The Economics of Public Grocery Stores

As New York Mayor Zohran Mamdani works to implement his campaign promise to create public grocery stores, the initiative has been met with significant criticism, especially from economists. The criticism is, I believe, badly misplaced, based on the very models of the economy that have contributed to our slow growth, increasing inequality, and today’s affordability crisis. There is indeed a strong economic argument for doing something along the lines that Mayor Mamdani proposes. Traditional economists typically begin with the presumption that private, competitive markets are efficient and the desirable way to provide ordinary goods like groceries. Government should stick to where it is needed, these economists believe, like providing defense and environmental regulation. But over the past 50 years, this presumption has been totally undermined, as we’ve come to understand better the many ways in which markets “fail,” especially in the presence of imperfect information. Even in the simple area of groceries, market incentives direct consumers to more profitable but less nutritious foods, contributing, for instance, to the childhood diabetes crisis. Public grocery stores, whose objectiv...