Central Air - Cheap Meats

Episode Date: July 29, 2026

This is a free preview of a paid episode. To hear more, visit www.centralairpodcast.comThis week: It's another edition of the White House Correspondents’ Dinner, and Maxwell Tani from Semafor joins us to talk about it. Could this humiliation be enough to end the dinner for good? Then: Have you heard about the new mayor in New York City? This guy, Zohran Mamdani, has been running the city for seven months, and he’s working on opening city-owned grocery stores that will sell meat and produce 30% below the city’s normal retail prices. We discuss that, and what Mamdani can do to prevent theft, bare shelves, and other problems that could arise with public-sector grocery. Plus: Mamdani's brewing fight with the teachers' union and never mind about arresting Benjamin Netanyahu...Upgrade your subscription to hear the full episode at www.centralairpodcast.com.

Welcome to Central Air, the show where the temperature is always just right. This is Josh Barrow. I'm here with Megan McArdle, columnist for the Washington Post, and Ben Dreyfus, who writes the Substack newsletter, Calm Down. And since there has been yet another White House correspondence dinner, we're joined this week by media journalist Max Taney. Max is the media editor at Semaphore. He was formerly a White House correspondent for Politico. Hi, Max. Hey, how's it going? Good. Thank you for joining us. I guess we get to do this every few months now, which is great.

I've always loved the WHCD, I would love to have it happen even more often. Just one continuous dinner. It should just be like a progressive dinner party that never ends. Stomping on a human face forever. Like Twitter. Yeah. I think there's some people in the White House Correspondents Association who would actually like that. I'm sure that there are.

And so, of course, you know, the president, what was the promise that he made? He was going to give a speechful of love when the White House correspondent's dinner reconvened after the assassination attempt that broke up the last one. And instead it was, of course, an hour of greener. Here's a little bit of the president speaking. Listen, but I want to personally congratulate CNN's Caitlin Collins on receiving her award. It was all about me. It's a fake.

She shouldn't get the award. It was a fake. But I didn't mind. I said, Caitlin, congratulations. But it was fake. There's no question about it. But she's a young, attractive woman. She never smiles.

I said, Caitlin, do you ever smile? Smile. You have a nice position. you're at CNN fake news. You should be a happy person. So smile, Caitlin, just smile. But we attack, and I thought Caitlin had really made it big with a major new sponsorship.

But then I informed her that it wasn't her on the Bud Light can. It was Dylan Mulvaney. And Dylan Mulvaney cost Bud Light $35 million in market cap. That was the worst commercial ever made, by the way, for those few people that want to hear that. So, Max, I'm going to ask you the question that we asked Alex Thompson when we had him on here a few months ago to talk about the last disastrous dinner. Why don't they put this fucking thing out of its misery? What purpose is this dinner serving that advances the interests of the public or of the journalistic industry? Like, why do we do this?

Well, I'll tell you the official reason first, and then we can get into, you know, more of the speculative reason why they keep this thing. going. But it's official reason to exist is to help pay for the operations of the White House Correspondents Association, you know, which includes its general lobbying on behalf of various media organizations and their correspondence for access. It pays for some scholarships for young journalists, which they always, you know, bring out these like high school age kids who want to be journalists, which is, I think, really an interesting choice in 2026. given the kind of general state of the industry. But I think it generally is meant to raise a lot of money to pay for the operations of the White House

Correspondents Association, which needs some money to continue to exist. But why they keep doing it is a broader question beyond the kind of logistics. I'm sure they could raise money through other means. And I bet that there would be some media organizations that would pay to not. have to go to the dinner. Yes. Yes. Is, you know, I think that there is a segment of the traditional DC media class that enjoys this,

you know, what is what they believe is kind of a, you know, spirit of unity and togetherness and, you know, the, what the dinner, I suppose used to be to some people at least or maybe to slightly more people, which is, you know, we go at each other every day. but at the end of the day, we're all Americans, and, you know, we want to show that we can project some civility and civil discourse, I guess. There's a group of people who still, I think, feel that way. Also, there are some of us who own ball gowns and do not have a lot of places to wear them. Nothing like the Washington Hilton to show off. I have a beautiful Tadashi Shogi off-the-shoulder dressed.

Josh, just is in my closet being sad and by itself. And why do you want to deprive it of its opportunity to go outside and shine? You know, there's nothing stopping you from just wearing that to a restaurant. Go to La Diplomat in your ball gown. Okay, the next time you come to town, Josh, bring your tucks. I will drag out my Todashi Shogi. Bring Ben, since he's going to be moving to your neck of the woods. And we'll all go to La Diplomat and sit there in our fancy clothes. Okay, Ben is not allowed to order an ice coffee with his entree, though. I don't like Legitimate. They always bring you this warm water because it's French.

