New York City Mayor Zohran Mamdani's plan to establish city-owned grocery stores draws parallels to economic warnings articulated by the 14th-century scholar Ibn Khaldun. The proposed initiative, which aims to offer a core basket of staples at prices significantly below retail, has been met with historical analysis suggesting potential negative consequences for the city's economic vitality.
Ibn Khaldun, in his seminal work "The Muqaddimah" written in 1377, described a cycle where excessive taxation and direct government intervention in commerce could lead to the decline of dynasties and states. According to his observations of North African and Near Eastern empires, initial low taxes foster enterprise and prosperity. However, as rulers increase tax burdens to fund luxury and military expansion, citizens' incentive to produce diminishes. This often leads governments to engage directly in commerce, establish monopolies, and offer subsidies, further discouraging private enterprise and ultimately weakening the tax base.
Mamdani's plan involves the city owning the land, covering construction costs, waiving rent and taxes for the stores, and subsidizing a basic selection of goods. A private operator would manage daily operations under city-set pricing and labor rules. Supporters view this as a measure to combat high food costs, but critics, referencing Khaldun's theories, suggest it could distort market competition and shift capital away from tax-generating private businesses.
The scholar's writings emphasized that a ruler's finances improve through equitable treatment of property owners and consistent tax revenue, not through direct state commerce. Khaldun warned that "Other (measures) taken by the ruler, such as engaging in commerce or agriculture, soon turn out to be harmful to the subjects, to be ruinous to the revenues, and to decrease cultural activity."
Critics argue that layering municipal grocery stores onto an already high-cost, highly regulated environment like New York City could accelerate the decline of independent businesses. This, they contend, would place a greater financial burden on taxpayers as the city underwrites the subsidized prices and faces increased fiscal commitments. The cycle Khaldun described, they say, involves private operators struggling against subsidized competition, leading to shortages and decreased quality, while the government's financial commitments grow.
Ibn Khaldun's proposed remedy was to maintain low taxes, thereby encouraging production and commercial expansion, which in turn would increase overall revenue. Modern supply-side economic theories share a similar foundation, emphasizing that reducing tax burdens can stimulate economic activity. Conversely, government-run commercial ventures, as proposed by Mamdani, are seen by this perspective as moving in the opposite direction.
The argument posits that America's major cities historically succeeded due to the abundance generated by independent enterprise, rather than direct government intervention in retail. Ignoring the lessons from thinkers like Ibn Khaldun, it is argued, risks not only failing to lower grocery prices in the long term but also potentially diminishing the city's overall economic prosperity.