Is this massive undertaking needed? Can the free market not guide the expansion of EVs itself?

A mere 8% of Tesla owners and 18% of other EV owners said charging stations being too far away was a major difficulty, and an even lower 8% and 14% respectively said there were not enough charging ports at each charging station. Despite these statistics, the federal government is attempting to control the charging station market throughout the country instead of allowing the free market to operate. The government claims to be farsighted when protecting future generations on climate change policy, but their policies are routinely shortsighted. If we truly want to be more environmentally friendly, central planning is not the answer; instead, we ought to trust in the responsiveness of the free market to consumer desires.

Lucid Motors is an example of market innovation occurring naturally without central planning. Recently, Lucid gained traction in the stock market due to having the longest-lasting car battery in the market. In response, competitors started creating longer-lasting batteries in order to win over consumers who prioritize battery life.

With the free market spurring innovation for battery life in EVs, why would we need a massive expansion of charging stations? The already high levels of satisfaction with charging station availability will only increase as battery life further improves. As the demand for EVs continues to grow, electric chargers and EV infrastructure will likely grow proportionately. There’s simply no reason for the federal government to interfere in an industry where the free market is already spurring plenty of innovation.

The post Federal Overreach on EVs appeared first on Show-Me Institute.

Saint Louis County, Saint Louis City, and Brentwood have decided to mandate that new construction and major renovations for several types of properties (residential and/or commercial, depending on the jurisdiction) must be accompanied by EV charging stations. None of these mandates consider the $5,000-per-charger cost businesses will face, and some of these regulations impose a substantial fine for being a day late and an EV charger short.

Some places—like apartments and office buildings where people park for hours at a time—are a good fit for EV chargers. But for other places, a charging station could actually be a liability. Think of places like diners or convenience stores, whose business models rely on getting people in and out quickly. The last thing the owner of a small diner needs is someone who comes in and occupies a table for an hour or longer, nursing a coffee while his car charges. That’s why decisions about where the chargers should be installed are best left to businesses rather than being determined by a one-size-fits-all government mandate.

If local officials want more EV charging stations, perhaps they should first clarify where they can be built rather than dictating where they must be built. Ironically, the municipal codes for the Saint Louis jurisdictions mandating chargers are mum about where chargers can be built outside of the areas where they are mandatory. This lack of clarity results in several weeks of permitting and site plan reviews, which often vary by jurisdiction. This is backwards. Dozens of municipalities nationwide have amended their codes to allow EV chargers to be built wherever property owners see fit and have fast-tracked the permitting process to finish, in some cases within a day. For example, Kane County, Illinois, and Bellevue, Washington, allow EV chargers to be built in all zoning districts. Several states, such as New Jersey, New York, and Oregon, have classified the installation of EV chargers as “minor work,” which helps speed up installation times and cut down on permitting costs. Chicago grants EV charger installation permits within a day and even provides a guide for the installation process. These are all simple ways to speed up the proliferation of EV chargers without twisting anyone’s arm.

Local officials are right to recognize that fueling an EV is different than fueling a traditional car. Due to the time it takes to charge, EV drivers won’t be waiting in lines at centralized “electron stations.” Rather, they’ll incorporate charging into their everyday life. As more Missourians buy EVs, it will make good business sense for more businesses and property owners to install EV charging stations, either to retain current customers or attract new ones. What EV driver wouldn’t the option of charging his or her car while at the grocery store or while typing away at work? Likewise, charging stations at apartment complex could become an appreciated—or even expected—amenity for prospective tenants.

Policymakers could also make it easier for Missourians to buy EVs. Currently some uncertainty exists about the validity in Missouri of the direct sales model that many EV companies use to sell their cars. Several years ago, Tesla was taken to court over the legality of selling its cars to customers without using a franchised dealership. While Tesla eventually won, it’s not clear if other EV companies would be granted the same freedom to sell. With many more EV companies using direct sales entering the market, ensuring they can operate in Missouri can bring EVs to thousands more residents.

