The city of Chicago is plagued by waves of violence, looting, and plunder dating back to 2020, which was deemed “the summer of looting” by the Chicago Tribune, spurred by the murder of George Floyd while in police custody amid COVID lockdowns. That summer, the Chicago police superintendent called for longer sentences for “looters, thieves, and vandals.” Three years later, however, Chicago isn’t faring much better: Chicagoans continue to flee the Windy City, and the violence continues. As of this April, looting across various Walmart stores resulted in four closings, half of their locations in the city.
The response? City officials, clergy, and residents came together to ask Walmart to reverse its decision and—wait for it—called for a boycott of all remaining open stores until the superstore capitulated. It should be obvious: the way to ensure that Walmart keeps its stores open is not to boycott the remaining stores after looters have pillaged all the merchandise! The police chief got it right back in 2020, when he called for criminal punishment for the looters, but to no avail. Moreover, American politicians like Alexandria Ocasio-Cortez made excuses for the 2020 looters. Defending looting will only ensure that grocery stores continue to be looted; this is elementary economics—lowering the cost of looting generates more looting. Incidentally, a Republican candidate in the Georgia legislature argued that AR-15s could be usedagainst the “looting hordes,” further calling the weapons “liberty machines.” Is it too much to ask that we all experience grocery store shopping without looting vandals or AR-15s? Chicago isn’t Caracas, after all.
And yet, Chicago’s mayor, Brandon Johnson, is doubling down on the economic crazy by throwing what can only be seen as a political Hail Mary as he suggests that the government create and operate a grocery store to ensure that Chicagoans have access to food. This is equivalent to witnessing the spread of a forest fire and dousing it with gasoline. As my colleague Anthony Sacramone would say: “It was the dumbest of times; it was the stupidest of times.” Even if one has never taken an economics class, have we learned nothing from the 70 years of government-run grocery stores in the Soviet Union? Modern-day Cuba and Venezuela also provide stark examples of what happens when the government determines how resources will be allocated. It never works and always generates violence.
There was a time when American and European economists grew fascinated with accelerating Soviet output, raising the question of whether we in the West could get economic growth and productive resource allocation with government at the helm. This is both a theoretical and an empirical question. Economists Ludwig von Mises and F.A. Hayek led the charge in what would be called “the socialist calculation debate” throughout the 20th century.
They suggested that due to the nature of human action and epistemological realities, we cannot successfully centrally plan economic affairs, because we don’t possess the requisite knowledge, which is the knowledge of time and place. Central planning eliminates prices, property rights, and the profit-loss mechanisms. Hayek argued that market prices, because of their contextual and decentralized nature, help us determine how resources can most productively be used at any given time. In a market, this is reconciled with temporal consumer preferences. Effective resource allocation cannot be known before the exchange through which prices emerge. Bureaucratic prices are arbitrary and cannot rival market prices. No one can comprehend all of what needs to be known to direct scarce resources toward their highest valued uses; the market works well because it is an emergent order, not a designed order.
This is as true now as it was when Hayek and Mises began to argue against the socialists in the 1930s. As Adam Smith declared, “The sole purpose of production is consumption,” meaning that firms must discover, learn, and adapt to consumers’ changing demands and needs. Firms don’t get to decide what customers want and then produce; instead, they must seek to understand the needs and wants of consumers to profit. There is no blueprint for economic development; it’s a spontaneous order.
OK, we’re far from Leningrad, and Mayor Johnson is not calling for a return to Bolshevism. Still, we must remember that his recommendation is destined for the same harmful consequences. When the government runs grocery stores, people wait for food that never materializes. In market economies where firms protected by private property rights run grocery stores, the food waits for the people.
It might be tempting to believe that the U.S. government would never resort to the inevitable authoritarian tactics required both to maintain government-run stores without the lines and lack of food and somehow quell the plunder. Additionally, the Soviet problem was one of total central planning; the economy was plagued by production and distribution problems. The problems in Chicago and other American cities experiencing retail closures due to looting and violence stem from eroding economic freedom and the protection of private property rights. The Soviet economy was systematically one of command and control. Even the highest-ranking Ph.D. economists-turned-Bolsheviks couldn’t figure out how to turn wheat into bread.
They did understand, however, that wheat shortages would require offering higher prices to wheat farmers, but that’s only part of the calculation problem. As such, the Soviets successfully filled silos with wheat that … ultimately rotted because they could not figure out how to incentivize turning the wheat into bread. Increasing wheat yields is merely a technological problem. Transforming wheat into bread and determining how much wheat should be dedicated to bread production, rather than to its hundreds of alternative uses (cereal, bagels, muffins, flour, cakes, pizza dough), is a problem of complex phenomena best addressed by the emergent market process.
During the socialist calculation debate, it was Oskar Lange, a Polish economist and advocate for socialism, who made one of the most damning critiques of the implementation of socialism, rightly asserting that it would lead to the “bureaucratization of economic life.” Mayor Johnson may not advocate for comprehensive socialism, but it’s a slippery slope. Socializing the grocery store will allow the government to socialize other things. Moreover, do you want the grocery store to be more like the post office or the DMV? It’s not that the government cannot do this; it indeed can. But at what cost? And what are the relevant alternatives? The answer is to restore economic freedom in these cities. People don’t flee cities in droves where there is peace and economic opportunity. They leave when those institutions are destroyed by terrible policies, not to mention politically corrupt labor unions, failing primary schools, billion-dollar-projected budget deficits, and high crime rates. These are Chicago’s problems. As Taylor Swift reminds us, “Band-Aids don’t fix bullet holes.”