I swear some of you out there think we live in a socialist community – a community controlled by central planners who decide which deals go where.
And you pretty much think these central planners are pretty dumb.
Every time news of a new retail development comes out, social media explodes with comments about what “they” should put there — A Wegman’s, an Olive Garden, a Sonic, a Mighty Taco, or whatever chain a commenter for his or her keeps her favorite . Always a chain, by the way, not “I hope that an ambitious local will open a local business there so that the community can bring greater economic benefit.”
I often want to ask, sometimes I also ask: “Who is ‘she’?” I really want to know who these people think is the “they” deciding which stores are allowed to open and where. I think I got an answer once. He said “the bureaucrats”. And when I explained that it didn’t work that way, his response was, “It was just a figure of speech.”
I think it’s important for people to understand that there are no central planners in our economy. It is important that people understand how free markets work. If people don’t understand that, we’re in greater danger of the socialists taking over.
But after more than a decade of dealing with people on social media and the “you” comments, it’s clear it’s a losing battle. They just won’t learn or listen.
When a business is announced for a location, the “they” comments remain. “Why are you putting that in there? The last thing we need is another deal like that.” For example.
This is often followed by a failure prognosis for the new company location.
One thing to say about chains: they didn’t become big chains without knowing what they were doing. Before they even scout a particular location, negotiate leases, or begin planning, they have conducted market studies. They know the population, the demographics, the wages earned, how much of the market there is to capture with their offering and how they intend to offer it. Executives don’t just roll the dice and hope for the best. They don’t operate under the illusion “if we build it, they will come”. They have pretty good data predicting a high probability of success.
All the data in the world does not guarantee success, of course, but the probability of success is high when the data indicates that there is a market opening. They may think they’re wrong, but be humble: they don’t have the data they have. You’re just guessing and chances are you’re guessing wrong.
And here’s the thing – this is not a socialist economy. Private real estate owners and private business owners can spend their own money however they want and grab any opportunity that suits their imagination.
If a proposed business location meets all zoning requirements and obeys all applicable laws, government officials cannot deny private business owners the right to risk their own money as they please. You can’t refuse to open a business just because you might personally think a particular business is a bad idea. This is how authorities are sued.
If a proposed business objectively meets the standards set forth in the zoning code and all other applicable statutes, community planners have no choice but to approve any application presented to them. And these applications are tightly constrained to ensure that the only criteria taken into account are zoning issues – the number of parking spaces, setbacks, environmental impact, signage, size and so on. There is no law limiting the number of pizza restaurants, donut shops, or coffee houses that can be located in a community.
You can’t build a concrete factory in a residential neighborhood, and many jurisdictions restrict strip clubs to certain neighborhoods (city officials can’t outright ban adult entertainment venues for constitutional reasons), but outside of these broad definitions, there’s no legal way for local officials to run a business because of the nature of the business or its perceived prospects for success.
In a free market, we wouldn’t want government officials to have that kind of power. Economies thrive because people come up with new ideas and risk their own money to advance those ideas. When you put up artificial barriers to entrepreneurship, be it for the chain owner or the local owner, you blaze a trail into poverty.