The article skates over one important aspect of local ownership. Part of the argument about small-business owners is that "these kind of local elites are often the bulwark of conservative politics." But that is a very cramped view of the role that the local business owners can play in their local communities.
The life of a community and its social organizations often depends upon the sustained engagement of people with the means and the motivation to provide meaningful support. When small businesses close and ownership is transferred out of the community, the organizations that hold the community together (libraries, sports leagues, gyms, parks) will suffer, and the community as a whole may move rapidly from vibrant to not. Yes, residents may be able to buy cheaper groceries, but the social costs might be quite high.
When I grew up in Poughkeepsie, New York, in the 1970s, we shopped on Main St. at the local farm store, the local shoe store, the local furniture store, the local bookstore, the two local department stores. The owners of those stores were on the boards of many of the local non-profits. The city had a flourishing library, a large YMCA and a YWCA (both with pools that were available to local schools), a philharmonic orchestra, arts organizations, and other groups that were essential to the life of the community per se. By the end of the 1980s, almost all of that was gone. There were plenty of forces undermining the life of Poughkeepsie (and of so many similar cities across the country), but it is important to see that the local business owners are a core component of the local ecosystems.
The mom & pops that were affected by Wal-Mart were often located downtown, and Wal-Mart and other big box stores are almost always on the outskirts of town or near newer expansions of town. So what seems like straight up competition contributed to downtowns emptying out. Wal-Mart isn’t the only reason, but they played a role.
Lots of towns have resurrected or are trying to resurrect their downtowns, but ironically they now have a new problem - what do they do about the loss of tax revenue as people stop buying from big box retailers in town and only buy from online stores.
Small business owners are behind the labyrinth of regulations that stifle competition. Many (most?) jobs and markets -- hairdressers, real estate agents, nail salons, accountants, taxicabs, auto dealers -- have captured the state's regulatory authority to raise artificial barriers to competition. Auto dealers are probably the strongest and worst of all. These barriers are not erected for quality or safety, but to reduce competition. It is corrupt and endemic across our states, liberal and conservative alike.
Maybe I'm missing it, but I really don't see any acknowledgement either in the post or comments regarding how important simple availability is when discussing small communities and small businesses. Having recently moved in retirement from a Phoenix suburb to rural Cochise County where the only thing with more offerings than Dollar General is more than 20 minutes away 'in town', I'm acutely aware that the nearest Costco is an hour and a half away in Tucson, that the Covid crisis has hit our local restaurants and businesses so very hard, and that I really, really want my local hardware store, a locally-owned Ace, to still be open next time I come to town. These businesses had been losing out very gradually to the majors & Amazon bleeding off business a few percent at a time. Now with Covid it's apocalypse. The big guys just don't have a lot of interest in these small markets. A lot of the MAGA crowd comes from this reality.
I'm basically in agreement with the article, but one critique that's not addressed here is the "keeping money in the community" angle that I've heard some make. It's a bit mercantilist, but intuitive: when your residents shop at Dollar General the profits are leaving the area... If you shop with locally owned merchants, and they in turn shop with other local merchants, your community is wealthier. (I've also heard this structure applied to black owned businesses, BTW.)
Maybe for exurbs this is not a big deal, as those people are often working for "export" firms, but in small towns that don't produce things sold outside the town, it kind of puts them in a bad position, right?
I think he's wildly underestimating a couple of things.
First, the staggering array of tiny subsidies big boxes get, for the direct ("come here and you'll pay half-taxes for 20 years!", "your store is protected from re-use by a similar store for half a century") to the hidden - interchanges, frontage roads, stop lights, and miles and miles of underground infrastructure that otherwise would never need to be built, leaving these stores with a terrible amount of tax contribution per acre, and per public investment.
Second, he brushes off the local monopolies many of these stores have because he also 'has a Circle K'. That's not always true! Often these stores demolished an entire ecosystem of smaller stores, who were not trying to 'protect their monopoly' because they didn't have one - there were *many of them!*.
To a large extent, these smaller stores don't need 'special protection', but the opposite - the big boxes need to not get special dispensation.
This reminds me of a bad idea some of SYRIZA's people were promoting in Greece a few years ago: they wanted to protect the restaurant industry (and hobble the country's biggest export sector) by outlawing "all-inclusive" beach resorts where food is provided on site.
Maybe Matt could also write something about state laws that ban direct consumer sales by automakers? The entire dealership sector is mostly unnecessary and owners of car dealerships are a huge source of funding for the Republican Party.
This topic is spicier than the Thai food you get when you say, "no, really, I want it spicy". Glad we can discuss it on a forum called "slow boring".