EVs come with many benefits. They help improve local air quality and reduce the transportation sector’s overall environmental impact. For Saint Louis EV drivers, charging their EV at home can lead to hundreds of dollars of fuel cost savings each year compared to a gasoline-powered car. EVs have lower lifetime maintenance costs than gasoline-powered cars. EVs can succeed on their own merits; forcing the hand of property owners is the wrong way to speed up the EV adoption process.

The post EV Charging Stations Don’t Need Mandates to Succeed appeared first on Show-Me Institute.

So what do some in the Missouri Legislature want to do with this burgeoning market? Subsidize it, of course. A bill prefiled in the Missouri House would subsidize Missourians for a purchase many are already making by giving out a thousand-dollar refundable tax credit for each EV purchase.

This is so redundant and unnecessary that even Elon Musk wouldn’t support it.

In a recent interview, Musk favored ending subsidies of any kind for all vehicles, whether gasoline or battery-powered.

When asked about the possibility of an up-to $12,500-per-EV tax credit being considered in Congress, Musk criticized it as unnecessary. While most makes of electric vehicles still qualify for the existing $7,500 federal tax credit, Tesla’s cars—which made up over two thirds of all EV purchases this year—haven’t for several years. Admittedly, Musk’s market power may account for some of his opposition to EV tax credits.

Musk also criticized the $7.5 billion dedicated to building EV charging stations in the recently passed federal infrastructure bill, saying that if gas stations don’t need support, EV charging stations shouldn’t either. If he doesn’t support these subsidies, I can’t imagine he’d support Saint Louis-area governments mandating new construction and property renovations being built with EV charging stations.

If the godfather (or Dogefather?) of electric vehicles thinks EV tax credits and subsidized charging stations are unnecessary, shouldn’t we?

The post Even Elon Musk Wouldn’t Support Missouri’s EV Tax Credit Bill appeared first on Show-Me Institute.

Measuring the success of economic development packages is challenging because it’s almost impossible to tell if any growth is actually due to the incentive package. Economic growth may have occurred without the incentivized project and new projects can happen without incentives. Research suggests that 75 percent of incentivized firms would have made the same location choice even without the incentive.

On top of that, the incentivized investments don’t always pay off. Tesla plans to build a large factory that could employ up to 7,000 people, but we’ve seen companies fail to live up to promises before (such as with Cerner in Kansas City). There’s really no guarantee that new jobs or infrastructure will come to the city as promised. Even if the jobs or infrastructure do arrive, it still might not be a net positive for the city, given the cost of the incentives. One study found that the costs and benefits of incentive packages are typically the same.

As I’ve previously pointed out, it’s probably not the best time to be giving out incentive packages. Government budgets are expected to be extremely tight due to COVID-19 and the resulting economic shutdown. Why should new, big businesses receive tax breaks while the citizens and businesses suffering through this pandemic in Joplin are left with their full tax burden?

With no guaranteed benefit and potential budget issues looming, offering $1 billion in incentives doesn’t seem like a great idea, and it definitely doesn’t seem like a good deal for Joplin’s citizens.

The post An Incentive Package for Tesla May Not Benefit Joplin appeared first on Show-Me Institute.

How so? For electric vehicles, their net environmental impact is more than what comes out of the tailpipe. Materials must be mined and processed—at significant environmental cost—and their electric charge must come from somewhere. Nuclear power emits close to zero greenhouse gas emissions, but is often misunderstood, especially regarding safety.

I address these matters in more detail in a recent op-ed posted at Real Clear Energy. 

The post Environmental Misconceptions Can Be Costly appeared first on Show-Me Institute.

As a revealing example of the magnitude of the changes that would be required to put the so-called “Green New Deal” into effect, let’s look at the little village of Kingdom City, Missouri, population 124. Endorsed by several presidential candidates, the Green New Deal would ban all use of fossil fuels over the next decade.

The big business in Kingdom City is servicing heavy trucks passing through Missouri going East and West on Interstate 70 and North and South on U.S. 54. Three filling stations in Kingdom City handle more than 450 18-wheelers on an average day.

What would it take for the Kingdom City filling stations to do the same work using electric power rather than diesel fuel?

