Ronald Reagan famously joked that the nine most terrifying words in the English language were: “I’m from the government, and I’m here to help.”

Nearly forty years later, one of the newest arguments coming from the democratic-socialist side of the political debate sounds remarkably familiar:

Think about that for a moment.

We already have SNAP, the Supplemental Nutrition Assistance Program. Government determines eligibility, writes the rules, distributes benefits and allows qualifying Americans to buy groceries from privately operated stores.

Critics argue that food stamps are inadequate, that they do not eliminate food insecurity, that some neighborhoods remain underserved and that many families still struggle with grocery prices.

Fine.

Programs should be judged by results.

But then comes the proposed solution:

Let government operate “free” or “low-cost” grocery stores.

Apparently the problem with government helping people buy groceries is that government has not become sufficiently involved in selling the groceries.

That deserves considerably more scrutiny than it usually receives.

From Food Assistance to the Food Business

There is an enormous difference between helping someone purchase food and actually operating a grocery store.

A grocery store must acquire or lease real estate. It needs refrigeration, freezers, shelving, lighting, loading areas, security systems, insurance and maintenance.

Someone has to negotiate with suppliers.

Someone must forecast demand.

Someone decides whether to order 500 tomatoes or 5,000.

Someone hires employees, writes schedules, runs payroll, supervises departments and handles turnover.

Then come transportation, warehousing, spoilage, theft, damaged merchandise, broken refrigeration equipment, expired products and inventory that simply does not sell.

Private grocery companies spend decades becoming proficient at these things, and even experienced operators sometimes fail.

Yet the public is expected to believe that government can step into a brutally competitive, low-margin business and simply declare groceries cheaper.

“Free” Is Not a Business Model

Politicians have discovered one of the most magical words in the English language:

Free groceries. Free transportation. Free childcare. Free healthcare. Free college.

There is nothing inherently wrong with a society deciding that some people deserve assistance. Americans have been doing that in one form or another for generations.

But government does not possess a secret warehouse where free things are manufactured.

Somebody grows the tomato.

Somebody picks it.

Somebody packages it.

Somebody drives it.

Somebody unloads it.

Somebody refrigerates it.

Somebody stocks it.

And somewhere along the line, somebody pays everybody involved.

Government does not eliminate the bill.
It changes who receives it.

If a government grocery store buys something for $1.00 and sells it for 70 cents, government has not magically reduced the cost to 70 cents.

It has created a 30-cent subsidy.

Call it a discount.

Call it social investment.

Call it economic justice.

But somewhere, someone still has to produce that missing 30 cents.

Usually, that someone is the taxpayer.

The Reagan Test

Reagan’s joke was not really about government employees being stupid or incapable.

The deeper point was about incentives, accountability and the expansion of institutions that do not face ordinary market discipline.

When a privately owned grocery store repeatedly loses money, something happens.

It closes.

Management gets replaced.

Prices change.

The business model changes.

Investors stop providing capital.

Competition imposes discipline.

Government operates differently.

When a government program loses money or fails to accomplish its stated objective, political leaders can conclude that the program was not large enough, was not funded sufficiently or simply needs more authority.

That asymmetry is precisely why government-owned businesses deserve unusually careful scrutiny.

The Food-Stamp Paradox

Suppose we are told:

Fine.

Let us investigate why.

Are benefits inadequate?

Are grocery prices rising too quickly?

Are there neighborhoods without sufficient competition?

Are transportation problems preventing people from reaching stores?

Are eligibility requirements poorly designed?

Is fraud occurring?

Are administrative costs excessive?

Those are legitimate policy questions.

But jumping from “our government food-assistance system has problems” to “government should own and operate grocery stores” is an extraordinary leap.

Imagine applying the same reasoning elsewhere.

At some point we must ask whether we are solving the original problem or merely expanding the institution assigned to solve it.

There Is One Case Where It Could Make Sense

There is, however, an intellectually honest argument for a publicly supported grocery store.

Suppose a genuinely underserved neighborhood cannot economically support a conventional supermarket.

Perhaps the population is too small.

Perhaps transportation is inadequate.

Perhaps private grocers have repeatedly attempted to operate there and failed.

In that circumstance, government or nonprofit assistance might reasonably help establish a limited market providing basic necessities.

But that is very different from pretending government has suddenly invented a superior grocery-business model.

Call it what it is:
A public service requiring a subsidy.

Then tell taxpayers exactly what that subsidy costs.

If voters decide the social benefit is worth $2 million, $10 million or $50 million annually, that is a legitimate democratic decision.

What should not happen is pretending the subsidy somehow proves groceries have become cheaper to produce.

They have not.

The bill simply moved.

Open the Books

Before opening Government Grocery Store No. 1, perhaps we should conduct a very simple experiment.

Give the proposed operators a building.

Give them the same wholesale food prices available to comparable grocers.

Give them the wage structure being promised.

Charge realistic utilities, insurance, transportation, refrigeration, maintenance and spoilage.

Include theft and inventory shrinkage.

Include administrative overhead.

Then require one thing:

Show the public the revenue.

Show the cost of goods.

Show payroll.

Show occupancy costs.

Show utilities.

Show transportation.

Show shrink.

Show management expenses.

And most importantly:

Show the taxpayer subsidy.

If government can actually sell comparable groceries materially below competitive market prices while paying higher wages and maintaining comparable quality and availability, wonderful.

We will have learned something valuable.

But if that store requires millions of dollars in annual taxpayer support, do not tell Americans that government made groceries cheaper.

The Question Reagan Would Ask

Government can absolutely help people.

Sometimes government should help people.

But government spending does not make economic costs disappear.

And when the proposed solution to an unsuccessful government program is another government program requiring government buildings, government employees, government purchasing, government logistics and continuing taxpayer subsidies, Americans are entitled to ask a very Reaganesque question:

“How much is this help going to cost us?”

Because perhaps the modern version of Reagan’s famous warning is no longer nine words.

It is only five.