The Ferguson situation is unfortunate for many reasons. Those burning down the city lack a comprehensive understanding of the case, yet they clamor for the indictment of an officer they don’t know to be guilty. They supposedly act in the name of justice while reflecting a total disregard for private property and the rule of law. They behave like anarchists while simultaneously demanding government intervention. This is a serious problem on many fronts, but I’d like to comment on the business perspective.
Consider a simple question: If you run any type of chain or franchise establishment–or even a small business–would you consider opening in or moving to Ferguson? With the ongoing riots and seemingly no way to protect property there, the answer is obvious. High profile firms like McDonald’s will probably stay, lest they be accused of social irresponsibility. Many others will likely exit, taking jobs and access to daily services with them. Why rebuild a business in Ferguson?
But Ferguson is really a random community in this cycle of violence. What happened there could just as easily have occurred elsewhere. Savvy business executives with their own money on the line will attempt to identify and avoid the next Ferguson. You can’t blame them.
Ironically, while private investment in Ferguson will suffer, some are starting to call for the federal government to step in and “rebuild the community.” Doing so would be a travesty of justice, reinforcing the notion that crime really does pay.
At the end of the day, economic development depends on individual liberty and respect for the rule of law. When these fundamentals are lacking, entrepreneurs demand higher returns to compensate for the extra risk or avoid investments altogether. This is the reality for Ferguson, and perhaps for other urban areas as well.