That is an answerable question, using mathematics to convert from one form of energy usage to another. We know that a “Green” 18-wheeler must supply essentially the same average power to move a load of cargo over the same distance as a diesel-powered vehicle. Based on diesel fuel usage and engine efficiency, we estimate the required average power at 160 kW (a little over 200 horsepower).

To recharge a single truck after eight hours on the road in 20 minutes would require a charging station capacity of 3.88 megawatts. For three truck stops, each with 10 electric “pumps,” you must multiply this number by 30 to get the needed capacity. That comes to 116 megawatts, which is the equivalent of 58 2-megwatt windmills costing $3 to $4 million each.

In other words, to use electricity to refuel heavy trucks passing through Kingdom City would require a starting investment on the order of $200 million in new wind-generated electric capacity. This calculation does not include further substantial change-over costs, including the installation of additional transmission lines and the construction of recharging stations. For simplicity sake, we have also ignored the significant reduction in fuel economy caused by the approximately 10 tons of extra weight of the Tesla-like batteries that a “Green” 18-wheeler would carry.

The Kingdom City example underscores the prohibitively high cost of trying to implement even a tiny part of the all-encompassing Green New Deal. Take the $200 million starting investment in this little village and multiply it by the thousands of other locations across the United States. You quickly arrive at a figure in the hundreds of billions of dollars.

But would there be any positive impact on the environment?

Now, you must consider that three-quarters of Missouri’s electrical generating capacity comes from burning coal and another 5 percent from natural gas. We also get another 10 percent from nuclear energy, but the Green New Dealers are not calling for more nuclear power. So where, over the next decade, could we find the additional generating capacity that would power electric cars and trucks?

It could only come from increased burning of fossil fuels.

The post What It Would Take to Bring Green Energy to Kingdom City, Missouri? appeared first on Show-Me Institute.

Are businesses and people in our state ready to make the jump from an economy that is heavily dependent on fossil fuels to one that would “meet 100 percent of power demand in the United States through clean, renewable, and zero-emission energy” over the next ten years?

Let’s start with Missouri farmers. Are they ready to switch to electric tractors, trucks, and combines in order to reduce their carbon footprint to the vanishing point over the course of a single decade?

We can answer that question with an unequivocal “No.” Here’s why.

Begin with the fact that there are no—repeat, no—Tesla-like, battery-powered farm vehicles on the market today that could begin to replace most of today’s diesel-powered vehicles in doing the heavy-duty, energy-intensive work involved in ploughing fields and gathering harvests. The battery-powered substitutes for today’s machines don’t exist, and – even if they did – other problems would prevent their instant and widespread use.

Did any of the utopian thinkers who devised the Green New Deal stop to consider that most farms are wired in much the same way as most homes. That is to say, they are not wired for industrial use – which is what would be required to bring about the presumed greening of agriculture through electrification.

The problem here cannot be solved by putting up hundreds or even thousands of new wind turbines to supplement the 500 now in use in Missouri – which provide an average of two megawatts of power per turbine, and then only when the wind blows.

As Blake Hurst, the president of the Missouri Farm Bureau, points out, the electrification of Missouri agriculture would be an immensely expensive undertaking. It would require nothing less than “totally rebuilding the electrical grid” in order to deliver far greater quantities of electric power to farms in thinly populated areas around the state. The grid, along with charging stations and other supporting infrastructure, would have to treat every farm with a fleet of one truck, one tractor, and one combine or cotton-picker as if it were a town with 10,000 or more inhabitants.

To understand the physics, consider a conservative estimate of the electrical requirements posed by a hypothetical electric combine that replaces a typical grain combine. The latter weighs 15 tons, consumes approximately 15 gallons of diesel fuel per hour, and is often used about 16 hours a day during harvest. At 40-percent efficiency, its diesel engine delivers about 244 kW of power.

To do the same work, the electric combine would need to carry the equivalent of about 3.5 Tesla batteries (4,400 pounds) for each hour of continuous use. It would therefore need approximately 28 Tesla batteries to go eight hours without recharging. The combined weight of all of batteries would be 17 tons, making the electric combine significantly heavier than the piston-driven combine. While battery technologies are improving, it will be some time before any dramatic changes in energy to weight are likely to take place.

