Notes on the Front

You probably missed this piece on RTE:

RTE Reporter (on the rooftop of a manufacturing plant, helicopter in the background):  We are with Tuck McGrath, CEO of Irish Enterprises.  Mr. McGrath, why are you closing your company down and moving to the Far East.

Mr. McGrath:  We had a great company – high profits, high wages, pensions and medical insurance for all our employees.  Then suddenly, yesterday, David Begg, that beardy-guy from ICTU, and a bunch of skinheads in dark shades broke into my office.  He demanded we immediately double wages, give everyone six-month holidays and buy all our staff fur coats.  He said if we didn't comply by the close of business, he'd come back and stomp on my kid's pet. 

RTE Reporter:  So, you're saying that David Begg actually –

Mr. McGrath: – Listen, I gotta run.  I gotta save Fluffy. (Mr. McGrath climbs on board the helicopter followed by a number of frightened management executives).

RTE Reporter (to camera):  So there you have it, one more case of trade unions chasing prosperous and responsible businesses out of Ireland.

A bit exaggerated?  Maybe, but not by much.  Everytime a business closes down or packs off to faraway lands, the usual excuse is high wages.  Or high costs, which many commentators insist are caused by the State paying so many public sector workers so much.  It's all of a piece.

That's why I found this article in the Sunday Business Post so interesting.

Antique Prints, on South Anne Street in Dublin, is closing after its owners were asked for a significant rent increase. Hugh and Anne Iremonger, who both work in the shop, have decided to retire and are selling off the stock. Anne Iremonger said that, with the increase, the couple would not be able to afford to pay an employee the minimum wage, and any employee would need a specialised knowledge of the prints.

No, Antique Prints didn't close down because trade unionists were lurking outside the shop window.  It closed down because of another business, a more powerful businesses:  commercial landlords.  This was a shop that had been operating successfully for 30 years from those premises, but were forced out because of the 'logic of marketplace'.  Of course, we shouldn't be surprised.  City centre rents are so high that unless a small business actually owns a premise or a lifetime, non-negotiable lease, there is little chance for the vaunted small entrepreneur.  Forfas showsthat Ireland has one of the highest levels of commercial rents in their internaional surveys.  The only operators allowed in are the big boys and girls, the retail chains, the endless Centras and Spars.  According to Ms. Iremonger:

'She was sad to be leaving the store, but [she] was following in the footsteps of many others, which have made way for high street shops and global brands.'

So do we just give up and escape in the helicopter, leaving our city and towns to the mercy of market forces?  No; while there is no silver bullet there are many small steps we can take, one of which is rent control.  Controlling prices is a tremendous difficult thing to do – set them too high and you have widescale profit-taking at the expense of the consumer; set them too low and businesses can't turn a profit with a consequent rise in the black market.  Not that we don't have price controls – the Energy Regulator artificially increases electricity prices beyond their market level in order to attract private investment, but this is done at a high cost to households, businesses and the economy.  One can only consider price controls in special circumstances.

Land is one of those circumstances.  You can't produce more land, you can't manufacture it and the normal laws of competition don't operate.  Therefore, controls are a practical and pragmatic response.  There are continuous debates in, of all places, the US over the role of commercial rent control.  Curious alliances emerge in support of such control – small businesses, community groups, anti-corporate campaigners and environmentalists:  all in the name of maintaining cities as diversified, living communities rather than a playground for powerful multiples.

It's not just that businesses close down because of rents.  The real problem is that most small businesses don't even get a look-in.  The Right is oblivious to this, believing that any interference in the 'market' is bad juju, even if that 'market' inhibits competition by preventing business start-ups and development.  Yes, that's the irony – the operation of the markets can actually inhibit competition. 

In these recessionary times all options should be put on the table – and one of them is to protect businesses from the operation of the marketplace. For to paraphrase Woody Allen:  big businesses swallow smaller businesses which, in turn, devour even smaller businesses – capitalism is like one big restaurant.