Tuesday, November 13, 2007
The rich are different, F. Scott Fitzgerald said, but the poor are different too—especially the communities in which they live. Many young people in poor towns or city neighborhoods never visit a restaurant; a fancy meal means carry-out. This is true because there simply aren’t many true “restaurants” in poor communities. Disturbingly, a similar problem is arising with regard to big grocery stores. The Chicago Sun-Times recently reported about the supermarket “food deserts” that cover most of the South Side. For residents of these areas, groceries are typically purchased at small retailers—where prices often are higher and selection lower than at large chain stores.
Why don’t big retailers open stores in poor areas? Should government do anything about this problem? The chief reason for capitalist hesitancy apparently is the fear of special problems of working in poor communities, such as vandalism, theft, and other crime. In the face of this reticence to market to demand, one could make an argument that government incentives to encourage low-cost grocery stores might provide more economic (and health) benefits for poor people than a raft of other government programs. Another problem is an urban variant of the “Wal-Mart effect”—that certain residents oppose big box entrants because they will “push out” smaller retailers. As always, the challenge is to separate supposedly worthy reasons for protectionism (such as the promotion of entrepreneurial role models in certain communities) from less savory ones, such as the protectionism of less inefficient businesses, under various masks, with the chief effect that local food-buying residents pay more and get less for their food dollars.
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