Grant Bosse: Real free markets are not the government’s business
Grant Bosse (Alexander Cohn/ Monitor staff)
To paraphrase Fezzik from The Princess Bride, politicians keep using the phrase “free market.” I don’t think it means what they think it means.
All too often, when a politician invokes the virtues of free market capitalism, it’s to justify the expanded government interference in the marketplace in order to help it thrive. Big government capitalism has broad, bipartisan support.
The New Hampshire Legislature this year overwhelmingly approved a massive increase in the state’s authority to interfere in the contracts of private businesses through the Auto Dealers Bill of Rights. Existing law already prevents auto manufacturers from selling vehicles directly to the public. They have to work through a state-licensed dealer, each of whom has a franchise to sell certain car lines within a limited geographic area. The law sets limits on the franchise agreements between the dealers and the factory, and provides a standalone state board where either side can bring disputes.
Under SB 126, which sailed through the Senate 21-2 and the House 338-30, the state of New Hampshire would prohibit car companies from requiring dealers to remodel their franchises more than once every 15 years. Can you imagine if auto showrooms still looked like they did in 1998? We would have exhausted the world’s known reserves of pastel.
The bill also scoops up farm, forestry, garden and construction equipment dealers, expanding the definition of motor vehicle to include attachments, accessories and parts.
SB 126 had the support of many Republicans who declare themselves opponents of big government and guardians of the free market. They justify tearing up legal contracts on the grounds that the contracts weren’t fair and that helping out local car dealers helps out the local economy. It also contains a provision allowing direct sale to consumers, but only for car companies like Tesla that don’t have any existing franchises in the state. While some liberty-minded members of the House used the Tesla clause as a fig leaf to justify their vote for bigger
government, it serves to further complicate New Hampshire’s regulatory climate.
The state budget deal reached this week did pare back a bit of government meddling. The budget up for approval by the House and Senate next week eliminates funding for the Green Launching Pad, a stimulus-funded partnership between the University of New Hampshire and the New Hampshire Office of Energy and Planning that funnels seed-money to select environmental start-ups. The budget does not include any money for Gov. Maggie Hassan’s new Office of Innovation. Both ventures were boondoggles waiting to happen.
Manchester officials are also using public resources to help out friendly businesses. This month, the Board of Alderman approved a $35,000 loan from the Manchester Development Corporation to help keep open the struggling restaurant XO on Elm. The MDC was set up in 1985 by Mayor Bob Shaw with a million dollars from the sale of city land as a revolving loan fund for real estate redevelopment. XO on Elm borrowed $100,000 from the MDC when it opened but needs more help to stay in business.
Shifting the MDC from redevelopment to restaurant bailouts may change the mission of the city agency, but it doesn’t fundamentally alter the city’s interference in the local economy.
Either way, city officials are using public money to pick winners and losers in the marketplace. XO is a popular, if not yet profitable, restaurant, and the rebirth of Elm Street as a shopping and dining destination has been a point of pride in the Queen City.
But there are dozens of restaurants within walking distance of XO on Elm, and hundreds competing with it. By helping this incumbent business, officials at the MDC and the alderman who approved their decisions have decided that they know better than the people who eat in downtown Manchester. This interference is unfair not only to restaurant owners already in competition with XO, but for the potential businesses that will never start because government kept a favored business limping along.
Aldermen are also considering closing down a section of Hanover Street to vehicle traffic on weekends in order to create a “block party” atmosphere and increase foot traffic. Like a college programming board, aldermen apparently think it’s their job to help local businesses attract customers.
I lived on Elm for a few years, and the intermittent car shows, road races and street fairs were incredibly annoying, trapping me in my apartment or keeping me from driving home for hours. And while some businesses benefit from the increased foot traffic, many others suffer from the lack of vehicle traffic. This year, a number of restaurant owners have asked the city to stop the block parties, warning that any more help will force businesses to close.
Ward 3 Alderman Pat Long disagrees with the petition asking the board to leave downtown business alone.
“It’s the free market,” he said. “You should be encouraging businesses to prosper.”
(Grant Bosse is editor of New Hampshire Watchdog, an independent news site dedicated to New Hampshire public policy. He is a senior fellow at the Josiah Bartlett Center for Public Policy.)