Free Markets, Free People

Dealergate


Dealergate and Statistics

Yet another statistical analysis of the Chrysler dealership closings has been conducted, although this one appears to be both much more thorough (albeit preliminary) and concentrated on the correct data (my emphasis):

To start with, we pulled raw donor data from The Center for Responsive Politics / OpenSecrets.org for the 2008 election cycle and extracted ~865 megabytes of 2008 individual contribution (“IC”) cycle table entries.

[...]

… this particular output is the widest available dataset on contributions. We matched this data against two Chrysler dealer lists:

First, Docket #797 “Document #3″ “Schedule of Designated Domestic Dealer Agreements and Cure Costs Related Thereto” (a list of dealers expected to survive).

Second, the famous “Exhibit A” document of dealers to be closed.

[...]

We ran binary logistic regressions across the variables. The results are interesting but the most dramatic was saved dealers v. donations by candidate and/or party.

The results of the analysis suggest that donors to Hillary Clinton in the recent presidential race received some preferential treatment. That does not mean that anyone has proven anything, nor that the statistical analysis makes any sort of unassailable case. It merely raises a concern that, given the probabilities, Clinton donors appear to have survived the dealership closings surprisingly well.

This puzzled us. Why would there be an significant noticeable (we have rightly been called out for using significant here) and highly positive correlation between dealer survival and Clinton donors? Granted, that P-Value (0.125) isn’t enough to reject the null hypothesis at 95% confidence intervals (our null hypothesis being that the effect is due to random chance), but a 12.5% chance of a Type I error in rejecting a null hypothesis (false rejection of a true hypothesis) is at least eyebrow raising. Most statistians would not call this a “find” as 95% confidence intervals are the gold standard for this sort of work. Nevertheless, it seems clear that something is going on here. Specifically, the somewhat low probability that the Clinton data showing higher survivability of Clinton donors could result just from pure chance. But why not better significance with any of the other variables? Why this stand out?

Then we got to thinking. Steven Rattner, the Car Czar, is married to Maureen White, one-time national finance chairman of the Democratic National Committee. What does Maureen do now? From her website:

Maureen White is currently Chairman of the Board of Overseers of The International Rescue Committee (IRC), a member of the North American Advisory Board for the London School of Economics, and a National Finance Chair of the Hillary Clinton for President Campaign. (emphasis ours)

That website looks dated, but you get the idea.

Again, we want to point out that our findings are preliminary and subject to change. But whatever the result, the Administration has made themselves very vulnerable by taking charge of the dealership closing decisions.

I’m still not sure if there’s anything to the allegations, but there seems to be more than enough anomalies to warrant some questions being asked of the Obama administration. It should be noted that the theory regarding potential shenanigans has morphed from Obama creating a Republican hit list with the closings, to Obama benefiting Democrat donors by allowing their dealerships to survive (and thrive), to Obama’s “Car Czar” rewarding donors to his wife’s favorite political candidate (Hillary Clinton). When the theory moves that much, often it’s a sign that one is fishing for a villain. And despite the evidence amassed in this case showing that an unusual number of Democrat donors are set to prosper from the closing decisions, that may be the case here.

However this all turns out, one thing is certain: by involving itself so deeply in the fate of Chrysler (and GM), the Obama administration invited scrutiny concerning its decision-making processes. Furthermore, in being so opaque about how the government is picking winners and losers (not to mention that it is making these decisions at all), the Obama administration has left itself open to attacks of favoritism. That has nothing to do with Obama or partisanship in particular, but with the fact that unaccountable power rightfully raises fears and suspicions of favoritism. If Chrysler had been left to fend for itself in bankruptcy, none of these questions would have been raised.

The government arrogated to itself tremendous amounts of power over what would normally be private business decisions. In the process, the Obama administration blatantly used its power and influence to reward a favored constituent group (the UAW). Now that statistical evidence suggests more favoritism may have been in play, it’s a little late to cry “conspiracy theory.” Instead, the Obama administration should start opening the books and answering questions.


