New York City Is Mamdani’s Economic Fantasy Land

The good news today is that New York City (NYC) has survived the first five-plus months of Mayor Zohran Mamdani’s takeover of Gracie Mansion and his relentless push to make his Democratic Socialist Party (DSA) the dominant force in both City and state policy. Thus, Executive Order 4 places faith in his Land Inventory Fast Track (LIFT) Task Force, which brings together a team of mayoral agencies and affiliated nonprofit organizations to develop programs to utilize city-owned sites that might be suitable for development. Selling the land off to the highest bidder is not a part of the overall plan. In addition, the Mayor is intent on imposing “aggressive” crackdowns on “neglected” private property, with a view to turning them over to what he deems “responsible entities,” including his allies in non-profits and community trusts. The goal is to shrink the private ownership of rental real estate in NYC.

Mamdani’s land development is deftly paired with his political agenda, where, as an energetic supporter of far-left Democrats, he has been active in the upcoming 2026 election cycle against more moderate, but still left-of-center Democrats, who still have some lingering recognition that the NYC—or the nation—cannot survive on a policy of “economic justice,” which the Nathan Cummings Foundation proudly defines as one that means that everyone has opportunities to participate and thrive in the economy, including those who are marginalized by our current economic systems. The principles of economic justice create a stronger economy because prosperity and equity go hand in hand.

Sorry, prosperity is driven by the higher investment returns that state-imposed “equity” constraints throttle. The Foundation’s naïve statement could make sense if the program it championed were the exact opposite of what the DSA wants, namely, recognition that the tragedy of marginalization stems from the endless network of regulation and taxes that make it difficult for small businesses to thrive. Instead, there is a constant drumbeat pushing in the opposite direction, which the CEO of JPMorgan Chase, Jamie Dimon, has repeatedly warned will drive established businesses out of NYC while prompting other firms to relocate elsewhere. It is important to remember that, as in all other contexts, life is lived at the margin, so any exit from NYC will be the net trend, with movement in both directions. It is already too clear that the much-derided billionaire class will flee—or has already fled—states like California where public-sector unions are plump with the “once only” annual wealth tax that goes to higher union wages and not to any expansion of useful services. The same could happen if Mamdani and his allies also introduce a punitive estate tax.

That message has not been lost elsewhere. States like Ohio advertise a zero corporate tax rate, compared to 8.85 percent in NYC. That tax differential will not immediately result in a massive defection, but it will lead to firms maintaining a presence in NYC selectively. Thus, key senior officials may remain in NYC while scores of other workers at places like Chase and Goldman Sachs decamp to Texas, where the business climate is more favorable. In addition, new businesses will be more reluctant to establish or expand their presence in New York State. One reason why the trend is not more pronounced is the presence of other powerful political leaders, such as Police Commissioner Jessica Tisch, who led the Israel parade that Mamdani refused to attend, and Julie Menin, Speaker of the New York City Council. In April 2026, Mamdani vetoed legislation that would have required a safe security perimeter around educational facilities because of its negative effect on his preferred constituencies, including “workers protesting ICE, or college students demanding their school divest from fossil fuels or demonstrating in support of Palestinian rights.” Menin engineered a 44-5 veto-proof vote to require the Police Department to develop protective strategies for religious institutions, a policy that Mamdani initially opposed but did not attempt a useless veto. It is therefore likely that if Mamdani and his allies gain in the next election, the antisemitic trends could become stronger and undermine today’s wait-and-see attitude that influences much of the public.

