Affordability Agenda

Zohran Mamdani is campaigning to be New York City’s next mayor (and he is currently trouncing his opponents) based on what he calls his “affordability agenda.” But, as an avowed “democratic” socialist, he wants to make things affordable for the people of New York through the application of government power. And it is true that socialism has often made products and services “affordable” through price controls and through government taking over the means of production. But making products and service affordable does not guarantee that they will be available. Mr. Mamdani needs to balance his fervor for socialist ideology with an understanding of history. Socialist affordability is usually combined with shortages, barren shelves, quotas, and long lines for scarce products.

There is one economic system that has consistently made products and services not only affordable but widely available. That system is free market capitalism. For many everyday goods, the number of work hours required to purchase them has decreased significantly since the 1950s. For example, buying a pair of men’s dress shoes required about 8.6 hours of work in the 1950s, while it takes about 3.6 hours today. Similarly, a gallon of milk required over half an hour of work in the 1950s, but only about 10 minutes today.

For large durable goods like refrigerators, the improvement is also substantial, dropping from 200 hours in the 1950s to 48 hours today. As economist Joseph Schumpeter said many years ago, “Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls.”

Unlike capitalism true socialism makes products and services affordable by controlling the means of production. Production is determined by the estimates in the 5-year plan that makes the decisions on what products and services will be made available. Prices are set by the politburo but it is impossible to determine if consumer demand at that that price will result in excessive inventory or scarcity. Availability of products is often determined by quotas. In the Soviet Union people would buy products because they had a quota whether they needed the product or not. They would then sell the product on the black market in order to be able to get the rubles to buy what they needed.

Although Mr. Mamdani would like to own the means of production (as he has stated) he is unlikely to be able to fully implement a socialist economic system in NYC. He will thus be limited to enforcing non-market based solutions such as price-controls to make products affordable. But the owners of the means of production want to be compensated for their time and effort and will withhold products from the market if they are not adequately compensated.

Capitalists can’t make a profit by trying to sell unaffordable products. Henry Ford did not make affordable Model-T cars because he wanted to serve the public good. He wanted to make money. But the affordable cars he made served the public good and they also made him very rich. Elon Musk built Teslas that served the public good (as determined by environmentalists and Democratic administrations) and now he is the world’s richest person. This is what Adam Smith predicted.

It is government that makes things unaffordable. The New York Taxi and Limosine Commission limited the number of medallions for the whole city. Medallions were so scarce that they could cost over $1 million at auction. That is until capitalistic companies like Lyft and Uber competed for the business and drove the price down. That served the public good a lot better than the commission.

And when private businessmen decline to build new housing under the strict conditions that will be imposed by a Mamdani administration the city will have to build the so-called affordable housing itself resulting in the same problems that have plagued the projects for decades. I am also pretty sure that Mr. Mamdani’s city-owned and operated grocery store will have store shelves very similar to those in Venezuela.

Mr. Mamdani does not seem to realize that most people don’t intentionally try to serve the public good. Only elites and the wealthy can afford to do that. Most people act to the incentives that serve their own self-interest and that of their families. Mr. Mamdani’s policies will incentivize more poor people needing even more public assistance to come to New York City while driving away wealthier taxpayers who prefer the lower taxes of Florida and Texas. The incentives created by these left-wing policies make them unsustainable and potentially disastrous.

Thanks for reading my commentary - but hold on there’s more to come!

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I usually try to back up my commentaries with hard data, referencing the source in my blogs and showing the source in my videos. One of the ideas I wanted to address in this commentary was that left-wing politics and high taxes had driven wealthier citizens from New York to friendlier locales. If this was the case, the impact of Mr. Mamdani’s policies would fall even harder upon the fewer wealthy citizens still remaining in the city, increasing their motivation to leave as well. Unfortunately one of my sources for this type of information is the census bureau and access to census data is now blocked due to the government shutdown.

While looking for another source for the information I was seeking, I stumbled upon historical demographic data from New York City from the Census Bureau published on Wikipedia a few years ago. It did not break down the wealth or income of the people in NYC but it did break them down by race. I was surprised to discover that while non-Hispanic whites made up about 92% of the population in 1940, it had fallen to only 31% by 2020. The number of whites in NYC had fallen from 6.9 million to only 2.7 million in that period, a period that saw relatively little change in the total population of the city (some of you old folks may remember the TV series the Naked City from the sixties that closed with the announcer proclaiming “there are eight million stories in the naked city. This has been one of them.” The population of NYC in 2010 was only 8.2 million).

So I don’t have the hard data I sought to prove my point. And different commentators could blame the white flight on racism rather than crime and high taxes. But it seems clear that, if the whites made up the middle and upper classes in the city, the loss of white citizens replaced by minority citizens would tend to focus ever more onerous taxes on fewer and fewer people. (it is true that the Asian population has swelled and that they tend to be middle and upper class but Asians still only represent about 16% of the population.)

The implication of this analysis supports the conclusion that Mr. Mamdani’s policies will attract more poor people needing public assistance while driving away wealthier taxpayers. To quote the late British PM Margaret Thatcher, “the problem with socialism is that you eventually run out of other peoples’ money.” Mr. Mamdani’s affordability agenda will only accelerate the pace of running out of other peoples’ money.

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 And while I am rambling on I might as well say something about the most recent government shutdown that hampered my research for this commentary.

It appears to me that the Democrats will be getting the greater share of the blame for the hardships caused by this shutdown. It is clear that the Democrats lied to the American people when they said that the Obamacare subsidies would only cost X because they were temporary, when every Democrat in Congress knew that once approved the subsidies would never go away and would continue to have a huge negative impact on the budget deficit and the public debt far into the future.

But it also clear that the Republicans lied to us when they passed the original Trump tax bill in his first administration because the horrendous deficits caused by the tax cuts were not disclosed because the cuts were supposed to expire, even though every Republican in Congress knew that they would do everything in their power to extend those cuts (which they did in the One Big Beautiful Bill).

Our political leaders use these deceptions to try fool the American people because they are contemptuous of our ability to see through their lies. Prove them wrong.