But do you not see that, even though it takes a little time, that the market is already beginning to do this. People read the Dallas Morning News (and this site to a much smaller degree) and there may be at least one entrepenuer in Dallas (or at least someone who knows an entrepenuer).

What you have is a legitimate business idea of a market research contractor who can be hired by local neighborhoods to sell their community to stores. Obviously, this would be a local government function, by my point is that it doesn’t have to be. In fact, it is more attractive to businesses if it isn’t - as local governments have a huge interest in the higher tax base generated by such a store (hint: they might exadurate a little).

Also, are people in low-income neighborhoods complaining that they have to travel a few miles for a store? Maybe that is a cost of living in a low-income neighborhood. Perhaps by intervening, government will be removing some of the legitimate market pressures to improve one’s lot in life (after all, it’s nice to live next to grocery stores).

Also, with grocery store development nowadays, we aren’t talking about a free market by any means. Local governments have really flexed their muscle in urban planning. Try to build a grocery store in one of the poorer neighborhoods in Eugene, Oregon (my town) for example. That is not going to happen - the city counsel has got their plan for the next twenty years and it doesn’t include grocery stores in low-income neighborhoods (just more in downtown and near the rich people actually), no matter how advantageous it is to the market and the city.

Urban planning has really crippled the ability to build stores in some places. Almost always (with a few exceptions) poor neighborhoods are part of government projects, and despite the failing utopias - city planners are holding tight to their projects all the more and not letting the market function.

I think this is just a simple case of the risk not being worth the rewards. Messing with all of these factors is a big headache for grocery stores. And while I doubt the executives and higherups are unaware of the profit potential, they are definitely aware (usually by experience) of all the negating factors. It looks to me like the market is saying - “build in the suburbs.”

So, in summary:
- the market is functioning by informing people of the situation (this is the first step towards some initial exploration)
- local governments providing research is not the incentive you might think it is
- are low-income folks staving because there isn’t a grocery store a few blocks away? Or do they travel a little like anyone else?
- urban planning has severely complicated the situation with new store location
- the extra profits are likely outweighed by substantial risk

Actually, one more note. Wal-Mart does more into poor neighborhoods for this reason. But they have a lot of leeway to do it financially - in spite of facing the worst of the government intervention.

No. I mean, yes, crime may be higher, but that doesn’t affect the bottom line: the profits are there to be had. The Starbucks and Home Depot experiments prove that. You might have more theft and more security expenses, sure, but that cost is quantifiable and it doesn’t make the businesses unprofitable.

If the neighborhood is so bad the people get murdered in the parking lots, then I can see that a business might stay away despite any potential profits. But most neighborhoods are not like that. Pinning this phenomenon on crime is an easy but wrong explanation.

Now, as a libertarian, I’m not comfortable with heavy-handed government interference in the marketplace, even if it is to correct something as despicable as racism. But surely we can do something through non-coercive means.

Another thing: the poor are more likely to not mind driving into nice neighborhoods, while the rich are very unlikely to consider entering poor, dangerous (perceived or actually) areas. So businesses (especially Target and Home Depot type of large chains) usually make the decision that they will place their stores where the highest proportion of all people will frequent them (rich and poor alike). Put their store in a low-income area, and only the low-income people will come there. Put it in a higher income area, and both poor and rich will come there. After all, the poor enjoy shopping in safety too.

This is essentially my point, but much better articulated.

You can try to rationalize it, but the fact is that businesses are not making location decisions based on good solid reasons, they are choosing locations based on what everybody else is doing. It’s a herd mentality.

I’ve lived in the same place for over 20 years (suburb of Dallas). I have observed this in the way malls come and go. It seems like all the big retailers build a fancy mall, then in less than 10 years it pretty much closes and they all go build another brand new fancier one hardly any distance away. Grocery stores and WalMarts have done the same thing. Maybe the move is so they can upgrade their buildings? They don’t seem to do repairs–they just go build a new one somewhere else.

And it does seem, at least in my neighborhood, that the shopping follows where the wealthier white people all move to. They follow the herd too.

And Dr. Berg’s research shows that the “common sense” may be mistaken.

Nice to meet you! I’m now a Yooper. (Oh no!)

As soon as you said “muggings in the parking lots” and all-night cop-on-duty at various places… I knew exactly what you meant/felt. Both the Rainbow and Cubs grocery stores in those areas… are open 24 hours… and are a bit unique and scary. Its weird down by the Mpls bus depot, too. Lots of seedy folks asking questions… borrowing money… asking the time or for cigs. Speaking of projects, there is the racially-aligned housing projects on Cedar (north of Lake St) and low-income folks from there… wander into the Hiawatha-Lake area for cigs, booze, food, and lysol. (erf) But look what’s opened on 21st and Lake St. AN ALDI’S! Holy cow, talk about irony or something!
There’s a pretty heavy beautification surge going-on in Hi-Lake area. Lightrail train station, brand new biketrail overpass, new wheelchair-killing tiled sidewalks with snap-in trees, new apartment buildings above Aldi’s, its quite a fancy-up. It all LOOKS like a minority force-out in many ways… but that’s just speculation.

Ok, all the best, everyone!
Wingnut
Michigan U.P.

you read this in the newspaper, did you?

What on God’s green earth makes you think that businessmen would be LESS aware of the profit potential than the people you are suggesting would make these decisions for them (i.e., politicians)!?

For any interventionist scheme to work, you must first (1) show that laissez-faire capitalism doesn’t find the optimum, which you haven’t done, because there may be hidden costs that you’re not aware of (the fact that Home Depot can make a huge profit in neighborhood X doesn’t actually guarantee that a grocery store, with a different cost structure can do so); but (2) more importantly, you have to show that the INTERVENER has BETTER information—about how to sell groceries—than the grocer!!!!!

Mika wrote:
show that laissez-faire capitalism doesn’t find the optimum

Laissez-faire capitalism NEVER finds the optimum, and isn’t designed to do so. What it DOES do is allow all interested parties to have an impact on the result, under some moral systems providing a more “fair” solution. (Other value systems prefer systems which encourage even distrubution of resources, which laissez-faire capitalism makes no attempt to accomplish.) Laissez-faire is crippled from finding optimum solutions due to lack of complete knowledge of the system, the fact that some participants may make illogical plans based on the knowledge they have, and the fact that some participants may not be interested in finding an optimum solution. A control economy with perfect knowledge and rational plans based on that knowledge will ALWAYS produce a more optimal market. The reason no large control economy has ever worked is that perfect knowledge quickly becomes impossible and that rational planning often (always) gives way to self-interested planning. Only with a limited scope can a command economy be optimal, and even then it has ethical problems for those who value individual freedom over corporate optimization.

Mika wrote:
(2) more importantly, you have to show that the INTERVENER has BETTER information—about how to sell groceries—than the grocer!!!!!

This is precisely the premise of the article. The argument made is that grocers are doing insufficient research in finding the most profitable markets. If this is true, showing them the research would cause them to open stores in these locations. The question then is whether the research is accurate (would these stores actually be more profitable), and if so why a grocer would refuse to accept it. If the problem is simply an unwillingness to pay for the research, it might be in a communities best interest to fund the research to convince a grocer to move into their neighborhood.

Note that a control economy CAN be more efficient when the intervener is truly better informed. For ethical reasons though, I would be entirely opposed to FORCING the grocer to relocate due to intervention, even if the relocation would be better for all parties (including the grocer). What I definitely support is a voluntarily funded community research project designed to provide evidence to grocer of the benefit in placing a store. (It gets fuzzier when it becomes tax supported.)