I don’t like government running post offices, retirement systems, or air traffic control, so you won’t be surprised to learn that today’s column explains why it’s a dumb idea to have government grocery stores.

We’ll start with this video from the Foundation for Economic Education.

My knee-jerk instinct on this issue is to go to the archives and re-share the story of Boris Yeltsin visiting an American grocery store in the 1990s.

That episode reportedly helped convince him that capitalism was a superior economic model, though it should have been blindingly obvious based on the Soviet Union’s subpar economic performance.

Though, in fairness, perhaps Yeltsin had read – and believed – some of the American economists who thought there was more growth with communism. I’m not joking. Such people actually existed.

But comparing American grocery stores to Soviet bread lines in not fair, at least with regards to what the Mayor of New York City is proposing.

Zohran Mamdani doesn’t want the communist model of having the government operate all grocery stores.

Instead, he’s proposing a handful of government-operated grocers to supposedly save consumers money, up to 30 percent on basics if you believe his claims.

The Wall Street Journal is not impressed, warning that Mamdani’s scheme would simply transfer costs to taxpayers. Here are some excerpts from an April editorial.

The plan is for the city to select private operators, albeit with what will be strict rules for pricing and wage rates for employees (unionized of course), while subsidizing staples like bread and eggs. In other words, price controls. One advantage that government-run operations have is that they can operate with subsidized capital, while paying no taxes, and no need to make a profit. The city will pick up any rental costs. This means the Mamdani Marts will be able to undercut prices at the private grocery stores and bodegas in their neighborhoods.

What will be the indirect effects?

Here’s a very good summary from @profstonge.

Now let’s look at some real-world evidence. But I won’t point to bread lines and shortages in socialist hell holes like Cuba and the former Soviet Union.

Instead, let’s look at what’s happened in some American localities, starting with this column from Mike Nichols about a mess in Wisconsin.

…what’s happening in a south side neighborhood in Madison is the perfect illustration of why government should stay out of an intensely competitive business it knows nothing about. The city started planning to get involved in the grocery business at least six years ago amid fears that a Pick ’n Save at 1312 S. Park St. might be razed… Dane County already had plenty of grocers. In fact, the county, to this day, has dozens of grocery stores and Walmarts and Targets… But politicians and other officials in Madison — where there is, of course, lots of talk about “food deserts” and affordable access to food as a “fundamental human right” — forged ahead anyway. City of Madison politicians have thus far spent over $9 million buying and financing improvements on a 24,000-square foot portion of a new multi-use development right next to the Pick ‘n Save that never closed — and that apparently has no plans to close anytime soon. Kurt Welton, one of the owners of the building that Pick ’n Save leases, said…“Within a mile, there are four or five grocery stores. It is not a desert. …“Why does the city think it needs to spend $10 million to bring groceries there when they already have groceries? This is the way communists think.” …Meanwhile, Madison city officials — having already doled out millions — now own a nearby space at 815 Cedar St. that, it appears, was not built to easily house a grocery store. The space, for instance, reportedly had insufficient electrical power and the building had a roof that won’t accommodate necessary equipment.

Now let’s travel to Kansas City.

Here are some excerpts from an article in National Review by Haley Strack.

A city-run grocery store in Kansas City that was propped up by more than $18 million taxpayer dollars has closed. Sun Fresh Market opened in 2018 in the city-owned Linwood Shopping Center. …after months of bare shelves, severe crime problems that Kansas City has spent additional money to curb, and what one reporter described as a “rancid odor” connected to improper drain maintenance, Sun Fresh has shut its doors. …Despite cash subsidies from the city, Sun Fresh has struggled to break even — likely because of the steep costs of maintaining a security presence at the store.

Here are two other examples from smaller communities, as cited by Joe Lancaster in an article for Reason.

The city council in Erie, Kansas, purchased the city’s only grocery store in 2020 rather than let it close. The city operated the Erie Market for years but at a loss: Erie’s mayor said the average customer needed to spend $50 per month for the store to stay afloat, but the actual monthly expenditure was closer to $14. …Baldwin, Florida, opened a fully government-owned grocery store in 2019 after the town’s only grocer closed the previous year. …The store closed in 2024 after being in business for less than five years.

Is there a better approach?

An editorial in the Washington Post helpfully points out some policies that actually would reduce the costs of food.

New York Mayor Zohran Mamdani wants to spend tens of millions of dollars testing out government-run grocery stores. …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 to 3 percent. Partly that is due to shoplifting. …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.

And I’ll close with some excerpts from a Vital City column by Stephen Smith.

To get cheaper apples, the Big Apple must correctly diagnose why prices are high. …A better solution would be to work with the private sector to make it easier to open new grocery stores, stimulating competition in the sector the traditional way — by increasing supply. …The lowest-hanging fruit is to simply legalize selling groceries in more of the city. The most egregious planning barrier is that grocery stores over 10,000 square feet are not generally allowed as-of-right in so-called “M” districts, which are the easiest places to find sites large enough to accommodate the large stores that national grocers are used to. …To open a full-sized grocery store in these areas, a developer must seek a “special permit,” which requires the full City Council to get together and vote for an exception…and has in the past even been an invitation to corruption. Most famously, the City Council uses this power to keep out Walmart at the behest of unions… There are additional zoning obstacles. While the City has mostly removed parking requirements for housing, off-street parking is still required for grocery stores in much of the city. …policymakers need to focus on breaking down barriers to competition, letting New Yorkers vote with their wallets and sort the rest out.

The moral of the story is that government is the problem, not the solution. Shocking conclusion, I realize.

P.S. One of the reasons I’m a big fan of federalism is that I’d much rather have bad ideas get imposed someplace like New York City rather than nationally. Moreover, it’s always good to have fresh examples of why statism fails without risking the health of an entire nation.