Food Desert Desertion?

Speaker 2

Phil Magnus, stick on. Well, food deserts, a name that was given to a concept probably in fairly recent years that claims large segments of the population do not live in close driving proximity to a grocery store or ⁓ restaurants that serve certain types of things, namely ⁓ non-fast food restaurants. And as a result, most of these areas are said to be low income. ⁓ They're essentially not able to access food in their proximity.

Speaker 1

I hear this a lot when it comes to cities like New York, which seems so odd to me because having been someone who lived in a number of the boroughs and who lived in Manhattan proper for a while, Manhattan is known for its restaurants and it's known for its supermarkets. I mean, I don't know if everyone goes to Manhattan to check out the supermarkets, but there are supermarkets in Manhattan that are accessible either by walking. by the train. So it's a little weird to hear that there are food deserts in Manhattan.

Speaker 2

Yeah. And I think that really cuts to the core of the issue. People who use that term want to project like this state where essentially people can't get basic needs met by the marketplace. They try to portray it, food desert, as a failure of capitalism or a failure of the markets to bring grocery stores to a local community. And allegedly it's because they're poor and therefore they're left behind by these greedy profit seeking corporations. So there's a lot of rhetoric around that. And everywhere I've ever heard that's been described as a food desert, whether it's some of the boroughs of New York City, it's often depicted that way, or ⁓ actually large tracts of rural America in the South in particular, claim to be food deserts. Yet you can go there and you can find a Waffle House, or you go there and you find a supermarket. The stores seem to exist in abundance. They're just not the particular types of stores and restaurants that people using that rhetoric like.

Speaker 1

Yeah, I was gonna say it does seem like the powers that be have this idea about what constitutes food and acceptable food and acceptable diet and what doesn't because just take the ⁓ mustache twirling greedy capitalist, there's money to be made because people, I'm sorry, we still have to eat. It doesn't matter how much Ozempic you take, even on Ozempic you still need to eat. So when it comes to food deserts, You know, is this kind of a just a supply and demand issue? It seems that in the areas where there are food deserts, the demand and consumers for fresh food should be built in, but they still don't open. It just seems like if we look at consumer habits, people tend to prefer fast or processed food over food food.

Speaker 2

Right, right. So you have the food desert term, it's associated with a certain type of preference. What they really mean is they want like a fancy whole foods market, not the local convenience store. Or they want a sit down serving restaurant, not the McDonald's or Popeyes or Wendy's or whatever it happens to be that's in the area. ⁓ It's a judgment in favor of a certain type of food or grocery store and against other types of food. providers in grocery stores that are seen as artificially low class or not sufficient to meet the nutritional needs of a ⁓ central planner aligned socialist from an upper income bracket. There are two overlapping considerations here though that are often not mentioned. One of those is geography. Food deserts are often pointed out as being a common problem in rural areas, particularly the American South and Southwest. And it said, well, you know, little town in the middle of Mississippi or New Mexico that is 10 plus miles away from the nearest grocery store. And it's called the food desert. It's said to be like some sort of corporate greed driven discrimination against the people that live there. But you dig into the reality of it and it's actually a matter of simple geography. rural sparsely populated areas, it's very difficult to put a profitable supermarket in the middle of it. And the people that live there know that. The people that live there choose their houses there for a specific reason. And part of that is they're willing to drive 10 or 15 miles to the nearby town to get groceries. And some of the studies have been done on food desert, they'll actually ask people in these areas. Do you believe you're in a food desert? And they look at the interviewer just kind of like, what are you talking about? I drive the next town over because there's a Walmart super center there. And then the other issue that comes up, this is in urban areas, ⁓ often big cities that are very heavily regulated. We've had a wave of grocery stores and other types of institutions have pulled out of certain regions and neighborhoods of those cities. Think of the Bay area in California, San Francisco, Oakland, which I know all too well. And then also Seattle, Washington. These are areas that in the past decade or so altered their criminal enforcement laws on basic things like shoplifting. They stopped prosecuting shoplifters. Well, it turns out the local grocery store or the local mini-mart is often a target for shoplifters. And to remain profitable in those areas if the local police are no longer prosecuting petty crimes because it's under a certain dollar amount and the store itself is not allowed to do anything to stop the shoplisters other than sit there and watch and document it and then call the police that never come. Well, what happens to the store? Eventually it becomes unprofitable to operate there because people are coming in and just snatching your merchandise. Then they leave.

