The dynamism of
free-market competition can force individuals and businesses to change and adapt
frequently. This competition can create short-term "losers" as less efficient
businesses are forced to change or seek new work, but it creates just as many
short-term winners, and as a whole it improves the economy for all in the long
term. The famous buggy-whip manufacturer example illustrates this; surely that
business "lost" when Henry Ford introduced the Model T, but no one can argue
that automobiles have created more losers than winners.
Reporters covering the
dynamism of a free market no doubt find it easier to detail the very tangible
effects of competition on the old, established businesses that are forced to
change. It is difficult, though not impossible, to present the positive effects
of these changes, but they often get overlooked. Consider the recent story from
The New York Times headlined "A
Neighborhood Balks at a Chain Restaurant" (log-in required).
The article details
all the wonderful personality in Johnny’s Pizza, a Brooklyn pizzeria. But Johnny’s is troubled.
"There will soon be
another John right next door on Fifth Avenue — Papa John’s Pizza, a franchise
outlet," The Times tells us. "John Jr. considers this as an insult to his own
papa John, who died just one month ago."
paragraph sympathetically details all the loyal customers at Johnny’s who are
unhappy that Papa John’s is coming in.
Johnny’s is trying to
stop the competitor from moving in. The owner has circulated a petition which he
plans to send to Papa John’s corporate headquarters, asking them to disallow the
franchise. A petition making a request from one company to another can be a good
way for John Jr. to protect his business without using government force to limit
competition, but still the story focuses almost entirely on what are seen as the
negative effects of the incoming business.
Fellow pizzeria owners
also are unhappy about the new competition, and one openly reveals an attitude
that sounds as if it came right out of HBO’s "The Sopranos."
"For years [Johnny’s
competitors] worked in friendly rivalry, helping each other through tight
spots," The Times reported.
"If we get short on
cheese or tomatoes, we go to him or he comes to us," Gino Campese, the owner of
Scotti’s Pizza, told The Times. "When it’s time to raise prices, we get
together. There’s room for everybody. But not for Papa John’s."
One can easily imagine
the outcry if someone like Bill Gates made such a brazen statement, or if the
heads of the major oil companies admitted price-fixing and working to freeze out
competing forms of energy. It is very unlikely that The New York Times or any
other media would report those in the same sympathetic manner.
The story does provide
some information on the newcomer, telling us that Sandeep Singh is a 23-year-old
immigrant from India who invested tens of thousands of dollars in the Papa
John’s franchise, his second. Singh said he means no disrespect to his
competition, and that he, too, is a small business owner.
The headline could
have read, "New York Cartel Wants to Force 23-year-old Immigrant out of
Business" or, "Plucky Young Entrepreneur Challenges Pizza Monopoly."
After all, this young
man saved thousands of dollars for a risky venture, and tried for a year to find
a location. He may not be thrilled to be right next door to a competitor, but he
seems ready to accept it as part of a competitive market.
"Yes, we share a wall,
but we are not selling what Johnny sells, Johnny should not be concerned," he
told The Times. "The people who come to Johnny’s now will keep coming to
The reporter should
get credit for putting a face on the owner of the new franchise, but the story
overwhelmingly focuses on the "seen" and seemingly negative effects of the new
competition. By ignoring the tremendous benefits of competition (the article did
note in passing that Johnny was keeping his prices down in anticipation of the
competitor, but it was portrayed as a bad thing for him rather than good for
consumers), the reporter paints the dynamism of a free market as negative
overall. Failing to report the seen and unseen effects of free markets
(Singh plans to deliver pizza and customers can order online, options Johnny’s
doesn’t offer) may cause readers to overlook and take for granted the great
benefits that a free economy provides.
Morehouse is director of campus leadership for the Mackinac Center for Public
Policy, a research and educational institute headquartered in Midland, Mich.
Permission to reprint in whole or in part is hereby granted, provided that the
author and the Center are properly cited.