They don't put ice in it. It's absurd. You love Le Diplomat. I have been diplomat with you multiple times. That is a complete lie. I go with you because I like you. But that is how much I like you that I'm willing to put up with this restaurant that I constantly have to ask for them to bring ice to. But we're getting off track.

I was going to say, I feel like Le Diplomat actually, it's opening in Washington actually heralded kind of a new and better era in D.E. D.C. dining in all seriousness, but... La Diplomat is a good restaurant. And it's not like everyone in D.C. is obsessed with a good restaurant. The problem is that they think it's the greatest restaurant in the world. It's like if people in New York were obsessed with the Smith and wouldn't shut up about the fact that they got to go have dinner at the Smith. Like, that is what Washington, D.C. is like.

The diplomat is better than the Smith, though. It's about the same. Well, they have a Smith in D.C. now. They do. Yeah, and it's a good restaurant. It's just not a great restaurant. It's fine. Yeah, but they were also thrilled when they got it.

to get back to the dinner. I realize that that's the putative purpose of the dinner, but it's obviously not succeeding at that. And I also kind of think the previous incarnation of the dinner was bad in its own different way, that like it's not good to have the president come and give this like profane and nasty speech about how much he hates the press. But it also wasn't good to like bring a comedian in to do a roast to the president. Like it's not clear why that was the job of the White House Correspondents Association. So you had this awkward thing where it's like they book Michelle Wolf and then they cancel Michelle

Wolf and people are like, oh, is comedy illegal in America now? It was never clear why any of this was the institutional role of the White House Correspondents Association. And to your point about the media companies could just pay for those activities, it would be a lot better if this stuff was just done quietly and people did their jobs. And the press, in a way, made less of a spectacle of itself. Like especially in this time where the press is widely hated and under all of this financial strain, I think there's actually something unseemly about having this dinner where we celebrate ourselves and talk about how great we are and how important the free press is. I think it's tone-deaf.

And I think it's also not achieving the putative objectives that it has. Well, that's one thing that that's the argument that the New York Times has been making for the last 20 years. It's the Times hasn't gone to the dinner in, in decades. Partially I think because I think people at the Times, I think rightly, in my view, were sensitive to the optics of being too close. to the president that they're supposed to, to the administration, to anyone, to any institution that they're supposed to be covering kind of fairly. And you do, you do see these kind of, I think, you know,

optically kind of unfortunate situations where the president will make a joke or someone on stage makes a joke and they cut to the audience. And it's people who are pretty recognizable, you know, if you pay attention to this kind of stuff, you know, laughing or, you know, making a face or having some sort of reaction. So I do think that there are folks, serious folks in the media who feel that way. And I think, you know, there's one other kind of element of this, which is that the dinner, particularly during the Obama years, when pretty high-wadded celebrities started to attend, you know, and be guests of the media organizations. That's one of the traditions that I think really accelerated during Obama because, you know, obviously people wanted to be there, you know, wanted some proximity to the president, wanted to maybe meet the president.

if they didn't have the chance to. That also attracted advertisers. And there's a real kind of part of the event that is really kind of ad-driven. A lot of major media organizations will invite major advertisers to serve as guests at the dinner. Media organizations will also invite members of the administration to be guests at the dinner. And these are both kind of seen as status symbols. So there's an element of this which is still like a transactional, you know, kind of DC and business thing. that I think, you know, many people find to be a little bit icky, but I think serves, yeah.

But I think, you know, to some of these media organizations, serves a purpose either in the sense of getting better access or, you know, impressing a client who might spend a lot of money on advertising. I mean, I'm sympathetic to a lot of Josh's criticisms of this disgusting dinner. But having also, you know, one of the things that happens, even just internally, right, is like when you get invited to go, Like, the first time I got invited to go, I was like, wow, I made it. Now my company does like me. I get to go all the way down to New York to go to it. I mean, down to D.C. from New York to go to it. So it has, it even serves that purpose, like, internally without even having to go to outside advertisers.

But also, like, the bigger defense that I just want to make about it is that every industry has industry dinners where they pat themselves on their back. You know, the Oscars are that. And anytime anyone else looks at it, they think this is disgusting. And Todry, why are you giving yourself such a pat on your back? And because of Trump and because of everything that's gone on for the last decade, we all tend to focus on how stupid some of this is. But Amway salesmen also have dinners. Right, but they don't invite the president. I'm sure they do invite the president.

They do actually and often invite their customers or their vendors. The problem is probably just that because of the internet, people started watching C-SPAN, so it felt like this was a way bigger deal than maybe it used to be. So everyone was talking about nerd prom during the Obama years, which was disgusting and pathetic in lots of ways. I think the problem actually goes back further than that, right? The roast is a venerable, like old traditional way to do a dinner. Commentary magazine's fundraiser is still a roast. But, I mean, these things were really common, especially in the 50s and 60s. And the problem is that those were fine until partisanship got so poisonous.

