February 23, 2015

Why Cities Are Bad at Bargaining With Sports Teams

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Don’t look now, but there’s a land rush for the Los Angeles pro football market. Saint Louisans will already be familiar with Stan Kroenke’s plan to move the Rams to a stadium in Inglewood. But now the San Diego Chargers and Oakland Raiders, unhappy that their localities are not coughing up public funds for new stadiums, are also publicizing a plan to move to L.A.

Three teams will not be playing in the Los Angeles metropolitan area, but it allows all three franchises to simultaneously frighten local politicians into spending public dollars on a stadium. From an owner like Stan Kroenke’s point of view, it’s a win-win scenario. If the NFL allows him to move the Rams, his team will instantly gain $1.5 to $2.5 billion in value. And if he can’t (or never wanted to), Missouri has already planned to fund half the costs of a new stadium without any negotiation at all.

For Missourians, local officials have essentially locked residents into two possibilities: 1) approve around $400 million in public dollars for a new stadium, or 2) lose the Rams. Of course, the Rams might move regardless and Kroenke might demand more than $400 million to stay, but that’s what comes from committing the state to half the costs as the opening offer.

This situation is a perfect example of how poorly local officials fare when they bargain for taxpayers against billionaire-owned sports franchises. Where Stan Kroenke can credibly appear ready to leave the Saint Louis market without firm public subsidies, local officials declare how necessary the Rams are to the state. While Kroenke can strengthen his position and fail to negotiate, local officials need to be seen as trying their hardest to make sure Saint Louis is an “NFL city,” even when that means negotiating against themselves.

In essence, Stan Kroenke can look at this like a business negotiation. But local politicians are not spending their own money and have to be concerned about portraying an image of effectiveness and bolstering civic pride, making them poor bargaining agents for regional economies.

Even when there is no threat of a team leaving a lucrative market, pro teams can still reap public subsidies by threatening to move to different municipalities in the metro area. While it might not hurt the Chicago regional economy one bit if the Bears played in Rosemont (a nearby suburb), it would hurt the city’s tax revenue as recreation dollars flow to a different part of the region. Whether the team’s option is moving across the country or the county, pro franchises almost always have the best alternative to a negotiated agreement vis-à-vis local governments.

The best bargaining tool local officials can have is a skeptical voter base that understands that pro franchises do not create economic development or urban regeneration. Residents can vote against public dollars for entertainment venues. That constrains the local officials and sends a clear message to the NFL that Saint Louis is a great sports market, not a great mark.

February 22, 2015

Are Virtual Charter Schools Right for Missouri?

photo 3In 1999, 11 charter schools opened in Saint Louis and Kansas City. That same year, the Disney Channel released the millennial cult-classic Zenon: Girl of the 21st Century. “Grounded” on earth, Zenon communicates with her interstellar best friend with a handheld video device (what foresight!). While the technology in 2015 mirrors what Disney imagined, charter education in Missouri is still “so ’90s.”

This may be because virtual charter schools are not yet allowed to operate in the Show-Me State. Legislation has been introduced this session that attempts to expand virtual charter education opportunities. Online charters already exist in more than 30 states.

Virtual charter schools could provide an alternative for public school students and homeschool families outside of Saint Louis and Kansas City. The creation of a virtual school network also could create new employment opportunities for educators.

Traditional brick and mortar education may work for most students, but for children who require an alternate learning environment, 21st-century charter schools may be the answer.

 

February 21, 2015

Ditching City Hall: A Kansas City Development Story

Kansas City has a low population density for a city its size. How low? According to the Census Bureau, Kansas City had a population of around 2 million in 2010, making it the 29th largest city in the United States by metro population. However, in terms of population density, Kansas City had roughly 2,326 residents per square mile, making it the 129th densest city in the country, just ahead of Poughkeepsie, N.Y. (population 670,000).

In terms of population distribution, only around 216,000 residents live less than five miles from city hall, whereas the average city of Kansas City’s metro population has close to 400,000 residents living within the first five miles. Cincinnati, the 27th largest city by total metro population, has more than double the total population density of Kansas City within the first two miles outside of city hall, with just over 316,000 residents living within five miles of its city hall.

kc_dens

 

Kansas City’s low population near its city hall results in low population density at the city core. Similar to Saint Louis, Kansas City’s average population density is lower within two miles of its city hall than it is slightly further away from downtown, as the map below demonstrates:

map_kc_dens

Also like Saint Louis, the story of Kansas City’s development is actually one of decreasing density. Aside from the area right around city hall, Kansas City’s core (within eight miles of city hall) lost both population and population density on average between 2000 to 2010. Steady population growth only accrued in the city center and in low-density areas further than eight miles from city hall.

