Big-city leaders believe in industrial policies and have economic development departments and staff and budgets and policies to implement them. Sometimes they even have enough money (as in Chicago) to fund studies by academics wedded to the idea that new businesses must somehow be screened in terms of how much they might undermine existing sellers. (Others of us think that competition is a good thing.)
It gets even crazier when job-destruction policies are sponsored by the same well-meaning politicos. Today's WSJ includes a Chicago update.
"Big Box Rebellion," August 16, 2006; Page A10
"Well, that didn't take long. Just as Mayor Richard Daley and these columns predicted, the law recently passed by Chicago's City Council requiring a super-minimum wage is driving big retailers out of the city.
"Target was the first big chain to react, recently cancelling plans to open a new superstore in a run-down area on the city's North side. Only a few months ago the project was hailed by city leaders as an anchor for redeveloping that depressed neighborhood. Now it gets to stay depressed. Wal-Mart has also announced that its plans to build 20 new stores in the city over the next five years are "on hold" until the wage issue is resolved.
"This isn't what the politicians said would happen when they mandated that certain mostly non-union 'big-box' retailers pay a minimum of $13 in wage and health benefits by 2010, or more than two-and-a-half times the national minimum wage. 'This is a great day for working men and women of Chicago,' said Alderman Joseph Moore, who sponsored the ordinance but clearly doesn't think very far ahead, if he thinks at all. The Council was warned that stores would flee to the suburbs or not be built. But instead it heeded such activists as Annette Bernhardt, chief economist at New York University Law School, who claimed that 'We're very confident that retailers want and need to be in Chicago.' Whoops.
"This liberal red-lining may yet be overcome by common sense. Mayor Daley seems intent on vetoing the bill, which he says would result in higher property taxes to compensate for lost sales-tax revenue once stores leave. Alderman Shirley Coleman voted for the law but has since changed her mind now that a Wal-Mart in her district may never be built. At least three other aldermen who voted for the measure are also reportedly now open to giving Mr. Daley the votes he needs to sustain his veto.
"The entire 'living-wage' movement is the latest product of upper-income politicians who want to stick it to non-union companies in the name of helping the poor. But the working poor lose twice in Chicago: first, in lost retail jobs and then in less access to low-cost goods. Alderman Carrie Austin, who represents the area where the Target store was supposed to locate, puts it this way: 'My colleagues are saying, 'Don't worry they [the big box retailers] will come.' Well, mine just left.'"