4 ms·

Wouldn't it be cheaper for the town to just subsidize it?

jschveibinz 4y ago
This is a good question. Patronizing the store should be sufficient to handle the economics, but I would guess the price of products is not their biggest concern or consideration. If it was my town store, I would only want to make it a co-op and become part owner if there was an issue with management and/or cost control, e.g. bad owner, staffing, salaries, inventory, profit margin, upkeep, etc.
lozenge 4y ago
How will they know the correct subsidy amount? Excess subsidy would go to the owners.
- eterevsky 4y ago
  Run some kind of an auction.
  - cf141q5325 4y ago
    Auction requires multiple people interested. Here there are none.
theonlybutlet 4y ago
The former owners were retiring and no longer wanted to be involved. And nobody wanted to buy it.
phire 4y ago
The problem with that plan is convincing someone to be interested enough to actually take the subsidy. In this example, the old owners were retiring, and nobody wanted to buy it. There isn't a lot of revenue for a Grocery store in a town this small. So it was easier for the town to just buy it and then operate it. Apparently the store was profitable before the sale, and the town operated store in the neighbouring town also operated at a 3% profit. But looks like this town have made the choice to keep prices lower (probably to compete with the dollar general) and operate it at a slight loss, at least for the 2021 year, which is the only year they have released the annual report for since they bought it. Maybe the 2021 year included to startup costs and it would have otherwise been profitable.
mrweasel 4y ago
That depends on what you mean by "the town". In many cases the town may not be a legal entity, or it may be part of a larger county, that have zero interest in a rural grocery store. If you're thinking the inhabitants of the town then that might be somewhat unstable, as in people might be able to afford it one year, but not the next, people leaving, new people who are not interested. We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically.
- cool_dude85 4y ago
  >We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically. Sounds like you guys did the opposite: give a private owner a cheap loan and free volunteer labor. Hope she's at least opening up the books to you guys.
impossiblefork 4y ago
It's often very sensible to own something oneself, if you can organize it. If someone else owns it, they're going to want to extract profit for themselves and it's a very different situation than just getting an employee. For example, compare renting with being part of something like a condominium association. Building capital and controlling things oneself is the thing to do with almost everything. Why would you expect a subsidy to be as efficient?
- eterevsky 4y ago
  As someone who grew up in USSR I am generally a bit sceptical about collectively owned businesses. Not saying that it never works, but in general privately owned business is usually more efficient. Owning a business collectively opens it to politicking and bad decision making by committee. On the other hand, if the business model is simple enough, co-owning it might make sense.
  - impossiblefork 4y ago
    The problem I see with public ownership is the risk that the government will sell it and that one will thus be exposed to someone reaping monopoly rents, and this creates my preference for co-ownership. However, I think Soviet problems are in part due to a near-total absence of market mechanisms and of game-theoretic thinking-- i.e. 'what is this state enterprise actually incentivized to do', so I don't think it's applicable to these kinds of things unless they get ossified.
  - deleted 4y ago
    [deleted]
  - unity1001 4y ago
    > Not saying that it never works, but in general privately owned business is usually more efficient. Selection + survivor bias. The system only advertises successful private businesses. Not gigantic cooperatives that succeed in a global scale: https://www.commondreams.org/views/2012/06/25/yes-there-alternative-capitalism-mondragon-shows-way https://www.commondreams.org/views/2012/06/25/yes-there-alte...

This is a good question. Patronizing the store should be sufficient to handle the economics, but I would guess the price of products is not their biggest concern or consideration. If it was my town store, I would only want to make it a co-op and become part owner if there was an issue with management and/or cost control, e.g. bad owner, staffing, salaries, inventory, profit margin, upkeep, etc.

lozenge 4y ago

How will they know the correct subsidy amount? Excess subsidy would go to the owners.

eterevsky 4y ago
Run some kind of an auction.
- cf141q5325 4y ago
  Auction requires multiple people interested. Here there are none.

theonlybutlet 4y ago

The former owners were retiring and no longer wanted to be involved. And nobody wanted to buy it.

phire 4y ago

The problem with that plan is convincing someone to be interested enough to actually take the subsidy. In this example, the old owners were retiring, and nobody wanted to buy it. There isn't a lot of revenue for a Grocery store in a town this small. So it was easier for the town to just buy it and then operate it. Apparently the store was profitable before the sale, and the town operated store in the neighbouring town also operated at a 3% profit. But looks like this town have made the choice to keep prices lower (probably to compete with the dollar general) and operate it at a slight loss, at least for the 2021 year, which is the only year they have released the annual report for since they bought it. Maybe the 2021 year included to startup costs and it would have otherwise been profitable.

mrweasel 4y ago

That depends on what you mean by "the town". In many cases the town may not be a legal entity, or it may be part of a larger county, that have zero interest in a rural grocery store. If you're thinking the inhabitants of the town then that might be somewhat unstable, as in people might be able to afford it one year, but not the next, people leaving, new people who are not interested. We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically.

cool_dude85 4y ago
>We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically. Sounds like you guys did the opposite: give a private owner a cheap loan and free volunteer labor. Hope she's at least opening up the books to you guys.

impossiblefork 4y ago

It's often very sensible to own something oneself, if you can organize it. If someone else owns it, they're going to want to extract profit for themselves and it's a very different situation than just getting an employee. For example, compare renting with being part of something like a condominium association. Building capital and controlling things oneself is the thing to do with almost everything. Why would you expect a subsidy to be as efficient?

eterevsky 4y ago
As someone who grew up in USSR I am generally a bit sceptical about collectively owned businesses. Not saying that it never works, but in general privately owned business is usually more efficient. Owning a business collectively opens it to politicking and bad decision making by committee. On the other hand, if the business model is simple enough, co-owning it might make sense.
- impossiblefork 4y ago
  The problem I see with public ownership is the risk that the government will sell it and that one will thus be exposed to someone reaping monopoly rents, and this creates my preference for co-ownership. However, I think Soviet problems are in part due to a near-total absence of market mechanisms and of game-theoretic thinking-- i.e. 'what is this state enterprise actually incentivized to do', so I don't think it's applicable to these kinds of things unless they get ossified.
- deleted 4y ago
  [deleted]
- unity1001 4y ago
  > Not saying that it never works, but in general privately owned business is usually more efficient. Selection + survivor bias. The system only advertises successful private businesses. Not gigantic cooperatives that succeed in a global scale: https://www.commondreams.org/views/2012/06/25/yes-there-alternative-capitalism-mondragon-shows-way https://www.commondreams.org/views/2012/06/25/yes-there-alte...