For the last couple of weeks, most of the email generated by this blog has concerned those government-run grocery stores proposed by the New York Democratic mayoral candidate, Zohran Mamdani. If I eliminate the usual hate mail—which I have graded and returned—the rest is about split between those who are positive that it won’t work and those who are eager to see the experiment implemented, as long as it is done far from their homes.
A very small number of people pointed out that, while there were several examples of small government-run grocery stores in food deserts, there weren’t any examples of large-scale government-operated food stores. That’s true: I can’t find a single good example—but I found something fairly close: an example of the government’s intending to do good, but ending up distorting a very large market.
At the start of World War II, Great Britain found itself in a dangerous position: The island nation had to import two-thirds of its food under normal circumstances and German submarines threatened to cut off the food supply, so the British government implemented a strict rationing system for hard-to-obtain foods. Ration books were issued, a point system for meat, tea, sugar, and fats was established, and propaganda cartoons featuring Doctor Carrot and Potato Pete urged civilian compliance.The rationing system insured that the army received sufficient food to continue to fight, guaranteed that no one starved, and (most importantly) insured that everyone in the country believed that, regardless of an individual’s wealth or position, no one got more than their fair share of the available food. The English class system made that last point particularly important.
Surprising many, British food rationing did not stop immediately after the war’s end due to a combination of economic hardship and global instability. The country was deeply in debt, with its economy drained by six years of war. Imports had to be paid for in scarce U.S. dollars, which limited access to foreign food. At the same time, British domestic agriculture, though improved during the war, could not yet fully meet demand. The Labour government that was elected in 1945, prioritized fairness and full employment over market liberalization and viewed rationing as a way to ensure equitable distribution during recovery. Bureaucratic inertia and fear of inflation also delayed reform. Rationing, while unpopular, was seen as a stabilizing measure for when and if the economy and supply chains could recover. Thus, not only did the rationing not stop after the war, but bread was added to the list of controlled items.
In short, keeping rationing in place seemed both safer and fairer to the Labour government that did not fully trust or believe in a free market, so it continued to control both production and distribution of food. Producers, guaranteed a stable price for their goods, saw little reason to risk investment in either innovation or expansion.The rationing system was a form of price and supply controls and while such draconian measures were a necessary evil during the war, they were a huge mistake after the war. Wage and price controls inevitably lead to market inefficiencies such as shortages and a drop in the quality of goods delivered. As the government increasingly manages coupons instead of increasing productive activity, labor and capital are misallocated. The end result of such economic policies is always a shortage of goods and the development of a black market that sells goods at a high price.
As Milton Friedman said, "The government solution to a problem is usually as bad as the problem.”
By maintaining wartime controls during peacetime, Britain dramatically slowed its own economic recovery. Rather than letting the market rebuild supply chains and incentivize production, the government suppressed price signals, reducing incentives for farmers and importers to innovate or try to increase efficiency in both agriculture and distribution. At the same time, the government wasted money and manpower maintaining a large bureaucracy to enforce the rationing.
Though rationing was meant to ensure fairness, an economist like Milton Friedman would argue that forced equality through rationing reduced overall welfare. He would say it's better to allow prosperity to rise, even if unequally at first, than to hold everyone down to the same artificially low level of consumption.By the late 1940s, the British public was weary of prolonged austerity. Rationing, initially accepted as a wartime necessity, became increasingly unpopular as peace returned. Restrictions on staples like meat (8 oz weekly), butter (2 oz), and sugar (8 oz) felt oppressive, especially with limited variety and long queues. Housewives, in particular, were vocal about the burden, with some forming groups like the British Housewives’ League to protest rationing and price controls.
Ironically, though the British and the Allies had won the war, English food rationing lasted years longer than in any other European nation—including in Germany, who had lost the war. France ended food rationing in 1949, and Poland, Belgium, and Germany, in 1950. In 1951, Winston Churchill and the Conservative Party were returned to power with a promise to end economic controls, including rationing. England finally ended all food rationing in 1954.
Though rationing lasted almost three times as long as the war, food consumption in Great Britain returned to prewar levels within a few years after rationing ended.