Forward to the Past

Mamdani Madness exceeds Trump Derangement Syndrome

With government nothing succeeds like failure. That is the lesson that we learn with every governmental intervention designed to rescue us from our own perceived needs. Which, of course, were generated by our population freely acting in its own self-interest in response to prior government efforts to promote the general welfare (look that term up in Noah Webster’s early American dictionary-.

In service to the above principles, a new political supernova has exploded in our media skies. Supernovas, we should remember, collapse into black holes, from which nothing escapes. Such may be the case of Zohran Mamdani, who has eclipsed the bright stars of Democrat Socialism, AOC and Bernie (even on his best weekend).

Mamdani, in his brief takeover as leftist media darling of the moment, has eclipsed that prior prince of political prevarication, Gavin Newsom. Mamdani openly seeks to do to America’s greatest city what Newsom has already done to our greatest state. Zohran intends, by all he has said, to bankrupt the city in service to racial redistribution of the People’s Kapital from its evil white patriarchal European-ancestried oppressors. And he seems to be convincing many of that conspiratorial cabal to support and finance his efforts to extinguish them.

While stating that billionaires should not exist (nor, apparently, Zionists or Jews), he meets with the city’s uber-wealthy and is “open to working with the city’s business elite,” and denies being in favor of “taking over your business.” Those discussions are centered on how to preserve and markedly expand rent-controlled housing, extract further private wealth from primarily white neighborhoods (but he is not racist) to pay for free buses for the working class and poor (will Hochul’s congestion pricing for private cars return?), marginalize current supermarkets and neighborhood bodegas alike with government-run grocery stores, replace the police by defunding and transferring that funding to a cadre of restorative justice social and mental health workers, extend governmental indoctrination in wokeness, CRT, and DEI through universal childcare beginning at six weeks of age ( “it takes a village-NYC, not a parent-to raise a child”) and redistribute other basic needs of modern life on a more equitable manner. As noted in Kevin Dugan’s WSJ article, “…a little less than a third of the city’s wealthiest supported (him)” as Mamdani’s Millionaires. Many of the uber-wealthy, guilty over their ill-gotten (if legal) gains, consider that another 2% raise in their taxes is inconsequential to their lifestyles and will markedly enhance their public image and private sense of virtue signaling. Dugan further notes “They believe years of widening income inequality have harmed the city’s ability to attract talent and think a stronger social-safety net is needed to reverse the decline.” The talent they seek most certainly must require free bus rides and non-profit groceries. Note that, given Mamdani Millionaires’ demonstrated capitalistic expertise, these same uber-wealthy could band together and privately fund all these endeavors as non-profit NGOs completely apart from government in a far more efficient manner at less global cost to themselves and the general taxpayer, most of whom are not amongst the uber-wealthy. But they realize that with any success in such endeavors a jealous government would begin to intercede heavily with burdensome regulations and fees. Government is a pig whose place at the trough will not be denied.

Besides, such a private effort would again be pandering and paternalistic, a new version of “the company town” on a massive scale. Far better to incrementally reduce general liberty and enhance governmental authority for the sake of generally improved security that is neither personal nor corporate responsibility. Curiously, this vision of a Democrat Socialist working hand-in-glove with powerful corporate interests through the titans of financial industry is actually a return to fascism (see Benito Mussolini’s definition).

What else do we know about NYC’s neo-Lenin who wants to establish the city’s New Economic Policy? As expected, he is an inveterate liar. He claims intersectional identification with the poverty and limited agency of third-world populations. His parents, both of the professional elite class, emigrated to Uganda, did well by the sweat of their brows, but soon felt more welcome in South Africa where they again moved vertically by their talents and efforts. Recognizing that the only environment where they could truly realize the rewards due their personal talents and efforts, they then moved to the United States. Zohran was born and partly raised in the upper echelons of that third world environment, but spent most of the formative years of his childhood in the U.S.A.. His accomplished well-off parents sending him to select private schools and an elite university. He was accepted to that university, Elizabeth Warren-like, on the basis of a false claim of racial background. Since Asians of Indian background generally do better socio-economically than any other non-Caucasian groups, he became Black. He graduated to failed rapper-hood (apparently took his pseudo-Blackness too seriously), thence sought that common goal for those who have no specific marketable talent other than charisma or the desire to work hard. He ran for and won political office during the ascending wave of wokeness in New York politics. Although handicapped in the intersectional world by being male and choosing not to known as gay or transgender, he triple-scored otherwise by demonstrating facility with eating rice by hand and being (Black) Indian and more importantly Muslim. Islam has almost as many subcategories of belief and interpretations of their foundational documents as Judeo-Christians, but the anti-Semitic version is the most fashionable amongst his age group, the Progressive Elites, and the other demographics he needs. Despite his denials, his past behavior and current alliances clearly establish him as anti-Semitic.

While he is pro-Palestinian (strangely, the original Palestinians were Jews until Britain abandoned their trusteeship of the region) and favors Hamas, he wants to slash regulations for small business-which apparently means making it easier and cheaper for Halal street vendors (won’t they be undone by the new city markets?). There is electoral method in this; as Dugan notes in the WSJ “about half of New York’s 200,000 small businesses are owned by migrants.” But while advocating more rent-control, which everywhere has persistently reduced housing supply in all markets existing, he somehow wants to increase the private supply of housing in NYC, but states he is “…not just talking about social or socialized housing solutions.” That statement does not eliminate New York versions of Cabrini Greens.

