It's often very sensible to own something oneself, if you can organize it.
If someone else owns it, they're going to want to extract profit for themselves and it's a very different situation than just getting an employee. For example, compare renting with being part of something like a condominium association.
Building capital and controlling things oneself is the thing to do with almost everything.
Why would you expect a subsidy to be as efficient?
As someone who grew up in USSR I am generally a bit sceptical about collectively owned businesses. Not saying that it never works, but in general privately owned business is usually more efficient. Owning a business collectively opens it to politicking and bad decision making by committee.
On the other hand, if the business model is simple enough, co-owning it might make sense.
The problem I see with public ownership is the risk that the government will sell it and that one will thus be exposed to someone reaping monopoly rents, and this creates my preference for co-ownership.
However, I think Soviet problems are in part due to a near-total absence of market mechanisms and of game-theoretic thinking-- i.e. 'what is this state enterprise actually incentivized to do', so I don't think it's applicable to these kinds of things unless they get ossified.
Government ownership/operation is rarely a problem by itself. With the right management structures and incentives, they can be as productive and efficient as privately run businesses. In some examples, they can actually out-preform privately run businesses.
Around the world, there are many (partially) publicly owned logistics companies (airlines, cargo shipping lines) that are good examples of this working well. They can easily be profitable for the government owning them during the good times, they can actually run leaner with smaller rainy-day funds and be competitive with the private companies they are competing with. They can also operate in markets where private companies might choose to not operate, and can even drive more business to a country. Then when the bad times come around (for example, covid19 shutdowns), they can rely on government subsidies to get though the harsh times reasonably unscathed, while private companies might end up needing to do extreme cuts, or even go bankrupt.
With your example of the USSR, we are talking about an economy where every single business is collectively owned. And then to make things worse, the entire supply chain is collectively owned, and centrally planned. You can hire a good manager for the local store, but they aren't going to be able to change a thing when the government doesn't allocated them enough product to sell. You can't have two local stores compete with each other, they are both collectively owned and supplied by the same centrally managed supply chain.
It wasn't the collective ownership of the store that failed the USSR. It was the central planning of the whole economy.
With this example of a small small town grocery store, there is plenty still competition. There is the local Dollar General with it's shitty product selection. There is another government owned supermarket a in a town 9 miles away, operated by a different government. There are privately owned supermarkets in at least three larger town within 30 miles, and a town large enough for Walmart 45 miles away. There are probably also grocery delivery services (or at least amazon) covering the areas.
It will be forced to be competitive, and all the numbers are public for the residents to see.
> Not saying that it never works, but in general privately owned business is usually more efficient
The whole article is about how "market efficiency" has let down the small town. The town is simply too small to profitable enough for private businesses: as evidenced by no one chosing to buy the business for years.
I completely understand; I came from Mexico and it took me 20 years to stop seeing the government as always corrupt.
Private ownership opens it to all sorts of exploitation of workers or customers, plus if you subsidize it, you just move the politicking to the subsidy contract, and the bad decision making to the owner.
Building capital and controlling things is good for individuals or families, but less so for large, uncoordinated organisations, especially governments. If I, an individual, own a shop, I'm incentivized to make it profitable- in this small town case, I'm incentivized to stock things people want to buy, to reduce waste, and so on. (Or to bail out and sell the premises if the economic conditions don't make sense anymore). Making the shop better makes me richer.
If I'm a wage-paid employee in a large shop (or any organization), then I'm looking to a) not get fired b) get a raise c) get a promotion. The bigger and more bureaucratic the organization, the more personnel decisions tend to become disconnected from ground truths and the more it becomes possible to rise through politics, whether or not the shop gets better. The people at the top, e.g. the owners of Walmart, want their shops to be more efficient, but if line worker #529 doesn't think he'll be paid more for making his local shop 5% more efficient, then he won't- and if there are more reliable ways up, he'll take those.
When a government owns/runs the shop, even the people at the top don't care about it making money- it's not their money to lose! The shop is probably useful as a political tool/division point, though. Imagine left-right debates about whether the government store should stock condoms, or meat, or whatever.
The problem with that plan is convincing someone to be interested enough to actually take the subsidy.
In this example, the old owners were retiring, and nobody wanted to buy it. There isn't a lot of revenue for a Grocery store in a town this small. So it was easier for the town to just buy it and then operate it.
Apparently the store was profitable before the sale, and the town operated store in the neighbouring town also operated at a 3% profit.
But looks like this town have made the choice to keep prices lower (probably to compete with the dollar general) and operate it at a slight loss, at least for the 2021 year, which is the only year they have released the annual report for since they bought it. Maybe the 2021 year included to startup costs and it would have otherwise been profitable.
This is a good question. Patronizing the store should be sufficient to handle the economics, but I would guess the price of products is not their biggest concern or consideration.
If it was my town store, I would only want to make it a co-op and become part owner if there was an issue with management and/or cost control, e.g. bad owner, staffing, salaries, inventory, profit margin, upkeep, etc.
That depends on what you mean by "the town". In many cases the town may not be a legal entity, or it may be part of a larger county, that have zero interest in a rural grocery store. If you're thinking the inhabitants of the town then that might be somewhat unstable, as in people might be able to afford it one year, but not the next, people leaving, new people who are not interested.
We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically.
>We did something similar where I live. A new owner wanted to reopen the grocery store, and the town collected around $100.000 to get her started. A few people work for free a few hours a week, stocking shelfs and stuff like that. In the end though, it's a business and she needs to turn a profit. The people in the town are motivated to shop there, because if the store closes, the value of their homes will fall dramatically.
Sounds like you guys did the opposite: give a private owner a cheap loan and free volunteer labor. Hope she's at least opening up the books to you guys.
