Transpacific Bullies, Part II: Norco, California

While the municipal government of Seoul takes out its populist rage on Costco, the city of Norco, California has found itself overrun by the sort of unlikely scourge that, in the minds of city officials, necessitates - absolutely demands! - immediate action by city officials. 

What is this pestilence, you ask, that has Norco's political leaders shaking in terror?

Carwashes. 

Yes, you read that correctly: the Norco Mayor Kevin Bash believes that carwashes are "spread too thin" and he has thus proposed that the city ban the development of any and all new carwashes. 

Not surprisingly the owners of existing carwashes have jumped up in favor of the mayor's proposal, as it would protect them from the sort of competition that makes running a business such a chore. Instead of innovating better products and services, then, why not just get the city government to ban new competition outright? 

Which makes this story yet another illustration of the ol' idea of "concentrated benefits, dispersed losses." The owners of Norco's existing carwashes are an easily-defined and (probably) well-organized group which stands to benefit tremendously if the city government bans the construction of new carwashes. Carwash owners, therefore, are plenty willing to spend considerable time and energy in lobbying the government for special favors. Consumers, meanwhile, who would likely be irked by the higher prices they'd have to pay for a product of lower quality under such a band, are busy and can't devote their waking hours to fighting an ordinance that may cost them a few dollars a month. These drivers are thus unlikely to traipse down to City Hall and object to Mayor Bash's latest hair-brained idea. Unfortunately, many an asinine policy has ridden this sled straight into action (see, for example, US import tariffs on sugar).

Not, of course, that anyone is capable of telling us just how many carwashes are "too many," but as one astute Man-on-the-Street points out in the NBC 4 video above (also here), if the existing carwashes are supporting themselves and staying in business, then there obviously aren't "too many."

This video, which is a surprisingly good lesson in several basic principles of economics, also points out that a Norco carwash is not just a carwash, as the local sud-slingers offer a variety of products and services that distinguish them one from another. Some are of the self-serve coin-op variety, others offer full details, some are locally-owned, and some are part of larger national chains. Saying that there are too many carwashes in Norco, therefore, is a bit like saying there are too many supermarkets, ignoring the fact that Ralph's is not Trader Joe's, which is not Whole Foods, which is not Costco, which is not the local Korean market, etc.

As F.A. Hayek pointed out, competition is a continuous "discovery procedure" which enables producers to know what products and services will best meet the demands of consumers. This process of discover, which works hand-in-hand with Schumpeterian creative destruction, never ends and should not be snuffed by government diktat unless we desire a lower standard of living. Indeed, where would we be now if governments had decided that we had "too many" pharmaceutical companies in, say, 1960 (let's not get started on the FDA), or that there were too many food companies in 1950?

Fortunately, they didn't.