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Drew Bixby


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Tesla was blocked from selling cars in Texas. Is this a bad sign?

In the book Why Nations Fail, (http://whynationsfail.com/) the authors argue that inclusiveness is what made the US great and extractive-ness is what makes nations like Venezuela fail. Very generally, inclusiveness means everyone has an equal opportunity to compete and the laws support such an environment. In contrast, extractive-ness is an environment where rules, over-regulation, political favors, and financial weight give preference to certain groups over others.

This case with Tesla seems very "extractive"/non-iinclusive by their definition. Is this just isolated or is this a bad sign for the state of things in the US?

In case you are not aware, here is a brief synopsis of the Tesla case:


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    Jul 15 2013: Auto dealers have an effective lobby, so - as I understand it - many or most states, including Texas, have laws that prevent car manufacturers from selling their cars directly, as opposed to through a franchised or independent dealer. Tesla wanted to sell directly in violation of Texas laws, and was told - as I understand it - that they have to follow the same rules as other manufacturers. If that's right, what's the issue?
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      Jul 15 2013: The issue isn't the whether Tesla should have to follow the rules. The issue is whether the "rules" hinder competition and limit inclusivity. The Tesla case is evidence that those "rules" require extensive time, money, and resource. They favor the established players by creating a significant barrier to entry. The issue is whether that barrier to entry reduces the inclusivity, which is critical for long-term successful economies (according to the book Why Nations Fail).
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        Jul 16 2013: Thanks for the clarification. I didn't get all that from your brief set-up. The problem was that Tesla was not necessarily "blocked from selling cars" (they could apparently sell through a franchise), but that getting permission to sell directly from the manufacturer was time-consuming, and their application didn't make it out of committee in the Texas legislature in time to be acted on this year (or next). It is, of course, a common thing that complying with commercial rules or legislative requirements is difficult, expensive, and time-consuming, and always favor the big actors over the little guy. I frankly don't know of a place where this does not hold true, where "everyone has an equal opportunity to compete." Minor parties in politics, for example. It would be nice ...

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