What Selling Cars Suggests About a Free Society
It’s difficult to imagine how a society of which most members do not believe in individual liberty could become or remain a free society. There must be a tipping point, perhaps far short of the majority, where the mob will seize power or otherwise force its values on the rest of individuals. This is why classical liberals such as James Buchanan or Friedrich Hayek assign much importance to the private morals prevalent in a society—the first by invoking an ethics of reciprocity among natural equals, the second by emphasizing the traditional moral rules in a self-regulating order.
Anarcho-capitalists and some more mainstream libertarians such as Gordon Tullock reply that in a free society, it will be in the self-interest of everybody or nearly everybody to engage in, and respect, peaceful cooperation. Let’s focus on a society with a state whose main function would to maintain a free society against external and internal threats.
In America, the laws of 27 states generally prohibit car manufacturers to sell their vehicles directly to the public from company-owned stores, forcing them to use independent dealerships. (Selling online is not forbidden, but many customers apparently like a physical place where they can see the thing and obtain more information.) The situation looks better than half a dozen years ago, when all 50 states had come, over the previous 25 years, to forbid all sales in manufacturers’ stores. It is, however, doubtful that the state of public opinion has much improved as opposed to becoming infatuated with electric vehicles (EVs).
Tesla obtained the privilege of selling cares through its own stores in a few of the restrictive states, but the resistance of independent dealerships and political orthodoxy are now difficult to crack. What is the political orthodoxy justifying these bans?
Don Hall, president of the Virginia Automobile Dealers Association, puts it bluntly:
When you have one person who controls all the marbles, you get marbles when they want to give it to you.
The suggestion is that the state and incumbent rent-seeking businesses control all the marbles. That looks like democracy as the ancient collective liberty as opposed to modern liberty. Another example: An EV startup, Rivian, has failed in its efforts to establish its own stores in Georgia. The Senate President Butch Miller, who is also a Honda dealer, declared, apparently referring to a Rivian lobbyist, Jim Chen (“The Man From Rivian Who Wants to Change How We Buy Cars,” Wall Street Journal, September 17, 2022):
Why should 11 million Georgians change the way they’re doing business to accommodate one individual?
In a free-enterprise economy, by definition, an entrepreneur is allowed to challenge, through competition and “creative destruction,” what all other businesses do. Even if there were only one Georgian willing to buy a car from a manufacturer willing to sell it directly, the two would be free to trade. Note that if there were only one such Georgian, or a very small number of them, there would be no reason for any car dealer or politician to be worried; they must fear that many consumers would like the alternative they ban.
It is not to “accommodate” one individual, even if there were only one, that 11 million Georgians “should” have to change their old ways. In a free society, as opposed to a socialist or fascist one, nobody is forced to change his way. No consumer and no producer can force everyone, let anyone 11 million Georgians, to change their peaceful ways. But in such a society, a firm would certainly be free to offer on its own property to sell a car to any individual willing to buy one. The only “accommodation” to make to any one individual is to recognize that he has the same liberty as any of the 11 million others. It is called consumer sovereignty and free enterprise.
We may connect this issue with Gary Gerstle’s book Liberty and Coercion: The Paradox of American Government (Princeton University Press, 2015—see my review in Regulation). Gerstle argued that the American Constitution created a limited central government but allowed the states to be little democratic leviathans. The many examples included slavery and official racism and also sometimes minute regulation of businesses.
One hypothesis (which Gerstle, a lover of “good” leviathans, does not envision) is that the American Constitution suffered from the same vice as, albeit to a lesser degree than, the French Constitution. Both the French Declaration of the Rights of Man and the Citizen of 1789 and, even more, that of 1793 tried to marry individual liberty and the sovereignty of the people, an impossible feat. In his book Le Libéralisme (Paris, 1903), where you will find the French text of the two Declarations, Émile Faguet wrote:
If the right of the people means its sovereignty, which is exactly what the writers of the [French] Bills of Rights have said, the people has the right, as the sovereign, to suppress individual rights. And this is the conflict. Writing in the same bill of rights both the right of the people and the rights of man, the sovereignty of the people and liberty for example, on an equal basis, amounts to put water and fire together, and ask them to please get along. [My translation]
[In the original:] Si le droit du peuple, c’est la souveraineté, ce que précisément ont dit les rédacteurs des Déclarations, le peuple a le droit, en sa souveraineté, de supprimer tous les droits de l’individu. Et voilà le conflit. Mettre dans une même déclaration le droit du peuple et les droits de l’homme, la souveraineté du peuple et la liberté par exemple, à égal titre, c’est y mettre l’eau et le feu et les prier ensuite de vouloir bien s’arranger ensemble.