Since recharge time has to be short for economic reasons (a farmer racing against time to bring in a harvest can’t afford to spend several hours a day twiddling his thumbs), suppose that the electric combine “fast charges” in 20 minutes, an optimal time suggested for electric cars. The charging station and related infrastructure (i.e., generation and power distribution) would have to be capable of supplying in the vicinity of six megawatts of power during the recharge period! Let us pause to consider what that means.

Recharging a single combine requires the same power output as three of today’s wind turbines. According to government data, 1 megawatt of power capacity will supply 750 homes. Looked at in this way, the infrastructure necessary to recharge just one electric combine in 20 minutes would also be capable of supplying electrical power to the equivalent of 4,500 homes.

Suffice it to say: If you multiply that one combine by the total number of big combines and other heavy-duty vehicles used on Missouri farms today, you arrive at a very big number.

Even if we, as a state, were prepared to pay the huge costs of participating in a federal government-led crash effort to transition from diesel-powered to battery-powered farming, it is doubtful that our farmers would thank us. Apart from the inevitable adjustment problems in the introduction of new equipment, the electric combines, tractors, etc. would be more likely to bog down in muddy fields because of the extra weight of carrying a multitude of Tesla-like battery packs. And that’s not all. Barry Bean, a large cotton grower in the Bootheel in southeastern Missouri, shudders at the thought of the long lines of farmers with their tractors and cotton-pickers at charging stations at the end of a long day: “We all work the same hours and we’d all be coming in at the same time.”

*****

Let us turn then to freight transportation, another area important to Missouri as a crossroads between East and West, North and South. If, in the year 2030, all of the heavy trucks passing through Missouri were battery-powered, what would it take to charge them? We could not answer that question without a good deal more research. But we can say what it would take to open a single recharging station to handle a tiny fraction of the heavy-truck traffic that flows through the little village of Kingdom City, lying at the intersection of Interstate 70 and U.S. Route 54, on a daily basis.

Using the same analysis as above, to support a single service station at this site capable a) of recharging a Class 8 truck in 20 minutes that has been on the road for eight hours, and b) of handling 10 such trucks simultaneously, we have estimated that the supporting electric infrastructure must be capable of supplying close to 40 megawatts. That is the equivalent of about 20 2-megawatt windmills just to serve one refueling station. That same infrastructure would serve the needs of about 30,000 homes, or a decent-sized town.

*****

All this brings us to a final consideration. Where does Missouri’s electrical power come from? According to the U.S. Energy Information Administration, we get more than three-quarters of Missouri’s net electrical generation from burning coal, and another five percent from natural gas-fired plants. Oh, yes, our one nuclear power plant in Callaway County is good for another 10 percent, not that the Green New Deal manifesto is calling for more nuclear power.

Even in the act of saying “sayonara” to the use of fossil fuel in just two sectors of the state’s economy – agriculture and freight transportation – we would have to fall back on fossil fuels to provide additional electrical generating capacity.

The post Why the “Green New Deal” Will Not Fly in Missouri appeared first on Show-Me Institute.

As famed economist Milton Friedman (and others) have emphasized again and again, being “pro-business” is not the same as being “pro-market” or, in this case, pro-consumer. If consumers want a more personal touch with their car buying decisions, then there will be a market for the car dealership experience. And if they just want an electric car direct from the manufacturer, shouldn’t they have that option, too?

I won’t belabor the point too much since this is well-trod ground, but I do want to highlight this video featuring Friedman, and the Friedman quote below, to reiterate the problem here of playing favorites against consumer interests.

You talk about preserving the free market system. Who has been destroying it? The business community must take a large share of the responsibility. You must separate out being pro-free enterprise from being pro-business.

Missouri should take Friedman’s point to heart and let consumers decide for themselves what they want from their car-buying experiences.

The post Car Wars II: Revenge of the Cronies appeared first on Show-Me Institute.

It’s a two-part idea – beginning with the proposition that the robots are coming and they are about to change all of our lives – mostly for the better. Think of having a machine that can respond to the command, “Hey, Robot, build me a house.” The upside will be greater ease and prosperity; the only downside will be massive unemployment. Says Tesla CEO Elon Musk, “There will be fewer and fewer jobs that robots can’t do better.”

