By John F. Di Leo -
If you regularly drive north from Chicago to Milwaukee on I-94, as I do, you have watched Amazon’s Kenosha distribution center grow by leaps and bounds. The parking lot is full, day and night, as it is in online retailers’ similar facilities all over the country nowadays.
They may be on the outskirts of a metro like the Kenosha one, or in the heart of town, like Amazon’s 26 urban fulfillment centers in Houston, New York, San Francisco, Miami and Atlanta, often saving a blighted neighborhood by new construction and new jobs that no other business could justify bringing there.
The Christmas season is responsible for some of the current bustle, of course, but these places don’t disappear after the New Year. This presence – a new business model enabled by the internet – is here to stay.
Similarly, if you drive past – or actually stop to shop at – any of the national monster chains, such as Meijer and WalMart, you’ve been similarly impressed by their rapid growth in recent decades. They sell everything you need; they employ truck drivers, shipping/receiving workers, stockers and cashiers, sometimes in the same 24/7 environment as those online businesses.
The situation of such businesses in one’s community is an unexpected windfall, providing property taxes and new jobs well in excess of most uses of such land. While some locales fight them for political reasons, they are usually a net gain – at least, after such infrastructural improvements as road widenings and highway access are sorted out.
The Other Side of the Coin
All that being said, however, we are told that there’s a downside to this growth. The business press informs us that at least 24 enclosed shopping malls have closed down across the United States in the past five years. Worse, retail experts warn that another sixty are in danger of closing soon. People must not like shopping in malls anymore.
There are some new stores being built, of course. New stores everywhere. But not big malls, not big department stores like in the good old days.
What kind are they? Ross and Marshall’s… the discount clothiers. Half Price Books and Books-A-Million… the discount bookshops. H.H. Gregg… the discount electronics store. They’re all bright new retail shops, so every opening gives the lie to the claim that “retail is dying”… but they’re not the same kind of retail as the old kind, are they?
The new economy is all about the internet… and if you must have bricks-and-mortar, it’s about the big store and the discount store, we’re told.
People want to stay home and do their shopping online, or get everything from the same store so they can do it all in one trip. People must like worrying about being home to receive a package delivery, or not mind fearing that it would be stolen between its delivery at 2pm and their arrival home at 6pm. People must like buying things sight-unseen, praying it’s as good as it looked in the picture. People must like pushing rickety carts through a bumpy parking lot in the rain or snow, more than casually walking back to an enclosed parking garage attached to a regular mall.
They must like these things, you see. That’s what the experts tell us, because preference is the only explanation for change. We’ve left the small retail stores and the regular price stores, in favor of outlets and discounters and one-stop-shops.
Investment advisors and the business press warn against retail, unless it’s one of the “new” kinds… because shoppers have changed.
But Have People Changed Out of Conscious Choice?
In the mid-19th century, trailblazers such as Marshall Field and Aaron Montgomery Ward developed the modern department store chain, expanding the idea of a general store into a whole building of subsidiary shops, acting together as departments.
These stores didn’t just serve as stand-alone businesses though; by the mid-20th century they became the anchors of shopping districts or shopping malls, providing the community service of drawing shoppers to a location with free parking, restaurant and fast food options, other stores and other services as well.
The transformation of the retail world brought by the department store and the mall didn’t kill the small shops (though it sometimes required them to relocate). A good store in 1870 could still be a good store in 1970, though it may have moved from its own street corner into a newly built mall, in order to stay convenient for its clientele.
In a growth economy, retail may change; it may move around, but it doesn’t destroy. In a growth economy, where shoppers can afford to make choices, some will continue to patronize the old shop, others will patronize the new department store or mall; all will survive and some will prosper.
The issue isn’t the size or shape of the building, or the magnetic pull of a new Golf Mill or Woodfield or Water Tower Place across town. The issue is the growth economy. To shop, people must be able to pay, that’s all.
Many shoppers still like going to malls… many shoppers still like the convenience of getting everything in one department store… and many shoppers still like getting their jewelry from a jeweler, their kitchenware from a kitchenware manufacturer, their clothes from a single shop where the designers and buyers cater to their own type of customers’ style.
But for a consumer to act on his preferences, he has to be able to afford it.
If you can no longer afford to pay full price for your clothes, or books or china or jewelry, you must go online to search for sales, or find an outlet store. The boom in discounters, megastores and online retailers enables the American who must find the best price in order to afford his shelter, food, utilities and other basics.
Perhaps the change isn’t about preference at all; perhaps this change has been forced on us by an economy in long stagnation.
