'Zohranomics': NYC Mayor Zohran Mamdani’s socialist math doesn’t add up

Democratic Socialist New York City Mayor Zohran Mamdani is focusing on affordability. But his "free stuff" policy agenda would flunk an introductory economics midterm.

For example: Free bus rides will increase demand and cause overcrowding as service deteriorates. Can you envision New Yorkers queuing up like Londoners? Ditto free childcare, with risk of fraud. Ditto rent freezes, which are not likely to spur a rent-relieving housing supply surge.

Does Mamdani really think public employees will work the same long, intense hours at city-owned grocery stores that private-sector owners do to earn a living, while building their generational wealth? Or that it’s a good idea to shutter natural gas plants supplying 500 megawatts of reliable energy, which New York’s Independent System Operator extended beyond their planned retirement in mid-2025 lest the city suffer blackouts. At much lower renewables grid loads than Mamdani wants, Germany had to import dirty coal to keep from going dark.

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Remarkably, however, these attempts to revoke the laws of economics aren’t even his worst ideas.

Still more dangerous for New York — and the nation, if the anti-progress "progressive" left continues making political inroads — is Mamdani’s deep hostility to capitalism and capitalists. What an oddity for the mayor of the capital of global finance. Nothing could be a greater threat to prosperity, especially the aspirations for upward mobility of the very groups that helped elect Mamdani.

The most fundamental force for prosperity is the drive of people to improve their lives and their children’s lives. For two and a half centuries, it’s been well understood why competitive capitalism and free market incentives — not socialism, not what Mamdani calls "the warmth of collectivism" — are the surest route to affluence.

In "The Wealth of Nations," Adam Smith observed, "It is not to the beneficence of the baker, butcher and brewer that we owe our daily dinner, but rather their regard to their own self-interest." When President George H.W. Bush put me in charge of our assistance programs after the fall of the Berlin Wall, East Germans described the collectivist sapping of incentives more tartly: "They pretend to pay us, and we pretend to work." No wonder their cousins in West Germany enjoyed such dramatically higher living standards.

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"I don’t think we should have billionaires," Mamdani has declared. For the political left, "billionaire" has become an epithet, dripping with disdain. But most of us still admire the talented inventors and entrepreneurs who create the products and processes that expand our opportunities and improve our well-being. Yes, there is disruption along the way, and our safety net systems need to better mitigate the harms. But when was the last time you heard the pioneering builder of Tesla and SpaceX referred to in mainstream media as this generation’s greatest entrepreneur, rather than contemptuously as "billionaire Elon Musk"?

For New Yorkers, already straining under the city’s exorbitant taxes (with far from exemplary public services to show for them), Mamdani proposes both a wealth tax on the very rich and the highest corporate tax in the nation. Time will tell if he gets the necessary approvals from Albany. But the likely consequences would include an exodus of successful businesses, their well-paying jobs and highly taxed people, plus the jobs of many more who provide them with services. If you doubt it, look at high-tax, fiscally mismanaged, overregulated California hemorrhaging private sector jobs.

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More fundamentally, it is not possible to tax the rich without also taxing those trying to become rich. "Aye, there’s the rub," as Hamlet might say. Mamdani and his consiglieres Bernie Sanders and Alexandria Ocasio-Cortes want us to emulate democratic socialist Sweden and Denmark. But the lessons that should be heeded are startlingly different from their misleading vision.

Both nations abolished their wealth taxes because they were difficult to administer and raised little revenue, thanks to the disincentive to grow and locate wealth in the countries. Top income-tax rates for New Yorkers, combined with the federal levy, are comparable to Sweden and Denmark — but with a huge difference. The Swedes and Danes add a regressive 25 percent value-added tax (akin to a national retail sales tax) to finance their more-bloated welfare states. The result: U.S. after-tax per capita GDP is 50 percent higher than Sweden’s and Denmark’s (there are other differences, both positive and negative, but the high tax and welfare state disincentives are a big part of the story). Trading lower incomes for higher taxes to pay for free stuff is a poor bargain destined to worsen over time.

Mamdani pledges: "We will prove that there is no problem too big for government to solve and no concern too small for it to care about." He also promises "honest" budgeting. When the revenue raised is not sufficient to pay for the spending splurge, the higher taxes will have to include the broad middle class. Emulating democratic socialist Sweden and Denmark can only mean big increases in the city’s sales tax, which would hit lower income and younger New Yorkers especially hard. What a "warmth of collectivism" con job.