Map_kc_denchange

Many individual areas close to downtown are doing well. However, much like Saint Louis, those gains are outweighed by losses in other areas equidistant from Kansas City’s downtown. Furthermore, they are decreasing in precisely the areas where residents most rely on transit.

These types of population movements are not exclusive to Kansas City. City governments (especially Kansas City) often spend hundreds of millions adding amenities and subsidizing development downtown. And while the most visible parts of the city show modest improvement, structural problems in the city’s competitiveness and broad economic forces continue to erode population in traditionally poor, working-class, and middle-class neighborhoods.

Whether city hall can alter these trends is debatable. What is not contested is that, despite some increased density right downtown, Kansas City has a comparatively low population density that shows little evidence of rapid, or for that matter any, increase. When it comes to providing public services that depend on high densities to function efficiently, like transit, if the city plans under the pretense that it is as dense and centralized as, say, Cincinnati, it may end up providing worse service to the vast majority of residents, even as it favors certain sections of the city.

February 20, 2015

Shock and Audit: St. Joseph School District Out Tens of Millions Because of Staff “Stipends”

Missouri has seen its share of boondoggles. To name a few in recent years, Moberly was taken in on a $39 million sucralose scam that downgraded the city’s credit rating, left bondholders hanging, and resulted in jail time for one of the masterminds. In Kansas City, officials had to settle with a developer for millions over the failed Citadel redevelopment project, which saw criminal prosecutions of its own.

Now enters the St. Joseph School District. As reported by the St. Joseph News-Press:

“We went back about eight years and found there was over $25 million worth of stipends either not approved, unauthorized or improper. That $25 million worth of stipends is what we found to be problematic,” [State Auditor Tom Schweich] told the crowd inside the Oak Grove Elementary School commons area.

Since there was not full documentation going back further than 2001, Mr. Schweich added, that number could be in excess of $40 million paid out in stipends over that period.

“That is a startling amount of money,” he said, followed by a collective groan from the audience.

“Startling” is an understatement. The questionable stipends account for, on average, over $3 million each of the last eight years that could have gone toward substantive and proper investments in the education of St. Joseph’s children. Instead, according to the News-Press, it appears the money went to a wide array of cronyistic efforts,

including $45 for a Sam’s Club membership for [Superintendent Dr. Fred] Czerwonka, $1,500 for a painting for [Chief Operating Officer Rick] Hartigan’s office and $7,650 in free Internet service for 16 individuals, including an individual the district claimed they did not know.

In the auditor’s words, the stipends operated much like a “slush fund.” Throw in $3.4 million in overpayments from the state to the district because of inaccurate reporting and a swath of closed district meetings that should have been open to the public, and you have the makings of a full-blown scandal in northwest Missouri. It remains to be seen whether criminal action will be taken in the matter, but that seems to be very much on the table at this point.

Frequent readers of this blog know about our positions on transparency (for) and cronyism (against), so I won’t belabor those policy prescriptions in light of the district’s failures. The sheer magnitude of the district’s blackbox behavior is a better argument for vigilance and reform of state and local government than my words alone could offer.

It also goes without saying (though I’ll say it anyway) that “per pupil spending” remains a meaningless statistic, a fact emphasized here. How much you spend “on” a student doesn’t matter if the line items are $1,500 on administrators’ art, rather than $1,500 on the art department.

And yes, there will be many important story lines that will be worth talking about as the district’s actions are fully vetted, but one story line that has to remain front and center is how shameful it is that it took more than a decade for these problems to fully come to light—and the risk that St. Joseph’s scandal is just the canary in the coal mine statewide. That this school district was insulated so long from critical oversight makes me wonder whether similar behaviors might be taking place in one of the other 519 districts (!) in the state . . . and we simply don’t know it yet.

More to the point: If Missouri’s school districts are going to tell the state they have funding problems, then it’s fair for the state and the taxpayers to take a fresh look at how each district spends, or misspends, the state’s tax dollars. That is especially true in light of St. Joseph’s present troubles.

Education funding should be for the children, not for the districts, and it’s time district books were cracked open and thoroughly reviewed. For the state to deliver a quality education for our kids, it needs to hold every district accountable not only to stop problems like this from happening again, but also to ensure that they’re still not happening someplace else.

