New York’s future

If Zohran Mamdani implements policies that cause corporations to leave New York, high-income residents to move to low-tax states like Florida and Texas, and strong rent controls that lead to rental shortages and deteriorating housing stock, then based on known economic patterns and historical precedents, several things might happen.

The economic impacts would include reduced tax revenue. NYC relies heavily on corporate taxes and high-earner income taxes. Losing both could strain the city budget, leading to cuts to public services. Lower revenue would force reductions in transit funding, schools, public safety and social services.

There will be a slowdown in private investment. Companies leaving NYC would mean fewer jobs and less economic activity. Commercial real-estate vacancies could increase. Fewer firms would lead to fewer jobs and reduced consumer spending.

Housing market effects would result in rental shortages. Strong rent control historically leads to fewer new rentals being built, landlords converting units to other uses, long waiting lists, and shadow (cash) markets. There would also be declining housing quality. If landlords cannot raise rents while costs rise, maintenance suffers. This can result in illegal sublets, overcrowded units, and cash-based arrangements.

The departure of affluent residents shrinks the tax base and increases fiscal pressure on remaining residents. This results in greater economic inequality. Job losses hurt low- and middle-income residents most, leading to more demand for public support. With lower employment opportunities, more people may rely on city aid systems. New York City in the 1970s saw rent control, tax base decline, housing decay, and a fiscal crisis.

Currently, actual rent-controlled apartments make up a small percentage of units, about 2%. Rent stabilization is applied to many units in New York City and Nassau and Westchester counties. Big increases in rent control would lead to shortages and lengthy waiting lists. The waiting lists for rent-controlled flats in Stockholm are very long, with an average wait time of about nine years. The time can be even longer for more attractive city-centre locations, sometimes reaching 15 years or more

San Francisco has strong tenant protections, affordability for some, and constrained housing supply. Berlin attempted a rent cap, which was reversed due to supply issues. Cities in Florida and Texas have low taxes and business-friendly environments, leading to job and population growth.

If such policies were implemented and had the consequences depicted, New York City could experience a shrinking tax base, pressure on public services, reduced investment and job growth, and strained housing quality and availability. These outcomes are not guaranteed, but they are consistent with economic research and historical examples.

New York, long regarded as a centre for American dynamism, could be headed for ruin. It could become a social black hole of squalor, from which nothing emerges, not even light. Answer me one question: “Are these the shadows of the things that will be, or are they shadows of the things that may be, only?” Are we about to receive another example of the universal failure of socialism? It seems likely, though, as always, its failure will be blamed on outsiders. Kindly wait.

Madsen Pirie