John Gustavsson wrote in National Review this week that Zohran Mamdani’s city-owned grocery stores are a scheme to transfer public wealth into private pockets — a free-for-all for resellers, a blank check for shoplifting, and a permanent subsidy for cravings no policy can rewire. He’s correct about the mechanics. He’s wrong about whose pocket is the destination.
The proof is Yvonne.
She’s 22. She works the overnight racking system in the grocery warehouse I own through a holding company registered in the county next to the county where the warehouse sits. Midnight to 8 a.m. $15.50 an hour. Permanent temporary — six-month contracts renewed at my discretion. No benefits. Her right knee gives on the third case of every pallet — the one she has to reach across the chasm between the pick-and-place and the put wall, where the diagram says the motion is ergonomic and her body says it’s not. She stocks the canned tomatoes and the bagged rice you bought last week at Key Food and will buy from the city shelf this fall on Jerome Avenue. You bought them. I sourced them. The margin on a case through my private distribution is $1.04. The margin on the same case through the city-owned shelf is $0.73.
I get the $0.73 too.
Let me show you the number I want you to learn.
I supply the wholesale for 47 of the 60 essential items the ZohranMart will carry. Canned goods, dry pasta, the block cheese from a cooperative that doesn’t know it buys back through my second-tier invoice. When the city caps the retail at 30% below fair market, the private competitor’s margin compresses from 12% to somewhere near zero. The competitor exits or stops carrying what a family needs on a Wednesday. The traffic moves to the ZohranMart. The ZohranMart buys from me. I don’t share the margin with the competitor. I keep the margin the competitor would have taken, and I pay Yvonne the same $15.50 for the same knee.
Now follow the loop home.
Corey is a picker on my fulfillment line in Newark — 34, warehouse boots from the company store, 2 kids, a lease on a one-bedroom in a complex I hold through a housing LLC three blocks from the loading dock where he starts at 4 a.m. He packs the canned goods, the rice, the cooking oil — the items you priced 30% below private competitors’ shelf. Corey handles $41,000 worth of grocery inventory a shift. His wage is $15.80 an hour. The anti-fatigue mats for the concrete at Station 7 were quoted at $47 each. Eight mats. $376. I removed the line item in March. Corey bought his own insoles from the drugstore. $12.99 a pair. He replaces them every 6 weeks. That is his cost, not mine.
Corey’s wife takes the bus to the ZohranMart. She buys rice at 30% off. She saves $6.40 on a week’s groceries. I know the number because I priced it. Let me show you where it goes.
The rent on Corey’s apartment is set at 48% of his gross. The housing LLC invoices monthly. Miss a payment and you vacate within 72 hours — there is no eviction process because there is no leasehold. There is a license, revocable at will, written by my attorney in language you’d recognize as the property owner’s right to manage his asset. The rent is $1,040 a month on a take-home of $2,170. The $6.40 saved on rice doesn’t survive the first of the month. It doesn’t survive the week of the first of the month.
Read the next sentence twice.
The 30% discount on groceries recirculates through my warehouse payroll. Then through my housing rent. Then through my payday lender — Corey borrows $400 every third Thursday through the advance-fee arrangement I offer at the dock, 14-day term, $60 flat fee, effective annualized rate north of 400%. Then through my pawn operation on Market Street, where his wife pawned the television in month two. The television was purchased from HomePath, my rent-to-own affiliate, at an effective markup of 240% over cash retail. She paid $1,200 for a television I can source for $497. She pawned it for $90. She is still paying HomePath on the television she no longer has.
$6.40 saved on rice. $1,200 spent on a television. $90 recovered at pawn. $60 per cycle in advance fees. $1,040 a month in rent, 48% of a gross wage I set, on an apartment three blocks from the warehouse where he packs the rice.
The 30% discount isn’t savings. It’s the margin that makes the loop efficient.
Gustavsson thinks the reseller is the exploit. The reseller is the proof the margin exists. When a man from Yonkers loads his trunk with city-subsidized hamburger and resells it on Facebook Marketplace at 15% above the Mamdani price and 20% below the remaining grocer’s, he’s discovered the arbitrage I embedded in the product before it reached the shelf. I don’t oppose the reseller. The reseller is doing what I do at a smaller scale and without the trucking line. The difference between us is that the reseller pays cash, and I collect the cycle.
Shoplifting is the same efficiency under a different label. The operator’s losses are reimbursed as “targeted investment” — the city closes the gap between the retail sell-through and the guarantee the operator was promised when he signed the management agreement. That gap is a transfer from the taxpayer to the operator, who passes it to me. A woman walks out with a roast she didn’t pay for. The city pays. I keep my wholesale. She’s fed. The distribution loss is socialized. I’m told this is a moral problem. I find it an arithmetic one.
