V is for Vendor

Atlanta is essentially forcing well-established vendors, some of whom have occupied the same spot for ten years, out of business. Were they a danger to anyone? No. Were they selling illegal products? Mmmmmmm…no. Were they in the way of a new bridge? School? Highway? Nope. What gives, then?

In 2009 Atlanta officials decided to create a citywide vending monopoly. The city signed off on a deal that hands over all vending on public property to a single multi-billion-dollar corporation.

Atlanta Mayor Shirley Franklin signed an exclusive 20-year contract with a Chicago-based shopping-mall management company, General Growth Properties (GGP). While governments have long meddled with street vendors, this was the first time in American history that a city gave one company the “exclusive right to occupy and use all public property vending sites . . . including without limitation those vending sites currently occupied by public property vendors.”

The GGP contract calls for the construction of vending kiosks around Atlanta. As the kiosks are built the existing vendors are forced to move out or else start paying up to $20,000 annually in rent and fees to work out of a cramped GGP kiosk. Vendors used to paying $250 a year for their vending site must now hand over $500 to $1,600 every month for the privilege of working for the monopoly. This makes it all but impossible for most Atlanta vendors to stay in business.

Atlanta is not alone. In El Paso TX, the city decided that vendors should not compete with restaurants and so prohibits them within 1000 feet of one.

A spokesperson for the El Paso Restaurant Association admitted in an interview by the local ABC affiliate that the law is purely protectionist: “We wanted this ordinance in place to help established restaurants keep their business.”

Even the city’s health inspector admitted before the El Paso city council that the law was put in place “to address concerns of the fixed food establishment. . . . [T]here’s not a health reason or a Texas food rule that I can find that justifies that.”

All of which raises an important question. What business does government have regulating street vending at all? Street vendors have been selling goods for hundreds of years. This is not a questions of their selling something illegal or dangerous. It is a power grab by cities, pure and simple. Why?

I suspect the cities each have a canned answer–the “public interest.” Bosh. Dollars to doughnuts GGP and the Restaurant Association both paid big bucks to politicians to keep from having to compete fairly. As for the public interest, whose interest are we talking about? Certainly not customers, who benefit from the convenience and variety offered by these hard-working entrepreneurs. And certainly not the entrepreneurs themselves, who support themselves and their families by doing honest work.

Government, local, state, or federal, talks boldly about “public/private partnerships” and “supporting entrepreneurship” in America. This usually means taking our money to make a big show of supporting some politically-motivated industry. Think Solyndra. In reality, they just need to get out of the way.

Lest you be tempted to dismiss this as an ideological skirmish with little relevance to the business of day-to-day living, think about your own job. If you were laid off with no prospects of getting another job, you would be looking to start some kind of business. If you are lucky enough to have saved some substantial money, you might want to open a store. Prepare for a shock when the city dictates how your building is to look (form-based code), what businesses you must run (perhaps having an apartment above–form-based code again), and sets in to tax you into oblivion.

More likely, though, you will just want to survive by cutting hair out of your home, hauling firewood, or selling sandwiches from a wagon. Government is making things like that harder by the day. By the time you need to do so, it will be too late to complain–you’ll need the money and will roll over for the busybodies on your city council. Start now. Let your local politicians know that their meddling days are numbered.

 

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About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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