Mayor Mamdani Wants to Sell Groceries. Fine by Me, on One Condition.

Here’s a sentence I never thought I’d type: I don’t have a problem with Zohran Mamdani’s city-owned grocery stores.

Old Mr. Groovy would have blown a gasket. A democratic socialist mayor of New York City using taxpayer money to open supermarkets? Somebody call Sean Hannity. Somebody fetch my dog-eared copy of The Road to Serfdom.

Thankfully, I’m not that guy anymore. And the more I think about Mamdani’s grocery experiment, the more I like it. Not because I think it’ll work. Because it’s a test. And I love a good test, as long as nobody rigs it.

What the Mayor Is Up To

Quick recap for the non-New Yorkers. Mamdani promised five city-owned grocery stores, one in each borough, by the end of his term in 2029. The first is slated to open in Hunts Point in the Bronx by the end of 2027. Another is going into La Marqueta, the old city-owned market under the Metro-North tracks in East Harlem. The city owns the stores and sets the rules. Private operators run them day to day. The pitch is that a core basket of staples like produce, meat, and pantry items will be 30 percent cheaper than typical retail.

And how will the city pull that off? Partly by waiving rent and real estate taxes.

Ah. There it is.

Competition Equality or Bust

I’m a firm believer in competition equality. If two outfits are selling the same eggs to the same people, they should play by the same rules. Same taxes. Same regulations. Same everything. Otherwise you’re not running a competition. You’re running a fixed fight.

So here’s my one condition. Whatever breaks the city’s stores get, every private grocer in the five boroughs gets too. City stores don’t pay property tax? Fine. Neither does the Key Food down the block. And whatever the city’s stores can’t get a waiver for, like the market rent on the land and the cost of building the place, they have to carry on their own books, just like C-Town does.

Do that, and we finally get the fair fight free-marketers and socialists have been yapping about for a hundred years. Who can deliver groceries to consumers cheaper: the public sector or the private sector?

Two Drags, One Winner

Every grocery store is a drag on the consumer’s wallet. The only question is whose drag is heavier.

The socialist says the private sector’s drag is profit. Every dollar Stop & Shop pockets is a dollar you overpaid for your bread. Take profit out of the equation, and prices fall.

Fair enough. So how big is that drag? According to the Food Industry Association, food retailers netted an average profit of 2.1 percent in 2025. Two cents on the dollar. Grocery is one of the skinniest-margin businesses on the planet.

Now for the public sector’s drag. I call it the compulsory-monopoly tax, and I learned about it up close and personal, via 21 years of employment at a chronically dysfunctional highway department. Every government, including my chronically dysfunctional highway department, is a monopoly with compulsory customers. It can’t go out of business no matter how badly it screws up. And when the penalty for screwing the customer is zero, guess what happens? The customer gets screwed. It comes in three main flavors:

The sloth tax. At my chronically dysfunctional highway department, the typical worker bee produced maybe two or three hours of real work in an eight-hour day. Is it any surprise we referred to our jobs as “high-class welfare”? If Mamdani’s grocery bureaucrats are only half as slothful as my coworkers, roughly 31 cents of every payroll dollar the city throws at its grocery stores will buy absolutely nothing.

Sloth tax calculation: 2.5 hours divided by 8 hours equals 31.25 percent.

The pay-premium tax. My last union contract gave me 56 days of paid time off a year, free health and dental, and a pension starting at 55. Private companies that pamper their workers like that lose customers. Governments don’t. When you factor in benefits, public workers make 17 percent more than their private-sector counterparts. For every $117 a public worker is paid, his private-sector counterpart is paid $100. This pay premium works out to a 14.5 percent tax on the public payroll.

Pay-premium tax calculation: $117 less 14.5 percent equals $100.

The abuse tax. My department once hired a concrete contractor charging four times the going rate for sidewalk. Then it ordered sidewalk like it was going out of style. Nobody broke a law. The contractor just happened to be very “civic-minded” come election season.

Politicians are expert at monetizing their decision-making, and covering their tracks. They don’t explicitly announce to the world that their fiduciary responsibility to the taxpayers is for sale. They just let the beauty of manufactured coincidence do their talking. Nice things reliably happen to the people who are nice to them.

So how much does the abuse tax cost? I peg this little racket at eight percent of non-payroll spending. Why eight percent? Human nature. Legality lessons the blow of slimy behavior to the conscience. The GAO estimates that illegal slimy behavior (i.e., fraud) amounts to four percent of government spending. I have to believe that the abuse-tax rate for legal slimy behavior is more than that. And doubling it strikes me as a reasonable estimate.

Add those three taxes, and the full cost of the compulsory-monopoly tax comes to 25 percent. For every dollar a local government collects in taxes, the taxpayers get 75 cents of service. Twenty-five cents of every local government dollar goes up in smoke.

Compulsory-monopoly tax calculation: Forty-four percent of local government spending goes to payroll. Fifty-six percent goes to non-payroll stuff. Forty-four times 45.75 percent (31.25 percent sloth tax plus 14.5 percent pay-premium tax) equals 20.13. Fifty-six times eight percent equals 4.48 percent. 20.13 plus 4.48 equals 24.61 percent.

Two cents versus 25 cents. You can guess where I’m putting my money.

And the abuse tax may already be sniffing around. The Bronx store is 20,000 square feet and will cost about $10 million to build. The La Marqueta store is 9,000 square feet and will cost about $30 million. That’s roughly $500 a square foot versus $3,300. Maybe building under an elevated railroad really does cost six or seven times as much. Maybe. But forgive an old highway department hand for raising an eyebrow.

The 30 Percent Problem

Here’s the part that should make every New Yorker reach for a calculator. If profit is only two cents on the dollar, eliminating profit gets you prices about 2 percent lower. Not 30. So where does the other 28 percent come from? Waived rent. Waived taxes. Seventy million dollars in city capital money. That’s not the public sector out-competing the private sector. That’s the taxpayer picking up the tab while the mayor takes the bow.

And notice who the city hired to actually run these stores: private grocery operators. Even Mayor Mamdani, it seems, doesn’t trust city employees to stock shelves. I can’t say I blame him. I’ve seen how fast a road crew moves when nobody’s watching.

Let the Test Run

So, Mr. Mayor, here’s my offer. Level the field. Give private grocers every tax break your stores get, and make your stores eat every cost the private guys eat. Then run the experiment for five years and read the receipts. If city-owned groceries still sell eggs cheaper, I’ll write a post on this very blog admitting the compulsory-monopoly tax isn’t the beast I say it is. Hell, I’ll even eat my hat, assuming you’re selling hats at 30 percent off.

But if the city’s stores only win because they’re playing with house money, then we’ll know something too. We’ll know the drag of profit was never the real problem. The real problem was the drag of a monopoly that can’t go out of business.

Socialists say profit is the problem. I say it’s the compulsory-monopoly tax. Let’s settle it like grownups, with a fair fight.