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Intervention skews the marketplace

Posted: April 21, 2013 - 12:04am

One of the problems of government intervention in the free market is that it can artificially limit supply, skewing the balance of supply and demand.

If you want proof, just go to the ammunition aisle of, say, Academy Sports. Those empty shelves are courtesy of a belief that the feds are going to take away guns and limit ammunition. Just that fear has been enough to induce hoarding, like homeowners stocking up on milk and bread at the threat of bad weather.

In Columbia County, the market intervention is in the form of artificially limiting the number of apartments that be approved in a year. A rezoning request this past week, if later approved by commissioners, will be the last additional apartments allowed for the rest of 2013.

How? Commissioners last year adopted a new ordinance that limits apartment rezonings to 50 units per year. Because the recent request was for 50 units, that’s all for the year.

That artificial limit on supply not only raises the value of those apartments, it also increases the value of the parcels in the county already zoned for multi-family housing.

Is it done that way specifically to benefit those few property owners? There’s no reason to believe it is – but it’s also impossible to not notice.

Likewise, in Grovetown, the city council’s decision to all but slam shut the door to new tattoo parlors has one immediate beneficiary: The single city tattoo parlor that has been grandfathered in under the old ordinance.

By prohibiting tattoos and body piercings except by licensed physicians, the city council has pretty much guaranteed there won’t be any new tattoo studios opened in the city. Electric Avenue, then, is suddenly relieved from having to worry about a new competitor moving in next door.

With the apartment restrictions, we certainly sympathize. In general terms, they’re not the most desirable housing for a community. They invite transient residents who overburden schools, and Columbia County Sheriff Clay Whittle blames them for bringing more crime, too.

But as with the tattoo restrictions in Grovetown, limiting something raises its value. Electric Avenue’s owner didn’t quibble with the restrictions – why should he? – but perhaps he’d think differently if the city now decided his monopoly makes his place more valuable, and taxes it accordingly.

Better yet, city council members should undo the ill-conceived restrictions and just let the free market work.

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Comments (2)

soapy_725

Sort of like the demonizing of coal

in the movies. Have you ever seen a movie that portrayed coal as a good thing? How about nuclear energy? China Syndrome was released shortly before the Three Mile Island incident. A portion of the script referred to the destruction of an area the size of Pennsylvania. Hydro-electric dams are also shown to be high risk energy. Only recently has OIL been identified as evil. OIL had been revered as literally the "road to happiness and financial success". This from a recent PBS program on energy sources in America beginning with wood and whale oil.

Government decides who or what to demonize as a means of absolute control. Always has and always will. Money, power and influence peddling. It works quite well. And it will become more widespread.

Little Lamb

Economics 101

The editorial is a good economic analysis.

From a practical standpoint, how about this scenario:

Some tattoo parlors open just outside the city limits of Grovetown and get county business licenses (or whatever the county equivalent is). They make sure through their market research to choose locations that are growing commercially and residentially. Then, when the city inevitably wants to incorporate the booming subdivisions and retail areas, those tattoo parlors will clamor for grandfather status, too, since Columbia County approved them de facto.

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