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A case for government-run grocery stores

In recent news, Kroger, America's 3rd largest grocery chain, formally announced that they will shutting down around 60 locations this year, with one of these locations being the nearest grocery store to me. Also in recent news, NYC mayoral candidate Zohran Mamdani is campaigning on the idea of opening city-run grocery stores as a major part of his platform. More on that later.

With the local grocery store closure happening at some point this month, the anger and concern of residents here have been frequently making their way into local news and into town hall meetings. And their concerns are plenty valid. From that location, there are only two other grocery stores left that serve this densely populated area, one being inaccessible by bus line (without at least one transfer) from the ones that already serve the Kroger, and the second one being almost 20 city blocks (about a mile and a half) away.

To make matters worse, this Kroger serves a low-income area. That's right SW, your dearly beloved TinyViolins is a mere peasant. But to paint a clearer picture, what I see when I drive by this store is young parents with young children, often more than 1. I see elderly folks who move like they're dragging boulders. I see the sick and disabled confined to wheelchairs or oxygen tanks. I see aging, worn-out prostitutes and their pimps who surprisingly look nothing like the pimps in pop culture. I see homeless people and junkies loitering, and sometimes scrounging, like scattered flotsam around the economic center of this neighborhood, this grocery store.

And to be fair to the company, theft is a major concern both in and around the store. Public safety is something one is always conscious of when deciding to shop here. When prisons are already overcrowded, a shoplifter or addict simply isn't a top priority. It may as well be a Mecca for petty crime, which is unfortunate, but there are lots of cracks in impoverished areas and many people to fall into them. In any case, liquor in particular is a very prized commodity among our criminal community. I always have a difficult time picking up libations at this location.

However, the store is still profitable. It's frequently sprawling with shoppers. It's not like they're not making money. The core purpose of their business is being satisfied in this instance. And even if one wanted to address or at least curtail the issue of theft, getting rid of the alcohol would get you most of the way there without impacting people's need for essentials.

The crux of the problem, as I see it, is that Kroger, being a publicly traded company, has investors to appease. Despite making a profit at this and several other locations, it's very likely that they were not seeing the kinds of large margins they want to see from these stores.

See, many Kroger locations offer much more than simply groceries. There's a bakery department, a seafood department, there's furniture and clothes and greeting cards, etc. Many low-income people simply aren't going to spend a lot of money on fish or furniture or premade cheesecakes and tiramisus. The store model is simply disconnected from the needs and habits of consumers in their area. But rather than adjust their store model to boost their margins and chase profitability in other ways, they simply decided to screw over the neighborhood and their employees and abandon them without any contingency plan. In essence, they've created a food desert.




Now onto Zohran Mamdani, whose plan for city-run grocery stores are motivated primarily to address food deserts as well as high grocery prices. A noble endeavor by most standards, but can it successfully accomplish its goals is the main question. One whose answer could sink or float his entire political career.

There is precedent for government-run grocery stores in the US. There have been a few in Kansas, Florida, and Illinois attempting to serve rural areas disconnected from other options. To date, all of these stores have either closed or been sold off due to operating costs and financial struggles. Certainly not inspiring news for the people of New York City.

There are also examples of tribal grocery stores being run by the Choctaw and Potawatomi in Oklahoma, but the community structure of federally recognized indigenous tribes are a bit different from the rest of the nation. It may just be that these tribes want to keep their money within the community rather than allowing a national chain to extract funds to their corporate HQ.

The most successful instance to date is that of military-run grocery stores, otherwise known as commissaries. Every branch of the military is allowed to operate these stores on military bases both at home and abroad to meet the needs of service members and their families. Even though they have the ample backing of the US Department of Defense, these stores actually are well-received by our soldiers and veterans alike according to everything I've read. It could serve as a base model for how NYC wants to operate.

The one advantage that Mamdani has in his plan is sheer scale. The previous instances of publicly run grocery stores in the US took place in rural, sparsely populated areas. They had a very small pool of shoppers to sustain them, which doesn't usually bode well for perishable goods. In New York, however, you can't even pass gas without a dozen people smelling it. It's one of the most densely packed places on the planet and there will be no shortage of foot traffic to help these stores bring in money.

