What Socialist Grocery Stores are REALLY Like

In 1989, a trip to the grocery store brought down the Soviet Union. That year, in September, Boris Yelten visited the United States. He was a reformer, recently elected to the Soviet Union's first semi-open parliament and the loudest critic of the system from inside it. Two years later, he would become the first elected president of Russia and helped bring the entire Soviet order down. But in 1989, he visited Houston on an official tour to see NASA's Johnson Space Center. He saw mission control and the spacecraft, but none of that stayed with him. On the way out, he asked to stop at a supermarket, a Randall in the suburb of Clear Lake. That stop lasted about 20 minutes. He walked the aisles in amazement and asked questions to the staff. How much does this cost? Do you need a special degree to run a place like this? Are all American stores like this one? A man who had spent his entire career near the center of Soviet power looked at the shelves of a middling Houston market and said that not even Gorbachoff could shop like this. The abundance had left him sick with despair for his own people. One of his aids, Lev Sukanov, said that somewhere on that trip, the last vestage of Bulcheism collapsed inside him. A grocery store had answered, in one man's mind, the central economic question of the 20th century, which system actually feeds people, free markets or central planning, capitalism or socialism? [music] >> [music] >> Today, in the very country whose abundance stunned Yeltzen, that settled question is being reopened. People are angry about the price of groceries, and central planning is fashionable again. The clearest example is New York City Mayor Zoran Mandani, who won on the promise that the government could bring prices down with city-owned grocery stores. Built on city land with rent and construction covered by taxpayers, run to keep prices low rather than to turn a profit. His win has turned the idea into a template other politicians are eager to copy. But economics does not bend charismatic politicians. And good intentions do not automatically become good outcomes. Austrian economist Ludvigmon Mises put it sharply in human action. It is impossible to understand the history of economic thought if one does not pay attention to the fact that economics as such is a challenge to the conceit of those in power. So before we hand the grocery aisle to city hall, three questions deserve honest answers. What actually pushed grocery prices up? What did not push them up despite what you keep hearing? And would the popular cures make anything better? Start with the panic itself. Yes, the sticker on the shelf is higher. Food at home costs more than 30% above what it did in January 2020. But is the sticker the right yard stick? You do not buy groceries with dollars in the abstract. You buy them with the hours of work it takes to earn those dollars. American economists Marian Tupi and Gail Pulif from the Kato Institute call this the time price. Take the Thanksgiving dinner the American Farm Bureau has priced every year since 1986. A classic meal for 10. In dollars, it rose from 2874 in 1986 to 5518 in 2025, a jump of about 92%. Over the same years, the blue collar wage rose from $8.92 an hour to 3133, a gain of 251%. So measure the dinner in work time instead of money. In 1986, it cost a worker 3.22 hours on the job. In 2025, it cost 1.76 hours. The time price fell by roughly 45%. For the same labor that brought one dinner in 1986, a worker today buys nearly two. This is a textbook case of abundance, even as everyone insists otherwise. None of this denies the real pressure families feel from rent, insurance, and interest rates. But the claim that food has never been less affordable seems to be wrong despite the higher price tag. Still, prices did jump after 2020. So, what happened? The honest answer points back to Washington, not to the supermarket. The prelude was the pandemic, which froze the movement of people, goods, and capital, and produced one of the sharpest contractions in modern American history. Faced with that shock, the Federal Reserve responded aggressively. Between early 2020 and early 2022, the money supply measured by M2 expanded by roughly $6 trillion from about $15.5 trillion to a peak above $21.5 trillion. The Fed's balance sheet more than doubled from around $4.2 trillion to roughly $9 trillion. The money supply grew as much in two pandemic years as it had in the previous decade. The Fed can print dollars, but it cannot print goods. It can create liquidity, not semiconductors, nor shipping capacity, nor food. COVID was a negative supply shock. The real problem was too few goods, not too little money. Pour trillions of new dollars onto a shrunken supply of goods and you get the oldest result in economics. Too much money chasing too few goods. The trick works for a while. American economist Irving Fischer described the mechanism more than a century ago in his statistical relation between unemployment and price changes. For the moment, it all looks like prosperity. Then the costs adjust. The extra profits vanish, and what looked like a boom is revealed as a monetary illusion. When the bill came