And I think the actual moment when things started to go really off the rails was, the Colbert Bush thing. Because these roasts had often been quite pointed, but they weren't nasty in the same way, where this is just my opportunity to be like, you suck, I hate you. And the fact that, like, you know, all of the liberals are doing the claptor. But interestingly, like, I think I mentioned this the last time we talked about this, that I was talking to a colleague who was in the, I was not invited that year. But he had been in the room. And he said, actually, the funny thing is in person, Colbert died because Bush had had this very funny comedian who was like a lookalike and who did a routine with him that was quite funny. And then Colbert was not really funny.

It was Clappter. But that set the tone for every Republican president. And then it also set the tone for like, oh, finally, thank God, we've got a Democrat. And now it's Obama and he's glamorous and we're all going to swarm and it's going to be amazing. And it is definitely true that the currency internally. of getting that invite is definitely declined. I think part of the problem here is that journalists are just huge losers. Like, the idea that being invited to some rubber chicken dinner is some glamorous fun thing.

Losers need affirmation too, Josh. But that's the thing. If they had more fulfilling social lives and maybe knew some people who don't work as journalists, like this is one of the problems with straight people in Washington is that they hang out only with other people who work in their same industry. And so this is socialization for them. whereas they could have other friends who do other things, and then they wouldn't be that eager to go, like, hear the president insult them.

That's not exactly right. It's more that in Washington, college-educated people only work in a limited number of industries that are all centered around the fact that the federal government's sitting right there. And so, like, I have friends in many different industries. I know lawyers. I know nonprofit and think tank scholars. I think that Max actually would be a good person to talk to about this. I will say this.

I think that the other element here is that the White House Correspondence Association for better or for worse, I think probably, you know, in my opinion, for worse, is one of the only events that I think normal people know when it comes to major events on the D.C. social calendar. So, you know, I was at the one with the shooting in April. and, you know, basically as soon as that happened, that news got out, I got basically a million texts from people who knew that I was at it, people who knew that I, you know, people in my regular life who knew that I covered it, you know, in the past who'd kind of figured that I might be at it, had guessed. I think D.C. basically lacks any other events, major events that pretty much annual events that anybody knows. So if people in your life know that you are a White House correspondent or a media correspondent or work in the media or have attended the dinner,

in the past, you know, it's, it's, they think it's a, they still think it's a status thing and it's cool and they think they know that you're in the same room as the president. So I think it still has a little bit of this, you know, it still does have a status element to it, even though it is incredibly long and so boring. And every, you know, you are, every, the table seating is meticulously arranged. So you're sitting next to some, you know, the public affairs official for some major client, you know, for four hours, while you kind of make some, talk about whatever it might be, which I think is, is, is, is, is, is, is, is, is, is, is, is torturous. The small talk is always funny. One of the times that we went, Mother Jones

split a table with daily collar. And it was, you know, we were just having the oddest small talk you can possibly have. But it seems like I was like, on this level, hey, at least we're all colleagues. We're, we're making friends with each other. One thing the president found time in his hour-long speech to remark on, uh, was the new leadership at, uh, CBS News. The way he talked about this, he said, under my administration, a once feared and powerful regime that relentlessly attacked America has finally been toppled. Their former leaders have been removed. And they're now being run by a gay dictator facing internal divisions. But I for one wish Barry Weiss, all the best at CBS News. She's a wonderful

woman. There was a media executive who I talked to who thought that the speech was terrible, except for that joke, for what it's worth. That was a really good joke. It is a good joke. He didn't deliver it very well. You got to admit, it's a great joke. Well, it was also like at minute 53 of his speech, I think he had lost the audience, and maybe if it had come at a more opportune time, it would have gotten a better reaction in the room. How are things going over there at CBS News under Barry Weiss? Well, I think you can look at it two ways. I think in general, it hasn't been a success. She's been in the job for, I think, almost a year.

It's been a year since I think they bought the free press almost a year. And the Ellison's installed Barry Weiss as the president, the first executive editor-in-chief. of CBS News. Obviously, there's been a tremendous amount of turmoil, you know, a lot of internal friction, you know, some of which is probably unavoidable and would have happened to anybody in that role. And I think some of which can be chalked up to, you know, the fact that, you know, Barry had run a small digital media organization and is now in charge of a very large, old, slow-moving institution. and some of this has been really intense, you know, an intense learning curve. I think that the summer has been, I think, you know, after all of the events of 60 Minutes,

which happened earlier this year in the firing of Scott Pelly, I think things have calmed down for the last several months, as things tend to do in media. But I think that no doubt the internal turmoil, friction, bad news, headlines, you know, that happened over the last year, I really think, based on the people that I've had conversations with, that that's influenced what Ellison is going to do. If the Warner merger goes through and is approved, which I still think it will be. I think that there was at one point the possibility that Barry Weiss would be in charge of a combined CBS News and CNN. I think that based on how the last year is gone from the people I've talked to, that's almost certainly not going to happen.

