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?
When you have a highly competitive market with plenty of actors lower cost does trickle down. Otherwise you’re talking about an extremely complicated cartel which cannot exist.
> 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.
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.
Major grocers are more inclined to form cartels on price than to engage in organic competitive action. These businesses are too large and incentives too perverse for free market dynamics to apply anymore.
>Major grocers are more inclined to form cartels on price than to engage in organic competitive action.
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.
"The Transportation Department workers arrived at 9:15 p.m., right on time. Mr. Boyce and his crew were ready, having fitted the roof and rear wall panel 30 minutes before. By Monday, the structure was nearly complete. “This is all like synchronized swimming,” Mr. Mansylla said. “To build a structure in New York City in, what, 48 hours? That’s as fast as it gets.”
Your article doesn't say anything about cost, only that it got built fast. Every time the toilet example gets cited, the punchline is the cost, not how long it took, although that was appalling as well.
From the wikipedia article:
>The toilet's original proposed cost of $1.7 million inspired media coverage and criticism of the San Francisco government.
The whole point is in principle these things are good ideas but in practice they are tools weaponized by NIMBYs. This is the fig leaf that keeps them around. "But why would you do away with environmental review???" As if you were to stab 55 gal drums of toxic waste and dump them into a river. But really you were trying to build an apartment as large as many other existing apartments in the middle of the city. Or in this case, install something on the sidewalk.
What's the point of this observation other than for shock value? Yes, when you multiply small percentage by a huge number, you're still left with a huge number. That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
>That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
Otherwise it's like saying "you know what everyone should do? Raise their own chickens! Sure, you might be only saving $1 or whatever a day, but multiply that 365 days per year and 340 million Americans, and that's billions we're all collectively saving!"
And no, running a grocery store isn't something that scales easily.
> The class-action case was brought against a group of companies that includes Loblaw and the Weston companies, Metro, Walmart Canada, Giant Tiger, and Sobeys and its owner, Empire Co. Ltd.
> The plaintiffs allege those companies participated in a 14-year industry-wide price-fixing conspiracy between 2001 and 2015, leading to an artificial increase in packaged bread prices.
The whole egg fiasco is as far as I am concerned the biggest proof of price gouging cartel behavior there is. And people assume it is normal.
Vast majority of product sold when inventory is low, they just go out of stock still at MSRP right to the last sku in the inventory. Then, you wait until more are available, also at that same price.
Really, why would prices go up for the eggs in this situation if not for gouging? Sure plenty of chickens were culled. But the remaining chickens aren't costing more than they did before the cull. Whoever is producing the remaining eggs being produced is producing them for the exact same overhead they have always been producing. Feed is still probably the same. Maybe cheaper with an excess of feed on the market needing to be sold and moved out of feedlots before the next crop comes in, from the chicken culling your competitors were doing. Water is still probably the same. Power is still probably the same. Staff are still getting the same pay. Property taxes are still the same. Really, who is getting the $10 from the $12 dozen of eggs? Probably some guys smoking cigars if we are being honest.
>Really, why would prices go up for the eggs in this situation if not for gouging? [...]
Supply and demand. Just like blocking the Strait of Hormuz doesn't make oil 2x more expensive to produce everywhere else in the world, you're still left with the problem that the world has ~20% less oil to go around. That means the price of oil gets bid up until it's high enough to convince 20% of oil consumers to stop using oil.
You know what they say about massively consolidated multinational corporations with tens of thousands of employees and millions of square feet in real estate: no one making money there.
That may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains.
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.
>That may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains.
Not really imo. Private market passes costs to consumers and leverages subsidy offers to achieve rat race outcomes out of competing local governments off each other. It is how you end up with the classic case of a city courting some business but offering enough tax abatement where the city isn't actually getting anything out of the business, and once the abatement expire the business just leaves for somewhere else that will cut them a better deal. City ends up hostage to the business demanding ever more favorable incentives and removal of all taxes (there's been free trade zones established in the middle of ho hum suburbs, stuff brought in there doesn't even count as imported to the US).
Interesting. I think it really depends on the competitiveness of the market.
In a highly competitive market, every cost saved would be passed to the consumer, obviously this is simplistic microeconomics and doesn’t actually works this way.
In my city, there’s a supermarket approximately every 150 meters. Food cost is high, but for the entire country. Actually research shows that food cost is higher in low density towns where there is much less competition.
I wonder if there is a way to improve pricing more systemically by combating some of this.
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.
This is probably not far off from how things already work in distribution. Most restaurants are ordering from the same food wholesalers in a given region. When I go to more "independent" grocers or local chains they still have much of the same offerings as major grocers in my area, so I'm guessing they also order from the same sets of distributors (or lease shelf space to the same groups). And I'm not talking just the packaged stuff. But when certain varietals come in e.g. Cosmic Crisp apples, its like all the grocery stores in the area are getting the Cosmic Crisp apples over the next few weeks with the same sticker and all.
I know for stuff like seafood there is a saturday night 1am fish market near our harbor where significant volume is sold wholesale to restaurants and grocers (but also individuals interested in filling a chest freezer).
So I think already there are just few places to order food wholesale in a given region so those prices are probably somewhat even. Then of course you go to vons, kroger, ralphs, save4less, the local korean grocer, and see different prices for the exact same commodified product like Cosmic crisp apple or 6 pack of coca cola, there is your markup that comes from the grocer itself on top of the regional wholesale price. Grocers like to have flexibility in markup to play psychological games like rotating sales, coupons, and offer rewards programs. Seems that sort of finagling isn't tolerated at the next level of abstraction in business to business sales.
Cost disruptions might be good to put the blame on who exactly in the chain is gouging prices. At the end of the day, the eggs in the egg shortage were not more costly to produce than beforehand. And the egg farms that were culled of their hens, were probably not that much of an anchor on operations given that they probably were not consuming their usual power, water, farmhands probably all laid off, land bought and paid for probably decades ago by this point, way out in marginal farmland where property taxes are probably quite low. Certainly not enough to quadruple the price of eggs. And how interesting how Trader Joes still sold $2.99 dozen racks during this whole crisis.
Those are pretty extraordinary claims with very little evidence.
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.
Why is government directly engaging in commerce such a controversial topic. The government already does it in various forms: VA hospitals, Medicare price negotiations, government subsidies in agriculture, owning 10% of Intel etc.
Too much to write in a HN comment so here is a substack post (1) probably worthy of its own HN post.
