Many Cincinnati City Council members are to paraphrase Megan McArdle "Angry, Very angry, Do you understand Roselawn voters? They're very very angry at Kroger for closing its store."
This is one of those stories that gets a thousand crazy comments on Cincinnati.com, so I'm hesitant to wade in. ...But, I'm not sure there was much point to city council's hearing yesterday, except to express that city council doesn't like the economic reality that companies sometimes have to close stores. I don't know for sure, but I suspect that Kroger is not closing their store because they hate Roselawn, but because the store has not made a profit in ten years and it didn't make sense to have a location there anymore.
I suspect that the more important message that Council is sending to businesses is this: When you open a store in Cincinnati, you should understand that if things do not go as planned and the store is unprofitable (or loses a million dollars a year) you could be hauled in front of city council and berated if you decide to close it.
City Council is putting a burden on businesses that want to operate in the city, and it's something any company should consider when it opens a significant store in the city. They will be publicly badmouthed by the government if it doesn't work and they need to back out. On the margins, some businesses could be less likely to take a chance investing in Cincinnati with this risk. This risk factor might not be big enough to have a noticeable effect. But, all else equal this means fewer companies taking chances to invest in Cincinnati and perhaps fewer grocery stores.
It might make sense to create a tax break for operating a grocery is an underserved area. But, what Council is doing doesn't improve anything. So, it's just bad for the city.
File under: Bad Government
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