Mamdani Is an Economic Illiterate — and It’s Scary

Mamdani Is an Economic Illiterate — and It’s Scary

Of all the items on the agenda of Zohran Mamdani, the socialist candidate for New York City mayor, the proposal for government-run grocery stores received the most attention. The Uganda native vowed to:

[C]reate a network of city-owned grocery stores focused on keeping prices low, not making a profit. Without having to pay rent or property taxes, they will reduce overhead and pass on savings to shoppers. They will buy and sell at wholesale prices, centralize warehousing and distribution, and partner with local neighborhoods on products and sourcing. With New York City already spending millions of dollars to subsidize private grocery store operators (which are not even required to take SNAP/WIC!), we should redirect public money to a real “public option.”

The last line is an admission that American agricultural products are already lavishly subsidized, particularly on the federal level. And while it’s true that inflation has been eating into our incomes following the 2020 lockdowns, it’s reflected in the price tags attached to a wide range of products and services, not just food. The hike was caused by the Biden Administration’s monetary policy and the prices are now stabilizing.

Nevertheless, socialists are in the business of never letting a good crisis go to waste. Thus, Mamdani wants to undercut private enterprise by setting up government stores that supply goods at prices below market value. In a separate video, the son of a woke academic and a multi-millionaire film director admits that the end goal of his movement is seizing the means of production, setting up a centrally planned economy.

One problem with state pricing is that the merchandise still has value to the customers and that value is not expressed in the price tag affixed by a bureaucrat. The gap enables corrupt individuals to carve out space for illicit activities.

The Soviet experience illustrates that a centralized economy typically resulted in either the overproduction of goods and services — as was the case with, for instance, baked goods such as bread which was available in abundance and on the cheap, resulting in partially eaten loaves littering the streets and propaganda posters pleading with the citizenry to respect the labor of the bread makers — or, more often, shortages. The shortages were exploited by organized crime.

In the period following the death of Joseph Stalin, the underworld responded to market demands. Underground commerce was criminalized, but virtually everyone engaged in it in some manner. In The Soviet Mafia, Soviet and Russian author Arkadii Vaksberg showed how a shadow economy penetrated the entirety of Soviet life, with corruption reaching the highest levels, including the general secretary Leonid Brezhnev himself.

The most visible part of the shadow economy was its retail end — either the underground farztovscshiki or state store sales associates who, as everyone knew, were diverting most coveted goods to their cronies or selling them under the table at a profit, sometimes both. Lack of formal education or rare skill be damned, because of their position at the chocking point of distribution networks, sales associates easily accumulated more wealth and social cache than a typical engineer. The absurdity of the situation wasn’t lost on the educated classes — and was hugely demoralizing. Hard work and intelligence weren’t rewarded; willingness to live a lie and to some extent take risks were the prized qualities of late socialism.

Corruption only got more insidious further up the food chain. The British Russia expert Mark Galeotti wrote in his history of Russian mafia The Vory of how the underground economy was forged by the unholy trinity of shadowy operators, or tsekhoviki, the mafia muscle, and the government. Because the first two needed each other to operate:

Representatives from both worlds met in the southern Russia spa town of Kislovodsk in 1979, in a gathering that undoubtedly was known to the authorities and may even have been brokered by them. Although I have never seen anything to corroborate it, one retired KGB officer who served in the Fifth Chief Directorate (responsible for domestic political policing) later claimed to me that the head of his unit had actually attended this so-called “Congress” as an observer. The outcome was an agreement that, in return for a tithe of one-tenth of their earnings, the tsekhoviki would be free from interference.

Mafia penetration of economic activities is not easily remedied by free markets. When the USSR under Gorbachev and later the Russian Federation fostered capitalist enterprise, mobsters, who already had the infrastructure, were advantageously positioned to compete. What Russia and its former republics got after socialism was governments compromised by organized crime.

There is nothing distinctly Soviet or Russian about the mob filling the cavities of distorted markets, including taking advantage of price fixing. In recent memory, Hamas diverted international aid to Gaza, selling it for profit and using it as leverage to stay in power. Similarly, USAID shipments around the world have been appropriated by local chieftains and sold to the supposed beneficiaries of our largess.

Similar developments happen on our soil. Between 1995 and 2002, domestic intelligence agencies conducted Operation Smokescreen, intercepting a Hizbollah fundraising operation. The terror network smuggled cigarettes from the states with low tobacco taxes into the states with high tobacco taxes, funneling profits into terrorism.

I don’t pretend to know what’s in Mamdani’s heart. Yet it’s worth a reminder, that by his own admission, Mamdani arrived at socialism via Palestinianism. In one media appearance he explained “what brought me to the DSA, and to the explicitly Socialist movement, was that it didn’t carve out an exception for Palestine.”

I don’t think the Democrat is a member of a terror network, but he expressed sympathy for them. The system he proposes to create is more than unjust and ineffective — it creates the environment in which terror organizations can flourish. It certainly would not go against Mamdani’s beliefs to create conditions for corruption and violence to flourish.

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