Reason Magazine - Topics > Consumer Issues

No Shopping, Please, We're German

schapman@tribune.com (Steve Chapman) — Mon, 06 Oct 2008 09:00:00 EDT

BERLIN—It's a Sunday afternoon, and the Potsdamer Platz shopping arcade looks like any American shopping mall on a busy weekend. It's thronged with parents pushing baby strollers, retirees eating ice-cream cones, and teenagers sneaking kisses.

But there is one major difference. The mall has plenty of stores to draw shoppers—Foot Locker, H&M, Eddie Bauer, a discount supermarket, and more. But today, absolutely no one is going inside. There's a reason for that: The stores are closed. By law, they have to be.

Any American merchant would be writhing in agony at the sight of hordes of patrons who are not allowed to buy. But in Germany, this abnormal spectacle is entirely normal. Sunday may not be a day of worship in this largely secular society, but due to government decree, it's not a day of commerce either.

The only exceptions in the mall are eating establishments. Being exempt from the law, they stay busy serving people whose Euros are burning a hole in their pockets. Oh, and there is one retail store open—a small shop stocked entirely with Berlin souvenirs. Under Germany's quirky regulations, it may operate on Sundays because it caters to tourists.

Many Germans defend the closing law as a way of limiting the pernicious reach of consumerism. But don't think locals are immune to the need to shop just because it's Sunday.

In fact, just a mile away, at the Friedrichstrasse train station, customers are lined up 12-deep at the registers, buying the groceries denied them at Potsdamer Platz. It turns out the law has another gap, allowing shops to operate in train stations seven days a week because they allegedly accommodate the needs of travelers.

But the people carrying out bags of groceries don't look as though they plan to take them on a train to Prague or Warsaw. They look like they just couldn't manage to get all their shopping done during the week.

Organized labor likes the law because it grants workers a day of rest. Only some workers, however, get the break. An army of establishments is allowed to do business on Sundays—including restaurants, museums, movie theaters, and gas stations.

At the state level, additional peculiarities arise: Video stores are required to close in Baden-Wurttemberg, but not in neighboring Rheinland-Pfalz, so some residents of Mannheim go to next-door Ludwigshafen to rent their DVDs. Car washes may stay open in some places but not others.

The benefits of outlawing such capitalist acts between consenting adults, to borrow a phrase from the libertarian philosopher Robert Nozick, are not obvious. It creates real inconveniences for anyone who suddenly needs something—and there is no escaping the fact that 14 percent of all unforeseen, urgent needs arise on Sundays.

You may think it would be a relief not to squander your Sunday on shopping. But any relief is counteracted by the increased stress on other days. On Saturdays, when stores must close by 8 p.m., groceries are clogged with Germans making sure they have enough food to sustain life until Monday morning. Instead of being allowed to spread their weekend errands out over two days, they have to cram them all into one.

This is also a weird policy for a country chronically plagued by two ailments—weak consumer spending and high unemployment. Letting stores accommodate buyers on Sunday—or after 8 p.m. other days—certainly couldn't reduce consumption, and it might increase it.

After all, if you have a sudden urge to share a bottle of wine or fly a kite on Sunday afternoon, you probably won't go out and buy it on Monday morning. Some consumer needs are fleeting, and the lost sales are lost forever.

Employees who would rather have Sundays off gain from the status quo. But a lot of Germans don't have to worry about having to work on Sundays because they don't have the privilege of working at all.

Asks Jeff Gedmin, director of the Aspen Institute Berlin, "How can it be that in 2006, with 19 percent unemployment in Berlin, you can't buy a bottle of aspirin on Saturday night?" Liberalizing the law would boost the demand for workers at a time when jobs are pitifully scarce.

In the end, the law exists not because so many Germans don't want to shop on Sundays but because so many of them do. In a modern economy, there's something wrong with a policy that bars shoppers and stores from doing business when they find it mutually agreeable. Maybe it's time to give that approach a rest.

COPYRIGHT 2006 CREATORS SYNDICATE, INC.

Editor's Note: Steve Chapman is on vacation. This column was originally published in 2006

Target Settles ADA Lawsuit Over Its Website

jsullum@reason.com (Jacob Sullum) — Thu, 28 Aug 2008 14:17:00 EDT

The National Federation of the Blind has extracted $6 million from Target as a result of its lawsuit claiming that the chain's website was insufficiently accessible to the visually impaired. The NFB sued under the Americans With Disabilities Act, claiming the website was a "place of public accommodation" that Target was obliged to make accessible. (Target unsuccessfully argued that the law applied only to physical spaces.) In addition to putting $6 million in "an interest-bearing account from which members of the California settlement class can make claims," Target will enter into "a three-year relationship during which the advocacy group will keep testing the site to make sure it is accessible to the blind." The NFB says Target's site used to be notably harder to navigate with text-reading software than competing retailers' sites but has improved substantially in recent years.

As I said when a federal judge rejected Target's motion to dismiss the NFB's lawsuit, I don't think litigation, as opposed to public criticism and competitive pressure, is the appropriate way to address complaints like this one. Even if you accept the premise that the government should make sure all businesses (and websites) are accessible to people with disabilities, I've never understood why business owners, as opposed to taxpayers in general, should bear the financial burden of making them so. If the answer is that the modifications attract enough new business to justify the cost, there would be no need to impose them by law.

[via Josh Xiong]

Paper or Plastic: Either Way, You Pay

jsullum@reason.com (Jacob Sullum) — Wed, 30 Jul 2008 16:00:00 EDT

This week the Seattle City Council approved an ordinance that, as of January, will require shoppers at grocery, drug, and convenience stores to pay 20 cents for each paper or plastic bag they use:

The city will distribute at least one free reusable bag per household, and it will consider providing more free bags to low-income shoppers.
"This is a voluntary fee," said Council President Richard Conlin, who worked with Mayor Greg Nickels on the proposal. "No one has to pay it. You only have to pay it if you choose not to use reusable bags."

Can we stop it with this "voluntary tax" nonsense already? If you put your groceries in an unapproved bag, the government forces you to pay the fee, so it's not voluntary. By Conlin's logic, sales tax also is voluntary (you don't have to buy stuff), as are alcohol and tobacco taxes (you don't have to drink or smoke), air travel taxes (you don't have to fly), gas taxes (you don't have to drive), property taxes (you don't have to own a house), and income taxes (you don't have to make money).

A more plausible argument would be that the bag charge is a sort of user fee, since people who use disposable grocery bags generate more trash, which the city collects and dumps. The problem (other than the government monopoly on trash collection) is that bag usage is not necessarily a good indicator of how much trash a household produces. It would make much more sense to directly charge people based on how much they throw away, which would give them an incentive to reduce/reuse/recycle in many areas of life, not just in their choice of grocery sacks. Instead Seattle charges by the container, no matter how full.

Then, too, if the issue is trash, the city should charge more for paper bags than it does for plastic bags, which, as New York Times science writer John Tierney notes in a column Katherine Mangu-Ward cited earlier today, "take up much less space in landfills." They also "require much less energy..to manufacture, ship and recycle," and "they generate less air and water pollution."

[Thanks to Paul in Seattle for the tip.]

Lights Out at Guerilla Radio

mriggs@reason.com (Mike Riggs) — Fri, 18 Jul 2008 16:14:00 EDT

Russ Mitchell at Portfolio.com blogs about the impending close of the greatest Internet radio service in the history of Internet radio services—Pandora.com:

The [record] labels are intent on charging so a high price for streaming royalties that Pandora and its even-weaker peers would be forced out of business. That appears to be exactly what the labels want, despite the fact that research shows these kind of services actually increase record sales, as listeners discover new music and reconnect with old favorites.

Pandora and others are willing to pay royalties but need rates low enough to make enough profit to keep the service going. Such royalties historically have been set by government. Pandora is trying to get the attention of Congress, while making clear that Pandora's demise would cause internet radio to be dominated by the likes of Clear Channel. In other words, a faceless company's idea of mass hit entertainment shoved down our earholes.

I agree with Mitchell that the average big name record company can't tell its ass from a hole in the ground (Record company visits Grand Canyon, wonders, "Why is everyone taking pictures of my ass?"), but I'd rather see Pandora crash and burn than condone continued government interference in a rates dispute.

What do you think, H&R pundits?

Brian Doherty wrote here on Radiohead and the future of music without record companies.

Dead Over a DVD

mriggs@reason.com (Mike Riggs) — Sat, 12 Jul 2008 12:06:00 EDT

The Motion Picture Association of America (MPAA) has attempted to stop movie piracy by suing illegal downloading sites and their users, convincing bit torrent insiders to sell out their fellow pirates, and hacking those same sites and installing malicious code, with little effect.

Under the new direction of former federal prosecutor John Malcolm, the MPAA is now using dogs to combat piracy. The cute and cuddly pooches are trained to sniff out the polycarbonates used to make illegal DVDs, and have assisted in 35 raids, the confiscation of 1.9 million illegal DVDs, and the discovery of almost 100 burning stations.

But the recent death of one of the dogs establishes a tragicomic parallel with the drug wars:

A yellow Labrador retriever named Manny, an MPAA-trained disc-sniffer, died last month in Malaysia at the age of 1. The MPAA is awaiting an autopsy report, but suspects the dog might have been murdered.
"Word on the streets," Malcolm said, was that disc-counterfeiting groups had put out a hit on the disc-sniffing pooches.
"We heard from enough people, we took it as a threat," Malcolm said. "We are very interested in getting the autopsy report. We are very concerned. I'm not looking to cast aspersions. But Manny all of a sudden died."

The two remaining dogs, worth $17,000 each, have likely recouped their costs a hundred times over, and there's no reason for the MPAA to discontinue the program unless, A) pirates kill all the dogs; B) Pirates figure out how to make DVDs out of something other than polycarbonates; or, C) The MPAA catches all the pirates.

Seeing as the latter two futures are unlikely, I wonder how many dogs the MPAA would have to lose before it considered a thoughtful response to piracy?

reason's copyright archive here.

