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Why Ban Dollar Stores?

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Why Ban Dollar Stores?

10 Blocks podcast January 15, 2020
Health Care

Steven Malanga joins Seth Barron to discuss efforts to restrict dollar stores in cities across the country—the subject of Malanga’s popular story for City Journal, “Unjust Deserts.”

For nearly 20 years, “food deserts”—neighborhoods without supermarkets—have captured the attention of public officials, activists, and the media, who often blame the situation on dollar-discount stores in these areas. These stores, it’s claimed, drive out supermarkets with their low prices and saturate poor neighborhoods with junk food. But are dollar stores really to blame for bad diets?

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks Podcast. This is Brian Anderson, the editor of City Journal. Coming up on today's show, my colleague Seth Baron and Steve Malanga will discuss a hugely popular piece that Steve wrote recently about the battle over dollar stores in cities across the country. It struck a nerve with readers from across the political spectrum. Steve explains what the fuss is all about.

But before we get started with the show, I wanted to tell our regular readers at the Winter 2020 Issue of City Journal is hot off the press and should be arriving in your mailboxes soon. It's a super strong lineup for the first issue of the new year and decade, including John Tierney, on the needless panic over disposable plastic. Nicole Gelinas, on how autonomous vehicles could boost Detroit's economy. Chris Rufo, on Los Angeles is epidemic of drug addiction. Ralf Mangual on how incarceration of fathers affects children. Jim Meigs, on the promise of next generation nuclear power and much more.

If you're interested in subscribing to the magazine, you can visit our website to learn more at www.city-journal.org/subscribe  that's www.city-journal.org/subscribe. Each issue is designed with beautifully inspired covers making an excellent material for your coffee table, living room, or anywhere else you'd like to impress your friends and family. And of course there's tons of great content in every issue. That's it for the introduction, the conversation about dollar stores between Seth Barron and Steve Malanga begins after this.

Seth Barron: Hello again everyone. This is your host for today, Seth barren. Joining me in the studio is City Journals, senior editor, Steven Melanga. Steve wrote a terrific piece for the website that got a lot of attention on social media last week, so we thought he would get him on the podcast to talk about it. The piece is called “Unjust Deserts” or “unjust desserts, ” I'm not sure how you'd want to stress that, and it shines a light on concerted efforts by cities across the country to ban dollar discount stores or dollar stores as they're called in poor neighborhoods, that, so the proponents of the bans claim, drive out supermarkets and sell junk food. You can find the piece on the city journal website and we'll link to it in the description.

Steve, thanks for joining us.

Steve Malanga: My pleasure.

Seth Barron: So you opened your piece by describing an academic term created over 20 years ago, which our listeners have probably heard before called food deserts. What's a food desert?

Steve Malanga: Basically it's a place usually in a low income community where supermarkets have not located. And so fresh food doesn't seem to be readily available to residents unless you can get into your car and drive somewhere, which, even low income residents that have cars. But unless you can do that, fresh food isn't available. So that's considered a food desert.

Seth Barron: So what do dollar stores have to do with them?

Steve Malanga: Good question. It seems like a stretch, doesn't it? So the latest theory, here's the thing is for 20 years, basically the argument has been that food deserts are bad because they help account for poor health outcomes among the poor, because not having access to, let's say fresh vegetables in your immediate neighborhood, you eat bad food and that contributes to poor health outcomes. Now the problem is that over the last 10 years or so, there have been efforts to bring supermarkets into a lot of communities and yet health outcomes haven't increased, haven't gotten demonstrably better.

You can't demonstrate that that's made health outcomes better, so now the activists around Americans in urban areas and community activists are looking for another culprit. Another reason why something isn't working and they've chosen these discount stores, really dollar stores. I mean there are a lot of different kinds of discount stores, but you know the dollar stores, family dollar is a chain that's a very well known.

Seth Barron: Dollar general.

Steve Malanga: Dollar general is the other one. These are small stores, almost like this size of old style variety stores like Woolworth's if there's anybody out there who's old enough to remember Woolworth's. These stores have made a big impact in low income communities both in cities and also in rural areas because they sell stuff cheap. In fact, I remember as a young financial advisor going to write a story about family dollar and on the walls of their stores, they used to have this logo in every store was just "Good stuff cheap."

