What a city-owned grocery store can teach America about socialism

(Image credit: Illustrated | NATALIIA OMELCHENKO/iStock, larryrains/iStock, Library of Congress)

published 27 November 2019

The small Florida town of Baldwin, population roughly 1,600, is not the kind of community you'd expect to incubate incipient socialism. Donald Trump won it by 68 percent in the 2016 presidential race. Yet, as the Washington Post notes, textbook socialism is what the town has practiced since 2018, when the city government chose to open and run a local grocery store.

The case of Baldwin demonstrates how, on the ground, ideological distinctions between "socialism" and "capitalism" lose their salience. More to the point, it's a model for meeting economic needs that Americans would do well to expand.

Baldwin's mayor, Sean Lynch, is not interested in slapping a label on the effort. Like a lot of poorer areas, rural and urban alike, competition from major grocery chains has wiped out mom-and-pop alternatives in Baldwin. But those same major chains don't find the community profitable enough to justify opening a storefront. Thus, Baldwin has become a food desert. Its residents recognize that ready access to food is critical to stemming the population loss that could kill the community entirely. From Lynch's perspective, the store — whose workers are all city employees, and whose profits (when they happen) are returned to the city coffers — is simply a necessary service local government is supposed to provide. "We take the water out of the ground, and we pump it to your house and charge you," Lynch told the Post. "So what's the difference with a grocery store?"

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Rather than a demonstration of red state hypocrisy, there is wisdom in Lynch's pragmatism. Already, programs that are wildly left-wing — such as Social Security, Alaska's Permanent Fund, and public banks — are in place at the federal, state and local level. But because they do concrete good for people on the ground, they're broadly popular, and conservatives defend them on "conservative" grounds. Milwaukee's city government was more or less run by socialists from 1910 through 1940, who succeeded precisely by focusing on delivering pragmatic goods like schools, libraries, water fountains, public works that employed thousands, and a nationally-recognized chain of public parks.

Lynch's logic of treating this sort of municipal socialism as a pragmatic form of needed publicly utility doesn't stop with grocery stores or food deserts. Hospital chains are pulling out of a lot of rural areas due to the same economic forces, leaving many communities without ready access to health care. As with grocery stores, there's an argument for local town and city governments to provide basic health care services. The same goes for child care and public housing, as the twin crises of affordable child care and affordable housing are not limited to big cities. Meanwhile, by creating its own public bank, a local government would simultaneously gain a place to park its revenues, make sure at least some of the credit creation in the local economy is democratically directed, and provide local residents with another place to go for basic banking services other than predatory industries like payday loans. This doesn't even get us into all the services — from libraries to schools to parks to traditional utilities like water and sewers — that U.S. politics already considers the natural purview of local government.

Americans have gotten used to the idea of public options in specific contexts, such as health insurance. But the basic idea is applicable across a vast swath of economic activity. "[Public options] should not be last-ditch efforts to plug in the holes left by spectacularly dysfunctional parts of our economy," policy analyst Matt Bruenig wrote several years ago. "Anywhere there is a space where the government can profitably run an enterprise, it ought to do it, especially if the enterprise is consumer-facing."

That's not to say breaking even isn't a challenge. Unlike the federal government, local governments cannot create U.S. dollars. They do actually have to operate in more or less the same way as family budgets, shrinking their spending when times are tight. When the next recession hits, for example, Baldwin's grocery store could lose enough customer spending, and the city government could lose enough tax revenue, that the store can't keep functioning. Not to mention it won't always be able to lower its prices enough to compete with giant private chains.

On that subject, there are larger national changes we could make, to share the federal government's unique monetary and fiscal powers with local governments, and give Baldwin-style socialism more room to breath. The federal government used to regularly send money to state and local governments, no strings attached, under a program called "revenue sharing." We could start that back up and massively expand the scale of the sharing. The generosity of the checks could also automatically rise when the economy tanks, helping to plug recession-induced holes in city budgets.

The Federal Reserve is also already allowed to buy up municipal debt with a maturity of six months or less. It would take some political guts, but under its existing authority, the Fed could commit to buying up any local debt issued to sustain these sorts of public options. That would keep city governments' debt financing obligations dirt cheap, and effectively allow them to fund their efforts by rolling over short-term debt in perpetuity. Congress could of course always amend the Fed's charter to make its power to do this sort of thing both more expansive and more explicit.