And how is that the obvious solution? You see who is in the Whitehouse and you think this is a champion of antitrust and lifting up the little man? Quite the opposite. NYC government is a separate entity than federal government with different limits to its powers. They can't do anything about cartel behavior. They can, however, open a municipal grocery store.
The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors. No anything. What really would be the role of government after we stripped it of all its potential influences on the world of commerce? I can't even imagine what might even be left...
No, it seems a big role in this country for government is facilitating conditions for commerce. Educating the populace such as to upskill the nation's labor pool. Building roads free for businesses to use in transporting goods to market. Treating the sick before they get so ill as to be an undue burden on the medical system that threatens its entire latent capacity. Offering cheaper food seems in line with that. People aren't going to use the spare money to throw into a river; they will use their extra money to circulate back into the economy probably in more productive ways than Kroger buying back its stock or its executives or shareholders squandering it on oysters and boat fuel.
That post was not at all worth my time, it just cherry picked data without ever putting it together to show intentional price manipulation or monopolistic behavior (no, showing concentration isn't enough).
> They can't do anything about cartel behavior.
Incorrect, several states have passed their own antitrust laws, there's nothing that limits it to the federal government.
> The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors....
I do think the government should get out of many of those, so your argument doesn't really land for me.
> No, it seems a big role in this country for government is facilitating conditions for commerce.
I don't see how the government driving out competition by running its own grocery stores, presumably at a loss, is "facilitating conditions for commerce".
>I don't see how the government driving out competition by running its own grocery stores, presumably at a loss, is "facilitating conditions for commerce".
If someone is stealing your only $20 out of your pocket and I stop them and you now have $20 in your pocket, I've just created conditions for commerce on the part of you taking that $20 and spending it someplace else in the market than on the thief. When you give a dollar to a rich person vs a working class person, that dollar is far more likely to be circulated back into the economy in the latter case than in the former case. The poor person spends the bulk of their paycheck on needs and a handful of wants, real hard items, not speculative assets. The rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
What do you believe the role of government is? Do you believe that every resource we use in life should be priced such that a handful of individuals have the opportunity to live fat off the transaction? Inefficiencies at every level of the supply chain?
> If someone is stealing your only $20 out of your pocket and I stop them and you now have $20 in your pocket, I've just created conditions for commerce on the part of you taking that $20 and spending it someplace else in the market than on the thief.
But, to engage with your ridiculous bait and switch: whether I or the thief have $20 is irrelevant to the commerce as he'll presumably spend it at the market too, so even this ridiculously contrived example falls flat on its face.
> rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
Here you go again with some ridiculously biased example, but I'll engage with it for your own sake: money that's invested doesn't just disappear, it goes into the pockets of employees and suppliers or gets reinvested in some other way, continuing the cycle.
Good article, thanks for sharing. I haven't tried to verify its claims but at face value pretty illuminating.
It seems to me both that:
1. If this article is true then independent groceries should have a slam dunk in keeping prices low. They aren't subject to the price fixing cartel of the big grocers so if they lower prices they'll drive demand to their store and win out on the market. Margins for staples are quite low anyway so volume is the best way to make profits. This means we should observe independent grocers right now outcompeting large chains or driving costs lower .
2. Alternatively if the price gouging is coming from consolidation of the CPG market then state run grocery stores will be just as ineffective at combatting high prices as independent grocers. I guess one can argue that a sufficiently large amount of state run demand can negotiate better CPG pricing but I'm not sure this experiment is big enough.to leverage this.
Personally I'm not a fan of state run businesses because the US is so polarized. Today's support can turn into tomorrow's opposition. It's hard to build a lasting institution when differences in candidates and parties can wipe out any wins or losses.
Instead I'd like to either see state subsidizing of staples and CPGs using taxes (paying into a food price stabilization fund used to negotiate and aquire staples and CPGs at cost and then resold to grocery stores at lower prices, along with maximum margin guarantees from grocery stores) or I'd like so see an incentive program for independent grocers along with a state blessed way of having disparate grocers negotiate better prices.
But I also don't live in NYC and this initiative's success or failure isn't being run on my tax money.
>Personally I'm not a fan of state run businesses because the US is so polarized. Today's support can turn into tomorrow's opposition. It's hard to build a lasting institution when differences in candidates and parties can wipe out any wins or losses.
Certain states the government actually operates the liquor stores so this isn't wholly unprecedented. Government also does this sort of thing for armed forces. It is interesting how the US military with its associated progression, benefits, services, and provided housing, is sort of a gleam into what a communist united states might have looked like in another timeline. Kind of ironic when you get a pro military pro capitalist person I guess. They have more experience with de facto communism than most and seemed to have liked a lot of aspects.
It’s the idea, although they’ve chosen a weird location for that: La Marqueta is about 300 feet from a grocery store (City Fresh on East 116th). So this pilot store will effectively compete with private groceries for business, muddying the strength of any results (in any direction).
(I say this as someone who is broadly in favor of NYC trying to run city-owned groceries in areas that are underserved.)
Of course, there is a term called coercive monopoly. It exists especially in large infrastructure projects where the startup cost is tremendous so only government, or a single entity without the possibility of competition can enter.
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.
Maybe they should look into why the closings occurred. Around here, the Lake City grocery store closed likely because of rampant shoplifting and the police failing to protect the stores, along with excessive taxes.
Sure. Lots of things governments need to do are unprofitable, like delivering the mail or repairing the roads.
I can go to my local public library, borrow the free books, use the free computers, sit in the free chairs, ask the librarian for free guidance, enjoy the free air conditioning, and even book a free meeting room to meet up with some friends to work on a project.
Profitable? Fuck no. Great to have in my city? Fuck yes.
"Share" of the wealth says nothing about what the amount is. For example, if you create $10 of wealth, my share of the total wealth goes down, but my wealth is unaffected.
"About $42 trillion in new wealth was created in the first two years of the pandemic. Two-thirds of that has gone to the richest 1% of the world’s people, according to a report out Monday from the nonprofit organization Oxfam. In the United States, billionaires are a third richer now than they were before the pandemic."
> For example, if you create $10 of wealth, my share of the total wealth goes down, but my wealth is unaffected.
Government owned grocery stores already exist [1]. They are run by the U.S. military, have 200+ locations, and charge at least 25% less than other brands [1].
"Surveys consistently rate the commissaries as one of the military's top non-pay benefits." NYC wants to provide similar benefits for residents.
>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?