Do you have a sense of what they will do with CNN? Because the funny thing with the CBS situation is it looks to me like, phenomenon that we see over and over in sclerotic media institutions, which is that there's an old business model that's not going to work anymore and that's doomed. And the like, you know, audience is just in terminal decline for programs like the CBS Evening News. And so you get a new person who comes in with a new strategy that is also doomed and that is definitely not going to work. And then the old guard and the new leadership just pointed each other and say, your plan is doomed. It's never going to work. And they're both right. But that ultimately it's just that it's a

business model that just doesn't work anymore. And so it seems to me like that, I mean, 60 minutes, I think has a lot of brand value that I think Barry has unnecessarily destroyed. But I think a lot of the other aspects of CBS News were just in terminal decline. And CNN, in the long run, people are just not going to watch linear cable news in the way that they used to. So if you don't, you know, have this ideological shakeup that you have with Barry Weiss, you still have to try to fix CNN, right? Do they have a different approach that's more plausible on that? I really don't think so. I think so. I think that. I think one of the things that's interesting about this situation is that I don't think that anybody within

CBS News, or at least most people, don't disagree with Barry's diagnosis of the problem, which is pretty broadly shared in the industry, which is there is an aging and declining audience and the model that built CBS that made it one of the most historic, you know, one of the most history, you know, historic legacy brands, most watched, most paid attention to, news brands ever, you know, is broken, is in terminal decline and eventually will, you know, will go away or people just won't pay attention to. It already doesn't drive the conversation in the way that, you know, some more nimble folks online, you know, do. I think that there's really no solution to these problems. I'm a bit of a pessimist, you know, about this. I think that,

I think that these organizations still make a lot of money, obviously, and that's the reason why they still exist, because they're certainly a political headache for their owners. But I think that there's not really any fixing the linear TV model. They're going to try a bunch of stuff. They've been trying a bunch of stuff to try to make it cheaper, essentially. And technology allows that to happen. You know, they can license shows, which we've already seen in some ways. I think that they're going to continue to try to do things like build out their podcast divisions, which both CNN and CBS are kind of late on. They're both trying some version of CNN in particular is trying some version of a subscription model.

But I think that they have the fundamental problem. And I think this is where David Ellison and Barry to a certain degree have made some mistakes of, you know, I think alienating their core audience. I think one of the mistakes that Ellison and and Barry, and Barry, I think, Barry have made, and we've seen this at other places as well, you know, is telling a certain part of the audience, you know, that you basically don't want them or that you want to appeal to, you want to change what you're doing that that audience likes to appeal to a different audience. I think that that's really challenging in an era of media fragmentation where you can find media that fits and aims specifically at whatever your specific desires are as a reader or listener.

So I actually wanted to ask you about podcasts, because I, you know, I, I, I, I, I, I, I, I, I, I'm a fan. And I was looking, and before we, before we sat down here, I was looking through your, your profile page at Semaphore. And I was like, man, it's just a lot of podcasts, a lot more podcasts than like other stuff. And I also feel like I am now, someone was like, how many podcasts are you on? And I said, well, you know, three, maybe two kind of depends on how you count. But, you know, like I know, I now, I'm literally having a problem where I, because I have to

travel with my microphone. And because the post does video, also my hair dryer, my special hair dryer and my makeup and so forth. And the microphone stand, I, like, I am increasingly out of room to carry clothes in my suitcase. So I have been thinking about this why everything is podcast. You know, Trump once said everything is computer, now everything is podcast for media. Why, like, why is that? And do you, how do you think that's going for various organizations? Well, I think that everything is basically short-form video clips and YouTube at this point. I think the audience for podcasts globally is going to continue to grow, but also the volume of podcasts is increasing by the day, which is why you see you have this interesting phenomenon where

most of the top podcasts in the country, it used to 10 years ago, it shifted around a lot. Like you would have a podcast, you know, a new podcast that would come out and it would go shoot to the top of the charge. It was something that, you know, everybody who listened to podcasts was paying attention to and the charts would look really different every year. Now it is, there is this kind of established entrenched, you know, kind of top end, you know, of the podcast market, you know, Joe Rogan, the daily shows like that, Tucker Carlson. Central Air. Central Air, hopefully sometimes, I think. So I think that really most of the places where there's still discovery in podcasting is in the form of short form video clip.

