You may have heard that New York City Mayor Zohran Mamdani is planning to build five city-owned grocery stores for $70 million that will supposedly offer shoppers deep discounts to market prices on fresh foods like meat and produce, while selling other foods at normal prices.
Mamdani will subsidize the 30% discounts with city funds, while promising shoppers a sort of “free lunch.” But of course, as Milton Friedman explained, there’s no such thing. The stores will not pay city taxes, the stores won’t pay rent, and all the additional costs for the food not covered by the shoppers will come from taxpayers. The cost of lunch isn’t disappearing; it’s being picked up by those who won’t be at the table to eat it.
Perhaps hardest hit will be New York City’s small independent grocers, who will now face competition from a taxpayer-subsidized competitor. Frank Garcia, chairman of New York’s Multicultural Business Coalition, asked, “How are you going to compete with that?” The association is worried that the new competition will put its members’ businesses out of business.
The city will select private operators for the stores, but those operators will have strict rules to follow, including paying “family sustaining wages and benefits,” and a requirement to agree to a “labor peace agreement,” i.e. unionized workers.
In a somewhat ironic move, Mayor Mamdani has appointed the FTC’s former anti-monopoly queen, Lina Kahn, as the chairwoman of the city-owned grocery store operation. It’s rich that Kahn will now have the opportunity to destroy competition in New York’s grocery business after pretending for years at the FTC that she was on a crusade to maximize competition.
Action Line: Will Mamdani’s grocery stores help millions to put dinner on the table? Or will they end up a boondoggle the likes of California’s high-speed train? Perhaps this is the time the socialists will get it right. Perhaps not. Your Survival Guy isn’t in the predictions business; he’s in the planning business. When you want to plan for your retirement, email me at ejsmith@yoursurvivalguy.com, and click here to subscribe to my free monthly Survive & Thrive letter.
