New York Mayor Zohran Mamdani wants to spend tens of millions of dollars testing out government-run grocery stores. Some unsolicited advice for the socialist, who is already struggling with a strained budget: city-owned supermarkets won’t work.
Working through the city’s quasi-independent Economic Development Corporation, the mayor wants to dedicate $70 million to the project. That would get five proof-of-concept stores, according to the New York Post. The mayor promised on the campaign trail that five stores could be stood up for $60 million, and this won’t be the last cost overrun at the “public option for produce.” The mayor’s office did not respond to our request for comment.
The economics of public stores are fraught. By lowering prices below the market rate, stores struggle to fulfill surging demand and shortages become inevitable. That was the case at Kansas City’s Sun Fresh Market, which closed last year after wasting $18 million of taxpayer money.
Sourcing and stocking perishable food products is a complex business with notoriously thin profit margins. Despite claims by progressives that grocery stores price-gouge, profit margins usually fall between 1 percent to 3 percent. Partly that is due to shoplifting. Finding good real estate will also be costly in a city with scarce availability. (Whole Foods is owned by Amazon, which was founded by Post owner Jeff Bezos.)
Promising free stuff sounded nice on the campaign trail, but someone needs to pay for it. When his predecessor tried to trim spending on libraries, Mamdani called it “cruel.” Now that he’s in charge, his preliminary budget plan calls for nearly $30 million in library cuts. Those and many other cuts are probably necessary to get the bloated city budget on a more sustainable footing.
But Mamdani keeps trying to find new ways to spend more money. Earlier this week, Mamdani released a Spanish-language video with Rep. Alexandria Ocasio-Cortez (D-New York) urging parents — even if they are illegally in the country — to enroll free of charge in the city’s child care program for kids from three-years old to kindergarten.
If Mamdani really wants to bring down prices and boost access to fresh food, both great goals, he should welcome more private enterprise and competition. High sales taxes, labor costs and burdensome regulations make it difficult for supermarkets to make ends meet in the city. So does lax enforcement of shoplifting laws.
The mayor has said before that his grocery idea would be“political experimentation.” But as the Big Apple faces a $5.4 billion budget shortfall and Mamdani threatens a 9.5 percent hike in property taxes, it’s foolish to spend money studying a foregone conclusion.
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