Why do people like government owned and run grocery stores even when they have never worked, but just cost taxpayers?
For context, this is a question I originally answered on Quora
High time preference low IQ populations that are coddled to believe everything they want is a “right” like the idea of something being guaranteed to them by the government and free of charge without understanding the trade offs for that arrangement. Grocery stores already operate on razor thin profit margins of about 1–3% so if a government run grocery is to provide cheaper or free food they would have to operate at a loss or operate like a food bank and only provide items that are donated to them. A government run store that is operated like a food bank would have the same problems as other food banks: extremely limited selection, long queues, and some people coming out empty handed if they arrive too late. And of course, the incentives for government committees and employees to improve options or services when they can just continue leeching off the taxpayer dime, regardless of how much money they lose, is non-existent unlike a private store that faces the risk of insolvency for being poorly run. Without that incentive, people take the path of least resistance and continue providing subpar service. This is already quite evident in dilapidated and crime ridden government owned housing. The same pattern of disincentives would inevitably unfold in government owned grocery stores: the end product would not be cost effective and would be in short supply leading to queues. In both cases, the sluggish democratic model of allocating resources is ill equipped to deal with the dynamics of consumer preferences.
I don’t need to go to Venezuela or Cuba to point out the failures of government run grocery stores. We have recent examples of their failure here in the states.
- Baldwin, Florida opened a city-run grocery, Baldwin Market, with a $150K loan from taxpayers in Sept 2019 after its last private store closed. It lost over $400,000 during its four short years of operation before closing in March of last year.
- In Kansas city, MO city owned Sun Fresh Market, which opened in 2018, was forced to close this year. Despite receiving $18 million in taxpayer funding at the start, the store never broken even during a single year and lost nearly $7 million during its final two years of operation as a city owned store. Customers regularly complained about bare shelves and rancid odors throughout the store.
- The same failed experiment was repeated in Erie, Kansas, when city bought Stub’s Market and turned it into city owned government managed Erie Market in 2020. Last year the city decided to lease the store to River Grocery LLC after four consecutive years of revenue losses and empty shelves. Even this was not enough to stop closure this year. The service was so subpar that the average customer only spent $14/month at this store and lost $462,000 - $552,000 during the years of city management.
- St. Paul, Kansas also bought a failing grocery in 2008, but ultimately turned it over to private management to run the business, leasing out the property rather than running it directly through a government agency or committee and allowing market discipline to shape the stores decisions.
The privately managed city owned St. Paul Supermarket is the only success story here, and is more akin to the Georgist model of the city owning the land but leasing it to private business to manage (e.g. Singapore/Hong Kong model), than the socialist model of government owned and managed store (e.g. North Korea/Venezuela model) that has to wait for a central planning committee to vote on what they will make available to their captive customer base. People worried about food deserts could also organize consumer co-ops instead of trying the same failed tragedy of the commons experiment for the 10,000th time. Consumer co-ops meet the socialist demand for business to be collectively owned and democratically managed and are viable enough that 100 million Americans participate in them, but they require residents to actually work for their own betterment instead of expecting government officials to fulfill all of their needs and unlike government run grocery stores that rely on taxpayer generosity to stay afloat they would have to assume the risk and liability of running a business for themselves.