But that was their motto basically. And so they're very common now in low income neighborhoods, although there also expand a lot into middle income neighborhoods. They just do a good business because people like shopping for bargains, but the idea is that they also sell food, but it's only sort of packaged food. And these stores, the activists say, have gotten so popular that supermarkets can't go into poor neighborhoods and compete with them, that instead residents go to these stores and buy this package food and that's exacerbating the health problems of residence. Now the thing is, that might sound like a loony idea on the top. Just off the top of my head when I heard that, I was like, "That's crazy." But cities around America have begun banning or restricting dollar stores because of this notion.

And also another idea, an allied idea from activists, is that because these stores are discount stores, stores that sell off-price merchandise, that they lower the quality of the neighborhood and send a signal to other retailers, better retailers not to come there, and that perpetuates poverty. So the thing is that cities around America have begun buying this notion and they've introduced zoning regulations to limit the number of these stores, and in some cases to require discount stores that are already in place to start selling fresh merchandise, which is a big leap. I mean, to sell first merchandise, you need to have refrigeration and you need to have different suppliers and-

Seth Barron: Well, I mean it does sound plausible that if dollar stores are undercutting supermarkets and all they're selling is potato chips and soda, that it would create a lack of other choices, but you in your piece note some evidence that suggests it's not the lack of a grocery store that's driving poor diets. Can you elaborate?

Steve Malanga: Right. Well, first of all, let's start with the notion that Dollar Stores are undercutting supermarkets because they're selling potato chips. The thing is, of course, there are many retailers in America that sell some kinds of foods that also are sold in supermarkets, just like supermarkets also sell light bulbs and hardware and other kinds of things, pet food that's sold in other stores. However, supermarkets are unique and I've never heard of a theory, in let's say antitrust law, I've never heard of a theory that a discount stores in some way would supersede or out-compete supermarkets as a category. So on top of this, there's larger evidence, a couple of things that are important. The whole food desert narrative is now being questioned by academic research. A number of economists have done a study, for instance, utilizing a database of poorer neighborhoods where supermarkets have expanded in the past 10 years and looking at food purchases in those neighborhoods.

What they found is that when a supermarket comes into a neighborhood that was formally a so-called food desert, that residents’ purchases don't necessarily change. In other words, if a different kind of food is available in your neighborhood because a supermarket is there, it doesn't necessarily mean that you're going to buy that food. And the conclusion that the economist make, I think it's something that's self-evident to the average person, and that is, people are buying the food that they're buying, not because it's the only food available, but it's because that's what they want to buy. And that-

Seth Barron: This isn't Soviet Romania.

Steve Malanga: Exactly, where you only have one choice. That's exactly right. And so what the economists, and this one paper that I cite and link to in the piece propose is that the real solution is of course changing people's attitudes about what they want to eat, which is a problem by the way, not just in low income communities in America, but we do have some health problems and obesity problems really throughout the income spectrum in America.

So that the real solution, and it's much harder solution, is changing people's attitudes about what they want to eat. But the idea that there are food deserts and that somehow or another, this is what's undermining the efforts of poor people to improve their health, it's just, there's no empirical evidence for this and it's any bigger stretch to say, "Oh, and by the way, now it's discount stores that are creating food deserts." As any number of people have pointed out, even in the comments to this particular story, stores go in neighborhoods where they know they're welcome, they don't have a practice of going in places where people don't want to shop at them, and if there's a demand for something like healthier food or fresher food, a retailer is going to go there and satisfy that demand.

If they're not going someplace, it's probably because they don't see a demand there. And as the study suggests that even when extraordinary efforts are made to bring in certain kinds of retailers to a neighborhood, it doesn't necessarily dramatically change what people buy.

