The Economic Consequences of the Election: New York City Edition
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Some terms are overused, especially in politics. Fascist is one. Socialist is another. I could spend much time detailing all the problems this creates, but I’ll focus on one: Word Inflation. Overusing terms dilutes their meaning and power, making it impossible to describe a real fascist or socialist when one arrives. In this case New York City Mayor-elect Zohran Mamdani is truly the most socialist prominent elected official in the country. (There are others like Representative Ocasio-Cortez and Senator Sanders, but their true power is diluted in the legislature). Socialist Mamdani is the chief executive of the world’s most important business city.
What is Socialism?
Word inflation has diluted this meaning so that many proclaim themselves to be Democratic Socialists. That term sounds nicer, everyone supports democracy, but “socialist” is still the noun. Many believe that socialism just means being fair and nicer to people and having a lot of government programs, but the core socialist tenet is collective ownership, which is the abolition of private property.[2] Socialism is a confiscatory scheme that starts with the means of production but cannot end there because all privately owned property is a threat. So, the confiscation extends to personal private property, such as homes, and then to your labor, and ultimately to your ideas and thoughts.
But What About Mamdani?
No one can accurately predict how people will respond to a new administration and policy direction, and Mamdani is in a complicated situation. The troubling reality is that he is a true believer and seems to have an anti-American bent. In his victory speech, he ran through a litany of nationalities he thought should celebrate his victory, not once mentioning Americans. His parents are in elite professions (Ivy League professor and award-winning filmmaker) with Marxist proclivities.[3] Mamdani himself started a chapter of Justice in Palestine, an anti-Israel group, while attending Bowdoin College. Later, he married artist, Rama Duwaji, a Texan of Syrian descent who claims Syrian nationality and uses her art to rage against American imperialism.[4] All of this points to him being a true believer in Socialism and at least comfortable with a political narrative that the U.S. is more of a global force for ill than good.
And His Policies?
A review of his policy proposals confirms his philosophy. A simple list gives a flavor: freeze rent, build more housing, crack down on bad landlords, divert funds from the police to form a department of community safety, create city-run grocery stores, provide free city-bus service, make government pay for child care, raise taxes on the wealthy and corporations, and increase the minimum wage to $30 an hour.[5] There is more. You can read it all at the link below.
Housing
Housing is a big issue in New York; residents pay a lot to get a little. One of Mamdani’s campaign themes was “New York is too expensive. Zohran will lower costs and make life easier.”[6] How that suddenly will work is never explained.
His great hair, youthful smile, and media charm cannot change the fact that holding prices artificially low discourages the construction of new housing. If builders and landlords cannot earn a return and do not have the flexibility to adjust prices as conditions change, they will not build starter apartments for the young and lower income. They will only build units exempt from rent control, making the city even more unaffordable.
Mamdani’s team recognizes this and states; “As mayor, Zohran will put our public dollars to work and triple the City’s production of permanently affordable, union-built, rent-stabilized homes — constructing 200,000 new units over the next 10 years. … Zohran will initiate a Comprehensive Plan for New York City.”[7] But , as the late, great economist Walter Williams stated: “Short of aerial bombardment, the best way to destroy a city is through rent controls.”[8]
Exodus
Maybe one way he plans to increase affordable housing is through the units of the many people promising to leave New York. While I, probably like you, tire of loud-mouth celebrities promising to leave the country every time an election does not go their way (with almost zero follow-athrough), mobility is an important option, and it happens. As recently as 2000, New York was the second-most populated state; it is now the fourth.
As most of us know, moving is expensive and time consuming. Few do it without serious consideration, which is why less people will move than proclaim intent, but those who do are not likely to come back. Some are proclaiming that the threat of an exodus is overblown, but this seems to ignore actual data.
