The free market is unrivaled at producing the goods and services people want at the lowest possible price. It is the most democratic of institutions. Everyone’s dollar has the same value, and the voting of those dollars evidences demand and determines what will be produced.
When the market is coerced to respond to something other than aggregate demand, it operates less efficiently, shifting resources to produce things people want less.
This problem occurs when government interferes.
For example, intellectuals may lobby government to provide radio broadcasts of opera or chamber music which means fewer resources are available to blast heavy metal and rap which, unfortunately, are more in demand. Or, governmental officials may assume their election invests them with the expertise to decide what people really want or, if not want, should have; to the extent they are able, they may force businesses to produce it.
The “it,” insofar as Galveston City Council is concerned, is restaurants and hot tubs. A majority of the city council recently decided that there is a shortage of hot tubs and restaurants in town, particularly on the west end of the seawall. (I know many restaurateurs who would be astounded to learn this.) To remedy the deficiency, the city council has caused an ordinance to be drafted requiring hotels built on the seawall to include these amenities.
Before building a chain restaurant or hotel, investors do a sophisticated market analysis that is massaged with complex algorithms to accurately project demand. When there is sufficient demand for a restaurant, it will be built. If a hot tub or swimming pool is justified, it will be constructed.
Forcing hotels to stray from the market profile increases the chance they will not do well, will defer maintenance and become an eyesore. The idea that the city council knows better than the market or well-informed hoteliers is not credible.
Further, forcing hotels to tack on amenities will increase room rates and make it more difficult for less-affluent families to visit our city. The city needs and the market have provided a mix of hotels. Only a few hotels here are destinations that provide entertainment and amenities on site. The others are used mainly as a base from which guests leave early and return late to enjoy the city’s numerous attractions and eat in its numerous and varied restaurants. There is a restaurant within approximately 5 minutes of any hotel on the seawall.
The city council’s job is to make sure basic city services are well and efficiently provided — of which, only a few: that police and fire departments do their job; that the port and park board are well-run; the streets, drivable; the water, potable; the sewer, operable; the garbage, removed; the parks, verdant and clean. This partial list is a full-time job. If done well there should be no extra time to spend interfering with other people’s businesses. Once begun, there is no logical limit to these shenanigans; and council will feel justified in attempting to remedy any imagined deficiency.