The Future of Education in Kansas City

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On Monday, I’ll be participating in a panel discussion on the Future of Education in Kansas City. This event is co-sponsored by the Federalist Society and the Show-Me Institute. Check out the details below and then come check out the event on Monday night.

Should your ZIP code determine your educational choices? Do charter schools improve academic outcomes? What do local public schools need to succeed? Should tax credit scholarships be used to help students attend private schools? Should residents in struggling public schools get to transfer to neighboring districts?

These topics and more will be explored as our panelists debate the future of education in and around Kansas City, Mo.

The panel will feature the following influencers in the local education landscape:

  • James Shuls, Ph.D., distinguished fellow, Show-Me Institute, and Assistant Professor at University of Missouri–St. Louis
  • Dr. Amy Hartsfield, member-at-large, School Board, Kansas City Public Schools
  • Andrea Flinders, president, Kansas City Federation of Teachers, Local 691
  • Douglas Thaman, Ed.D., executive director, Missouri Charter Public School Association
  • John Murphy, public policy committee chair of the Missouri Catholic Conference

Admission is FREE, but please register so we can ensure there is enough seating. The event is scheduled from 5:30 p.m. to 7:30 p.m. on Feb. 23, 2015, at the Kansas City Club, 918 Baltimore Ave., Kansas City, MO 64105.

Teachers’ Union Gets Collective Bargaining Wrong

IMG_5945_Last week someone forwarded me this pamphlet from the Missouri National Education Association (MNEA) on collective bargaining for teachers. It’s a well-put-together brochure that explains the MNEA’s position on a pretty complicated issue. While I applaud the union for producing a primer on an area of public policy I think most people do not know a whole lot about, I take issue with a few of the points they make.

1. The MNEA’s pamphlet argues that the only way for teachers to successfully achieve an enforceable labor agreement is when one union acts as the exclusive representative of all the teachers subject to the labor agreement. This requirement is nowhere to be found in the constitution. It was not mentioned by the Missouri Supreme Court when it created collective bargaining rights for teachers in 2007. And the Missouri Supreme Court failed to mention the necessity of exclusive representation in any further decisions.

Furthermore, there are school districts in Missouri, such as Hillsboro and Warren (see below), where the school district has a labor agreement with multiple teachers’ unions. The fact that both the Missouri State Teachers Association and the MNEA already represent teachers in multiple multi-party labor agreements proves that a single exclusive representative is unnecessary.

2. The MNEA’s pamphlet suggests that collective bargaining through an exclusive representative is a democratic process that results in fair representation for all teachers subject to the labor agreement. Ordinarily, once a government union obtains the privilege of acting as the exclusive representative for employees, it never has to run for re-election. There’s hardly anything democratic about a representative winning a lifetime appointment after a one-time election.

Worse still, when one union wins the privilege to act as the exclusive representative for a group of government employees, other employee groups often lose out. We’ve seen this with both teachers and police.

3. The pamphlet fails to mention the history of teacher collective bargaining in Missouri. Instead, it simply alludes to a couple of Missouri Supreme Court cases in the late 2000s. In fact, the Missouri Supreme Court imposed collective bargaining on teachers in those cases. Prior to 2007, the courts had long held that the Missouri Constitution did not give government unions the right to collectively bargain with the government. Indeed, when collective bargaining language was added to the Missouri Constitution, collective bargaining with the government was seen as impossible and potentially unconstitutional.

Teachers’ unions, like the MNEA, may now collectively bargain with the government. However, this is not some long-established right. The court created teacher collective bargaining law only eight years ago. Whether you consider this an activist decision or the product of a living constitution, the law is still in flux. There is no reason for the MNEA to assume that principles used in the private sector, such as exclusive representation, have a necessary place in collective bargaining with the government.

February 19, 2015

Change On the Way for Rideshare Regulation in Missouri?

The Mardi Gras celebrations that took place last week in Soulard were met with extremely cold weather, with temperatures dropping into the teens after nightfall. I was driving through the area later that night, directly behind an empty cab. As we neared an intersection, a woman came forward to hail the cab. It drove right by and left her in the cold.

