Mamdani became a household name this year for policies that include city-owned grocery stores. He thinks they would help New Yorkers with high food prices.
However, AFN spoke to one researcher that said city-owned grocery stores do not work. David McGarry is the research director of Taxpayers Protection Alliance (TPA), who just published a report for TPA on city-owned grocery stores.
"The definition of insanity is doing the same thing over and over again and hoping for a different result and city-owned grocery stores have failed across the U.S., in Kansas, in Florida, and in Missouri,” says McGarry. “And yet Mamdani thinks that the way to solve the perceived problems with availability and affordability of food in New York is to try the same failed socialist experiment again."
McGarry also points out that government regulations are part of the reason why goods cost as much as they do in New York City.
"There are minimum wage laws that raise costs, permitting laws that raise costs, and a whole litany of restrictions that are imposed on builders and businesses that prevent ordinary businesses from operating efficiently and saddle ordinary businesses with all sorts of compliance costs," explains McGarry. "Also, I would add that another crucial factor about NY's grocery problem — it is really a larger problem than that even — is that areas with high crime tend to experience a lot of these problems."
If someone is a small grocer that has to factor in the costs of either the threat of theft or routine theft, McGarry states that they are not going to be able to lower their prices as they might otherwise do.
Meanwhile, small businesses that sell groceries may be harmed by the presence of city-owned grocery stores.
"Small businesses are subject to the pressures of the market," says McGarry. "That means that, if they fail to provide an adequate service or fail to provide goods adequality, they will go out of business. This is very simple, and the government does not have that problem."
If a city-owned grocery store fails, there's always tax dollars to subsidize it and to keep it afloat. This, says McGarry, creates a tremendous competition problem.
"If the government runs a grocery store at a loss and artificially suppresses the prices of groceries, of course people are going to want to shop there. Of course, your small business owner — whose operating on a very tight bottom line — will be unable to keep up with the artificially low prices that the government is offering,” concludes McGarry, “but this goes completely unseen and really unthought off by the potential incoming Mamdani administration."
