As COAST has warned repeatedly, City meddling in the marketplace is not just a wasteful use of our tax dollars, it has market-warping effects that are not easy to control or predict.
This week's closing of Jeff Ruby's Walnut Street Grill is Exhibit A of why crony capitalism does not work.
We know it is hard for our elected leaders to see, but Cincinnati and Hamilton County families are hurting. They are having a hard time making their mortgage payments; they are driving that old car longer than they used to; they are buying fewer new clothes. Thus, they are limiting severely their spending for dining and entertainment.
The tens of millions of dollars in subsidies to numerous restaurants on the Banks are certainly helping open these shiny new establishments, but they are chasing a limited number of dollars spent on the luxury of an evening out. And while some new visitors are enjoying what Cincinnati has to offer, that's not nearly enough to offset the competition created by these subsidies.
Imagine you opened a new restaurant yourself, at your own expense, with private dollars on Main Street near Sixth. There, you employ a maitre de, chefs, waiters, and janitorial staff. With your own dollars, you took the significant risk of opening and operating a restaurant. And of course, you are paying property taxes, sales taxes and earnings taxes on all that economic activity.
Then, months later, six blocks away, the City decides to create a hip new neighborhood, with brand spanking new, shiny restaurants. The entire neighborhood is subsidized with tax dollars from the community, and the new restaurants specifically are given in excess of $1 million each to open their doors. Most of this is not loans, but outright grants.
How do you compete with a restaurant receiving massive subsidies, in a neighborhood receiving massive subsidies only blocks away?
The answer is you don't. You lose your private investment in favor of the crony capitalism going on just blocks away, and for which you are paying taxes to create and subsidize.
So, in the process of wasting tax dollars on a neighborhood and on businesses that may or may not succeed, we kill the very businesses that are paying the taxes to make all this possible. Freaking brilliant!
Of course, the Aronoff District itself received generous subsidies when it was the "new kid on the block" to the detriment of the Main Street Entertainment District which had been thriving, Japps, Stowes, Neons, Rhinos... It is a vicious cycle in this city.
ReplyDeleteSure...
ReplyDeleteIt had nothing to do with the fact that a typical lunch there, sandwich and a side with a non-alcoholic drink, was around $18 after tip. Save 5-6 bucks and eat the same quality lunch next door at Nicholson's. Who, by the way, has been open in the Backstage District for 15 years.
Or at happy hour where they offered no drink specials. Their other neighbors, The Scene and Righteous Room, have them daily.
Also seems a little silly to close the weekend before thousands of visitors will be in the city, more importantly, directly right across the street.
Wow, this is a stretch.
ReplyDeleteCOAST is so quick to defend Ruby for being hurt NOT by an awful business model, but a subsidy that isn't hurting any other businesses downtown. Meanwhile Ruby sits on the Covington waterfront asking for a handout from COV to reopen his 1980's floating diner.
We oppose all crony capitalism subsidies, whether in Ohio or Kentucky.
ReplyDeleteThe first damage they do is taking money from hard working, honest, taxpayers, who can't afford the market "wisdom" of elected officials.
Second, they create artificial markets and artificial competition, thus hurting the very taxpaying businesses that made it all possible from the outset.
Whether in Ohio or Kentucky, or West Virginia or Indiana, it is generally a bad idea in both concept and implementation.
Wait until Ruth's Chris steakhouse opens at The Banks. It'll be bye bye time for Mortons. City Council, the worst outfit to be doing so, is picking winners and losers.
ReplyDeleteWait a minute - Isn't Walnut Street Grill directly on the vaunted streetcar route? I thought everyone on the route was going to get rich.
ReplyDelete^That's what COAST said when they got all mad about Tarbell owning property on the streetcar line. If the streetcar is supposed to suck, why do they care?
ReplyDeleteHaHa, does the sting of losing two elections hurt that bad boys?