Private Enterprise Fuels the Community

By Max Gulker

Residents of Berkshire County, the mostly rural far-western slice of Massachusetts where AIER makes its home, joke that Bostonians don’t know the final fifty miles of their state exists. Kudos to the Boston Globe, therefore, for gazing past Springfield and Amherst to tiny Housatonic–population just over one thousand–at the edge of that frontier.

The transformation of local restaurant Pleasant and Main in the wake of Covid-19 and mandatory business shutdowns is undoubtedly a feel-good story. But Globe columnist Thomas Farragher’s recent piece also reveals what Massachusetts governor Charlie Baker and those in charge of Covid-19 responses in most other states left on the table when they forcibly shuttered and then micromanaged the reopenings of local businesses.

Use Knowledge or Lose Knowledge

In May and June, as state governments began proposing and then implementing their plans to gradually roll back shelter-in-place orders and business shutdowns implemented earlier in the spring, it became clear that the worst of the economic damage from misguided government policy was far from over. The conventional approach that emerged, and Massachusetts followed with gusto, were “phased” reopenings where crack teams in state capitols placed different kinds of businesses into different buckets with different reopening dates.

There would be no local input, no taking into account the complex ecosystems in which small businesses exist, and little room for the unique insight and creativity of business owners themselves. Regarding the latter point, I wrote in May that “regulations meant to ease the country back to work are more likely to prevent businesses from engaging in an informative discovery process through competition and making the small intuitive adjustments impossible to implement from the top down.”

The post-Covid success of Pleasant and Main is the result of exactly those small intuitive bottom-up adjustments. Owner Craig Baro addressed the constraint of social distancing in a restaurant, whether imposed from above or driven by customers’ precautions, in a unique manner. The uniqueness was driven by the combination of his own creativity, experience, customer base, and physical space.

As the Globe reports, Baro turned his large indoor dining room, already decorated with a high-end flea market of knicknacks customers loved to browse, into a general store. Dining areas popped up in the outdoor areas and unique nooks and crannies on the property. Through a combination of his own vision and work along with donations from locals, Baro turned these spaces into places people would want to dine, with or without virus scares and accompanying regulations. “That meant new dining spaces with new names. The treehouse. The barn. The lounge. The garden,” writes Farragher.

When Farragher describes Baro as “cooking for a community,” he doesn’t mean Pleasant and Main has become a soup kitchen. This is a business with customers. By being an entrepreneur responding to “the peculiar circumstances of time and place,” as well as welcoming local customers as a part of that project, Baro is rebuilding the interconnectedness that forms an often unseen but always important foundation supporting economic well-being at a local level. A better description might be that Baro is “fueling the community.”

Running on Empty

Supporters of the shutdown and micromanaged reopening process employed by most states might respond that Pleasant and Main achieved these results in the wake of the policies I criticize as stifling such entrepreneurial creativity. But Baro appears to have been uniquely poised to get over these hurdles, to solve problems from the bottom up despite regulators’ best efforts.

First, Baro evidently had the financial wherewithal to weather the storm and come out on the other side ready not just to sputter along but to invest in his business. The failure of many other businesses to do so after months of shutdown and Massachusetts-style phased reopenings speaks not to those owners’ miserliness or disconnection from their communities, but the simple fact they no longer had the resources to keep their businesses going.

Second is the quite unique and interesting nature of the physical space Pleasant and Main occupies. Housatonic’s Main Street architecture has the classic look of an old downtown, albeit one lamentably devoid of many businesses that slowly left as Western New England’s manufacturing economy dried up over the course of decades. Pleasant and Main occupies a chunk of one such block complete with courtyards and alleyways. Maintaining the old building and property for use as a restaurant must be a job unto itself in normal times. But in these abnormal times, Baro had exactly the physical space to be creative right in front of him.

How many other restaurateurs nationwide share Baro’s creativity, local insight, and love of community, but were stifled by the same regulations? How many are already closed or desperately running on fumes? How many can see other spaces in the same community that could be put to creative use, or other local businesses they could partner with, but haven’t because those Covid regulations have slowed down activity and stifled the lines of communication and interaction?

States devolving reopening responses to localities would not have been a panacea, but I strongly suspect we would have seen more stories like Pleasant and Main, and perhaps Baro’s resurgence could have been in the papers months earlier.

As Berkshire winter looms, the outdoor spaces at Pleasant and Main will become unworkable. My money’s on Baro and his loyal customers finding as-yet-undiscovered creative ways to continue to adapt. But they have a leg up. Governor Baker and the expert teams in statehouses across the country must find ways to give more small businesses the flexibility to solve the problems that state commissions both cannot and should never have tried to solve.

Max Gulker is an economist and writer who joined AIER in 2015. His research focuses on two main areas: policy and technology. On the policy side, Gulker looks at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker is interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy. Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.

Source: AIER.org