I think this is the mindset required for this conversation. There is no way to make a library drive a profit, let alone financially self-sufficient. However, the library exists because the city values the externalities, specifically an educated public and reduced crime. For those purposes, libraries are incredibly cost efficient.
The same argument can be made for public grocers. Reducing poverty has cascading effects including better health and lower crime rates.
Well no, because the library is often the sole provider of book lending services and there's no private sector alternative. The same can't be said for grocery stores. To continue your analogy, it would be closer to the government setting up its own streaming service, even though there's netfilx and several other competitors. Even though people hate netflix for its price hikes or whatever, it's unclear how the government can do a better job here than netfilx (or other competitors), aside from strongarming/expropriating rights holders.
That's not how it used to work. That's still not how it works in my country. I buy my bread from a specialized shop, my cheese from another, and my fresh produce from yet another. I know people who only buy their meat from a butcher (I do it sometimes, but not always).
I understand your point of view. But in cities of all sizes, it's easier to not have to do that. For example in NYC, a medium size city, you can easily go do your shopping in multiple places, and not at the same time.
Economic viability isn't what led to "wide availability and inventory". No, it's imperialism. It's exploitation of the Global South. It's paying slave wages through subsidiaries in West Africa to cocoa farmers while making sure those countries stay poor, for example.
We also wage economic war on our our anointed enemies like Cuba and then use the inevitable result of that economic warfare as a reason why our system is good.
> Won’t it just cause neighboring stores to close?
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.
You can't conclude it was a ruse without knowing the elasticity of egg demand!
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?
It could potentially be a ruse by egg producers. Certainly there's reason for suspicion. But darth_avocado's claim was that grocery stores were in on the ruse and must have extracted huge profits from price gouging consumers. I think that's obviously false. You'll note that in the jury case the plaintiffs were themselves megacorporations, and substantially larger ones than the producers they were suing at that.
I don't blame consumers for deciding they don't care about the underlying market structure and just want cheap eggs. But you can't run a store on that basis, and if the city feels like it has to there'll be problems.
He won by not being a capitalist. He campaigned on doing something to actually meet the basic needs of the people who elected him. This is the cost of that promise. This will force them to compete on those terms instead of directly on money.
Oh no! Struggling Americans will be able to buy food cheaper! What will we do?
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.
To anyone who espouses these claims that the government isn't capable of anything or that it's somehow a moral hazard I just have to ask: how's that working out for you in particular and society in general? Does it feel like things are going well?
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.
You sound extremely privileged and frankly out of touch (not uncommon with the HN demographic).
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?
In some neighborhoods there are only luxury grocery options.
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
It’s about supply and demand. Luxury grocers provide a shopping “experience”, where low cost grocers do not. In a luxury neighborhood it would make sense the shoppers are looking for experience more so than low cost.
The neighborhoods I'm talking about also have many people living in poverty or near it. Looks like you live in Israel which is perhaps less integrated / more segregated than Brooklyn (I don't know though, I haven't been to see first hand)
I was very skeptical of these plans at first—as a New Yorker, I don’t exactly have a lot of trust in our city’s government to run things well.
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.
"Hey, let's try something new!" without a plan for success is just a recipe for failure.
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!"
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.
As an outsider, it will be interesting to see a pilot at minimum. I'd be hesitant for NYC if it rolled out massively expensive stores across the entire city without understanding if it succeeds at the small scale. I'm not sure why this succeeding or failing has to be viewed as a violation of a sacred value.
Governments should do more experiments, and this does seem to have been thought out enough to not be a total waste of money.
I believe it's simple tribal behavior, combined with American blindness to a "free market". They'd rather be correct and put everything in a good / bad bucket instead of experimenting and learning from the experience.
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?
- 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.
Yeah it was so successful that people would line up around the block for bananas the one time a year. Or when boots came into the store you'd pick up whatever size you could, as you'd trade later.
Updated - since my text was confusing. The subject at hand is subsidized grocery stores, the USSR is an example of failed centrally planned subsidized grocery stores.
My fil owns a bunch of grocery stores in Russia. The gov't still essentially subsidizes the cost of basic goods to keep prices low for the poor. Because of this, even the poorest have access to what they need, and they worship Putin because of it - "he makes sure we're taken care of". Obviously we could get into the corruption, why they're so poor in the first place, etc, but it is clearly working pretty well.
Also in Israel, stable basic products (like milk) have a government mandated pricing, not even subsidized.
It’s a good idea in its simplistic form, and works well most of the times, but once every 2 years you get a crunch where the manufacturers just decline to produce products at a loss, so we don’t have milk or butter for 2 weeks.
NY Post wailing aside, it’s unclear that hizzoner has engaged in that much personal graft. There’s also no evidence presented that the staff of this program are being hired through a graft scheme.
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.
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.
A gov run grocery store will have to pay rent and taxes.
The only difference is it doesn’t have to make profits to pay its owners.
The question is, why are you prioritizing being “fair” to people profiting off hunger, over being fair to working people trying to eat? Even if it is “unfair” this is a kind of unfair we should all support (assuming it succeeds at feeding people).
And even worse, last estimate I saw was 30 million to open a store! 30 million! Graft is alive and well. Communism is a dismal failure, and I don't want to live through it myself. Say no to communism.
Dumb populist idea, grocery stores make 2% margins, best case scenario you're saving people 2%, realistic scenario you introduce operational inefficiencies that the chains already optimized out and waste taxpayer resources.
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.
You’re not putting a municipal grocery store on the same block as an existing big box and saying “wow, savings!”
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
Those corner stores exist in a perfectly competitive market, they have low turnover so they have to charger higher prices to pay staff wages and rent. There are no abnormal profits. Why would you set up a government run store with more operational inefficiencies and less ability to respond to the local knowledge problem, than like give money or food stamps to people in these areas, or use the money in some other way?
> “Some will insist that city-owned businesses do not work, that government cannot keep up with corporations. My answer to them is simple: I look forward to the competition. May the most affordable grocery store win,” Mamdani said.
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.
Store are low margin businesses, unless they own the walls. In this case, what often happens is that when he retires, the owner keeps the walls but sells the business. The walls are put in an asset portfolio, while the poor bastard who bought the business see their renting cost climbing. And that's not talking about the buying group whose margin grow YoY while the shop margin goes down.
> 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.
Restaurants already do this. They buy from wholesalers, because they're cheaper than the grocery store.
