Some Half-Baked Thoughts on the Economics of City-Life after Returning to Montreal after a Week in Paris

One of the great fringe benefits of my job is that I often get invited to some pretty great cities for work. I’ve just returned to Montreal from a week in Paris. I love Paris. What I love most about Paris are its neighborhoods. Walk a few kilometers outside the tourist center, and you will find fantastic inner city areas that each have their distinctive character and identity. For a long time, I used to hang out in the 14th arrondissement (intra muros Paris, the Paris that lies inside its internal ring road, le Périphérique is divided up into 20 boroughs). These days, I am more likely to try to find a place in the 20th, which is one of Paris’ most riotously multicultural neighborhoods. On this recent trip, I watched Chile win a World Cup match in a Chilean bar, watched Brazil triumph in a Brazilian restaurant, and don’t even get me started about what happened when Algeria beat South Korea! Those interminable 1-0 games are a lot more fun when you are watching them with people who have an existential stake in the outcome.

One of the great things about Paris neighborhoods is that you don’t have to step outside of them to get everything you need. Every neighborhood has its market days, and, surprisingly for a city in a country that has always been on the verge of an economic nervous breakdown, there is very little empty store frontage. Walk up and down rue Ménilmontant, where I hung out on this last trip, and you will find all manner of bars, restaurants, and mom-and-pop shops.

And you will also find tons of local bookstores and cinemas. From the apartment I rented in the 20th, I could walk to half a dozen bookstores. One of them, Le Comptoir des Mots, right by the Gambetta metro station, is a wonderful generalist bookstore, whose owners lovingly place handwritten reviews on the books they think worthy of your attention. There is a great bookstore specializing in bandes dessinées just up rue de Belleville, near the Jourdain metro stop. One bookstore a stone’s throw from there seems to be run (to judge by the books they stock) by anarchists interested in urbanism and Italian literature.

Don’t get me started on the cinemas: to go to the movies in Paris, you do not have to go downtown or to some suburban mall, to see one of a handful of movies on offer. Just stroll down the street, and you are likely to find a cinema showing a wide range of movies of sometimes dubious commercial potential. My favorite movie theater in the world, les 7 Parnassiens, right by Metro Edgar Quinet, last week was showing a fantastic Chinese murder mystery, the latest movie by the Dardenne brothers, an Israeli movie about an aging leftist couple increasingly alienated by their country’s rightward drift, and a documentary about organic winemakers. There are tons of rep houses where you can catch, say, an Antonioni cycle on a big screen rather than watching it in your own home, or even worse, on your computer. Pick up the weekly Pariscope, and you will find literally hundreds of movies on offer, rather than the roughly 30 or 40 that are to be found in any given week in Montreal or Toronto.

My question: how is this possible? How do Parisians manage to sustain so many bookstores and so many cinemas?

I don’t buy irreducibly cultural explanations of these kinds of phenomena, of the “the French just like hanging around in bookstores” variety. People make choices about where to spend their time and money within a choice set, and that choice set is not just a natural occurrence. It is produced by social forces such as the market, and it can be tweaked in various ways. The French like hanging around in bookstores and repertory cinemas, not just out of some irreducible cultural longing, but because they are plausible choices for them, sustained by a variety of forces, some man-made.

One factor that clearly makes a difference is Paris’ population density. Paris, it turns out, is four times denser than Montreal is. Now, urban theorists and environmentalists have been telling us for a while now that denser cities are more sustainable cities. We consume less fossil fuel when we share space to a greater degree than do people who live in single-family structures. But it turns out that living in denser spaces may actually be more fun. If there are four times more people in a given area, that means four times more consumers: four times more potential book buyers, four times more cinema-goers. Little neighborhood bookstores and neighborhood cinemas have more of a chance to make a go of it, when they have four times more people at easy walking distance.

Urban density is not simply a natural fact, like the weather. It results from choices that we have made, and continue to make. In Montreal, that involves worrying first and foremost about how to make the island car-accessible to suburbanites, rather than incentivizing densification (for example by making suburbanites internalize at least some of the costs that their largely car-based way of life imposes on all of us). If my hypothesis is correct, our urban policies are not only wasteful from a resource point of view. They may actually have an impact on whether or not neighborhood bookstores are sustainable.

I noted above that as far as I can see, there is very little empty store frontage in Paris, even in a fairly “populaire” neighborhood like the 20th. In Montreal, I live in a fairly affluent neighborhood, Notre        Dame de Grâce. Our two main shopping streets, Monkland and Sherbrooke West, are pock-marked with empty store-fronts. That seems paradoxical: there is a lot of buying power in my ‘hood, and yet the places in which to exercise that power seem to diminish every week.

The paradox is dissolved when one talks to shop-owners who have had to deal with vertiginous rent increases as the socio-economic make-up of my part of NDG has broken solidly upper-middle class. Property owners sense that they can make a killing by attracting a deep-pocketed franchise into the neighborhood, and they are willing to hold out for months, even years, til they hit the jackpot by roping in a Starbucks. For me, the emblematic moment was when the lovely flower shop on the corner, run by a charming Polish couple, shut down, only to be replaced a few months later by a David’s Teas.

