Capitol Hall Report – May 4, 2017 – Crony Capitalism Has no Place in a Conservative State like Texas

Crony Capitalism Has no Place in a Conservative State like Texas

Crony capitalism has no place in a conservative state like Texas. There is no question that a key factor in Texas’ economic success has been our “free market” policies. Open competition, with minimal government interference, is the engine which drives companies to produce better products at lower prices. The benefactor of free markets is the consumer. Where the market is controlled by government regulations, consumers lose, but with free markets the consumer wins.

Unfortunately, Texans are being denied the benefit of the free markets by draconian state laws that deny the public a free market place for buy/sell new automobiles. Currently Texas law dictates who, when, where, and how an automobile can be sold in Texas. Just to name a few of the restrictions: 1).Texas law prohibits the sale of a car on Sunday; 2). Consumers cannot purchase a new automobile from a distributor; and 3). A manufacture cannot sell their automobile in a store they own. There are many more laws which were carefully crafted by the automobile distributors and dealers to restrict competition; and when competition is restricted the big loser is the consumer.

It is  ridiculous for Texas to be one of only four states where consumers are prohibited from buying new cars directly from a vehicle manufacturer. Current Texas law limits consumer choices by forcing new automobile purchases to be through government protected dealers.

A special “carve-out” bill for an influential billionaire is now being fast-tracked through the Texas Legislature.  Putting lipstick on a crony capitalism bill, like this one, will not turn it into a free market bill. A bill that just carves out a niche for one billionaire in a tightly regulated market is not a free market bill. It is crony capitalism at its worst. The argument that it makes the market a little ‘freer’ is hollow at best.

I believe Texas car buyers deserve the same choices and conveniences that car buyers in nearly every other state already enjoy. That’s why I authored Senate Bill 2093, the direct sales bill which gives Texans the freedom to choose for themselves how and where they buy a new car, giving them the freedom to comparison-shop in a truly free market.

By passing this direct sales legislation (SB2093), Texas will eliminate the need to give a single billionaire a special carve-out exemption. Texans deserve a truly free market.  Carve-outs are not the kind of conservative legislation Texas should be known for. The legislature should level the playing field by giving Texas consumers the purchasing freedom they currently enjoy in other markets.

The laws granting franchised dealers their legal monopoly on new car sales in this state were created in the 1930s. Consumer conveniences facilitated by technology and a broad variety of commercial enterprises would have been unimaginable to the legislators in the 1930s. It’s simply untenable to think they intended to create a permanent monopoly, locking Texas consumers into the antiquated franchised dealer model for all time.

It’s time for Texas to pass direct sales legislation (SB 2093) that will move our auto marketplace into the 21st century, not because a billionaire is asking for it, but because it’s the right thing to do for our economy, our job market, and Texas consumers.