The municipality which has monopoly on land taxes and costs will compete with stores that must pay taxes and rent? Won’t it just cause neighboring stores to close?
Won’t a better option be subsidizing taxes for grocery stores, and let the discounts competitively pass unto the customers?
This is the same trickle down economics principle that has proven not to work over, and over, and over again. There's exactly zero reason to believe these businesses would pass on the savings to consumers.
Consider! Ingles (a supermarket brand here in NC) is criticized for holding huge amounts of abandoned/vacant/dilapidated properties [0], which stifles competition and lets them hold an effective monopoly and makes neighborhoods objectively worse. It's not about the taxes. Don't underestimate a chain's ability to eat costs by maintaining their market position.
[0] https://avlwatchdog.org/opinion-ingles-markets-often-raises-...
But that's not all subsidy mechanisms. The best ones are where pass-through is enforced, not assumed.
You already know of one that works: WIC. It lowers the effective price for customer, which the store receives as reimbursement.
It's not about trickle-down -- that's ideology. It's more about designing the right mechanism.
You can create subsidies which are inverse to the stores income. It doesn’t HAVE to go to large chains. There are many way to encourage small businesses to open. Competing with them is not one.
I'm sure this time trickle-down economics will work and not simply line the pockets of business owners
Even if we take at face value that this is happening, their margins are famously low (ie. low single digits[1][2]) that any improvements are likely negligible. In the best case scenario where they're run as competently/efficiently as a normal grocery store, but don't take any profits, you'd be saving like 50 cents on a $10 pack of ground beef. Of course, all of this would go out the window if it's less efficient, either due to government incompetence[3], or lack of scale.
[1] https://www.macrotrends.net/stocks/charts/ACI/albertsons/pro...
[2] https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m...
But as others said, groceries are working on minimal margin. And all of them work with the same wholeselles (except those with vertical integrations), and this is a nation wide problem.
Or if there could be some kind of network and information protocol that could provide a decentralized alternative.
Maybe there could be an Internet protocol or NYC Internet protocol that food suppliers could list low price items with. Independent stores could order from here, shipped to their store, or maybe one or two city warehouses where they could pick up.
Maybe another system where suppliers could voluntarily detail cost disruptions, allowing government or other organizations insight and sometimes the possibility of helping alleviate those issues etc.
I mean the government already spends a lot to subsidize retail food purchases. Maybe another idea is just a very easily accessible new app for credits that is NYC only?
It's just that making a single store puts all of the logistical and other issues onto one government department and location, which has been shown in socialist countries to break down.
I am all for a few more socialist policies (I am lucky to have survived this long on outsourcing rates without a consistent healthcare plan), but it definitely needs to be a contemporary effort and not some centralized 1950s model.
And, even if they are true, the obvious solution would be to enforce the already existing antitrust and competition laws, not to have the government directly engage in commerce.
"Surveys consistently rate the commissaries as one of the military's top non-pay benefits." NYC wants to provide similar benefits for residents.
[1] https://en.wikipedia.org/wiki/Defense_Commissary_Agency [2] https://www.youtube.com/watch?v=PQOXdtPBGXI
>In 2024, DeCA estimated that it saved patrons $1.58 billion and had an operations cost of $1.7 billion, $1.5 billion of which was funded from appropriations.[8]
Isn't this the "selling $1 for 75 cents" business model (aka moviepass) that people made fun of a few years ago?
Many things government does are not economically viable. That's why they get left to government.
> Won’t it just cause neighboring stores to close?
The idea is to build these where that has already occurred.
(I say this as someone who is broadly in favor of NYC trying to run city-owned groceries in areas that are underserved.)
Groceries are not one of these. If you have a problem of high grocery costs, there are many better ways to tackle that other opening a government owned store. But it does make for a great photo op.
But economic viability -> competition -> research and development -> economic growth
Hopefully they kept all those profits around from the time they price gouging consumers in the name of “supply chain issues”, “transitory inflation”, “bird flu” etc. I still remember all the headlines about bird flu and how egg prices were doubling because of it. Turns out the egg production barely dropped and it was all a ruse to make more money.
This is ultimately the kind of thing that worries me about a municipal grocery store. Will voters allow it to respond in rational ways to market conditions, or will they expect the city to go out and extort some egg suppliers when market prices rise above what they consider reasonable?
