Ever since I can remember, there’s been a notable imbalance between the attention and credit given to the demand side of the economy compared to the supply side. I try to ensure that my students see the latter is just as important as the former.
Part of this effort is highlighting the risk taken in creating the supply and bringing it to market. Recent events near the Alamo have brought into sharp focus the lack of respect entrepreneurs and small businesses face.
After years of unsuccessful attempts by the Texas General Land Office (GLO) and the Alamo Trust to persuade Vince Cantu to sell his bar, Moses Rose’s Hideout, the San Antonio city council (acting on behalf of the Texas GLO and the Alamo Trust) voted 9–2 to authorize eminent domain on his bar to make way for their Alamo museum and visitor center.
The two sides have been far apart in negotiations, with the Alamo Trust’s last offer being $3.5 million versus the “ridiculous” $17 million Mr. Cantu is asking. One casualty in this whole saga is a basic understanding of opportunity cost.
Part of Mr. Cantu’s figure factors in how much he thinks he’d be losing given the “expected economic success” from the impending renovation of the Alamo grounds. But there’s also the matter of all the work he’s put in to make his business successful.
Entrepreneurs like Mr. Cantu are a rare breed given their high threshold for risk. They give up a steady paycheck, commit substantial savings or incur untold levels of debt, and put in endless hours to see an idea to fruition. A business is essentially another child in the family.
Though some in the media dismissively feel Mr. Cantu’s bar is “just” another one of fifty bars downtown, it is employing people, feeding families, and putting students through school.
One party that does seem to understand economics 101 is the Alamo Trust. They have stated that “without the ticket revenue from the 4D theater, the entire project becomes unviable.”
This calls into question the propriety of invoking eminent domain.
The US Constitution permits such seizures in the interest of “public use,” though not “without just compensation.” This could be an opportunity for the Supreme Court to revisit the controversial Kelo v. City of New London case of almost two decades ago. A court justified this taking 5–4 on the grounds that the beneficiary would promote “economic development,” which in turn qualified as public use.
The government often seizes property under the justification that this is necessary in order for the state to provide public goods, which are generally understood to be goods from which the public as a whole directly benefits but that no single individual pays for: roads, rail, flood control, etc. In other words, core government goods and services.
For the Texas GLO and the Alamo Trust to then claim that without Mr. Cantu’s property, “city/state support” for the project would be required is a misdirection and an insult to taxpayers. But then, the taxpayer has already been trotted out as a straw man here.
The concern about the “greedy . . . extortion of the taxpayer” is curious. If that and “economic development” are genuine worries, why not decry the shakedown of taxpayers on the front end, in the property tax assessment process?
In fact, the only reason the taxpayer was introduced to this situation was because of the heavy-handed actions of the city and state.
Alas, Mr. Cantu is merely an unwanted tenant to be rid of. If that’s what the Texas GLO, the Alamo Trust, and the San Antonio city council think about him, what must they think about anyone else who protests in defense of their property and forcible taking of their livelihood?