Woo Hoo, a Sparkler!

jsullum@reason.com (Jacob Sullum) — Fri, 04 Jul 2008 15:07:00 EDT

The Portland Press Herald reports that the Maine Fire Marshal's Office prepared for Independence Day by staking out fireworks stores in neighboring New Hampshire:

Mainers suspected of buying fireworks may be stopped and arrested as they cross the border. Penalties range from a $50 fine for having less than $100 worth of fireworks to 10 years in prison for having more than $5,000 worth of fireworks.

While Mainers who want to explosively express their excitement on the Fourth are limited to sparklers and caps, New Hampshirites can legally purchase and use some pretty cool stuff (PDF), including not just multistage fountains but flying and exploding products such as the Aerial Super Seven Shell, the Wolfpack Missile Base, and the nine-shot 4th of July Spectacular. No wonder Mainers are tempted to smuggle.

Although New Hampshire does not allow "firecrackers, bottle rockets and reloadable type shells," its "permissible fireworks list" runs to 57 pages of tiny print. And unlike Pennsylvania, New Hampshire lets people not only buy mortars but use them. When I lived in Northern Virginia, I knew people who would go up to Gettysburg every year to get fireworks that were legal to sell in Pennsylvania, but only for use in other states. They were illegal to use in Virginia too, but police tended to look the other way on Independence Day and New Year's Eve.

I've been disappointed by the fireworks regime in Texas, which I imagined would be wide open. Although the state law is fairly permissive, there are many local restrictions. And Dallas, where I live, bans all unlicensed use of fireworks. If you happen to live in New Hampshire or some other firework-friendly place, please set off some mortars and rockets for me.

Greg Beato and Robert Stacy McCain defend real fireworks.

[Thanks to Michael Graham for the tip.]

Murdering Hookers Is One Thing, but Having Sex With Them...

jsullum@reason.com (Jacob Sullum) — Thu, 26 Jun 2008 10:29:00 EDT

When I found myself in the unaccustomed position of seeing merit in a class action lawsuit, I knew it wouldn't be long before I came across one that was easier to ridicule. Even The New York Times has trouble keeping a straight face about the lawsuit over "hidden sex scenes" in Grand Theft Auto: San Andreas. Here is how what is ostensibly a news story about the case begins:

Lawyers who sued the makers of the video game Grand Theft Auto: San Andreas profess to be shocked, simply shocked, that few people who bought the game were offended by sex scenes buried in its software.
Any buyer upset about hidden sex in the violent game could file a claim under a settlement the lawyers struck with the game's makers, Rockstar Games, and its corporate parent, Take-Two Interactive. Of the millions of people who bought the San Andreas version after its release in 2004, exactly 2,676 filed claims.

Each of them will get coupons or discounts worth $5 to $35, at a total cost of less than $30,000. The lawyers, meanwhile, will get $1.3 million, equivalent to a contingency fee of 4,300 percent. They emphasize that Take-Two also has promised to make a "charitable contribution" of $860,000 to everyone's favorite charity, the Entertainment Software Ratings Board.

The problem is not just the extreme lopsidedness of the payments but the difficulty in figuring out exactly how consumers were injured by Take-Two's failure to completely eliminate the sex scenes that had been edited out of the official game. The scenes were "accessible only to knowledgeable players using third-party software," the Times notes, so it's not as if easily offended people accidentally stumbled upon them. In any case, how many easily offended people play Grand Theft Auto? Players who unlocked the sex scenes presumably viewed them as a bonus, not a bug.

The discovery of the scenes did lead to a change in the rating for the unexpurgated game, from M (for players 17 or older) to AO (for players 18 or older). That might make a difference to retailers and therefore affect Take-Two's ability to distribute the game, which is why it ultimately released a cleaned-up M version. But from the consumer's point of view, it's a trivial distinction. Since the only way to see the hidden scenes was to go looking for them, the only consumers who might have been upset about them would have been parents who bought the game for their more tech-savvy kids. They would have to be parents who are OK with a video game featuring the murder of police officers, prostitutes, amd random passers-by but draw the line at cartoony sex. To the credit of the American public, there don't seem to be very many of them.

Warning: Your Calories May Vary

jsullum@reason.com (Jacob Sullum) — Fri, 13 Jun 2008 13:27:00 EDT

It's not often I get to praise class action lawsuits and simultanesously agree with litigation enthusiast John "Sue the Bastards" Banzhaf, so I guess I should seize this opportunity. Seattle attorney Daniel Johnson has filed a lawsuit against the Applebee's restaurant chain for misrepresenting the fat and calorie content of its dishes. The lead plaintiff is a Washington woman who was dismayed to find that the items on the chain's Weight Watchers menu were a lot more fattening than Applebee's claimed. Johnson also has filed a would-be class action against Chili's, On the Border, and Romano's Macaroni Grill, saying those chains are guilty of similar misrepresentations.

These suits follow, and seem to have been prompted by, an investigation by Scripps Television Stations that found a wide divergence between nutritional information advertised by these chains and the results of independent laboratory analyses. The Cajun Lime Tilapia, Steak and Portobello, and Garlic Herb Chicken at Applebee's, for instance, had twice the advertised fat, while the Macaroni Grill's Pollo Margo Skinny Chicken had twice the advertised calories. As Katherine Mangu-Ward suggested last month, this sort of thing is not just a bad business practice but a form of fraud: selling something under false pretenses, knowing that the buyer is counting on certain features of a product and either deliberately lying about them or not caring enough to make sure the information is accurate. In a case like this, where the injury to any particular consumer is neither negligible nor serious enough to make an individual lawsuit worthwhile, a class action is an appropriate remedy. Johnson stands to gain much more from this lawsuit than any of the class members, but that is his reward for performing a genuine public service: encouraging restaurant chains to be more honest by creating negative publicity and forcing them to pay the cost of defending or settling the case.

Oil Prices and Economic Reality

schapman@tribune.com (Steve Chapman) — Thu, 29 May 2008 07:00:00 EDT

Right now, energy consumers can only envy the Greek King Sisyphus. He was condemned by the gods to spend his life pushing a boulder up a hill, only to see it roll back down again. Motorists and other fuel users seem condemned to push uphill forever, with never a downward respite.

In the past year, world crude oil prices have risen like a bottle rocket. In the last year, they have doubled. Since February, they have gone from less than $90 a barrel to $135 a barrel—a level that was almost unimaginable at one time, like three months ago.

And some experts say that someday, we'll look back fondly to the days of $4-a-gallon gasoline. Famed oilman Boone Pickens is betting oil prices will reach $150 a barrel. Goldman Sachs analyst Arjun Murti, one of the few to anticipate the recent price surge, says they could reach $200. That would mean pump prices of $6 a gallon.

All this is the result, we are told, of a devilish convergence of forces: tight supplies, geopolitical uncertainty and booming demand in countries like China and India. Since none of these is likely to change, the upward trajectory of prices won't either.

At the risk of ending up on Pollyanna's Christmas card list, allow me to differ. Oil prices are unpredictable, particularly in the immediate future, and it's easy to think of events that could force them higher—like, say, a war between the United States and Iran. But in the long run, there is every reason to think that the steep, rocky ascent we have been on will give way to a welcome downhill path.

I'm not alone in my optimism. Michael Lynch, head of an energy consulting firm in Massachusetts, told the Associated Press the current price of gasoline "is the peak or very close to it." Analysts at the investment bank Lehman Brothers say we are just as likely to see oil at $80 a barrel as at $200.

It's easy to take a trend line as eternal fate. The oil market may look particularly inflexible, given the finite nature of fossil fuel deposits and the insatiable needs of growing economies. But two important things in the oil market can change. One is demand. The other is supply.

Demand here is already in full retreat. People are abandoning SUVs for hybrids, taking mass transit and even venturing out on foot. "The average American motorist is driving substantially fewer miles for the first time in 26 years," reported USA Today recently. "Miles driven in February declined 1.9 percent from February 2006 before rebounding slightly for a 0.3 percent year-over-year gain in March." And that was before gas got to $4 per gallon.

Americans are not the only influence on oil demand, but they're the biggest one. We consume a quarter of the world's annual supply—three times more than China and eight times more than India. So if our consumption starts falling and keeps falling, the petroleum sector will quickly feel the effects.

The common assumption is that oil use in China and India will soar no matter what. But even on the other side of the planet, demand is inversely related to price. Pump prices have risen in China, and if American motorists are cutting back on travel, you can bet that Chinese drivers are doing the same.

The supply of oil is also related to the amount it sells for. It's not getting easier to find new reserves, but at $130 a barrel, a lot of companies are going to be looking really, really hard. They will also be reevaluating fields that couldn't be profitably tapped at $60 a barrel. The federal Energy Information Administration projects that U.S. production will rise 24 percent in the next decade.

The same factors should boost output abroad. OPEC members will face far more temptation to cheat on their production limits. "This year will be a year in which supply will be put into the market by stealth by OPEC countries and countries we call black-hole countries" such as China, Lehman Brothers energy economist Edward Morse told The New York Times.

Back in the 1970s, everyone thought the world was running out of petroleum. But spurred by huge price increases, production rose even as demand was falling. Before long, the world was awash in cheap oil.

Don't be surprised if it happens again.

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

'The Ethos of Organic Food': Worrying About Things That Don't Matter?

jsullum@reason.com (Jacob Sullum) — Wed, 21 May 2008 14:50:00 EDT

This New York Times article about organic baby formula, which ran on the front page of the national edition, is puzzling on several levels. Apparently some mothers (at least two!) who buy the organic version of Similac have been dismayed to learn that it contains sucrose instead of the lactose used by competitors. According to the Times, "All infant formulas contain added sugars, which babies need to digest the proteins in cow's milk or soy." But the supply of organic lactose has been tight lately, so Similac decided to use less-expensive (and sweeter) organic cane sugar instead.

Does that make the formula less healthy? The Times hems and haws on that question, citing clashing opinions regarding the effect that different sugars might have on tooth decay and obesity. The bottom line is there's no clear evidence sucrose is any worse for babies than lactose. "No health problems in babies have been associated with Similac Organic," the Times reports. Furthermore, "Doctors say that parents need not worry about the precise composition of formula, because the product over all has been proved safe and effective. "

Still, says one pediatrician, "That organic formula would be sweeter might not be a health risk, but it certainly isn't what the parents [who buy organic products] have in mind." A taste researcher concurs: "Making sweeter formula so that babies like it more seems to me contrary to the ethos of organic food."