and on YouTube. We see that in the media podcasts that we do. And the reason for this, why there are so many podcasts is because those are the only places with meta, with Facebook basically getting out of the news distribution business and with Google increasingly, you know, becoming, you know, not directing traffic to written word articles. The only way for news organizations, media organizations, journalists, whoever, to distribute content to reach broad audiences is through short form video clips on TikTok, Instagram Reels, and YouTube shorts, which I guess people do watch, apparently, and YouTube, which as we know is increasingly replacing people's televisions. People will just, you know, are not paying for cable and are just literally, if they want to

watch TV, putting on, you know, television quality stuff that's on YouTube for free, putting it up on their connected TVs. I think that's really the reason why you're seeing basically so much of this. It's interesting because, you know, my sister works at the San Francisco standard, which is this upstart San Francisco paper that does really good work. But she also has a podcast on there. And she was in town recently using this exact setup that I'm on right now to do hers. And we don't do video. But so she had, they had, they made her change my change all of this and put a background on and all this bullshit. And I was like, so how many people are we, they watch it? And she was like, oh, no, no. No one's ever watched

it. Like the numbers on their YouTube channel are incredibly low, right? And when they do pop, because of some magical algorithm nonsense, you know, it goes up into the tens of thousands or something like that, which just is not. The only way that they can financially do that is because they have the studio. They have employees not hiring people individually to do it. And it's a long, long thing. But like the discovery is so, there's so many things on YouTube now that it's not, it's not like the old days on Facebook where you could just kind of like trick people into it. And really game it in a very like direct, I can make a projection way. And then you're talking to bring it back to CBS.

They just hired Mike Peska, who, you know, friend of the show, and he's going to be in charge of their podcasts. And I used to work for CBS Digital when I worked at CNET. And, like, we spent a lot of time about how to drive people to various products in this different, you know, Facebook-driven era back then. And I'm just trying to wonder what it even will look like to try to force people into those funnels to whatever new shows that they're going to build. up that Mike's going to oversee to put them at the top of the charts where it does make sense for them to have, for them to push in on this format. And I guess I'm curious, like, what do you think, you have a podcast that is part of a media organization? And I don't know what the market looks like now and what the strategies are like and what we can expect to sort of see

when you look at a place like CBS that has as much money as it needs, but it's in a different environment. Yeah, I mean, I think it's going to be a real challenge. And I think that that, you know, Mike actually kind of said this to Ashley Carmen in an article in Bloomberg kind of about these kind of first generation or Generation 1.5 podcasters like Mike Peska, who was one of the first daily podcasts when he, which he launched at Slate, The Gist, which I'm sure plenty of people here listened to, you know, 12 years ago or so. I think that CBS still does have some advantages, which is it has one of the top podcasts in the country, 48 hours. It's basically their dateline equivalent. Those true crime podcasts tend to do really well.

So they still do have, you know, a feed that they could get really creative with. And they have a huge YouTube channel as well and just all the power of, you know, the affiliates. And they can, they can get pretty creative with how they, you know, promote their stuff. So I think that they do have some advantages over small little startups like us. But I think that they're also somewhat constrained by, you know, the brand to a certain degree and the, you know, what standards and practices expects from at a legacy news organization that's branded CBS versus, you know, versus a small independent, you know, publishers, media companies, podcasters. So I think that they do, I would say the distribution is a greater advantage than the limitations of, you know, their

legacy media standards. But, but I do think it's. it's really hard to launch a podcast into a market where people, that's already like fairly mature and people have their habits and know what they want to watch. So I think it's going to be challenging. Max Taney from Semaphore. Thank you so much for joining us. Thanks for having me, guys. This is really fun. Thanks, Max. Let's take a quick break. We'll be back with more central air. Megan, Ben, I thought you might be interested this week in a little update on my life in Mamdani's, New York. Because, you know, New York, we're always on the periphery of media coverage. I feel like people often don't pay very much attention to what's happening here. And there's some interesting stuff that's been

happening in New York lately that the world might like to know about. Have the purges started? Are the secret police roaming the streets looking for people driving gasoline vehicles? Now that I own an electric vehicle, I guess I will survive the purges. So I'm just in time. If the secret police are here, they're very well disguised. I mean, you know, the regular police are still around New York. I mean, one of the secrets about New York is, is that we have like twice as many police officers per capita as a normal large city does. And so, you know, we always have a large police presence as part of why we are one of the safest large cities in New York. But so far, they seem to be doing ordinary policing, sometimes

