In Defense Of The Free Market

A stream of business failures downtown was recently reported by The Capital and other sources, leading calls from some for heavy intervention to save our precious downtown. Fighting the temptation to do the same, I eventually allowed reason to prevail, advocating that the free market can do the job better than any amount of planning, regardless of how perfect or obvious that planning seems to be.

A manager of a store selling rugs provides anecdotal support of my contention in her letter to the editor today:

As a relatively new member of the Annapolis business community, we have
seen nothing but success since we have arrived. Our first year was way
ahead of projections, and we are looking forward to an even better year in
2008.

Much of this is due to our fun and wonderful rugs. but much is also
the result of our proactive stance of never sitting back and waiting for
business. This is the same attitude I see in many of the new businesses in
town. These stores offer unique and interesting product that cannot be
found elsewhere.

The question to answer before undertaking any development policy is whether there is an insurmountable structural problem with businesses downtown. I tend to think no, as does this letter writer. Furthermore, it's quite noteworthy that this business makes money selling rugs, as opposed to booze.

Arguments for government involvement in economic development are almost always arguments for protectionism, which I almost never support. Businesses failing is a natural part of economics, and an important one. The last thing that we want to do is support an inefficient or outdated business. This would unfairly disadvantage entrepreneurs thinking about opening a new business downtown that may be better or more useful. The best thing the government can do is get out of the way.