Step out of the way, aldermen, and let entrepreneurs thrive

Remember the scene in “Gladiator” when the Emperor of Rome looks out to the crowd to decide whether to give a thumbs-up or thumbs-down to let Russell Crowe live or die?

Three proposals pending in the Chicago City Council would similarly allow aldermen to decide whether new businesses live or die.

Earlier this spring, Ald. Greg Mitchell introduced an ordinance requiring aldermanic review of every business license application in a ward.

In separate developments, Aldermen Leslie Hairston and Patrick Thompson proposed to rezone commercial corridors in South Shore and Bridgeport, respectively, as single-family residential — meaning every new business would need a special rezoning exemption to open. Each exemption would require the alderman’s support, a $1,025 application fee, public notice, usually a lawyer and sometimes an urban planner and result in at least a two-month delay.

The aldermen claim they just want to shut out “bad businesses,” guided by the advice of local residents, but inevitably they will squeeze out entrepreneurship. The first-time and small-budget businesses that I work with at the Institute for Justice Clinic on Entrepreneurship, which assists Chicago entrepreneurs, do not feel they have the political power or financial flexibility to go through the rezoning process — and so they open elsewhere or not at all.

The proposed new ordinances also would diminish the value of commercial buildings by making it difficult or even illegal to rent storefronts to stores, which could chase away real estate investors.

Why should political favor determine which businesses have a chance to succeed?

No single alderman — or community group — should exercise control over entrepreneurship in a neighborhood. No alderman or community group can forecast which business will be a “problem business” or a “desirable business.” If the power to approve or reject a business is discretionary, it will be discriminatory.

Even people with the best intentions will be operating on assumptions and biases. They may assume, for example, that all dollar stores or nail salons are the same and no more are needed. They may also assume that local residents or businesses that already are established are the only applicants that will (or should) succeed.

But entrepreneurs specialize in defying expectations. Entrepreneurship is about breaking the mold. New versions of old business models and wholly innovative businesses arise unexpectedly.

In Rogers Park, a little shop opened in May, selling make-your-own macaroni and cheese. They sold out in two-and-a-half hours their first day. What if their alderman had shut them out, thinking the neighborhood did not need another quick-service restaurant? What if the Avondale neighborhood, on Chicago’s Northwest Side, had rejected Honey Butter Fried Chicken as just another fried chicken business, so that it never got the chance to be a destination and a leader in fair employment practices?

Perhaps the next wig shop in South Shore will become the next big brand. Who knows? A few street vendors from Harlem built the company Nubian Heritage, which now sells shea butter products at major retailers all over the country.

It would be foolish to shut them all out, and it is impractical to think a community advisory committee can identify the businesses with true promise, when experienced venture capitalists have trouble doing so. For neighborhoods to thrive, the city must welcome entrepreneurs with a variety of backgrounds and ideas. That means allowing lots of people to tackle the same business model, so that the most innovative and highest quality approach can rise to the top. It also means allowing people to try businesses that seem sure to fail, because sometimes an entrepreneur’s “crazy” idea is clairvoyant.

Aldermen Mitchell, Hairston, Thompson and other Chicagoans who worry about failing business corridors should work to empower Chicago officials to enforce existing city codes that protect public health and safety. But the city should not allow aldermen to discriminate against and shut down businesses before they even launch.

Hardworking Chicagoans looking to chase the American Dream deserve better.

By Beth Kregor is director of the Institute for Justice Chicago Clinic on Entrepreneurship.