Protectionism Never Works – Very Long

Daimler Benz uses Tesla’s batteries and their powertrain for their electric cars. Toyota uses a Tesla motor. Consumer Reports rated the Tesla Model S higher than any car it ever reviewed. Automobile Magazine and Motor Trend named it the Car of the Year in 2013. It exceeds 200 miles on a charge, and getting better. The Tesla is here to stay.

Yet, Texas decided that consumers cannot buy it in their state, since Tesla does not subscribe to the dealer-based business model, where dealers, which Tesla considers unnecessary middlemen, simply mark up the product. So any Texan that wants a Tesla has to travel out of state to get one.

The ride-sharing company Uber provides a superior service and an alternative to taxicabs. When you request an Uber car on your smartphone, you see where the cars in your area are. It tells you when it will arrive. You see it coming toward you on a map. You also see a picture of the driver, his or her name, a picture of the car coming for you, the make and model, and the license plate number. When you step into into the car, which usually comes faster than advertised, you greet the driver by name, he already knows your name and has your number. If he had trouble finding you he already called you. You get your ride and when you are done, there is no worry about the price. It’s set by the system. There is no tip. You need no cash or credit card. You simply get out of the car and the fare shows up in your account seconds later. No flagging cabbies. No strangers behind plexiglass walls. No racket with prices. The prices are better than cabs.  No hassles with tips. Much safer for both the ride and the driver, since both are registered by the system. It’s a truly superior service.

Yet, in New York City, they are now going to “study the impact of Uber” before they will allow it to grow. Well, of course it’s going kick taxicab butt! The day of the taxicab racket is over. In New York City, you have to have a “Medallion” to drive a cab, which costs more than $1 million. With Uber, you just sign up.

Protectionist regulation, like in the example with Tesla and Uber, never work, at least not very long. The new service or product, if truly better, will blow the old established ones away.

Why is there Netflix? Why are we not streaming Blockbuster into our televisions?

Why aren’t we uploading our pictures to Why do Instagram and Flickr even exist?

Why aren’t we buying our books at and all our products at Why was Amazon able to rise?

Why is Google a verb? Why don’t we “Excite” or “Yahoo!” or “Alta Vista” or “Bing?”

Why don’t we buy our music at instead of at iTunes?

Because in every case, the old stodgy institutional company was not nimble enough to realize what was happening to them until it was too late, and the newcomers provided superior products.

Good luck, Texas, with your trying to keep Teslas out of the state and propping up your car dealers.

Good luck, New York, holding up the medallion-based taxicab culture.

Good luck, protectionists!