What exactly does that mean? As far as the U.S. Department of Agriculture is concerned, the Times notes, "a product can be labeled organic when 95 percent of its ingredients are grown without the use of certain pesticides and herbicides." So a product can meet this standard, or even hit the 100 percent mark, but still not be organic in spirit? And if the ethos is so demanding, can any sort of baby formula truly be organic, since breast milk is both more natural and healthier?

Ron Bailey recently noted several myths about organic food, including the notion that it's especially healthy.

The Birth of the Nuppie

info@reason.com (Greg Beato) — Tue, 20 May 2008 07:00:00 EDT

At 31 inches long and 48 inches wide, weighing approximately 300 pounds, Casulo may be the largest, heaviest gadget in the history of gee-whiz technology. And yet for a few days in February, as news of its existence traveled from one trend-spotting blog to the next, the bulky rectangular box captivated the attention of those normally preoccupied by much tinier fare.

Created by two German designers, Casulo is an almost magically compact trunk crammed with enough stylish furniture to outfit a studio apartment. The pieces include a slatted bed frame and a twin mattress, a sizable armoire, a desk with a four-drawer cabinet, a six-shelf bookcase, one height-adjustable stool, and two square seating cubes that moonlight as additional storage space. Its footprint matches that of a standard European pallet, making it easy to ship and store. Its contents can be unpacked and assembled in approximately 10 minutes, no tools required.

Casulo’s streamlined surfaces are devoid of any non-functional ornamentation—the mood the system projects is one of clean, efficient, and fairly institutional playfulness. If there were a high-security prison for criminal Playmobil figures, it would be equipped with this stuff. But if whatever comfort Casulo’s spartan furniture offers the body remains largely untested—so far, only a prototype exists—the comfort it affords restless souls is obvious.

Thanks to an ever-expanding array of wireless technologies, we can now fit our jobs, our record collections, and our five favorite friends into our pockets. But even our most state-of-the-art futons and entertainment centers remain hopelessly immobile, their practical range limited to one side of the room or the other. Products like Casulo attempt to remedy that: Any day now, they promise, our physical property will be just as portable as our intellectual property.

No doubt old Tom Joad would be surprised by our kinetic aspirations. On one hand, mobility in the service of leisure is a hallmark of the richest among us—these days, you can easily spend more than $1 million on a luxury RV, and if you have a spare $100 million, Space Adventures, Ltd. will be more than happy to send you to the moon next year. On the other hand, mobility yoked to domesticity, mobility as an economic strategy, have traditionally been hallmarks of the underclass.

In the last decades of the 19th century and the first of the 20th, what the historian Carlos Schwantes has dubbed a “wageworkers’ frontier” existed in the American West and Canada. Millions of migrant laborers provided temporary manpower for the fisheries, mines, lumber operations, farms, canneries, cattle ranches, and construction companies operating in the new territories, and mobility was the key to their livelihood. As soon as one job ended, they hit the rails or the highways looking for the next. “There are 300,000 hobos in the country, and we want good roads so it will be easier for us to find work,” exclaimed Jeff Davis, the self-proclaimed “King of Hobos,” at a 1913 meeting of automotive industry executives in Detroit.

But however important this just-in-time army of human labor may have been to the region’s economic development, the hobos (whom Davis always took care to distinguish from “tramps” because of their desire to work) weren’t particularly respectable. Without families to support or mortgages to pay, these highly mobile workers, most of whom were young men, spent their money in saloons, gambling dens, and brothels.

In the 1920s, John Grissim explains in The Complete Buyer’s Guide to Manufactured Homes & Land, a nationwide craze for family camping inspired some car owners to build trailers comprised of “little more than folding canvas tents on a wooden platform mounted on a single axle.” Eventually, commercial vendors began producing trailers too; when the Great Depression hit in the 1930s and people started moving west in search of better prospects, they often turned their erstwhile leisure vehicles into home sweet home when they got there. “It wasn’t long before campgrounds that accepted these semi-permanent tenants were dubbed trailer parks,” Grissim writes.

Citizens with more permanent roots dubbed these parks “trailer slums,” and mobile living became the province of the poor—and, to a lesser extent, plucky retirees piloting Winnebagos across the country at a pace that would make even Jack Kerouac weary. But why let the oldsters have all the fun? Why should rock stars and power forwards have a monopoly on traveling from urban playground to urban playground in pursuit of new customers for their services?

In the current bestseller The 4-Hour Workweek, the 29-year-old slackerpreneur and self-improvement guru Tim Ferriss insists that the greatest assets of the “New Rich”—and the keys to creating “luxury lifestyles”—are “time and mobility” rather than huge bank balances. To put it another way: That homeless guy sleeping in his own urine in your building’s doorway? He isn’t as poor as he looks!

Ferriss, a self-described tango champion and online dietary supplement tycoon, disdains the notion of slaving away in white-collar serfdom for the deferred promise of geriatric adventure. Instead, he preaches the virtues of economic autonomy, extended travel, and “mini-retirements” that last months or years instead of weeks. And thus Tom Joad’s nightmare becomes today’s white-collar dream. What is Casulo but the creative class’s version of a homeless guy’s shopping cart? And what are vehicles like the Design Within Reach Airstream Trailer or the GMC Pad but more elaborate and mobile versions of Casulo?

Introduced last year, the $50,000 DWR Trailer updates Airstream’s iconic, aluminum-shelled asphalt dinghy with an interior suitable for a Dwell centerfold. The GMC Pad, so speculative it doesn’t even exist as a prototype, is a concept for something General Motors describes as a “mobile urban loft” for modern city dwellers who’ve been “priced out of Southern California’s escalating housing market.”

Along with side panels decorated with graffiti murals, it includes all of the touches that deliver the “cultural & geographic freedom” that today’s migrant copywriters demand—Thermador kitchen appliances, a personal spa designed in collaboration with Kohler, satellite TV. “Whether located in walking distance from your job @ TBWAChiatDay, spending a couple evenings along PCH, or wintering at Mammoth, with the GMC PAD, home is where you want it,” General Motors advises. “And commuting is what other people do.”

No doubt it’s easy to mock the idea of, say, rebel handbag designers lighting out for the territories in their DWR Airstreams, mad to live, mad to be saved, mad to admire the matte ebony finish of their eco-friendly flooring and burn, burn, burn like recessed halogen lighting tastefully exploding across the laminate doors of the roomy cabin’s overhead lockers.

But it’s a seductive vision too. Ever since Huck Finn decided to go downriver on a raft for no other reason than to escape the bounds of sivilization, hyper-mobility has stood as one of the purest expressions of American liberty. Now, as gas prices and gridlock threaten to constrain us, as Minutemen and TSA officials do their best to keep the flow of human beings in check, it’s no wonder products like Casulo and the GMC Pad are so appealing. Shouldn’t we be able to move around the planet at least as freely as our credit histories and embarrassing party photos do?

And must we really sacrifice comfort and style just because we want to live the itinerant life? In On the Road, Sal and Dean remain so committed to constant movement, one suspects, in part because the accommodations are so squalid whenever they actually arrive anywhere. In 2008 shouldn’t you be able to consort with winos and hookers all day and then, after managing your online dietary supplement business via your on-board WiFi connection, fall asleep on pin-tucked Baltic flax linens?

Today’s merry entrepreneurs and migrant knowledge workers can combine the liberating mobility of the Beats with the liberating autonomy of having a simple, Walden-like shelter even Martha Stewart might envy. The dream doesn’t get any more American than that.

Contributing Editor Greg Beato is a writer in San Francisco.

Raw Milk Rebellion

feedback@jacobgrier.com (Jacob Grier) — Fri, 16 May 2008 15:00:00 EDT

On May 1, Pennsylvania state troopers arrived at the home of Mennonite farmer Mark Nolt, seizing a reported $20,000 to 25,000 worth of farm equipment and placing Nolt under arrest. His crime? The illegal sale of unpasteurized milk and other dairy products. And Nolt isn't alone. In February, federal investigators subpoenaed two employees of Mark McAfee's Organic Pastures Dairy in California. Though the subpoenas do not indicate the purpose of the investigation, McAfee told me the feds were seeking evidence that his dairy was selling unpasteurized milk for human consumption across state lines.

These are just the latest skirmishes in the growing conflict over the right to sell unpasteurized, or "raw" milk. On one side of the fight is an odd coalition of whole foodists, dairy farmers, and libertarians who want the government to butt out of their milk-drinking decisions. On the other side are public health officials and assorted busybodies determined to tighten regulations.

Fittingly, the debate has come to a head in California, a state equally known for its organic foods and its nanny state meddling. Late last year, the legislature quietly enacted strict new bacteria limits on raw milk, holding the product to the same standard of sterility as its pasteurized counterpart. Proponents contend the rule is necessary to protect consumers from dangerous diseases. Opponents, including McAfee and state Senator Dean Florez, say the standard is unfeasible and will put dairymen out of business. They've secured a temporary restraining order against the law, but losing in court could bring about what Florez calls "the end of raw milk in California."

While the fight to produce and consume unpasteurized milk might seem like a step back in time, raw milk advocates have good reason to lament the state of the modern dairy. Today's agricultural processes sacrifice flavor for safety. In the 2004 edition of his classic book, On Food and Cooking, food science writer Harold McGee explains how milk used to change with the seasons. When it wasn't preserved in cheese, butter, or other products, it was enjoyed fresh on the farm and tasted of the pasture. The growth of cities in the 18th and 19th centuries changed this. Without access to grass, cows were often fed on less nutritious fare, like the spent grains from beer brewing. The resulting milk was less flavorful and frequently unsafe. Expanding railroads and the invention of the refrigerated rail car brought fresher milk to the cities, but these required producers to pool their output, increasing the risk of contamination. Milk-borne illness quickly became a major cause of infant mortality.

Thus pasteurization came as a tremendous boon. By heating milk below the boiling point, producers killed off potentially harmful bacteria and increased their product's shelf life. As pasteurization became the norm, both the federal government and many states prohibited the sale of unpasteurized milk. Though these regulations made milk safer, today's burgeoning growth in natural foods requires a looser regulatory approach.

