What Could Be More Ignorant…

… Than a Government-Run Grocery Store?

Right now in New York City. Mayor Mamdani is moving forward with his plan to open a chain of government-run grocery stores. At least one for each of the City’s five boroughs.

Mamdani’s underlying concern is that groceries have become too expensive for low-income people to buy, undoubtedly due, writes Francis Menton in his Manhattan Contrarian, to “evil capitalists siphoning off vast profits somewhere in the system.”

Mamdani told the New York Post (14 April) that the government stores will sell “basic” products like bread, milk, and eggs at “guaranteed cheaper” prices.

“When it comes to the products that we will be selling at the city-run grocery stores, there will be an essential basket of goods that will be guaranteed a cheaper price, and cheaper than what they’re being sold at currently,” Mamdani said during a news conference at La Marqueta in Harlem.

Francis Menton wonders, do Mayor Mamdani and his sycophants not know about the overwhelming evidence of socialism’s failure in the case of grocery stores?

The Soviet Union was famous for its sad, empty grocery stores, often with little or even no inventory, and long lines that would form every time there was a rumor that some food would be available. This was universally known (among those who paid attention) to be the case into the 1980s, going on 70 years since the Communist state had been formed on the promise of abundance for all.

In 1989, a rising star in Soviet politics and a new member of the Politburo, Boris Yeltsin, made a trip to Houston, Texas, just as the Soviet state was beginning to fall apart. Yeltsin’s main purpose for the trip was to visit the Johnson Space Center, but somehow, Yeltsin made an impromptu visit to a Randall’s supermarket. The Manhattan Contrarian includes a photo readers can view.

In 1990, Boris Yeltsin wrote:

“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. . . . 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.”

Well, right, Mr. Mamdani was born in 1991. But is it too much to ask, again wonders Mr. Menton, can he really maintain complete ignorance about everything that happened before that year, even universally known things that happened just two years previously?

… it’s not like the phenomenon of empty grocery stores in socialist countries has gone away. Look around on the internet, and there are hundreds upon hundreds of images available of empty grocery store shelves in socialist paradises like Cuba and Venezuela. But even that’s nothing compared to North Korea, where they have periodic famine years where hundreds of thousands of people (or maybe it’s millions) starve to death.

There is no mystery as to why goods disappear from grocery store shelves when the prices are subsidized.

As soon as goods are being sold for below-market prices, then everybody who works in the system can enrich themselves by buying at the subsidized prices (before the public gets a chance) and re-selling on a black market. All the store clerks, delivery people, cashiers, shelf stockers, and so forth, get to the goods before the public can, and the goods disappear. The system insiders then consume the goods themselves, or sell to their friends. This is natural human behavior, and nobody has yet figured out a way to stop it. Mamdani won’t do better than anyone else.

Here is an excerpt from Menton’s August 2016 piece, titled “Why Capitalism Works And Socialism Doesn’t: Arbitrage.”

If you can buy something cheaply and immediately turn around and sell it for more, chances are you will do it. Why shouldn’t you? Is there something wrong with that? This is completely normal and pervasive human behavior. This behavior is also a source of a very large percentage of the wealth in wealthy countries where such behavior is permitted. It is also the reason why, in market economies, comparable things almost always trade for very comparable prices.

Mr. Menton would recommend that Mayor Mamdani read the piece, but Menton doubts the mayor will read it.