What Is the Causal Effect of Electing a Socialist as the Mayor of a Great American City?

Predictions Based on Urban Economics Logic

If Zohran Mamdani wins the Tuesday NYC Primary on the 100F degree day, then he will be the next Mayor of New York City.

I teach urban economics. In this Substack, I want to sketch out an exam I would write to use the logic of urban economics to make informed predictions about what will be the consequences of NYC electing an avowed socialist. I considered giving this Substack the title; “Socialism in Spatial Equilibrium”.

The Setup

The Northeast U.S features one Superstar City (New York City) that has extensive suburbs that are close to the City but are not part of the Mayor’s jurisdiction. There are two nearby cities called Boston and Philadelphia that feature progressive (but not socialist) mayors. New York City is the most productive city in the Northeast region and it attracts the most tourists and it has the best culture and consumer city quality of life.

New York City now elects a Socialist who raises taxes on the wealthy and firms, sets the price of transit to $0, raises the minimum wage and further distorts the housing market using rent control, and variety of other strategies.

True, False, Uncertain (briefly explain)

#1 Home prices and property tax revenue will decline in NYC.

#2 Home prices and property tax revenue will increase in the NYC suburbs.

#3 Home prices and property tax revenue will increase in the City of Boston and Philly.

#4 While Finance firms have been leaving NYC for decades, this process will now accelerate.

#5 Free public transit will cause many quality challenges that will surprise the Socialist Mayor. (see my recent Substack)

#6 The rise of Work from Home will allow more firms and their workers to move outside the NYC jurisdiction and to more infrequently visit the high tax city for group meetings.

#7 Public Sector unions will negotiate more aggressively with the Socialist Mayor and this will increase NYC’s deficit challenge.

#8 The City’s bond rating will decline and this will mean that the City will borrow at a higher interest rate.

#9 NYC will become even more of a poverty magnet as poor U.S residents and poor international residents will be more likely to move to NYC.

#10 While a NYC Mayor can only serve for 8 years, the resulting policies will have a persistent impact on reducing the vibrancy of the NYC economy and its quality of life.

#11 The police will face extreme oversight and they will reduce their policing. While Murders will be investigating, other crimes will not be. This anticipated lack of deterrence will further reduce urban quality of life.

#12 Building on #11, the city’s nightlife will decline in quality as people are afraid to venture out at night and use the public space such as the parks.

#13 Real estate owners in NYC will invest less in maintaining the building capital stock. A “Detroit Effect” will emerge.

#14 Gifted public school programs will receive less $. The parents of these kids will be even more likely to suburbanize to move to a Scarsdale.

#15 As productive firms leave NYC, this disruption of idea production and intellectual interaction will reduce overall U.S economic growth.

Readers, note that each of these claims represents an economic hypothesis that can be tested in a few years. Economic logic can be used to evaluate each of these statements. What is the causal effect of a powerful Socialist on a local economy?