What a contrast we had last week between the inauguration of Zohran Mamdani, a socialist, as mayor of New York City and the decapitation of the socialist regime in Venezuela. It’s a great opportunity to use the lessons of one failed socialist state to project what might happen in this newly minted one.
Venezuela was once wealthy, as wealthy as New York City. It was the envy of Latin America and rolling in oil money. By the 1970s, it was the wealthiest country in Latin America, with GDP higher than Spain, Greece and Israel. Today, the oil is still there, but the state lacks the know-how and infrastructure to monetize it. As a result, their GDP is only five to ten percent of Spain’s, and most of that loss came in the past decade.
What happened? Many things, but chief among them was Venezuela’s leadership. It wasn’t just incompetence; it was the belief that political ideals are more important than economic reality. It was an example of why centralized state systems fail, because no one man or committee can replace the free market, no matter how good their intentions. Because of poor management, wishful thinking, and adherence to socialist ideals, Venezuela saw an economic and social collapse. Inflation hit 344,509 percent in 2018-2019 when prices doubled every two weeks. (At that point, the money in your bank account is worth nothing and local currency is useless.) Those residents who could afford to do so fled. Many turned to graft, corruption and crime to pay their bills.
The Cost of Socialist Policies in New York After Four Years
Like Maduro when he took over for Chavez, Mamdani lacks experience running a business or managing a large enterprise. His plan is to focus on activism and ideas that sound good rather than work well. That’s what caused Venezuela’s collapse. Let’s look at how that might work out for New York after four years of a Mamdani socialist city government.
How Rent Freezes Lead to Housing Decay
After four years of a Mamdani-ordered rent freeze, New York will be well on its way to seeing the rise of slumlords and the decay of its housing. Unable to pass along the ever-rising cost of maintenance and repairs, landlords will stop making repairs and defer maintenance. The result will be elevators that are broken more often than they are running, roofs that leak, and boilers that may be out for months at a time, leaving the residents without heat. Smaller landlords will declare bankruptcy, leaving the building in the hands of its mortgage holder. The value of these buildings will drop because you can no longer make any money as a landlord.
In the 1970s, Boston tried a similar program, as did Berlin 30 years later. Both cities saw apartment availability drop and the cost of unregulated units shoot up. In New York, where not all apartments are rent controlled, the same thing will happen. The result will be higher costs for the 1.3 million renters who are not lucky enough to live in rent-controlled units. Many New Yorkers will move to New Jersey and commute. Others will lwave the tristate area completely, further eroding the city’s tax base.
If You Think the Subway is bad Now, Just Wait
It’s not just apartments that will suffer from a lack of maintenance. If Mamdani makes mass transit free, expect the transit system—which already needs billions of dollars just to bring it up to a “state of good repair”—to get worse and then fail.
Without the $7 billion brought in by transit fares, there will be no improvements and fewer repairs. A system that creaks along on its best days will become beset with failures. The same thing happened to the Caracas subway system. Without funding, it deteriorated so badly passengers were sometimes left to walk through tunnels when equipment or the power failed.
If you plan to ride the New York subway after four years of free fares, better bring your walking shoes and pack a flashlight because your train might not make it.
Government Grocery Stores and the Risk of Food Shortages
Mamdani said he will open five government-run grocery stores, one per borough. Since there are 8.5 million people in the city, this is a classic example of socialists making big promises to make people feel better rather than addressing the underlying need.
In response to Mamdani’s election, D’agastino’s and Gristedes, which have 24 grocery stores, have said they will leave the city. That’s going to leave at least 19 neighborhoods underserved. It’s also foolish to think that a five-store chain will have the purchasing power and distribution efficiencies of a larger chain, meaning prices in the government-run stores will eventually have to go up or subsidies will have to grow. More tax dollars will be required to put cheap food on the shelves, which will benefit only a small portion of the residents.
Coincidentally, Venezuela had state-run grocery stores. They were plagued by corruption and poor management because the employees were hired for political, social or nepotistic reasons, not for their management skills or capacity to perform the work. When oil prices fell, the Venezuelan state could no longer afford to subsidize the food, leaving stores empty and contributing to starvation seen in 2017-2019. You may recall what was referred to as “The Maduro Diet,” when the average Venezuelan lost 24 pounds in a single year due to food shortages. That’s squarely on the government’s shoulders.
Why were there food shortages? When they cannot make a profit selling food, farmers stop producing it.
After four years of Mamdani’s grocery store plan, more neighborhoods will be food deserts, Mamdani’s stores will be unable to provide sufficient food at the low prices promised, and taxes will increase.
