[venning]

We often moan about the taxi industry, the hotel industry, or the dealer associations but, in doing so, we miss something very important. The players in that industry often existed for years or decades in a state of government-backed protection without realizing it. Taxi drivers didn't necessarily lobby for market restrictions; they took advantage of the oligopoly, sure, but not necessarily consciously.

If you live in a state of believing that the market is actually fair and others have an equal shot at participating in it, then someone else entering the market in defiance of the existing protections appears to be unfair.

It's hard to believe that you didn't enter into a job market and win a wage fairly. That, instead, you were unfairly advantaged by artificial pressures in that market much bigger and more entrenched than you.

Essentially, the incumbents have been lied to for years and, now that new logistical realities are changing the status quo, it is very hard for them to understand why this is happening. They think someone must be cheating.

---

To expand on joosters' analogy of taking a fence down elsewhere in this thread [1], it's not necessarily bad if we take the fence down, we just need to realize that doing so may have serious consequences in the near-term. Having such a strong, deep-rooted artificial pressure in a market so abruptly removed may result in a painful readjustment of the market that hurts a lot of people.

(My other comments weren't meant as a defense of dealers, only intended to elucidate their operations.)

[1] https://news.ycombinator.com/item?id=10463745

[grandalf]

Car dealers are among the biggest "small business owner" donors to political campaigns in the US. The National Auto Dealers Association is a big part of most dealers' lives, and they know who is buttering their bread.

I mention this b/c I don't think it's a gradual accident... The dealers forced Ford to shut down factory stores in Oklahoma not too long ago. This is a turf battle.

[venning]

Absolutely. Regulatory capture is a real thing and a really bad thing. I'm certainly not defending the franchise protections. I would just like to be clear: people get hurt when we uproot the status quo quickly. That isn't to say we shouldn't do it. There aren't easy answers here, particularly for the legislators who have to make those decisions.

[maratd]

> There aren't easy answers here

I don't think the circumstances are as grim. Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show. They may need to apply for a job at the new factory store, but that's really the extent of the displacement. You're not eliminating an entire industry. You're re-organizing it to reduce friction.

[swatthatfly]

> Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show.

Some people may benefit from this "service", but not me, nor any of the people I know. The only benefit I could see from my previous buying experiences is the act of handing out the key for a test drive. Everything else was simply designed to extract as much money from my pocket without giving me back anything in return. I had all the information I needed to make a purchase decision, the financing doesn't need to be done at the dealership, the car can be bought from a website, and delivered to the curb. A bunch of grown men sitting around all day and swarming people that enter the floor with the goal of "giving them a good deal" is not a value proposition. It's a complete misallocation of resources.

[maratd]

Salesmen aren't a substantial part of the workforce in a dealership. Mechanics, secretaries, service coordinators are. You still need those.

Finally, while you're OK dropping the equivalent of a year's pay on a website, most people are not. They need to talk to someone. So you're still going to need salespeople ... although they'll be far more pleasant to deal with, since there will just be one price that everyone pays and you won't have to be in constant fear of being ripped off.

[brandonmenc]

> Finally, while you're OK dropping the equivalent of a year's pay on a website, most people are not.

It seems to be mostly tech workers who pine for the "buy it now" experience for car shopping. They all seem to know exactly what make, model, and color they want, and they never buy used.

Everyone else has a budget, coupled with a wide range of what they consider an acceptable car - which is why test driving and "show me what else is on the lot" will always be a thing.

[swatthatfly]

> Salesmen aren't a substantial part of the workforce in a dealership. Mechanics, secretaries, service coordinators are

You're describing a regular garage here. We have those on most corners. Some also sell used cars btw. The argument is centered around the sales activities, hence the comment.

[venning]

Agreed. And I didn't mean to sound grim.

Markets tend to be efficient in the long-term and inefficient in the short-term as it is still determining how to place capital and whatnot based on new information. I feel like our industry (software, and technology generally) understands that well, even if implicitly. It's just that those "inefficiencies" are often real people and the "short-term" means being unemployed or unemployable for a while.

It's important to innovate and to do so boldly, but to also not be cavalier with how that innovation affects a world that was spinning long before that innovation was conceived of. Not to say that you or anyone else on this thread is doing so, I just wish to point it out.

[ska]

  "short-term" means being unemployed or unemployable for a while.

If you add the caveat that "for a while" might in practice equal "several generations" for comparable employment, this is true. See for ex. industrial revolution.

The hard truth is that to the degree that these things do work as a simplistic free market model might predict (and that is clearly arguable) they may operate on time scales that will do nothing to alleviate to problems the changes cause.

[venning]

Very true and very scary. The sad thing is that regulatory protection often makes matters worse by insulating people from changing realities. That causes the inevitable collapse of that protection to create an even greater shock to those who had been protected.

[coryfklein]

> See for ex. industrial revolution.

I was not aware that the industrial revolution caused unemployment that lasted for generations. Can you provide a link for further study of this?

[newjersey]

It is one thing to provide short-term support for carriage drivers and ship cargo loaders when mechanization renders their jobs useless. It is a different matter when existing big businesses stand in the way of progress.

