supermarkets

Farmer Jack's used to be the only supermarket chain operating in Detroit. When Farmer Jack's went out of business, they sold their supermarkets to Kroger. Kroger decided to buy all of the stores except for the ones in the city of Detroit. This left Detroit without any supermarkets.

So Detroit has no supermarkets. Why? It seems like at least one supermarket could make it in a city of 800,000 people. So why didn't Kroger pick up any of those stores? Well to start remember that grocery store operate on the slimmest profit margins in retail. So you have to sell a lot of stuff consistently and not have any extra operating costs. So what did Kroger say?

1. Theft: Theft rates are significantly higher in Detroit than anywhere else. That's a big cost and security gaurds are expensive.

2. High slip and fall liability: Detroit residents are more likely to sue than others. This is obviously a big cost.

3. Food Stamp cycles: food stamps aren't really stamps, and when those little cards get refilled by the government on the 1st of the month everybody goes out to buy groceries. This cycle makes it harder to do business.

This kind of thing fascinates me. So what can we learn from this.

1. Crime breeds poverty. Lots of people think the reverse is true, and they are certainly mutually reinforcing. Rudy Guliani's one great insight was that if you stop crime, you reduce poverty.

2. Lawsuits are dumb. This is the same kind of "They owe me something" mentality that leads unions to destroy this state. They also hurt the entire society.

3. Relying on the government to fix poverty doesn't work. (ok that's a stretch...but it doesn't)