When Gov. Ron DeSantis (R-FL) went after Disney and revoked its special governance district, he said it was a matter of restoring the “free market” and opposing “corporatism.” But so much for all that: The Florida Republican just signed a bill that is a direct attack on free enterprise and really resembles textbook corporatism, which is collusion between government and special business interests.
Here’s what’s going down.
“Florida Governor and Republican presidential candidate Ron DeSantis has signed off on a bill prohibiting car manufacturers from using direct-sales models in the state,” auto industry publication CBT News reports. “Titled HB 637, the measure prevents most automakers from selling directly to consumers, requiring them to rely on franchised dealerships instead starting this July. The Florida Automobile Dealers Association (FADA) was heavily involved in writing and pushing the legislation through the state government.”
The short version: DeSantis will make it illegal in most cases for car manufacturers to sell cars directly to consumers, forcing Floridians to go through middlemen via car dealerships. The law did, however, make a few interesting exceptions.
“The legislation allows electric vehicle companies to continue selling to consumers without third-party retailers, meaning Tesla, and possibly smaller brands such as Rivian, Lucid and Polestar, will be allowed to operate in the state as normal,” CBT News says. “Legacy automakers, such as Ford and General Motors, must still use franchised dealers to sell their products in the state.”
On the one hand, this exception makes sense because Teslas are currently sold directly from the manufacturer, so legally mandating Tesla dealerships would disrupt the industry in Florida. But on the other hand, if this legislation was really necessary to “protect consumers,” why wouldn’t it be necessary for electric vehicles, too? And isn’t it a bit suspicious that Tesla CEO Elon Musk has been a huge supporter of DeSantis and that the law included a special exemption that really helps Tesla?
I reached out to the governor’s office for comment and specifically asked if DeSantis’s personal relationship with Elon Musk played a role in this special carve-out. Perhaps unsurprisingly, I did not hear back, as of this writing.
But regardless, this policy is deeply flawed and anti-capitalist. It’s an attack on free market principles and an embrace of the kind of corporatism DeSantis has so often decried.
For one, it will almost certainly lead to higher costs for Floridians. If they could cut out the middleman and buy cars directly from manufacturers, they would almost certainly be able to get them for lower prices. But if they go through a dealership, the dealers must charge higher prices to pay their own salaries and expenses.
Almost never before in the history of economics has having a middleman lowered prices, as advocates for this policy have rather absurdly claimed. As one letter signed by economists and other experts concludes, “The argument that adding a mandatory layer of costs between the manufacturer and the consumer will reduce consumer prices has no basis in economics.”
Secondly, this policy openly uses the power of the government to rig a market in favor of special interests. It was explicitly influenced by the lobbyists who represent the auto dealers. It protects them from competition using the force of the law to skew the market in their favor. And this very industry gave DeSantis and the other Floridian policymakers who made this bill happen loads of money. According to Florida Politics, car dealership interests gave “more than $2 million to DeSantis in the last two years, $230,000 to political committees controlled by Senate President Kathleen Passidomo and $50,000 to Sen. Ben Albritton.”
That’s textbook crony capitalism and corporatism. It’s bad news for Floridians, who will almost certainly face higher car prices than they would in a free market. And, perhaps most importantly, it’s a transparent betrayal of the values around which DeSantis has built his national political profile.