A rotten idea: state-run grocery stores

Was the USSR Producing Enough Food?

Food will rot if this rotten idea comes to pass. In a ludicrous move that attempts to address the financial strain on everyday New Yorkers, Zohran Mamdani, a communist candidate for city council, has put forth a proposal for government-run grocery stores. This initiative is aimed at combating rising food prices and ensuring that all residents have access to affordable groceries. While Mamdani’s pledge sound well-intentioned, they are incredibly ignorant as the economic theories surrounding price controls—fundamental to his proposal—paint a stark picture of why such ideas often lead to disastrous consequences.

Price controls are a form of government intervention intended to regulate how much a seller can charge for a good or service. These measures are often viewed as a short-term solution to help consumers cope with rising costs. However, history has time after time shown that price controls lead to much more harm than good.

In 2003, For example, Venezuela’s Hugo Chávez imposed price controls on food to ensure affordability, formalized by the 2011 Law on Fair Costs and Prices, but the policy triggered catastrophic consequences. By setting prices below production costs, the government crippled farmers and manufacturers, leading to widespread shortages, empty supermarket shelves, and a surge in black-market trade by 2014. Hyperinflation skyrocketed to 1,698,488% by 2018, fueled by money printing to cover deficits, while corruption saw tons of food rot in warehouses. Domestic production collapsed, hunger soared (90% couldn’t afford food by 2018), and over 7 million fled by 2025. Partial relaxation of controls after 2019 allowed dollarized private stores to restock, but at prices most couldn’t afford, leaving state-run stores like Mercal understocked and underscoring the risks of government-led food systems, relevant to proposals like Zohran Mamdani’s NYC grocery plan.

Another example is Cuba. Since the 1960s, Cuba’s socialist government has imposed price controls on food and goods to ensure affordability, with notable waves in 1963, 2016, 2019, and 2022–2024, but these measures consistently triggered shortages, black markets, and economic stagnation. Early controls led to empty shelves and Soviet dependence, while later caps on produce and staples like pork and rice drove vendors out of markets, as prices fell below costs, fueling informal trade and inflation (estimated at 200% in 2021). Domestic production withered, with 70% of food imported by 2024, and public unrest, like 2021 protests, reflected frustration with persistent scarcity. This history of mismanagement and supply collapse serves as a cautionary tale for proposals like Mamdani’s, highlighting risks of inefficiencies and market disruptions if subsidies distort competition.

The USSR is another prime example of failed price controls. Following the 1917 Bolshevik Revolution, the Soviet Union imposed price controls, formalized in the 1920s under Stalin’s centralized planning and expanded through the 1965 Kosygin reforms, to stabilize consumer costs, but these measures led to chronic shortages, black markets, and economic collapse. Fixed prices, set below market levels, disincentivized production, causing empty shelves in state-run stores by the 1970s–1980s, with citizens queuing hours for basics like bread. Repressed inflation fueled a black-market economy, while central planning’s inefficiencies—producing millions of unwanted goods—stagnated the economy, contributing to the USSR’s 1991 dissolution. This history of mismanagement and scarcity warns against state-led interventions and highlighting risks of supply disruptions and market distortions if subsidies falter.

The crux of the issue lies in the basic economic principle of supply and demand. When a government sets prices artificially low, demand typically exceeds supply, creating shortages of the very items intended to be accessible. As sellers face dwindling profits, they either reduce production or exit the market altogether, further exacerbating scarcity. In the end, consumers often find themselves in a worse position than before the imposition of price controls. Instead of solving the problem, Mamdani’s proposal could lead to grocery deserts, where citizens struggle to find basic food items, and a growing black market where those who can no longer afford the overpriced legal goods are forced to turn.

Were Mamdani’s proposals to gain traction, we will experience similar troubling outcomes. The government grocery stores, funded by taxpayer dollars, would not only lead to waste and misallocations of resources but also place a financial burden on the city’s budget. Taxpayers could face an increase in their bills to support these subsidized establishments, while also bearing the costs of a decrease in market competition in the form of higher prices overall. Long-term ramifications could see the grocery sector in New York cluttered with excessive regulation and inefficiency, stunting its growth and innovation.

In short, while the goal of making food accessible to all is important, history teaches us that government-run solutions always worsen existing problems. Rather than diving into the deep end with price controls and state-run grocery stores, policymakers would be better served to create an environment where competition can thrive and innovation flourishes, leading to sustainable solutions for everyone involved. As the saying goes: “The road to hell is paved with good intentions,” and if Mamdani's proposal moves forward, we may very well be heading toward a historic disaster.