The 19th-century Luddites had the same fear of automation. During the Industrial Revolution, with mechanization replacing manual labor on an unprecedented scale, their proposed solution was to smash the new machines that were taking jobs away from some people (even as they were creating new jobs for many more people).

The 21st-century Luddites – Musk, Facebook founder Mark Zuckerberg, and other big names in Silicon Valley – have a different solution. Rather than smash their own machines, they are promoting a “universal basic income” (UBI, for short) to take care of people unable to find work because of the job-destroying robots.

A UBI of, say, a couple thousand dollars a month for unemployed yet able-bodied adults would create a whole new “safe space” – freeing millions of people from the nasty necessity of having to go out and find work in order to enjoy life unencumbered by financial difficulty.

“We should have a society that measures progress not just by economic metrics like GDP, but how many of us have a role that we find meaningful,” said Zuckerberg in a recent speech at Harvard. “We should explore ideas like universal basic income to give everyone a cushion to try new things.”

Musk argues that unemployment and economic output will both rise as a result of greater automation, leaving society with “no choice but to distribute a portion of the money to everyone equally.”

Let’s try to talk a little sense here. Who is to pay the vast sum of money needed to create a new leisure class of non-workers if not the people who continue to work? And in the long history of automation, has there ever been a time when a rapid expansion in unemployment (as happened in the Great Depression) was accompanied by a still more rapid expansion in GDP. The answer is never.

More importantly, automation creates more employment than it destroys. During the Industrial Revolution, for instance, automation made weavers who worked on ancient looms obsolete. But the number of people working in textiles exploded. That is because capital investment in labor-saving devices raised productivity, lowered prices, improved quality, and left more money in people’s pockets to spend on things besides the bare necessities.

The Silicon Valley superstars promoting a UBI display an incomplete understanding of how free-market capitalism works. It depends upon human motivation no less than technological innovation. Under free-market capitalism, people compete with one another to satisfy the needs of others. Rather than living off the sweat from the brows of other people, they have the satisfaction that comes from earning their own way and living useful, purposeful lives.

On this Labor Day, let us celebrate the enduring value of work. There may be other motivations for a basic income, but a fear of robots destroying all the jobs absolutely shouldn’t be one of them.

The post The Utopian Apocalypse: Silicon Valley Freaks Out over Automation appeared first on Show-Me Institute.

The post Tesla: Let Buyers Decide appeared first on Show-Me Institute.

The ruling comes from a lawsuit filed by the Missouri Automobile Dealers Association (MADA) against the Missouri Department of Revenue. MADA argues that allowing Tesla to sell directly to consumers is forbidden by the Motor Vehicle Franchise Practices Act (MVFPA) and that the DOR was mistaken in granting a dealer’s license to Tesla. The law requires manufacturers to sell cars via a franchise agreement with a car dealer, but Tesla argues that the two (manufacturer and franchisee) can be one and the same. In other words, Tesla established an agreement with Tesla to sell Tesla’s cars.

Regardless of whether Tesla is exploiting a loophole in the current legislation, to me the real question is whether the law should effectively prohibit a manufacturer from selling to consumers. While dealerships can reduce a manufacturer’s burdens regarding advertising, selling, and maintaining cars for consumers, does it make sense to “force” a third party into the mix? Given that dealerships tend to provide insufficient information on electric cars, and that direct manufacturer sales can lower distribution costs, it’s difficult to see the rationale behind limiting consumers’ decisions regarding how to purchase a car.  

Tesla is bringing innovation into Missouri’s automobile industry, and to shun such innovation is a missed opportunity. Regulations such as the MVFPA should be in place to serve consumers, not protect specific dealerships. If they don’t do this, then perhaps it’s time for an updated business model.

The post Road Blocked for Tesla in Missouri appeared first on Show-Me Institute.