Approximately 500,000 people left New York City in a three-year period, ending in 2023. But unlike some other cities, the population grew again after COVID. With Mamdani’s election, we mainly have stated intentions, but some are taking action: “Agents across the tristate (NY, CT, NJ) area describe a fresh wave of migration that’s already igniting bidding wars and record-breaking sales just beyond the city limits. Agents from Greenwich, CT, to Paramus, NJ, say their phones have been ringing off the hook since Mamdani’s decisive primary win this summer. They’re calling it the ‘Mamdani effect,’ a sudden rush of Manhattan and Brooklyn buyers eager to lock in suburban properties before potential policy shifts take hold.”[9] That influence reaches beyond the region as well: “The ‘Mamdani Effect’ Is Boosting the Palm Beach Real Estate Market.”[10] I will have to save a discussion of the Wall Street South movement and the rumors of the a stock exchange relocation for another essay.
We do have some precedent to examine what happens when the wealthy flee taxes. Effective in 2008, Maryland increased the top tax rate on incomes over $1 million to 6.25% on top of county income-tax rates that averaged about 3%.
The Comptroller of Maryland reported that the number of “millionaire” tax returns dropped by a third in the following year, as total declared income dropped by 22%. Officials expected income-tax revenues to increase by $106 million, but they actually fell by $257 million. A Bank of America study on interstate migration found that Maryland lost $1 billion of its net tax base in 2008 by residents moving to other states.[11] The Laffer Curve is real — people do not just accept higher taxes.
Mamdani wants to impose a 2% income tax on New York City residents who make more than $1 million a year and hike the corporate tax from 7.25% to 11.5%. By comparison, Maryland’s increase was modest.
Grocery Stores
Mamdani proposes to establish at least one city-owned grocery store in each borough. He either thinks he knows how to run grocery stores better than people who actually run grocery stores, or Mamdani knows he can’t do better and will just run them at a loss. He’ll force taxpayers to pay for the inefficiencies and budget shortfalls. The reality is that either the city grocery stores will have empty shelves much of the time or will carry things no one wants. We’ve seen this story before and know the ending.
Minimum Wage
The new mayor wants to increase the minimum wage to $30 an hour. The problems and costs of this are obvious and well worn: layoffs of low skilled labor, outsourcing, price increases, substitution of automation for labor, and fewer small businesses starting up. At $30 an hour, a person earns $62,400 a year for full time work, but that is not the full story. Employers have expenses and taxes to pay, and a $62,400/year employee probably costs closer to $80,000. That means EVERY employee must be productive enough to justify $80,000/year. No fresh, high school graduate is worth that. Few new immigrants are worth it. No dropout trying to escape the streets through legitimate work will ever get hired. This plan will kill jobs by the thousands.
The good news is: Many things Mamdani wants to do must be approved by the state legislature, even a “rubber stamp” city council cannot make these proposals an instant reality. The bad news is: The legislature seems inclined to approve at least some of them. We have seen this before — in New York! In 1975, the city ran out of money. Contributing to this were large public expenditures on transportation and a very generous welfare program. The “Big Apple” could not get a loan and had to be bailed out by the federal government. So, if you think what happens in New York stays in New York, think again. Mamdani’s Socialism could cost all of us eventually.
[1] In 1919 the famed British economist John Maynard Keynes resigned his position on the British delegation to the Paris Peace Conference in protest over the terms of the German surrender to end World War I. He then wrote a short book entitled The Economic Consequences of the Peace in which he laid out his case and predicted that the terms were so harsh they would lead to another large-scale war in Europe.
[2] https://www.britannica.com/money/socialism
[3] https://people.com/all-about-zohran-mamdani-parents-11841456
[4] https://nypost.com/2025/11/08/us-news/zohran-mamdanis-wife-rama-duwaji-outspoken-against-us-imperialism/
[5] https://www.zohranfornyc.com/platform
[6] https://www.zohranfornyc.com/platform
[7] https://www.zohranfornyc.com/platform
[8] https://www.dailypress.net/opinion/local-columns/2022/06/the-cost-of-rent-control/
[9] https://www.realtor.com/news/trends/new-york-city-residents-migration-suburbs-mayoral-election-zohran-mamdani/
[10] https://www.realtor.com/news/trends/zohran-mamdani-new-york-election-palm-beach-florida-moving/
[11] https://taxfoundation.org/blog/marylands-millionaires-missing-after-income-tax-hike/