What is ever so disturbing about the political debate is that the dominant response of both Mamdani and Governor Kathy Hochul moves in exactly the wrong direction. Both are keen on pouring tax dollars into losing public housing ventures so long as they are run by the same organizations that eagerly embrace the flawed notion of economic justice. Their two programs call for the creation of public funds to build various kinds of projects that are thought to stimulate economic activity in the city, including substantial amounts of public housing. Throughout the current debate, both the Mayor and the Governor advertise the number of units they hope to create with substantial public money, which cannot now be spent by either private or public bodies on other activities. Thus, the Mayor has consistently promoted the City’s first Expedited Land Use Review Procedure (ELURP), which sharply reduces the time for approval of these publicly sponsored projects, from an advertised seven months to ninety days. However, that expedited process is only available for these public projects. Any private competitors will still have to comply with the far longer timetable under the ULURP (Uniform Land Use Review Procedure). Therefore, the net effect of the ELURP is to shift the balance between public and private projects in favor of the former, a destructive policy.

Private projects can only succeed (unless propped up by government subsidies) if they generate net revenues that are subject to taxes, but which are likely to be cheaper to build and more tailored to the needs of their targeted populations, which vary across the City. There is no reason to think that politically connected organizations will be able to anticipate demand and deliver units at affordable prices if they are required to meet certain union mandates that raise costs, thereby widening the gap between rental revenues and overall costs, which are not capped in any sensible way. For example, Mamdani’s “Block by Block” program includes implementation of the “Construction Justice Act,” which establishes “a $40 per hour minimum wage and benefit standard for construction workers on City-financed projects.” The matchless administrative skills of NYC’s partners will combine to produce higher costs and lower rental revenue, with no explanation of how the gap will be bridged in what looks like a rerun of the shoddy construction of public housing going back to the 1960s.

The ultimate irony here runs even deeper. The Mayor’s plans for the new project at 351 Powers Avenue will create approximately 84 new homes. But there his skinny description stops. There is not the slightest indication about the time frame in which these units will be brought online, how much they will cost, what arrangement will be made with the various contractors as to terms and price, what consultation will be had with neighbors about the usual issues in such developments, how much off-street parking will be provided, where the curb cuts will be made, how much noise will be made, and abated, during the period of construction, whether various local, state and federal environmental or civil rights reviews will be required of this project, whether the Mayor may perhaps be able to waive some of these requirements, or what opportunities to be heard will be given to the neighbors who are famous for having NIMBY objections, sometimes correct to some but not all projects. 

Most important, perhaps, is the sad conclusion that the whole effort is a drop in the bucket. NYC is a big place, and according to the City

As of 2023, New York City had 3,705,000 total housing units. Of these units, 1,109,000 are owner-occupied and 2,324,000 are renter-occupied. . . . As of 2023, a tight housing market remained in New York City, with a citywide rental vacancy rate of 1.41%, below the 5% threshold required for rent regulation to continue under State Law. This translates into the availability of just 33,210 units available for rent out of more than 2.3 million rental units citywide.

So just how much of a difference can it make that some 84 units (or even 1,000 new units) will be added to the city’s housing stock in the future? That number is far below the number of units likely to be taken off the market during the same period due to the rent stabilization laws, making it impossible for landlords to recoup their costs if these laws are enforced. In 2024, the City Reporter wrote: “The latest New York City Housing and Vacancy survey estimates that last year 26,310 rent-stabilized apartments were ‘vacant but unavailable for rent,’ down from about 43,000 in the same survey two years ago.” Making this reform work would require a long-term commitment from the full cast of public officials that they will not reimpose any system of rent control after funds are spent to bring these units up to snuff, but before they have been rented out for market rates that will last for the future. However, it does not take a kickback of millions of dollars to the Mayor’s ideological compatriots to reverse the current shortages. The misbegotten Mayor should urge the Governor to support legislation to lift the current cap—thereby allowing more units to enter the market, enabling more real estate taxes to be collected, and reducing cost barriers to new construction.

What I fear is that the Mayor’s decisive political objection to this proposal is that there is one thing a system of deregulation cannot supply: a steady source of public vendors to whom the Mayor owes political favors. It will take a sustained effort for New York’s progressive, now socialist left, to rethink the errors of their ways before they learn the hard way.‍

Richard A. Epstein is a senior research fellow at the Civitas Institute.