> 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 question of volume. If they're really going to sell things at a loss, then it should create real demand. If you have that demand, then you're going to start running out of groceries mid-day. At that point, the business sucks because you either have to show up at 10 AM to buy anything, or they start some ridiculous rationing program to prevent people and businesses effectively reselling at market rates, or they make up for their negative margins by increasing their volume and losing even more money.
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.
It sort of doesn't matter. The point is that if the goods are being sold below market value then you will either have shortages, rationing, or accelerating losses. This has always been a problem in non-market socialism.
> The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly.
Why?
Stock store/generic brands. Don't stock 40 variants of Colgate toothpaste that all have the same ingredients and are described separately as "fresh mint", "cool mint", and "mint". Stock more staples than sushi.
I mean Costco’s a membership club. This is NYC. Of course somebody’s gonna show up with a truck and arb any profitable grocery item if there isn’t rationing.
Not being able to get stuff on a pallet or in a 5 gallon bucket or whatever has its own cost. Hell, not being able to invoice on NET30 or have a supplier or even not having to pick and pack stuff has a cost.
Not a new idea and the intention seems to be good. I wonder how will the implementation go. Where does the stores source merchandises? What is the volume of the five stores in total? How do they plan to offer a better price -- is it a percentage lower than some other stores, or something else? What if they have to run them with a loss? Such and such.
This is Mamdani’s worst idea. Margins on most essential goods in grocery stores is incredibly low, sometimes it’s a loss leader. Does anyone know of any solid economic rationale for this move?
The underlying theory is to put these stores in areas that otherwise lack grocery store access, meaning they won’t compete with existing stores for small margins. Running at a (moderate) loss would also be politically acceptable; the city runs a lot of things at a loss for civic purposes and fills the gaps with taxes.
(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.)
Many people losing their minds over stuff like this... I'm just glad some people are finally trying out new ideas, because the status quo is not working for a large portion of the American population.
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.
I'm not opposed to this, but I'd rather have seen incentives and subsidies for local co-ops to succeed in this space. That's probably harder than it sounds, though.
I wonder what the margin is on groceries and if the stores can sustain themselves by operating at cost. I also want to know how they plan to handle pricing during shortages, e.g. eggs.
The government already runs/oversees a variety of public grocery stores. Including:
- 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.
This sounds extremely non economically viable.
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?
> Won’t a better option be subsidizing taxes for grocery stores, and let the discounts competitively pass unto the customers?
I'm sure this time trickle-down economics will work and not simply line the pockets of business owners
When you have a highly competitive market with plenty of actors lower cost does trickle down. Otherwise you’re talking about an extremely complicated cartel which cannot exist.
It's not trickling down. Lower costs do result in lower prices.
> 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-...
I didn’t specify on the subsidies themselves.
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.
Major grocers are more inclined to form cartels on price than to engage in organic competitive action. These businesses are too large and incentives too perverse for free market dynamics to apply anymore.
>Major grocers are more inclined to form cartels on price than to engage in organic competitive action.
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...
[3] https://en.wikipedia.org/wiki/Noe_Valley_public_toilet
> https://en.wikipedia.org/wiki/Noe_Valley_public_toilet
Mamdani has clearly taken lessons like these to heart.
https://www.nytimes.com/2026/04/07/nyregion/how-to-build-a-r...
"The Transportation Department workers arrived at 9:15 p.m., right on time. Mr. Boyce and his crew were ready, having fitted the roof and rear wall panel 30 minutes before. By Monday, the structure was nearly complete. “This is all like synchronized swimming,” Mr. Mansylla said. “To build a structure in New York City in, what, 48 hours? That’s as fast as it gets.”
Your article doesn't say anything about cost, only that it got built fast. Every time the toilet example gets cited, the punchline is the cost, not how long it took, although that was appalling as well.
From the wikipedia article:
>The toilet's original proposed cost of $1.7 million inspired media coverage and criticism of the San Francisco government.
Sure... because it was a prefab and still took two years at that cost.
Plus, the cost of building includes a lot of permits, inspections, studies, and money to sldo so. Taxes too.
Was all this waived?
I'm a firm believer that part of progressivism needs to be reining in these sorts of NIMBY obstacles.
Environmental assessments are NIMBY? Well regardless, the point is it should be the same for everyone.
> Environmental assessments are NIMBY?
It's a kiosk being added to a concrete sidewalk in the middle of Manhattan, by the city itself.
There must be a way to do projects of this small scale without spending years on paperwork.
The whole point is in principle these things are good ideas but in practice they are tools weaponized by NIMBYs. This is the fig leaf that keeps them around. "But why would you do away with environmental review???" As if you were to stab 55 gal drums of toxic waste and dump them into a river. But really you were trying to build an apartment as large as many other existing apartments in the middle of the city. Or in this case, install something on the sidewalk.
Margins being low is fine when you've scaled across a nation. Annual gross profit for Kroger is $34b.
>Annual gross profit for Kroger is $34b.
What's the point of this observation other than for shock value? Yes, when you multiply small percentage by a huge number, you're still left with a huge number. That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
It represents the privatized waste figure out of your grocery bill that is not going to the food you are bringing home.
See my previous comment:
>That doesn't mean it's suddenly worth doing unless you can make the argument that it scales easily.
Otherwise it's like saying "you know what everyone should do? Raise their own chickens! Sure, you might be only saving $1 or whatever a day, but multiply that 365 days per year and 340 million Americans, and that's billions we're all collectively saving!"
And no, running a grocery store isn't something that scales easily.
Well, let's check back in 2028 after running this pilot study.
It literally happened here in Canada:
https://www.cbc.ca/news/business/loblaw-bread-price-settleme...
> The class-action case was brought against a group of companies that includes Loblaw and the Weston companies, Metro, Walmart Canada, Giant Tiger, and Sobeys and its owner, Empire Co. Ltd.
> The plaintiffs allege those companies participated in a 14-year industry-wide price-fixing conspiracy between 2001 and 2015, leading to an artificial increase in packaged bread prices.
The consumer cost of overcharges from price-fixed bread in Canada was estimated at 4-5 billion dollars. And that's just bread. Is that negligible?
Usually if someone steals a millionth of that, they go to jail for a very long time.
The same players are now under investigation for selling underweight meats.
The whole egg fiasco is as far as I am concerned the biggest proof of price gouging cartel behavior there is. And people assume it is normal.
Vast majority of product sold when inventory is low, they just go out of stock still at MSRP right to the last sku in the inventory. Then, you wait until more are available, also at that same price.