In short, safer milk resulted in the loss of seasonality and taste. Cooking milk introduces new flavors, some of them unpleasant. And since pasteurization kills bacteria indiscriminately, many raw milk devotees argue that the process robs them of probiotics, bacteria that they say build their immune systems and aid digestion. As McAfee put it to me, "kids are germ magnets." Exposing them to raw milk, he argues, is good for them. Similarly, the testimonials section on the website of the Campaign for Real Milk, a project of the Weston A. Price Foundation that aims to overturn legal barriers to unpasteurized milk, is full of quotes from people writing that the product has cured them of everything from indigestion to autism. While some of these claims are obviously far-fetched, it's clear that many raw milk drinkers believe they benefit from introducing a thriving population of bacteria into their bodies.

And therein lies the problem. If a batch of unpasteurized milk happens to be tainted with E. coli or Listeria, feeding it to a "germ magnet" will lead to potentially serious illness. In his testimony at Florez' senate hearing, University of California-Davis professor Michael Payne testified that although raw milk accounts for just a tiny percentage of milk consumption in the U.S., it is responsible for twice the number of disease outbreaks as pasteurized milk. John Sheehan, director of the FDA's Division of Dairy and Egg Safety, takes things further and compares drinking raw milk to "playing Russian roulette with your health."

Alarmist statements like Sheehan's make it hard to believe the government's more reasonable warnings, and the FDA's ban is arguably part of what gives raw milk its allure. Payne does not advocate banning the sale of raw milk, but he does suggest that tighter regulations could help ensure safety. At greatest issue is California's new requirement that raw milk contain no more than 10 coliform bacteria per milliliter, the same standard that pasteurized milk must meet. The state argues that even though these bacteria are not inherently harmful, their presence is suggestive of fecal contamination; McAfee contends that such a low measure will be impossible to satisfy in California. Although Maine and Washington have instituted the 10 coliform limit without killing their raw milk industries, he is right to worry. Nearly a quarter of samples tested in Washington and Maine didn't pass the test, and even California's own Department of Food and Agriculture reports that only 25% of bulk milk samples collected in the state pass the test before being pasteurized.

Florez is considering legislation that would substantially raise the coliform limit for raw milk and increase testing for pathogens, along with other safety improvements. Given that so many raw milk consumers demand live bacteria in their milk, it's a reasonable compromise, and one that McAfee says his dairy could live with.

And yet, while certain regulations make sense for broad retail sales, there's something heroic in the civil disobedience of men like Mark Nolt. After all, if a consenting adult wants to buy milk taken straight from the cow, is it any business of the law to interfere?

When I recently visited dairywoman Kitty Hockman-Nicholas at Hedgebrook Farms in Winchester, Virginia, I saw nothing dangerous or diabolical. Kitty showed me around the farm, introduced her cows by name, and demonstrated her milking process. It would have been illegal for Kitty to sell me raw milk—she provides it for people who buy into "cow shares" and thus technically own the cows from which they get their dairy—but she kindly sent me home with some as a gift.

My trip to the farm provided delightful insight into the origins of one of our most essential foods. I didn't enjoy any miraculous health effects after drinking it, but the taste was smooth and creamy, with none of the processed aftertaste I now can't help noticing in store-bought milk. As I sipped my unpasteurized beverage, I reflected on the absurdity of the situation: If Kitty were to offer the same experience to others for a profit, the government could forcibly put her out of business.

Though Mark Nolt, Mark McAfee, and their loyal customers' devotion to raw milk may seem eccentric to some, the consumption of raw fish in sushi or uncooked meat in beef carpaccio is equally strange to others. And with consumer freedom increasingly under attack from busybodies on the left and right, it's hard not to admire their rebelliousness and their resolution to drink milk in its freshest form. Though there is certainly a place for reasonable food safety laws, any regulation that leads to otherwise law-abiding farmers being shutdown or arrested has gone too far. With a growing movement of consumers demanding raw milk, the time has come for the government to get out of their way.

Jacob Grier is a writer at the Cato Institute.

Class Action Lawyers Get Creative

jsullum@reason.com (Jacob Sullum) — Thu, 01 May 2008 17:09:00 EDT

The good thing about class action lawsuits is that they allow enterprising lawyers to consolidate many small claims, any one of which would not be worth pursuing on its own, and win settlements for consumers who may not even realize they've been injured. The bad thing about class action lawsuits is that they allow enterprising lawyers to consolidate many small claims, any one of which would not be worth pursuing on its own, and win settlements for consumers who may not even realize they've been injured. Which category does Vibhu Talwar and Patrick Finkelstein v. Creative Labs fall into?

According to the settlement agreement, the lead plaintiffs, who filed their federal lawsuit in California, alleged that Creative had misled consumers by exaggerating the capacity of its MP3 players. The fraud allegation hinged mainly on two different definitions of gigabyte. According to the decimal definition (the only one I knew until today), a gigabyte is 1 billion (10⁹) bytes. According to the binary definition, a gigabyte is 1,073,741,824 (2³⁰) bytes. While Creative used the decimal definition in its advertising, the settlement says, "certain computer operating systems report hard drive capacity using a binary definition." On those systems, a 20GB Creative Zen player would register as only 18.6GB or so, about 7 percent less than advertised.

I see the potential for confusion (I'm confused just trying to explain the grounds for the suit), but I'm not sure this amounts to fraud, or that consumers have suffered an injury, or if they have that the injury amounts to anything in practical terms. I've got 8,346 tracks on my 40GB Creative Zen Nomad Jukebox (which for some reason registers on my computer as 38.1 GB, 2 5 percent less than advertised), and I still have 18.4GB to spare. I suspect the machine will die before I fill it up.

Still, according to the email notice I received today, I'm eligible for "a 50% discount off the price of a new 1 GB MP3 player" (which I have no interest in purchasing) or "a discount certificate good for 20% off the price of any single item purchased at www.us.creative.com" (which I might actually use). I guess the measliness of the settlement, which few "class members" will bother to collect, matches the imperceptibility of the injury pretty well. As usual in this sort of class action, the real beneficiaries are the lawyers, Brian Strange and Barry Fisher of Los Angeles, who will collect $900,000 for their trouble.

At least Strange and Fisher have done a public service by encouraging companies to be more honest. Or maybe not. As of 2003, Creative has included in its packaging a notice informing consumers that "1GB = 1,000,000,000 bytes," that "available capacity will be less" than total capacity (because of the operating software), and that "reported capacity will vary." But Creative offered that clarification two years before Strange and Fisher sued the company. I wonder where they got the idea for the lawsuit.

Now Playing at Reason.tv: What We Saw at the Mortgage Bailout Demonstration

gillespie@reason.com (Nick Gillespie) — Tue, 22 Apr 2008 16:30:00 EDT

On April 16 in Washington, D.C., the Ad Hoc National Network to Stop Evictions & Foreclosures organized a demonstration outside a meeting of the Mortgage Bankers Associaton at the Washington Court Hotel.

reason.tv's Dan Hayes and Michael C. Moynihan checked out the demonstration and talked with some of the activists, who quickly changed the subject from home loans to Castro's Cuban paradise, the need to free Mumia Abu Jamal, forgiving student loans, the Rothschilds (!), Haitians eating a mixture of dirt and oil (!?!?), and much, much more. Approximately six minutes.

To view the video, click on the image below.

For the full song used in the intro and outro, go here.

I've Got Two Words for You: Lawn Darts

jsullum@reason.com (Jacob Sullum) — Wed, 16 Apr 2008 13:23:00 EDT

"Even outdated children's coats can pose risks, experts say." That warning nicely captures the spirit of this hysterical (in both senses) USA Today exposé of yard sales, those snakepits of recalled toys and no-longer-approved apparel. In what way can outdated children's coats pose risks? Health writer Kim Painter never quite gets around to telling us. Presumably she is not referring to the risk of taunts from peers who are scornful of your child's out-of-style hand-me-down clothes. Possibly she is thinking that an older coat might have a drawstring around the hood, which "can cause strangulation." Or maybe she means that the buttons could be attached with thread that the Consumer Product Safety Commission later deemed inadequately thick; after all, such buttons, if swallowed and lodged in a child's windpipe, can cause suffocation.

Painter also wants parents to be "extremely cautious" about "used cribs or other nursery gear," since "anything over five years old may not meet safety standards." The phrase "death trap" appears. Yet Painter is not talking about a crib that's so rickety it could collapse at any moment or so worn that your baby could be impaled by shards of wood; presumably you would notice such hazards. She is talking about a crib that's just like the one in which you, or even your older children, slept for years without injury, but that has been retroactively declared unsafe by government regulators. For Painter, who is dismayed by the fact that most people fail to return recalled products even though the government says they should, exercising independent judgment in assessing and addressing a putative hazard is unthinkable.

Some toys, for instance, have been recalled because they contain small, powerful magnets that, if removed and swallowed by a toddler, can cause internal injury. Upon hearing of this risk, you could a) immediately put the toy in a secure container and rush it back to the retailer before this lurking evil kills anyone in your family or b) decide to keep the toy away from little kids who might disassemble it and swallow the pieces. As far as Painter is concerned, only the first course of action is acceptable. Not panicking is not an option.

Painter is so mistrustful of your judgment and common sense that she warns you to "never buy or sell a used car seat or bike helmet [emphasis added]." Why? "If it has been in an accident," she explains, "it might not work properly." If you're the one selling a car seat or bike helmet, wouldn't you know whether it had been in an accident?

[Thanks to Jennifer Abel for the tip.]

Absolut Faux Pas

info@reason.com (Greg Beato) — Thu, 10 Apr 2008 16:26:00 EDT

Did you hear the one about the Swedish vodka company recently purchased by a French conglomerate marketing to Mexican consumers that pissed off U.S. bloggers? Ah, the perils of globalism! In early March, Absolut ran an ad in Mexican magazines as part of its "In an Absolut World" campaign. The ad featured a map of North America from the 1830s, when Mexico still controlled great portions of land it eventually coughed up one way or another to the United States. If the real world were as perfect as it sometimes seems when you're smashed on vodka, Absolut suggested coyly, the Dallas Cowboys would be Mexico's team, not America's, and the Beach Boys would've had to settle for Nebraska girls.