Despite seven years of the Obama administration’s claims of “recovery,” America’s median household income today is still lower than it was in 1999. This nation of 300 million has some 90 million people of working age “outside the workforce” – meaning they’re either unemployed or on welfare or forcibly retired far earlier than they desired, or just stumbling along on savings or their families’ generosity. Tax rates, unfunded government mandates, and crippling business regulations have driven so much manufacturing out of this country that our old manufacturing powerhouse cities – Detroit, Chicago, Philadelphia, Cleveland – are dying, forced to maintain the infrastructure of a city with the tax base of a town. And government must cover the costs of tens of millions on welfare by charging the rest of society for the cost of their care.
The Truth of the Matter
So those who shop must count every penny… and that means you only go to the department store, or the full price luxury store, for one gift, and find a way to buy the others on clearance or online. You still shop; you still spend, so the business press reports sales as flat, or up a bit, or down a bit… but there’s still spending, so they think people are changing how they spend on purpose. The business press was educated on the philosophy of the American free market, told that everything is about customer choice; what they do must be what they want to do, so let’s help them do more of it!
But that’s not really true at all. The long economic plunge of the Pelosi-Reid-Obama years – the long plunge that started with the Democratic takeover of Congress after the 2006 elections, which the Obama presidency has kept a Republican Congress from repairing – has left the American consumer in a constant struggle.
This can change, and it will, if the next election goes right. A conservative Republican president can undo the damage of recent years; in concert with a Republican Congress, a conservative Republican President can welcome factories back to these shores, can cut the government spending that squeezes out the private sector, can undo the regulations that add so much unnecessary cost to energy and manufacturing and investment.
And if that happens – let’s make that “WHEN” that happens, since it MUST – we will see a return to the economic patterns of the past, when new retail options didn’t replace the old ones in the marketplace, they just joined them. As the last good Democrat President said of economics, “a rising tide lifts all boats.” With the right policies, the non-participation rate will shrink at last, and millions of underemployed or forcibly retired will be working again... and people will return to the traditional career trajectory of ever-improving standards of living, as America was intended to enable.
There is no need to give up on brick-and-mortar department stores, or on the wonderful commercial joys of America’s bustling shopping malls. There will be room for all of them again, for both the new and the old, the big and the small, the cheap and the luxurious, when the economy is restored, and more people will be able to shop without counting pennies again.
But you can’t expect to restore an economy by electing socialist Democrats who don’t believe in economics.
Democrat frontrunner Bernie Sanders says “You don't necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers…” He just doesn’t understand that the providers of those choices all employ people, giving their employees dozens of times more career opportunities than there would be if only one deodorant maker or only one shoe maker had a monopoly.
Democrat frontrunner Hillary Clinton, when once asked if there should be exceptions for the many employers who can’t afford her party’s costly regulations, tellingly snapped “I can’t be responsible for every undercapitalized entrepreneur in America!”… clearly demonstrating that she defines a properly capitalized business simply as one that can afford her costly whims. She has neither patience nor compassion for employers (and their employees) who cannot.
And despite a century of watching the crush of overregulation and high taxation drive industry after industry to foreign shores, Democrat candidate Martin O’Malley lives in a world of denial, snapping “But it is not true that regulation holds poor people down or regulation keeps middle class from advancing.” He passionately sticks to his anti-employee, anti-employer, reflexively statist ideology, contrary to all the evidence, contrary to the life experience of millions of former textile workers, steelworkers, coal miners, shoemakers, toymakers, and every other industry that has been driven offshore by the 20th century leviathan state.
Can we return? Sure we can.
We can bring back manufacturing and employment; we can bring back the economic growth rates of the 19th century, along with the standard of living opportunities of the 21st. We’ve seen it in the boomlet that followed John F. Kennedy’s tax cuts, before the Great Society squashed them… we’ve seen it in the boom that followed Ronald Reagan’s tax cuts, before the tax hikes and regulatory growth of the 1990s squashed them.
We can do it, but only if we recognize that tax rate corrections aren’t enough; we need to cut off the arms of the leviathan that rise to choke off the business sector; we need to bind the legs of the leviathan that otherwise step on the necks of entrepreneurs before they can even get a start.
America can return, to the days of shopping without waiting for a clearance sale… to the days of not having to shop online at midnight because two or three part-time jobs just don’t allow time or money for a day of casual shopping. If government gets off our back, we will be able to again get back to shopping. A rising tide will lift all boats – both the new economy AND the old.
But first we must reject the destructive economic policies of the Democratic Party, and replace them with the economic vision of the Austrian school of economics. Then, and only then, will we be able to enjoy shopping again.
So don’t give up on those sixty shopping malls. Don’t assume that the cornucopia of the retail world is gone forever, and that Christmas shopping will always be done, frantically online, late at night, after arriving home from a second shift.
America doesn’t have to give up on anything truly American. America just has to give up on Democrats.
Copyright 2015 John F. Di Leo
John F. Di Leo is a Chicago-area Customs broker, writer, actor, and shopper. He worked in a mall one Christmas in college, during the Reagan era, and recommends it as a great experience for anybody. Don’t give up on the economy that made America great!
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