Tyranny Takes the Gold
In the name of the Olympics, the state moved in like a storm trooper.
Here is a tale, a story true in every detail, that the American public, and especially those owning and operating small businesses, should take to heart. With all the gripes about government regulation of business, both critics and defenders of capitalism believe that ours is still fundamentally a free-enterprise system in which all of us have the opportunity to own, manage, and build any type of commercial enterprise we wish. But it is not as free, as open, as we assume.
In 1976 I managed to realize a long- nurtured dream. An opportunity presented itself that I could not refuse—a business that I felt qualified to own and operate came up for sale in an area far from the chaos and bustle of any city. I was able to buy a profitable business, move to an area where mountains replaced skyscrapers, and realize two dreams with one stroke of the pen.
The business was a small motel, a one-man operation. Located in a remote section of the Adirondacks, in upstate New York, it was only a few miles from the site of the 1980 Winter Olympic Games in Lake Placid, New York. The International Olympic Committee had just awarded the area the right to stage the next Olympic games—a fortuitous bonus that did influence my decision to buy property in the region.
For the first year, I was no more than one small operator in an area that had an over-abundant supply of small operators. I caught "Olympic fever," as we called it then, excited by the prospect of being involved in an event of international proportions, with the world coming to my doorstep, my backyard, to watch the best athletes in the world compete for the gold.
Then, in stepped the state of New York, with legislation and regulations that changed everything. In August 1977, barely a year after I had relocated to the area, a new law went into effect and changed all our lives. Chapter 912 of the laws of 1977 created a new and powerful state entity, the Olympic Accommodations Control Corporation. The function of this government-controlled and -operated organization was to acquire, by whatever means necessary, all commercial lodging facilities within a four-county area for the use of the Olympic Committee.
Not only did the state give itself the right to literally commandeer any and all lodging facilities, it also gave the corporation the power to determine prices, terms for payment, and who would be lodged in any facility so acquired by the state.
We were told what price to charge for our services, to whom we would rent those facilities, how many individuals were to be accommodated in each unit, for how long those people would be allowed to remain in the unit, how and in what manner payment would be made—all this without the option of refusal.
We could, of course, shut our businesses down for the entire period of the Olympic games. That included virtually the entire winter season of 1980. Or we could attempt to ignore the demands of the Olympic Accommodations Control Corporation and continue to rent or lease our properties as always. But then we became liable to prosecution by the state under the rules and regulations of the law. The penalties included fines and imprisonment.
The worst was yet to come. In determining what rate would be charged, the corporation decided to base the rate on the summer season of 1979. During that year American consumers had experienced the second serious oil shortage. Fuel prices had risen dramatically, with a grave effect on the rates charged for rooms in the Olympic region. Because of the suddenly high cost to the tourist of traveling to such a remote and out-of-the-way location, demand for accommodations in the area had fallen off severely, and our prices had dropped accordingly.
After a group of furious motel owners demanded some relief from the law, some modifications were made. The period on which our Olympic rates were to be determined was moved back to the summer of 1978, a full two years before the games took place. The rate was to be roughly 35 percent higher than the price charged during the base period. On the surface, it sounded great.
Between the time from which the rates were determined and the time the games occurred, however, the cost of energy rose nearly 100 percent. The single most significant cost of operation rose 100 percent, and we were to receive only 35 percent more for our services. Cost increases during that period pushed the cost of operating a motel or hotel in the area right off the charts. Still, our rates had been frozen by the state.
Lodging facilities were the only businesses controlled by the state. No other type of industry was included under the law. That caused problems that the motel owners had foreseen, had predicted, long before the games actually began. Having asked for protection in the event that certain other businesses decided to take advantage of our situation, we were assured, by officials responsible for such things, that in the event something of the kind occurred, they would assist us.
They didn't. For example, on the day prior to the beginning of the games, the cost of a single bed sheet rented from one of the local linen services was 26 cents. On the first day of the games, the price of that same sheet, from the same company, rose to $1.00. The charge for all items rented from that particular company quadrupled. When we brought our case before the Olympic Accommodations Control Corporation, and other officials who had been responsible for freezing our prices, we were told they were powerless to aid us.,
With energy costs up over 100 percent and, now, the cost of linen service up almost 300 percent, the additional 35 percent income began to vanish rapidly. In its overzealous attempts to protect the public from possible gouging by the motel-hotel owners in the region, the state was, in effect, bankrupting the lodging industry.
Virtually all expenses rose dramatically during the period—for labor, paper goods, everything. At the end of the games we, as a group, found our pocket-books empty, our desks piled with bills for which there was no money.
We, who hosted the world, were impoverished by the experience. In some cases, property owners didn't even cover outright expenses. In many other instances, the operators made less than would have been the case if the games had never taken place. All this because of state interference in the marketplace in the name of Olympic competition.
Whenever government is allowed, under the guise of protecting the public, to dictate prices and terms to private business, we not only are stripped of our freedom, of our rights under the law; we also face the danger of destroying the very industry so controlled. The state of New York, in more recent months, has finally become concerned for the very industry it helped to destroy, suddenly realizing that we are in serious trouble. For some of us, it is too late.
Tourists traveling into the area, especially in the town of Wilmington, are dumbfounded by what they find. Motels closed, boarded up, abandoned. The entire area resembles a ghost town in the making as, one by one, businesses shut down, never to reopen. Not all of it is the result of the state's interference, but much of it is.
We, who were raped by the state, have learned a valuable lesson. Our freedoms can vanish in the blink of an eye at the whim of the government whose purpose is to protect those very freedoms. We are free to do business only so long as our interests and those of the state are the same. When that is no longer true, beware. It's a lesson one would hardly associate with the thrill of the Olympics. And it happened behind the scenes, far from the view of an American public that believes free enterprise still prevails.
Robert St. Yves is a motel owner in Wilmington, New York.