Also, if anyone has any reservations about a government run grocery store, go ask your representatives to come out against military commissaries. I bet you will not be able to find one active politician who will try to remove that. You know why? Because government run grocery stores work. End of story. Period. There is no discussion. You are wrong if you disagree. We do this. It exists. It works. And people love it. Try to find one politician that will end that service.
Groceries also form cartels as the other commenter mentioned. The biggest grocers in Canada did it for many years until they were penalized for it (though it’s likely still continuing in other ways - the same players are now under investigation for selling underweight meats)
The estimated cost to consumers from bread price-fixing was $4-5 billion
https://old.reddit.com/r/nyc/comments/1sjq9v9/mayor_zohran_m...
Or it’s just a way to neutralize the ineffectiveness of the management, since it’s not profitable based, who’s going to be fired?
What we have now is the result of unfettered private control. Private companies collude to raise prices and lower wages. The standard of living in real terms has been in decline for over 50 years. Education, medical, housing and food costs continue to spiral. Where we do have publicly owned alternatives, such as with municipal broadband, those publicly-owned alternatives are always far better.
Are we going to make the same argument that EPB in Chattanooga is somehow a moral hazard and has an unfair advantage to Verizon, AT&T, Comcast and Spectrum?
Let's just say that it's true that they do. Why is that a problem? Why is it good that billion or trillion dollar companies can charge higher prices than the government can so their owners can buy another mega-yacht at the expense of the people who depend on that service? Because that's what's going on now.
Do you think working families in NYC don't deserve the same monetary relief that massive corporations get with their own welfare programs? Why should trillion multinational companies take our public money to subsidize their businesses and we can't do the same for workers?
Why do you prefer helping non human entities (corporations) over literal humans?
But I’ve come around. Let’s try something new! Let’s show people that local governments in the United States really are capable of making a difference in their daily lives. If it fails, well, we tried & we’ll keep trying.
I honestly don't understand the desire for municipal grocery stores at all. Grocery stores famously operate on super slim margins, so it's not like they're raking in the dough. Many of them are often run extremely well. In Texas, HEB is so beloved that a lot of people consider it far better at disaster recovery operations than the actual government.
I'm not against plans to better help people afford groceries, but somebody needs to at least explain how the plan is economically rationally viable, not just "let's try something new!"
Error 1: "Something must be done, this is something, therefore this must be done." Yeah, but "this" is something stupid, with no real-world chance of working.
Error 2: "We will not do anything until we can prove that it will work." You can analyze things to death and waste years in the process, and never do anything.
Somewhere in between is the right answer. You see plausible success, but still far from certain. Then you experiment.
Now, is New York striking the right balance? I have no idea. I'm not privy to their internal discussions. But I know that, if it fails, everyone is going to mock them for trying. That is, everyone is going to assume they fell into error 1. But did they? Getting the balance right still means that the experiments fail a fair amount of the time.
There gotta be a lot of accounting magics working here. Otherwise you can't explain why they simply don't sell everything and buy bonds. I don't have a theory so hopefully some finance people can explain.
Governments should do more experiments, and this does seem to have been thought out enough to not be a total waste of money.
So many conservative states and cities absolutely running things into the ground, making people miserable and oppressed and their cost of living skyrocketing for years, decades, look at Texas look at Florida, so many examples
So why not try something progressive for a change and see what happens?
Why the heck not just try?
Here's how this will pan out.
- A number of "officials" (friends) will get cushy jobs for running this program.
- It will lose millions of tax dollars
- a small portion of the population will get cheaper produce for a photo op
- Mamdani and friends will call it a success
- But net, this will be net negative for the city (ie. tax dollars to crony jobs and subsidizing food for some).
Whats the point? The USSR has tried this (subsidized grocery stores centrally planned). Lets not.
If on the other hand, the issue was hey its expensive to bring produce XYZ, so why don't we work to reduce that cost by legalizing Kei [1] trucks and exempt from tolls. Now that would be something interesting.
The USSR tried lots of things we do successfully.
This is actually something governments have a proven ability to do, at least in some contexts, without becoming a corrupt boondoggle.
