Food for Thought

Zohran Mamdani's public option grocery proposal is pie in the sky

Could progressive politicians and bureaucrats create something like this…?

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There are plenty of reasons to deplore Zohran Mamdani, the “democratic socialist” who just snagged the Democratic Party nomination in the New York City mayoral election. He’s a racist. He’s an antisemite. He hates America. He supports genocidal terrorist groups. He’s a crack-brained radical socialist. He’s an egregious hypocrite.

But never mind all that. Everything you need to know about Zohran Mamdani will be revealed during your next visit to the supermarket. Among Mamdani’s campaign promises is the creation of a chain of government-owned, government-run grocery stores for NYC. Food is too expensive, he says, and he’s going to fix that. His proposed public grocery chain would be that beloved institution of the Left, a nonprofit. It would be exempt from city taxes. This, Mamdani claims, will enable them to sell groceries for less. I have no idea how many such stores would be necessary to serve a city with a population of over eight million people. But let’s say a hundred, which is a nice round number.

The next time you’re at the supermarket, take a good look around. Notice the grocery carts, the shelving, the bins, the coolers, the freezers, the bakery section, the checkout lanes, the employees going about their various tasks. Think about what must be going on behind the scenes to keep the front of the store operational. Then multiply by a hundred and ask yourself what it would cost and how long it would take to create Mamdani’s public grocery chain. Obviously, it would require a huge capital investment and take years, perhaps even a decade, to build.

Then there’s the question of cost. Mamdani seems to think it would be easy to make cheap groceries available to the masses. But how? NYC can’t control the wholesale price of foodstuffs, so any cost savings would have to be squeezed out at the retail level. That won’t be easy. Food is expensive in NYC because everything’s expensive in NYC: real estate, construction, electricity, water, labor, etc. and so forth. On the labor front, by the way, Mamdani is proposing a thirty-dollar city minimum wage. In effect, he’s imposing higher labor costs on his supposedly cost-saving grocery chain.

It’s inconvenient for Mamdani’s proposal that the retail grocery business operates on the thinnest of profit margins: under two percent. And though the Left gets all excited over the idea of a nonprofit, unburdened by the need to make money, the fact remains that even nonprofits must operate in the black. There just isn’t much scope for cost cutting at the retail level.

Of course, retail prices could be arbitrarily fixed at a low level. But in that scenario, the chain would almost certainly be operating in the red. While the city can fix retail prices, wholesale prices are beyond its control. What to do about that? Well, the city would just have to close the gap with an annual subsidy. Assuming that Mamdani’s dream comes to fruition, that’s the most likely outcome: New York City’s taxpayers would find themselves burdened with a very expensive corporate welfare case.

There are additional considerations. Retail grocery operations require access to city services: power, water, sewage, trash collection, etc. Would these services be provided to the public option grocery chain for free? If so, that would constitute an indirect, and costly, city subsidy.

And finally, there’s the problem of ideology. It’s horribly easy to imagine what a nonprofit grocery chain run by a cabal of radical socialists would be like. A 2022 article published on the website of Perdue University’s College of Agriculture noted that “Liberals prioritize the social and environmental sustainability of their food more than others.” That’s one way of putting it! We can assume that the Mamdani’s grocery chain would be targeted by the food department of the activist class with demands for maximum social and environmental sustainability of the food on offer. Potato chips? Uh-uh. Snack cakes? Nix. Frozen pizza? As if! Red meat? The horror!

Finally, Mamdani’s idea is nothing new. A recent article in Reason magazine notes that government owned and operated grocery stores have been established in several cities—none too successfully. For all the pious claims that running a grocery store as a nonprofit would lower costs for consumers, the converse is the case. The Reason article cites a Vanderbilt University study that sets forth the pros and cons of a public grocery store option. Its discussion of the pros is followed by this review of the daunting cons:

[T]he public grocery store has limitations. As a threshold matter, when operating in a food desert, it’s likely that big-box stores have leveraged teams of market researchers to determine that operating a store in that area is not feasible. Thus, from day one, the public grocery store will likely face economic headwinds. Furthermore, public grocery stores often find it difficult to compete with big-box stores. For one, “big-box stores” can quickly train management using the considerable institutional knowledge at their disposal. On the other hand, public grocery stores often must balance proper training with other factors: In one case, a store manager was promoted to her position for showing the foremost dedication to the store, and had to learn all of the technical expertise on the job. Additionally, big-box stores can almost always win on price and efficiency, making it vital for public grocery stores to prioritize engagement with the community to help drive sales. To counteract these various challenges public grocery stores must (1) meticulously plan their entrance into the market, (2) hire the right staff, (3) select a suitable location, (4) leverage external funding sources, and (5) work with distributor networks to find the most competitive prices.

The Vanderbilt researchers are surely correct that “meticulous planning” will be necessary to establish a chain of public-option grocery stores in NYC. But when Mamdani first floated his proposal, no one seems to have asked if there was anything down on paper. So what’s the plan? Does he have any idea how the necessary capital will be raised, or what the construction costs might be, or what the chain’s corporate structure would look like? How many stores would ultimately be required? How would they be staffed and managed? How would they be distributed across the city?

An article in the New Republic, supportive of the candidate’s plan, describes it in the most general terms. Mamdani himself has said that he’ll start work on his socialized grocery chain on his first day in office as mayor. He has spoken vaguely of an initial five stores, one per borough, with startup costs in the neighborhood of $60 million. For the reasons listed above, this figure seems wildly optimistic.

Progressives correctly point out that many low-income neighborhoods in New York and other big cities are “food deserts,” whose residents lack ready access to large retail grocery outlets. Their solution is along the lines of Mamdani’s proposal: If Big Food refuses to serve such neighborhoods, let the government step in. Ah, but the government played a big role in creating the problem.

As noted above, NYC is an expensive place to do business. One reason for this is the costly regulatory burden imposed on businesses by big-city governments. Another is progressivism’s aversion to enforcing the law. A high-crime neighborhood in a city where it costs a lot to do business is unlikely to be viewed by Kroger or Dollar General as a good place to set up shop. The wave of retail business closures that swept over urban America in the wake of the 2020 George Floyd riots embodies a lesson that progressives and leftists just cannot comprehend. They view the business community with hostility as an arm of capitalism, and with greed as a ready source of tax revenue. If Zohran Mamdani is indeed elected as mayor of New York City that hostility and greed is sure to be maximized, making even worse the problems he aspires to solve.