Tiny schools start in a library or classroom with a small group of volunteer students and no more than one or two teachers, usually for a couple of hours on a weekend. For up to a year, the teachers try new methods and get instant feedback, refine what they’re doing, and improve. The students attend voluntarily; they know they’re part of the experiment. If all goes well, after a year, the educators are in a much better place to start a full-fledged school than if they had tried to build a whole school from scratch. What’s more, if the plan doesn’t work, no students are harmed, and very little money is lost.

Spearheaded by 4.0 Schools in New Orleans, tiny schools are a promising response to a stubborn problem—starting a new school is incredibly risky.

Think about it: if you are an aspiring charter- or private school leader and you want to start a school via conventional means, you’re talking about an organization with a million-plus dollar budget, contracts with 10, 20, or more staff and teachers, the rental or purchase of a large building, and the lives of hundreds of children—and that is just the start. This risk explains why even the supposedly agile and entrepreneurial charter school sector has created applications to open schools that stretch into the hundreds of pages. When we’re talking about that much money and that many people, authorizers want as much assurance as possible that the school is going to work. I don’t blame them.

The most common criticism I hear, though, when I get excited talking about small entrepreneurial ventures like tiny schools is that they are simply “boutique” options. They cannot scale. “There are 50 million school children, for crying out loud, and you’re talking about teaching 20!”

Much of this ire has been directed toward AltSchool, a new private school model out of Silicon Valley. AltSchool runs a series of very small schools that personalize education to every (generally wealthy) child who attends them. They made news recently with a $100 million investment from some of the biggest names in technology and venture capital. Their model is intensive and expensive, and most have dismissed it as a viable option for students across the country. They may be right.

AltSchool critics remind me of a blog post written almost 10 years ago by Elon Musk, founder of PayPal, Tesla, and Space X (and promoter of nuking Mars). He too received criticism, particularly from environmentalists, when his first Tesla cars were priced north of $100,000 apiece. “The planet is warming, and you’re building cars only a small number of people can afford!”

Musk’s response to his critics is a good lesson for entrepreneurship in education. In a blog post titled The Secret Tesla Motors Master Plan (just between you and me), he wrote:

Almost any new technology initially has high unit cost before it can be optimized and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.

Replace “electric cars” with schools, and you’ll see where I’m going.

So many schools today—traditional public, charter, and even private—suffer from a kind of institutional isomorphism: Each one looks like the next. At the same time, we continue to see statistics indicating that students across the board are not prepared for college-level work. When we narrow our focus to low-income or minority students, the picture gets even worse. In Missouri (where I live), for example, only six percent of African-American students scored college-ready in all four subjects tested by the ACT. Six percent. Innovation is sorely needed.

But trying to create large-scale schools with an envelope-pushing model is expensive and risky. As a result, most people tend to stay in the same safe lane and, at best, try and tinker around the edges. This explains why most charter and even “lab” schools look so similar to the average public school and generally perform about as well.

One solution to this is the high-end model of AltSchools, where wealthy families pay for the innovations that might eventually make their way down market. Another is the small, focused model of tiny schools that rapidly iterate and see themselves as a work in progress rather than a finished product. But in both cases, it is the limited scope and tight focus of the effort that enable the innovation to take place.

We should not be so quick to dismiss “tiny” efforts to rethink schooling. A “tiny” effort in automobiles just made a car that broke Consumer Reports’ rating system. These schools may end up being bigger than we think.

The post The Case for “Boutique” Efforts appeared first on Show-Me Institute.

From harnessing solar energy to launching the first privately funded rocket, SpaceX founder and PayPal cofounder Elon Musk is a doer.

When something is broken, the billionaire doesn’t sit back and wait for change. When he didn’t think that payment over the Internet worked optimally, he created PayPal. When he saw that the U.S. space program had stalled, he founded SpaceX. When he drove on the highway and saw too few electric cars, he started Tesla.

Recently, Musk turned his attention toward a new market—education. Dissatisfied with what he saw, the inventor did what comes naturally to him, he built something better—Ad Astra.

While Ad Astra (Latin for “to the stars”) sounds more like a cutting-edge technology startup than something to do with children, it is a private school that enrolled over a dozen students during the 2014-15 school year, including Musk’s five sons and children of other SpaceX employees.