Really, why would prices go up for the eggs in this situation if not for gouging? Sure plenty of chickens were culled. But the remaining chickens aren't costing more than they did before the cull. Whoever is producing the remaining eggs being produced is producing them for the exact same overhead they have always been producing. Feed is still probably the same. Maybe cheaper with an excess of feed on the market needing to be sold and moved out of feedlots before the next crop comes in, from the chicken culling your competitors were doing. Water is still probably the same. Power is still probably the same. Staff are still getting the same pay. Property taxes are still the same. Really, who is getting the $10 from the $12 dozen of eggs? Probably some guys smoking cigars if we are being honest.
>Really, why would prices go up for the eggs in this situation if not for gouging? [...]
Supply and demand. Just like blocking the Strait of Hormuz doesn't make oil 2x more expensive to produce everywhere else in the world, you're still left with the problem that the world has ~20% less oil to go around. That means the price of oil gets bid up until it's high enough to convince 20% of oil consumers to stop using oil.
You say bid up. I say gouged. Potato Potato I guess.
Oh, that must be why the grocery business is wildly profitable
You know what they say about massively consolidated multinational corporations with tens of thousands of employees and millions of square feet in real estate: no one making money there.
Low margins, high volumes.
Walmart has low margins. Walmart is also wildly profitable.
That may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains.
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.
>That may be, but you can direct subsidies towards inverse relation to the store’s income. You can even add extra taxes for large chains.
Not really imo. Private market passes costs to consumers and leverages subsidy offers to achieve rat race outcomes out of competing local governments off each other. It is how you end up with the classic case of a city courting some business but offering enough tax abatement where the city isn't actually getting anything out of the business, and once the abatement expire the business just leaves for somewhere else that will cut them a better deal. City ends up hostage to the business demanding ever more favorable incentives and removal of all taxes (there's been free trade zones established in the middle of ho hum suburbs, stuff brought in there doesn't even count as imported to the US).
Interesting. I think it really depends on the competitiveness of the market.
In a highly competitive market, every cost saved would be passed to the consumer, obviously this is simplistic microeconomics and doesn’t actually works this way.
In my city, there’s a supermarket approximately every 150 meters. Food cost is high, but for the entire country. Actually research shows that food cost is higher in low density towns where there is much less competition.
I wonder if there is a way to improve pricing more systemically by combating some of this.
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.
This is probably not far off from how things already work in distribution. Most restaurants are ordering from the same food wholesalers in a given region. When I go to more "independent" grocers or local chains they still have much of the same offerings as major grocers in my area, so I'm guessing they also order from the same sets of distributors (or lease shelf space to the same groups). And I'm not talking just the packaged stuff. But when certain varietals come in e.g. Cosmic Crisp apples, its like all the grocery stores in the area are getting the Cosmic Crisp apples over the next few weeks with the same sticker and all.
I know for stuff like seafood there is a saturday night 1am fish market near our harbor where significant volume is sold wholesale to restaurants and grocers (but also individuals interested in filling a chest freezer).
So I think already there are just few places to order food wholesale in a given region so those prices are probably somewhat even. Then of course you go to vons, kroger, ralphs, save4less, the local korean grocer, and see different prices for the exact same commodified product like Cosmic crisp apple or 6 pack of coca cola, there is your markup that comes from the grocer itself on top of the regional wholesale price. Grocers like to have flexibility in markup to play psychological games like rotating sales, coupons, and offer rewards programs. Seems that sort of finagling isn't tolerated at the next level of abstraction in business to business sales.
Cost disruptions might be good to put the blame on who exactly in the chain is gouging prices. At the end of the day, the eggs in the egg shortage were not more costly to produce than beforehand. And the egg farms that were culled of their hens, were probably not that much of an anchor on operations given that they probably were not consuming their usual power, water, farmhands probably all laid off, land bought and paid for probably decades ago by this point, way out in marginal farmland where property taxes are probably quite low. Certainly not enough to quadruple the price of eggs. And how interesting how Trader Joes still sold $2.99 dozen racks during this whole crisis.
Those are pretty extraordinary claims with very little evidence.
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.
Why is government directly engaging in commerce such a controversial topic. The government already does it in various forms: VA hospitals, Medicare price negotiations, government subsidies in agriculture, owning 10% of Intel etc.
I wouldn't argue that the US healthcare system is so good that no market distortion can be detected from its current structure.
>Charges $100 for a tylenol because insurance or medicare will blindly pay for it
Yup no distortions here just good old fashion free market!
Indeed.
Too much to write in a HN comment so here is a substack post (1) probably worthy of its own HN post.
And how is that the obvious solution? You see who is in the Whitehouse and you think this is a champion of antitrust and lifting up the little man? Quite the opposite. NYC government is a separate entity than federal government with different limits to its powers. They can't do anything about cartel behavior. They can, however, open a municipal grocery store.
The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors. No anything. What really would be the role of government after we stripped it of all its potential influences on the world of commerce? I can't even imagine what might even be left...
No, it seems a big role in this country for government is facilitating conditions for commerce. Educating the populace such as to upskill the nation's labor pool. Building roads free for businesses to use in transporting goods to market. Treating the sick before they get so ill as to be an undue burden on the medical system that threatens its entire latent capacity. Offering cheaper food seems in line with that. People aren't going to use the spare money to throw into a river; they will use their extra money to circulate back into the economy probably in more productive ways than Kroger buying back its stock or its executives or shareholders squandering it on oysters and boat fuel.
1. https://grocerynerd.substack.com/p/grocery-update-17-how-gro...
That post was not at all worth my time, it just cherry picked data without ever putting it together to show intentional price manipulation or monopolistic behavior (no, showing concentration isn't enough).
> They can't do anything about cartel behavior.
Incorrect, several states have passed their own antitrust laws, there's nothing that limits it to the federal government.
> The government engages in commerce all the time. If we took that argument to its logical conclusion there would be no libraries as they compete with book stores. There would be no armies as they compete with Blackrock mercenaries. No public transit as it competes with private transit. No public events as that competes with ticketmaster. No public schools. No public universities. No scientific research grants. No sheltering or feeding the poor. No treating the sick. No treating veterans. No bridges. No roads. No harbors....
I do think the government should get out of many of those, so your argument doesn't really land for me.
> No, it seems a big role in this country for government is facilitating conditions for commerce.
I don't see how the government driving out competition by running its own grocery stores, presumably at a loss, is "facilitating conditions for commerce".