Here is my unpopular take... many small businesses are really just employees with a shitty risk/reward equation. Imagine you are a McDonalds franchisee. Your job is barely different than a regional manager of a bank. Your innovation was a one time thing of selecting a location + ability to hire and manage employees in a system almost completely designed before you paid the franchise fee.
You didn't invent anything, and you didn't add value beyond some management skill that any regional manager of a larger company would have.
Most mom+pops have worse management skills than the McDonalds. Many have almost no ability to engage a workforce, which is why they are terrified of people getting a better deal from unemployment (though to be fair, many are great - I worked at a DQ for 3 years in HS for a guy I learned a lot from).
Part of this rage from the small business owners is that they have been, basically, worshiped from the left and right as job creators and saints of the community for their entire lives. They've answered to virtually nobody - including in a lot of cases their customers or employees. Any world where they have consequences for their actions, rules to follow, or god forbid, any kind of loss of status.. yeah, they are going to be mad.
This is only going to get worse, as tech companies are making these companies obsolete. And not just Amazon - what happens when batteries will take an electric car 1000 miles on a charge, and chargers exist in most homes. No more gas stations, each of which is a small business, often run by one of those lauded "job creators".
I love entrepreneurs. Inventors. People who make a new product that does something new, a new kind of experience, a better mousetrap? Those are the job creators. Bubba who inherited a truck stop? Sure, more risk than a typical employee, but much less risk than your average commissioned salesperson who has to create her own sales funnel.
The parallel to agriculture (Big Ag vs family farms) here is interesting. Environmental and food safety regulators in both the US and Europe have told me consistently and unequivocally that big corporate farms produce less pollution and have fewer food safety hazards than small operations, counter to my initial Loraxian expectations. But it's a similar dynamic as Google's server farm efficiency, the amount of revenue the big farms/slaughterhouses lose from any regulatory shutdown is enormous, and they have the resources to invest in better safeguards to prevent costly shutdowns.
A big difference here is the regulatory capture dynamic, which seems absent from Walmart vs Mom and Pop (fewer regulatory carveouts for small ag, especially if you want to sell in USDA shops). The perceived "badness" from the regulators I've talked to is a function of the regulatory benchmarks they use, and Big Ag definitely has more of a hand in defining those benchmarks than small-scale farmers.
In any case, for both cases I think "bigness = bad" is probably the wrong perspective.
I grew up in rural East Texas and the first Walmart outside of Arkansas was in the next town over from where I lived at the time. I have seen a pattern over the years of Walmart extracting low tax or subsidy deals from a local municipality to get Walmart to move there, and then when the deals expire Walmart leaves and sets up in the next town over that offered them a better deal. This leaves vacant a big box retail building that can only be filled by another big box retail store. There's just not a lot of those to go around in rural America so you have have these empty buildings that give the impression of rural blight. This playing off different rural towns against each other is somewhat tangential to Matt's post but I think it leaves a bad taste in the mouths of several rural residents that makes Walmart an easier target than other Big Box retailers.
Is it wrong that one of the reasons I like Matt's new venture is that his writing often confirms my prior biases? I mean that in the best possible sense: I had a vague notion that the war on corporate bigness* (qua bigness) was BS, but hadn't really bothered to flesh out my reasoning as two why this might be the case. His arguments here are pretty difficult to refute.
*I'd be tempted to depart from this thesis when it comes to financial firms, though.
Belated comment; big v. small is not about antitrust or competition; it is part of an overall desire to return to am imaginary status quo ante prior to the "modern" period where "Small Town America values" reigned. Big corporations are being lumped in with all the bad modernist forces that have eroded those (white Christian male) values. In this sense, big box stores, "feminism," technology, BLM, et. al. are all part of a series of attacks felt on something Hawley is trying to protect. Hawley dresses up the emotional response of being attacked as a philosophy, but it isn't, which is why "eroding the free market by forcing wage controls" (how he would perceive minimum wage laws) is not an acceptable policy response. He just knows that if things were "Small Town America" again wages would magically be fixed because those (white Christian male) small business owners would do the "just and moral" thing. He is a philosopher like Paul Ryan is an economist -- with a superficial layer of ideas which once pierced reveal a soup of feelings, assumptions and givens.
What I'm hearing here is Matt's intern should form a union.
The article skates over one important aspect of local ownership. Part of the argument about small-business owners is that "these kind of local elites are often the bulwark of conservative politics." But that is a very cramped view of the role that the local business owners can play in their local communities.
The life of a community and its social organizations often depends upon the sustained engagement of people with the means and the motivation to provide meaningful support. When small businesses close and ownership is transferred out of the community, the organizations that hold the community together (libraries, sports leagues, gyms, parks) will suffer, and the community as a whole may move rapidly from vibrant to not. Yes, residents may be able to buy cheaper groceries, but the social costs might be quite high.