to the annoyance of the mayor's left-wing supporters who thought that he was going to legalize certain types of crime. But in fact, they're arresting more people for fair beating in the subway and that sort of thing. But no, I have not been purged yet. You can always come hide with us, Josh. I just want you to know that. Thank you. But what people may have been seeing out of New York in the news, there's a few things the mayor's been up to that have gotten some national attention. Let's start with the grocery stores because one of the promises that Zoron made when he was running for mayor that I think drew an outsized amount of emotional reaction is his plan to have publicly owned grocery stores, one of them in each borough of New York City. And the idea is groceries are too expensive. We're going to have public provision. And the government will sell cheaper groceries to bring down the cost of living in New York. New York. And this is one of those things where it's like, it's a dumb idea. The city has definitely wasted more money on stupider ideas in the past. So I've not been able to, like, muster the kind of emotional reaction that a lot of people have to this. But it's also one of those ideas where it feels

like the mayor could have just moved on from it and there wouldn't have been a groundswell of outrage. In the same way that, you know, he ran on free buses and we're not doing free buses. In fact, we have a much more sensible initiative with the state where they're trying to do things. they'll make the bus service faster and better. And that may actually lower the cost to the government to providing bus service, but we're still going to collect fares on the buses, or at least we're going to say the fares are required on the buses. But he's not walking back from the grocery stores. They are working on this. They intend to open a city-run grocery store in the Bronx next year and in Manhattan by 2029. And the mayor had a press conference where he

announced that certain staple foods like meat and produce are going to be priced 30% lower than they are in private grocery stores once these new grocery stores open. So I'm actually expecting lines around the block for these places. And it seems to me that, you know, like the city will lose money on that, but probably a sustainable amount of money. It seems like the sort of thing the city can do and it can cause the prices to be lower through subsidy. And so we probably are, in fact, going to have this socialist grocery store experiment

where there's going to be cheap produce and cheap meat. And we will see what happens when that actually plays. proves to be very popular. I mean, since they're only going to do five of these, it doesn't seem like it's actually going to drive down costs for other places, right? Like, I feel like the fear that it's going to knock those people out of business is probably wrong. But isn't what you then expect that there would be massive supply issues at the store? Yes. They're probably relying on the fact that they're going to run out of these things to stop it from being this unending massive subsidy that bankrupts the entire city. They told me that if New York elected a socialist mayor, we'd get

breadlines, and apparently they were right. Isn't it also going to be a problem? I mean, maybe they have a plan for this, but if they are doing 30% margins on meat and produce and stuff like that, and you are someone who has to buy them in bulk because you have a restaurant or something like that, and Costco only gives you a 15% mark, isn't there just going to be people going and buying every single bit of it? So part of the theory, as I take it, is that they're going to have, there's going to be a card, and you can only buy so much at a time. Now, Now, does a 30% discount make it worthwhile to smurf the stuff where you have a ring of people who each go? Like, honestly, for a smaller family restaurant, probably.

Right? Where if you have, like, if you are an immigrant family, you have enough relatives who can buy you meat. Like, yeah, I mean, meat's really expensive. Getting a 30% discount would be meaningful for a small restaurant. It's obviously not going to work for, like, McDonald's. Well, but I don't know if it's 30% off retail. I mean, restaurants are already paying a lower price per unit by buying in bulk from distributors, and the distributors also deliver to them, which is a cost savings compared to having to, you know, I mean, there's a reason that to the extent that stuff is being, you know, for example, stolen out of grocery stores and resold on the street. It's usually detergent and other things that do not expire. So I, there was a statement on this from Anna Barr, who's a spokeswoman for the mayor, who also, Fun fact, was an intern for the upshot at the New York Times when I worked at the upshot many years. ago. And so she said that they're going to have some sort of volume limit system that prevents people from redirecting the food. But the thing is, I think you're likely to end up with lines, even with people only going and buying it for their own personal purposes. There's a lot of people who are going to be happy to take a bus all the way across the Bronx or the subway and go to this store for the discount. And so I think what you will find is that the stores are a quote unquote success in the fact that there will be significant demand for this stuff that is being sold below cost. The problem is that the

city will be losing money on that. And an additional problem is that, you know, the income at grocers will be upset about being outcompeted on price. Sort of like with national health care, right, if you were a city-owned operation and you're losing money on every unit, as the old economist joke goes, you can't make it up in volume. So what are you going to, what is the, what do you do in the NHS, right? You just limit the amount of service, which means I would expect that what they're going to do is that there will be these theoretical prices and they will not order very much of any individual items. So you can go to the grocery store and get a 30% discount on meat, but it might be ham hawks this week and it might be like something you don't want next week

because that is one of the easiest ways to control the fiscal cost of a service that has been priced below market. Well, but the thing is like this is an important PR thing for not just for the city, but for Mamdani's socialist project. And so it's important that people get the sense that these stores are a success on whatever terms that is. And so, like a line outside the store showing how popular it is and how much demand there is, that's success. But if people get in the store and none of the things they want are available, that's failure. And that's going to make the thing look ridiculous. And so I think they, you know, they have to come up with a model for this where people are getting in the store and coming out with products they actually wanted.

