Failing to Learn the Lessons of History
1st July 2025
Plenty of people have commented on New York City mayoral candidate Zohran Mamdani’s proposal to lower food prices by creating city-owned grocery stores, but there is still more to be said about this plan. Mamdani either thinks or believes that voters think that store owners are making huge profit through price gouging, and that recent increases in prices have nothing to do with inflation, tariffs, or other government actions.
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Once a government store opens, the public employee unions will quickly organize the workers and demand that the city pay a “living wage,” which will no doubt be defined as sufficient to allow employees to rent an un-rent-controlled apartment. This will more than eat up any savings from not having to earn a profit or pay taxes. Far from saving consumers money, the grocery store will have to charge much more than their competitors to keep afloat.
Except they won’t, because instead of earning a profit the city-owned grocery stores will start out in the red and get only redder over time. The city will start by paying the capital costs of converting some building into a grocery, then agree to cover worker wages and pensions. Soon the whole idea of “covering costs” will be seen as archaic and the city council and state legislature will be told not to look at the revenues when asked to fork over more subsidies.
You only have to look at the transit industry to see how this will play out.