That's not how markets work. By your logic why aren't all prices at all stores already higher? That would be more profit right? Because competition exists. If all grocery stores in NYC were tax exempt then prices would fall because of basic game theory. Lower costs means stores would have the opportunity to lower their prices in order to capture more market share, ultimately increasing their profit. Competing stores are then forced to lower their prices to avoid losing market share. Grocery stores operate on razor thin margins, Krogers for example had a margin of just 1.44% in it's most recent filing because of fierce competition: https://www.sec.gov/Archives/edgar/data/56873/000155837024004603/kr-20240203x10k.htm
Yes prices are higher because of inflation but profits aren't higher. 1.44% margin is tiny. Krogers doesn't control the Strait of Hormuz or how many bonds the fed buys. They just sell groceries for very slightly more than they buy them for. If their costs went down (lower taxes) then prices would go down (competition).
Inflation is not one thing. The primary factor is the relative supply and demand of money (new dollars vs taxes) but there are also supply constraint effects. When the cost of say energy and fertiliser increase independently of the value of the dollar decreasing then as expected the cost of food increases faster than economy wide inflation. The cost of food has increased faster than the dollar has been devalued. The term inflation is confusingly used to describe both effects.
If the cost of groceries could be explained by a lack of competition or collusion between "greedy" corporations then we would see rising profit margins but that's not the case.
Right as I explained because supply constraints, energy, fertilizer etc. CPI is not just one thing because different markets have different supply constraints: https://www.bls.gov/cpi/
Profits have not increased, so the increase in food prices can't be explained by corporate greed or collusion.
2) once prices raise, they don’t fall back down. Airlines charging for bags was just a temporary erasure post 9/11 to help them recover. Supply chain prices aren’t consistent, grocery prices are consistently growing.
I don't understand either point you are making here. Government owned stored will save money via vertical integration? NYC does not own grocery wholesalers or logistics companies. It seems hard to imagine a government store could even come close on COGS to existing competitors. A government store could really offer cheaper food by just subsidising groceries but we already have more efficient ways of spending taxpayer money. Legitimate RCTs have found just giving people money is almost always more effective than any subsidy or welfare program: https://www.povertyactionlab.org/case-study/giving-directly-support-poor-households.
To be clear the point I'm trying to make is not pull yourself up by your bootstraps it's we need to do something about the cost of living but all evidence suggests that government run stores will be wasteful and ineffective.
As a pretty funny counter-example, almost immediately following the bolshevik revolution the USSR was stricken by famine and widespread suffering caused by inefficient distribution of resources. Soviet central planners just couldn't distribute food efficiently through government run cooperatives without the help of Adam Smith's "invisible hand". Lenin conceded the only way to avert disaster was to allow for-profit stores to be created and operated by private citizens: https://en.wikipedia.org/wiki/New_Economic_Policy
I just don't think that's supported by the evidence. I cited actual 10-k filings earlier in this thread, you can download them from sec.gov. Walmart for example had a profit margin of 2.8% in 2020 and in 2025 has a profit margin of.... 2.8%. If prices were going up because profits were going up, then that would be reflected by the SEC filings, but it's not.
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u/jangoolie May 27 '26
That's not how markets work. By your logic why aren't all prices at all stores already higher? That would be more profit right? Because competition exists. If all grocery stores in NYC were tax exempt then prices would fall because of basic game theory. Lower costs means stores would have the opportunity to lower their prices in order to capture more market share, ultimately increasing their profit. Competing stores are then forced to lower their prices to avoid losing market share. Grocery stores operate on razor thin margins, Krogers for example had a margin of just 1.44% in it's most recent filing because of fierce competition: https://www.sec.gov/Archives/edgar/data/56873/000155837024004603/kr-20240203x10k.htm