Apparently, Absolut's ad agency put too much faith in news stories that we gringos are so geographically illiterate we think maps are just promotional posters for globes. But as any border patrol vigilante worth his margarita salt can tell you, what happens in Mexico City doesn't always stay in Mexico City. The controversial Absolut ads crossed the Rio Grande via the Internet, and U.S. bloggers with anti-immigration leanings, already sensitive to the idea of being undermined by an army of dishwashers and day laborers, demanded a boycottini.

But do these angry patriots really believe drunken Mexicans fantasize about owning Salt Lake City? Do they really believe Absolut wants to decrease the size of its most lucrative market, America? It's just an ad, part of a campaign that portrays a glibly "idealized" alternate universe. In another ad in the campaign, men get pregnant instead of women. In a third, the Almighty Bartender reaches down from the heavens to dump ice cubes into an ocean that is presumably hot with the sweat of boiling dolphins. As much as Absolut may position itself as a light-hearted advocate for gender equality and the War on Climate Change, it's mostly a light-hearted advocate for selling as much vodka as possible—and it's not above sucking up to its many different constituencies to do so.

Indeed, over the last three decades Absolut has done a brilliant job of this. In 1980, vodka had a reputation as a cheap commodity that was so generic even Communists couldn't screw it up too badly. Then the Swedes began exporting Absolut in those chic medicinal bottles. And running ads in virtually every magazine big enough to earn a spot on your local newsrack. (Possibly the one thing Martha Stewart Living, The New Republic, Garden Design, Scientific American, and Hustler have in common is that they've all run Absolut ads.)

The spare but glamorous layouts of those initial Absolut ads transformed vodka's status from cheap commodity to yuppie status item: They were like a pair of designer jeans that got you drunk! Over the next 25 years, Absolut employed a strategy of versatile monotony, producing more than 1,500 ads that followed the same simple template as the first one—a depiction of the bottle plus a short phrase beginning with the word "Absolut."

As the campaign progressed, it grew more and more abstract, and thus more and more effective. The boastful language of the earliest ads ("Absolut Perfection," "Absolut Gem") gave way to puns that said nothing about the product itself. A bottle wrapped in chains was paired with the phrase "Absolut Security." A bottle turned on its head was paired with the phrase "Absolut Yoga." The company was no longer selling itself as a maker of vodka; it was selling itself as a maker of witty but empty advertising. In the same way that vodka is so tasteless, odorless, and colorless it can be mixed with just about anything, the Absolut brand was so meaningless it could be mixed with just about anything too.

Thanks to this chameleon-like ability to appeal to so many different kinds of consumers, Absolut is the most popular imported vodka in America. It's the third largest liquor brand worldwide. Two years ago, however, it decided to finally retire its traditional ads. Last year, it unveiled its first "In an Absolut World" ads; unlike their empty, eye-catching predecessors, these ones convey actual messages, often with a progressive slant. And that, Absolut has learned in the wake of its fantasy annexation of a sizable chunk of the American West and Southwest, is a recipe for trouble.

Still, is a single controversial ad grounds for boycotts and disownment? Last year, America drank approximately 1.68 billion shots of Absolut. Think of all the drunken hook-ups that represents! Think of all the business deals Absolut helped seal, the concerts and football games and slow Thursday afternoons it enhanced. Plus there's the question of whose "perfect world" Absolut's border realignment really represents. Ultimately, more Mexico would just mean less America; the net result would be fewer illegal immigrants invading the U.S. in search of a better life. That doesn't sound like a Mexican fantasy at all. Instead, it's a scenario nativists would toast.

Contributing Editor Greg Beato is a writer in San Francisco.

FCC Approves XM-Sirius Merger

rbalko@reason.com (Radley Balko) — Mon, 24 Mar 2008 16:01:00 EDT

That's the good news.

The bad news is that two companies had to grovel before a government panel to get the merger approved in the first place.

My dissection of the National Association of Broadcasters' asinine opposition to the merger here.

CORRECTION: It was the Justice Department that approved the merger, not the FCC. The FCC will issue its own ruling later.

I'm Not Going to Pay a Lot for That Gasoline

jsullum@reason.com (Jacob Sullum) — Thu, 20 Mar 2008 13:21:00 EDT

Suppose you pull into a gas station and notice that the price for a gallon of regular unleaded seems awfully high—more than $4, compared to the $3.30 or so you're used to paying. If you're in a hurry, you might decide to pay the premium. If you have a couple minutes to spare, you might go to the station down the street where prices are lower. In Indiana, you would have a third option: Buy the gas and call the attorney general:

Three Hendricks County gas stations agreed to refund customers after Attorney General Steve Carter's inquiries about excessive pricing last week.
A Speedway and two Marathon gas stations on U.S. 36 set prices at $4.09 a gallon for regular unleaded gasoline for a period of time last Friday, sparking complaints to the attorney general's office. The stations agreed to provide customers with refunds of the difference between the market price at the time and the higher price—70 cents a gallon.
"These prices stuck out like a sore thumb and were clearly excessive in the marketplace," Carter said. "Our inquiry into the matter has resulted in an outcome favorable to customers."

"The system has worked," Carter added. "The attorney general's office is regularly monitoring gasoline pricing and the market pricing to ensure a quick investigation and review of excessive pricing reports. The stations involved have cooperated with our inquiry and recognize the need to provide customer refunds."

How does Indiana's gasoline czar know a station is guilty of "excessive pricing"? When its competitors are charging less. Possibly Indiana motorists, even without a crack staff of taxpayer-funded investigators, are also capable of gathering this information. They could, say, consult those gas station signs with the prices displayed in big numbers. If that takes too much effort, here's a website where they can do gas price comparisons without even leaving home.

I don't quite understand where Carter gets the legal authority to dictate gasoline prices. His website explains the circumstances in which consumers should file an "incident report":

In 2002, the Indiana legislature adopted a law making it illegal to engage in excessive pricing during a state of emergency. The law is designed to prevent retailers from profiting at the expense of consumers should any emergency, like the September 11 tragedy, ever occur again. This law is triggered when the governor declares a state of emergency; the law can only be used while the state of emergency is in place and where there are insufficient cost factors to justify the increase. There is no specific percentage of price increase that is prohibited by the law. The law prohibits any price increase that "grossly exceeds" the price at which the gasoline was available before the emergency was declared.

Is Indiana under a perpetual state of emergency?

[Thanks to Nicolas Martin for the tip.]

There Oughta Be a Law

rbalko@reason.com (Radley Balko) — Sun, 09 Mar 2008 17:22:00 EDT

In a new report for the Competitive Enterprise Institute, Eli Lehrer looks at a series of dumb products and activities that the various states have banned. Here's a little taste:

Louisiana's unique-in-the nation florist licensing statute makes it illegal for anybody to arrange two or more types of flowers without passing a largely subjective state licensing exam. In theory, a child could face a fine for picking a bouquet of flowers and selling it at a roadside stand.

Whole thing here.

Is Anyone Torn Between the Troegenator Double Bock and Bud Light?

jsullum@reason.com (Jacob Sullum) — Wed, 05 Mar 2008 11:54:00 EST

The Pennsylvania legislature is considering a bill that would loosen restrictions on beer sales. Under current rules, you can buy one or two six-packs at a time from a bar or a specially licensed deli, convenience store, or supermarket. You can also buy beer from distributors, but only in cases. When I was living in Pennsylvania (where I grew up and got my first job after college), the upshot was that you could choose between the meager, relatively expensive selection at a retail outlet or the bigger, cheaper selection at a distributor, but that only made sense if you wanted a lot of a particular beer. You could not go to a store and, say, pick an interesting selection of three different six-packs, as people in other states routinely do. The proposed changes would allow people to buy any configuration up to a case from a distributor and any configuration up to 18 bottles from a retail outlet.

This seems like good news not only for consumers but also for microbrewers, since it allows people to more easily sample a wider variety of beers in smaller quantities. Yet according to The Philadelphia Inquirer, Pennsylvania's microbrewers (or some of them, at least) are worried about beer deregulation:

The Trogners [owners of Troegs Brewing, near Harrisburg], like many in Pennsylvania's community of 67 beer brewers, believe they could get slammed by what is termed a "beer reform" measure winding through the legislature.
It is intended to give Pennsylvania beer lovers more choice, including the ability finally to buy a six-pack conveniently.
But the proposal has sent waves of anxiety through state beer brewers—many of them family owned microbreweries—who fear it will give an edge to out-of-state brewing giants and cut into their much smaller profits.
In-state brewers, including the Trogners, don't mind the expanded access to six-packs.
The problem for many is the proposal to allow the sale of 12- to 18-packs of beer: Smaller breweries don't have the packaging equipment to produce those sizes. It would give larger breweries an even larger price advantage.

If you are a microbrewer trying to compete on price with flavorless, mass-produced swill like Budweiser, you might want to consider another line of work. Troegs produces a wide variety of tasty beers, so why should it worry about drinkers who buy 18-packs of Coors Light? Its competition is imported beers and other American microbrews, over which it does have a price advantage in Pennsylvania. Microbrewers, of all people, should be able to appreciate the virtues of greater consumer choice.

Jay Brooks considered the microbrew industry as a "long tail" phenomenon in the October 2006 issue of reason.

[Thanks to an anonymous reader whose email address I don't recognize for the tip.]

Elmo Knows Your Name...and Where You Live

jsullum@reason.com (Jacob Sullum) — Thu, 28 Feb 2008 12:52:00 EST

It should be said at the outset that Elmo utters his murder threat very sweetly, with a lilt at the end that makes it sound like a question: "Kill James?" Still, one can imagine that a toddler's parents would find it disconcerting. I myself am a bit puzzled as to how it could happen at all. James Bowman's parents said the doll, which is designed to incorporate its owner's name into various undoubtedly adorable phrases, started suggesting the boy's slaughter after they changed its batteries. But why would the word kill be in Elmo's vocabulary to begin with?

