Wednesday, October 12, 2005

HCSA Override: The Cost and Lessons of Political Apathy

It was certainly no surprise that the City Council overrode the mayor's veto of the Health Care Security Act (HCSA), although it was a surprise that only two members voted to sustain the veto (40-2). The size of the vote did demonstrate that the UFCW and its lobbyist on the bill, Evan Stavisky, did a great job and that the late charging opponents just were too late to do much to effect the outcome.

That being said, it is important to emphasize that the independent supermarkets that opposed the bill, including the National Supermarket Association (NSA), a group of independent grocers, need to become more involved in the political process. The Alliance has, over the past decade, represented this sector on a number of key issues, from defeating the Giuliani megastore plan to the derailing of the Bloomberg attempts to enhance the regulatory power of the Department of Consumer Affairs. All of this work, however, was done without the financial backing of any member of the NSA.

The work of the Alliance on these issues, as well as on the various successful box store battles, was supported by other independent stores, food wholesalers and a handful of chain stores concerned about non-union warehouse clubs. Even the historic battle over the East Harlem Pathmark, a fight that we led but that Al Rodriguez and Luis Salcedo (NSA members at the time) made substantial contributions to, was never financially supported by independent store owners (the very folks who would have directly benefited from a Pathmark defeat).

On the other hand when we defeated a similar Pathmark proposal in Astoria we did get strong support from a number of independents, in this case mostly Key Food operators and a number of independents who were not affiliated with the NSA. All of which is to point out that the NSA and its members have been benefiting from our work for the better part of ten years without having any commensurate financial burden.

Perhaps the greatest benefit these retailers received was generated from the East Harlem struggle. The fight in this case involved the need to defend the store owners against a vicious public relations assault that had labeled these retailers as substandard bodegas and East Harlem as a retail desert with a total absence of quality food stores.

The counterattack that we waged was extremely successful. For the first time these hard-working minority entrepreneurs were given recognition for their achievements. Editorial boards started to back-off on the character assassination and we personally wrote a score of Op-Ed pieces that literally put the independent supermarkets on the map. And you know what? They deserved it. Their risk-taking and hard work demanded recognition and not denigration.

In addition, the new found recognition was accompanied by something even more important. Up until this point the independents had been redlined by mainstream banking institutions, with many operators forced to borrow money at usurious rates. As their achievements began to be recognized, however, Governor Pataki's office, through the intervention of the Alliance, set up a series of meetings between the independents and banks such as Chase and Citibank. Loan programs were set up that for the first time put these stores in a much more advantageous financial situation.

Over the years we have approached the NSA and suggested that the organization use its considerable economic clout to better its political advantage. Yes, we have also proposed a working relationship. None of these discussions came to fruition for a variety of reasons, most related to NSA's own internal issues. Our continual emphasis has always been something Richard Lipsky use to say to his political science classes at Queens College: "You may not be interested in politics, but politics is surely interested in you."

Unfortunately the advice wasn't heeded and the HCSA became a confirmation of Dr. Lipsky's observation. The NSA's head-in-the-sand approach came back to bite the group but that's not the full story. You see the Alliance has to share the blame here. For ten years we advocated on issues that hit at the heart of the bottom line concerns of independent supermarkets. We did this without the active support of the NSA and we were successful in a great many instances in protecting the industry's interests.

Having a guardian angel has its cost. It allowed the group to procrastinate at what it should have done years ago: set up an organized lobbying effort. If the HCSA accomplishes this it will have served a useful purpose as a wake-up call for NSA. In observing the group's reactions to the bill's passage however – strident threats and a walkout of a meeting with Council staff – it looks that emotional posturing is displacing the kind of rational self-criticism and re-organization that the bill's passage should have generated.


Jill Gardiner in today's NY Sun does a good job at outlining some of the independent supermarkets' objections to the HCSA. Our old friend Luis Salcedo, the group's executive director, argues that the law will put between 40% and 50% of its members will be put out of business. While this seems a bit high it underscores the seriousness of the group's failure to engage in the process leading up to the bill's passage.

The most curious aspect of the article, however was Gardiner, citing Chris Quinn the bill's sponsor, saying that there had been a breakdown of communication between NSA and the Council. She reports the Quinn said that her staff had been talking with a "government affairs professional"(allegedly representing the group) who told them that the NSA had expressed "no concerns" with the legislation.

This is very strange indeed. The only possible such person would have been the Alliance's Richard Lipsky and as our preceding post points out neither Lipsky in person or the Alliance as an organization took any position on the bill. In fact since we work with the UFCW and Lipsky represents Gristedes (John Castimitidis was a supporter of the bill), we at no time either took a position on the bill or talked to anyone about the bill's impact on mid-sized markets.

This allegation then is part of a face-saving effort on everyone's part. The NSA should have been more proactive in defense of the group's interests and certain councilmembers who are close to the NSA and its member stores should have done more outreach. In the absence of this needed "communication" finger-pointing replaces healthy self-criticism.

The Sun also weighs in once again editorially on the impacts of the HCSA. Picking up on Gardiner's reporting the paper shifts from its previous pro-Wal-Mart rant and starts to worry about the plight of the inner city supermarkets.

This concern is a lot more well deserved than the Sun's sympathy for Wal-Mart and the paper's failure to accurately depict the scandal of the world's largest retailer sending its employees to access public health benefits at the tax payers expense. It also avoids confronting the inconsistency of worrying about the inner city entrepreneurs while championing the entry of a retail octopus that will put the investments of these minority business people directly at risk.