Actually, no extra money will flow from NJ to California.
Consumers will pay less for their cars, and the extra $1000-$2000 dealerships make on each car, will remain in the consumer's pocket. This is better on the whole.
Dealerships are market inefficiencies, as they create no real value or "wealth"[1]. They give nothing to consumers in return for the $1-$2k extra that consumers pay for each car.
Eliminating an economic inefficiency (the middle-man) creates a surplus. Where that surplus flows, whether to the consumer or the producer or split between both, depends on the market.
> Dealerships are market inefficiencies, as they create no real value or "wealth"[1].
This is very surprising complaint to hear - the whole capitalist economy is filled with inefficiencies! (and Paul Graham is hardly saying something novel here).
The GP wasn't saying that all middlemen add inefficiencies or destroy value, only that these particular ones do since you're forced to use them regardless of need.
Consumers will pay less for their cars, and the extra $1000-$2000 dealerships make on each car, will remain in the consumer's pocket. This is better on the whole.
Dealerships are market inefficiencies, as they create no real value or "wealth"[1]. They give nothing to consumers in return for the $1-$2k extra that consumers pay for each car.
[1] As defined by Paul Graham in: http://paulgraham.com/wealth.html