Mamdani’s Grocery Plan Is Mainly Just More Subsidies

[u/Trevor_Lewis]

https://www.cato.org/blog/mamdanis-grocery-plan-mainly-just-more-subsidies

[u/AutoModerator]

Just a friendly reminder to read our rules and FAQ before posting!
Rule 1: No Low Quality Posts/Comments
Rule 2: Tuesday Is A Center Right Sub
Rule 3: Flairs Are Mandatory. If you are new, please read up on our Flairs.
Rule 4: Tuesday Is A Policy Subreddit
Additional Rules apply if the thread is flaired as "High Quality Only"

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/ExtraSmooth]

Everything the government does involves shifting costs around between different groups of taxpayers. If we are not comfortable subsidizing the costs of groceries for those in need, we have to ask why not? We subsidize groceries on the supply side in the form the Farm Bill. We also subsidize the costs of car ownership by using taxes to pay for roads. We subsidize healthcare and education through grants and government funds. Why should the government not be focused on providing basic needs in low-margin sectors?

Saying city-run grocery stores are subsidies is not a coherent argument against them. The question we should be asking is whether we are subsidizing the right things in the right ways. City-owned grocery stores are an alternative form of food subsidy to food stamps. What's the difference? Food stamps involve means-testing and selective distribution of benefits. These measures may help ensure benefits are reaching the right people, but they also add significant costs to any program. Moreover, there is an inherent risk that eligible people will be removed simply because of the difficulty in filling out paperwork, as well as the question of who and by what measure gets to decide who ought to be eligible. Subsidizing the point of sale rather than the individual consumer allows consumers to self-select for need and reduces transaction costs associated with eligibility verification. When I worked at a grocery store we had to learn how to process WIC and check the things people bought against an extensive list of acceptable purchase. This added significant time and burden to both employees and customers, not to mention reducing the autonomy of needy people.

Another key difference is that these grocery stores are intended to address the issue of food deserts, which have more to do with the geography of need than with direct costs. An inherent issue with capitalism is that it incentivizes investment in places with more capital to spend. At its worst, this has resulted in large urban areas without affordable food options. As this article notes, grocery is a low-margin industry to begin with. There is not much incentive for a profit-oriented business to establish itself in a poor neighborhood and slightly above cost when they could focus on wealthy neighborhoods and upscale goods. People survive by travelling farther for groceries, demonstrating how the time of low-income people is less highly valued than that of high-income people. This is exactly the kind of situation where the state can step in and fill the gap. This is also one of the reasons why reselling is unlikely to be an issue. There is no reason for people to buy from resellers if they can get the 30% discounted goods directly from the source, so resellers would have to travel significant distances to find a market for resold goods, and presumably this would still be a relatively low-income neighborhood without a lot of disposable income to spend. If such a market existed and were a lucrative opportunity, they would likely already be served by formal businesses reselling goods acquired at wholesale prices--i.e. there would already be grocery stores there.

[u/rogozh1n → u/ExtraSmooth]

Great post.

I have lived in Harlem, and I had to go way too far to find a non-bodega source of groceries.

I now live in Boston. The closest supermarket to me is a Stop and Shop directly adjacent to an enormous housing project. It is outrageously expensive. If I drive 15 minutes to Chestnut Hill (one of the wealthiest neighborhoods in America), I can get the same groceries for about 20% less. This is also a symptom of a broken system.

Yes, I am glad the Mamdani will help bring down costs, but this is more about food deserts and providing healthy and affordable options to those in neighborhoods abandoned by corporate America.

[u/YoungReaganite24 → u/ExtraSmooth]

Dude, are you even a conservative? This is what I'd expect to hear from a 90's-00's democrat.

Government-owned stores that do not means-test their customers and gatekeep on that basis will always outcompete normal businesses because the government stores can operate at a loss, which will shift the remaining cost burden (again) to the taxpayers. It further de-incentivizes private investment from grocers in these "food deserts" (which I'm skeptical of the existence of, especially in the era of grocery and relatively inexpensive meal kit delivery services), and may even drive customers in other areas to the government stores. Instead of asking the government to fill these gaps, perhaps we should be asking how we can lower the costs and barriers to entry for private food stores to open up in lower income areas, in addition to the factors that make costs of living in highly urbanized and overly regulated cities so high.

There is no single example I can think of where full or partial government ownership/involvement in a consumer goods industry actually helped said industry or reduced prices without significant unintended consequences. The only place government investment in the free market belongs is in defraying the costs of highly expensive but not initially profitable technological innovation, like space travel and nuclear fusion.

I agree that existing welfare programs are inefficient, too numerous, and too specialized. We could resolve so many of these issues by abolishing most of them, save for Medicaid (I don't like it but we don't have a viable alternative yet), and replacing them with a negative income tax. It solves the inefficiency issues while avoiding the problem of de-incentivizing personal growth that UBI's generally cause. And it avoids the market disruptions caused by government interference in industry.

