MERCANTILISM GONE UPSCALE. In the latest manifestation of "The Windy City Gone Wimpy," the pate-banners at the Chicago City Council seek to ban what they define as a formula business from historic districts.

Proponents got the idea from San Francisco and cities where similar measures are in effect.

The proposal's backers point to a 2004 study that found that for every $100 spent at an Andersonville business, $68 remains in Chicago, compared with $43 at a chain store.

Let's take this proposition seriously. How many Andersonville (a North Side neighborhood that was once the Swedish ghetto of Chicago) residents earn their incomes in Andersonville businesses? Heck, how many earn their incomes at a workplace in Chicago?

The neighborhood's roots date to the mid-19th Century, when immigrant Swedish farmers moved into what was then a distant suburb. Settlement was sparse until the Great Fire of 1871, when the log cabins preferred by city-dwelling Swedish immigrants were outlawed within Chicago's boundaries.

The immigrants soon migrated north, settling into homes around Clark Street and opening delis, hardware stores, bakeries and other businesses.

The neighborhood, which is officially part of Edgewater and Uptown, slid into a decades-long decline after the Great Depression. Swedes began to move to the suburbs after World War II and Clark Street became littered with empty storefronts.

Though local business leaders rededicated Andersonville to its Swedish roots in the 1960s, disinvestment again plagued its commercial district in the 1980s.

You mean a neighborhood might not be self-supporting, and people and businesses move out? Or, a neighborhood might earn its keep by encouraging people from other neighborhoods to import goods and services from it?

Frequent Clark Street patron Amy Mall said the homegrown shopkeepers are what make the neighborhood special.

"It would be sad to see Andersonville change," said Mall, who routinely rides two buses from the Logan Square neighborhood for the shopping pleasure. "If it did, there wouldn't be a reason to go there."

What is to stop the residents of Logan Square from running "Buy Logan" campaigns, or local businesses asking the City Council to defund the Chicago Transit Authority so that Logan Square residents can't contribute to Andersonville's balance of trade surplus?

Time to consider a point Paul Krugman makes in Pop Internationalism. The purpose of trading is to import, meaning to get more cheaply the stuff you can only produce for yourself at greater expense. Consider the latest acquisition at Cold Spring Shops. In the foreground, a Chinese-built Great Western King. There are some dollars that left the United States to make this acquisition possible, and more than a few British pounds went to China. In the background, a Great Western King I assembled some years ago from an Oakville kit. Far fewer dollars left the United States to make that kit possible, and one could argue that I "saved" a lot of dollars designing my own power train and electrical pickups and a number of other improvisations to make it run. (The opportunity cost is left to readers as an exercise. Top-link economists are supposed to devote every waking minute to researching difficult problems.) But for all the money that I didn't spend, and all the papers I didn't write, I have an engine that didn't run as well out of the box as the one that involved sending money out of the country.


To the extent that Andersonville business interests are encouraging the residents of other Chicago neighborhoods to import goods from Andersonville, their argument in favor of keeping the money in Chicago is internally inconsistent, and to the extent that residents of other Chicago neighborhoods are willing to import goods from Andersonville, the shopkeepers will be able to hold their own against those formula businesses.