There’s a lot of talk these days about the “big box stores:” Walmart, Kmart, Kroger, etc. A lot of people think the stores are predatory by nature and are destroying Mom-and-Pop shops to the detriment of society and joy and goodness. The argument is that we would all prefer little local stores but somehow the big chains are forcing themselves on us.
My initial response, as someone who firmly believes in the basic economic efficiency of the free market as a way of providing what people want and need, is out-and-out denial. After all, I reasoned to myself, on the free market people vote with their wallets, finding whatever best gives them what they want. And because Walmart and other massive stores have clearly been winning for some time, my initial thought was that the death of the little guy is because the big guy is inherently better for society.
But we all really know this isn’t entirely true. There’s a lot of people who would prefer to walk to a little local store and buy their daily food, but can’t because the only choice is big box stores that they have to drive to. And so what a lot of us are led to is the irrational belief that, through open competition between stores and voluntary interactions, the big stores are somehow creating a solution that, despite everyone involved trying to find what’s best for themselves, is worse for everyone.
So how is it that the free market, which involves people making free choices for their own good, results in solutions are in some ways worse than other solutions? And more important than the problem is that we have, if the badness of Walmart et al. is true a dysfunction inherent in the free market. And if the free market is inherently dysfunctional, it cannot be trusted and the only alternative, governmental coercion, must be used to stop people from the natural result of their making their own choices.
It would be the death of libertarianism.
But no need to worry, libertarians of the world. The answer to our paradox is simple: the free market is not producing the current dysfunctional market situation. What currently exists with the United States is not a free market, but rather a mixed market, where there are semi-free elements (such as the individuals ability to choose whatever he wants to shop), but there are also coercive elements (in the form of government regulations) which are distorting the natural market preferences.
In this case, it is zoning regulations which are depriving people of the option of local mom-and-pop places. We have accepted government regulations which, under the guise of helping people, have outlawed most selling in ” residential” areas. Thus, we have artificially produced a situation where people have to drive far away to get to stores, which pretty much rules out the nearby local grocer. And as doing business with neighbors is a very humanizing interaction, being forbidden from doing it breaks up a lot of the community connections which should naturally exist and cause social relations to run more smoothly. And because individuals can’t legally start business out of their own homes, and therefore businesses have to start as fully established shops, the corporation has a huge starting advantage because almost no individual has the cash to start a medium-to-large business all at once.
And let’s not even mention the oppressive minimum wage laws which make it difficult for the mom-and-pop outfit to hire cheap spare-time teenage labor. As someone who comes from a small town where teenagers have difficulties finding employment, I can assure you that there are plenty of teenagers who would be willing to work for a little shop for under $7.35 (there’s plenty that do, but they have to do it illegally), and there are plenty of local shops which could do better if they paid below the official minimum.
And so the situation isn’t that somehow the free market is putting power into the hands of big corporations. Instead, it’s the artificial constraints on the market that are leading to massive power in corporate hands. What we ought to be fighting isn’t the free and voluntary exchanges of capitalism, but the distorted and corporatist nature of over-regulated crony “capitalism.”
2 Trackbacks
[...] effort to punish a farmer for farming successfully. No surprise there: I’ve told you all before that zoning laws squish the little guy while helping the powerful. This entry was posted in [...]
[...] said before that the free market can deliver an appropriate number and selection of little mom-and-pop shops. [...]