>I don't see how the government driving out competition by running its own grocery stores, presumably at a loss, is "facilitating conditions for commerce".
If someone is stealing your only $20 out of your pocket and I stop them and you now have $20 in your pocket, I've just created conditions for commerce on the part of you taking that $20 and spending it someplace else in the market than on the thief. When you give a dollar to a rich person vs a working class person, that dollar is far more likely to be circulated back into the economy in the latter case than in the former case. The poor person spends the bulk of their paycheck on needs and a handful of wants, real hard items, not speculative assets. The rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
What do you believe the role of government is? Do you believe that every resource we use in life should be priced such that a handful of individuals have the opportunity to live fat off the transaction? Inefficiencies at every level of the supply chain?
> If someone is stealing your only $20 out of your pocket and I stop them and you now have $20 in your pocket, I've just created conditions for commerce on the part of you taking that $20 and spending it someplace else in the market than on the thief.
Grocery stores aren't thieves, they're largely pretty terrible businesses with extremely thin margins.
But, to engage with your ridiculous bait and switch: whether I or the thief have $20 is irrelevant to the commerce as he'll presumably spend it at the market too, so even this ridiculously contrived example falls flat on its face.
> rich person bids up Tesla stock and makes Elon into a billionaire off a PE of 317 now, thin air pumped into the balloon in other words with all this money tied up in overpriced TSLA stock than empowering real work in the economy.
Here you go again with some ridiculously biased example, but I'll engage with it for your own sake: money that's invested doesn't just disappear, it goes into the pockets of employees and suppliers or gets reinvested in some other way, continuing the cycle.
> What do you believe the role of government is?
Limited.
Good article, thanks for sharing. I haven't tried to verify its claims but at face value pretty illuminating.
It seems to me both that:
1. If this article is true then independent groceries should have a slam dunk in keeping prices low. They aren't subject to the price fixing cartel of the big grocers so if they lower prices they'll drive demand to their store and win out on the market. Margins for staples are quite low anyway so volume is the best way to make profits. This means we should observe independent grocers right now outcompeting large chains or driving costs lower .
2. Alternatively if the price gouging is coming from consolidation of the CPG market then state run grocery stores will be just as ineffective at combatting high prices as independent grocers. I guess one can argue that a sufficiently large amount of state run demand can negotiate better CPG pricing but I'm not sure this experiment is big enough.to leverage this.
Personally I'm not a fan of state run businesses because the US is so polarized. Today's support can turn into tomorrow's opposition. It's hard to build a lasting institution when differences in candidates and parties can wipe out any wins or losses.
Instead I'd like to either see state subsidizing of staples and CPGs using taxes (paying into a food price stabilization fund used to negotiate and aquire staples and CPGs at cost and then resold to grocery stores at lower prices, along with maximum margin guarantees from grocery stores) or I'd like so see an incentive program for independent grocers along with a state blessed way of having disparate grocers negotiate better prices.
But I also don't live in NYC and this initiative's success or failure isn't being run on my tax money.
>Personally I'm not a fan of state run businesses because the US is so polarized. Today's support can turn into tomorrow's opposition. It's hard to build a lasting institution when differences in candidates and parties can wipe out any wins or losses.
Certain states the government actually operates the liquor stores so this isn't wholly unprecedented. Government also does this sort of thing for armed forces. It is interesting how the US military with its associated progression, benefits, services, and provided housing, is sort of a gleam into what a communist united states might have looked like in another timeline. Kind of ironic when you get a pro military pro capitalist person I guess. They have more experience with de facto communism than most and seemed to have liked a lot of aspects.
> This sounds extremely non economically viable.
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.
It’s the idea, although they’ve chosen a weird location for that: La Marqueta is about 300 feet from a grocery store (City Fresh on East 116th). So this pilot store will effectively compete with private groceries for business, muddying the strength of any results (in any direction).
(I say this as someone who is broadly in favor of NYC trying to run city-owned groceries in areas that are underserved.)
Of course, there is a term called coercive monopoly. It exists especially in large infrastructure projects where the startup cost is tremendous so only government, or a single entity without the possibility of competition can enter.
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.
Maybe they should look into why the closings occurred. Around here, the Lake City grocery store closed likely because of rampant shoplifting and the police failing to protect the stores, along with excessive taxes.
> Maybe they should look into why the closings occurred.
Do you think there's no research on the causes of food deserts?
Store closings are nearly always the result of them not being profitable.
Sure. Lots of things governments need to do are unprofitable, like delivering the mail or repairing the roads.
I can go to my local public library, borrow the free books, use the free computers, sit in the free chairs, ask the librarian for free guidance, enjoy the free air conditioning, and even book a free meeting room to meet up with some friends to work on a project.
Profitable? Fuck no. Great to have in my city? Fuck yes.
Privately run grocery stores have been profitable for 250 years in the US. What has changed recently?
Could it be the decriminalization of shoplifting? Or maybe excessive taxes? Or mandates on wages? Vandalism?
I forgot to add homeless camping around them, which discourages shoppers.
> Could it be the decriminalization of shoplifting? Or maybe excessive taxes? Or mandates on wages?
Could it be the K-shaped economy?
https://www.bloomberg.com/news/articles/2021-10-08/top-1-ear...
"After years of declines, America’s middle class now holds a smaller share of U.S. wealth than the top 1%."
"Over the past 30 years, 10 percentage points of American wealth has shifted to the top 20% of earners, who now hold 70% of the total, Fed data show."
"Share" of the wealth says nothing about what the amount is. For example, if you create $10 of wealth, my share of the total wealth goes down, but my wealth is unaffected.
https://www.marketplace.org/story/2023/01/16/how-the-worlds-...
"About $42 trillion in new wealth was created in the first two years of the pandemic. Two-thirds of that has gone to the richest 1% of the world’s people, according to a report out Monday from the nonprofit organization Oxfam. In the United States, billionaires are a third richer now than they were before the pandemic."
> For example, if you create $10 of wealth, my share of the total wealth goes down, but my wealth is unaffected.
Sure. Inflation doesn't exist. Isn't that lovely?
Government owned grocery stores already exist [1]. They are run by the U.S. military, have 200+ locations, and charge at least 25% less than other brands [1].
"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
From your own article:
>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?
Sure. It's also the business model of your local library.
I think this is the mindset required for this conversation. There is no way to make a library drive a profit, let alone financially self-sufficient. However, the library exists because the city values the externalities, specifically an educated public and reduced crime. For those purposes, libraries are incredibly cost efficient.
