This week’s “Daily Journal” guest columnist is Donna Martinez, Co-Host of Carolina Journal Radio.
RALEIGH — Some folks believe you’ve got to read the great economists, scholars, and philosophers to understand market forces, business and economic cycles, and the tug of war in a free society between individual responsibility and government regulation.
When it comes to freedom’s historical development and detailed underpinnings, they’re right. But there is a pop culture television alternative that, between the screaming and yelling, bleeped expletives, and trumped-up cliff-hangers, does a great job of providing a real-world illustration of the time-tested truths, principles, and power of a free-market economy.
The show is “Kitchen Nightmares,” hosted by internationally renowned restaurateur and chef — and now American TV star — Gordon Ramsay. Ramsay is, first and foremost, an entrepreneur. For the past several years, he’s put his creativity to work showcasing market forces as entertainment. Cameras in tow, Ramsay goes behind the scenes and into the heart of failing restaurants, putting owners and staff through a one-week boot camp on how to save their dying operation and emerge a savvy competitor.
Most of the restaurants he rehabilitates survive. Others are sold for a nice profit. But even Ramsay can’t fend off the inevitability of the choices consumers make in a free market. Regardless of the outcome, each restaurant challenge — or Kitchen Nightmare — provides a valuable lesson that would make free-market economists proud. Here are a few of my favorites — the ones that are often the hardest to learn.
Kitchen Nightmares Economic Lesson No. 1 – In a free market, failure always is an option. Some owners fail because they ignore Ramsay’s customer-oriented recommendations. Others, such as a pub in Michigan, run with Ramsay’s cures only to fall victim to declining disposable income, a factor outside even the best owner’s control. Even the Midas-touched Ramsay has suffered the closure of a restaurant. Increasingly, society is loathe to accept that a for-profit business that is unable to compete should go under if the owner can’t generate more revenue than costs. There are no government bailouts in Ramsay’s real world of winners and losers.
Kitchen Nightmares Economic Lesson No. 2 – The free market provides opportunity as a byproduct of failure for those willing to see it. If the restaurant fails and outside investors are involved, the failure can push capital infusions to other entrepreneurs with more effective business plans. These entrepreneurs will, in turn, hire workers and create products and services designed to meet a market need or want. On the individual level, the kitchen manager who loses his job when the doors close often hones his employment search for a business that utilizes his skill set more effectively. Others find success working for themselves. Still others seize the opportunity of failure to begin a new vocation better suited to their passion.
Kitchen Nightmares Economic Lesson No. 3 – Listen to what the market is saying. Customers validate the business plan every day when they come back to the restaurant. Only when they take their money elsewhere do owners finally address nightmares lurking in the kitchen that are sending customers, and the owner’s investment, out the door. Ramsay’s “Kitchen Nightmares” does a splendid job of spotlighting human nature’s aversion to change, even in the face of indisputable market signals: an empty dining room. Ramsay’s challenge is to get owners to adopt the changes customers — and the market — are asking for.
Kitchen Nightmares Economic Lesson No. 4 – No amount of regulation and oversight can replace individual responsibility. Sensible public health regulations are appropriate, but the show demonstrates that even restaurants in highly regulated New York can serve food in unhealthy conditions. When Ramsay the entrepreneur, not government inspector, comes across kitchens that would send you and me running for the door, he stops operations and makes everyone learn — via the scrub brush — that meeting customer expectations of cleanliness is imperative for financial success, not just government compliance. Ultimately, it’s up to the owner, not the inspector, to ensure his customers are well-served if he wants them back.
If you have the time and inclination to read the catalogue of the economic greats, by all means, do so. But if you want to be entertained while you learn, just turn on the TV.