But let's say for argument's sake that we know for certain the store is going to be a financial failure. What then would be the benefit of setting up shop in a food desert?

See, the thing is that people have to eat regardless. Our bodies require nutrition, and sometimes that comes in the form of chips and soda from the local corner store. Sometimes that's a Big Mac or a bucket of chicken or whatever food abomination Pizza Hut is selling. Sometimes that's Top Ramen or hot dogs or whatever shelf-stable easy-to-prepare items people can afford. If one is unable to or can only access grocery stores with great difficulty, those options are simply going to be a lot more convenient and available.

It doesn't take a genius to figure out what the end result of a highly-processed, high caloric, low nutrition diet will be. Obesity, heart disease, diabetes, probably other chronic diseases. And indeed, there are correlations and associations with these health problems when it comes to living in food deserts. Those health problems have many lasting consequences for later on in life. Shorter life expectancy, inability to work, reliance on government assistance, medical debt, straining public health resources, you name it.

There is a social cost to not having access to fresh, nutritious food. And maybe certain people in food deserts will be willing to brave the extra hoops and hurdles from traveling further to obtain their nutrition and maintain their health, but it takes extra time and energy that working parents or the elderly or disabled may be too constrained to pursue. How many blocks is okay for an old grandma to be carrying groceries? Idk.

But this is now an issue that my community will be forced to contend with. In low-income areas, it's rare for new businesses to want to set up shop due to the low potential for growth, hesitancy from banks to give out loans or investors to pour capital, and likely increased operating expenses from redesigning and remodeling the old store to fit the new format. Many storefronts simply remain abandoned for years as a blight on the community that it once serviced. I fear that this is going to be yet another example of that. There are currently no plans to repurpose the soon to be vacated business front.

I'm lucky enough to have my own means of transportation and can make the longer trips if need be, but I know there are many others that aren't as fortunate and will have new challenges to contend with as they try to feed themselves and their families. I, for one, am not very hopeful for their chances considering there's a McDonald's right across the street from their grocery store.
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MarkPaul · 26-30, M
There are plenty ways to lure free enterprise companies into communities without a government takeover. Whether a Republican imposter takes a stake in Intel or a Socialist-Democrat threatens government ownership of grocery stores, rental units, and other free market enterprises that kind of government intervention reflects a lack of political leadership, creativity, and understanding.
TinyViolins · 31-35, M
@MarkPaul There's also no way to keep them there outside of government intervention. What's to stop them from taking the benefits and then bailing again a little further down the line?

Like I mentioned, this store was profitable. It attracted plenty of customers. It still chose to shut down citing outside factors. Crime unfortunately tends goes hand-in-hand with areas dealing with poverty and economic insecurity, which is the primary reason stated. Without addressing that, the next store is going to run into the same problems short of spending a buttload on security or insurance.
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TinyViolins · 31-35, M
@MarkPaul
That's the dumbest thing I have ever (EVER) heard... EVER

Well, I'd defer to you given that you're an expert in that field.

How about government focus on the social issues that prevent businesses from wanting to operate in a high crime zone (and I don't mean with military deployment) and leave enterprise free.

They have been focusing on the issue. My state spends billions to address homelessness and addiction, but providing those benefits tends to attract the homeless of other areas which only increases the need for more money. It's a perpetual feedback loop. It ends up putting the perpetual expenses on taxpayers regardless.

Ultimately I don't believe that there is a solution short of mass institutionalization, and that's gonna cost taxpayers as well.

The free market can't fix everything. This was a private business operating without competition or intervention from the government that still chose to leave despite being profitable. This a clear cut example of a market failure.

Groceries are not like other businesses. They are integral to communities. Society literally cannot function without access to food. This company, like many others, are failing to meet the needs and demands of their customers. In cases like that it's reasonable for the government to step in.
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TinyViolins · 31-35, M
@MarkPaul And yet you have failed to float a single idea yourself on how to resolve this problem. You're literally just clinging to this blind faith idea that the free market will somehow find a way to fix everything and that governments are being intentionally incompetent by allowing crime, as if it doesn't affect their jobs either. How about you suggest a plan instead of squawking 'free market' like a libertarian parrot?