So I think maybe you then have to limit the number of people who can get in the store. They definitely don't want a Soviet-style situation where people get inside the store and the shelves are bare. And all you can buy is a bunch of hamhawks because that's going to make them look stupid. And I think they're very focused on not looking stupid. It will be very interesting. Like how much of the city's budget are they willing to commit to this project? Because selling goods at like well below cost, you get a lot of demand that way, right? So exactly how much are they willing to lose to make Mom Dani's grocery stores not look ridiculous?

It'll be interesting to find out. So the claimed budgetary commitment here is they're putting $70 million in capital toward these stores, and that's supposed to pay for the construction of five stores. Now, I don't think there's even going to be five because they've announced sites for these two stores, one in the Bronx and one in Manhattan. The Manhattan site is a piece of city-owned land where they have to build a new store. And so I think, you know, you identify there that there's going to be demand for funds. They also haven't found suitable sites in some of the other location, so I think one way they can make the sustainable is by opening less than five stores. But so there is that capital commitment.

And then there's also all sorts of implicit subsidy where, like, you know, that piece of city-owned land has real value that they're not going to charge against this. The stores are not going to have to pay rent. They're not going to pay property tax. They are not going to have to pay income tax, although grocery stores have pretty low margins. So the avoidance of income tax isn't that large a savings. Most of this stuff is already exempt from sales tax even in privately-owned stores. So there'll be some amount of implicit subsidy. But yes, I think to your point, that may not be enough subsidy to charge 30% less than the private retailers and not have to have a loss that you have to cover even on top of all of that stuff. Especially if you're instituting some sort of you can only buy this much ham this week, card system. Like, which, oh, to stop it, I mean, I have no idea what that costs, but it costs more than what Key Foods does. I am looking at a thing that I just Googled, so I can't, it's from the National Retail

Solutions website. Sounds very official, right? And they are suggesting 65 to 70% should be a cost of goods sold, which doesn't leave, I mean, like, that's essentially saying that, like, everything else will be free. Everything else will not be free, right? You need electricity and wages and, like, and you're going to have shrinkage and spoilage, which is something that you worry a lot about in the grocery industry. And in fact, like, years ago, I interviewed an executive at P-Pod about Amazon's entry into. to groceries. Now, I was not then working for the Washington Post, but full disclosure, today, Jeff Bezos owns the outlet where I work. And I was asking her about, like, how

worried are they? Amazon's this incredible retail giant. And she was just like, you know, honestly, not that worried. And the reason I'm not that worried is that it's so friggin hard to make money in the grocery business. Spoilage, if you don't get it exactly right, will absolutely kill you. The stuff, the perishable stuff is the stuff that keeps people coming into your grocery store rather than ordering from Amazon. And that perishable stuff goes bad so fast. If you over-order, you're going to lose a ton of money. And if you under-order, you're going to get people who are going to face empty shelves, and then they will get mad, and you will lose a ton of money. And it's actually just an incredibly difficult business. And I think that is also probably

going to be what the city discovers. Now, my understanding is they're going to get some private operators to operate this. But I don't know. Are they going to get a a good private operator to run this city-owned grocery store? Are they interested in that? Well, they're going to need to, I mean, just to be able to do buying at scale, right? To get any of this at a reasonable cost, they're going to have to get someone who's buying them in large amounts from... Well, but then you've got to pay those people, and then that's expensive, right?

Because the parameters that I've seen are not only do they have to sell these items at a 30% discount, but also you have to have a, quote, fair price on the non-subsidi-aided or non-mandated discount items. And there are wage mandates on the employment side. No, for profit company is going to be like, I have to sell this below cost, deal with a city contract, and what I get in exchange is free rent and no taxes on my one to three percent margins. I think not. So I suspect what they're going to end up with is a nonprofit operator. And they're not a lot of like really successful, sharp, large distribution, non-profit grocery operators that I'm aware of, although I leave open the possibility that I've just not heard of them.

