Cronyism in Montgomery County

by Russ Roberts on November 13, 2011

in Crony Capitalism

From an unsigned editorial in the Washington Post:

A BILL BEFORE THE Montgomery County Council would force big-box retailers such as Wal-Mart, Home Depot and Target to negotiate with neighborhood groups as a condition for getting their new stores approved. This is such a spectacularly bad idea, on so many levels, that it’s hard to imagine how it came to be taken seriously in the first place.

Introduced by Council President Valerie Ervin (D-Silver Spring) at the behest of a unionthat represents workers at competing stores (including Safeway and Giant), the legislation is aimed mainly at Wal-Mart, which wants to build two stores in the county. Four other members of the nine-member County Council signed on as co-sponsors, which suggests that the bill stands a good chance of enactment — although lately some of the lawmakers have developed cold feet.

Leave aside that the stores proposed by Wal-Mart would create hundreds of jobs; that they’d be crammed from Day One with thousands of bargain-happy shoppers; and that any broad measure of public opinion would doubtless favor more Wal-Marts in Montgomery — there’s currently just one. Wal-Mart didn’t become the world’s most successful retailer by being unpopular.

More to the point, the legislation would establish a system so starkly arbitrary, unfair and distorted that it would be an embarrassment to any jurisdiction in the United States that tried to implement it. It’s no accident that none has.

The bill would require a big-box retailer to enter into a “community benefits agreement” with three neighborhood groups — no more, no fewer. The retailer would have to reach an agreement satisfying the groups’ demands — More playgrounds? Better roads? A $500,000 check? — or to show that it had made a good-faith effort to do so. If it failed to meet those tests, the county would deny approval for the new store.


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