New York City Mayor Zohran Mamdani has decided the best way to provide affordable and accessible groceries to people in the city is by establishing city-owned grocery stores.
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| Source: https://apnews.com/article/mamdani-nyc-grocery-stores-prices-bronx-4634d4030209fea663e68f5d6d09a325 |
Mamdani campaigned on the proposal as a plank in a wider affordability platform centered on shifting the power of government toward policies to help the city’s struggling working class. At one point last year, he framed the idea as a modest experiment and said if it doesn’t work, “C’est la vie, then the idea was wrong.”
He is proceeding with plans to open five city-owned stores (one in each borough) that will offer a 30% discount on a core basket of essentials (fresh produce, meat, seafood and dairy). The stores are targeted to open between late 2027 and 2029.
The initial cost is at least $70 million to acquire the real estate and build out the stores.
The grocery store plans have already created problems. Mamdani has already had to admit a New York City ID will be required to shop at the stores so that non residents don't take advantage of the benefits.
This means that you will need an ID to shop at a grocery store but don't need an ID to vote in New York City!
In that grocery stores operate at very thin margins of 1%-4%, in order to provide grocery prices 30% below market, large ongoing subsidies will be necessary beyond the fact that the stores will pay no rent and pay no property taxes.
The plan may work to lower grocery prices in the short term but at the expense of disguised costs in higher taxes for New Yorkers.
Not only will large taxpayer subsidies be required to operate the grocery stores, Mamdani will likely need to eventually offer subsidies to private sector grocers who have to compete with the government stores due to the price distortion caused.
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| Link: https://x.com/danrivoli/status/2090217154213785647 |
Mamdani might be wise to consider a little history that takes us back to the fall of the Soviet Union nearly 40 years ago.
Many point to the fact that the Soviet Union collapse occurred as the Soviets were baited into trying to compete with the U.S. defense build-up instituted by Ronald Reagan.
The Soviets just did not have the financial resources to match the United States in defense spending while also tending to the needs of its citizenry.
The Soviets spent money on guns rather than butter. Something had to give and the Soviet people were the ones that suffered.
However, a little known visit to a suburban Houston supermarket in 1989 by Boris Yeltsin appears to have been the real catalyst that ended up bringing down the Soviet Union.
Yeltsin visited the Johnson Space Center in Houston in September, 1989 to tour NASA's Mission Control and to view a model of the planned International Space Station.
After visiting the Space Center, Yeltsin made an impromptu request for his entourage to stop at a local Randall's grocery store so that he could get a glimpse of what everyday life was for Americans as he was heading to the airport.
That visit changed the course of history.
At the time, Yeltsin was a newly elected member of the Soviet Parliament and the Supreme Soviet and had been a key ally of the General Secretary of the Communist Party Mikhail Gorbachev, who was initiating reforms but the pace of which was too slow for Yeltsin.
Houston Chronicle reporter Stephanie Asin was with Yeltsin on the visit to the grocery store that day.
This is a picture of Yeltsin touring the grocery store.
This Houston Chronicle story from 2014 fills in the rest of the story.
To give you some perspective on what was available in the Soviet Union at that time, here is a picture of a Russian store from that era.
An aide to Yeltsin later reported that in that visit to the grocery store in Houston “the last vestige of Bolshevism collapsed” inside his boss.
Two years later Yeltsin was elected to the newly created office of President of the Russian Federation after the collapse of the Soviet Union with Gorbachev.
Yeltsin immediately began dismantling the socialist economic system and introducing capitalism to the Russians. In the process, he attempted to convert the world's largest command economy into a free-market one.
The results of that transition were rocky in large part to cronyism in the break-up of many of the large state-owned businesses. Many Russian oligarchs were created and Yeltsin eventually resigned his office in 1999 haunted by charges of corruption and incompetence.
His successor?
However, a little known visit to a suburban Houston supermarket in 1989 by Boris Yeltsin appears to have been the real catalyst that ended up bringing down the Soviet Union.
Yeltsin visited the Johnson Space Center in Houston in September, 1989 to tour NASA's Mission Control and to view a model of the planned International Space Station.
