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The election of Zohran Mamdani as New York City’s mayor marks a historic moment. It is the first time a member of the Democratic Socialists of America has taken charge of the nation’s largest city. But behind the wave of activist enthusiasm lies an economic agenda that risks backfiring.
According to the Cato Institute, Mamdani’s plan is not an outright revolution but a gradual suffocation of the market through layers of government intervention: rent caps, minimum wage hikes, subsidies, and expanding bureaucracy. Each measure breeds inefficiency, which then invites even more intervention.
The Mirage of Rent Control
The new mayor’s first promise to freeze rents and build 200,000 public housing units over ten years is being hailed as progressive by supporters. But it is a serious economic misstep. Rent caps, like any form of price control, discourage investment, degrade existing housing, and ultimately benefit wealthier households who already have homes.
The Cato Institute points out that in San José, more than 60 percent of rent-controlled apartments are occupied by middle- or high-income families. In New York, where 40 percent of rental units are already regulated, such a policy would only worsen the housing shortage.
The Hoover Institution adds, “In 2019, Governor Cuomo’s law limiting rent increases led to the loss of tens of thousands of rental units.” Freezing rents would likely repeat that mistake. As center-left economist Assar Lindbeck once remarked, in many cases rent control seems to be the most effective way to destroy a city, short of bombing it.
The Tax Trap
Mamdani has also promised to raise taxes on incomes over one million dollars by two percentage points. He calls it a “minor correction,” but it actually amounts to more than a 50 percent jump in the city’s tax rate for high earners, from 3.876 percent to 5.876 percent, an effective increase of 51 percent.
During an interview on CNN, journalist Erin Burnett pointed out the discrepancy. Mamdani tried to defend the plan by saying it was only “a 2 percent increase,” confusing percentage points with a relative increase of 2 percent. Burnett’s math was right, but the larger problem is economic, not semantic.
The Hoover Institution warns that such tax hikes could drive away top taxpayers, reducing overall revenues rather than increasing them.
A Fragile Job Market
Another major proposal is to raise the minimum wage to 30 dollars an hour by 2030. The Cato Institute argues that this is yet another form of price control, this time on labor, and its side effects are well documented.
In California, when the minimum wage in the fast-food sector rose to 20 dollars, it led to the loss of 18,000 jobs, according to a 2025 study by the National Bureau of Economic Research (Clemens et al.). “Entry-level jobs will disappear,” warns the Hoover Institution, “keeping young and low-skilled workers from gaining the experience they need to move up.” The result could be higher exclusion and an exodus of small businesses to the suburbs.
Municipal Grocery Stores: A Step into the Unknown
Mamdani’s proposal to create a network of nonprofit municipal grocery stores is based on a faulty assumption: that “food deserts” are the cause of nutritional inequality between rich and poor.
A large study by the National Bureau of Economic Research (Allcott et al., 2019) debunks this claim. After analyzing the purchases of 61,000 American households and the opening of 6,721 new supermarkets between 2004 and 2016, researchers found that access explains only about 10 percent of the dietary gap between income groups. The remaining 90 percent comes down to preferences: wealthier households are simply willing to spend nearly three times more on healthy food ($1.14 versus $0.43 per 1,000 calories).
Even in so-called “food deserts,” where supermarkets are scarce, 85 percent of grocery shopping already takes place in supermarkets. Americans, including low-income households, travel an average of 5.2 miles (8.37 kilometers) to buy groceries. When a new store opens nearby, eating habits barely change because people simply switch from one supermarket to another.
The study goes even further. When lower-income families move to healthier neighborhoods, their diets barely improve. The issue is not supply but demand, driven by education, which explains about 20 percent of the gap, and nutritional knowledge, which accounts for 14 percent.
Building public grocery stores to solve a problem that barely exists would cost hundreds of millions of dollars for little to no nutritional benefit. The study suggests that subsidizing healthy food directly would be more effective, though closing the nutrition gap would still cost around 11 billion dollars a year.
New York risks investing heavily in infrastructure it does not need, while the real barriers to healthier eating remain limited education and financial means.
A Historical Mistake Repeated
According to the Fraser Institute, Mamdani’s election reflects the “economic amnesia” of parts of the American left. The socialist experiments of the 20th century failed to provide even the most basic goods, from housing to food, while wasting enormous resources. “Every time the state takes over the role of the market, it destroys efficiency, freedom, and prosperity,” the institute warns.
New York’s story is one of a city built on entrepreneurial drive, not central planning. By handing the keys of the city to a committed socialist, its residents may be trading creativity for control.
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