Governments do in fact take over utility companies and hospitals. Never heard of anyone complaining about that. Certain businesses just won't or can't meet the needs of a population and the dumb thing would be to leave your citizens without essential services while begging for someone to come along.

Taxpayers fund law enforcement, schools, fire departments, roads, bridges, social services, libraries, mass transit, water treatment, certain utilities, hospitals and clinics, and yes, even free lunch programs. Taxpayers fund things that benefit communities. Having a grocery store benefits the community. It's not that farfetched of a notion to have the government intervene here when it has intervened in so many other public services

This store closure is just one of many examples around the nation of private businesses failing to meet the needs and demands of their markets. It's a textbook market failure. Government intervention is a frequently used means of trying to correct these market failures and limiting their negative externalities
MarkPaul · 26-30, M
@TinyViolins Look, I'm not suggesting doing nothing. My idea that I floated if you could see beyond your own limitations is to entice free enterprise business back into the community with crime prevention activities, tax incentives (if necessary), and collaboration in building the type of environment where the business can thrive.

Your allegation that a business that was making money profitably, simply packed up and left for no business reason is justifiably suspicious. That is why I don't believe you understand how business works. A business that is profitable, doesn't pick up and leave. The solution of the root cause problem, which you have thus far failed to identify, requires proactive government action that does not include ownership.

As I suspected, you actually are calling for more than grocery stores to be nationalized. How soon will it be that you start comparing dry cleaning to a fire department, a laundromat to a utility, and a gym to a hospital. No, government ownership should not be the first resort to resolving and eradicating your personal fears.

Once again, keep in mind I am not suggesting a government hands-off approach. I am opposing outright government ownership of business. We call government facilitating business enterprise government-business collaboration and yes, that is a solution.
TinyViolins · 31-35, M
@MarkPaul None of those ideas are free enterprise. It's direct government intervention favoring one store in one area that actually does have other competitors within a 2 mile radius. What's to stop other stores from holding the government hostage by threatening to leave unless they get certain perks?

They have been trying to reduce crime and public safety concerns. They just built a tiny home village 8 blocks away from the store. They've been converting hotels into affordable housing over the last 3 or 4 years. Police have been targeting drug rings to help with the addiction problem (a lot of theft is done for resale purposes). They literally moved a police substation to be on the same street as the store in order to respond to crime more quickly. The store has their own on-site security that occasionally use off-duty officers. It's recklessly naive to assume that my city has done nothing to try to alleviate economic and public safety concerns.

It's not suspicious, it's the truth that was revealed in a town hall meeting. The company itself stated that the primary reason for leaving was due to increases in retail theft. I guess that the increases in security expenses didn't do enough to offset the shoplifting shrink in their eyes, so they decided to cut their losses.

It may have been profitable, but I don't know what the margins were at this location. It was probably pretty low. It has been known to be an underperforming store given the other departments like bakery, meat/seafood, and apparel did not make the kind of sales corporate likes to see. Poor people tend to focus on staples.

Nationalized? When the hell did I say that?

All I'm saying is that it's very common for governments to fill in where markets have failed and in this instance, the market has failed. I think your idea of offering perks and privileges and magically solving crime is naive and fails to take in the complexity of fixing homelessness, addiction, and poverty
MarkPaul · 26-30, M
@TinyViolins The fact that you think government taking over ownership of businesses, grocery stores today, nail salons tomorrow and who knows what else, is going to "fix" homelessness, addiction, and poverty is laughable... until it becomes clear you are serious.

A government run grocery store is not going to address any social problem; it will only mask it at perpetual taxpayer expense and the increase in property taxes or sales taxes, or both will only counter-produce more than just a grocery store fleeing a crime ridden community. Everyone else, including the homeless will follow.

Government control over the levers of business that extend beyond sensible and in-the-public-interest regulation is like chasing a rainbow. You might as well argue that life will become 33% better when government controls everything. No doubt in that case, you will be the first in line to complain if that local government ever comes under the hypnotic suggestions of someone like pedophile enthusiast, Cry-Baby-trump.

I'm sure you feel like you can wash your hands of the problem and call it day by advocating, "let the government do it." Do-gooders often look for something that will ease their consciences with the least amount of effort. I'm not willing to do that and so we will just have to leave government ownership off the list of viable ideas.