The thing the city has going for it here is that the grocery sector in New York City is genuinely sclerotic and has poor cost control and has very high prices compared to the country as a whole. And some of that is just inevitable stuff about the built environment in New York City. If you're going to open a grocery store in Manhattan, it's not going to have proper suburban style loading docks and you're going to have to take things to multiple levels when you would not design a multi-level grocery store and any other level. location. There are fundamental cost drivers. But there's also policy choices the city is made that make our grocery sector very expensive. In particular, we have zoning rules. We're basically

in these in so-called M zones in the city, which were once upon a time for manufacturing and other industrial uses. These are the most logical places to build a normal grocery store that is, you know, on one level with parking lots around it. And in those zones, if you want to build a store over 10,000 square feet, you need a zoning variance. You have to go. You have to go. to the city council and get special permission to open your store. And so in practice, the way that's been used is they don't let Walmart in because the grocery unions don't like Walmart. And when other grocery operators come in, the city council has a whole list of expensive things they want them to do. You know, you have to put solar panels over the parking or you have to preserve some building

or build some office space that nobody really wants. And so sometimes that happens, but it's usually with higher-end grocery stores that can really make a lot of profit and are willing to go through that. So you get a special Whole Foods in Gowanus and Wegmans at the Brooklyn Navy Yard with a bunch of useless office space and buy it. But it means that we are undersupplied with grocery stores. And also we have a bunch of incumbent operators that would never make it in a place where there are really good grocery stores around. But people shop at Gristides and Food Emporium and these kind of gross expensive stores because that's who has the experience operating and who has the incumbent stores in these areas. So the fact that prices are, you know, unreasonably high to

begin with, at least helps the city with getting to that 30% discount because discounted often inflated floor or often inflated ceiling, I suppose. And, you know, they're competing against union operators that already have high costs. So I think, you know, Mamdani really did hit on something, which is that New Yorkers do overpay for groceries and that, you know, maybe these incumbents could use a kick in the ass and to compete against an operator that is able to get in a better position on price. But really, what they ought to do is deregulate the sector. make it easier to open new stores. There's some really wonky stuff about like elevators. And, you know, if we allowed better kinds of freight elevators and grocery stores, it would be easier to get

food in and out of the basements compared to the hand trucks they're using now. But it's sort of interesting that he's brought in Lena Kahn, whose whole vision of the economy is about these, like, independent yeoman operators and protecting their position where really you kind of need to protect their ability to charge high prices. And then he has this vision of, you know, well, we need public provision because the private sector is inefficient here. When there is a third answer, which is that we need a, you know, a more competitive private sector, unfortunately, there's a very limited market for that in New York politics, even though that, you know, that would be what would really lower prices in a sustainable way. I would imagine that these are going to be popular in the

sense that there will be lines outside of them. But then, you know, assuming they can somehow keep them stocked and that they don't end up with those photos of, you know, nothing on the shelves, then people are going to say, why don't you build more of them? And it seems like that's when, when this either spirals completely out of control into like the bigger problems, or they have to say, we can't do more of them. You know, there's a limit here in some way, if you look at it as a longer-term project. And I guess I'm curious what you sort of see as the outcomes beyond for just the, whether the stores have customers, which they will be. Well, so I think one likely outcome there is, I mean, you know how hard it is to build anything in New York. And, you know, like, you know,

you know, seven million dollar, like, you know, restroom buildings and parks and that sort of thing. And so I think partly, one way they can do with this is that they can say, these are a great success, we really need more of these. And we're going to have a lot of community meetings, and we're going to figure out where the store can go in Brooklyn. And, like, if you just, if you just allow these things to slow roll, like, you know, the, Mamdani is claiming that he's going to have all five of these open by the end of his first term. But they've already announced that the Manhattan store, which is the second farthest along, is not going to open until 2029, which is the year he's going to stand for re-election. So my guess is that they will say this store is a big success.

We really need more of them. We're going to have a program to roll them out. And it will be just like any other government program in New York. It will take forever to get to scale. And eventually he won't be the mayor anymore. The better question that you get there is, what do you do in the meantime to manage flow through the stores so that it looks like a success on a limited scale rather than something that has gotten completely overwhelmed by the demand for cheap groceries. I mean, one other possibility is that they will decide that the prices are unsustainable and that the 30% discount was not reasonable. And they can cut the discount to a point where both they avoid having the big fiscal losses they have to subsidize and they reduce the demand

because the discount is not as extreme and it's not worth going all the way across the Bronx to get there. So I think that's one way they could manage it. And I think that's the sort of promise you can break. You can say, oh, unforeseen circumstances, 30 wasn't possible. We're doing a 15% discount. And then it becomes sustainable. Here is a question I have. How are they going to manage it? That's it for this week's free episode of Central Air.

We have much more for paying subscribers. We look at how you might prevent theft in a city-run socialist grocery store. We also talk about what cuts of meat they might carry in the city's stores. We also look at some other New York controversies, an interesting fight between Namdani and the Teachers Union. And finally, I think we may have found the way to bring peace to the Middle East. I think we solved that behind the paywall on this week's episode of Central Air. So if you want to hear that, go to Centralairpodcast.com.

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