The incident reminds me of two pull-string dolls my sisters had when I was a boy: Matty Matel and his Sister Belle. They could not learn your name, and they came loaded with just a few fixed phrases, including "let's play cowboy," "it's time to eat," "let's play house," "I'm glad we're friends," and "I love you." Somehow (possibly through my rough handling), those phrases got mixed up, so that Sister Belle (if I recall correctly) started to say, "I'm glad we're house," while Matty Matel would say, "It's time to eat you," which was at least as disturbing as homicidal Elmo but easier to explain.

[via The Freedom Files]

Some Businesses Are Inherently Public, Says Washington State Supreme Court

bdoherty@reason.com (Brian Doherty) — Thu, 21 Feb 2008 13:11:00 EST

Some bad news from the Institute for Justice, in a press release ~~that does not yet seem to be on their website~~ that you can read here in its entirety:

The Washington Supreme Court today dealt a blow to civil liberties. In Ventenbergs v. City of Seattle, a divided Court decided that the city of Seattle could violate local entrepreneur Joe Ventenbergs' constitutional right to earn an honest living by creating construction waste-hauling monopolies for two multi-national corporations, making it illegal for Joe to practice his profession.

“The Court got the law wrong today and Washingtonians will suffer as a result,” said William Maurer, executive director for the Institute for Justice Washington Chapter (IJ-WA), which represents Joe Ventenbergs. “The Court ruled that our constitutional rights are less important than protecting two enormous, out-of-state corporations from competition. The sole good news from this decision, however, is that it is so narrow that it affects only hard-working entrepreneurs in the waste-hauling business and not other entrepreneurs throughout the state, who will be able to continue to rely on the protections of our state constitution to combat the creation of government monopolies.”

In a decision released this morning, the Court stated that hauling construction waste is not a private enterprise and “is in the realm belonging to the State and delegated to local governments.” The court found specifically that the provision of waste hauling service is a “government service” and constitutional protections do not apply to government-provided services.

Justice Richard Sanders, joined by Chief Justice Gerry Alexander and Justice Jim Johnson, dissented, arguing that today’s decision “presents a textbook example of governmental corporate favoritism to advance the profits of the privileged few at the expense, and the extinction, of any potential competitors. It flies in the face of the state’s privileges and immunities clause which was adopted to combat this exact sort of unholy alliance between government and big business, which ultimately not only disserves the excluded businesses but also the public in general.”

IJ's page dedicated to the Ventenbergs case. with a timeline and many links.

California Wine From Texas

jsullum@reason.com (Jacob Sullum) — Wed, 16 Jan 2008 15:24:00 EST

This week a federal judge ruled that a Texas law prohibiting out-of-state retailers from shipping wine directly to consumers while permitting in-state retailers to do so violates the Commerce Clause by creating a discriminatory barrier to interstate trade. You may have thought that issue was settled by Granholm v. Heald, the 2005 case in which the U.S. Supreme Court said discriminating against out-of-state wineries in this manner was unconstitutional. But liquor wholesalers, who are desperate to preserve the "three-tier system" that gives them a stranglehold on the distribution of alcoholic beverages in most states, argued that retailers did not deserve the same evenhanded treatment as wineries. Although U.S. District Judge Sidney Fitzwater disagreed, he handed the wholesalers a partial victory by agreeing that Texas has a legitimate regulatory interest in maintaining the three-tier system and may therefore require that out-of-state retailers buy the wine they ship directly to Texans from wholesalers in Texas. What that means, according to the Santa Rosa, California, Press Democrat, is that "a California retailer like Wine Country Gift Baskets would have to buy wine from a Texas wholesaler, ship it back to California and repackage it in baskets, and then ship it back to Texas."

That does not sound very practical, and it leaves Texas wholesalers with the same privileges they had before, controlling nearly all the alcoholic beverages sold to Texans (except for those sold directly by wineries, which are allowed to circumvent wholesalers under state law). The Specialty Wine Retailers Association is nevertheless calling this decision an important victory, since it undermines the arguments wholesalers throughout the country have been pressing in support of protectionist laws. The ruling also may put out-of-state retailers in a better position to ask the Texas legislature to endorse a more sensible and consumer-friendly system.

[Thanks to The Wine Commonsewer for the tip.]

Stuck in the Middle by You

jsullum@reason.com (Jacob Sullum) — Thu, 10 Jan 2008 13:29:00 EST

In a new report (PDF), the Specialty Wine Retailers Association (SWRA) notes that liquor wholesalers have been throwing money at state legislators in a largely successful effort to maintain their government-enforced monopolies on the distribution of alcoholic beverages. Those privileges were threatened by a 2005 Supreme Court decision overturning state laws that prohibited out-of-state vintners from shipping wine directly to consumers while allowing in-state wineries to do so. The Court found that such laws violated the Commerce Clause by erecting discriminatory trade barriers. Since then the wholesalers have been urging state legislatures to comply with the ruling not by opening up their markets but by imposing uniform bans on direct shipping. According to the SWRA (whose members want the freedom to buy directly from wineries), those lobbying efforts have been accompanied by a total of $50 million in donations to state political campaigns, an amount that "dwarfs that of any other sector of the American alcohol industry as well as numerous other groups." In Texas, for example, "alcohol wholesaler political contributions were greater than the political contributions of all gambling and casino interests, retail interests, food interests and all business services...combined." This generosity, says the SWRA, "coincides with the enactment of alcohol wholesaler-supported policies in nearly every state that protect the wholesaler." Examples:

• Between 2000 and 2006 Illinois alcohol wholesalers contributed $5,731,776 to political campaigns. In 2007 the Illinois Legislature passed a law that protected in-state alcohol wholesalers by prohibiting Illinois consumers from continuing to buy wine from out-of-state retailers. Wholesalers also convinced the Illinois legislature to force large Illinois wineries to sell only to state wholesalers, rather than direct to retailers has they had been able to do.

• Between 2000 and 2006 Texas alcohol wholesalers contributed $6,976,104 to state political campaigns. The Texas Legislature has passed prohibitions on out-of-state retailers shipping to Texans and limitations on in-state retailers shipping to Texans, both moves protective of and supported by state alcohol wholesalers.
• Between 2000 and 2006 California alcohol wholesalers contributed $4,296,304 to state political campaigns. In 2005 California passed legislation protecting wholesalers from competition by prohibiting Californians from purchasing wine from out-of-state retailers, policy California wholesalers pushed for.
• Between 2000 and 2006 Michigan wine wholesalers contributed $2,099,319 to state political campaigns. In 2005 the Michigan legislature passed a wholesaler-supported law that protected in-state wholesalers from competition by prohibiting Michigan consumers from purchasing wine from out-of-state retailers.
• Between 2000 and 2006 Virginia alcohol wholesalers contributed $2,580,161 to state political campaigns. The Virginia General Assembly passed a wholesaler-supported law prohibiting Virginia wineries from continuing to sell wine directly to retailers and forcing them to sell their wine to wholesalers.

[Thanks to The Wine Commonsewer for the tip.]

Big Box Panic

mmoynihan@reason.com (Michael C. Moynihan) — Wed, 02 Jan 2008 12:34:00 EST

On the corner of Newbury Street and Massachusetts Avenue in Boston sits one of the famed architect Frank Gehry’s least inspired creations. “360 Newbury” is a big box of a building—appropriate considering that its first three floors have long housed big-box record stores—famous only as Gehry’s sole multi-tenant office building in the U.S. But for the third time in 10 years, its retail space sits vacant. Its last tenant, the British-owned music giant Virgin Megastore, broke its lease in 2006 after four unprofitable years hawking CDs and DVDs to local college students. A company spokesman promised “to seek an alternative location in Boston.” It has yet to do so.

Virgin snapped up the space in 2002, when the failing music retailer Tower Records vacated the building ahead of its long, protracted descent into bankruptcy. Back in 1987, when Tower Records launched its single largest megastore in the Gehry building, the future of Boston’s independent record store business looked grim. Vinyl merchants and industry experts predicted that most independent retailers would feel the pinch of the big box; megastores like Tower would have more stock on hand and, it was presumed, would offer significantly discounted prices. The three-story Tower Records & Video would pose a direct challenge to small, local stores like Newbury Comics, a comic book merchant turned record shop specializing in independent music, hard-to-find imports, and 7-inch records by local bands. To make matters worse, the new Tower store would be situated on the very same block as Newbury Comics.

But it wasn’t just the specter of Tower that frightened small retailers like Newbury Comics. The music business was experiencing rapid growth in compact disc sales, and chain stores were expected to become the dominant players. Giants like Recordtown, Strawberries, Coconuts, Musicland, and Sam Goody—most of whom have now either disappeared or seen influence decline—would come to dominate the industry, The Boston Globe predicted. Among independent stores, the Globe wrote, a “panic” was precipitating Tower’s arrival. So ominous was the thought of a big box music store in Boston that The New York Times covered the store’s opening, suggesting that the independents might as well throw in the towel, since Tower “has virtually no competition in its league.”

At the time, Newbury Comics co-owner Michael Dreese told the Globe that he too was “worried,” and that when all the chains had settled in—the British giant HMV would soon open a megastore across the river in Cambridge and another in Boston’s Downtown Crossing shopping district—“there is going to be blood all over the place.” It would, presumably, be the blood of the independents. The Times spoke in the past tense, suggesting that the indies’ demise was a foregone conclusion. “On the block where a punk-rock record store, Newbury Comics, once held sway,” the Times sighed, “a new Tower Records sells that kind as well as more mundane music and a wide assortment of videotapes.” The store would stock, a spokesman said, “60,000 cassettes and close to 50,000 CDs,” versus the typical average of “12,000 CDs and 13,000 cassettes.” Who could compete with that?

Well, Newbury Comics, for starters. “We had a huge competitive advantage knowing the local market,” Dreese now says. Today Dreese and his partner, both MIT dropouts, preside over a mini-chain of their own, with 27 stores in five states, while HMV, Tower, and Virgin are all distant memories in New England. As the market changed, centrally controlled operations such as the Los Angeles–based Tower proved vulnerable to smaller, more localized competition. “Virgin and Tower were exceptionally poorly managed and made poor use of technology,” he says. “Combine that with Virgin and HMV’s very British arrogance when they entered the market.”

