All Commentary
Tuesday, February 1, 2000

Plunder Gets a Boost

A Secret California Bill Is the Latest Example of the Danger of Economic Ignorance

Timothy Sandefur is a law student at Chapman University in Orange, California.

A recent legislative battle in California demonstrates once again the dangers of economic ignorance and what Frederic Bastiat called “legalized plunder.” Assembly Bill 84, fortunately vetoed by Governor Gray Davis, would have “prohibit[ed] a public agency from authorizing a project or development that includes a retail store exceeding 100,000 square feet with over 15,000 square feet to be devoted to the sale of nontaxable merchandise.” This legislation purported to “protect” communities that are supposedly wrecked by larger stores like Costco and Wal-Mart that have started competing with supermarkets.

The bill was passed secretly, over the course of three days, without public hearings, and with just barely enough time for the news to cause a public outcry. But even aside from these shady techniques—and the fact that the text of the bill wasn’t even listed on the Web pages of its own sponsors—the bill was a great example of an old political phenomenon: demagogues thriving on ignorance.

Many Californians favored the bill, even if they disliked the secrecy. One letter to the editor in the Los Angeles Daily News tells the story: “I’m all for free enterprise,” the writer said, “and some argue that these retailers will benefit our communities. I strongly disagree. Our communities are built around small businesses and local markets that support good jobs and good business. I fear the loss of good jobs, traffic jams, small businesses closing down and our local government paying for health benefits that these megacenters refuse to offer their employees.”

There has been a lot of press given recently to people’s fear that America’s traditional small towns, with their quaint drugstores and newsstands, are being swallowed up by greedy corporate giants and chain stores. At the same time, many of these critics complain about what they call “urban sprawl,” which in fact merely means the growth of small towns and more opportunities for small-scale entrepreneurs to open their own quaint stores.

It should come as no surprise that the smaller stores would complain and lobby the government to get involved. As Frederic Bastiat wrote in The Law, man can live by his own labor, but “It is also true that man may live and satisfy his wants by seizing and consuming the products of the labor of others. . . . [I]t follows that men will resort to plunder whenever plunder is easier than work.”

Boycotting Wal-Mart

Last year, when Wal-Mart announced plans to try its hand at grocery sales, the United Food and Commercial Workers Union (UFCW) and the AFL-CIO immediately protested, marching at non-union Wal-Mart’s headquarters in Arkansas and signing “good neighbor cards” pledging not to buy groceries at Wal-Mart. AFL-CIO president John Sweeney even promised to ask that no union-negotiated health plans use Wal-Mart pharmacies. UFCW president Doug Dority said, “Wal-Mart has the money with over $3 billion in profits. But we have the people. We have the power in our pockets and pocketbooks to stop Wal-Mart from destroying good jobs. We are going to mobilize that power to protect our neighborhoods and our communities.”

Protect them from what? Low prices? Neighborhoods, it seems, have far more to fear from economic ignorance than from Wal-Mart or Costco. The National Council on Economic Education’s recent study demonstrated how common that ignorance is. “On average,” the study announced, “adults get a grade of 57 percent for their knowledge of basic economics,” and high schoolers get 48 percent. One out of four adults does not know that an increase in price tends to result in a decrease in quantity demanded.

The connection is clear. The notion that large grocery stores are bad for communities is a self-serving misrepresentation by union leaders, designed to manipulate the economically ignorant. And the saddest aspect of this ignorance is that the economic principles involved, like so much of economic theory, are simple—so simple that economists often have to use big words to make them sound complex. In this case, the economic principle involved is simply, “people work to get things.”

Battle Continues

Fortunately, Governor Davis vetoed the bill. But the fight continues elsewhere. A recently passed ordinance in Clark County, Nevada, would “restrict any retailer with more than 110,000 square feet of space from using more than 2 percent of that space for the display and sales of groceries.” In the October 6, 1999, Las Vegas Review Journal, the UFCW local’s president, Roberta West, argued that if Las Vegas permitted larger grocery stores, “we will all pay the price through increased traffic, neighborhood blight, and elimination of the diversity we have come to expect in our retail stores.”

Why would the president of a farm and commercial workers union be concerned with heavy traffic? How would a large grocery store cause “neighborhood blight”? What, indeed, is “neighborhood blight”? Of course, the UFCW isn’t concerned with anything of the sort, but with “protecting jobs” from Wal-Mart’s competition.

The Clark County measure points up the truth of another statement by Bastiat. “When [people] can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit . . . . Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy, in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.”