One of the upsides of New York Mayor Zohran Mamdani’s $70 million state-run supermarket project is that it allows rational Americans to watch socialism fail in real time.
Mamdani Marts promise to provide 30% discounts on core grocery items, which means they’ll be heavily subsidized by taxpayers. Most grocery chains already operate with a slim 2%-3% profit margin, and that’s with the benefit of highly efficient global supply chains and bulk orders.
It’s highly probable that Mamdani Marts will run out of the artificially discounted items very quickly. People like cheap stuff. To stop the most aggressive customers from hoarding or reselling groceries, the stores will either have to implement a form of rationing or quotas, limit supply and have empty shelves, or carry subpar inventory that fewer people desire.
That has been the outcome of every government-run grocery in history.
To stop outsiders from taking advantage of New York taxpayers, the Mamdani administration has already suggested that customers will have to produce some kind of identification, such as a library card system. According to the standards set by Democrats on voting, this is tantamount to Jim Crow.
Though the mayor’s office walked back the ID claim this week, the bidding agreement stipulates that the private entity running the store must hand out membership cards to “implement the discount program.”
The agreement, however, forbids means testing the membership. Which means that affluent New Yorkers are free to walk into these stores, allegedly created to alleviate the suffering of the city’s poor, and buy as much taxpayer-subsidized food as they like. They will have more money to gobble up goods under market value and more space for storage.
Meanwhile, Mamdani Marts exist to circumvent market forces and undercut the prices of products sold by privately owned establishments. Which means private chains are now competing with New York taxpayers. Within a mile of the site of Mamdani’s proposed supermarket in Harlem — sitting in an alleged food desert — there are at least a dozen grocers. Some of the bigger ones, Aldi’s and Whole Foods, can weather a loss of business. It’s the smaller shops that will likely be driven out first.
Many successful discounted grocery market chains narrow their choices to pass on savings. Not Mamdani Marts. The operating agreement demands “a full stocked grocery department, household goods, culturally specific products, plus kosher, halal, vegan, gluten-free, dairy-free and diabetic options.”
While discount grocers are now relying more on self-checkout and smaller staff to cut costs, the private operator running the Mamdani Mart must not only guarantee 30% discounts on core items but also prioritize full-time staffing and give them “best-in-class, family-sustaining wages and benefits.”
These private operators of Mamdani’s grocers, charged with paying utilities, maintenance, cleaning, and security, but not any real business decisions, must have “strong reputations” in “sustainability, community involvement, culturally responsive merchandising.” Nothing about running a self-sustaining business. The word “profit” only appears in the operating agreement in the word “non-profit.”
Mamdani promises to open five grocers with $70 million. As one New York City councilperson has pointed out, he could have bought over a million Costco memberships for the needy. Reports show that Costco shoppers get around 20% saving on all groceries and household goods compared to big supermarket chains. A discriminating shopper can find savings exceeding 30%.
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Then again, low-cost grocery chains such as Aldi, Grocery Outlet Bargain Market, Lidl, etc., cost somewhere around $1 million to $3 million to open, depending on the area. Which means with $70 million, Mamdani could, conservatively speaking, have financed the opening of more than 30 real supermarkets across five boroughs.
Better yet, he could have just let supermarkets do their capitalist thing. They do it well.