As the chains floundered in the face of declining music sales, Newbury Comics nimbly altered its business model without abandoning its core constituency of indie music fans. Today, compact disc sales account for just below 50 percent of Newbury Comics’ revenue. DVDs are approximately 20 to 25 percent, and pop culture and sports tschotchkes—Boston Red Sox caps, Ozzy Osbourne action figures—cover the rest. Hiring a platoon of tattooed hipsters added an extra patina of authenticity to the shopping experience—something Virgin, HMV, and Tower didn’t offer.

According to Dreese, who spent much of his youth in London hanging around the original Virgin Record Shop’s lunch counter, Newbury Comics challenged the big boxes by liberally borrowing from the big-box business model, making aggressive use of “loss leader” merchandise (pricing items below cost to entice customers into the shop), competitive pricing, and a refined distribution system that used vast online databases. It moved into the Internet early, selling merchandise through both its own website and third-party Web stores such as Amazon and eBay. Dreese doesn’t worry much about downloads (iTunes, he says, has helped his business), and, as he recently told Boston Magazine, his focus remains on how to “keep beating Wal-Mart.”

The inability to adapt to local tastes and the failure to anticipate technological market shifts have been the Achilles heel of many big box retailers. When Wal-Mart was forced to shutter its vast network of German stores, a mystified company spokesman told a reporter: “We thought everyone around the world loved Wal-Mart.” (The International Herald Tribune quoted a baffled Wal-Mart shopper in South Korea, where the company has also abandoned operations, wondering, “Why would you buy a box of shampoo bottles?”) The chain had made the mistake of assuming that full-spectrum retail dominance is achieved by virtue of size alone, without regard to cultural and regional difference.

That error is common not just among chains but among their critics. Market leaders do not always react in a timely and profitable manner to shifts in taste and technology. While big-box retailers have enormous competitive advantages—sui generis leverage with distributors and manufacturers, unparalleled capital resources, immense political influence—they also face a distinct disadvantage in adjusting themselves to local preferences.

‘Its presence had a magnetic effect on the caffeine crowd.’
Just ask Starbucks CEO Howard Schultz. In 1998 community activists in Harlem bemoaned the supposed retail segregation that concentrated so many Starbucks cafés in midtown and lower Manhattan while ignoring the traditionally minority-dominated neighborhoods north of 125th Street. “In my opinion,” one local activist told The New York Times, “people in this area do deserve to get the goods and services they would get in other areas.”

Starbucks responded to critics through its “urban coffee opportunities” program, opening a store in Hamilton Heights, a majority Hispanic neighborhood with a significant black minority population. But after a few years doing lackluster business, the chain’s Seattle headquarters determined that the store wasn’t worth saving and pulled the plug on the franchise. Elsewhere in the city, upper-middle-class New Yorkers were taking aggressive action against supposed corporate usurpation, staging protests and “direct actions” against Starbucks outlets that, they said, were homogenizing their neighborhoods. In Hamilton Heights, the protests went the other way. According to The New York Times, “residents mobilized to save their Starbucks,” pressuring corporate headquarters and community leaders because the store was providing jobs and, they hoped, would ultimately boost property values.

When the shop finally shuttered, a local community leader observed that Starbucks “was not attracting the neighborhood support because of a lack of cultural affinity. Most of the people [in Hamilton Heights] don’t go to hang out in a cafe. If they hang out, they hang out on the sidewalk. And it’s mostly old men talking about the old days.” Instead, residents preferred Dominican coffee from La Flor De Broadway Café, a hole-in-the-wall coffee shop with no seats, no Bob Dylan CDs on sale, no chrome espresso machines at $300 a pop. They do, however, serve a strong 80-cent cup of coffee.

In 1998 Jon Cates faced a similar challenge from Starbucks. Located in the bustling Westport neighborhood of Kansas City, Cates’ Broadway Café, a haunt of local hipsters, students, and artists, discovered that the Seattle coffee goliath was slated to open an outlet on the same block. The café’s supporters sprung into action, papering the windows of their new neighbors with leaflets and eventually appealing to the city zoning department to stop development. When that was unsuccessful, the shop’s owners collected thousands of signatures in protest. But that too failed, and Starbucks opened for business, confident in its ability to steamroll Cates.

Three years later, Cates reluctantly conceded to a Wall Street Journal reporter that his business was thriving. Rather than defeating the outsiders with zoning regulations, they won with old-fashioned competition: “Starbucks helped our business, but I don’t want to give them any credit for it.” Eight years after Starbucks invaded Westport, Cates has actually expanded his business, opening a coffee bean roastery in the neighborhood that supplies other independent cafés in the region.

Phoenix Coffee Co. in Cleveland Heights, Ohio, an independent café who battled Starbucks for five years, also found the Seattle competition a boon for business. Phoenix’s co-owners Carl Jones and Sarah Wilson-Jones told Cleveland’s Sun Press that “While Starbucks was there”—the store has since shuttered—“our business grew by 20 percent a year. We’ve been grateful the corporate giant moved in, since its presence had a magnetic effect on the caffeine crowd.”

By understanding local tastes, Newbury Comics, Phoenix Coffee Co., La Flor De Broadway Café, and Kansas City’s Broadway Café demonstrated that localization, customer care, and authenticity are far more effective means of fighting larger rivals than agitating for anti-chain legislation. Had Broadway Café owner Jon Cates initially looked at historical precedent, rather than petitioning city hall, he perhaps would have understood that David slays Goliath with encouraging frequency in the history of American business.

‘One third of the grocery business of the nation has been wrested from the independent store.’
Across two pages of the April 28, 1928, New York Times, reporter Evans Clark observed breathlessly that American corporations were engaged in a ruthless campaign of economic expansionism and were making “deep inroads into the retail store business” abroad. Lurking behind the ubiquitous Boots Pharmacy signs in England, Clark wrote, was the invisible hand of American capitalism: The chain was owned by the New York–based conglomerate United Drug Company, which, by 1928, operated 10,000 outlets in the United States and 800 in the United Kingdom.

American business reached far beyond the traditional trading boundaries of the Anglosphere: “the familiar red signs of a well-known domestic five-and-ten-cent chain appear both on London and Berlin street corners; the laboratories of a St. Louis chemical concern turn out American mouth wash in Madrid; the plant of a Detroit manufacturer assembles American autos in Osaka…fifty-four theaters in Brazil are now linked in a continuous chain of management with movie palaces in Manhattan, Brooklyn and Queens.” In certain areas of industry, the Times ruefully observed, “American companies have practically monopolized output and sales.”

Three months later Clark returned to the pages of the Times, this time to warn readers of big business’s domestic plot to “displace the neighborhood store” through predatory pricing and sweetheart distribution deals. Beneath an image of a cigar-chomping capitalist casting a malevolent gaze over a map of America, Clark signaled the death knell of the neighborhood enterprise, arguing that the “storekeeper of today is a corporate executive, who presides over chains of a thousand.

Yesterday the corner tobacconist’s was just a tobacco store and nothing more. Today chances are it’s one link in a chain of tobacco stores whose length is the breadth of the continent.…One third of the grocery business of the nation has already been wrested from the independent store around the corner…and is now in the hands of great corporations which claim the nation is their customer.”

The trade journal Printers’ Ink expressed similar concern for the neighborhood store: “Think a moment. What has become of the old corner tobacconist? Answer: United Cigar Stores. What has become of the old ‘home-cooking’ restaurants in so many cities? Answer: Child’s, $12,000,000 (backed by Standard Oil) and Thompson’s, $6,000,000—to say nothing of several others. Big Business (United Drug Company and Riker-Hegeman) already dominates the drug stores of New York, Boston and Chicago.”

If one excises the references to tobacconists and long-forgotten retail giants like Woolworth’s and Butler Brothers, the doom-laden rhetoric of the 1920s sounds strikingly familiar; the anti–big box activism of recent years—directed primarily against retail giants such as Wal-Mart and Barnes & Noble—has its antecedents in the activism of the 1920s, the apogee of the first wave of anti-chain fear. As the business reporter Anthony Bianco argues in his anti–Wal-Mart book The Bully of Bentonville: “For many people over thirty, the phrase ‘the corner store’ continues to be powerfully evocative of an establishment where the person across the counter knew you and would even extend credit if you were a bit short, a place that was as distinctively personal as its proprietor’s fingerprints.”

But this idealized view of the past isn’t entirely accurate, as the anti-chain crusaders of the 1920s would have been quick to point out. In Land of Desire, historian William Leach describes the small town of Marion, Ohio, in 1929. In “the town where both President Warren G. Harding and socialist leader Norman Thomas grew up and all the houses had front lawns,” writes Leach, “there were two Kresge’s, two Kroger grocery stores, three chain clothing stores, two chain shoe stores, one Woolworth’s, one Montgomery-Ward, and one Penney’s.”

By 1914, the burgeoning chain system boasted over 20,000 individual stores. An industry audit that year listed United Cigar Stores Company as the largest chain, with over 900 shops. The Great Atlantic & Pacific Tea Company (A&P) had 800; Woolworth’s 774. The Riker-Hegeman drug chain had 105 stores and, the auditors noted with alarm, was “growing at the rate of more than three a month.”

These numbers would expand dramatically in the coming decades. By 1929, over 25 percent of all retail sales were transacted in a chain store. As Clark wrote in the Times, “Competition [in the grocery business] is no longer between the chains and the independents—the independent grocer has ceased to exist as a real factor in the grocery market—but between the chains themselves. Over half the grocery business is done by chains in Boston, Baltimore, Washington, Chicago, Kansas City, Los Angeles, San Francisco and eight other leading American cities.”

By the 1930s, 10 percent of chain store grocery business was transacted through a single corporation (A&P), which at the height of its power controlled a massive 16,000 outlets. As the business journalist Charles Fishman, author of The Wal-Mart Effect, points out, “At its peak, A&P had five times the number of stores Wal-Mart has now (although much smaller ones), and at one point, it owned 80% of the supermarket business.” This alarmed not just the local competition, but manufacturers too, as large chains began producing their own branded products. In a letter to independent grocers, one breakfast cereal producer warned that “Any jobber is blind who shuts his eyes to the increasing menace of the chains, a menace to your business far more than to ours.”

Of the grocery chains considered “menaces” during the 1930s, few remain in business. Today A&P maintains just over 100 stores. They were swiftly replaced by even bigger goliaths, such as Kroger and Wal-Mart. In 2006, according to the research firm Retail Forward, Wal-Mart was the largest grocer in the country, transacting around 16 percent of all food and beverage sales.

