Zoning Laws and Cronyism
The Wall Street Journal reports:
" ... in scores of cases, large supermarket chains including Supervalu Inc., Safeway Inc. and Ahold NV have retained Saint Consulting to block Wal-Mart, according to hundreds of pages of Saint documents reviewed by The Wall Street Journal and interviews with former employees.
Saint has jokingly called its staff the "Wal-Mart killers." ....
Supermarkets that have funded campaigns to stop Wal-Mart are concerned about having to match the retailing giant's low prices lest they lose market share."
In the most recent case, Supervalu, which operates nine Jewel-Osco grocery stores in the Chicago suburbs has hired Saint Consulting to block the construction of a single Wal-Mart supercenter.
Instead of revamping their own systems so they can compete with the retail giant, it's more effective for Supervalu to block the store and retain their grocery monopoly. Clearly they have no concern for their own customers. Supervalu's philosophy is simple, if they can't beat a competitor's prices, they strangle it with bureaucratic red tape. Meanwhile the customer's are left picking up the tab.
But not all of the blame belongs with the corporation. In the end, they're just doing what any business would do: attempting to maintain market dominance. Their actions would be impossible without the local government. Zoning law is like a plague ravaging our nation. It represents the greatest deterioration of private property rights I can think of. It asserts that while you may "own" property, you must ask the government's permission to use it. The same goes for building permits. Theoretically, these permits and codes exist to keep us safe. In reality, they're abused by groups like Saint Consulting to keep the competition at bay.
Furthermore, Saint is only delaying the inevitable. Eventually, a Wal-Mart, or some other competing store, will enter the area. Crony Capitalism can't keep the competition out forever. But even if it could, the higher cost of living associated with Jewel-Osco's cronyism will eventually cause wealth to leave the area for greener pastures. Either way, without innovation this grocer will become the next buggy whip manufacturer.