Will that nominal 2% higher cost to the uber wealthy truly pay for all this? As William L. Anderson wrote in the Mises Wire, “New York’s state of delusion is not limited to its politicians. Delusional officials are placed in office by delusional voters…who have reigned…for 50 years.” That delusion has been sustained by state and federal government’s socialization of failed indebtedness. The first example was the fall of 1975, when NYC had debt due of $453 million and only $34 million with which to pay. City officials worked out a delay with banks while the federal government furnished bailout funds. As William E. Simon, ex-Secretary of the Treasury said in 1978, “the city’s political and media elites were clueless about economics and finance.” Who needs clues when the Federal Reserve and Treasury will always have the answer?

That last sentence is the key Moral Hazard of our country first established by Keynes at the time of the Great Depression and the foundation stone of our governmental fiscal policy ever since. Mamdani, with no economic or political education to speak of, bases all of his policies on that foundation. How might he and NYC repeat that debacle of a half century ago?

NYC’s initial attempts in 1975 were to insist that the federal government should purchase bonds that the market refused despite a very high interest rate. In an unusual seizure of fiscal responsibility, Anderson, then Treasury Secretary, also refused, denying NYC a sort of “pre-bailout”. So city officials engaged in the highly illegal (then and now) practice of paying off current indebtedness with proceeds from new indebtedness. Of all our governmental entities, only the Treasury and Federal Reserve are legally allowed to conduct this Ponzi scheme. The Democrat administration of NYC at that time was fully aware of their criminal activity, but insisted that the Feds bail them out.

Irving Howe wrote the essence of their arguments in the New York Times.:
”Our true sin, in the eyes of Philistine skinflints and neoconservative ideologues, has been the decency—if not sufficient, still impressive—with which New York has treated its poor; that two or three pieces of enlightened legislation like federalization of welfare and national health insurance, worthy in their own right and hardly a threat to any hierarchies of power, could soon ease the plight of the city; and that only a fresh national policy emphasizing the social goals of the welfare state, which right now means measures designed to save our cities from collapse, can yield a remedy…The assault on the welfare state is an assault on the poor, the deprived.”

If one substitutes illegal immigrants for the deprived, the above is the kernel of Mamdani’s campaign.

But Anderson notes that NYC’s financial problems in 1975 were not its welfare statism. Treasury Secretary Simon had said that New York City’s subsidies to its middle class (had) been overwhelmingly greater that its subsidies to the poor. Anderson wrote “…its payments to municipal unions and the perks the city was providing for its middle class like free hospitals and free tuition for higher education through the City University of New York” were most responsible for its bankruptcy. We see a similar fantasy playing out now in Chicago, with its newly enhanced unsustainable pension benefits to unionized city workers. Likewise, careful review of Mamdani’s intentions seem aimed at that same middle class of New Yorkers, and the unions will certainly expect “their fair share” of his new largess. Fortunately, the 1975 meltdown was counteracted by Republican financial deregulation and an explosion of capital markets which remained headquartered in the city. So that prior experiment in socialism was rescued by capitalism.

Far greater damage was done by the 2008 financial collapse. For NYC that disaster was sited on the sands of ongoing rent control and the continued delusion of the political and financial elites. This time a Republican federal government and Federal Reserve gave in to the new unalienable right of home ownership, almost regardless of ability to pay. Financial wizards saw a new market in bundles of collateralized mortgages, marketed as securities based on the unshakeable value of the homes they financed. Massive quantities of new money were created and made based on the Cantillon Effect. But this became its own type of Ponzi scheme, as these mortgage securities were sold, resold, and sold again, while they provided artificial support to a rapidly climbing price in housing, which made the securities even more attractive. Like the Tulip craze, this bubble popped. Once again, the entire economy was at risk due to massively small margins on credit and massively large unpayable debt. Once again, this was not a failure of capitalism but a result of governmental intervention in capitalism (remember Mussolini). Once again, the private actors were bailed out through socialization of the debt by the federal government. No one, no sector, bore responsibility.

Nonetheless NYC has been in a precarious position ever since because of government intervention via unjustified state and city mandated lockdowns of society, education, and business during Covid and the largesse of a two-term socialist Mayor, DiBlasio. Mamdani might, temporarily, make the cost of living in NYC slow its inexorable rise, but under the most stringent financial restrictions cannot make life there less expensive. That city is the most inflationary environment in a nation wherein the Federal Reserve has mandated as a chief goal the ongoing devaluation of the dollar at at least a rate of 2% yearly. Funding for the unions running the buses and other public services as well as establishing a chain of subsidized (and unionized) grocery stores remains unidentified. The massive numbers of trained restorative justice social workers and mental health professionals are nowhere to be found, and will take years to train at huge financial cost to the city. His plans for expanding rent control will raise the real cost of housing as the supply of housing will decline. Conversion of unused office space to apartments or condominiums will not suffice, as this market is already slowing due to the costs involved and the beginning rebound of the NYC office market. His other policies likewise cannot be born solely by the rich, even those that choose to remain for virtue signaling by the new “Radical Chic”.

A generation is considered 33 years. This is the upper age limit of many of Zohran Mamdani’s well-meaning but unschooled-by-life supporters. The exact number of years between New York City’s two most recent fiscal failures. Presuming Mamdani’s election based on “free” in 2026, one might expect the next collapse in 2041. That, as noted by Anderson, like those of 1975 and 2008, will be born by more revenues from the middle-class New Yorkers that the government had been subsidizing. But he may likely, if elected, pull a Swartzenegger and be New York state’s governor, or perhaps already in the Senate. Fortunately, we do not have to depend on populist wisdom to keep him from the Presidency. For that, as always, we have the Constitution.