Seth Barron: Well, what about the argument that the presence of these dollar stores sends a signal generally that the neighborhood is in decline? That it's a poor neighborhood and-

Steve Malanga: Yeah, the problem with the activists who make this argument is, they need to get out more because one thing about dollar stores for instance, is that they are not exclusively expanding in poor neighborhoods. In fact, I quote a story in the New York Times years ago that was published in which, was about basically it was about a Dollar Store in America essentially. And what the story did was quote someone from AC Nielsen, the consumer research company that said that the biggest area of expansion for dollar stores is in middle income and upper middle income neighborhood because this is just this kind of bargain shopping is just a fascination of Americans. I mean I'll give you an example, there is a dollar store in a strip mall in a community near mine where median household income according to the census Bureau is an $82,000 a year. You know, so.

Seth Barron: Right near here on Fifth Avenue and 46th Street or so there's a store called Five Below, where everything is five dollars or under.

Steve Malanga: I always thought that referred to like winter wear for [inaudible 00:11:53] at five degrees below.

Seth Barron: It's underground and everything is under $5. Okay. So how are other, I mean there's a number of cities that you talked about that are trying to restrict dollar stores, Fort Worth, Oklahoma City, Birmingham, Alabama. How are they doing this? Is this, are they just-

Steve Malanga: Mostly through zoning regulations. You could have zoning regulations, so that's one thing that local governments have extensive control over more so than just about any other thing. What municipalities are given control over by States, and so you can do it through zoning regulations and the zoning regulations can say, we can only have so many stores selling this kind of merchandise under this size, because these stores tend to be smaller stories, again, they're like the old variety store. They're not a big Walmart, or a big Target, so it's through zoning regulations and the regulations that we've seen this in other places too. Zoning regulations can be quite restrictive and so they haven't in the past necessarily targeted discount stores if anything, but that's the vehicle through which they're doing this.

Seth Barron: I see. You know, neither of us is an expert in dietary science, but we know a little bit about city and state government. So you know, just to summarize, what's the best approach for cities to improve diets in the community, or is this even government's responsibility?

Steve Malanga: Well that's just it. There you go. Let's start right there. The problem is that even when we're well intentioned, we can send the wrong message. The best example of that is starting in the late 1970s, Washington, at the urging of senators like McGovern, who had had a heart attack and therefore changed his diet dramatically, began issuing FDA recommendations for diets and what to eat and what not to eat. And this was really the beginning of a sustained effort against eating meat, against eating whole dairy, and with promoting a more carbohydrate based diet. We now know that many of the recommendations, particularly in the early years of the FDA diet guidelines have turned out to be wrong, that among the restrictions were restrictions put on eggs for instance and eggs are considered a very valuable source of quality protein at a low price.

And there are quite a number of researchers who suggest that in fact, it was the federal government's diet guidelines that led to an overreaction, which turned people too far towards carbohydrates and ironically, what we've seen since the 70s is actually, I guess you could say the fattening of America and some prominent researchers now say that the FDA guidelines may have contributed to that. So it's a good question. I mean, I think we could all agree that eating more fresh fruits and vegetables is a pretty good idea and certainly through education campaigns, let's say in schools to educate kids about this, which is a tough, anybody who has kids knows how tough of a task that is. But you know, we can perhaps accomplish something but as these education campaigns kind of sputter and fail to make an impact, what happens is people tend to become I guess more and more autocratic about what they'd like to see government do. It's a danger for a couple of reasons. One is because you can force people to do the wrong thing, which is something that we see in the dietary guidelines. And the other things is you can simply, come up with solutions, but there's no evidence for. And in the process you're depriving these communities of the kind of stores that shopping patterns show they want, for no reason at all.

Seth Barron: Steve, I guess we'll just end by telling everyone to make sure that they eat their five servings of fruits and vegetables today. Make sure you stay away from the potato chips and the soda. Just kidding. Just kidding. Don't forget to check out Steve's piece at City Journal, it's called “Unjust Deserts.” You can find it on our website. You can follow City Journal on Twitter @CityJournal and on Instagram @CityJournal_MI. Remember you can email us that podcast@city-journal.org if you have any questions or suggestions. As always, if you like what you heard on the podcast, give us a five star rating on iTunes. Thanks for listening and thanks Steve for joining us.

Steve Malanga: Thank you.

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Photo by Mike Mozart via Flickr

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