Maybe that cab driver had someplace to go or was simply done driving that day. I do not know. But what I do know is that woman could have used a convenient, inexpensive ride home. The same is true of the 60 drivers who were cited with DWIs before 8 p.m. Unfortunately, the supply of taxis in Saint Louis is strictly controlled by a regulatory body that thinks it knows how many cabs Saint Louis should have and how those cabs should serve customers.
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That body is known as the St. Louis Metropolitan Taxicab Commission (MTC), and they have decided that new ridesharing services like Uber and Lyft should not be able to provide needed transportation to Saint Louisans on nights like February 14. Instead, they tightly control the supply and business practices of for-hire vehicles, as we have detailed in previous blog posts. That includes UberBlack (Uber’s expensive black car service), which can only partner with a limited supply of MTC-licensed premium sedans.

But change may be in the air for Missouri cities, including Saint Louis. Other cities, like Kansas City and Columbia, have or are in the process of changing their taxi codes to allow ridesharing. However, Columbia’s changes ask for insurance that is reportedly 20 times the dollar amount they require for cabs, perhaps to make Uber too expensive to operate.

At the state level, two bills in the Missouri Legislature, SB 351 and HR 792, would set a statewide standard for the regulation of Uber, Lyft, and other ridesharing companies (officially transportation network companies) given certain license payments and insurance coverage. If these state standards pass, it would be a dagger to the heart of the MTC, as it would preclude that body from regulating ridesharing companies in any way. The MTC’s significant barriers to entry and management of ridesharing company driver supply would be eliminated. That would open the door for cheaper, more plentiful transportation in Saint Louis.

In the many states where ridesharing companies are allowed to operate, thousands, and sometimes tens of thousands, of for-hire vehicle drivers have entered the market. Even during peak hours, they pick up passengers quickly and offer the ease of app-based payment, all for prices competitive with regular cabs.

Just think, next time it might be you on the street corner in the freezing cold after a big event. Would you want to rely on a few passing cabs to decide whether your fare was worth the trouble? Or would you rather rely on a competitive market that includes cheap, responsive ridesharing services at the touch of a button? Not a hard choice, unless of course you’re a taxi regulator.

Transparency Would Shine Some Light

The essence of a well-functioning democracy includes transparency and a right to information. When fire protection boards, such as the O’Fallon Fire Protection District, make crucial decisions in closed-door meetings, they are violating a critical tenet of democracy.

file0001605429169Former Fire Chief Mike Ballmann, who claims that the firefighters union pressured the board to fire him, believes that the union has overstepped its role in the affairs of the fire district. When asked about union involvement in the management of the fire district, Ballmann said that the Fire Protection District Board of Directors was “packed with union people so the shop gets what it wants without any grief.” With the union’s heavy involvement in deciding who will run for the board positions, has the government union overstepped its role?

Since the district is funded by taxpayers, its business should be conducted with the interest of the taxpayer in mind. However, when board meetings are closed, interested taxpayers do not get to see how government unions involve themselves in district affairs. Furthermore, according to Ballmann, there are instances when the union shop steward is invited into the closed board meeting, which not even fire chiefs are allowed to attend. The problem isn’t the existence of a union, but rather their conspicuous control over the fire protection district.

The obvious and sensible solution is for fire districts like O’Fallon to follow in the footsteps of the Monarch Fire Protection District and initiate an open collective bargaining process. This would make sure that any changes made to district operations, union contracts, and decisions to hire or fire employees are free from ambiguity. However, despite efforts to gain the O’Fallon Fire Protection District Board’s insight on this issue, the inner workings of the district seem as ambiguous as ever.

Taxpayers are aware of the great importance firefighters play in protecting their community; their concern, rather, lies in the fact that their fire district is lacking representative leadership and sufficient oversight. Transparency is essential to guarantee that the taxpayer interests are being met. Once open collective bargaining becomes the norm for all government unions, we can ensure that both the worker and the taxpayer are being represented and considered in the political process.

February 18, 2015

How Much “Choice” Is in Senate Bill 1?

sb 1 word cloud

This session, the senate has worked to create a veto-proof bill that will “fix” the school transfer law. Does the 84-page document provide the educational opportunities families in unaccredited districts are hoping for?

