The grocery store may be the least forgiving classroom in which to teach political economy. The shelves do not care about ideology. The checkout scanner does not respond to applause lines. A gallon of milk does not know whether it was purchased in a capitalist marketplace or a municipal experiment in economic justice. It only knows what it cost to produce, transport, refrigerate, stock, and sell.
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That is the inconvenient thing about economics. The numbers have no political affiliation. They simply arrive at the register.
That reality is the great problem for economic promises. They sound wonderful from a podium. They become considerably more complicated somewhere between the warehouse and the shopping cart.
More than a century ago, Americans laughed at a song built around an apparently contradictory declaration: “Yes, we have no bananas.” The joke worked because the contradiction was obvious. In modern politics, the same joke has returned wearing a suit and carrying a spreadsheet.
Which brings us to one of the more fascinating promises emerging from the modern urban left: the government grocery store. The concept has obvious emotional appeal. Groceries are more expensive than they were in 2019. Families are frustrated. Everyone would like to see lower prices at the checkout counter. A politician who promises cheaper food is speaking directly to one of the most basic anxieties in American life.
But economics has a nasty habit of asking the question that politics prefers to avoid: Who pays for the discount?
New York City Mayor Zohran Mamdani has promised five city-owned grocery stores offering a core basket of essential goods at prices 30 percent below typical retail. It is an attractive number. Thirty percent is the kind of figure designed to make a voter pause over the receipt and imagine relief.
The problem is that grocery stores are not exactly rolling around in mountains of excess cash waiting for a government competitor to teach them humility. The modern supermarket is a low-margin business. The profits are not measured in extravagant percentages. They are measured in pennies.
A grocery chain may move billions of dollars in merchandise and still operate on a relatively small net margin after accounting for labor, rent, refrigeration, transportation, spoilage, insurance, technology, and the thousand invisible expenses required to keep a store open every day.
The grocery store equation is not complicated. Revenue minus costs equals profit. The difficulty begins when politicians promise to change the first number while pretending the second number will politely remain unchanged. A 30 percent reduction in price does not vanish. It must be absorbed somewhere.
Perhaps the store negotiates better purchasing agreements. Perhaps it operates more efficiently. Perhaps it reduces expenses through a different business model. Perhaps the government passes on expenses, such as rent or taxes, that a private competitor must bear. Those are legitimate possibilities.
But grocery stores have already spent decades chasing efficiencies. The question is whether those savings can bridge a 30 percent gap in an industry where profits are often measured in pennies, not dollars.
One possible source to cover the gap is the taxpayer. The discount may appear at the checkout counter, but the bill does not necessarily disappear. It may simply move to another counter, where the taxpayer eventually picks it up.
It is the oldest banana trick in economics: the fruit is cheaper, the store is proud, and the bill has simply been relocated to a place where nobody is looking. The banana joke has survived because it captures a very old economic problem: the difference between a price and a product.
America has tried versions of this experiment before. When private grocery stores disappeared from some communities, local governments stepped in, hoping public ownership could preserve affordable access.
Baldwin, Florida, opened a municipal grocery store after its only supermarket closed. The town was not chasing profits. It was trying to provide residents with access to fresh food. The intentions were admirable. The arithmetic was less cooperative.
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A small, city-owned store does not automatically gain the purchasing power, distribution network, and operational efficiency of a national chain. Grocery retail is a business in which scale matters. A truckload of bananas costs less per unit when you are buying thousands of truckloads instead of a few pallets.
Baldwin Market eventually struggled to attract enough customers and closed in 2024. The lesson was not that government cannot sell groceries. The lesson was that groceries remain groceries.
Bananas still have to be bought. They still have to be shipped. They still have to be stocked. Someone still has to pay for them.
A politician can announce cheap bananas.
A warehouse still has to supply bananas.
A truck still has to bring bananas.
A worker still has to stock bananas.
The price at the register can be lowered through subsidy or policy.
The bananas themselves remain stubbornly attached to reality.
The Soviet Union learned this lesson the hard way. The tragedy of Soviet economic planning was not that communists could not count. Many Soviet economists were highly educated and mathematically capable.
The tragedy was that when empirical conclusions contradicted political orthodoxy, political orthodoxy could prevail.
Nikolai Kondratiev, one of the Soviet Union’s prominent economists, supported the New Economic Policy, but argued for a greater emphasis on agriculture and consumer goods rather than Stalin’s drive toward rapid industrialization. His research on long economic cycles challenged the Marxist expectation that capitalism was approaching inevitable collapse.
Kondratiev was arrested in 1930 on fabricated charges of belonging to an anti-Soviet organization, imprisoned, and ultimately executed in 1938 during Stalin’s Great Terror.
His problem was not bad mathematics. It was that his conclusions were politically unacceptable.
That is the recurring problem with systems that attempt to replace millions of individual decisions with a single political calculation. Prices are not merely numbers attached to products. They are signals. They contain information about scarcity, demand, transportation, labor, risk, and opportunity cost.
Erase the signal, and you do not eliminate the problem. Instead, you eliminate the warning system.
The defenders of government-run grocery stores often respond that capitalism has failures of its own. That is true because markets are not perfect. Corporations make mistakes, businesses fail, and corporations do not always treat consumers fairly. However, acknowledging the imperfections of one system does not magically solve the problems of another.
A government can own a grocery store. It can subsidize a grocery store. It can even operate a grocery store more cheaply under certain conditions. But eventually, the same economic question appears: What is the actual cost? The answer cannot be negotiated away.
The great illusion of political arithmetic is the belief that numbers can be persuaded to serve a preferred conclusion. Costs can only be reduced, absorbed, delayed, disguised, or transferred, but the grocery receipt eventually arrives—and when it does, someone always pays.
That is why “Yes, We Have No Bananas” remains such a useful metaphor. Its comic force lies in simultaneously affirming and denying the availability of the same thing.
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Economic reality is less forgiving than a vaudeville song.
Someone always pays.
Image created using AI.