The same argument can be made for public grocers. Reducing poverty has cascading effects including better health and lower crime rates.
Well no, because the library is often the sole provider of book lending services and there's no private sector alternative. The same can't be said for grocery stores. To continue your analogy, it would be closer to the government setting up its own streaming service, even though there's netfilx and several other competitors. Even though people hate netflix for its price hikes or whatever, it's unclear how the government can do a better job here than netfilx (or other competitors), aside from strongarming/expropriating rights holders.
> To continue your analogy, it would be closer to the government setting up its own streaming service…
https://www.pbs.org/
Why does everything needs to be economically viable?
Not everything does - transport infrastructure, healthcare, sewage, for example do not.
But economic viability -> competition -> research and development -> economic growth
Because that’s what has traditionally allowed western countries to have a wide availability and inventory of goods vs communist economies.
But why does the availability have to be wide? Maybe those stories can do few things, but do them well. Sell staple foods and healthy choices.
Because than people won’t come to your store. People buy where they can purchase the maximum of their shopping cart in a single place.
That is why you have loss leader grocers, where they pull people with dramatic discounts on specific items, but the total cart costs the same
That's not how it used to work. That's still not how it works in my country. I buy my bread from a specialized shop, my cheese from another, and my fresh produce from yet another. I know people who only buy their meat from a butcher (I do it sometimes, but not always).
It really depends on the countries culture
I understand your point of view. But in cities of all sizes, it's easier to not have to do that. For example in NYC, a medium size city, you can easily go do your shopping in multiple places, and not at the same time.
Yes, and some people do that.
Some consumers go to specific stores to purchase specific qualities of brands.
But most do not, especially for convenience products. You get it where you can.
Counter point: China.
Economic viability isn't what led to "wide availability and inventory". No, it's imperialism. It's exploitation of the Global South. It's paying slave wages through subsidiaries in West Africa to cocoa farmers while making sure those countries stay poor, for example.
We also wage economic war on our our anointed enemies like Cuba and then use the inevitable result of that economic warfare as a reason why our system is good.
> Won’t it just cause neighboring stores to close?
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.
You can't conclude it was a ruse without knowing the elasticity of egg demand!
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?
The DOJ thinks it was a ruse.
https://www.reuters.com/legal/government/us-egg-producers-fa...
As did a jury:
https://apnews.com/article/egg-producers-price-gouging-lawsu...
It could potentially be a ruse by egg producers. Certainly there's reason for suspicion. But darth_avocado's claim was that grocery stores were in on the ruse and must have extracted huge profits from price gouging consumers. I think that's obviously false. You'll note that in the jury case the plaintiffs were themselves megacorporations, and substantially larger ones than the producers they were suing at that.
I don't blame consumers for deciding they don't care about the underlying market structure and just want cheap eggs. But you can't run a store on that basis, and if the city feels like it has to there'll be problems.
He won by not being a capitalist. He campaigned on doing something to actually meet the basic needs of the people who elected him. This is the cost of that promise. This will force them to compete on those terms instead of directly on money.
I think that's essentially the entire point, considering that most of the economically viable grocery stores already exist.
In Seattle, the proposal for a government grocery store included exemption from paying property taxes and rent.
So they have an unfair advantage over the competition.
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?
Oh no! Struggling Americans will be able to buy food cheaper! What will we do?
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.
Grocery costs has to come from some formula. If the mamdani stores actually do sell at a lower cost, where did the discount come from?
Again. This exists. There is no theoretical here. Go look up how the military commissaries work. That will answer your question.
military commissaries are subsidized with taxes.
So would these stores have lower prices because of tax subsidies? What prevents rich people from exploiting these subsidies?
[dead]
To anyone who espouses these claims that the government isn't capable of anything or that it's somehow a moral hazard I just have to ask: how's that working out for you in particular and society in general? Does it feel like things are going well?
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.
You sound extremely privileged and frankly out of touch (not uncommon with the HN demographic).
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?
Subsidies can go to small businesses owners. Not just large corporations.
In some neighborhoods there are only luxury grocery options.
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
It’s about supply and demand. Luxury grocers provide a shopping “experience”, where low cost grocers do not. In a luxury neighborhood it would make sense the shoppers are looking for experience more so than low cost.
The neighborhoods I'm talking about also have many people living in poverty or near it. Looks like you live in Israel which is perhaps less integrated / more segregated than Brooklyn (I don't know though, I haven't been to see first hand)
I was very skeptical of these plans at first—as a New Yorker, I don’t exactly have a lot of trust in our city’s government to run things well.
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.
"Hey, let's try something new!" without a plan for success is just a recipe for failure.
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!"
I have a feeling that those slim margins don't really mean that Walmart is making e.g. 3 bucks on every 100 bucks (https://www.macrotrends.net/stocks/charts/WMT/walmart/profit...).
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.
If they can make 3 bucks per hundred of sales, and do that more than once per year... then that beats a bond that pays only 3 percent per year...
Yeah that could be the explanation.
Found the economist. Or maybe the mathematician, I’m not sure. Astute.
Simple fix really, HEB should just open up stores up north.
As an outsider, it will be interesting to see a pilot at minimum. I'd be hesitant for NYC if it rolled out massively expensive stores across the entire city without understanding if it succeeds at the small scale. I'm not sure why this succeeding or failing has to be viewed as a violation of a sacred value.
Governments should do more experiments, and this does seem to have been thought out enough to not be a total waste of money.
I believe it's simple tribal behavior, combined with American blindness to a "free market". They'd rather be correct and put everything in a good / bad bucket instead of experimenting and learning from the experience.
"let's try it" is exactly the right attitude
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?
Just because we can does not mean we should.
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.
1 - https://en.wikipedia.org/wiki/Kei_truck
> The USSR has tried this. Lets not.
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.
https://en.wikipedia.org/wiki/Defense_Commissary_Agency
Yeah it was so successful that people would line up around the block for bananas the one time a year. Or when boots came into the store you'd pick up whatever size you could, as you'd trade later.
(true stories)
Again:
> The USSR has tried this. Lets not.
would rule out things like "going to the moon" or "building roads". It's a pretty useless rubric.
I am not doubting the USSR fucked all sorts of things up. I'm doubting that that inherently means those things must be impossible.
Updated - since my text was confusing. The subject at hand is subsidized grocery stores, the USSR is an example of failed centrally planned subsidized grocery stores.
