The collective brass of the Iowa City-Coralville-North Liberty Commerce Triangle are hard at work on a landmark economic policy charter to be known as the Community Business Attraction and Anti-Piracy Compact. A lofty title for what some believe to be little more than a misguided protectionist reaction to the giant sucking sound emanating from the Iowa River Landing.
The Compact is intended to prevent the participating towns from attracting business at the expense of one another. Under the deal, participating towns may not offer incentives to businesses considering relocating from another Compact Community or in any way solicit (“pirate”) businesses to relocate from a fellow participant.
Iowa City Manager Tom Markus and his counterparts in Coralville and North Liberty proposed the agreement in response to the Von Maur Incident. In 2010, the city of Coralville opened its bag of fiscal tricks and found a $10 plot of prime real estate and almost $10 million in incentives to lure the department store Von Maur from its home at Iowa City’s Sycamore Mall to the newly paved shore of Coralville’s Iowa River Landing.
For the record: What Coralville did was bogus as all hell and everybody knows it. Yes, Coralville’s Iowa River Landing project was blindsided by a colossal recession that thwarted its search for an anchor, but when the cupboard was bare they made the crunch-time decision to cannibalize their own mother.
Given the bad blood that lingers, it’s understandable that officials in all three towns would support an agreement that would prevent such ugly competition in the future. And what better way to make local competition friendlier than a good-old-fashioned dose of commercial protectionism.
Friedmanites, Invisible Handers, and all manner of free-market advocates may be quick to decry the protectionist underpinnings of this Compact. (Full disclosure: we, the authors of this column, are more sympathetic to this sort of free-market dogma than we often care to admit in polite company.) But, those biases aside, more learned folks say that protectionism is, generally speaking, bad economics. In the oft-cited paper “Protectionist Trade Policies: A Survey of Theory, Evidence and Rationale,” noted economist and University of Iowa alumnus Cletus C. Coughlin concludes that protectionist policies “generate lower economic growth rates” and “[protect] domestic producers at the expense of domestic consumers.”
With just a little imagination, it’s easy to see how Compact Communities could be adversely affected by a limitation on competition. A successful small business interested in relocating into a Compact Community, for example, might be scared off by Compact regulation of its future movement.
In the long run, the Compact could slow economic growth by hindering the ability of businesses to move along with the population. If, ten or fifteen years down the road, North Liberty experiences a major population boom it may not have the necessary tools to attract nearby businesses from Coralville and Iowa City. In other words, businesses would not be able to follow future population movements, leading to inefficiencies in the marketplace that hurt businesses and consumers alike.
Obviously, the arguments above assume that businesses should be able to move freely between towns and market forces should be allowed to do what they do. But maybe—brace yourselves, free-market friends—restricting the movement of businesses in and around Iowa City is not such a bad thing.
Let us turn, for a moment, to Italy. The regions of Tuscany and Umbria, filled with quaint boutiques lining beautiful cobblestone streets, exist in their unadulterated states thanks in large part to government intervention. Former New York Times columnist Anthony Lewis, in homage to the country, wrote, “Italy is evidence that there is more to life—a civilized life—than the unregulated competition of the market.”
Here’s the gist of Lewis’s argument and that of the economists who support his point of view: Protectionist regulations can allow culturally and historically valuable places to exist despite their relative economic inefficiency.
The heart of Iowa City is this state’s Verona, or the closest thing we’ve got to it. It’s historically, culturally and aesthetically superior to any point along the Coralville Strip; it’s a cradle of the arts that deserves more than to be left behind by a convoy of moving trucks and minivans bound for North Liberty. It’s a place deserving of protection against those most uncouth market forces.
If market forces are permitted to act without restraint, then businesses and people in Iowa City will begin to gravitate toward Coralville. Why? Because Coralville offers more conveniences at a lower cost. Young people will want to move there to start their families, not because Coralville has better nightlife (it certainly does not) but because it’s cheaper. In the meantime, Iowa City becomes older and emptier; as a result it will be increasingly difficult for the historic buildings and quirky local businesses of Iowa City to exist.
If the market is not on our side, how shall we protect our beloved town?
That’s where local policy measures like the Community Business Attraction and Anti-Piracy Compact come in once again. It’s more than a retroactive pledge of good faith between communities; it will help insure the long term vitality of business in Iowa City by limiting the ability of suburban developers to coax area businesses to “greener pastures.” By reducing some of the incentives for businesses to leave town, the measure should reduce the risk of capital flight from Iowa City to Coralville.
It may be hard for believers in The Unknown Ideal to stomach, but this compact seems to be good policy. Though the Compact was precipitated by the poaching of Von Maur, it’s really about the long term protection of one of the Midwest’s greatest gems, historic Iowa City. The city’s leaders deserve credit for recognizing the value in the preservation of history; their commitment extends far beyond this compact, as just last month, the City Council moved to protect a four-block section of Jefferson Street by labeling the area a historic overlay zone.
There is a time, we know, for everything under the sun. There’s a time for unchecked market forces, but there’s also a time to fight back against the natural progression of sprawl to save something that has value beyond its financial bottom line. The fight to preserve the aging Iowa City will be a tough one as long as Suburbia continues to sing her siren song, but it seems that we’ve finally taken a step toward shutting her up.
Skaaren Cossé is an undergraduate at the University of Iowa studying Finance and International Studies.
Zach Tilly is an undergraduate studying Journalism and Political Science. He also writes for The Daily Iowan and the Washington Post’s swing-state blog, The 12.