Businesses, governments and taxpayers across Iowa's 99 counties and hundreds of cities and towns (indeed throughout America) are confronting three challenges from e-commerce in a global economy.
(1) Iowa's nationally and locally owned retail outlets, newspapers, and bookstores are struggling to find business models that will carry them from small town virtual monopoly storefronts into the highly competitive global marketplace of Web pages and social media.
(2) State, county and local governments are trying to figure out what they can best do to help the economies and communities of constituents for which they feel some responsibility.
(3) Taxpayers are questioning the wisdom of a "solution" that involves transferring their tax dollars from legitimate government projects to the bottom line of a handful of politically favored for-profit enterprises. Especially do they question the transfers when the money is used for business plans that appear to be pretty unimaginative responses to "e-commerce."
These issues were recently explored in depth here in "Big Boxes, Little Bookstores and Taxpayers; We'll Leave the Prairie Lights on For You," June 6, 2012.
That blog entry provided the research and source material, with links, for what ultimately became a column in this morning's Press-Citizen, below. If this is a subject that interests you that earlier blog entry is worth your exploration. Otherwise, this lighthearted 644-word column will provide a quick-read, summary view of these deadly serious issues.
Iowa City Press-Citizen
June 11, 2012, p. A7
The Iowa City Council, at least three members, recently leapfrogged over their colleagues to rule that local taxpayers should pay for a local business’s “museum quality gift shop” and café.
To “speed things up a little bit” they delegated the matter to the discretion of the city manager.
The grant is not even a TIF. It’s a $27,500 gift, plus a possible $15,000 1 percent loan.
Why do it? They want to “educate the public about eCommerce.”
The lucky beneficiary of this largesse? Iowa City’s Prairie Lights — widely beloved, and by no one more than me. But our love is not the issue.
The issue? Whether taxpayers really support the council handing over taxpayers’ money, without their approval, to favored for-profit businesses.
Clearly, the council is not interested in the answer.
Confronted with a petition to put public review of one of its latest controversial TIFs on the ballot, the council’s response is to suggest using a legal technicality to make the payment anyway, using a bond that citizens’ petitions can’t challenge.
This council switch would cost taxpayers an additional $300,000. The council thinks it’s worth the money to keep citizens at bay.
If it’s legally required we vote on the bonds to fund legitimate governmental projects, like the proposed county justice center, isn’t it even more appropriate the public be involved in taxpayer funding of private, for-profit businesses?
Capitalism means owners provide the capital, sometimes profit handsomely, but also bear all risks.
Socialism means governments own and provide traditional governmental services like police, fire, parks, schools, roads, libraries — and smoldering landfills.
What we’re doing — in Washington, Des Moines and Iowa City — is corporatism, the intertwining of business power and government largesse.
During World War II, in Benito Mussolini’s Italy, we called it fascism. Owners take the profits; taxpayers take the risks.
If that’s what local taxpayers truly want, there’s probably a way it can be provided constitutionally. But is that really what we want?
E-commerce? Aside from the café and gift shop, the city says this is the store’s “attempt to adapt to the ever-changing traditional and electronic market.”
That raises some issues.
According to the store’s website, it’s already in that business. Moreover, the owner concedes, “there’s no overhead.”
Every business confronts the “ever-changing traditional and electronic market,” including this newspaper.
Change can put a business out of business. However, this is the capitalist’s challenge, not the taxpayer’s responsibility.
Swiss watchmakers respond to digital watches, slide rule firms to calculators, mainframe computers to desktops, cellphones to smartphones — the examples are endless.
Bookstores are challenged with online sales, e-books, online self-publishing, Wal-Mart (40 percent of all best-seller sales), the cornucopia of Internet resources, the decline in discretionary time for reading.
Convenience, as well as savings, motivates e-book readers. If they can download a book to their Kindle while in bed and get advice from the Internet, why would they get out of bed and come to Prairie Lights for “a staff member to assist customers in e-book sales”?
Moreover, the city’s solution, adding a gift shop, is a way of getting out of the book business, it’s not a creative 21st-century e-commerce business model for staying in it. It’s like a pharmacist — also online and Wal-Mart challenged — adding groceries to the drug store merchandise.
In the greater Iowa City-Coralville area, every retail outlet must respond to the opportunities as well as the challenges offered by change.
Does the council intend to give our tax money to all of them? If not, why Prairie Lights?
Want to know which stores are suffering the greatest e-commerce impact? The Big Box stores, like Best Buy, Sears and Wal-Mart. Shoppers come to look, then order online from elsewhere. The companies are closing stores; their common stocks have declined.
Want to save those jobs, council?
Maybe local taxpayers should buy Wal-Mart a “museum quality gift shop.”
Nicholas Johnson, another satisfied Prairie Lights customer, teaches at the University of Iowa College of Law and maintains http://FromDC2Iowa.blogspot.com.