due, the popular culprit was corporate greed. A new word even appeared for it, greedflation. But the greedflation story has two weaknesses. First, it is poorly measured. Greed didn't suddenly spike in 2020. Business owners were not hungrier for profit than they were before the pandemic. The desire to improve one's condition is a permanent feature of human nature. And most of the time, it drives firms to compete, innovate, and cut costs. Forces that help consumers, not harm them. Second, even a firm that would love to gouge runs into two walls. consumer demand and competition. No business, not even a monopolist, can raise prices without limit because shoppers substitute toward cheaper alternatives the moment one good gets too dear. And how competitive is the grocery business? Look at the margins. Food retailers are famous for razor thin profits. According to the Food Industry Association's 2023 report, food retail businesses average just 1.6 cents of profit for every dollar of sales. Those are what economists call normal profits, just enough to keep the doors open. A grosser clearing under two cents on the dollar is in no position to gouge anyone. So, the causes were monetary and real, not a sudden outbreak of greed. But suppose we ignore all that and cap prices anyway. Picture two towns in the path of a hurricane. In the first, residents demand a freeze on grocery and gas prices so no one can profit from the emergency. The freeze passes to cheers, then the shelves empty. With prices held low, the families who arrive first take far more than they could use because nothing signals them to hold back. The families who arrive an hour later find bare shelves and dry pumps. There was enough for everyone. The cap simply lets too much pile up in too few hands. In the second town, prices are free to rise as the storm approaches. Shoppers see the higher numbers and take only what they truly need. Drivers fleeing town fill the tank halfway, planning to refuel down the road. Every family that buys a little less leaves a little more for the next one. The higher price is doing a quiet, unglamorous job. It carries the information that goods are scarce. The town with the unfair prices is the one where everyone still eats. A price is not a punishment the seller inflicts on you. In their book, 40 centuries of wage and price controls, economic historians Robert Shuttinger and Aean Butler trace the same failed cure back nearly 4,000 years from Habarab's Babylon through ancient Egypt to feudal Europe and beyond. The clearest case is Rome. In 301 AD, facing runaway inflation from his own currency debasement, Emperor Dialesian issued his edict on maximum prices. Fixing the legal cost of everything from grain to labor, with death as the penalty for charging a penny more, farmers and merchants responded exactly as the two- town story predicts. They simply stopped bringing goods to market rather than sell at a loss. Shortages deepened. Mobs and executions followed. And within four years, the edict was abandoned as a dead letter. As Austrian economists like Ludvig von Mises and Friedrich Hayek taught, prices coordinate economic activity without anyone needing to plan it centrally. In human action, Mises argued that market prices tell producers what to produce, how to produce, and in what quantity. American economist Thomas Soul makes a parallel point in basic economics. Pricecoordinated markets let people signal to one another how much they want of something and how much they're willing to pay for it. Seen this way, prices aren't obstacles, but enablers. They let producers and consumers each discover how best to serve the other. Which brings us back to the cityrun store. The promise is lower prices without the chaos. The trouble is that the government can hide costs. It cannot erase costs. We have run this experiment many times. The Soviet Union ran state stores for nearly everything and failed. Cuba still rationed subsidized food through them and has failed. Venezuela also tried them out and failed. The results are a matter of record. Chronic shortages, [music] thin variety, sinking quality, long lines. And the reason is not lazy clarks or corrupt managers. It is the absence of a profit and loss signal. Profit tells an entrepreneur he has created value. Loss tells him he has wasted scarce resources and should change course. Strip out that signal and the store flies blind. Its losses do not vanish. They are simply transferred to taxpayers. A public store can sell below cost for a while, but only by burning resources that could have done more good somewhere else. The affordability problems are real, but the recent inflation was made in Washington. So the cure shouldn't lie in suppressing prices or in replacing markets with government stores. It should lie in the reliable forces that make goods abundant in the first place. Stable money, competition, investment, and the simple freedom to produce. Boris Yeltson did not need an economics lecture. He needed 20 minutes in an ordinary American store. And the contrast with the empty shelves back home told him everything. >> Hey, you want a shot at a million dollars? Okay, great. Take this threeinut quiz on why America's less affordable.