When I grew up in Poughkeepsie, New York, in the 1970s, we shopped on Main St. at the local farm store, the local shoe store, the local furniture store, the local bookstore, the two local department stores. The owners of those stores were on the boards of many of the local non-profits. The city had a flourishing library, a large YMCA and a YWCA (both with pools that were available to local schools), a philharmonic orchestra, arts organizations, and other groups that were essential to the life of the community per se. By the end of the 1980s, almost all of that was gone. There were plenty of forces undermining the life of Poughkeepsie (and of so many similar cities across the country), but it is important to see that the local business owners are a core component of the local ecosystems.
Re: mom & pops vs Wal-Mart:
The mom & pops that were affected by Wal-Mart were often located downtown, and Wal-Mart and other big box stores are almost always on the outskirts of town or near newer expansions of town. So what seems like straight up competition contributed to downtowns emptying out. Wal-Mart isn’t the only reason, but they played a role.
Lots of towns have resurrected or are trying to resurrect their downtowns, but ironically they now have a new problem - what do they do about the loss of tax revenue as people stop buying from big box retailers in town and only buy from online stores.
Small business owners are behind the labyrinth of regulations that stifle competition. Many (most?) jobs and markets -- hairdressers, real estate agents, nail salons, accountants, taxicabs, auto dealers -- have captured the state's regulatory authority to raise artificial barriers to competition. Auto dealers are probably the strongest and worst of all. These barriers are not erected for quality or safety, but to reduce competition. It is corrupt and endemic across our states, liberal and conservative alike.
https://ij.org/report/license-work-2/
Maybe I'm missing it, but I really don't see any acknowledgement either in the post or comments regarding how important simple availability is when discussing small communities and small businesses. Having recently moved in retirement from a Phoenix suburb to rural Cochise County where the only thing with more offerings than Dollar General is more than 20 minutes away 'in town', I'm acutely aware that the nearest Costco is an hour and a half away in Tucson, that the Covid crisis has hit our local restaurants and businesses so very hard, and that I really, really want my local hardware store, a locally-owned Ace, to still be open next time I come to town. These businesses had been losing out very gradually to the majors & Amazon bleeding off business a few percent at a time. Now with Covid it's apocalypse. The big guys just don't have a lot of interest in these small markets. A lot of the MAGA crowd comes from this reality.
I'm basically in agreement with the article, but one critique that's not addressed here is the "keeping money in the community" angle that I've heard some make. It's a bit mercantilist, but intuitive: when your residents shop at Dollar General the profits are leaving the area... If you shop with locally owned merchants, and they in turn shop with other local merchants, your community is wealthier. (I've also heard this structure applied to black owned businesses, BTW.)
Maybe for exurbs this is not a big deal, as those people are often working for "export" firms, but in small towns that don't produce things sold outside the town, it kind of puts them in a bad position, right?
I've been enjoying Matt's work on this blog but this strikes me as his biggest miss so far - and I wish the topic had come up in his podcast conversation with Chuck Marohn of Strong Towns (https://www.strongtowns.org/journal/2021/1/3/matthew-yglesias-the-case-for-one-billion-americans).
I think he's wildly underestimating a couple of things.
First, the staggering array of tiny subsidies big boxes get, for the direct ("come here and you'll pay half-taxes for 20 years!", "your store is protected from re-use by a similar store for half a century") to the hidden - interchanges, frontage roads, stop lights, and miles and miles of underground infrastructure that otherwise would never need to be built, leaving these stores with a terrible amount of tax contribution per acre, and per public investment.
Second, he brushes off the local monopolies many of these stores have because he also 'has a Circle K'. That's not always true! Often these stores demolished an entire ecosystem of smaller stores, who were not trying to 'protect their monopoly' because they didn't have one - there were *many of them!*.
To a large extent, these smaller stores don't need 'special protection', but the opposite - the big boxes need to not get special dispensation.
Really excellent book on this is Stacy Mitchell's The Big Box Swindle (https://stacymitchell.com/front-page/).
"Mom & Pop are not only running a low-productivity business (this I don’t think applies to me but you be the judge)..."
I judge you to be highly productive. But you should not seek productivity gains by following the UPS model:
"UPS figured out... avoid left turns at all costs...."
I judge that you’re highly productive as measured by Thoughts Provoked / Article. Keep up the great work thanks for pushing.
This reminds me of a bad idea some of SYRIZA's people were promoting in Greece a few years ago: they wanted to protect the restaurant industry (and hobble the country's biggest export sector) by outlawing "all-inclusive" beach resorts where food is provided on site.
Maybe Matt could also write something about state laws that ban direct consumer sales by automakers? The entire dealership sector is mostly unnecessary and owners of car dealerships are a huge source of funding for the Republican Party.