You’re counting the way I count now.
| Line Item | Monthly Cost to Corey | Where It Goes |
|---|---|---|
| Gross wage (160 hrs × $15.80) | $2,528 | — |
| Federal/state/FICA | $358 | Treasury |
| Take-home | $2,170 | — |
| Rent (48% of gross) | $1,040 | My housing LLC |
| HomePath (TV + couch + bed frame) | $278 | My rent-to-own affiliate |
| SwiftCash advance fee (2 cycles) | $120 | My lender |
| Gas, transit, food (subsidized) | $487 | Market |
| Net remainder | $245 | — |
| Pawn recovery (TV, month 2) | $90 | My pawn shop |
$245 a month. After the loop runs. After the 30% discount on groceries has done its work as the entry fee that makes the architecture legible to the consumer and invisible to the taxpayer. The taxpayer sees a cheap grocery store. I see a warehouse operating subsidy I never budgeted for and a payroll recapture rate that went from 87% to 93% the quarter the ZohranMart opened.
The cooler on Dock 4 has been broken since June.
The repair is $7,200. The cheese goes soft 2 hours into the shift. Yvonne pulls the spoiled stock, logs the waste, and the operator files a claim with the city for the difference between the expected sell-through and the actual. The $0.17 margin I collect on every case she pulls through the compromised cooler is the same $0.17 I would collect if the cooler worked. The waste is somebody else’s line item. Yvonne’s knee is on page 9 of the ergonomic audit I commissioned and did not implement. I have not, at any point, asked Yvonne about her knee. I have asked her about her rate.
Here is the principle your grocery store is only an example of.
Every city that subsidizes the cost of a necessity through a public channel — food, housing, medicine — and leaves the employment relationship that produced the poverty unchanged, has built a delivery mechanism for the employer’s recapture loop. The subsidy pays the worker enough to stay alive between shifts. The employer captures the yield of the shift. The subsidy is maintenance I do not fund. The yield is margin I keep. I didn’t invent this arrangement. Pullman built it in 1880 and called it paternalism. I build it in 2026 and you call it progressive.
In Pullman, Illinois, the Pullman Palace Car Company set rents above comparable Chicago market rates — roughly 20 to 25% higher — and deducted them directly from wages before the worker touched his paycheck. George Pullman owned the houses, the stores, the street, the water, the church. The worker earned a wage and returned every cent of it to the man who paid it. The wage was a distribution mechanism. The loop was closed. The worker’s take-home was what remained after the owner recaptured the output of his own payroll. The Pullman Strike of 1894 was a revolt against the closure of the loop. Cleveland sent federal troops. The loop held. The workers went back.
I run the same loop. The only difference is that Pullman owned the house. I own an LLC that rents the house, and another LLC that lends the wage back, and a third that sold the furniture at 240% markup, and a fourth that pawned it when the wage ran short. Four LLCs where Pullman had one. The loop is tighter. The architecture is more fragmented. The maintenance is partially subsidized by Medicaid and SNAP, which means the taxpayer covers the portion of the loop I cannot recapture through rent and credit. All of the yield. None of the maintenance obligation. My grandfather would have found this arrangement more efficient than the one he ran.
“The rich ruleth over the poor, and the borrower is servant to the lender.” Solomon said that in Proverbs. He was not describing a market failure. He was describing a design specification. The 30% discount is the modern wage — the portion the system concedes so the loop has something to recapture. Pullman conceded it in rent. I concede it in grocery savings. The concession is the entry fee. The loop is the product.
I have not modeled what happens to my warehouse labor price when the last independent grocer in the corridor closes and the city becomes my only buyer. The procurement team tells me the contract is locked through 2031. I don’t require that answer before then.
I’ve watched the shelf empty from the inside. The city’s tax base is slowly paying for the gap it opened. I’m told the ten-year has a problem with the arithmetic. I haven’t looked. I am, in this moment, content with the quarterly wholesale number. God does not require me to trace where the shelf empties from.
Gustavsson was right about the mechanics. He stopped one sentence short of the wholesale invoice. That sentence is my margin.
Corey packs rice at 4 a.m. Yvonne pulls spoiled cheese at midnight. The 30% off shelf is the entry fee to a loop I built before your mayor opened the store. Some vessels are made for honor, and some for common use, and some pack rice at 4 a.m. so the discount can be advertised at noon. The Lord did not abolish the loop. He merely regulated the price of entry.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.