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 after 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 Johnny’s."
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.
Isaac M. 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.