After visiting the Space Center, Yeltsin made an impromptu request for his entourage to stop at a local Randall's grocery store so that he could get a glimpse of what everyday life was for Americans as he was heading to the airport.
That visit changed the course of history.
At the time, Yeltsin was a newly elected member of the Soviet Parliament and the Supreme Soviet and had been a key ally of the General Secretary of the Communist Party Mikhail Gorbachev, who was initiating reforms but the pace of which was too slow for Yeltsin.
Houston Chronicle reporter Stephanie Asin was with Yeltsin on the visit to the grocery store that day.
Yeltsin, then 58, “roamed the aisles of Randall’s nodding his head in amazement,” wrote Asin. He told his fellow Russians in his entourage that if their people, who often must wait in line for most goods, saw the conditions of U.S. supermarkets, “there would be a revolution.”
“Even the Politburo doesn’t have this choice. Not even Mr. Gorbachev,” he said.
The fact that stores like these were on nearly every street corner in America amazed him. They even offered free cheese samples. According to Asin, Yeltsin didn’t leave empty-handed, as he was given a small bag of goodies to enjoy on his trip.
This is a picture of Yeltsin touring the grocery store.
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| Credit: Houston Chronicle |
This Houston Chronicle story from 2014 fills in the rest of the story.
About a year after the Russian leader left office, a Yeltsin biographer later wrote that on the plane ride to Yeltsin’s next destination, Miami, he was despondent. He couldn’t stop thinking about the plentiful food at the grocery store and what his countrymen had to subsist on in Russia.
In Yeltsin’s own autobiography, he wrote about the experience at Randall’s, which shattered his view of communism, according to pundits. Two years later, he left the Communist Party and began making reforms to turn the economic tide in Russia.
“When I saw those shelves crammed with hundreds, thousands of cans, cartons and goods of every possible sort, for the first time I felt quite frankly sick with despair for the Soviet people,” Yeltsin wrote. “That such a potentially super-rich country as ours has been brought to a state of such poverty! It is terrible to think of it.”
To give you some perspective on what was available in the Soviet Union at that time, here is a picture of a Russian store from that era.
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| Credit: Gennady Galperin/Reuters |
An aide to Yeltsin later reported that in that visit to the grocery store in Houston “the last vestige of Bolshevism collapsed” inside his boss.
Two years later Yeltsin was elected to the newly created office of President of the Russian Federation after the collapse of the Soviet Union with Gorbachev.
Yeltsin immediately began dismantling the socialist economic system and introducing capitalism to the Russians. In the process, he attempted to convert the world's largest command economy into a free-market one.
The results of that transition were rocky in large part to cronyism in the break-up of many of the large state-owned businesses. Many Russian oligarchs were created and Yeltsin eventually resigned his office in 1999 haunted by charges of corruption and incompetence.
His successor?
Vladimir Putin.
Putin has been popular with the Russian people based on his macho style and nationalistic bombast. However, potential trouble lurks for Putin because of the Ukraine war and an economy that is still a shadow of the United States and its European neighbors.
Putin has been popular with the Russian people based on his macho style and nationalistic bombast. However, potential trouble lurks for Putin because of the Ukraine war and an economy that is still a shadow of the United States and its European neighbors.
Even Poland, which for years had to suffer under the boot of Soviet communism, now has almost 75% higher GDP per capita than Russia.
The Russian consumer spends about 40% of their income on food which is the highest it has been in 16 years.
In the United States it is about 10% of the average family budget.
On top of all of this, Russians are currently dealing with inflation of 6% per year and a central bank interest rate of 14%.
Mandami stated that if his "experiment" doesn't work he will just say c'est la vie.
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| Credit: Google AI |
Failure in this case will not be due to bad luck or a small failure.
Is Mamdani not aware that the "experiment" has already been done?
How can Mamdani or anyone else look at this data and history and believe that the people of New York City are going to be better off at the end of this Soviet style "experiment"?
A couple hundred million dollars or more and it does not work out?
It is easy to say c'est la vie when you never have to spend your own money.