Speaker 1

Yeah, that reminds me of a recent controversial interview that the New York Times did. One of the interviewees was a writer for the New Yorker who happens to live in a, I believe a $2 million brownstone in a very lovely section of Brooklyn, but still finds the time or make the time to shoplift from Whole Foods. And the sort of philosophical argument being corporations, bad, big box stores, bad. Also, they could take it. They could take the hit, but you pile on enough sticky fingers and those costs start to really add up. And there is no shortage of businesses all around the country that are closing down because they just can't stay open with all the stealing that that takes place.

Speaker 2

Right. I think that highlights two problems. First, this rich New Yorker lady, she said she's sticking at the capitalism by shoplifting from her local Whole Foods, even though she comes from a mint background of privilege and high income and has all the joys and perks of life in the material sense. And yet she thinks she's fighting capitalism and sticking it to the corporations. What this points to is the food desert concept. comes out of academia and it comes out of an academic elite that is often very far removed or the people they purport to be advocating on behalf of. Friedrich Hayek used to point this out. says, the great contradiction of socialism, socialism presents itself as a workers movement for the little people, for the bottom of the rung to do better their lot in life. But every socialist movement, revolution, whatever they want to call themselves anywhere. It's always the privileged offspring of the wealthy, the well-educated, the laptop classes that are appointing themselves the vanguard of this cause on behalf of workers who never asked them to do any of these things. And you see a microcosm of it in the food desert debate. You actually go around to the ⁓ neighborhoods or the rural regions of the South where these food deserts allegedly live. And the people that live there, have no idea that this is even a problem. They're perfectly happy and content with the grocery stores and restaurants and fast food chains that they have. So it's a projection from generally well-off people, the upper class, educated elites that have leftist ideological views and have decided that they're going to advocate on behalf of other people that are not asking of that. Zoran Mamdani, another example, offspring of wealthy academics. who has decided that there are food deserts all over New York City and therefore his solution is we need publicly operated grocery stores, kind of like in a throwback to the Soviet Union stuff.

Speaker 1

So apparently we are living through late stage capitalism. maybe you can help me define that. But what I find interesting every time I hear the people talking about late stage capitalism is that I guess one of the characteristics of late stage capitalism is that you allow a lot of people to get away with stealing. Whether you call it micro looting or shoplifting, it seems like a lot of people are getting away with taking things that don't belong to them. And I would think late stage capitalism sounds so dystopian. you would think that people would be having their hands chopped off or something.

Speaker 2

Yeah, well, let's go to the history of that term. Late stage capitalism is something that Marxists and socialists have been claiming that we're operating in for more than a century. So it's like the arrival of late stage capitalism is itself late by their own predictions. So the term itself, comes from this economist in Germany by the name of Werner Sommart, the turn of the 20th century. And I think he wrote one of the essays on this in the 1920s where he says, following the Marxist stage theory of history that capitalism was entering into its late stage. you know, elements of the left have been using that ever since. Now, Sombart himself, he starts as a Marxist and he's writing as a Marxist socialist in this era. Shortly thereafter, he decides he's going to blend his socialist philosophy with something called nationalism, thereby creating national socialism. Ends up supporting Adolf Hitler. basically what it was going on.

Speaker 1

I don't like where this is going.

Speaker 2

That's where late stage capitalism came from as a concept. And the people that use it today, they kind of forget that latter part of Sombart's career, but they picked up the term and they've been predicting ever since the 1920s that we're in this imminent stage of collapse called late stage capitalism. And yet none of the predictions associated with it seem to be coming true except in their own minds. And then when they decide that the predictions are not coming through, it's not that something with socialism is wrong as a theory. It must be something that we are missing in terms of capitalism. And therefore we, the intellectual vanguard elite, need to go out and make this thing a problem to prove that late stage socialism exists. So what do you get? Decriminalization of shoplifting. So you can point to shoplifting as proof that capitalism's failing. And then it's like a vicious cycle. Well, what's the economic effect? Shoplifting drives businesses out of the community because it transfers the enforcement cost of keeping their merchandise and stock onto the shop owner themselves. And I see this all the time when I go out to the Bay Area or I'm sure you see some of them in New York City walk into a Walgreens or a CVS there. 10 or 15 years ago, they were installing self-checkout machines where you can just pick up anything, you walk to the door, you swipe it, swipe your card and you leave. Almost like a trust system. Today we've swung in completely the opposite direction. Now you have to push a button at the end of each aisle to get the store manager to come unlock the cage so you can get deodorant because they're afraid you're going to shoplift it. It's transferred the enforcement mechanism of just running a shop away from trust and onto the owner and the manager of the establishment itself. Also some of the burdens put on you as a consumer. ⁓ You have to wait for someone to come open up the cage after you push the button to get your deodorant or your razors or your lottery detergent or whatever it happens to be because of the shoplifting risk. Well, now you have other options, one of which is I'm just not going to go to the store. I'll get on my computer and order it off of Amazon.