Enrollment is only expected to grow to 20 students next fall, but the school’s mission to eliminate assembly-line learning is gaining momentum. Ad Astra functions without grade levels and focuses on the individual needs of students.

“Some people love math. Some people love music. . . . It makes more sense to cater the education to match their aptitudes and abilities,” he said in an interview for Chinese television.

This concept is not new. In fact, De La Salle Middle School, a private school in Saint Louis City, also organizes students based on ability, not age.

Additionally, four states have adopted Education Savings Account (ESA) programs to both give schools more autonomy and parents more flexibility to find the educational model that best fits their child’s needs. Families like the Vissers and Ashtons have benefited from Arizona’s ESA program. They have been able to develop a unique educational program for their children, and their stories are worth watching.

Unfortunately, burdensome state regulations and inflexible funding streams often prevent innovation in education. I hope seeing what is possible in the private sector through examples like Ad Astra will encourage state leaders to allow for more specialization and experimentation. Finding a school that best fits a child’s needs should not be limited to the uber-wealthy and smart.

Whether Musk is sending people on the 140 million mile journey to Mars or attempting to reform education, I wish him luck! One of these will prove to be a less difficult challenge, and I hope it’s the latter.

To watch Musk’s interview about Ad Astra, click here.

The post A Private School That’s Out of This World appeared first on Show-Me Institute.

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.

The post Don’t Ban Tesla to Protect Middlemen appeared first on Show-Me Institute.

However, MADA’s claims hold little merit. The Motor Vehicle Franchise Law bans manufacturer-direct sales for franchisors (meaning those with franchises in the state). Tesla does not use the franchise model to sell its cars, and hence is not banned from direct sales. And this is not a loophole. The Franchise Law was designed as a series of protections to prevent large car companies from undercutting their own franchisees. It was not written to enshrine the independent car dealerships as the only method to sell cars in the state.

That is an important distinction, because whether or not Missourians believe car companies need to be legally prohibited from cannibalizing their own marketing and sales outlets, there is no economic justification banning a manufacturer-direct car sales model. As I wrote in a recent op-ed:

. . . vehicle distribution through dealerships can be costly to the consumer. The 2009 Department of Justice paper “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers” reported that as much as 30 percent of the cost of a new car is due to auto distribution. Enshrining the car dealership model in law has limited the ability of car manufacturers to both reduce inventory costs and increase customization, practices common in other markets. In Brazil, where GM can engage in direct sales, cost savings from order to delivery averaged 8.6 percent through direct sales.

Car buyers . . . might prefer directly buying from manufacturers for lower prices, customization, or simply to avoid bargaining at a dealership. A J.D. Power and Associates poll found that half of Americans profess a desire to buy manufacturer-direct, even if the prices are equivalent.

While that does not mean the dealership model would or should disappear, the government should not stop Tesla or any other car company from trying something different. That freedom to innovate is essential for a competitive market.

The post Don’t Ban Tesla, Let It Compete appeared first on Show-Me Institute.

The last time I bought a MacBook I made the purchase from an electronic goods store, but I could have bought it from one of Apple’s retail locations. In fact, millions of Americans purchase products directly from manufacturers rather than through a local storefront under independent ownership. Should Missouri pass a law barring Apple from directly selling computers? Such a prohibition would strike many people as an abridgement of freedom of choice, but that sort of policy is exactly the approach some lawmakers want when it comes to selling cars.

In Missouri, like other states, it is illegal for any car manufacturer with franchises to sell directly to the public. Dealerships fought for that regulation, implemented in the 1980s, under the argument that they needed to be protected from predator car companies.

Tesla, a new electric car company that has no dealerships, is selling cars directly to Missourians. Instead of welcoming a new business model to the state, car dealers and politicians like Mike Kehoe (himself a former dealership owner) want to ban direct-manufacturer car sales entirely.

Supporters of direct sales bans claim dealerships just want a level playing field, and that Tesla is getting special treatment. They claim, as all middlemen have, that their position is necessary, that allowing direct competition from manufacturers could allow car companies to destroy the dealership model. That would be bad for Missourians, they assert, because dealerships protect consumers and provide competitive markets. Having many dealers supposedly creates competition, leading to the lowest possible price for consumers.