Would you support laws that would slow down the growth of digital cameras in the late nineties and early noughties so Kodak could continue to sell celluloid? I bet a lot of people were affected by that change. Where is the smooth transition for them?

[venning]

The interesting thing about the particular examples in this thread--local taxi companies, hotel franchises, dealer franchises--is that none of them are in fact "big businesses". If Uber and AirBnB and Tesla succeed, they will all be considerably larger than any other player in those spaces. They will be the big businesses.

Personally, I have no interest in protecting businesses. I have an interest in protecting competition. I like the disruption and I like the creating of new value that they bring. I just also feel for the individuals who often are so vigorously disrupted.

[SilasX]

So there's an active, non-artificial market for scummy negotiating tactics and pressuring people to take deceptive financing deals?

[__jal]

I'm having trouble coming up with a meaning for "non-artificial market". Do you mean a market free of all forms of non-participant manipulation, coercion, information-assymetries, etc.? I don't think we make those on this planet.

[SilasX]

Right, I get it, there's no perfect/elegant/ideal/Platonic market anywhere.

But if you really can't tell the difference between "people use car dealerships because they all find them more convenient" vs "people use car dealerships because of a law that says they have to buy this way", then you're generalizing too far from the above point.

[JoshTriplett]

> Car dealers are among the biggest "small business owner" donors to political campaigns in the US. The National Auto Dealers Association is a big part of most dealers' lives, and they know who is buttering their bread.

Which makes me wonder how much it would change the US political landscape to eliminate the massive protections granted to car dealerships.

[grandalf]

> eliminate the massive protections

It would certainly change things a lot, but it would have to happen through the same democratic process that put the protections there in the first place.

[fineman]

That never works. You'd need those who benefit from the protectionism to stop lobbying. The issue is that it never was democratic, it was graft that made these regulations and it's graft that keeps them going.

The way to get rid of regulatory capture is to make it impossible to enforce and let the leeches die.

Uber may not win, but Taxi companies will die.

[AnimalMuppet]

Some fences need to remain. Take barbers/hairdressers, for instance. It turns out that a barbershop can be a great place for spreading head lice. You want your barber/hairdresser to be trained to prevent that. That's part of what their licensing is about.

So, are there any aspects of being a car dealer that are worthwhile fences? Offhand, I can't think of any, but that doesn't mean there are none.

[venning]

I agree. As an avid "car guy" and a student of regulation, I cannot think of any reason for car dealers, as a whole, to be protected in the long-term. I am, however, perplexed with how we should address the possibility of established manufacturers attempting to cannibalize the sales of their most profitable franchises by building neighboring dealerships with their considerable capital.

I believe the California model actually offers a lot of hope: manufacturers can compete, but they must observe a 10 mile radius from existing franchises.

[AnimalMuppet]

Pick a model - say, Chevrolet. Is there anywhere within the LA basin that isn't already within 10 miles of a Chevy dealership? Does this rule leave the manufacturer any place to be in a place like LA?

[venning]

This is why I am perplexed.

[fineman]

How many hours does that take?

Why does it take so long and yet being a waiter requires no (government) training at all?

[jacobr1]

Right, a waiter could do all sorts of things to contaminate food but doesn't require licensing. Regulations and investigation are sufficient. The same could easily been done for barber shops. Enforcement can also be done via torts. Insurance also requires certain base level of employee training. There are many ways to try and prevent and remediate problems other than requiring a license.

[unics]

Licensing only provides money to a regulatory system. Health inspectors may prevent head lice but word of mouth is still the main way a business gets shut down for shoddy work.

[mathgeek]

"Health inspectors may prevent head lice but word of mouth is still the main way a business gets shut down for shoddy work."

The difference, at least in theory, is that the health inspector prevents the outbreak. Word of mouth is generally more reactionary and after-the-fact.

[drzaiusapelord]

>. Taxi drivers didn't necessarily lobby for market restrictions

Drivers are out in the street protesting anything that allows ride sharing and demanding further restrictions. The idea that employees are innocents is riduculous. This ignores 100+ years of unions, associations, legislation, etc. Its the rank and file demanding these laws, not shadowy men cutting backroom deals. If these deals get made its because the rank and file have a enough political capital to make them happen.

>Essentially, the incumbents have been lied to for years

This seems to be politically biased. These people know exactly what they're doing. When the Chicago Teacher's Union marches and claims low pay (instead they are some of the highest paid teachers in the nation), they know exactly what they are doing. When cab drivers block streets to protest Uber, they know exactly what they are doing.

[venning]

There is a difference between the creation of the status quo and the defense of it.

> ...out in the street protesting...

> ...Chicago Teacher's Union marches...

> ...cab drivers block streets...

Your examples are all of its defense which, while understandable, is largely ignorant of the protections' unintended consequences. My earlier comments addressed the creation of those protections and the effects of their inevitable repeal.

> The idea that employees are innocents is riduculous.

I in no way implied innocence of any party.

> This seems to be politically biased.

Not that it matters, but I am contractually obligated to not display political bias in public. Even without that, as a matter of course and as a non-political resident of Capitol Hill, I avoid politically-biased discussion.