- The Washington Times - Thursday, August 29, 2002

The latest step in a long-running campaign to restrict retail competition has been taken in Southern California. In response to Wal-Mart's announced plans to open 40 of its Super Centers in the area, the Los Angeles chapter of the United Food and Commercial Workers union has raised its dues to fund lobbying and advertising opposition, and other locals plan to follow.

Earlier steps in that campaign by unions and union employers have included campaigns to get state and local governments to overturn big-box building permits and limit the sale of nontaxable grocery and pharmacy items at big-box retail stores by law, with California's 1999 Proposition 84 a particularly slimy example. But perhaps the most instructive was in September 2000, at my local (unionized) Ralph's supermarket. A store employee stationed at the entrance was asking patrons to "save our jobs" by signing preprinted cards (in both English and Spanish) saying "Help save our family stores from big box stores coming to our area. They are 5 times our size. It's the right thing to do."

I couldn't help but notice the irony of this strategy to oppose big-box stores. Ralph's, a huge, merged chain, with 450 stores, is hardly a "family store," and would maintain a far larger market share than the entrants they are trying to keep out. Further, such large grocery chains have achieved their current large market share by using economies achieved by their much larger size to outmuscle smaller competitors who might truly be considered family stores. So they have already done to family stores what they want to stop big-boxes from doing to them. And the current dominant grocery chains' claim of competitive helplessness against demon big-boxes is also at odds with the substantial slotting fees those chains are able to charge for space on their shelves, which many assert represents undue power to restrict competition in the market the big-boxes are trying to expand into.

But this is really about fears of supermarkets and their unionized employees that their "good jobs" will be competed away by nonunion big-boxes' expansion into grocery retailing. Were it not, those special interests would certainly come up with a more plausible argument than the primary one put forward in my area that allowing big-boxes to sell such nontaxable goods would represent a drain on the local treasury to provide public services. After all, grocery chain stores selling primarily nontaxable items are surely a greater net burden, after any local sales tax contributions, than big-box stores selling primarily taxable items.

To protect themselves against this competition, grocery chains and unions are trying to make sure individual shoppers aren't allowed to decide where to shop for themselves, by turning the issue into a "community" decision, where their political clout can be wielded against potential competitors their customers might like better, if given the option.

However, community preferences arise only to the extent that they reflect members' values. If every local citizen opposed buying groceries and pharmacy items in big-boxes, no politically imposed restrictions on competition would be necessary, because big-boxes wouldn't enter areas or continue to offer products that attracted few customers. But community members have differing preferences, and some would very much like added competition for their grocery and pharmacy dollars. Excluding big boxes for "the community" denies those people the opportunity to satisfy their preferences.

No one would be forced to shop for groceries at a big-box store. Anyone who believes they would benefit can do so, without forcing others who feel otherwise to do the same.

In contrast, politically excluding them forces some consumers to lose options they prefer because others don't want them to have those options.

Even the claim that big-box stores harm local workers as a group by replacing "good" jobs with bad ones is suspect. The big-box jobs that would be created are better than the employment alternatives of those local workers who would fill them. Preventing the creation of such jobs harms those would-be employees. And if other workers are willing to provide the services customers desire for less than current workers, the "good" jobs that big-boxes would displace are really just jobs for which consumers are currently being forced to pay more than necessary, through higher prices.

Big-box stores are not America's villains. They do threaten some competitors and some unionized workers, but only because a large number of consumers prefer the terms they offer to their alternatives. Since those stores provide what local consumers want more efficiently, using political machinations and misleading claims to restrict their ability to compete does not advance local residents' well-being. Rather, it harms them by reducing their freedom to choose where to shop.


Gary M. Galles is a professor of economics at Pepperdine University in Malibu, Calif.

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