By Walter E. Block
Zohran Mamdani is a socialist who believes that government is the solution to all problems. Have we learned nothing from the almost perfectly controlled experiments of East and West Germany, North and South Korea? The two socialist pairs shared a common culture, language, history, human capital, and much more with their more capitalist counterparts. And the results are there for everyone to see.
His goal is to make the Big Apple a comfortable place for the poor and the working class. Hence, his advocacy of rent control and government-run grocery stores.
Let us posit, per impossible, that contrary to common sense, his socialist policies will succeed. The poor, the working class, the middle class will live happily ever after with no financial problems whatsoever, thanks to Mayor Mamdani.
Will this be an economic boon? No. Why not?
New York City, especially Manhattan, is the financial capital of the Empire State, the nation, and the entire world. New York City is a creator of vast wealth because it is home to numerous successful CEOs, managers, nerds, lawyers, CPAs, specialists, artists, intellectuals, actors, and athletes, etc., who are exceedingly productive.
Why are they so successful? Why do they have such an important impact worldwide? First, they possess human capital, special skills, and experience. Second, and of greater relevance to our concerns, they congregate closely together. They cooperate with each other. They bounce ideas off each other.
Now, you might think the advent of digital communication devices such as Zoom has made mere geographical proximity not so important. After all, with these modern techniques, the entire world is a communications oyster. Not so, not so.
This was demonstrated during the pandemic, when downtown office towers virtually emptied out. Everyone worked from home, connecting with colleagues, bosses, and underlings—only electronically. If personal, face-to-face contact was so unimportant, matters would have stayed exactly that way. A silver lining of COVID-19 would have been discovered, saving office space and commuting time. Yet this did not occur. Commercial real estate soon filled up again, as we discovered that people work more efficiently when they can see each other eye to eye. Moreover, there is far less slacking off.
If Mamdani succeeds, Manhattan and the other four boroughs will become havens for the poor and blue-collar workers. Paradoxically, this will worsen, not improve their overall economic prospects.
READ MORE: New York City Just Voted to Destroy Itself, and It’s Time to Let It Happen
Why? The magnificent, productive engine that is the Big Apple will be no more. Yes, the large-scale contributors will move elsewhere but will not be as successful. We are not rich so much due to the hard work of most people. Rather, our prosperity is due mostly to the unappreciated work of the few geniuses we are lucky enough to have alongside the rest of us.
One of the best measures of this phenomenon is the salaries pulled down by these different groups. Let us suppose that Mamdani’s supposed beneficiaries earn $50 per hour at the apex. What of the people who will leave if he succeeds? Let us stipulate, arguendo, at least 10 times that amount, and very likely much more. With the success of this mayoral candidate, NYC will be turned into Anytown, USA. Like it or not, this will be a bitter pill to swallow. The poor and the middle class simply do not (economically) belong in this environment if we want to maximize wealth for all. If there were anything like free enterprise in operation, the rich would long ago have bid this precious real estate away from them.
Let me put this point differently. If someone whose productivity is $50 per hour must otherwise wastefully commute for 60 minutes, the economy loses that amount of goods and services. Ditto for someone who contributes to our well-being at the rate of $1,000 per hour. Who belongs in New York City, if we wish to maximize prosperity and end poverty? Upon whom should the responsibility of commuting rely? I’ll give you one guess. I fully realize that this is an insight that many people (economic illiterates) will find objectionable, so let me try again to make this more palatable and plausible.
READ MORE: Mamdani’s Affordable Housing Plan Doomed to Fail
Vail, Colorado, is generally accepted as one of the most expensive ski resorts in the country. Where do the waiters, busboys, cleaners, chauffeurs, plumbers, carpenters, and other blue-collar workers live? Right near the ski slopes? Nope. That pricey real estate can only be afforded by the movers and shakers of our economy. These middling, wealthy folk voluntarily locate themselves within commuting distance of this cornucopia. The mayor of Vail, thankfully, does not seek to make this desirable area a haven for all.
Why does this occur? It is due to the “magic of the market” in the felicitous phrase of former President Ronald Reagan. This process is hidden, unappreciated, but it enriches us all. Ditto for the insight of Adam Smith with his “invisible hand.” This is precisely the system that Zohran Mamdani aims to imperil.
Walter Block is a policy advisor with The Heartland Institute.
Editor’s Note: Zohran Mamdani is an avowed Democratic Socialist and has a real chance to become the next mayor of New York City.
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