While running for mayor of New York City, Zohran Mamdani made headlines by promising to create five government-owned grocery stores, one in each New York borough. These stores would prioritize low prices over profits. At a time when affordability is the political buzzword of choice, this was catnip for the left. Food prices have been rising across the country. Especially in the Big Apple, groceries are expensive. By having a government run a few grocery stores, the thinking goes, prices can be kept low for consumers.
This is complete nonsense. It’s hard to think of a better distillation of bad government policy.
As many have pointed out, food is not a high-profit industry. The margins on selling groceries are razor thin. Kroger does not buy an item for $5 and sell it for $15, as many clothing stores and other retail outlets do. Instead, the typical margin is somewhere around 1-3 percent. Blaming a supermarket for high food prices is like blaming a waiter for an overcooked steak. It’s convenient and might feel sensible, but isn’t remotely close to addressing the source of the problem. The clearer culprits for rising food prices include the war in Ukraine, high gas prices, tariffs, and other geopolitical factors. Not price-gouging grocers.
Second, New York is partially responsible for their relatively high gas prices. The largest grocer in the United States, and the largest private employer in the entire nation, is Walmart. A stupendous one percent of all workers are employed by this one retail store from Bentonville, Arkansas. It’s an economic colossus. How many Walmarts are in New York City? None. Zero. The largest retailer, the largest company, in the entire country has no presence in the country’s largest city. No other country has such an imbalance. Can you imagine a Paris without Carrefour or a Tesco-less London? No! Because it makes no sense.
This is not, as some claim, because of expensive real estate or other market characteristics unique to New York. Walmart has tried to open locations in the city several times. Instead, special interests are keeping the mart of Sam Walton out. Unions and the municipal government do not want Walmart in their fair city. Can you imagine what would happen if New York ceased to be filled with mom-and-pop storefronts, and big corporations moved in? Chaos would surely ensue. Special interests have prevented the cheapest grocer from entering New York. This has enabled smaller businesses to enter. Of course, this comes at a literal cost: higher prices.
Instead of allowing the cheapest supermarket in, Mayor Mamdani has instead decided to keep prices high, but obfuscate the true cost. The city will now explicitly subsidize five grocery stores and undercut the rest of the market. Of course, the city is able to do this by using taxpayer dollars. The prices on the shelves of the “Mamdani marts” may be lower, but the cost to the typical New Yorker will likely be higher.
Incredibly, these will be government-owned grocery stores, but they will not be government-run. The city is planning to hire a private contractor to operate all five. This, again, is government run amok. The city is going to subsidize one private company, increasing the chances that competitors who are not bestowed such treatment are put out of business. It is unclear to me how this makes the city a better place.
Of course, this all assumes the stores open at all. The City of New York is the largest landowner in the city. They hold dominion over a massive 44,000 acres, which is roughly the size of Brooklyn. The municipal budget is around $125 billion dollars. And yet, if all goes well, the first city-owned grocery store will open “by the end of 2027”. For those keeping score, it will take almost two years from Mamdani swearing in to open a single grocery store. The already modest five stores across the city? Doubtful they are open by the end of his first term. Most haven’t even found a location yet, despite literally thousands of acres to choose from.
These are not serious people.
Not content to let a campaign promise wither on the vine, Mamdani has doubled down and said that, “A core basket of everyday groceries will be 30 percent cheaper at the five new municipal grocery stores. The basket will include all fresh produce, meat and seafood, along with roughly 20 additional categories of pantry staples, dairy and refrigerated goods.” Grocery stores don’t make anywhere close to 30 percent margins. Having meat and seafood priced 30 percent below market will depend on massive government subsidies.
I’m legitimately fascinated to see what happens. If there are really five grocery stores in New York offering meat at 30 percent below the competition, how will they keep it stocked? Prices that low create a clear arbitrage situation. It will be profitable for people to buy dozens of pounds of meat every day, and resell it at a markup. Even restaurants may find it cheapest to buy their ingredients every day from a Mamdani mart rather than a traditional purveyor.
Mamdani has backed himself into a corner.
So what will happen? There isn’t a clear way out. Sure, some simple rules can keep the worst abusers in the system in check. There may be a two-pound cap per person on meat or seafood. But even with such restrictions, if shrimp is 30 percent cheaper than the competitors, how are they going to keep it in stock? One of the attacks on Mamdani was that as a socialist, there would be bread lines and empty shelves in New York if he was elected mayor, similar to the USSR in the 1980s. A few government-owned shops won’t result in systemic bread shortages. People waiting in long lines for cheap meat, or empty shelves, however, are terrible optics. Mamdani’s political opponents will run roughshod by comparing photos from the Soviet Union to the government stores. There’s no way around it. If a grocery store is selling meat at a 30 percent discount, there will either be long lines, empty shelves, or a steady stream of trucks constantly trying to keep up with demand.
Of course, a lot is loaded into that “if”. There are two realistic outs for the Mamdani administration. The first is to spin the 30 percent discount. Perhaps it will only be for one type of unpopular meat, say chicken thighs, and one type of seafood, say cod. The 30 percent discount will also be interesting. How is it calculated? Will the government stores be 30 percent cheaper than the typical supermarket, or 30 percent cheaper than the gourmet grocery store that only sells chickens that are grass-fed and raised by virgins in the moonlight? It will be worth keeping a close eye on how the benchmark price is calculated.
The second out is to never open the stores. Given the initial slow-walking and difficulty in doing anything in New York, this is fairly likely. Let some environmental review bog things down. Get the public on the side of competitor grocery store owners who claim they will be put out of business. Maybe, eventually, one store in the Bronx opens with a 30 percent discount relative to Lower Manhattan, allowing Mamdani to save face.
Or you could just, you know, let a Walmart open and save everyone else a great deal of trouble.
There's just so much here. It's too much fun. I highly recommend you quit whatever you're doing and read Tom Wolfe's essay "Radical Chic: That Party at Lenny's".
Mamdani: A Ugandan landowner, son of an elite professor and a filmmaker, living in a rent-controlled – i.e. for poor people – apartment, elected as a "socialist" mayor...
Lately, I've seen, stereoptically, uniformly, a reductionist definition of "fascism" as "capitalism's last ditch effort to preserve itself" or something along those lines.* Which is really funny in Mamdani's case, as he is, apparently, trying to subsidize New York capitalist elites, who don't want to pay their employees enough to live where they work, with taxpayer funds. The same goes for the "public" mass-transit system. It's a give-away to the corporate elite, paid for, almost certainly by the mass of those in the middle.
This is why communists hate socialists. They know socialists are just slow-roll "fascists" in disguise (acc. to left definitions of fascism & liberalism). Communists are accelerationists, in this case; whereas socialists are managed-declensionists. The communists would say "remove all public subsidy to these corporate entities. Let the workers feel the pain – then they might revolt and/or leave for other pursuits." But the socialists keep on enticing, promising, luring the workers back in – with promises of a better life, a kingdom to come, utopia, salvation from and within their benevolent hands.
*This is a very popular definition amongst "progressives" today. They, naturally, fail to see, or remember the New Deal State's longstanding slogan "FDR saved capitalism from itself." ("Ahh," I say, "so you admit FDR was a fascist!".) And, of course, a communist would say "FDR saved the capitalist class from imminent revolution."
I was shocked at how many people who will foot the bill voted for policies like this. I guess virtue signaling is easier than doing math.