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Sunday, November 23, 2014

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Going out of business

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In the past few months, three longtime Jewish establishments that combined have served the Toronto community for close to 150 years have closed down. The rapid changes in the economy have made it increasingly difficult for “mom and pop shops” – in this case a bakery, a bookstore and a restaurant – to compete.

This is most unfortunate for the community and, more importantly, for the affected businesses and their employees. Besides the economic costs, there’s the personal pain and feeling of loss of years and years of hard work, only to be left with little to show for it. These closings are just a microcosm of the economy as a whole. The jobless rate remains stubbornly high, with economists predicting this will continue for many years. 

While there is some debate as to the nature of protection that society can and should offer businesses from competition, the mainstream Jewish view is that it should provide very little. While some Jewish courts might enjoin a second pizza store from opening if there aren’t enough customers to support two, that represents a minority view. “Let the best business win” is the strategy that serves the greatest public good. All agree that if a new entrant just lowers profits of the competitors, no protection would be afforded.

In deciding economic policies, the benefit of the many must take precedence over the needs of the few. Progress does come at a cost. Competition is good for the consumer, but that good can at times, sadly, be achieved only at the expense of the few. Free trade has brought enormous economic benefits, and Israel, for example, has spent much effort in negotiating such agreements, helping to turn it into an economic powerhouse. One hears voices opposing free trade – from politicians concerned about some local businesses, or from environmentalists who oppose (in theory) almost all forms of economic development – but rarely, if ever, will an economist express opposition.

What Jewish law does offer businesses that are struggling to compete is protection against predatory pricing – selling below cost, thereby driving out the competition, at which point losses and more can be easily recovered.

The only “protection” the community can offer most businesses is patronizing them. Our tradition teaches that all things being equal, we should support our co-religionists. This feeling of brotherhood should come naturally to us. Likewise, we should make a special effort to buy Israeli products.

However, this show of support need only go so far. If the quality is inferior or the prices higher, one is not expected to forego better alternatives. Yet it would seem that, especially today with the difficulty of competing against megastores, it behooves us to support our own if the cost is only slightly higher. We should be willing to slightly inconvenience ourselves and to pay a little more to help support our own, even if we feel this is only delaying the inevitable.

The competitive nature of today’s marketplace makes it incumbent that our community do its utmost to offer ancillary services such as employment counselling, internships and interest-free startup loans to enable people to meet the challenges of tomorrow.

Send comments to rabbijay@torahinmotion.org.

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