Speaker 1

One of the other features of late stage capitalism seems to be people filming themselves committing these crimes at the self checkout. see, there's a number of videos you can go on TikTok or anywhere else on social media. And there are people filming themselves like they'll ⁓ swipe one lemon or whatever, and then bag an extra five. You know, beyond like the weird social. aspect that we have ⁓ and you the voyeurism that I take part in watching people do terrible things is there something to the idea of Well people are choosing to eat the crappy food because the crappy food is less expensive Than the good food because I see this happen. I see this and in a number of places. I see it on the side of kind of social justice-y people who are talking about, the reason why you're eating the unhealthy food is because it's cheaper. And then I also see it on the other side with like super healthy people who say, you know, they, whoever they are, don't want you to eat this. That's why they make it cost this much. What's going on there? Is, you know, is the processed food less expensive than, you know, the quote unquote, you know, healthier food?

Speaker 2

I think a lot of it is people that have very particular dietary preferences projecting that onto the rest of society and assuming, well, I like all natural vegan kale salad on gluten-free buns and whatever happened to be sold at Whole Foods for ⁓ a 75 % markup over its next competitor. Therefore, all of society must have that similar dietary preference. And they judge the rest of society. They say, well, you you're not only ⁓ behaving in a way that is against my preferences. If you eat from McDonald's, you're also behaving unethically. And sometimes they'll wrap environmentalism into it. say, well, you're eating beef from McDonald's and that contributes to global warming. Whereas my non-processed high-end farm to table meal that is three times as much from the local ⁓ organic grocery store. saving the planet. So therefore I'm virtuous. So you got that layer overlaid with it. Another component of it is they're kind of missing one of the benefits of fast food. Now fast food isn't always the greatest thing for every meal. And yeah, there were arguments. It has health detriments to it, but it also has certain benefits. For example, fast food is often a very known and stable product. You can go into a McDonald's anywhere in the country and indeed anywhere in the world and it'll be the same thing. If I'm traveling to some unknown region and I have no idea of the local knowledge to find where the organic deli is, but I see a McDonald's on the side of the road, I know at least that's not going to get me sick. At least they're going to deliver exactly what I'm expecting. It'll also be quick. And there's the second benefit. Not everyone has the luxury of taking a three hour brunch at the fancy organic farm to table restaurant. If I can go through the drive-through and have my food in 10 minutes, I had saved on my time and some people want that. Some people like that. It works better in your work day or given your own circumstances. I think what this really comes down to is the people that are assuming what's best for other people and complaining about food deserts are projecting their own subjective preferences onto the entirety of the world. And then they get mad with the fact that consumers don't want that ⁓ or may prefer something different. They get mad with the fact that corporations or companies that run these food chains and grocery stores actually respond to the consumer base in their area, not what the person in New York City in a million dollar penthouse believes that they should be responding.

Speaker 1

The ubiquity of McDonald's, as you describe it, reminds me of that famous scene from Pulp Fiction where he says, you know, in France, what do they call a quarter pounder with cheese? A Royale with cheese. And something that I realized when I lived in New York, I wasn't very frugal with eating out. I would eat out a lot. And ⁓ as I, you know, gotten older and have a family and actually cook more for myself, I realized just how much cheaper it is. to eat at home versus to go out. My kids ⁓ love fast food. They could be picky eaters, so they have very specific nugget requirements. And the other day when we went out, the total came out to something like 16 bucks. And then I started doing the math in my head. like, wait a minute. I could have bought this weight of chicken thighs. and I already have white jasmine rice at home and I got some frozen veggies, I could've whipped that all together, a really big meal and it would've come out to less money than $16. And I know a number of people have run those experiments, the idea of can you live on this set amount for a week? And it involves cooking for yourself and also sometimes sacrificing really, you tasty stuff or decadent stuff that you would otherwise want to do, but ultimately you're needing to control yourself and make that choice. Okay, I'm going to eat clean, I am not going to go down the route of having a whole cheesecake.