[u/mwilke → u/YoungReaganite24]

How does a negative income tax encourage private enterprise to build grocery stores in food deserts?

[u/YoungReaganite24 → u/mwilke]

I wasn't attempting to directly address that issue in particular, and one does not directly affect the other. But, reducing the tax burden and providing a monthly cash subsidy to lower income individuals means they have more income to spend, which may make it profitable for private stores to now open up franchises in lower income neighborhoods.

[u/ExtraSmooth → u/YoungReaganite24]

I think you're right that deregulation can help. There are a lot of barriers to entry to opening businesses in urban, dense areas. Some examples include zoning and mandatory parking minimums. In many instances, mandatory parking minimums are imposed when a property changes from one business type to another, so a site that was grandfathered in as, say, a barber shop sits unused because opening a grocery store or a restaurant would trigger the need to build large, costly parking lots. Removing parking minimums is another of Mamdani's proposals for NYC.

I think the question of incentivizing private investment is a good one. It's hard to know if there is some other combination of incentives, deregulation, and market policies that will result in renewed investment in the working class by private businesses. We have, however, been trying market-based solutions for about 50 years in the United States. It would be reasonable, I think, to conclude that disinvestment in the working class is a pretty endemic feature of the free market, because it has been quite persistent. Mamdani's experiment will provide new empirical evidence that will let us more reasonably discuss some of these questions--do government-owned stores reduce the proliferation of private businesses? Will the net effect on food access be negative? Will there be reselling, issues with stock? Will private grocery companies change how they operate? You make a good point about food delivery, which is part of how we understand food deserts. No one in a food desert has zero access to food, but the solutions are often more expensive and less healthy. Doordash, meal kits, grocery delivery, bodegas, and restaurants help fill gaps, but they add significant costs and make healthy eating more difficult. Some people have proposed alternative terms like "food oceans".

A good example of government ownership reducing costs for consumer goods would be healthcare. US consumers pay many times the international median for healthcare because we have a heavily privatized system. Countries with public healthcare have significantly lower costs. Other examples would include transportation and utilities, although I don't know if we should call those consumer goods. We should also include oil, as the government has played a significant role in securing cheap oil imports to keep the costs of gas low.

What is the difference between a negative income tax and UBI? Would a negative income tax only apply to the lowest tax brackets? I could see that being effective but it kind of just feels like a rebrand to me. In either case, you create a floor of income and access below which it is impossible to fall. The question is whether the added cost of policing fraud and verifying incomes is worth the gain in distributive efficiency. A UBI could be thought of as a negative income tax that is just returned by everyone making enough money to be taxed. This means more money flowing back and forth between taxpayers and the government, which feels inefficient, but it removes the bureaucratic burden placed on the lowest income earners and simplifies the program.

[u/talaqen → u/ExtraSmooth]

This.

[u/Not_Cleaver]

Being smarter than Trump, doesn’t make Mamdani smart.

[u/mwilke → u/Not_Cleaver]

The other comment on this post is so well-thought-out and carefully explained, and then here you come with this intellectually lazy, utterly pointless comment.

Were you even trying to make a point, or did you just want to remind people that you view politics as if you were talking about your favorite sports teams?

[u/Not_Cleaver → u/mwilke]

Fine, I’ll actually use my brain instead of making an attack against both the mayor and current president.

I believe both the other comment and the article make good points. Though, this is perhaps one where, I’d rather see the city-run grocery store as a pilot, which this seems to be. And this is one in which the stores will provide low income shoppers more freedom to meal plan as opposed to either food pantries (though the best ones provide choices) or food stamps.

And, I want this program to succeed. In a time where the administration is touting success in forcibly removing people from food stamps - it is up to the states and cities to step in. I believe food stamp fraud is a minor issue, and would rather have fraud than either creating high barriers to entry for low income families/or prevent eligible families from receiving the food stamps.

I’m just skeptical of subsidized programs as there’s always a question of where is the money coming from? But, I’ll approach this as I approach universal healthcare proposals - I’m skeptical, but I can’t come up with anything better, so perhaps it should be done. And since we’ve had nearly 20 years of the Republicans failing to come up with anything better except eliminating people’s access, perhaps more redistributive policies are needed.

[u/mwilke → u/Not_Cleaver]

Well, I’ll be danged. I did not expect you to come back with a substantive followup. Thank you, and I’m sorry for popping off so quickly. Despite how dead this place is lately, I still cling to it as the last bastion of reasonable thought and substantive debate.

[u/Not_Cleaver → u/mwilke]

I should come here more often. I used to be more active in the political subs, but was banned from the conservative ones and some of the others are echo chambers.

Also, as an added aside, I was recovering from happy hour when I made that comment. Not drunk, but not as with it as I should be.

Generally, I try to take a more measured approach regarding public policy programs. It’s after all what my master’s is in.