Walmart and, "Letting the Marketplace Decide"

Greg David has a post hearing evaluation of the city council's oversight of Walmart's entry into NYC-and he divines that the council is trying to create a separate economic island cut off from the rest of the region: "... I'll say that the Walmart opponents want to manage the New York economy in a way that will make it different than the rest of the country, including the nearby competitive states of New Jersey and Connecticut, and even the adjacent suburbs of Westchester and Nassau County."

He goes on to argue: "Barring Walmart from New York isn't the only goal of the mostly union-based effort to create a New York economic island. They want to require businesses in New York to provide sick days while businesses operating outside the city can set their own policies. They want a living wage that would establish a higher wage here for the most unskilled jobs. The result would be to open a major competitive gap between the city and its rivals."

We wonder where David has been for the past three decades as NYC-but particularly the current misguided mayor-has increased the cost of doing business here-prompting a leakage of sales out into New Jersey that has become a veritable flood. The gap that David alleges would be created is already here-and is more like a chasm as folks look to avoid sales taxes, gasoline levies and deposits on all beverages from beer to water. In fact, Mayor Giuliani did a study that demonstrated the profound impact that the confiscatory NYC sales tax had on our competitiveness-creating a bigger hit than the mega-store deficit that he tried to alleviate, but failed to do so.

But David risibly gives the mayor kudos for shining, "the spotlight," on why the city council's Walmart effort is wrongheaded: "Asked about the hearing, the mayor reiterated his view that New York should be open to any legal business that wants to come here. "You should let the marketplace decide," he said. "Anybody who has tried to manage the marketplace, it has not turned out very well. I think the Soviet Union is as good an example as you'd ever need of that."

How can the mayor-and David by extension-promote this canard with a straight face? Mike Bloomberg has run roughshod over the property rights of NYC's small land holders-talk about your Soviet Union comparisons, indeed! He has shown, in this regard, little regard for the marketplace where, Columbia University for example, would have to bid on Nick Sprayregen's property fairly and openly-without the city and state's eminent domain gun at his head.

But it is no accident that David leaves out this issue since he has come out foursquare in support of the Kelo decision and the city's use of condemnation-so much for letting the marketplace decide things. Which brings us to the mayor's use of sweetheart deals for his favored developer-the Related Companies. Bloomberg certainly didn't see fit to put the Bronx Terminal Market site up for bid-you know, to see what the marketplace would decide was the value of the property. And when the property adjacent to the Gateway Mall became available, it was Related that the mayor favored with a no bid contract-and example of patricianage, if not good old fashion commissar favoritism that we saw in, well, the old Soviet Union.

What this all underscores is how the selective use of free market principles is promulgated when small businesses are fighting a giant retail predator-and how quickly those principles are jettisoned when a well connected developer comes a calling for favored nation status-and for the bargaining power that the state's power of condemnation offers.

What this tells us is that Crain's also knows where its bread is buttered-and does anyone think that its support of eminent domain and Walmart, not to mention its cheerleading for every Bloomberg mega-development, isn't itself a product of its own marketing principles? After all, it is the real estate community and other big businesses that form the bulwark of the Crain's readership-not to mention its advertisers. And standing up for the little guys would simply not be good for business-Crain's own.