We all love the beloved mom-and-pop restaurants, corner shops, and laundromats. They’re powered by hard-workers, toiling for decades doing simple but grueling hours of work. And they keep their shops cheap to beat their national conglomerate competition. There are multiple factors for these cheap, comparatively culturally and communally in-tune shops to still be alive: these folks own the land or property to operate, they have low employee count, they’re deeply intertwined with a niche community to sell, a historically long, complex supply chain, and the willingness to work long hours for no extra pay. This has defined many communities: ramen shops in Japan, Chinatown in NYC, laundromats and nail salons across America, cultural communities built by immigrants in Toronto, handyman businesses, small factory productions. They’re not defined by immigration, though they are an important group, but a willingness to work hard, long and often strange hours.

Though I’m a core believer in the private market, I’ve also warned about the power and leverage of money. Today, private equity is buying up all the aforementioned businesses. Many Westerners hate Private Equity for the right and wrong reasons: many times, PE buys struggling businesses, so when they increase prices, everyone hates them. But without the cash injection of PE, the business would’ve died sooner. Sometimes, PE uses their immense cash investments to accumulate businesses and expand, using the power of money to squeeze out competition. This is monopolistic behavior that is horrible for the economy, catering to communities, etc.

It’s the latter case of powerful businesses, using their immense wealth to buy out large swaths of an industry, that worries me. Mom-and-pop shops, though they need profits to pay themselves for a living, are not only trying to cater to their community via tuning their service and relationship, but they also ensure they’re not pricing out their community. For the largest businesses, their ambition is precisely why Americans struggle: they are willing to not only buy out competitions (which naturally will increase price out of pure supply of the business) but also raise prices to be as profitable as possible.

I think it’s natural for some businesses to want to expand ambitiously. Not everyone wants to do that. My dad for instance purchased an assisted living business; the previous owner ran it for 20 years with no employee helping 6 elderly people, living in his basement. My dad carries on the tradition; though he doesn’t work there all the time, maybe half the time with an employee the other half, he has the lowest prices across America, approximately 1/2-2/3 of the average price anywhere else (we started in 2021 at $3k with the price now just at $4k). It’s a tradition carried on not only by the previous owner but also my dad’s belief in providing that service at affordable prices. He’s also culturally Chinese and wants to provide as cheap of a price as possible while providing the best service (oxymoron from a microeconomic perspective, but I think it’s just a culturally Chinese attitude in business, in addition to his desire to help people. He tested too highly in the GaoKao for engineering, so he became an engineer, but, when he was young, he secretly wanted to be a doctor). Many folks cannot afford this service even with medicare, and I think my dad’s business reflects the attitude Mom and Pop businesses had that allowed Americans to thrive.

The cost of living crisis is here, not just because of inflation, but also because of the increasingly monopolized nature of the economy. As more baby boomer businesses close without a successor (which is a huge problem, even NYC Chinatown restaurants) or get gobbled up by PE, an increasing proportion of services in America are aiming at ambitious expansionary goals which require immense profit at the expense of the average American.