I recently watched a film in a movie theater in a ‘transitional’ neighborhood in Oakland and was more than pleasantly surprised on walking through the unimposing entrance to what could have been a very large garage. The scene opened up to a cheerful combination of café, pub and pizza parlor. Orders could be eaten in the pub or delivered to the several movie theaters in the back rooms which were furnished with comfortable sofas, armchairs and tables. I immediately started to wonder what zoning restrictions, business licenses, building codes, disabled access laws and liability insurance issues prevented most movie theaters from offering such an attractive movie going experience.
This got me thinking about how the state creates blandness and uniformity in so many of our other consumer experiences as well. For example, when I lived in London I was relatively close to one of the largest street markets in Europe. On busy market days the sights, sounds and smells were unforgettable, as stall holders bellowed their offers in rich cockney accents and socializing blended with business in an ever-changing tapestry of conversation and exchange, all knit together by the spontaneous order of countless small-time independent entrepreneurs. Compare this experience to visiting a typical American, big-box retailer or a regional shopping mall with a uniform design, the usual large corporate anchor tenants and the customary and familiar retail names filling a sterile and sanitized space managed by a top-down administration.
I am not unaware of the genuine economies of scale that often favor larger enterprises (although there are dis-economies of scale too), nor am I unappreciative of the fact that the 21st century consumer has access to greater choice and a wider assortment of products than at any time in American history, but it is nevertheless a little appreciated fact that state power is the major force behind large, monopolistic, cartelized and bureaucratic corporate behemoths. For example, central planners like Robert Moses used state power in the form of eminent domain to literally bulldoze away vibrant communities in favor of highways that favored automobiles as the dominant urban transportation system, and consequently subsidized the growth of big box retailers that would have struggled to survive if they had been forced to construct and maintain their own mass transportation systems to bring customers to them.
Furthermore, retailers such as Walmart can afford to pay its employees such low wages only because up to 80 percent of its employees receive food stamps and so are subsidized by taxpayers through the state welfare system. In addition, competition for labor is reduced (which helps to keep salaries low) because large corporations inevitably capture regulators and use the regulatory apparatus to limit competition from smaller, nimbler and more aggressive competitors. They do this in by imposing fees, licensing requirements, capital requirements and other burdens that are more easily borne by larger companies. Furthermore, legal restrictions on trade unions make it harder for low income workers to organize for themselves collectively.
It should not be too surprising that most regional shopping malls in the U.S. look alike as most of them are owned by the same company, the Simon Property Group. What has virtually disappeared from all Simon properties over the last few years are the local retailers that bring some sort of uniqueness and local flavor to the mall. The reason for this is that Simon Properties can easily replace a local retailer with a national chain retailer who faces significantly lower occupancy costs because of the national account relationship with Simon Properties. In other words size matters and we have seen how the state acts to negate any dis-economies of scale (increased costs of communication and management, increased costs of maintaining heavier equipment, difficulty of accounting and allocating resources as more transactions are internalized within the firm, problem of re-gearing to respond to new challenges etc.) by socializing the costs and immunizing firms from competition.
“There is more to life than increasing its speed.” Mahatma Gandhi