‘The number of chain stores in any community should be limited by law.’
Industry groups mustered more than pressure campaigns in their battles against the chains of the past. They also called for laws to “defend” local stores—to stop the spread of Kreske’s, Sears, A&P, and various regional chain druggists. Recent legislation attempting to hinder the expansion of big-box retailers has roots in a long history of legislation—most of it nullified—against chains.

While anti–big business agitation has a long pedigree in America, it wasn’t until the 1920s when the chain became the prime target of both left- and right-leaning politicians. As early as 1922, the Los Angeles City Council tabled a resolution mandating that “the number of chain stores in any community should be limited by law.” Sen. Royal S. Copeland (D-N.Y.) bemoaned the influence of big business on the old neighborhood, urging lawmakers to pass legislation to protect small businesses: “When a chain enters a city block, ten other stores close up. In smaller cities and towns, the chain store contributes nothing to the community. Chain stores are parasites. I think they undermine the foundations of the country.”

Future Supreme Court member Hugo Black, then a Democratic senator from Alabama, told his upper-chamber colleagues in 1930, “Chain groceries, chain dry-goods stores, chain clothing stores, here today and merged tomorrow—grow in size and power. We are rapidly becoming a nation of a few business masters and many clerks and servants. The local man and merchant is passing and his community loses his contribution to local affairs as an independent thinker and executive. A few of these useful citizens, thus supplanted, become clerks of the great chain machines, at inadequate salaries, while many enter the growing ranks of the unemployed.”

By the late 1920s, politicians realized that populist rhetoric directed against chain stores was a political winner. In 1928, Sen. Smith Brookhart (R-Iowa) called on the Federal Trade Commission to investigate the “chain menace.” After a six-year investigation, the agency published its findings. While siding against the alarmists—there were no true monopolies in retail, the commission determined—the report’s complaints will sound familiar to today’s Wal-Mart critic: merchandise sold beneath cost, strong-arming manufacturers, employees paid low wages. The study also provided unintended advice for the local merchant, observing that “less service [is] given to customers by chains.”

In 1928, the Supreme Court struck down the Pennsylvania Drug Store Ownership Law, an anti-chain ordinance that required drug stores to be owned by pharmacists, not corporations. The court ruled that the law’s stipulation of who could own a business was “repugnant to the Constitution.” That year 13 states attempted to pass anti-chain legislation.

In 1938, Rep. Wright Patman (D-Texas) introduced legislation to tax any chains with over 10 outlets in a single state. Its provisions, one industry observer noted, “were drastic enough to have put many a chain out of business.” The chain tax, Chain Store Age editor Godfrey M. Lebhar calculated, would have a disastrous effect on large retailers. If Patman’s bill had passed, the Woolworth Company would owe approximately $81,000,000—in 1938 dollars—in taxes, even though the company’s net profits amounted to $28,000,000. “In the case of the A&P,” Lebhar wrote, “with approximately 12,000 stores in 40 states at that time, the tax would have totaled more than $471,000,000.” The bill never made it out of committee, but the stage was set for future legislative attacks on the chain system.

‘The retail book trade cannot live against the competition.’
Today’s independent booksellers and their supporters fret about an Axis of Evil consisting of Amazon, Borders, and Barnes & Noble—and with good reason. Today, independent bookstores account for just 15 percent of the market, down from 80 percent in the early 1970s. The American Booksellers Association (ABA), which represents over 3,000 independent stores, filed suit against publishers’ “unfair” use of volume discounting in 1995 (they settled out of court) and again in 1998 against Barnes & Noble (the ABA settled on a $16 million payment of its legal fees and dropped the suit).

But the ABA too could assuage their fears by looking to historical precedent, when both publishers and smaller shops attacked chain discounters with blind fury. As far back as 1872, Publishers Weekly argued that publishing houses selling directly to consumers—and often offering free shipping to boot—would sound the death knell of the local bookstore: “The retail book trade cannot live against the competition of manufacturers and either the competition or the retailers must cease to be.”

In 1900, the R.H. Macy’s department store sued the ABA for refusing large retailers the right to sell books below cost, which, the group contended, would “ruin the small bookstore.” Macy’s, which has long since left the bookselling business, used paperbacks as loss leaders—another way of enticing customers in the increasingly crowded Manhattan department store market. Fourteen years after filing suit, New York’s Supreme Court decided in favor of Macy’s, awarding the company $140,000 in damages.

But it was a pyrrhic victory for Macy’s, which would be repeatedly targeted by the ABA in decades to come. 1934 brought the National Recovery Administration’s “codes of fair competition,” including a “bookstore code” that disallowed discounting of books until six months after their release. In 1935, much to the ABA’s dismay, the U.S. Supreme Court ruled the codes unconstitutional.

Later that year, New York’s state legislature passed the Fair Trade Act, which would force Macy’s to abide by its resale price maintenance agreements with certain publishers and to cease loss-leader discounting. The New York State Supreme Court invalidated the legislation the following year, with a judge declaring, “The act attempts to give to private persons unlimited power over the property of others.” When the U.S. Supreme Court reversed the decision on appeal, finding that the state’s Fair Trade Act was indeed constitutional, Macy’s exploited a loophole in the law exempting book clubs from discounts. Thus, Macy’s Red Star Book Club was born.

During the 1930s campaign to punish stores selling below cost, a Carnegie Corporation report complained that the business of bookselling had inexorably changed—it had become a business: “The old-fashioned bookstore was a charming place, but charm alone will not solve the problem of modern book distribution.…Hard though it may be to face the fact, the bookstore of today cannot primarily be a place for those who revere books as things-in-themselves.” An ABA representative later complained to a Senate committee that “non-book-minded merchants” were killing the industry and “price-cutting, unless stopped, will ultimately eliminate the personal bookstore from the national scene and in turn will have a serious effect on the quality of our national literary production.”

This, of course, has yet to happen. Chain stores are still the undisputed kings of bookselling, but their sales figures have remained flat in recent years. Meanwhile, the ABA announced in 2004 that “independent bookstores’…sales increased, in terms of both dollars and number of units sold, capping a three-year period of sustained growth,” citing an Ipsos BookTrends study. In 2004, an ABA spokesman told The Wall Street Journal, “Even though there are fewer stores, the survivors are doing better.” As for our country’s literary production, 2005 saw 172,000 books published in America, a dramatic increase from the 39,000 released in 1975.

Today’s attempts at anti-chain legislation follow a similar pattern—and have, in most cases, met a similar fate. Maryland’s anti–Wal-Mart law, which mandated that the company spend at least 8 percent of its payroll on health care, was recently voided when a federal judge ruled that “state laws which impose employee health or welfare mandates on employers are invalid.” In 2006 the Chicago city council passed a resolution requiring stores of at least 8,300 square meters in floor space and earning at least $1 billion in revenue annually to pay a “living wage”—approximately $13 per hour—only to see the rule vetoed by Mayor Richard Daley. In California, Gov. Arnold Schwarzenegger vetoed a similar law that would have forced Wal-Mart and other big box stores to provide health care benefits for their employees, arguing that “singling out large employers and requiring them to spend an arbitrary amount” on insurance would have no appreciable effect on “the health care challenges we face.”

‘Wal-Mart’s growth formula has stopped working.’
But if legislation has done little to restrain the chains, the marketplace has regularly cut them down. Contrary to many activists’ assumptions, America has not been condemned to centuries of retail uniformity. Quite the contrary: The 21st century consumer has greater choice and access to a wider assortment of products than any time in American history.

In a country of such colossal wealth, price and convenience are not the only factors affecting consumer choice. Even among Starbucks executives, who single-handedly created a market for espresso drinks in the Unites States, there exists a deep fear that it won’t be an aversion to paying $5 for a cup of coffee that will inhibit the company’s growth but a backlash against the chain’s focus on standardization. In February 2007, Starbucks CEO Howard Schultz fretted in an internal email (later leaked to journalists) that “the automation that is helping to drive the company’s expansion is sucking the romance out of the Starbucks experience.” Starbucks isn’t going to disappear any time soon, but as Business Week recently pointed out, the chain “is suddenly besieged by tough competitors.”

The same is true of Wal-Mart, a dominant company showing signs of wear and overextension. In 2006 it posted a mere 1.9 percent growth in same-store sales—that is, sales in outlets that have been in operation a year or more. It was the slowest rate since the company’s inception. Writing in the Harvard Business Review, the retail analysts Darrell Rigby and Dan Haas suggested that the smaller chains “are managing to coexist and even thrive in the same forest with Wal-Mart.” Business Week recently reported that “Wal-Mart’s growth formula has stopped working,” arguing that “America’s largest corporation has steered itself into a slow-growth cul de sac from which there is no escape.” Richard Hastings, a senior analyst at the retail rating agency Bernard Sands, agreed, telling the magazine that we were seeing “the end of the age of Wal-Mart. The glory days are over.”

Maybe. But stores like Wal-Mart will always be with us, just as they were when they were called Woolworth’s or A&P. If Sam Walton’s creation disappears, it will doubtless be replaced by a more clever, more modern adaptation of the business model he popularized. It is likely true, as big-box critics contend, that stores like Wal-Mart will always dominate certain sectors, thus threatening the existence of many smaller competitors. But chain stores often create markets that didn’t previously exist, both by forging new trends (like the $10 new release CD, quickly adopted by Newbury Comics) and by provoking a backlash against the alienating experience of big-box shopping. There will always be those that find Wal-Mart inauthentic, those that prefer the punk rock ethos of a Newbury Comics to the Deep South values of Wal-Mart, with its habit of censoring CD covers and song lyrics.

360 Newbury, graveyard of Virgin Megastore and Tower Records, recently announced that it would be renting its first two floors to the electronics and CD retailer Best Buy. After years of doing combat with big boxes, Newbury Comics’ Dreese doesn’t betray the slightest worry about the latest competitor. “We’re the last man standing in Boston,” he says. It’s a safe bet that, sometime in the near future, he’ll be peering down the road, watching another megastore packing a moving van.

Michael C. Moynihan is an associate editor at Reason.