Mamdani launches his government groceries: What could go wrong?

Taking another page from the playbook of third-world communist Hugo Chavez, New York Mayor Zohran Mamdani has launched a string of government groceries, offering city residents discounts of up to 30 percent on basic foodstuffs. Hugo, who ruled Venezuela as ‘el supremo’ named his enterprise ‘Mercal.’ Mamdani hails his as making New York ‘affordable.’

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What could go wrong?

According to Jonathan Turley, writing on his blog:

Mayor Zohran Mamdani used his “First 100 Days” speech this week to announce that he has kept his promise to create a chain of city-run stores . . . by pledging to open one store sometime “next year.” According to the New York Post, the city is planning to make an East Harlem location the first store at a cost of $30 million. It will be located in La Marqueta near Park Avenue and may not actually open until 2029.

Hopefully, La Marqueta will be renamed La Marxista for clarity. It will follow a long line of failed state-operated and city-operated stores. Chicago’s mayor, Brandon Johnson, also pledged such city-run stores.

It is notable that the stores received such emphasis by Mamdani. It is not difficult to set up a grocery store, particularly when you run the city that approves permits and compliance conditions. It is not even difficult to set up a money-losing store as long as you have a city budget to pay for it. It is far more difficult to set up an independently sustainable store.

All about the socialism indeed. So let’s look at what might happen:

First, how are the competitors going to match it? Who can compete with artificially cheaper or even ‘free’? Odds are good that New York’s corner bodegas will watch their margins fall and lose massive amounts of business to the cheaper government groceries, as if the introduction of big box retailers, which already happened, didn’t squeeze them enough. If the government competitor can cut the price of groceries 30 percent, they will have to do the same, and that means they’ll lose money, given that grocery margins are always narrow, single-digit affairs. And unlike the big government competitor, they’ll still have to pay taxes, permits, rent and other operating costs, which will shrink their margins further. Many will Go Galt, or take their operations to other cities or even homelands such as the Dominican Republic or Puerto Rico, where the business climate is not hostile. In the end, the government behemoth will be the only show in town.

But that could be complicated by other factors. What’s to stop residents from New Jersey and Connecticut from shopping in those stores, too? New York City could end up subsidizing the entire region with cheap groceries, wreaking havoc its own finances and the economic ecosystems of those other states, too,, and it’s likely shortages will follow, unless, of course, they initiate a system of strict government-issued ID and rationing.

Here’s another problem: Who’s going to stop people from getting into line early in the morning, buying up the entire cut-rate supply, and re-selling it at a profit that still undercuts existing grocers? That always happens, and will happen again once this bad idea is put into place.

Oh, but there are more problems, too. Andrew Gruel looks at it from the supplier perspective and foresees some bad food getting into the state operation:

And there’s still other stuff. This feller seems to know what he is talking about:

And still more problems:

One, a large percentage of New Yorkers take SNAP benefits. Why would cut-rate groceries be anything useful for them, other than for reselling purposes? They already get what they need for free.

Here’s a related issue:

Many people in New York don’t buy groceries at all, for the reasons cited above. 

Now let’s take a look at it through the eyes of those who have lived through socialist nightmares in other countries:

Here are some other places that have tried it domestically:

So what we have here is one big sinkhole of costs that seems designed to penalize private business owners with a huge new competitor they can’t beat while other solutions to high grocery costs for the poor are already available and in place. Mamdani, of course, as a communist, doesn’t like the private sector, and doesn’t want it around, so he may well know exactly what he is doing, but most New Yorkers aren’t going to see the quality of their lives improve. Human flight will accelerate as scarcity and substandard goods kick in and competitors flee. It’s just bound to be one big bonfire of socialist failure, same as it was in Chavez’s Venezuela, where rationing, shortages, bad food, and empty shelves were the ugly result.

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Yet fools out there still seem to think it’s worth imitating:

It won’t end well for them.

Image: Grok, ai-generated illustration