The Free Market Works Best When (Or Hockey, Rite Aid, Thai Proverbs and Doubting Government and Business)

I’ve been thinking a lot about the free market lately.  In part, I’m wondering why Center City Allentown has one good drug store (Rite Aid), and why that one good drugstore is being displaced by the coming AHL hockey arena (I generally support the arena project), and what that drugstore is going to put up its next shingle in the suburbs, and where that leaves Center City residents no longer able to walk or take reasonable transit routes to a drugstore of any kind, and what all of that says about the degree to which markets are efficient at providing basic needs.

One might argue that the arena project would not be happening without governmental canoodling and the creation of a special tax district downtown.  Sure.  But that doesn’t explain why there’s only one viable option for prescription drugs within a reasonable distance for residents who either walk wherever they’re going (we all say we want walkable cities!) or take transit (we all say we want more people riding buses).  Some arguments will come and go from the fiscally arch-conservative side: the people downtown are poor because the government’s meddling keeps them poor.  If it weren’t for government, those people would have better jobs, cars, nicer places to live, better healthcare options and so on.

And yet, at a time when rental prices and retail space downtown are likely to be at their lowest points ever (so much vacant space, but lo, an arena project looms), I don’t see a whole hell of a lot of savvy business types flocking into even the nicest, newest spaces the city has to offer.  If ever there was a time to come in from suburbs to set up shop, surely it is now.  And yet. Indeed, the coaxing of various businesses with tax breaks and economically favorable statuses is a tweaking of the supposedly pure state of equilibrium the market is thought able to deliver.  We’re in an economic mess, say some, because of government meddling.  In the process of wars on poverty and building great societies, lots of people got screwed.  These are not of themselves outlandish hypotheses. But when some fiscal conservatives take the next step to say that government has no real, legitimate role in trying to fix the mess it has created, I get confused, Columbo style.

Government makes mess.  Government perpetuates mess. Government never should have made this mess in the first place, so now government has no role in trying to fix it.

That doesn’t sound right, does it?  The real kicker: let business do what business wants and business will save everyone.

I’m not anti-business by a long shot, but I am very anti-dogma.  Enron was a business.  All those big banks that helped bring us to the brink of ruin were businesses.  Wall Street is a business.  Yes, Congress is a business. Like government, business can do harm and business can do good.  Like government, business can be generative.  Like government, business does not deserve our total, utter, faith and trust.

Here’s when the market really can cure all that ails you:

  • Perfect information is universally available, obtained, and understood on all sides of every transaction and hypothetical transaction.
  • Every consumer or investment choice is made by perfectly rational beings with the same exact meta-goals.

So, in other words…yeah.  Sounds good on paper.

Unfettered beliefs in the efficiency and tangential goodness of markets or government aren’t tenable forever.  At the local level, we long to believe that a rising tide will lift all boats, and, to a degree, I think it will.  But I also read a Thai proverb today that gave me pause:

At high tide, the big fish eat the ants.  At low tide, ants eat the fish.

I’m not calling anyone an ant.  But isn’t this idea basically the fear behind the fear the well-horned have of the Occupy movement?  And isn’t it the fear most people caught somewhere in the disappearing middle have in general, that when push finally comes to shove, when things get REALLY bad, it won’t be push and shove but blocks on fire, looting, violence, chaos?

Even if high tides lift all boats, low tides come regardless. Will we trust the government, the market, or will we invest now in each other, in communities, in partnerships, in new ways of being neighbors?

3 thoughts on “The Free Market Works Best When (Or Hockey, Rite Aid, Thai Proverbs and Doubting Government and Business)

  1. In a fit of curiosity, I looked up Allentown and whaddaya know, it’s undergoing an urban renewal process. Urban renewal is one of those neat things that municipal governments do when they think they can outsmart the market. Think of New London, Connecticut (the same one that gained notoriety in the Kelo case) and its development program. It’s not exactly the best way to try and examine the market in action.

    1. I understand your point. And some of the eminent domain concerns with Kelo may resurface here. Interestingly, many blame redevelopment in the 60s and early 70s for the beginning of Allentown’s woes (though macro issues were at work as well). In that phase of redevelopment, an entire working class neighborhood (with working people) was seized and eventually turned into Section 8. That didn’t exactly help a downtown who’s main economic activity was retail consumer spending.

      The point, now, though is precisely what you’re getting at: examining the market in action happens best inside a kind of vacuum. But Allentown is not a vacuum. Further, a pure market model has to assume the bulleted points above, and those conditions don’t exist anywhere, and never have.

      Thanks for reading and commenting.

  2. Pingback: Cities and Prices

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