Freeze and Fail: How Mamdani’s Populism Would Undermine Affordability
Zohran Mamdani has recently won the NYC Democratic Party primary election on a platform centered around a rent freeze as the solution to the city’s housing crisis. The pitch is appealing—protect tenants, freeze rents, stop displacement. But while the intention may be noble, the economics aren’t just flawed—they’re harmful. Rent control is not housing policy; it’s scarcity management. As any Econ 101 student learns, price caps below market levels lead to shortages. This isn’t ideology—it’s basic supply and demand. In the context of housing, it means fewer new units, deteriorating maintenance, and inefficient allocation of space. Economists across the spectrum agree that rent control undermines the incentive to build and maintain housing. For instance, Diamond et al. (2019) analyses a 1994 law in San Francisco that expanded rent control to certain buildings but not others. In the short run, tenants benefited from protection against displacement. But over time, landlords converted rentals to owner-occupied units or short-term rentals, resulting in a 15% reduction in rental supply and a 5.1% increase in citywide rents.
Mamdani’s proposal repeats a familiar mistake: offering short-term relief to a narrow group of renters while undermining long-term housing supply. Yes, New York City is expensive—but that’s why they need to build more, not freeze the market. Rent control traps people in homes they’ve outgrown and restricts mobility. Glaeser and Luttmer (2003) find that in rent-controlled cities, housing is poorly allocated: older singles occupy multi-bedroom apartments while young families are priced out. That’s not equity—it’s dysfunction.
While rent freezes can increase tenant stability, that isn’t always a benefit. In incomplete markets, tenants often can’t insure themselves against rising rents. Mobile individuals may respond by relocating, but long-term tenants with deep neighbourhood ties—family, jobs, schools—face high costs from displacement. Some housing advocates argue rent control provides valuable insurance for these residents. Yet evidence suggests the benefits are uneven. Ahern and Giacoletti (2022) show that rent control in St. Paul, Minnesota, disproportionately benefited middle-class white renters, while low-income minorities saw little or no gain. In cases with wealthy landlords and poor tenants, wealth transfer was negligible. If the goal is redistribution, the policy fails: its impact runs counter to its intent. A broader review by Kholodilin (2024) finds near-universal agreement in the literature that rent control reduces housing quality. Of the dozens of studies reviewed, all but one concluded that regulated dwellings experience greater deterioration.
True affordability doesn’t come from punishing landlords or capping profits. It comes from expanding supply. That requires ending exclusionary zoning, streamlining permitting, incentivizing infill, and legalizing more multi-family housing near transit. If tenant vulnerability during this transition is a concern, adopt targeted policies: housing vouchers, nonprofit developers, and short-term, narrowly tailored stabilization. But these are band-aids—not substitutes for construction. Mamdani offers a populist slogan: freeze rents. But slogans don’t build homes. His policies would reduce supply, raise market rents, and worsen inequality between insiders and those still locked out.
If Mamdani is serious about affordability—not just protecting incumbents—he needs to fight for abundant housing. And Mamdani’s economic vision doesn’t stop at housing. His call for city-run grocery stores, framed as “food justice”, is more accurately described as a Soviet throwback with organic branding. Running a grocery store in New York City is already a low-margin business—profits average just 1–2%. The sector is fragmented and competitive. Poor neighbourhoods are served mainly by small, independently owned groceries and bodegas. City-run stores wouldn’t serve the public—they’d undercut local businesses while delivering bureaucratic inefficiency. Mamdani has no administrative experience to suggest such an experiment would succeed.
Then there’s his proposed $30 minimum wage by 2030—a number driven more by aesthetics than analysis. New York City has already committed to a $16.50 wage by 2025, indexed to inflation. Mamdani’s plan would raise it to $20 in 2027, $23.50 in 2028, $27 in 2029, and $30 by 2030, followed by annual increases based on inflation or productivity. While small businesses would get more time, the end goal is the same. Notably, the city currently lacks the authority to set a separate minimum wage above the state level. Mamdani acknowledges this but insists there are “legitimate routes” around state pre-emption. Most academic research finds that large hikes in wage floors tend to reduce employment or hours, especially in small businesses. Higher wages sound great in theory, but combined with rent control and public grocery stores, they create a fantasy economy where investment dries up, businesses close, and shelves go empty. Prices don’t vanish because laws say so—they reappear as scarcity.
Ultimately, progressives should avoid repeating the mistakes of populists like Donald Trump. His desire to revive manufacturing was understandable, but his tariff policies accelerated deindustrialization. Economic fantasy, left or right, is still fantasy.
Policies most economists would oppose include freezing rents across all rent-stabilized apartments and establishing city-owned grocery chains. Other proposals remain debatable in the literature: constructing 200,000 housing units over ten years with corresponding deregulation; universal free childcare for all New York City children aged 6 weeks to 5 years; fare-free city buses; and increasing corporate and top marginal income taxes on New Yorkers earning over $1 million annually. These may have merits—but unlike rent control, they at least engage with economic trade-offs honestly.
References:
Ahern, K. R. and Giacoletti, M. (2022). Robbing Peter to Pay Paul? the Redistribution of Wealth Caused by Rent Control.
Diamond, R., McQuade, T., and Qian, F. (2019). The effects of rent control expansion on tenants, landlords, and inequality: Evidence from San Francisco. American Economic Review, 109(9):3365–3394.
Glaeser, E. L. and Luttmer, E. F. P. (2003). The Misallocation of Housing Under Rent Control. American Economic Review, 93(4):1027–1046.
Kholodilin, K. A. (2024). Rent Control Effects Through the Lens of Empirical Research: An Almost Complete Review of the Literature. Journal of Housing Economics, page 101983.
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