In reality, vehicle distribution through dealerships can be costly to the consumer. The 2009 Department of Justice paper “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers” reported that as much as 30 percent of the cost of a new car is due to auto distribution. Enshrining the car dealership model in law has limited the ability of car manufacturers to both reduce inventory costs and increase customization, practices common in other markets. In Brazil, where GM can engage in direct sales, cost savings from order to delivery averaged 8.6 percent through direct sales.

Car buyers in Missouri, and in America, might prefer directly buying from manufacturers for lower prices, customization, or simply to avoid bargaining at a dealership. A J.D. Power and Associates poll found that half of Americans profess a desire to buy manufacturer-direct, even if the prices are equivalent. If dealerships cannot lure customers the way they operate now, why should Missourians be forced to buy their new cars only from them?

Allowing manufacturer-direct car purchases does not necessarily mean the death of dealerships, as long as they can be of service to both buyers and car companies. From the manufacturer perspective, dealerships allow the company to devolve responsibility for advertising, selling, financing, and maintaining a car, which allows the company to focus on car production.

I bought my MacBook from a store, but I wouldn’t force that choice on others in the market. The next time you purchase a computer, you will have the choice to buy from many types of stores or even directly from a manufacturer—business models that meet the needs of customers in different ways.

That’s a vibrant marketplace, and there is no reason the same type of market cannot exist for cars in Missouri. Indeed, if the playing field between Tesla and other car companies needs to be leveled, we should do so by scrapping the ban on direct car sales. There is no reason manufacturer-direct sales cannot exist side-by-side with competitive dealerships.

Joseph Miller is a policy researcher at the Show-Me Institute.

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That said, it must be noted that although Tesla is being wronged by the proposed amendment, policymakers would do well not to proclaim the heavily-subsidized company to be some spirit animal of the free market. Indeed, many businesses are quick to proclaim their love of the market while simultaneously marshaling special protections and subsidies to themselves. Tesla fits that description to a T; hit up that last link for a list of examples.

The Tesla episode reminds me of an old video featuring famed economist Milton Friedman. Asked some decades ago about who can save the free market, Friedman framed his response this way:

You talk about preserving the free market system. Who has been destroying it? The business community must take a large share of the responsibility. … You must separate out being pro-free enterprise from being pro-business.

The short video, which I commend to all of our readers, is below:

There is a difference between being pro-business and being pro-market. Clearly the proposed legislation would be pro-dealers; it would not, however, be pro-Tesla or pro-consumer.

The post Tesla, Car Dealers and Milton Friedman: The Problem of Protectionism and Cronyism appeared first on Show-Me Institute.

First, Medicaid expansion. To reiterate, Missouri should not expand this expensive, broken health care program. “Medicaid Transformation” is not the same thing as “Medicaid reform.” Transformation is just expansion rebranded.

Second, Right to Try. The bill would allow terminally ill patients greater flexibility to seek experimental medications, making this bill the latest in a string of proposed reforms — including last year’s Volunteer Health Services Act and this year’s hemp oil bill — emphasizing greater access in care and treatment. I testified in favor of the law in both the House and Senate, and while several states are considering the law this year, Missouri could end up being the first in the nation to pass it.

Third, paycheck protection. Paycheck protection would allow public employees in unions to, by default, keep more of their money rather than have it automatically siphoned off for a union’s political activities. It’s a common sense approach to a thorny free speech problem, which I’ve testified about before. If it goes to voters, you’ll hear much more about this topic from me in the weeks ahead, but the Senate will have to vote on it first.

There are other issues which are also lingering in the legislature, including tax credit reform and voter ID. I support both. TIF reform and the transportation tax are also big issues, and I would direct you to David Stokes’ and Joe Miller’s excellent work on those topics respectively. The school transfer issue is still very much alive, and of course there’s Tesla versus the car dealers, which you can read more about here and here.

It’s been a long session, but it’s not over yet. Stay tuned to Show-Me Daily as the week goes on for updates on these issues.

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