Like a lot of Republicans, New Jersey Gov. Chris Christie likes to talk about how the government should get out of the way of the free market. In a speech last week in Washington, D.C., he railed against President Obama’s economic interventions. “We don’t have an income inequality problem, we have an opportunity problem in this country because government's trying to control the free market," he said. And he urged his fellow conservatives to shout their opposition to government regulations from the rooftops. “We need to talk about the fact that we’re for a free-market society that allows your effort and your ingenuity to determine your success, not the cold, hard hand of government determining winners and losers.”
Then Christie came back to New Jersey and signed off on a cold, hard government regulation that blocks Tesla from selling its cars in the state.
The rule change prohibits automakers from selling directly to consumers, as Tesla does. Instead, it requires them to go through franchised, third-party dealerships, as the big, traditional car companies do. In other words, it requires that the middle-men get their cut. The Christie Administration made the move unilaterally, via the New Jersey Motor Vehicle Commission. It was urged on by lobbyists for the state’s existing car dealerships, which fear the competition. The upshot is that Tesla will be forced to stop selling cars at its two existing dealerships in the state, and drop its plans to build more. It’s unclear what will happen to the employees of those dealerships.
New Jersey is the third state to effectively block Tesla by banning automakers from selling their cars directly. The other two are Texas and Arizona.
In a blog post, Tesla blasted the Christie administration for enacting the rule change administratively, rather than waiting for the legislature to resolve the ambiguity in existing law. A spokesman for Christie, on the other hand, told me the governor views the new rule not as a policy change so much as a clarification of the status quo for car sales in the state. He added that the governor might be open to approving a law overturning that ruling, but noted that the legislature has not presented any such bill so far.
Tesla, needless to say, is not thrilled. The Christie administration and its bureaucrats, the electric-car company alleged, are “thwarting the Legislature and going beyond their authority to implement the state’s laws at the behest of a special interest group looking to protect its monopoly at the expense of New Jersey consumers. This is an affront to the very concept of a free market.”
The auto industry, it's worth noting, is already something less than free, with both Tesla and traditional U.S. automakers benefiting from various forms of government largesse. That said, blocking Tesla from competing with existing car dealerships seems like a particularly blatant form of "picking winners and losers."
If there’s a silver lining for Tesla, it’s that when bills banning direct sales do make it to state legislatures, they tend to get defeated. It turns out the public likes being able to buy cars from whomever it wants, rather than having its choices constrained by Republican governors and their bureaucrats.
Previously in Slate:
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