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Does the U.S. Really Operate as a Freemarket System?

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March 18, 2014 – Comments (7) | RELATED TICKERS: TSLA

Imagine inventing a product or service only to have it removed or reduced in the marketplace by regulations and/or the government.  How would you feel?

That seems to be the trend the past couple of weeks in the transportation/automotive industry.  A couple of weeks ago, Tesla faced backlash in New Jersey, and more recently, in New York.  Now Ohio is planning a proposal to block Tesla from setting up direct-sales stores. 

The reason for this hate against Tesla according to these states?  Telsa undercuts traditional auto dealerships.  What?!

This really goes at the core of a free market system.  Going back to the beginning of this post, imagine creating a new product.  You are able to make this product to meet customer’s demands in your own place (house, rented building, etc.) and you are making a ton of money.  You are making so much money that you are a threat to other similar companies. 

Now you get a notice that you are not allowed to sell your product directly.   You need to instead have a middleman sell it because that is what is “fair”.

It is ridiculous.

On the other side of the U.S., there is another travesty in the making.  Seattle City Council has voted against companies like Lyft, and Sidecar on how many cars they can have on the road.  These companies provide customers an alternative to taxi’s with ride-sharing services.  Some of them implement smartphone apps making the whole business more streamlined.

The taxi business doesn’t like this and now has helped limit the number of cars like Sidecar can have on the road at any one time.

The free market system of the U.S. at its finest.

Discuss.

7 Comments – Post Your Own

#1) On March 18, 2014 at 4:21 PM, griderX (96.13) wrote:

The National Automobile Dealers Association (NADA) is getting a picture of the future and they don't like it...all they see is their demise!  The system is broken and they are trying everything to maintain the status-quo.  

Their days are numbered! 

 

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#2) On March 18, 2014 at 5:31 PM, mikecart1 (98.87) wrote:

griderX,

I agree.  When you look at the big picture, you also wonder who controls what in this country.  How do some of these car companies continue to release these 1 minute+ commercials during the Super Bowl and how can they afford to pay the actors that endorse their products.  Money is coming from somewhere.

In the end, it comes down to money I think.  GM, Ford, etc. don't like what Tesla is doing or what it represents.  The same goes for the taxi companies on the West Coast.

They say they want to encourage small business, but when they businesses get too big and threaten big business, the rules all change.

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#3) On March 18, 2014 at 8:15 PM, awallejr (81.55) wrote:

I live in NYC and do a lot of driving, don't get me going about the recent expansion of livery and "green" cabs.  They have made traffic a nightmare for me and they love to cross 2 lanes just to cut me off.  I am such a different person when I get into my car.  When I drive you are all the enemy to me.

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#4) On March 19, 2014 at 7:48 AM, mikecart1 (98.87) wrote:

awallejr,

Hahah.  They did mention on Bloomberg that it is a hypocrisy among taxi drivers.  They want things their way but when they operate as a company, they speed, break traffic rules, and do whatever they want.  If independent car sharing companies did the same, those same taxi companies would probably call the police.

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#5) On March 19, 2014 at 3:40 PM, JaysRage (89.42) wrote:

The automobile dealer cartel is a strong one.   It will be one of the last to go, but I feel strongly that all middle-man industries will eventually be eliminated.   If you consider what has happened with travel agencies.....I believe that is the future of all of these industries.    Real estate is holding on due to the MLS, but not for long.   More and more independent databases are coming together with real estate information and it's simply a matter of time.   I do feel that auto sales will be one of the last to go, but I do think it will happen.   The inertia will eventually be too strong. 

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#6) On March 19, 2014 at 4:04 PM, mikecart1 (98.87) wrote:

JaysRage,

As a result, there will be fewer jobs as machines have done to assembly lines and factories.  But I'm not sure if this is a good or bad thing long-term.  Yeah it makes the unemployment number look bad - at least temporarily.  However, if society continues to advance, there may be newer jobs that are created that are not even thought about today.

Similarly to how no one thought a webmaster would be needed 100 years ago.

 

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#7) On March 19, 2014 at 5:24 PM, JaysRage (89.42) wrote:

mikecart1 -- It's definitely a job mismatch situation.   We aren't preparing ourselves for the jobs that are there and the jobs that will be there and the jobs that should be there.   I think the entire economic and political and education system has been very slow to catch up with the technology revolution that is going on.   There are jobs and opportunities all over the place within the technology, technology sales, digital marketing, data, and logistics spaces and that isn't going to change any time soon.    

The focus continues to be on minimum wage and manufacturing jobs, when we're in the middle of one of the biggest technology advances that we've seen in my lifetime.   It just makes me shake my head.     

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