New York City’s new socialist Mayor Zohran Mamdani has pledged to open city-run grocery stores to lower costs and help the working class with his socialist policies.
City-owned and managed grocery stores have resurfaced as eye-catching policy ideas to lower food costs and fight hunger. However, they will have the opposite effect: wasting taxpayer money, promoting inefficiency and hurting local food businesses.
Mamdani’s Plan: Bad Economics
Mamdani bases the need for city-run grocery stores on a socialist theory rather than hard data. This is a blatant feel-good dream that denies basic economics. This sounds very good on paper, ‘free’ always does, until the money needed to fund the free goods cannot be found.
He argues that these stores are needed to address supposed food “deserts,” which are usually crime-ridden areas that retailers often avoid. He also claims the groceries will provide working-class New Yorkers with better access to affordable food. His pilot program consists of launching five stores across the city, one in each borough. It is all part of his socialist platform, which, besides lowering grocery costs, also includes freezing rent and increasing corporate taxes to fund this project.
A closer examination of the plan reveals it cannot succeed because it entirely replaces market signals—such as costs, property rights, profit and the profit motive—with bureaucratic decision-making. He proposes the classic Marxist alternative to a free market economy.
Why Socialism Cannot Work: The Property Rights Problem
Socialists view the economy as an engineering project, where every detail must be carefully planned and executed with precision. They do not consider the need to adapt to the unpredictability of human nature and the diversity of human qualities. Their view is based on the misconception that having intelligent, well-meaning technocrats in control of everything will always deliver the desired results.
Such a system does not consider the impact of private property upon the individual. When people own property, they are motivated to use it wisely. They will find new ways to improve it. Property rights establish accountability because owners are responsible for the outcomes of their choices and reap the benefits of their success. This allows individuals to pursue gains that extend far beyond central planning.
City-run grocery stores eliminate these vital incentives. Without private ownership, no one has a personal stake in the store’s success. Bureaucrats spend other people’s money without facing personal consequences for failure. They lack the local knowledge and responsiveness that private owners have. Most importantly, they lack property rights to defend, a personal investment to protect, or a profit motive to drive efficiency improvements.
The Predictable Collapse
Thus, state-run groceries lack incentives to succeed. This is not a theoretical conclusion. Others have tried it without success. This unnatural plan has already failed in Kansas, Florida and Missouri. Despite millions in taxpayer funding and subsidies, government-run stores closed after struggling with empty shelves and rampant crime shortly after opening.
Relying on government subsidies, the stores can sell their products at below-market prices, and customers rush to buy everything as soon as the products arrive. Such stores struggle to keep their shelves stocked.
City-run grocery stores are also plagued by theft because managers lack the same incentives as those in privately owned stores to prevent it.
Central planning, as seen in Marxist-run places like Cuba, North Korea and Venezuela, inevitably leads to long lines and empty shelves.
Finding Solutions
Affordability comes from a free market, respect for property rights and increased competition, not from government control. Remove government restrictions and unfair regulations from the grocery sector, and prices will decrease.
Mamdani’s proposal will prove what socialism has always accomplished: it is unsustainable. It distorts incentives, hinders innovation and centralizes power, leading to economic stagnation, shortages and inefficient authoritarian rule.
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First published on TFP.org.