Anti-business regulations aren’t helpful to consumers

THERE are times that those in government insist they can “help” people by discouraging the “wrong” businesses from investing in a community. This theory of economic development works about as well as you would expect with local citizens deprived of affordable goods and job opportunities.

Tulsa became the latest to try this approach, when the city council recently voted to restrict the opening of dollar stores in part of North Tulsa for at least six months. Those supporting the ban argue it will make conditions more favorable for a full-fledged grocery store that offers more fresh produce to locate in the area.

Perhaps, but there’s good reason to be skeptical. Certainly, it’s true that if government limits competition to favor a specific vendor or industry, the favored company usually benefits. But by reducing competition, government officials also indirectly raise prices on consumers. And if there are fewer overall stores because of a restriction, government may also reduce job opportunities.

Tulsa isn’t the only community where government officials have tried to discourage retailers from selling products or services to local citizens. In many other communities, Walmart has been a particular target.

In 2012, the Los Angeles City Council tried to keep a Walmart Neighborhood Market from opening by passing a ban on all chain stores in Chinatown. That proposal prohibited issuing permits to any businesses “that maintain two or more of the following features: a standardized array of merchandise, a standardized facade, a standardized decor and color scheme, a uniform apparel, standardized signage, a trademark or a servicemark.”

In 2014, New York City Mayor Bill de Blasio said, “I have been adamant that I don’t think Walmart — the company, the stores — belong in New York City.” Yet de Blasio’s predecessor, Michael Bloomberg, noted in 2010 that government efforts to keep Walmart out of the city didn’t mean city residents weren’t shopping there. Instead, they were just driving farther to make those purchases.

“If you would do surveys in, for example, southeast Queens, people are going to Nassau County to shop at Walmart,” Bloomberg said. “If you do surveys in lower Manhattan, they’re driving over to New Jersey.”

Citing research from Jerry Hausman, an economist at M.I.T., The New Yorker acknowledged in 2014 that “when Walmart enters a new market, it drives down grocery prices in general; to compete with Walmart’s low prices, other stores lower their own prices. Lowincome families benefit most, because they spend a greater proportion of their wages on food.”

Lost in these debates is the fact that businesses — whether a Walmart or dollar store or any other type of business — remain in operation only if local citizens choose to shop there. It’s not surprising that North Tulsa has a higher ratio of dollar stores than higherincome areas, because dollar stores have a business model based on selling low-cost goods to lowerincome people.

Critics of these businesses are often publicly vocal, but the message local citizens send with where they spend their money is even louder, and more indicative of community preferences.

Political rhetoric notwithstanding, government officials don’t do consumers any favors by “protecting” them from getting more bang for their buck.