Mamdani’s grocery store problem is all politics 

New York City Mayor-Elect Zohran Mamdani (D) appears intent on becoming a grocery store mogul. But while the chattering classes bicker back and forth over his plan, uber-capitalist Milton Friedman may have the last word. 

As the late Nobel laureate once said, “When everybody owns something, nobody owns it.” In the case of Mamdani and his proposed city-owned grocery stores, expect a twist on Friedman’s maxim: When everybody owns something, there’s never enough to go around.

Lost in the philosophical screaming of capitalism versus socialism are the very real problems any government runs into when trying to operate a business. When governments own businesses, those businesses are not primarily responsive to investors and consumers. Instead, they are subject to political demands — demands that often destroy competitiveness and can eventually lead to failure or to an inability to operate without heavy subsidies. 

Despite the discontent surrounding capitalism, state-ownership of industry has not fared better. In the aftermath of World War II and the Great Depression, many European nations embraced state ownership of the “commanding heights” of their economies. Those experiments mostly ended in the late 1980s or early 1990s. Every country that tried this was eventually faced with uncompetitive, wasteful industries it could no longer prop up.  

There are still isolated examples, though. In Mexico, for instance, the government oil monopoly PEMEX has been turned into a combination welfare state, job creation program and toy for whatever political party is in power. The result has been declining production, aging and poorly maintained assets and massive debt.

For Mamdani, initial grocery store openings will likely be celebrated as a triumph for his progressive politics and treated as proof that socialism works. But the trouble will likely start before the first lease is signed. Given the high profile of this plan, can any part of the sprawling, contentious progressive coalition resist demanding inclusion of its agenda? After all, isn’t progressivism about inclusion and justice? 

Before the store doors open, a whole host of thorny issues will have to be dealt with. For example, where will these stores be located? Who will the landlord be? Will they be sufficiently convenient to the most aggrieved or oppressed class — or perhaps the best-organized oppressed class? Will the landlords pass woke muster?

Even more contentious could be what is sold in the stores. How much ultra-processed food will be sold? Mamdani may not be able to keep the lights on if he won’t sell soda. Will the stores need to have the same offerings as large supermarkets? After all, doesn’t everyone have the right to sushi bars and a wide selection of artisanal cheeses?

Will Mamdani invite the SEIU to unionize store workers? Will they get a living wage with full benefits, a pension plan and vacation time? If New York has to pay $45 to $50 per hour plus benefits, breaking even will be difficult. And good luck firing slackers, especially if they are members of some organized oppressed class. 

The biggest issue will probably be shoplifting — “shrinkage,” as the industry calls it. Although the vast majority of customers are not serial shoplifters, higher rates are associated with youth and those with lower incomes. Organized shoplifting rings are increasingly common in New York, second only to Los Angeles in their pervasiveness. 

So, what will Mamdani do about it? What anti-theft measures is he willing to tolerate — or, more to the point, what will his “defund the police” allies permit? Will social workers arrest the shoplifters? In a city with so much of the population under financial pressure, the “shrinkage” problem in city-owned markets could be severe. 

What are the chances the city prosecutes shoplifters to the fullest extent of the law? My guess is that being a homeless, transgender, oppressed ethnic minority would mean the city-owned stores become your free food pantry. But you likely don’t have to hit the identity politics jackpot to score free food. Unless you are a 50-plus white male Wall Street banker in a $1,000 suit, it probably won’t be a challenge to walk out with a couple of expensive steaks.

And once word is out that the city is lenient (at best) about shoplifting, these stores will become magnets for opportunists and organized efforts to steal. It might be the best thing to happen to New York’s bodegas. After all, where would you rather shoplift — Mamdani’s free buffet, or the corner store where the proprietor might just have a shotgun behind the counter? 

Market failure does exist. There is an argument to be made for governments to address impaired access to fresh food. Setting aside that the real long-run answer to revitalizing cities is creating a favorable investment environment through better management, improved land use regulations, lower taxes and cutting the bureaucracy, there are interventions that can work. 

Atlanta is subsidizing a private grocery chain to set up and manage stores in the city. Smaller than an over-ambitious, full-sized supermarket, and run apart from the city bureaucracy, the first store appears to be performing decently. Of course, Atlanta is just getting its feet wet, starting in an area that has density and high commercial activity. Its next foray into a low-income, lower density neighborhood might not fare so well.

In the end, if New York runs its stores like a real business — independent and free of progressive political demands — the stores could be successful. But let’s face it: The chances Mamdani and his progressive allies will allow that to happen are nearly zero. 

Keith Naughton, a longtime Republican political consultant, is co-founder of Silent Majority Strategies, a public and regulatory affairs consulting firm, and a former Republican political campaign consultant in Pennsylvania.