Why a Wealth Tax will Drive Businesses and Taxpayers Out
Mamdani plans to pay for his socialist programs by imposing a 2% wealth tax and an 11.5 percent corporate tax hike. What he doesn’t seem to realize is that wealthy people don’t have to stay put—they can afford to move.
History—as well as common sense—has shown that when you tax the wealthy and the producers, they go somewhere with lower taxes. New York, which is home to 49 Fortune 500 companies, down from 71 in 2020, cannot afford to lose more companies like Philip Morris or Goldman Sach’s asset management division. Too many financial services companies like Elliott Management and Citadel have already left the city. Wall Street could become a ghost town.
New York’s Loss has been Florida’s Gain
While corporations have been bugging out to escape the disaster that is New York City, four years of Mamdani policies will see consumers bugging out, too.
It’s a vicious circle as departures lower tax revenue, which means budget deficits, school closures, fewer police, fire trucks and other services. This causes even more people to leave. All because of a bad idea implemented by a socialist mayor who ignored history and apparently never heard Margaret Thatcher say, “The problem with socialism is that eventually you run out of other people’s money.” When the rich leave, so does their money, as California is experiencing.
Detroit, once the fourth largest city in the country, lost 25 percent of its population between 2000 and 2010. The same thing could happen in New York. In Detroit, the median home price plunged 82 percent. People who could not sell their homes lost them to foreclosure. Vacant housing proliferated, leading to urban blight and decay. If this happens in New York, expect crime to rise, public services to deteriorate, and things to start looking like, well… the slums of Venezuela.
At least 20 percent of Venezuela’s population bugged out during its collapse, with many coming to the U.S. during the years of Biden’s open borders. Others moved to Europe, Colombia, and other neighboring states. More than 13,000 doctors and skilled professionals left Venezuela as its problems became obvious. They didn’t have to walk or take a bus; they could afford to fly away and never come back. The same thing will happen in New York City.
In Eight Years, it Will Be Even Worse
Now imagine Mamdani gets elected to a second term. (Possibly because all the smart people have left the city.) What would things look like after 8 years of his policies?
The number of Fortune 500 companies left will be measured in single digits. Small businesses will have closed up shop, unable to deal with the crime, regulation, and high taxation. Neighborhoods will be filled with empty storefronts. Even the cabs and Ubers will be gone, replaced by robo-taxis.
Foreclosures of both apartment buildings and private residences across the five boroughs will be astronomical because of a lack of jobs and real estate prices in the dumpster. The transit system will have collapsed with frequent derailments, breakdowns and rampant crime on the platforms and in the cars themselves.
The ultra-wealthy will be long gone, having moved to London, Paris, Singapore or Dubai. The well-off will have bugged out to places like Miami, Nashville, Charlotte, or Austin. Many people who have to work in New York will have moved upstate or live in Connecticut.
By this point, even the blue-collar workers will leave, looking for greener pastures. Anyone who can afford to retire early will have left as well, leaving almost no tax base.
Can New York City be Saved?
Some of you might be asking, why bother? Maybe we can let the city’s failure serve as a lesson to other people who want to elect socialists, but I am afraid much of the voting public is too stupid or too uninformed to make that connection. For example, failed socialist states exist in Cuba and Venezuela, but that didn’t change the voters’ minds. I believe we should save it if we can.
What may separate New York City from Venezuela’s fate is that Venezuela is a country while NYC is just a city. They are in a state and in a country with governments that may oppose the mayor’s plans. If Biden were still president, I doubt he would bother, but President Trump may try to disrupt Mamdani’s worst plans. Trump has already shown his administration won’t hesitate to withhold money to get a local government to cooperate, so expect to see threats, lawsuits, and injunctions in the next few years.
But the one thing you can be pretty sure of is the military won’t need fighter jets or naval ships if Trump wants to arrest the mayor. He’ll just send the FBI.
Prepper Lessons on Surviving Socialism
Lesson one: be an educated voter and vote. By the time a socialist is elected into a position of power, it’s too late to stop them.
Lesson two: bug out early. Just as when a hurricane bearing down on the coast, the people who get out two or three days before it hits are better off than those who waited until the last minute to leave or who decided to stick it out. The time to leave a failing city is before the socialist policies drive down housing prices and make others think twice about moving there.
Warning signs that should tell you it is time to bugout include capital flight, such as when big employers and the wealthy leave, visibly decaying infrastructure, and a loss of services.
Lesson three is historical: when socialism dies, and it always does, it takes others with it. We’ve seen this throughout history. Communism and socialism have killed millions.
Lesson four: urban preppers shouldn’t rely on public transit. When you need it most, it might not be there.
Lesson five: when the socialist economy dies, you need commodities or tradable skills you can use for barter. The people who thrived in Venezuela during its collapse had one or both, such as a way to grow or produce food.