There are a number of things the bill will do, but whether or not students will have more choice remains to be seen. Here are a few points dealing with educational options (the bill addresses many other issues):

  • First and foremost, the bill does not contain the voucher portion that resulted in Gov. Jay Nixon vetoing the transfer legislation last year. In the area surrounding Normandy High School, there are 17 private high schools within five miles. Check these options off the list.
  • As the word cloud above indicates, the focus of this year’s legislation is charter schools. The bill allows charter schools to expand in provisionally accredited districts. There are currently 10 provisionally accredited districts. Charter schools designated as “high quality” will have an expedited opportunity to gain charter reauthorization as well as replicate. These portions of the legislation may or may not expand choice. Thus far, zero charters exist outside of Saint Louis and Kansas City.
  • The proposed legislation allows students in unaccredited school districts to cross district boundaries and attend a charter school with an APR of 70 or higher. Here are the Saint Louis City charter school options for Normandy students. There is only one existing option for Normandy High School students.

normandy charter school options table

  • Under the new law, students would have to live in an unaccredited district for at least one semester and apply to transfer by a March 1 deadline. The new policy would exclude students from transferring if they were homeschooled, attended a private school, or moved into the community due to a change in guardianship. Students whose parents do not understand application procedures and miss the application deadline will remain within an unaccredited school.
  • The proposed legislation allows students to attend a virtual school either within a district or charter that sponsors the school or under transfer guidelines. A virtual school under the new law must meet a set of conditions. It is unclear which, if any, current virtual schools will meet those conditions.

Senate Bill 1 attempts to provide more choices for students in struggling schools. It also tries to resolve issues within the transfer program, such as who operates the transfer program and how transportation and tuition works. But this bill falls short in many ways. First, the proposed additional options in many cases do not yet exist. Until those options exist, students are limited. Second, the proposed law restricts open charter enrollment to unaccredited districts, which may deter charters from opening in places like Jennings, a provisionally accredited district with low student enrollment. Third, the transfer guidelines themselves are restrictive and arbitrary. As Senator David Pierce pointed out, one of the bill’s goals is to reduce the number of transfer students.

Judge Michael Burton ruled last week that Normandy is in fact unaccredited. He wrote, “As the transfer statute makes abundantly clear, every child deserves to be enrolled in a non-failing school district—now.” This bill may provide options for some students, but for many students, choice is still restricted. Until lawmakers see providing quality options as more of a priority than reducing transfers, we are unlikely to see a real “fix” to the transfer program.

 

Ditching City Hall: A Saint Louis Development Story

We’ve said it on this blog many times before: Saint Louis has low population density. The population is widely spread among multiple counties in Missouri and Illinois, with a much-reduced core city and growing population and employment centers far away from downtown.

We have shown census tracts representing Saint Louis’ population distribution before. However, a different way to view the data is to consider metro population within certain distances from a central point (in this case city hall), allowing easier city-to-city comparisons. When we compare Saint Louis to cities of similar population, we observe that the city has abnormally low population density in its core. According to 2010 Census figures, Saint Louis had the 18th largest MSA population (2,812,896), but only the 31st largest population within 10 miles of city hall. For example, compared to Baltimore, with a slightly smaller population than Saint Louis (2,710,489 in 2010), Saint Louis has a larger metro area but much lower densities close to the city center.

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In fact, the area within a mile of the Saint Louis city hall has a lower population density (5,020 per square mile) than most of the rest of the city. This is atypical among peer cities, which have their highest densities downtown (averaging 9,000 per square mile). The map below shows population density in Saint Louis in concentric one-mile rings radiating from city hall:

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In addition, contrary to the narrative of a rebounding core, the city’s population density fell most in Saint Louis City from 2000 to 2010, as the map below demonstrates:

Pecentage change Pop_dens

Population did increase in certain neighborhoods in the central corridor and in the heart of downtown Saint Louis. And the growth downtown is somewhat misleading because of the incredibly low base it grew from: in 2000, the population density less than one mile from the courthouse was a mere 3,870 persons per square mile. And in the city as a whole, notable neighborhood gains are more than made up for by loses in areas to the north, south, and east of those improving neighborhoods. Looking at the region as a whole, outside of the heart of downtown, population density only showed steady growth in areas further than 25 miles away from city hall.

Saint Louis’ low population density and abnormal population distribution has important implications for the provision of public services. For example, when the type of service provision relies on density (such as with transit), it may be better for the city to model its service on other cities with similar densities rather than ones with similar MSA population totals. In addition, the pretense that Saint Louis’ downtown is (or should be) the dense economic engine of the region that drives much of regional planning may be inappropriate and result in misaligned public services.

However, the abnormal situation of Saint Louis’ downtown is also a reason to hope. Other cities show that there is a market for downtown living, and perhaps if the officials focus on safety and service instead of big-bang projects, organic growth will take hold. Or maybe they’ll build a new football stadium instead.