So here’s my question: should property owners be allowed to let their commercial properties remain vacant for months and years on end while waiting for a sweetheart deal? There are at least prima facie arguments to say that they should not, arguments that should not simply be dismissed even by those who think that markets ought to be all-powerful in determining supply. By holding out for long periods of time in the hope of maximizing rents, property owners create public bads, degrading the commercial streets that abut residential neighborhoods, and creating incentives for people to abandon these streets and go shopping downtown or in malls. It doesn’t seem outlandish to at least consider the possibility that property owners ought to be disincentivized from allowing shop fronts to remain empty.

I am no expert in the French laws regulating commercial leases. I do know that it is much more difficult for a French property owner to evict a commercial tenant. Commercial leases are typically 9 years long, and the breaking of a lease involves owners in paying commercial tenants substantial indemnities. Maybe that is part of the explanation for why the streets of Paris are such a crazy-quilt of commercial entrepreneurship.

We come to one of the most controversial mechanisms through which the French have attempted to protect small bookstores, the Loi Lang, which prohibits stores from marking books down by more than 5%. The rationale is that big chain bookstores like FNAC can afford to mark books down considerably to get people into their branches, something that is a lot more difficult for the local bookstores whose volume of sales might not be sufficient to justify such “deep cuts”.

I am not sure whether a law regulating book prices is the right way to go, (though I am not sure that it is not, either). After all, why couldn’t a small bookstore use it as a “loss leader” to get people in to buy other books at the regular price? What seems more obnoxious and potentially regulatable are the insidious and market-distorting practices that big chains have historically engaged in, such as making deals with distributors which give them a few days’ head start in the sale of popular new books. The point is that there is no “natural” competitive context in which to pit large and small businesses against one another. There are rules governing competition, and those rules can be chosen to attain desirable social ends. Yes, I know we must always be aware of the need to avoid potentially perverse consequences. But a mistake would be to think that the status quo is not already one that generates perverse consequences (to wit, the empty shop fronts in my affluent NDG neighborhood!).

I am no economist. The last class in economics that I took at University was a course in the history of economic thought taught by a wonderful old professor at McGill by the name of Jack Weldon. We started with Smith, and ended with Marx, if memory serves. So all of this may be hopelessly naïve. The point I want to make in this little bit of observational economics is that the forces that are making many of our commercial streets far less diverse – far less conducive to neighborhood bookstores and cinemas – than they might otherwise be are not like the weather. They result from choices – about the way in which we develop our cities’ residential patterns, about the way in which we define the property rights of commercial property owners, about the rules of competition that we establish between later and smaller providers, and no doubt about a lot more. Once we come to realize that there are choices involved here rather than blind forces, we can begin to think the very liberating thought that the kinds of cities we want may be within our reach.


Some Half-Baked Thoughts on the Economics of City-Life after Returning to Montreal after a Week in Paris — 4 Comments

  1. Mr. Weinstock,
    I’m the editor of a Montreal-based webzine and we’ve been giving a lot of thought to the question of fixed prices for books (I, personally, am much in favour of such an idea).

    A few friends shared your article with us today. Would you mind if we re-blogged it to in the coming week, with attribution and pingback to the original post?



  2. Every time I see the suggestion that population growth and increased density is good and is “more fun”, I wonder why do such advocates have such short term horizons? The world population has already reached a point beyond “sustainability” and climate change is increasingly affecting the planet. Our grandchildren and their children won’t be living in the same environment that we inherited when we were born. The world population’s record level is resulting in record levels of consumption of fossil fuels, pollution and growth of urban sprawl into previous agricultural areas is something which is certainly not sustainable. And what do “theorists” come up with? Ideas suggesting that more people is good and….fun! Regardless of how many cinemas and book stores there are, if urban (or other) theorists were really interested in long term sustainability, they would give more thought to discouraging population growth and families having too many children, etc.

    Regarding differences between North America and France, culture is obviously a huge part of the equation, whether you “buy” it or not. You can compare practically any aspect of daily life and there is a significant difference…from language, to food, to political perspectives, etc. One clear difference is on the small screen. French television is loaded with endless “talk” shows…whereas Hollywood produces endless “sitcoms” (i.e. some French who watch tv like to think while Americans tv watchers just like to be confronted with predictable bad jokes). However, when asking about the difference in book buying, you did not factor in the obvious…There are no huge Parisian Chapters or Barnes and Noble stores, and Canadians are increasingly buying discounted books on amazon.

    Regarding your theories about landlords keeping their storefronts empty while waiting to snag a good tenant, is there not the possibility that you might be exaggerating? If all landlords did that, the street would be bare and none of them would snag any decent tenants who wished to avoid ghettos.

  3. Hello Anonymous,

    Thanks for the comments.

    The suggestion is most certainly not to increase population size. Rather, it is to create incentives for populations to organize themselves in a less sprawling way in urban regions so as to avoid rapid depletion of limited resources. The slowing of population growth, and “densification” are on the same side of this struggle.

    The question is not whether culture is or is not an explanatory factor. It is whether it is an irreducible factor. My suggestion is that France has the culture it has because certain choices are made easier to them by laws that structure the market in certain ways rather than others.

    Also, just as a matter of fact: there most certainly are mega-stores like Chapters and Barnes&Noble in France. What’s more, Amazon also targets the French market. A law was actually just passed on the 27th of this month that extends the “loi Lang” to Internet trade, specifically to Amazon. The biggest French version of the megastore is FNAC, which sells everything from books to electronics to CDs. They have a big online presence, and also have stores all over the country, and beyond (Belgium, for example).