Starbucks Case Illustrates How Government Police Aren’t Like Private Police

Tate Fegley – May 12, 2018

Recently, two African-American men were arrested at a Starbucks in Philadelphia for trespass and disturbance. They claimed that they were waiting to meet a potential business partner. A barista asked if they wanted to order anything, but they declined. One of the men had asked to use the restroom, but was told it was for paying customers. One onlooker reported that a barista told the men that they needed to make a purchase or leave. Having done neither, the police were called. Reportedly, the police asked the men to leave three times. After refusing, saying they had meetings at Starbucks all the time and were about to make a real estate deal that would change their lives, they were arrested.

A video recording of the arrest led to protests and calls for boycotts of the company, which have been met by apologies from the Starbucks CEO, the mayor of Philadelphia, and even the police commissioner (who originally said that the officers had done nothing wrong but later said such wording was incorrect and that what he should have said is that they followed the law – a statement which itself is of interest, raising the question, To what extent can police do the wrong thing and yet remain within the law?). Additionally, the Starbucks CEO Kevin Johnson personally met with the men who were arrested and will close 8,000 Starbucks locations on May 29 for racial sensitivity training.

Though many interesting observations have been made of these events, my marginal contribution is to point out the radically different results we observe when the entity seen as screwing up depends on maintaining the good graces of consumers for its survival versus one that relies on tax revenue. Remember when United Airlines had the Chicago Police eject a passenger from their flight? This was quite the embarrassment. There were calls for boycotts and United’s stock price took a hit. However, none of these things happened to the Chicago PD, whose “customers” can only boycott by leaving town (though actually even that may not be enough, as Chicago PD received $3.1 million in grants from the federal COPS program alone in FY2017, with an additional $1.3 million from the OJP ) and [which] has no stock price. Relatively little ire was directed at the Chicago police, despite being the ones who actually bloodied the guy.

And so it is with the Philadelphia PD. It won’t be boycotted, its stock price won’t drop, and no one will be fired. (Although the Starbucks manager who called the police is “no longer at that location,” it is unclear whether this means relocation or firing.) However, you can bet Starbucks will make great efforts to prevent a similar occurrence from happening again. They will be very careful regarding the circumstances under which they will instruct their employees to call the police.

The examples of police involvement with United Airlines and Starbucks illustrate part of the reason why we so rarely hear about abuses by security in the private sphere: there are costs borne by private companies when they decide to use force (whether that force is justified or not), [costs] that the public sector does not [bear]. The use of force is usually bad for business, and the incentive is to avoid it until whatever it is meant to stop or prevent becomes more costly than the use of force. Additionally, private companies are unprotected by qualified immunity. But perhaps most important in terms of why their incentives differ from the state’s is that they require customers to continue to be willing to give them money.

Hopefully these events can serve as a lesson for those concerned about police accountability: what might be more effective in minimizing police abuse than civilian review boards, consent decrees, police accountability task forces and so forth, is the ability to take one’s business elsewhere.

This article was originally published at Tate Fegley is a 2018 Mises Institute Fellow, and winner of the 2018 Grant Aldrich Prize for Best Graduate Student paper at the Austrian Economics Research Conference. He is currently a graduate student at George Mason University.


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