Understanding Economics is Important

Here’s a short section of an article I read in the WaPo last week (note the title):

The purchases you make at a store surrounded by free customer parking are effectively taxed to make that parking possible.

Glass puts this “invisible sales tax” at about 1 percent, given estimates that parking makes up about 10 percent of the cost of developing a store, while rents make up around 10 percent of a retailer’s costs of operating it. That 1 percent, Glass argues, is then passed on to consumers in the cost of goods you buy at said store (which was built with, well, parking).

via How cheap parking makes a lot of life more expensive – The Washington Post.

So what do you think?  Was this worth a spot in a major newspaper?  The title is intriguing, right?

But seriously?  There are a thousand things that affect the cost it takes to do business in any field, and that includes retail.  But parking increasing prices by 1%?  That’s news?

People try to make arguments all the time about how this or that affects your life.  Most states have a sales tax.  There’s not a single state I can name that has one lower than 3%.  But 1% of the cost of an item being due to parking is somehow a big deal for the college-educated author of this article.  The author wants you to be up in arms that if you bike to a store you’re paying an extra 1% to subsidize people who want to park there for free.  The author never once considers that maybe having smaller stores that are aimed at walking traffic would raise the cost more than 1% in distribution and transportation cost or in loss of economies of scale.

Understanding basic economics and critical thinking is important.  Articles like this hit my news feed every day and there are really smart people out there making bad arguments because they don’t question their basic assumptions or consider the unintended consequences of the changes they’re pushing or advocating.

Don’t be that guy.

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