This topic is spicier than the Thai food you get when you say, "no, really, I want it spicy". Glad we can discuss it on a forum called "slow boring".
Here is my unpopular take... many small businesses are really just employees with a shitty risk/reward equation. Imagine you are a McDonalds franchisee. Your job is barely different than a regional manager of a bank. Your innovation was a one time thing of selecting a location + ability to hire and manage employees in a system almost completely designed before you paid the franchise fee.
You didn't invent anything, and you didn't add value beyond some management skill that any regional manager of a larger company would have.
Most mom+pops have worse management skills than the McDonalds. Many have almost no ability to engage a workforce, which is why they are terrified of people getting a better deal from unemployment (though to be fair, many are great - I worked at a DQ for 3 years in HS for a guy I learned a lot from).
Part of this rage from the small business owners is that they have been, basically, worshiped from the left and right as job creators and saints of the community for their entire lives. They've answered to virtually nobody - including in a lot of cases their customers or employees. Any world where they have consequences for their actions, rules to follow, or god forbid, any kind of loss of status.. yeah, they are going to be mad.
This is only going to get worse, as tech companies are making these companies obsolete. And not just Amazon - what happens when batteries will take an electric car 1000 miles on a charge, and chargers exist in most homes. No more gas stations, each of which is a small business, often run by one of those lauded "job creators".
I love entrepreneurs. Inventors. People who make a new product that does something new, a new kind of experience, a better mousetrap? Those are the job creators. Bubba who inherited a truck stop? Sure, more risk than a typical employee, but much less risk than your average commissioned salesperson who has to create her own sales funnel.
The parallel to agriculture (Big Ag vs family farms) here is interesting. Environmental and food safety regulators in both the US and Europe have told me consistently and unequivocally that big corporate farms produce less pollution and have fewer food safety hazards than small operations, counter to my initial Loraxian expectations. But it's a similar dynamic as Google's server farm efficiency, the amount of revenue the big farms/slaughterhouses lose from any regulatory shutdown is enormous, and they have the resources to invest in better safeguards to prevent costly shutdowns.
A big difference here is the regulatory capture dynamic, which seems absent from Walmart vs Mom and Pop (fewer regulatory carveouts for small ag, especially if you want to sell in USDA shops). The perceived "badness" from the regulators I've talked to is a function of the regulatory benchmarks they use, and Big Ag definitely has more of a hand in defining those benchmarks than small-scale farmers.
In any case, for both cases I think "bigness = bad" is probably the wrong perspective.
I grew up in rural East Texas and the first Walmart outside of Arkansas was in the next town over from where I lived at the time. I have seen a pattern over the years of Walmart extracting low tax or subsidy deals from a local municipality to get Walmart to move there, and then when the deals expire Walmart leaves and sets up in the next town over that offered them a better deal. This leaves vacant a big box retail building that can only be filled by another big box retail store. There's just not a lot of those to go around in rural America so you have have these empty buildings that give the impression of rural blight. This playing off different rural towns against each other is somewhat tangential to Matt's post but I think it leaves a bad taste in the mouths of several rural residents that makes Walmart an easier target than other Big Box retailers.
Is it wrong that one of the reasons I like Matt's new venture is that his writing often confirms my prior biases? I mean that in the best possible sense: I had a vague notion that the war on corporate bigness* (qua bigness) was BS, but hadn't really bothered to flesh out my reasoning as two why this might be the case. His arguments here are pretty difficult to refute.
*I'd be tempted to depart from this thesis when it comes to financial firms, though.
Belated comment; big v. small is not about antitrust or competition; it is part of an overall desire to return to am imaginary status quo ante prior to the "modern" period where "Small Town America values" reigned. Big corporations are being lumped in with all the bad modernist forces that have eroded those (white Christian male) values. In this sense, big box stores, "feminism," technology, BLM, et. al. are all part of a series of attacks felt on something Hawley is trying to protect. Hawley dresses up the emotional response of being attacked as a philosophy, but it isn't, which is why "eroding the free market by forcing wage controls" (how he would perceive minimum wage laws) is not an acceptable policy response. He just knows that if things were "Small Town America" again wages would magically be fixed because those (white Christian male) small business owners would do the "just and moral" thing. He is a philosopher like Paul Ryan is an economist -- with a superficial layer of ideas which once pierced reveal a soup of feelings, assumptions and givens.
A fun workaround that the Japanese have stumbled upon to ensure that family businesses are effectively run is for the owners to legally adopt adult executives so that they can ultimately run the business whilst keeping it within the family. https://www.economist.com/the-economist-explains/2013/04/16/why-are-so-many-adults-adopted-in-japan