Competition: Key to Consumer Dominance; B. Siegan

There is no doubt that the more business facilities in existence, the greater the competition each will Copyright 1973 Bernard H. Siegan Mr. Siegan is the author of Land Use Without Zoning and many articles on the subject. He practiced law for 20 years in Chicago before moving in 1973 to La Jolla, California where he is an adjunct professor of law at the Uni versity of San Diego Law School. 298 confront. But this is about the worst reason in a free enterprise society to deny anyone access to the market. We live' in a society which is highly dependent upon competition. We rely upon compe tition to protect the consumer and stimulate the introduction of new, more and better products and ser vices. There is no governmental agency available to accomplish these vital tasks: nor can govern ment benefit the consumer and society even remotely as well, as any traveler to the socialist coun tries can confirm. The consumer is king when competition abounds; he is a serf when it is controlled and restricted.

A new shopping center will have to provide something better or different to attract customers and the! older centers may have to change their methods and improve products and services to keep 1974 COMPETITION: KEY TO CONSUMER DOMINANCE 299 pace. For consumers, the result will be some or many lower prices and larger varieties and better se~· lections. Life will be made that much easier and more comfortable for many people. A Competitive Society The concept of open competi·· tion is innate to this country, as evidenced by the antitrust law8 which are intended to make the deliberate elimination of competi· tion a crime. If, for instance, sev eral builders within a city were to agree to build a small number of apartment buildings and to pre vent any others from being built, laws would quickly be adopted, if they did not exist, to dissolve this agreement and possibly even pe nalize the parties involved. This is because such an agreement would give the initiators special econom ic powers.

Zoning accomplishes the same result when it limits construction or development. The owners of ex isting buildings would in either stua tion be able to charge higher rents and/or offer poorer services and/ or avoid undertaking repairs and improvements. But it might be said, perhaps there might be too much, or Hcut throat" competition and we need zoning to save us from such a fate. The answer is that there can never be too much competition from the consumer's vantage point - and everyone is a consumer. Business men who voluntarily enter a mar ket should bear the risk of compe tition; they can take into account this risk when they commit their funds. Moreover, why should those who are part of the market be given preferred status over those who want to enter it? Nor is it possible for anyone to determine the "correct" amount of business competition. There are always many uncertainties in the business world and it is difficult to evaluate precisely market condi tions pertinent to any proposed de velopment. Future economic and population trends are exceedingly difficult to project accurately for anyone area, and this is com pounded by changes in demand caused by the shifting desires and needs of people, all of which may glut or unglut a market. This is a risk that can much better be borne by entrepreneurs than by con sumers.

Those who invest their money have the greatest incentive and are consequently in the best posi tion to estimate this risk, and that includes both the developers and their lenders, for all large projects require major long-term financing. To return to the case of the proposed shopping center - many of the owners of existing busi nesses must contemplate it with 300 THE FREEMAN May as much delight as they would an impending hurricane. Self-interest would dictate opposition to any ad ditional competition. And unfortunately, such self interest has often been a major factor in zoning decisions; busi nessmen have frequently used overt or covert influence to try to kill a proposed rezoning that would create more competition. Would-be developers can also be expected to exert similar efforts and, regret tably, the outcome of the competi tion for the favor of the local pol iticians may determine whether development will occur.

Some contend that this state of affairs must be tolerated because zoning regulations will in the long run provide for better quality, both materially and environmen tally. What such a stand fails to comprehend are the benefits achieved by society whenever new development occurs in a highly competitive market. Consider this example. Because it is not zoned, the apartment mar ket is exceedingly competitive in Houston and there is usually a significant vacancy rate. Yet new buildings continue to be erected even in the face of such difficul ties. Why? Because the owner or developer of a new project believes that he can provide something dif ferent or better than what is cur rently available, and will be able therefore to attract people to buy or rent his housing in preference to his competitors'. He has detected some void in the market and believes he can satisfy it and still obtain a profit able return. This may involve pro viding more amenities, larger rooms, more recreational facilities, more open space, better aesthetics, or perhaps lower rents. It requires skill, ingenuity, innovation and much time and effort on the part of the developer, yet the commu nity is likely to benefit as much or more than he does. In this manner, society is rendered enormously valuable services without cost.

This process has led to the very high standards of living in this country. To restrict it is to sub stantially retard the progress and well-being of our society. t) IDEAS ON LIBERTY A.ntiSocial Behavior THE COVETOUS PERSON lives as if the world were made altogether for him, and not he for the world; to take in everything and part with nothing. CALEB c. COLTON In Quest of JUSTICE MANY THINKERS, jurists, philoso phers and statesmen have searched across the centuries for the mean ing and content of justice. Like many open-textured concepts, the essence of the word has proved elu sive. Justice should be constrained· to a consideration of interpersonal relationships and should exclude relationships between man and the universe. However, such circumscription suffers one potential hazard: it ex cludes man-to-impersonal-object or nonhuman relationships. For ex ample, our categorization elimi nates consideration of justice vis a-vis the hypothetical situation where a man kicks a friendly dog, drowns a kitten, or tea~es a bird.