Mamdani’s mad supermarket gambit

The city plans to invest $30 million of taxpayer money to develop the first store. The idea is to sell staples such as bread and eggs at near wholesale prices by eliminating the profit motive.

First, it seeks to solve a problem that does not exist. Grocery prices across the country are up just 1.9% over the past 12 months. Moreover, government cannot operate as efficiently as the private sector.

City-owned supermarkets are far more likely to produce inefficiency, waste, and unintended consequences that ultimately harm the very consumers they aim to help. The supermarket business is inherently low-margin and intensely competitive.

Walmart and Amazon, with its Whole Foods stores, compete aggressively on price and delivery. One key to the success of these two giants of the American economy is their laser focus on distribution costs.

At their core, Walmart and Amazon are logistics companies. Private grocery chains succeed or fail based on their ability to manage costs, negotiate with suppliers, and respond to demand.

A city-run supermarket, by contrast, would operate under political rather than economic incentives. Decisions about pricing, hiring, product selection, and location would inevitably be influenced by political considerations, union pressures, and bureaucratic constraints rather than the discipline of profit and loss.

Without the pressure to turn a profit, a government-owned supermarket has little incentive to control costs. Over time, what begins as a pilot program could easily become a permanent fiscal burden.

New York City already faces significant budget pressures, from public pensions to infrastructure needs. Its 2027 budget deficit is projected at $10 billion. Adding a taxpayer-subsidized grocery chain is a big financial mistake Advocates of Mamdani’s supermarkets argue that “food deserts” justify government intervention.

But the reality is that, throughout the city, a consumer can find a grocery store within a 10-minute walk. If grocery access is limited in certain areas, the causes are complex, including crime, zoning restrictions, and high operating costs.

A city-owned supermarket does nothing to address these underlying issues. In fact, it may exacerbate them by masking the real problems rather than solving them. If theft, regulation, or labor costs make it difficult for private stores to operate, those barriers will affect a public store as well, unless it relies on heavy subsidies and reduced standards.

Moreover, government-run retail operations have a poor track record. From public housing maintenance failures to inefficient transit systems, large-scale municipal enterprises often struggle with accountability and performance.

A supermarket may seem simpler, but it still requires sophisticated logistics, inventory management, and customer service. There is little reason to believe that a city bureaucracy will excel in these areas where experienced private operators already compete intensely.

A better approach would focus on removing barriers to private sector success. Reducing regulatory burdens, addressing retail theft, and encouraging competition would do far more to lower prices and expand access than creating a government-owned alternative.

If New York City were to welcome companies such as Walmart and Amazon, food prices would be lower, and customer satisfaction would improve. Government regulation, along with the power of New York City’s unions that oppose private ownership, is the problem.

foreign service officer who later worked in law and finance for over 30 years. Today, he writes a daily note on markets, economics, politics, and social issues.