The text isn't confusing; the conclusion you draw is just unsupported.
The USSR is an example of many failed things. That they failed at those things does not mean those things cannot be done.
If it wasn't confusing what made you bring up the space program and fixing roads?
I was offering a tangible example of where the thing being proposed was a failure.
> If it wasn't confusing what made you bring up the space program and fixing roads?
They are examples of the USSR failing at a possible thing. They illustrate my critique of your claim.
My fil owns a bunch of grocery stores in Russia. The gov't still essentially subsidizes the cost of basic goods to keep prices low for the poor. Because of this, even the poorest have access to what they need, and they worship Putin because of it - "he makes sure we're taken care of". Obviously we could get into the corruption, why they're so poor in the first place, etc, but it is clearly working pretty well.
Also in Israel, stable basic products (like milk) have a government mandated pricing, not even subsidized. It’s a good idea in its simplistic form, and works well most of the times, but once every 2 years you get a crunch where the manufacturers just decline to produce products at a loss, so we don’t have milk or butter for 2 weeks.
NY Post wailing aside, it’s unclear that hizzoner has engaged in that much personal graft. There’s also no evidence presented that the staff of this program are being hired through a graft scheme.
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.)
Por que no los dos?
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 has tried this. Lets not.
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.
*bunker.
Sounds like it’s a bunker of some kind, and the ballroom was just a cover story
(https://www.independent.co.uk/news/world/americas/us-politic...)
> It will lose millions of tax dollars
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.
It also doesn't seem fair to compete against stores that have to pay rent and taxes.
A gov run grocery store will have to pay rent and taxes.
The only difference is it doesn’t have to make profits to pay its owners.
The question is, why are you prioritizing being “fair” to people profiting off hunger, over being fair to working people trying to eat? Even if it is “unfair” this is a kind of unfair we should all support (assuming it succeeds at feeding people).
The working people who own grocery stores and bodegas are trying to eat.
And even worse, last estimate I saw was 30 million to open a store! 30 million! Graft is alive and well. Communism is a dismal failure, and I don't want to live through it myself. Say no to communism.
Dumb populist idea, grocery stores make 2% margins, best case scenario you're saving people 2%, realistic scenario you introduce operational inefficiencies that the chains already optimized out and waste taxpayer resources.
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.
You’re not putting a municipal grocery store on the same block as an existing big box and saying “wow, savings!”
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
Those corner stores exist in a perfectly competitive market, they have low turnover so they have to charger higher prices to pay staff wages and rent. There are no abnormal profits. Why would you set up a government run store with more operational inefficiencies and less ability to respond to the local knowledge problem, than like give money or food stamps to people in these areas, or use the money in some other way?
> “Some will insist that city-owned businesses do not work, that government cannot keep up with corporations. My answer to them is simple: I look forward to the competition. May the most affordable grocery store win,” Mamdani said.
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.
Store are low margin businesses, unless they own the walls. In this case, what often happens is that when he retires, the owner keeps the walls but sells the business. The walls are put in an asset portfolio, while the poor bastard who bought the business see their renting cost climbing. And that's not talking about the buying group whose margin grow YoY while the shop margin goes down.
> 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.
Restaurants already do this. They buy from wholesalers, because they're cheaper than the grocery store.
> 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 question of volume. If they're really going to sell things at a loss, then it should create real demand. If you have that demand, then you're going to start running out of groceries mid-day. At that point, the business sucks because you either have to show up at 10 AM to buy anything, or they start some ridiculous rationing program to prevent people and businesses effectively reselling at market rates, or they make up for their negative margins by increasing their volume and losing even more money.
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.
What if it was possible to stock products during the day?
It sort of doesn't matter. The point is that if the goods are being sold below market value then you will either have shortages, rationing, or accelerating losses. This has always been a problem in non-market socialism.
Costco sells chickens as loss-leaders.
They don't run out, and Walmart doesn't go buy all of them to resell.
A loss leader isn’t a business model when everything is being sold at a loss.
The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly.
> The idea that Mamdani is going to undercut a low margin business with higher labor costs is just silly.
Why?
Stock store/generic brands. Don't stock 40 variants of Colgate toothpaste that all have the same ingredients and are described separately as "fresh mint", "cool mint", and "mint". Stock more staples than sushi.
I mean Costco’s a membership club. This is NYC. Of course somebody’s gonna show up with a truck and arb any profitable grocery item if there isn’t rationing.
Not being able to get stuff on a pallet or in a 5 gallon bucket or whatever has its own cost. Hell, not being able to invoice on NET30 or have a supplier or even not having to pick and pack stuff has a cost.
Not a new idea and the intention seems to be good. I wonder how will the implementation go. Where does the stores source merchandises? What is the volume of the five stores in total? How do they plan to offer a better price -- is it a percentage lower than some other stores, or something else? What if they have to run them with a loss? Such and such.
This is Mamdani’s worst idea. Margins on most essential goods in grocery stores is incredibly low, sometimes it’s a loss leader. Does anyone know of any solid economic rationale for this move?
The underlying theory is to put these stores in areas that otherwise lack grocery store access, meaning they won’t compete with existing stores for small margins. Running at a (moderate) loss would also be politically acceptable; the city runs a lot of things at a loss for civic purposes and fills the gaps with taxes.
(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.)
> The underlying theory is to put these stores in areas that otherwise lack grocery store access,
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...
Yes, I agree the city has undermined their own (strong) argument with their choice of location. I noted that in another comment as well.
(I previously lived about a ~10 minute walk from that public market.)
Many people losing their minds over stuff like this... I'm just glad some people are finally trying out new ideas, because the status quo is not working for a large portion of the American population.
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.
If you're interested in grocery store economics, I strongly recommend:
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.
I'm not opposed to this, but I'd rather have seen incentives and subsidies for local co-ops to succeed in this space. That's probably harder than it sounds, though.
I wonder what the margin is on groceries and if the stores can sustain themselves by operating at cost. I also want to know how they plan to handle pricing during shortages, e.g. eggs.
There are existing examples they can probably look to.
https://en.wikipedia.org/wiki/Defense_Commissary_Agency
Are they looking to hire any software engineers right now?
Don’t do these kinds of idiotic things. Do what Singapore does for housing.
Singapore's largest grocery chain is a co-op run by the country's labor unions, which are closely aligned with the government.
https://en.wikipedia.org/wiki/NTUC_FairPrice
The government already runs/oversees a variety of public grocery stores. Including:
- 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.