Tag Archives: Henry Hazlitt

Mystery Portland Grocery Store

The city of Portland might sell a long-vacant parcel of land on the corner of NE Martin Luther King Blvd. and Alberta Street way below cost in order to attract a grocery store. What amounts to a $2 million subsidy is so shady and ill-advised that the proposed store has asked not to be identified until the deal has closed. It’s hard to run a successful business, but who wouldn’t reach out for some free cash? They should be embarrassed. And it’s easier to criticize the deal before we know the store involved, since no doubt that store is dear to our food-loving Portland hearts. 

The land is said to be worth $2 or $3 million dollars, and has apparently been for sale for some time but no one wants it at that price. The neighborhood is considered a risky investment with a history of racial tensions, but is often targeted for bigger and better things. The land might sell for only half a million.

The Portland Development Commission really, really wants a grocery store to go in here, so they’re willing to take a loss to make it happen. But as pointed out by the Oregonian there are plenty of other groceries stores nearby, so there is low demand for another. The development only pencils out with a large subsidy. This means the land and the potential opportunity aren’t worth very much, so semi-interested tenants are looking the other way until a big enough bag of money hits them in the back of the head.

In his book Economics In One Lesson, Henry Hazlitt outlines situations very similar to this, and warns against this kind of government intervention as never ending with a net positive outcome. This northeast Portland property is a great example to illustrate his point. The land had already been purchased with taxpayer money, so the city as a whole has entrusted their money to the City in the hope that some good will come out of it. But seeing as the money doesn’t belong to them, it doesn’t surprise me that the PDC is reckless with the investment of other people’s money. They have their minds on high ideals such as helping the public, saving a blighted neighborhood, and even bringing in a much desired tenant such as Trader Joe’s (or whomever this mystery grocery store turns out to be). They might think, “It’s what the people want – right? We’ll making it happen. It’s worth the cost.”

But really, Portland would be giving away a store. They would take taxpayer money and give it to a private company to spend on a business in a location that no one has been willing to build. Then the profits go to that business – not the taxpayers. That is $2 million dollars that could have been spent on something else. Anything else. Portlanders are exactly that much poorer as a result. If the money has to be spent on something, it could be spent on something that is actually worth $2 million dollars. If taxpayers still had the money in our pockets, having not been taxed, we would have exactly that much more money in our pocket when we shop at this mystery store. We could spend it on a bag of chocolate covered pretzels. Now we can’t and there will be fewer bags of chocolate covered pretzels sold.

This location is certainly not the neighborhood most deserving of a new grocery store, if one must be given away. So east Portland and the often discussed food desert lose out. Nearby existing grocery stores will lose some business. The people who live down the street will love it, but the entire city will take a loss on a bad investment, but especially those who live nowhere near the proposed sale. Another grocery store might have been interested at a lower sale price, but as explained by someone from Whole Foods as to why they were not interested in the food desert, “Selected sites must model profitably for us since we cannot fulfill our company’s overall mission without the profits our stores provide.”

Sure it’s just a couple dollars from me, and a couple dollars from you, and a couple dollars from everyone. But add this to the other couple dollars they’ll take for the next project. And the others. Is this really what you want to spend your money on? I doubt a new Whole Foods is about to appear here, but I’d love for a Trader Joe’s to be built at this location. It’s exactly one mile closer to my home than the one I usually visit and is bound to have better parking.

But even if the deal is good for some people as Henry Hazlitt says, we must look “not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

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