In New York City, Democrats nominated a self-declared socialist, Zohram Mamdani, to be the next mayor. Mamdani wants city-owned grocery stories, which he argues can be kept afloat with a small taxpayer subsidy. But can they? Only a few cities have city-run grocery stores (which lose money), but a larger number have city-owned hotels, which tend to lose large amounts of money. City-owned hotels have lost hundreds of millions of dollars.
For example, the government-owned Hilton Baltimore Inner Harbor lost money every year in the many years it has been open. In 2005, Baltimore’s city council approved a plan to borrow $301 million to construct the hotel, after a consultant said the city would make $39 million from the hotel by 2024, and that it was too good an opportunity to miss. But the hotel has consistently lost money, year after year, including $143.7 million in direct spending by the city of Baltimore to keep the hotel afloat. The Baltimore Banner describes how the hotel became a costly white elephant:
Baltimore has spent and refunded $143.7 million to keep the hotel afloat. And last year was one of the costliest on record…Baltimore contributed $15.7 million to the hotel, including $7.7 million in direct appropriations….
In 2006, as Baltimore prepared to borrow $301 million, Swerdling, a bond underwriter at Piper Jaffray Hospitality Group, made revenue projections based on reports from other consultants.
The prediction: The Hilton Baltimore Inner Harbor would be so successful that not only would it repay the debt, but it also would pay millions of dollars annually into the city’s general fund, totaling $39.1 million by 2024. And those annual payments would be on top of tens of millions of dollars in taxes paid by the hotel.
The reality: The 757-room hotel opened in 2008 during the Great Recession and immediately started losing money.
To keep the hotel afloat, the city’s first line of defense was to refund property taxes paid by the hotel. When that wasn’t enough, it refunded the hotel occupancy taxes. Then, when the COVID-19 pandemic hit in 2020, Baltimore started giving money directly to the hotel from its general fund and from federal pandemic relief funds.
All along, the Baltimore Development Corp. has provided in-kind services to the hotel, including office space and administrative work.
New York mayoral candidate Zohran Mamdani, who wants the government to run grocery stores, also has called for pulling police out of high crime areas. He denounced the New York Police Department [NYPD], writing, “We don’t need an investigation to know that the NYPD is racist, anti-queer, and a major threat to public safety. What we need is to Defund The NYPD.” Mandani also said that “Queer liberation means defund the police.”
Zohran Mamdani has called for emptying jails, because “VioIence is an artificial construct.”
Mamdani also proposed arbitrary, extreme restrictions on rent that would leave landlords with too little money to maintain housing units, which could turn much of New York into a slum.
Historically, government-run grocery stores haven’t worked well, says Professor Glenn Harlan Reynolds:
Democratic mayoral nominee Zohran Mamdani has a lot of dumb ideas….the dumbest of his ideas may be his plan for government-run grocery stores….Business owners across New York City and the nation have denounced Mamdani’s plan as a Soviet-style disaster….In the old Soviet Union, the government did in fact run the grocery stores.
Shelves were often empty. Lines were absurdly long. Product quality and service were, to put it mildly, horrible.
In fact, things were so bad in the government-run grocery stores (and department stores, and clothing stores) that there were separate stores for the big shots, the nomenklatura as Soviet citizens resentfully called them….It’s such a bad idea that the wildly unpopular Chicago Mayor Brandon Johnson considered it, too — and gave it a pass. Johnson conducted a feasibility study that he never made public, but the idea was apparently such a disaster that he never even tried to claim subsidies that the state of Illinois had made available for the purpose.
The feasibility study likely concluded, as any bodega owner could attest, that the grocery business is notoriously low-margin — and, even in so-called “food deserts,” fiercely competitive….Several American towns and smaller cities have tried to launch publicly owned grocery stores, usually when the last local market closed in the face of big-box competition. All have met with uniformly dreadful results.
Some point to the 17 states that successfully run state liquor stores to contend that a state-run grocer can work, too. But that’s a terrible argument: State-run liquor stores derive from a post-Prohibition decision to limit alcohol consumption by making it inconvenient and expensive…
New York Democratic lawmakers have been reluctant to speak out against Mamdani’s extreme proposals, fearing that doing so will offend the Democrats’ left-wing base. Mamdani is incredibly popular on the left-wing social media website Bluesky, where users expressed rage at the New York Times for running an article about how Mamdani, who has no African ancestry, claimed to be African-American on his college application.
But a few Democratic lawmakers have spoken out against his extreme positions. Laura Gillen, a House Democrat on Long Island, recently criticized Zohran Mamdani, saying, “Socialist Zohran Mamdani is too extreme to lead New York City. His entire campaign has been built on unachievable promises and higher taxes, which is the last thing New York needs. Beyond that, Mr. Mamdani has called to defund the police and has demonstrated a deeply disturbing pattern of unacceptable antisemitic comments which stoke hate at a time when antisemitism is skyrocketing. He is the absolute wrong choice for New York.”
