How Conservative Texas Legislators Protect Business Rather Than Free Markets

Each of the two major political philosophies has its own particular temptation to excess.The left, for instance, can turn its natural and legitimate concern for the poor and marginalized in society into an unhinged and counterproductive socialism that destroys the productive economy, and into a class-focused Marxism that undermines individual liberty and dignity. We see quite a bit of that going on these days.But the right can turn its natural defense of free enterprise and capitalism into protectionism for business interests and other policies that are actually counter to free markets and economic dynamism. We see quite a lot of that going on these days, too, even in Texas, supposedly one of the most free-market states in the Union.Unfortunately, a lot of my friends on the right confuse being pro-business with being pro-markets. They're not the same thing. Supporting free markets means welcoming new competitors and disruptive new business models. For instance, welcoming ride-sharing even though it disrupts the existing taxi business, and welcoming wine being sold direct across state lines even though it disrupts existing distributor and retailer relationships.New competition and new business models work to the benefit of consumers through lower prices and new services. Being pro-market means removing barriers to new entry and competition, not erecting new ones. And it certainly means that you support whatever result the market delivers, rather than trying to rig the game in favor of some favored, existing business or industry.Some conservative Texas lawmakers this legislative session are presenting us with not one but two examples of confusing business protection with free-market support. This is unfortunate, but it may provide an object lesson in the difference between being pro-market and pro-business.Sen. Kelly Hancock, R-North Richland Hills, and Rep. Dade Phelan, R-Beaumont, are moving SB 1938 and HB 3995, respectively, which are designed to protect incumbent electricity transmission companies from new competition. These bills, filed at the last minute, give existing electric utilities an inappropriate level of control over construction of distribution lines and would specifically overturn a competitive bid that could save East Texas consumers millions of dollars. Essentially, it protects an incumbent provider from the inconvenience of having to deal with new competition.SB 1938 literally says that "a certificate for a new transmission facility that directly interconnects with an existing electric utility facility may only be granted to the owner of the existing facility." How's that for protecting existing companies against new competition? Just make new competition illegal.But there's more. With SB 1415, Hancock (again) has introduced a bill that makes it illegal for Tesla to service cars in Texas. It's already preposterous that Tesla is prohibited from directly selling cars in Texas — that's another example of a law that simply protects an established business model against competition from new business models. But Hancock's bill doubles down on the offense, including "servicing" and "repairing" in the definition of dealership activity, and since Tesla doesn't have dealerships, Tesla would be forbidden from using its six Texas service centers to service its vehicles.As a conservative, free-market Texan, I'm more than frustrated with elected Republicans who tell voters that they believe in free markets, but then spend their time in Austin protecting entrenched business interests against new competition. And that's exactly what these two legislative efforts are designed to do, protect existing electric companies and auto dealers from new competition.In one of their bits of propaganda, the electric utility companies say "while competition is good in theory." No, actually, competition is good in fact and in practice. Whether you're an electric utility, an automobile dealer, or an elected member of the Texas Legislature, when you find yourself in the position of inhibiting competition, you're on the side of business, not the side of free markets. And they aren't the same thing.Tom Giovanetti is president of the Institute for Policy Innovation in Irving. He wrote this column for The Dallas Morning News.   Continue reading...

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