You could be right about it losing millions of dollars, we’ll see. Millions isn’t very much on the scale of NYC’s civic infrastructure; it would be difficult to even call it a waste at that scale, since the results will themselves be valuable.
(This is in pointed contrast to our last mayor.)
The kei truck thing might be a good idea, but so is groceries managed as a public service.
The USSR had a problem with corruption. Ok? There have been gov run groceries outside the USSR, and in recent times - not decades ago.
If you don’t have an example of this leading to corruption more recent than the USSR, i gotta assume it was a USSR problem, not a gov grocery problem.
The USSR fell before I spoke my first words. The world is a very different place, and the United States works very differently from the USSR.
At worst, some people will get some cheaper groceries out of this. If you want to get mad about government spending, maybe we shouldn't be building a ballroom attached to the White House.
As opposed to the millions that come out of your pocket on top of the taxes you pay? At least this brings some of the tax money back to the people. When you let grocery store price gouge you without competition, the money goes to executive pay and shareholder value.
Well it's interesting enough to try. Are they going to keep the stores open at a loss, that's not really competing then, is it?
If they sell things that are much cheaper, restaurants could start sourcing their food from there, too. Why get your chicken from some supplier if you can buy it from a cheaper government run store at much less.
But then, if these stores are not run at a loss, it means somehow there is this large inefficiency that other stores haven't tapped into. And if I had to guess, grocery stores don't seem like a large margin business, but perhaps that's just my ignorance as it's not something I ever looked into in detail.
Restaurants already do this. They buy from wholesalers, because they're cheaper than the grocery store.
But now grocery stores could be cheaper than wholesalers if there are any subsidies involved or selling at a loss is a thing. Why go to wholesalers when you can camp out with a van by the government subsidized stores when it opens or when delivery comes.
Not saying this is insurmountable, the stores can implement a purchase quota: you get X amount of items per transaction and we take your ID or something. But it opens up that kind of a situation. Like I said, I hope it works, it would be interesting to watch.
It's a low margin, high volume business. I'm extremely skeptical that this plan works beyond just being a politically popular way to light money on fire. I say that as someone who actually like Mamdani.
If you don't like grocery stores gamifying or selling junk, regulate those aspects. Or put the taxpayer money towards something useful like building public housing.
Food deserts exist in NYC, and many New Yorkers buy staples at corner stores that charge significantly more than a standard grocery store. Your second paragraph implies that this policy is due to some dislike of existing grocery stores, but that assumes these communities are actually being currently served by grocers at all
(This is the theory, the practice will be challenged by NYC’s ability to acquire land in neighborhoods that are underserved by groceries and develop a supply chain for these stores. This will be harder, but I personally don’t vote for mayors to only have easy problems to solve.)
I’m generally partial to that motivation - however doesn’t seem to be happening here.
This location (La Marqueta) is within a couple hundred feet of a "City Fresh Market" grocery store and ~1500 from several other grocery stores
https://www.google.com/maps/search/grocery+store/@40.7983886...
I just hope they properly track and monitor the outcomes and foster honest/open feedback. The gov't loves to throw money at problems, but never really does much to analyze, pivot, or admit when something doesn't work because that just gives the opposition ammo.
The Secret Life of Groceries: The Dark Miracle of the American Supermarket by Benjamin Lorr, and
Grocery: The Buying and Selling of Food in America by Michael Ruhlman
Extremely insightful about how much it cost to run a grocery store, where profits go, who the food suppliers really are, etc. Very eyeopening.
This told me that for the very simplest consumer items, they might easily be contracted out and sold at just above production cost. Consumers would be free to buy fancier bottle openers, but sometimes a hunk of stamped metal does the trick.
Likewise for many other consumer basics ? Like, a Gotham store brand ?
- Armed forces commissaries. The op ex is subsidized by the taxpayer, but the cost of goods reflects the market wholesale price, plus a 5% fee to pay for capital goods/facilities upkeep.
- Grocery stores run by non-profits/charities. Eligible donations are a tax deduction, which represents a form of subsidy by the taxpayer. These stores are really popular in some places in the US.
- Food banks. Operate on a mix of private donations and taxpayer grants/tax receipts to some donors.
It all amounts to the same thing. The finance model is different in each case, but its all taxpayer supported no matter how you look at it.
