Don’t Favor Incumbent Businesses

Today, Slate’s Matthew Yglesias reported that a group of business owners in the D.C. area are trying to block a new hotel because they think guests won’t favor their establishments. Yglesias points out that even if that happens the business owners won’t lose customers, then makes a broader point:

But the bigger picture question is why should public policy be promoting the interests of incumbent business owners? There’s a Korean restaurant on my block that’s pretty good and offers a great happy hour bargain. But there’s definitely better Korean food out there, much of it just inconveniently far away in Annandale. If the proprietor of a top-notch Korean restaurant in Virginia wants to open a DC location across the street, should the city step in to block that lest the restaurant that’s already there be “displaced” by competition? That doesn’t sound like a good idea.

Yglesias could well have been talking about some business owners in Provo, who at times have implied that for some reason policy should protect them. I originally reported on this phenomenon in this post — calling its consequences economic nihilism — but I’ll include the same Daily Herald quote again because it has to be seen to be believed:

“Economic development activities can hurt some businesses when it helps others,” the committee wrote in a letter to downtown businesses. “A new clothing store, book store, craft store, etc., can hurt or even drive an existing one out of business. There is no sure way to do no harm. Government should not be in the business of hurting one business to help another or to bring in new business.”

That insane quote comes from a letter signed by multiple business owners in downtown Provo.

Incumbent business owners sometimes feel like the government should protect them from competition. That doesn’t benefit anyone and it’s absurd to boot.

In both Yglesias’ example and in Provo local business owners are essentially asking to stop development because they’re afraid their company won’t be able to compete. That makes absolutely no sense; a thriving downtown business district should be filled with thriving businesses that are refined in the marketplace, not zombie businesses that are kept on life support by government control. In the end, that’s not capitalism and it doesn’t benefit consumers or the businesses themselves, who end up existing in an artificially depressed district.

The really sad thing is that in Provo this attitude led business owners to reject — and recently more or less defund — the advocacy and development agency Downtown Provo Inc.

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Filed under Development, Downtown, economics

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