Clarity Blog

Clarity Blog

Posts Tagged ‘free market’

Unintended Consequences

Yesterday morning after outlining our 2012 PR plan to senior managers at The Management Trust – the largest community management company west of the Mississippi – I got a good lesson in the unintended consequences of bureaucratic meddling.  It wasn’t from one of the TMT guys – it was from a food vendor in the parking lot.

He was one of those guys who calls on office buildings with a cooler full of goodies.  His employer is a business that ‘s been around for at least 20 or 30  years, as I remember them from my early days in the public affairs / public relations business in Orange County.

He said there were only three of these businesses left in the county, not because they weren’t good businesses – he had hoped to start his own after learning the ropes – but because of the actions of bureaucrats.  Specifically, the Health Department worried that conditions in the coolers might not meet standards set by other bureaucrats further up the government pecking order, so they stopped issuing permits to new from-the-cooler food vendors.  The three existing businesses were grandfathered and continue to operate, dividing the county between them in neat little territories, but no new competitors can enter the market.

Was this move necessary?  I’ve read of dozens, hundreds, of food poisoning cases stemming from food bought in restaurants and grocery stores, but never one about food poisoning from a from-the-cooler vendor.  Why, then, are permits still issued to restaurants and grocery stores, but not to these vendors?  It seems like unjustified bureaucratic over-kill.

Then the vendor complained that his company won’t take ATM cards, which he figures is costing him about 50 percent of his potential sales.  “People just don’t carry cash any more, so they can’t buy my stuff,” he explained.  I was on an American Airlines flight the other day and tried to give the stewardess cabin attendant a twenty for some pitiful food, but she turned me down, saying they only take ATMs.  If American can refuse cash at 40,000 feet, how can this guy’s boss continue to refuse ATMs at ground level?

Could it be that government has created a near-monopoly by eliminating new competitors, thereby removing any motivation for the owner to invest in improvements?  A new competitor taking ATM cards – and thereby taking away sales – would cause the stodgy company owner to rethink and offer services customers want, but there is no new competitor.

It seems no matter where you look, you just can’t find an example to illustrate how replacing a free market with a government-controlled or government-directed economy works out better for consumers.

An Unhealthy Development

City planners in the Bay Area city of Richmond are putting the finishing touches on the town’s new general plan and hope to include a first-in-the-nation “wellness element” in the document, which will guide how new development is processed.  Writes

The new rules would require builders to show that residents have adequate access to healthy foods, medical services, public transit, affordable housing, recreation and open space, economic opportunity, safe neighborhoods, and environmentally sound, sustainable buildings.

Excuse us, but isn’t it the free market’s responsibility to provide residents with services like groceries (healthy or not), doctors and jobs? Isn’t it Richmond’s responsibility to make sure neighborhoods are safe? Aren’t homebuyers still free to choose whether to pay more for a recreation-rich neighborhood or less for one that’s not so well equipped? And ditto for the added price for “environmentally sound, sustainable buildings?” Whatever that means.

Richmond city planners need to realize that starry-eyed idealism comes at a cost.  Unless it dies a welcome death, the “wellness element” of Richmond’s draft general plan will not make Richmond’s economy any healthier. It will make the city less attractive to developers, who are likely to take their business – and the revenue new development generates for cities – elsewhere.