“Dealergate”: Things To Keep In Mind

Whether or not the decisions to close certain Chrysler dealerships was political motivated is still an open question, and based mostly on anecdotal evidence as well as an incomplete analysis data. Regardless, the evidence available thusfar, when viewed in light of the Obama administration’s previously demonstrated willingness to meddle for partisan gain (UAW anyone?), suggests that in the very least more investigation is warranted.

As the investigation unfolds (the yeoman’s work of which is being done by Doug Ross and Joey Smith), there are couple of things to keep in mind. Although many people have referred to the closing list of dealerships as a “hit list” it makes much more sense to concentrate on the dealerships remaining open and regarding it as a potential “friends Obama supports” list. By way of example, the evidence unearthed by Joey Smith regarding the RLJ-McLarty-Landers enterprise reveals that big time Democrat donors and partisans are reaping enormous benefits from the Chrysler plan in the form of all its competition being wiped out. So who owns this luckiest of dealerships?:

In my analysis of the Chrysler dealers that will remain open, I came across one dealer group that stood out to me.
The company is called RLJ-McLarty-Landers, and it operates six Chrysler dealerships throughout the South. All six dealerships are safe from closing.

[...]

The interesting part is who the three main owners of the company are. The owners are Steve Landers (long-time car dealer, 4th-generation dealer), Thomas “Mack” McLarty (former Chief of Staff for President Clinton), and Robert Johnson (founder of Black Entertainment Television and co-owner of the NBA’s Charlotte Bobcats). Landers has given money to Republicans in the past, but McLarty campaigned for Obama in 2008, and Johnson has given countless amounts of money to Democrats over the years.

Smith has found a similar fortune for Lithia Motors, whose CEO Sidney Deboer is a Democratic donor (although he’s also given to Republicans) and has come out publicly in favor of the Obama administration.

Of course, all of this is still anecdotal, but the planned closings look awfully fishy when the list of canceled dealerships is so totally dominated by Republican donors, and the list of survivors features prominent Democrat supporters.

Regardless of the above, Nate Silver has provided the excuse for Obama supporters to safely ignore this story by declaring the percentage of Republican car dealers to be so high in comparison to Democrats, that there should be little to no surprise when the closing list is so chock full of GOP partisans:

There is just one problem with this theory. Nobody has bothered to look up data for the control group: the list of dealerships which aren’t being closed. It turns out that all car dealers are, in fact, overwhelmingly more likely to donate to Republicans than to Democrats — not just those who are having their doors closed.

[...]

Overall, 88 percent of the contributions from car dealers went to Republican candidates and just 12 percent to Democratic candidates. By comparison, the list of dealers on Doug Ross’s list (which I haven’t vetted, but I assume is fine) gave 92 percent of their money to Republicans — not really a significant difference.

There’s no conspiracy here, folks — just some bad math.

Despite what Silver asserts (i.e. that the control group of non-closing dealerships should be examined), he does no such thing. Instead, he researches the Huffington Post’s Fundrace database for donations from car dealers to arrive at his decision that such occupation gives to the GOP at the tune of 8-1. However, Open Secrets arrives at a much different conclusion, especially over the long term, in which dealers only gave to the GOP at approximately a 3.5-1 clip. At those numbers, one would expect to find somewhere around a quarter of the closings to affect Democrat donors, instead of the 2.36% found thus far:

In fact, I have thus far found only a single Obama donor ($200 from Jeffrey Hunter of Waco, Texas) on the closing list.

Another review of all 789 closing dealerships, by WND, found $450,000 donated to GOP presidential candidates; $7,970 to Sen. Hillary Clinton; $2,200 to John Edwards and $450 to Barack Obama.

Of course, it’s important to remember that statistics do not prove the existence of anything, just its likelihood of existing. Nevertheless, the details uncovered so far suggest that partisanship may have indeed played a role in deciding which franchises remained open.