View from the bridge: Reflections on capitalism and community change
One of the most valuable aspects of sitting at the helm is the opportunity to reflect on a multitude of topics while quietly passage-making. Recently, my thoughts have turned to the diverse — and at times conf licting — views that circulate within our local community. These inconsistencies, even outright contradictions, have become more apparent as changes unfold around us.
Those who know me are aware of my lifelong involvement in engineering and maritime matters. Yet, my academic journey also led me into the worlds of economics and finance, both as an undergraduate and graduate student. Studying engineering economics with Professor Bernard Gleimer, using the DeGarmo / Canada textbook, was a foundational part of my preparation for the Professional Engineering board exams. This training fostered a lasting interest in the analytical dimensions of economics and finance, which continue to intrigue me today.
Adam Smith is frequently cited as the father of free market capitalism — a system designed to allocate limited resources efficiently through the guidance of an “invisible hand.” Smith generally opposed government intervention in capitalist markets, though he acknowledged that intervention might be necessary when the system failed to serve the interests of its people.
The recent closure of Shelter Island Heights Pharmacy has generated criticism directed at both local Democratic and Republican administrations. However, the reality is that the property’s sale to Shelter Island Heights Pharmacy LLC — a firm based on West 57th Street in Manhattan (home to its parent entity) and registered with the NYS Department of State shortly after the acquisition — was a legitimate business transaction. This exchange, typical of capitalist practices, benefited both parties and was beyond the influence of Town government. Our community has not condemned those who sell properties to realize increased equity, own multiple properties for short-term rentals, or purchase property to house employees.
During the debate over short-term rentals several years ago, I illustrated housing supply and demand curve shifts on a whiteboard in my Town engineering office and reviewed these concepts with several Town Board members. My argument was permitting residences for short-term rental use would permanently damage the supply of affordable year-round rentals and encourage the proliferation of “shell corporations” that operate residential housing investments.Nevertheless, legislation passed, justified by the principles of capitalism and private property rights.Regardless of the pharmacy’s ownership, its continued operation in a familiar manner was a comfort to many in our community. Medications essential for managing chronic conditions remained easily accessible, and even my elderly dog could receive his prescriptions without difficulty.
It is my view that capitalism is a driving factor behind the difficulties faced by small, independent pharmacies, irrespective of ownership — be it a local neighbor or a major real estate firm from Manhattan. Independent pharmacies must navigate the complexities of securing reimbursements for drug costs, which are typically not simple cash transactions. Most prescriptions are paid through third-party reimbursement systems involving customer insurance and government plans. These payments, along with regulated co-pays, should theoretically cover the pharmacy’s expenses for drugs and operations. The reality, however, is that small pharmacies struggle to compete with large drug chains and mail order operations, which benefit from lower drug acquisition costs due to their scale.
Some may argue that the “true” pharmacy owner should help subsidize these costs out of goodwill or a sense of community responsibility, but such expectations are incompatible with the fundamentals of capitalism and sounds a bit like the “socialism” many are quick to condemn. So which is it?
Capitalist enterprises often consolidate businesses, sometimes to the detriment of employees. Management consulting firms, under the guise of capitalism, have advised pharmaceutical companies on strategies to increase opioid sales, contributing to the crisis faced in America. Additionally, firms have manipulated employee pension plans for their own financial benefit. Members of our community have worked in these fields and are our neighbors and we don’t condemn them.
Some readers may perceive me as critical of capitalism, but that is not the case. What I recognize is the limited ability of government — local or otherwise — to influence outcomes in situations such as these. This reality serves as a warning: while the free market provides for many of the things we value and rely on in our community, it also brings a host of complex issues that cannot be easily resolved. Holding local government responsible for some of these outcomes is both an unreasonable and untenable position.
