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CONLEY COMMENTARY (WSAU) – One of the things that makes living in Manhattan so expensive is grocery prices. Grocery stores, which operate on very thin margins, can’t afford the rent on a building, or a parking lot. The grocery stores that DO exist are upscale, expensive places like Trader Joe’s or D’Agostino’s. Or you can shop at bodegas, small neighborhood convenience stores where everything costs more.
Mayoral candidate Zohran Mamdani proposes city-owned grocery stores, where prices would be subsidized by taxpayers and prices would be reasonable. Has that been tried anywhere else? Well, yes, in other countries. In the old Soviet Union. There were upscale grocery stores that were well-stocked – but they were for foreigners and party officials only. Everyday Russians shopped at the GOST – where, you were lucky if you got to the front of the line and bread was still available. Venezuela and North Korea also have state run grocery stores with empty shelves. North Korea even has a most curious grocery store that is stocked to the rafters, but no one is allowed to buy anything. It exists only to give the illusion of abundance.
But surely a state-run grocery store would be run better in the United States. It’s been tried here too… in Kansas City… where there are many neighborhoods without supermarkets. So the city subsidized Sun Fresh Markets starting in 1998.
Five stores were subsidized to the tune of $65-million. What happened? Mostly empty shelves. To keep prices low they only stocked basic items. If you preferred Hellman’s mayonnaise… sorry Ajax brand is the only type available. You want Wonderbread? Sorry you get Baxo brand. And since these stores don’t stock name brand items, with higher profit margins, they lose tremendous amounts of money. And they are never fully stocked. National brands like Tyson and Kellogs have national, reliable distribution networks. No-name brands don’t. Better be first-in-line when the produce truck pulls up. Once the bananas and apples are gone, they may not come back until next week.
But surely Zohran’s New York City people’s markets will be run better. You’d better hope not. If a government subsidized grocery store is successful, it undercuts any for-profit grocery store nearby. Their prices will go even higher.
The bottom line is simple. Only a free market economy, built on supply and demand, works. From Russia to Kansas City, to New York, government interference always fails.
Chris Conley
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