Big box stores kill small businesses and the jobs inside them.

At least, that was the main answer I got when I posed this question a few weeks ago: Why do Angelenos hate big box stores? (Some of the responses are on the opposite page.)

I asked because I really didn’t know why. I thought maybe it was because big box stores are hulking, ugly and soulless expanses and they create traffic. Those appear to be secondary reasons.

In the interest of debate, I’ll concede the point. O.K., you’re right. Big box stores kill small businesses, particularly competing retailers, and put their workers in the unemployment line.

But there’s a strong counter-argument: To kill such competitors is not a bad thing, so long as the businesses die as a result of a better process. That’s because the economy as a whole is improved when uncompetitive businesses are streamlined away, when someone figures out a more efficient way to do the same work or more work or better work with the same or fewer people. That’s why we encourage businesses to compete.

Jobs are a casualty, sure, but different work and usually higher-end work eventually is created as the overall economy becomes more efficient.

There was a time in this country when 97 percent of the people were occupied with the same low-end work: Farming. However, the industrial revolution came along and now less than 3 percent of the population is engaged in farming. Vast numbers of farming jobs were destroyed and the transition was hard on folks in the 19th century. But it would be difficult to argue that we’d be richer and generally better off if we hadn’t gone through that transition and still had an agrarian economy today (although I’m confident that a couple of you will try).

This, of course, is Joseph Schumpeter’s old “creative destruction” argument. He said the best economy is the one in which jobs are being destroyed the fastest and most creatively that is, replaced by technology or improved processes that do the same work faster, better and cheaper. Or replaced by a whole new industry that kills an old one, much in the way that Henry Ford roughed up the buggy whip industry.

In fact, that pretty much sums up the history of the U.S. economy industries and businesses and job categories are routinely destroyed but replaced by something better. We don’t have many switchboard operators or elevator attendants anymore, but we have software salespeople and MRI technicians. There are disruptions and personal calamities in the transition, sure, but in the end our unemployment rate usually stays low and personal income and household wealth continue to rise.

The point is that retail is not exempt from this march of economic progress. Small old stores that still close at 7 p.m. and are unable to adjust by offering something different or better may well go out of business. For them, it’s a tragedy. But for society as a whole, the economy is more efficient as a result of the competition from big box stores. And customers benefit by getting a wider selection of goods sold at lower prices at all hours of the day and night.

Thanks to those of you who responded to my question a few weeks ago, particularly those who made heartfelt and passionate points.

Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

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