February 17, 2015

Still Movin’ On Out

In a recent analysis of Missouri’s migration patterns since 2004, Michael Rathbone and I found that Missouri’s net out-migration—more people moving out than in—has been especially pronounced since 2008. The most current information used in that study ended in 2013. Because some of the data have been updated, has there been any change over the past year in Missouri’s migration pattern?

Our earlier analysis used information provided by Atlas Van Lines and United Van Lines. These moving companies track outbound and inbound moves for all states. Calculating the ratio of outbound moves to total moves provides a rough gauge of whether more households are relocating into or out of a state.

Both companies recently published their findings for 2014. The table below reports the ratio of outbound to total moves for Missouri and its neighboring states. The evidence from Atlas Van Lines shows that more households moved out of Missouri (55.5 percent of total moves) than in. United Van Line’s 2014 National Movers Study also finds that outbound moves exceeded inbound moves.

Here are two aspects about these numbers. First, they prolong a trend that began several years ago: more households moving out of Missouri than moving in. Second, in 2014 Missouri’s percent of outbound moves exceeded that of most neighboring states. The Atlas report found that the percent of outbound moves was lower in six states relative to Missouri. Five states had relatively fewer outbound moves than Missouri, according to the United study.

“Relying on data sources as varied as moving companies to the Census Bureau and the IRS,” Rathbone and I noted, “our evidence reveals that, especially since 2007, more of Missouri’s residents have relocated out of the state than others have moved in.” Updating the moving company figures does not alter that conclusion.

 

Outbound (%) in 2014

 
State Atlas   United
Arkansas 52.4   51.7
Illinois 60.1   63.4
Iowa 54.6   52.5
Kansas 54.7   58.2
Kentucky 50.3   55.0
Missouri 55.5   53.1
Nebraska 57.8   46.2
Oklahoma 45.4   43.4
Tennessee 44.4   50.0

 

Don’t Ban Tesla to Protect Middlemen

Missouri auto dealers, through the Missouri Automobile Dealers Association (MADA), is on the offensive. Their target is Tesla, the luxury electric car manufacturer, and their goal is to prevent the company from selling cars in Missouri. They backed a bill in 2014 which would have banned Tesla, and now that that effort has failed, they have filed a lawsuit against the state of Missouri.

The essence of the dispute is that Tesla, uniquely among U.S. car companies, does not use middlemen (dealerships) to sell its cars. MADA, which represents those middlemen, wants it to be illegal for a car company to directly sell its vehicles to consumers. They claim it already is illegal, under the Missouri Motor Vehicle Franchise laws. But the Missouri Department of Revenue disagrees, claiming the laws are only applicable to manufacturers that have dealerships in the state and are not designed to enshrine dealerships as the only method of selling cars.

Along with their legal and legislature maneuvering, MADA is publicizing why Missouri should create more regulations to enshrine the dealership model as the only way to sell cars. They argue that without car dealerships the state’s economy would suffer and that consumers need the type of long-term car care that only they, and not the manufacturer, can provide.

Without a doubt, using car dealerships as a sales and maintenance unit has many advantages for manufacturers and consumers. After all, it became the dominant mode of selling cars for a reason. However, it is not an intrinsically superior way to buy and sell a car and certainly should not be afforded new legal protection.

For example, according to a report from the Department of Justice, dealerships can raise the costs of selling cars. Experiences from General Motors sales internationally have shown that manufacturer-direct sales can lower the cost of a car by 8.6 percent. Furthermore, consumers may prefer manufacturer-direct sales over the uncertainty of haggling with car dealers, if they are given the choice. One poll conducted in the United States found that half of respondents would prefer to buy from the manufacturer even if they were not offered a lower price.

MADA’s efforts would take that choice away. They claim that buying a car is an important financial decision and that dealers provide the long-term care customers need. But there is no shortage of ways consumers could choose to service their vehicles if they buy directly from Tesla, including agreements with auto-repair shops. Car buyers are no less capable of looking after their assets than homebuyers, who somehow manage to purchase and maintain houses without house dealerships.

As for the economy as a whole, protecting a certain way of selling cars is no way to increase jobs or increase competitiveness. Business models change constantly and create new opportunities and products even as they replace older ones. That sentiment underlined the Federal Trade Commission’s (FTC) criticism of Missouri’s legally entrenched franchise system. They stated, “[C]onsumers are the ones best situated to choose for themselves both the cars they want to buy and how they want to buy them.” That may not always be to the benefit of car dealers, but it’s good economics and good for the state.

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