Many people are bemoaning
the so-called high street crisis as being indicative of some kind of prophecy
of doom on our retail industry. Now while we can all feel sympathy for the people
that lose their jobs because of this, the overall picture is that just the
opposite is happening: the closure of the high street shops is democracy's way
of saying that better things are happening elsewhere, and that on average,
the public is reaping the rewards of an ever-changing society.
This is why it's like
tariffs in reverse. Tariffs benefit a small proportion of the domestic
population, and hurt the rest of the population, to engender an aggregate loss.
High street store closures hurt a small proportion of the domestic population,
and benefit the rest of the population, to engender an aggregate gain.
What I'm describing here
is standard in economic theory: it is a natural selection-type filter known as
Schumpeter's 'gale of creative destruction' (after the economist Joseph
Schumpeter). It is the market's way of saying that demand for whatever you are
providing, or for the way you are providing it, is declining.
Creative destruction
transmits informal signals, not just about who should be selling what, and how,
but also about maximising investments, prudent and imprudent capital ventures, selection
pressure on innovation and efficiency, new training opportunities, alternative
products and improved technology.
Creative destruction is
not just a filtering effect on struggling businesses and industries, it is also
an opportunity for greater competition, which channels creativity,
modernisation and material advance. It does not mean an end to high street
stores; it means there is a niche opening for better ones. Competition doesn't just
drive drown prices for consumers, and ensure increased efficiency from
suppliers - it provides fresh opportunity for would-be businesses to enter the
market and add to the value created in society.
Those high street shops,
at their best, will not be retailers struggling to compete with more efficient
and cheaper online competitors - they will be small businesses like bakers,
butchers, patisseries, cafes, restaurants, takeaways and so forth, that are continually
able to provide goods and services that people prefer over the bigger
retailers, often to enjoy the sense of community spirit too.
Creative destruction
involves losses in society as well as gains - but the 'creative' part far
outweighs the 'destruction' part - as the threat of bigger competitors acts as a driver for new ideas and opportunities, and continual demand for improved
products and services.
To the small
minority of politicians who think the so-called high street crisis is their cue
to call for state intervention in the shape of bail-outs, subsidies, tax breaks
and financial restitution - this is as clumsy as it is foolish. Any political attempts
to cushion the blow only serve to distort the vital information signals regarding
where capital is best allocated, where labour is best employed, and which
businesses and industries are likely to create the most wealth and value in
society.
Finally, it shouldn't have slipped your notice that the political buffoons appearing on media outlets recently bemoaning the mass decline in high street retailers are the exact same political buffoons who've been so influential in helping these closures along by imposing literally billions of pounds of increased overheads on these companies through their inflated minimum wage legislations and fattened up taxation on businesses. Statist chickens always come home to roost.
