My favorite bookstore in the world is Borderlands Books in San Francisco, a sci-fi themed bookstore.
Or rather, it was my favorite bookstore, because it's about to be forced out of business courtesy of San Francisco's new minimum wage hike, and pressure from Amazon.
Two lessons from this:
Lesson 1: The bad effects of minimum wages are real.
There's just no way around it. Yes, we liberals often like to talk about all those studies that show that the effect of minimum wage hikes isn't that big. But on the margin there is going to be an effect. And when your favorite business is on the margin, that means your favorite business gets the ax.
If you want to accuse Borderlands owner Alan Beatts of being a money-grubbing profiteer, be my guest, but you'll be wrong. The whole reason Borderlands exists in the first place, in the face of pressure from Amazon, is that it is close to being a nonprofit. From Beatts' blog:
[T]he basic facts:
1) The bookselling side of Borderlands has never been terribly profitable.
2) Based on current business, the new minimum wage, once fully in effect ($15 per hour in 2018) would move the bookstore from being modestly profitable (roughly $3000 in 2013 before depreciation) to showing a yearly loss of roughly $25,000.
3) It is reasonable to expect that the best-case, long term sales trend for a brick-and-mortar bookstore is relatively flat.
4) Making 50-60 hours of work, per week, with no real holidays on my part an intrinsic part of our business plan is neither viable long-term nor something I am going to do.
5) Any solution would need to have a very good chance of working. Closing now is a straightforward process and doesn't require any money and a limited amount of frantic work. Pouring money and / or time into a solution that might work is not something that I'm willing to do at this point in my life.
The only solution that I can see would be to reduce expenses by an amount at least equal to our projected yearly loss. The only expense that is large enough to reduce by that much is our rent. So, the only viable solution I can see would be to substantially reduce or eliminate the amount we pay to house the store. The problem is that I can't see any realistic way to achieve that. If I had the money, I would buy a building, move the store there and stop paying rent. It would be a terrible investment, since I'd be losing out on the income from that money, but if I were driven by profits or money, I wouldn't be running a bookstore to start with...
However, I don't have even a fraction of the money that would be required for that. Based on the current market and the sort of building we would need, the price tag would probably be somewhere between 1.5 and 3 million dollars. So, what it gets down to is -- if someone (or a group of someones) out there wants to buy us a building, I'll be happy to move the store and stay in business. But, otherwise, I cannot see any solution that will allow us an even half-way reasonable chance to make the business work at a minimum wage of $15 an hour.
Do I seriously think that someone will buy us a permanent home for the store? Not at all. I would do it for my store, but I don't think I'd do it for anybody else's. On the other hand, if I had as much cash as Ron Conway, Mark Zuckerberg or Elon Musk, I guess I might do something like that. But, realistically, it's not going to happen.
But, if it did, I would keep running Borderlands 'til someone carried me out feet first. I really don't want to close. But I can't see any real, sane alternative.Now you tell me if he sounds like a capitalist pig.
No, a high minimum wage really does kill some good and valuable things.
Lesson 2: Technological progress does have drawbacks.
I LOVE Amazon. I would NEVER go back to the days of brick-and-mortar stores. But that doesn't mean that the advent of this cool new technology is costless. When bookstores disappear, a unique kind of positive experience will no longer be available to humanity. Amazon's bookselling business may give customers more overall pleasure than bookstores, but there is a type of pleasure involved with hanging out in a bookstore that will not be replicated by Amazon ever (or at least until virtual reality technology becomes almost inconceivably more advanced). Just because costs are worth paying doesn't mean there aren't costs.
But in fact, since there is a positive externality to bookstores, created by the presence of other shoppers, it's likely that there are a few individuals out there who will actually be made worse off, in the strictest sense, by the advent of Amazon.
In other words, new technology is an improvement by many yardsticks, but not always by the yardstick of Pareto efficiency. When brick-and-mortar bookstores are gone, you really can't buy your old bundle back (unless you are a very rich person who can afford to buy a bookstore and operate it at a loss).
My new goal is to get really rich so I can buy and operate a Borderlands-type bookstore at a loss.
Borderlands may not be dead yet. Here's how you can help save it. And more plots are being hatched...