Chaos and Innovation

The last few weeks I have been thinking quite a bit about chain restaurants. At some point in the recent past, I started to really dislike your typical chain restaurant. Perhaps my wife and I were gifted too many gift cards to Darden Restaurants, but I find myself feeling slightly disdainful toward chains and longing for the uniqueness of small locally owned restaurants. I’ve had trouble keeping chain restaurants off my mind, and I have been asking why they become so popular, why people get so excited when they spread, and why they have such staying power.

 

In his book The Complacent Class, George Mason economist Tyler Cowen offers an answer. He describes chains as being popular because they make the choices easier for the consumer. They standardize their products and environments, making decisions for consumers easy and automatic. They are also easily recognizable and expensive chains can be a simple way to signal wealth. Their products and services in general probably won’t blow anyone away, but things will always be predictably decent.

 

Cowen offers this as an explanation for why chains dominate markets, but also cautions against this market domination. He writes:

 

“As chain stores rise, there is also a loss of dynamism, competition, and market entry for new ideas and products. Keep in mind that today’s major chain was once a small individual store on a street somewhere. A bit more economic chaos, even if it is inconvenient in the short run, actually tends to be correlated with higher rates of innovation.”

 

When you go to a chain restaurant, you can be pretty confident that you will get a decent meal. You can be sure that the menu won’t have anything too strange on it, so you can almost throw a dart and select something generally in line with your usual tastes.

 

Go to a street corner food vendor, a locally owned ethnic restaurant, or that fusion joint that recently popped up, and the guarantee that you will know what you want to order is gone. Ordering is more difficult and you won’t have the certainty that you will enjoy whatever you order. This is great if you want something unique and new, but if you don’t feel like making more tough choices at the end of the day, this is another obstacle to a full belly.

 

The problem, however, with chain restaurants is that once they become dominant, and once they have a menu where everything generally appeals to the median customer’s pallet, there is little incentive for new innovations in the food space. Marginal gains won’t be found in new menu items and unique flavors, but rather in smaller portions and new ways of cutting costs or managing the supply chain. We might get some efficiency gains in this model, but the innovation has nothing to do with the product or service we receive, it is entirely focused on further back-end standardization.

 

We may all be happy and get what we want from this type of model, but we might also be foregoing greater gains from new innovations to the actual products and services themselves. More competition between restaurants might lead to even more new fusion joints, and we might get to experience new irresistible flavors that far surpass the standardized food options at chain restaurants.  It may be chaotic and hard to sort through at times, but settling for easy products and services might make us worse off in the end than if we made more of an effort to find something interesting and excellent.

Formal Power Structures

In the United States, and every democracy, political parties play an important role in organizing and structuring the political process. In his book, Political Realism, Jonathan Rauch looks at the ways that parties have shaped American politics and examines recent trends that have taken power away from parties. Rauch is concerned because political parties establish formal power structures, and when they are removed, the functions they performed do not disappear, but instead shift to other actors, who are often uncontrolled and anonymous.

 

Rauch quotes James Q. Wilson who wrote a book in 1962 titled The Amateur Democrat which looked at the Democratic Party in New York, Chicago, and Los Angeles. All three cities had their own form of machine politics which Wilson examines in depth at a local level. Even at that time, Wilson noticed the tension between political parties, traditional candidates, activists, and amateur political candidates. Rauch quotes Wilson’s findings writing, “despite being nominally on the same side (all Democrats)…a keen antipathy inevitably develops between the new and the conventional politicians.” Activists are more radical and are focused on getting a win on their particular issue right now, where as professional politicians focus on a long-term game, understanding that decisions need to be made today, tomorrow, one year from now, ten years from now, and a hundred years from now. The process for making decisions over such a time span is important, and it is parties, not enthused activists, that create a structure to allow such decisions to be made over the long run.

 

Wilson describes other essential functions of parties and Rauch describes them in his book, “They recruit candidates, mobilize voters, and assemble power within the formal government. … If legal power is badly fragmented among many independent elective officials and widely decentralized among many levels of government, the need for informal methods of assembling power becomes great.”

 

We do not always like our political parties, often because their decisions are not tough enough on the things we don’t like and don’t go as far as we want on the things we do like. Our parties may seem to be too willing to compromise or may appear to be too influenced by other interests than our own, but parties are importantly balancing power and influence in a structured system. If you take parties away or limit their control and influence, you end up in a system where money is finding alternative ways to influence the public and where hidden actors or zealous activists and political junkies shape the direction of politics.

 

While parties are not always positive forces, they tend to be more stable forces. Their slowness to adapt to important issues and their long-term posturing that does not reflect the wishes of citizens today is frustrating and feels undemocratic, but they are a chaos buffer, stabilizing the system, normalizing behavior, and creating political structures that posture politicians and opposing political forces for the long-run. We should recognize that taking power from the party will not necessarily give us the positive outcomes we want. Reducing the influence of parties simply shifts the who and how of political influence, and opening the system to ever more participation by political amateurs and activists can turn governance into chaos.