Recently in a small community, business retention was given as a reason to turn down the zoning approval for a new business. Sure, there were two existing businesses in the same general retail category in the community already. But I couldn’t help but ask myself if elected officials are the best people to choose economic winners and losers. When does business retention become local protectionism, and is that a problem here?
Developers aren’t the bad guys!
Protectionism flies in the face of free market capitalism. Businesses and developers recognize the local and regional capacity for a community to succeed, which is why they spend millions to invest there. They do not enter a community as “terminators” seeking to destroy.
Change is Scary
Protectionism could be a manifestation of fear. Nearly every community expresses the desire to grow, be it in the tax base, jobs, housing, and/or people. But those same communities often have an aversion to the inevitable result of that growth: Change. The fear of change within a community, in the hopes of preserving the status quo, can hamper its prospects for prosperity for 50 years or more. Public outcries against new businesses set up barriers to new entrants. (Believe me, word gets around – they will stop knocking). They are also a public statement that, in the community’s opinion, the business they are protecting is not fit to compete in the economic landscape. So, what might seem a favor, is in fact a public vote of “no confidence” in that business or business owner.
Local Protectionism Stunts Growth
In the end, the local business suffers. Despite best efforts of protectionism, locals will find options elsewhere that offer better selection, price, service, or some other perceived value chain. Protectionism doesn’t keep an entity in business. It keeps them from evolving to meet the (like it or not) global market. And, it stunts economic growth and plants the seeds for cronyism, bribery, corruption, and red tape. These are all things that every community truly should fear.
Now, we haven’t seen a community devolve to the point of bribery and corruption. Most often local elected bodies just want to ensure the economic security of the existing retail stores. But they fail to recognize what they cannot control: market share erosion to sales over the internet, dollars leaving the community to other markets with more appealing retail stores and simply the natural business cycles of stores such as the existing retailers.
Protectionism Doesn’t Embrace Growth and Change
Our concern for the community is one of remaining stagnant instead of embracing growth and change. A good business that sees a market opportunity in a community will find a way to offer its goods and services to that market. They will do so either by investing dollars inside that community or finding a way to tap it from the outside, leaving them in the dust from a tax revenue perspective.
Change is inevitable. Growth is optional.
What do you think?
