The automotive industry is the most popular industry in recent years. Of course, numerous investors have attracted hundreds of billions of yuan to the automotive industry. As a result, the competent authority decided to play a role. It has been reported that the new “Automobile Industry Policy” to be issued at the end of the year will further strictly examine the qualifications of manufacturers of new automobile auto industry to curb the current investment in auto investment. Officials from all walks of life also stated that the government will continue to intensify its efforts to rectify the situation in which the auto industry is “scattered, small, and disordered.” The new industrial policy will be conducive to auto makers seeking to integrate or merge, and give birth to powerful auto makers.

Good intentions. However, there is a problem: In Zhejiang, more than 40 private enterprises are competing for vehicles. Does the government also restrict their investment enthusiasm?

Let us carefully clarify this issue. First of all, there is a clear affiliation between the governments at all levels in China; then, if the enterprise and the capital are state-owned, theoretically, the central government authority can close any factory and can decide on any state-owned capital. The investment does not require any economic reason. This principle also applies to existing automakers and all state-owned capital that will be invested in the automotive industry. For these enterprises and capitals, the competent authority can of course say that the restrictions are limited, saying that closing will close.

However, assuming that companies are private, or will soon invest in the funds of private companies, can the government limit it? We admit that if the government is for macroeconomic stability, for example, in order to curb inflation, then it can of course indirectly suppress the enthusiasm of private enterprises to enter the auto industry through macroeconomic policies, such as raising interest rates. However, the development of a paper industry policy requiring private enterprises to implement, or by raising the barriers to entry into the industry, is almost exclusively aimed at creating barriers to the entry of private capital. Is this practice economically justified? Is it in accordance with the rule of law?

The competent authorities certainly think that they are responsible for the healthy development of the entire industry now and in the future. However, the author thinks that taking into account the current corporate structure of the automobile industry, shutting down existing state-owned auto companies that have no benefit, and strictly restricting state-owned capital from entering the auto industry, it may be a reasonable, legal, and effort-saving approach.

If the competent department officials restrict private capital into the automobile industry as the main way to rectify the automobile industry, then the author would have to remind the relevant departments that the current situation of the automobile industry is “scattered, small, and chaotic.” of. The simple fact is that all current automobile manufacturers—it is said that they are distributed in 31 provinces and municipalities—have a total of 123—all without exception being approved by local and industry authorities. When the competent authorities are rectifying, intensifying efforts to rectify, and vowed to continue to intensify efforts to rectify the situation of the automobile industry, which is “scattered, small, and chaotic”, does it have any thought: Should one bear responsibility for this situation?

Moreover, we can infer that the threshold for entry into the industry set by the competent authorities was even higher. However, did these thresholds really filter out the seeds that can really grow into large enterprises? The current rectification itself shows that it does not. Well, a dose of medicine, when the dose was much larger than before, did not work.

There is no point in accountability, but this historical fact once again proves one of the most basic conclusions of economics: government authorities are no smarter than private entrepreneurs. If the money used to invest is its own, then the money itself constitutes a harder constraint for entrepreneurs than any approval process. Therefore, these private entrepreneurs are much more cautious than the government authorities.

The competent authorities of course have their own ideas: overcoming difficulties in collecting water, old businesses are not good, there are all kinds of costs and resistance, and it is much easier to restrict and prevent the establishment of new enterprises. This is true. However, this practice has made a mistake, which is equivalent to giving existing companies a monopoly. They can get a rent on their own by simply relying on a birth certificate that was previously obtained by the competent authority's failure to effectively perform the examination and approval duties.

According to sources, since the approval of new businesses was simply impossible, Zhejiang’s enthusiastic private entrepreneurs had no choice but to pay for shells. The so-called shell, in the jargon of economics, is monopoly rent. I hope that there will be an expert to answer: This kind of artificially created rent, that is, the unreasonably increased transaction costs, is it beneficial or unfavorable to the development of an industry?

No one denies that the auto industry is "scattered, small, chaotic," and no one does not like domestic auto companies to become bigger and stronger and participate in international competition. However, outside the market process, even if you have the world's most powerful computing computer and the most advanced model, it is impossible to affirm with certainty which company has the potential to become bigger and stronger. The market will always surprise people. A few years ago, the Geely Company, which had repeatedly been a refugee camp, did not give anyone a license a few years ago. Can people do a good job now?

Only the open market competition process itself has a dynamic discovery capability, telling people which companies can become China's GM and China's Toyota. Once we have artificially closed the market through regulatory measures and restricted competition, we will never know what we have lost. Presumably, what we have obtained is probably the worst result.

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