Speaker 2

It all comes down to trade-offs. I trade-offs are the basic observational instrument of economic life. When I give up something else to make a choice, there's the trade-off. It's built into the decision. And maybe I am giving up the gourmet element of a fancy meal that I've prepared out of ⁓ farm-to-table, organic, farmers market type products. in exchange for getting a fast meal, but I'm gaining time in return or vice versa. Maybe I am able to eat cheaper by preparing a meal myself, stuff that I bought at the grocery store, than I could if I went to a restaurant. Well, there's a part of the trade-off and that includes the effort now I have to do to cook it and put it on the grill and clean dishes, but maybe I'm saving money. Time's an element of that trade-off. But again, you see so much of the discussion in this space, people claim to recognize a problem. And the problem is really what it comes down to is they can't walk into a different part of the country and get exactly the type of food delivery that they are expecting for their home and usually a very wealthy area.

Speaker 1

And it is funny that when something like an Uber eats has become kind of a civil right, the amount of arguments I've heard basically, you know, claiming, you know, something along those lines are pretty ridiculous. And, know, to the point of, of supply and demand, there was a brief moment in my, in my family history when my father kind of, ⁓ had ownership of a grocery store where we're are butchers by trade, but next door was a grocery store that unfortunately went under and they had all this produce that that was in stock and we tried to sell it, you know, to get rid of it. And the amount of fresh produce that we were unable to sell was pretty ridiculous. And it was like, here is an example of people just choosing to forgo whatever we had in stock and choose other things that they were going to buy. So the question that I have is, we all generally have an idea of like, ⁓ we should all eat better. We should all eat a little bit more healthy. Now in my personal relationships, I can kind of talk to my friends, nudge my family members, like, hey, why don't you put that down and maybe pick this up? How do you do that on a societal level? Obviously government has tried.

Speaker 2

tries and it usually ends up in like lines of rationing and shortages. And I think what the issue comes down to here is the market itself becomes an information signaling service. It's a rationing mechanism that responds to what's selling on the store shelves. You you own a grocery store and you order too much of a certain type of produce and at the end of the week it's spoiled because people are just not buying it. Well, what do you do? Do you go back and say, well, aha, They must eat their celery. So I'm going to order the same amount next week. Or do you change the requirements, essentially? Do you change your order and say, well, maybe they aren't purchasing celery, but they are purchasing chicken nuggets. And we ran out of that on Thursday. So maybe we need to order more chicken nuggets next time. And this is a continuous iterative process that plays out in every store in America. They are responding to the sovereignty of the consumer. and telling them what they want to purchase and they're making their orders for restocking and resupply based on that. Now there's an interesting economic scenario because sometimes you see this in periods of extreme shortage. So like when a hurricane hits a town, well what happens? Everyone rushes to the grocery store and they empty all the aisles of things that they're gonna be without ⁓ power or something for the next week. So what do you do? You get food and you figure out ways to store it. You get all the ice. ⁓ It's a natural response to an extreme event. But I noticed something about these a few years ago. ⁓ I was watching coverage of a hurricane, and I noticed this pattern that people were going to the meat aisle of the grocery store, and they were buying up all the burgers, all the steaks, all the chicken legs, everything you could do. But then they got to that one section that was the vegan fake meat section, and nobody would touch it. It looked like it was a random Tuesday. The fake meat section was still fully stocked. Some of you are thinking, well, what's going on here? Why is this stuff remaining on the shelves even in a time of severe grocery store shortage on all other staple goods? And it turns out that there's probably a distorted market signal that was sent. It became politically popular a few years ago to foster an interest in fake veggie burgers, because it was the ethical thing to do, or it was good for the climate, or something like that. So a lot of stores... misinterpreted that signal and they devote entire sections of the grocery store to veggie burgers or whatever it is, yet nobody was buying them. And we had an artificial boom in the fake meat industry. And if you look at the stocks of these companies now, they shot up and soared initially as like, is going to be the next big thing. And now they're selling for pennies on the dollar. And some of those companies are facing bankruptcy. Well, that was a misinterpreted signal of the market. that has since corrected because people ended up not buying these things. Most people decide that, they taste terrible. I want the real stuff.

Speaker 1

And I think most people would go cannibal before they go vegan. think that's what history will show us. We obviously have to talk about ⁓ welfare, ⁓ SNAP in particular, and some of the changes that came to it. You would no longer be allowed to buy soda and sugary drinks and those sorts of products. And what are your thoughts on that? know both of us are aligned in that we want to get rid of it, but it being as it is.

