WHY THE ECONOMIC SCARS OF RIOTING WILL HAUNT MINNEAPOLIS FOR DECADES:
“This was it for us,” medical supply store owner Lisa Steffes told CBS Minnesota. “We are a family-owned business. It’s just not worth it anymore being downtown.”
In another example, the Star Tribune reports that a manufacturing company, 7-Sigma Inc., is leaving the city after burning in the riots, and taking 50 jobs with it.
“They don’t care about my business,” owner Kris Wyrobek said of city officials. “They didn’t protect our people. We were all on our own.”
An exodus of businesses is exactly what economists would expect to see in an area ravaged by rioting. The underlying reason is not hard to understand: Property rights are the foundation of any market-based economy. There is a long and clearly observed correlation between the strength of property rights and economic growth.
Why? Well, private enterprise can only function so long as entrepreneurs know they will be reasonably secure in their property. When entire city blocks are destroyed by wanton rioting while local officials sit on their hands, it sends the message that even an otherwise-profitable investment might not pay off. Investors in such cities must now price in economic risk and insecurity that makes it much less competitive compared to its neighbors. And safety considerations also will come into play.
As a result, jobs and economic opportunity are likely to dry up. Property values fall, and the area slips into decline. What’s more, higher insurance rates will make doing business more expensive and leave locals facing higher prices. Does that sound like progress to you?
Thanks to rioters who wrap themselves in the rhetoric of “social justice,” this fate may await Minneapolis, or at least some of it. This isn’t mere speculation: We’ve seen this scenario play out before in parts of Los Angeles, and in cities such as Detroit and Newark.
Detroit, you say?
Earlier: Kimberly Klacik At The RNC: ‘I Want Baltimore To Be An Example’ To The GOP.