Zohran Mamdani and State-Run Supermarkets

Zohran Mamdani, the Democratic Mayoral candidate of NYC, wants to establish state-run grocery stores that are designed to save customers’ money by eliminating the profit motive (https://foodtank.com/news/2025/06/city-owned-grocery-stores-a-bold-fix-for-food-insecurity/). Socialists see eliminating the profit motive as a virtue of their various policies and programs, but it is precisely those profits and losses that are necessary for increasing the affordability of goods and services. Walter E. Williams (2008) argues that rather than being exploitative, “profits are incentives for firms to satisfy customers, find least-cost production methods and move resources from low-valued to high-valued uses” (p. 90). Since Zohran Mamdani’s state-run grocery stores will not react to the signals given by profits and losses, they have no incentive to reduce costs or offer higher quality services than their competitors. Ludwig von Mises (1944) points out that if state-run enterprises are not making profits, then they are probably losing money, which means taxpayers will have to make up the difference. Mises writes: “When the government tries to eliminate or to mitigate this dependence [on profits] by covering the losses of its plants and shops… The means for covering the losses must be raised by the imposition of taxes” (p. 70). State-run grocery stores will not save money for New Yorkers overall; they will pay low prices at the cash register—assuming the artificially low prices do not lead to shortages or rationing—but then pay more in taxes to subsidize an inferior product.

References

Ludwig von Mises (1944). Omnipotent Government: The Rise of the Total State and Total War. Liberty Fund.

Walter E. Williams (2008). Liberty vs. The Tyranny of Socialism: Controversial Essays. Hoover Press.