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Thursday, October 2, 2014


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Government intervention impedes economic success






Brooks

Brooks

Editor’s Note: Views expressed in guest columns and letters to the editor reflect the views of the author, not the views of The State News.

The 2010 Michigan ban on smoking in bars and restaurants was implemented with the intention of creating a healthier, more enjoyable dining experience.

I can tolerate the smell of smoke. It doesn’t bother me — although I certainly understand why it bothers others. My interest, however, is not with the political controversy that envelopes the ban, but rather, the economic dilemma.

A recent report from the University of Michigan was released with the intention of “clearing of the air.” Did the ban have an economic impact on Michigan business? Consider, after all, that we have a government telling restaurant owners what is and is not allowed in their establishments — a notorious warning flag of economic inefficiency.

The report concluded, however, there were no negative economic effects on bars and restaurants — with the exception of night clubs, which, prior to the ban, experienced rising sales and have since seen a decrease in sales.

This, for the most part, seems to be pretty good news — at least economically. However, I am puzzled as to why we needed a ban in the first place.

Let’s think about this. Say you are the owner of a restaurant here in East Lansing, and let’s assume there is no ban. You have the freedom to permit or to prohibit smoking in your establishment.

You must now decide what would best satisfy your customers and best serve your business. You first have to determine what type of customer you want to attract.

Do you want casual diners who enjoy a glass of cabernet sauvignon with a meal, or do you want hard drinkers? Do you want parents with their children, or do you want rowdy college kids? Perhaps you want to attract both and divide your restaurant into smoking and non-smoking sections.

If you want to attract families, it might make sense to ban smoking. If you believe you could make more money from rowdy student patrons, then allowing smoking might be the economically-efficient choice.

Either way, should this not be a choice that is left up to the owner of the business? It is, after all, his or her business.

The fact is, however, today we have a government enforcing a ban, and the question is whether or not that is a good idea.

One commonly voiced concern about removing the ban is that all restaurants suddenly will allow smoking and there will be nothing but smoke-filled rooms. I am confident, however, there always will be accommodations for the vast majority of customers in a free society.

Before the ban, there were smoking and non-smoking restaurants. There also were smoking sections and non-smoking sections. If they removed the ban today, and every bar and every restaurant were to allow smoking, one can imagine the first owner to recognize “the potential business in a smoke-free establishment.”

I get it, by the way. You want to eat at your favorite restaurant without smoke clouding the air.
But does your right to a smoke-free meal trump an owner’s right to run their business as they please? I really don’t think so.

The smoking ban is a good example of how a government entity limits our economic choice.

And while this forced intrusion did not have a significantly-negative effect, decisions by government to intervene with force generally prevent an economy from reaching its full potential and causes economic hardship, if not outright decline and poverty.

A recent study done by The Heritage Foundation, in partnership with The Wall Street Journal, ranked every country in the world by “economic freedom.”

Economic freedom, by their definition, is the “fundamental right of every human to control his or her own labor and property. In an economically-free society, individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”

Where would you guess the United States ranked? If you had asked me, I would have said first — or at least the top three. Alas, no. The Land of the Free comes in at number 10. Notably, the United States falls behind Canada, which ranks sixth, Australia, third and Hong Kong at number one.

What is more alarming is our “economic freedom score” — a score measured using the set of criteria previously mentioned — actually dropped when compared to last year’s. The drop is because of declines in monetary freedom, business freedom, labor freedom and fiscal freedom.

Although the U.S. is well above world averages, the U.S. now has registered a loss of economic freedom for years and has received its lowest score since 2000.

In the event you do not feel that economic freedom is important, consider the standard of living along the full spectrum of planetary nations.

The top percentiles include Hong Kong, Switzerland, Japan, Great Britain and the U.S. The 50th percentile is occupied by countries like Peru, Mexico and Poland and the bottom percentiles include North Korea, Iran and Cuba.

It certainly would appear there is correlation between freedom and standard of living.

Is it possible that our current-economic malaise and our declining score are related? I believe that is precisely the case.

Alex Brooks is a guest columnist at The State News and an economics senior. Reach him at brook194@msu.edu.


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