Speaker 2

But the fact that it exists, well, I think this is just a classic example of the government trying to be the nanny state. And again, it usually originates from people that are upper middle class or upper class. They're wealthy in background. They have the luxury of saying, well, I eat this way, therefore everyone else should. So what do do? Well, we have this policy that subsidizes ⁓ food, food stamps, essentially, for poor people. And we're going to say, We believe the poor, their lifestyle decisions are not the best for them. We know better. We can be the paternalistic arm of the government that comes in and tells them, well, you have to spend your money on things that we think you should be consuming, not things that are bad for your health. And that's why you start getting these policies of restrictions on goods that have too much sugar in them or that are perceived as unhealthy. It's a way to try to nudge them into a different lifestyle. and say, we don't like your consumer preferences. We don't like the choices you make on your own. So therefore, we're going to make them for you.

Speaker 1

And you know, if you're going to go further than that, I guess we could talk about the idea of government owned or government run grocery stores, because one of the one of the highlights that I've heard is that they're going to at least in New York City, when these stores eventually get built in I don't know how many years and after 10s of millions of dollars spent, they're going to make sure that staples are always available staples like eggs. And so if If you're going to make sure eggs are available, that obviously means you want people eating eggs. And a question that, that I have when it comes to these stores is like, well, how much should eggs cost? And it's kind of a trick question, right? Because the price depends on how much people are willing to pay. You're right. So it's sort of, don't know how they're going to be doing these calculations. It seems like kind of an old. Soviet style where they're going to be looking over over at the West at know the capitalist country saying ⁓ how much are they charging for eggs? Okay, that gives us an idea of how much we're going to charge ours. Yeah

Speaker 2

That's the thing, you take away the price mechanism, you lose all the signal value being sent. And this is why ⁓ state-owned, state-run entities, stores like this, they ration their way into shortages. The common cause and problem in the Soviet Union was that ⁓ they had a fixed bureaucratic target for production. These are how many shoes are going to be needed this year. Well, it turns out they missed the mark and there's a shortage of shoes. or there's an overproduction of some component of shoes that's mismatched with another area of the ⁓ production line. And because some bureaucrat did something wrong, ⁓ you have a surplus of parts and not enough finished product. This is a recurring basis. Well, the market itself tends to weed out those types of bad decisions and errors because there isn't really a margin for it. ⁓ When you have a government-owned store, It messes up, it miscalculates how many eggs to order and prices them incorrectly and either goes into a shortage because they've underpriced their eggs and people are just consuming or they ordered too many and they're sitting on the shelves and rotting. There's no repercussion. If a store did that continuously, the store would go out of business. The government does it continuously. Well, it has the backing of the taxpayers to keep it open no matter how many stupid decisions over and over it keeps making.

Speaker 1

You know, on that note, yeah, let's talk about I mean, the cost of setting up one of these government stores versus a private store. Because like you just said, if a private store was making all these bad decisions, it would eventually go out of business. So I wonder, here you're you have a government store that's kind of sold, let's use that pun, sold on this idea that they're not going to be seeking profit. Okay, so then what does that mean? How do you know when it's time to close up shop? How do you know if this store is being successful versus it's it's an utter failure. ⁓

Speaker 2

That's exactly the problem because as soon as the government store faces that situation, it's not like, wait a minute, you're dragging our entire budget into deficit. Well, the government store just goes to the government itself and asks for a new appropriation. They say, well, the reason why we aren't breaking even is because we've been under-invested in, and maybe you need to give us a new ⁓ grant to up our facilities or something. Another thing you see in government stores is like who gets the contract to run it or who gets hired to run it. Now that's a political decision. The private sector employees are hired based on competence and if you don't do your job, you get fired. In the public sector, you don't do your job. You go to your public sector union who files a case on your behalf and makes you unfirable. ⁓ Or if you're in the public sector and you're wasting a bunch of money, you go to your friend. who's the politician and lobby them for a new contract to your firm that's decided on political basis. And because there's basically the unlimited purse of drawing off the taxpayers to sustain these things, there's no market mechanism to illustrate or put pressure on a failing business because it's no longer a business, it's a bureaucracy.

Speaker 1

And it's going to be interesting to see what happens when the government loots the taxpayer to put up these businesses and how they handle micro looters in their store. that's something both Phil and I will be keeping an eye on. This has been another episode of Happy Hour Econ. We'll see you next week.