democrats, including Sen. Cory Booker, junk-grade investments in dubious companies all of a sudden became gold-medal candidates for government loans and loan guarantees.  That's the capitalism part.

That many of the companies were managed by people with close ties to people in the Obama administration didn't hurt either. That's the crony part.

"These are the people and the thinking that brought us Solyndra. But it doesn't stop with the energy industry," said Sabrin. "Any business or industry that creates an unholy alliance with government to give it special privileges and considerations not available to its competitors or businesses generally engages in it."

Agriculture offers many examples, with Sugar maybe at the top of the list - anything to protect domestic sugar refiners. When the government hands out free money, pretty much no-strings-attached it's not surprising that the lines to take it are a mile long.

The federal government spent $3.5 trillion in 2013. It received in tax receipts $2.8 trillion in 2013. The current national debt is $17.5 trillion.

With figures like that, no wonder cronies crawl the halls of Congress and schmooze at White House parties. After all, they know whatWillie Sutton knew when he was asked why he robbed banks: "Because that's where the money is."

"When the government rigs the market it's like every other crooked game: it favors the cheaters, scams the honest player and convinces the honest player that the easiest way to get ahead is to become a cheater," said Sabrin.

"It's the government picking winners and losers rather than letting the market place decide," said Sabrin.  "It's a racket."

1 comment:

  1. Nothing against Murray, but why call it "crony capitalism". What does "rigging the state's car-sales rules to prevent the luxury electric vehicle manufacturer from doing business in the Garden State" have to do with capitalism? Sounds a lot more like state-imposed violence than voluntary cooperation. Crony fascism is more like it.