Every member of the Georgia Legislature was elected in November. Thus, one would expect those legislators to hold the citizens who elected them in high esteem; after all, they were wise enough to elect them, right?
The next month or so will determine whether those legislators actually trust their voters to make independent decisions in the marketplace, or they believe the citizens need to be protected from decisions elected officials don’t think we are capable of making on our own.
Two bills before the Legislature demonstrate the choice before these politicians. One would allow craft brewers and brewpubs to actually sell beer for customers to take home; another would allow Tesla to sell cars directly to consumers. Both actions may seem like simple consumer purchases that are only shocking in that they currently are illegal, yet current Georgia law insists that consumers need the help of an independent professional to sell them both beer and cars.
Today, citizens of Georgia can take beer home only after it has been purchased from the manufacturer by a beer distributor, then sold to a retailer and, finally, bought by the consumer.
Georgia law also requires car sales to go through an automobile dealer and does not allow direct-to-consumer sales. Tesla has enjoyed an exception for 199 cars per year, but after that, Georgians cannot purchase a Tesla because Tesla does not have a network of dealers.
Middlemen, such as beer distributors and car dealers, surely play valuable roles, and many customers would surely continue to avail themselves of their services even if not legally obligated to do so. But that is not a sufficient reason to guarantee them an exclusive role by law. The Internet and e-commerce have been all about eliminating middlemen. Why, after a quarter century of the Internet allowing for more direct connections between buyers and sellers, would the Legislature want to stand in the way of that progress?
Such laws protecting established businesses are similar to attempts to ban ridesharing services in order to protect entrenched taxi companies. Established car dealers, who have invested millions of dollars in their dealerships, would have good reason to be upset if the manufacturers they sell for cut them out of the transaction. Nevertheless, that is more a matter to be settled between the dealer and the automobile manufacturers who already have a contractual relationship that most likely addresses this exact issue. If it doesn’t, that is more a failing of the dealers and their attorneys, not a reason to deprive consumers of freedom of choice on the channel through which they wish to purchase a car.
No safety concerns enter into the arguments against either proposal. Beer already can be consumed by people on premises, so the state already has certified it as safe and is responsible for regular inspections. Any cars sold directly to consumers still would need to meet all the federal safety standards. The middlemen in question provide logistical and informational services; it seems reasonable to let consumers choose whether those services are something they need.
The Legislature is likely to allow Tesla to sell direct to consumers, but anyone wanting to buy any other brand of car will swill be forced to go through a dealer. Whether small brewers and brewpubs will see passage of a small exemption is a trickier question. Beer distributors are very protective of their role and have great political power, and the decision may turn on whether the beer distributors see any exemption as a slippery slope to further deregulation or simply a reasonable exception that will go no further.
The question before the Legislature is this: Do they want Georgia’s citizens to enjoy the full benefits of direct-to-consumer sales if it increases options and lowers prices? If the Legislature is on the side of its citizens, it not only will approve these measures, but also search through Georgia code for other outdated laws used to protect businesses that otherwise would be replaced by the new forms of commerce.
Fewer steps between manufacturer and consumer mean a lower consumer price. At a time when raises have been hard to come by for many Georgians, anything that can be done to provide savings to consumers is a good thing.
Dorfman is a professor of economics at the University of Georgia, a senior fellow at the Georgia Public Policy Foundation and a regular contributor to Forbes.com and RealClearMarkets.com. The foundation calls itself an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians.