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Zohran Mamdani, the 34-year-old Democratic Socialist who was elected mayor of New York City this month, is promising to usher in a new brand of economics. To tackle the city’s inexorably rising costs and Make New York Affordable Again, he’s proposing a series of sweeping economic changes, including freezing stabilized rents, free buses, City-owned supermarkets, free day care, constructing half a million union-built, city-owned affordable housing units, and new taxes on the 1%.

We spoke with two experts about why the plans could be tough to execute.

One of the most unaffordable things in New York is housing. And while average rents on existing leases are still relatively affordable at less than $2,000 a month for a two-bedroom apartment, anyone leasing now will pay an average of $3,900 per month. The big driver is scarcity. With a 1.4% vacancy rate, and more than half of renters paying more than 30% of their income for rent, and over a quarter paying more than 50%, the city needs a new plan. “That's a severe rent burden,” Mark Willis, a housing policy expert at New York University, told BBTW. “We need more housing. Plain and simple.” 

A healthy city would have a vacancy rate above 5%, the threshold for deactivating the city’s rent stabilization law. But Willis says that’s unlikely to ever happen. Citywide averages may show landlords making $600 a month for every apartment in a stabilized building, but that ropes in buildings with only a few stabilized units. Landlords of truly affordable housing, Willis said, are getting about a month’s less rental income a year than it costs to simply maintain an old building. A freeze could bankrupt landlords, and the city needs to reduce their costs with bigger tax breaks for repairs and investments.

“You want to know why rents are high in this city? Well, the basic costs of running a building are high,” said Willis. “And if rents are lower because of rent stabilization, then you can't properly maintain the building even if you wanted to.”

Is Mamdani’s plan to build more realistic? Maybe, but not if union labor is used. His proposed $100 billion can build 200,000 units over 10 years, but using union labor would boost the price by 50% or more.

The rest of Mamdani’s agenda is even less viable, argues Nicholas Economides, a serendipitously-named professor of economics at New York University. “If you really have free buses and anybody can come in, no questions asked, the homeless are going to live there, the drug addicts are going to live there,” he told BBTW. The city’s transit operator says free buses will cost it $640 million in lost fares, about 4% of its total budget. A study for Mamdani says it will generate $1.5 billion in new economic activity, but it may be hard to funnel that cash back to the MTA.

Mamdani’s plan to open one low-cost supermarket in each of the city’s five boroughs won’t do much, noted Economides. “We're going to pay it from our taxes, but one grocery store for the whole of Manhattan and one for the whole Queens and so on, I mean, it's not going to make any difference,” he said. 

But the real problem with Zohranomics, argues Economides, is Mamdani’s plan to raise taxes on the city’s wealthy. New York already has city and state income taxes that total 14.8% of taxable income. Another two percentage points would bring that to nearly 17%. “That's a huge number,” said Economides. “People who don't have to live in New York, let's say they're retired, can go to a state in which they pay zero tax. I think that it shows an extreme level of irresponsibility by the mayor-elect to propose new taxes.”

It is also notable that versions of Mamdani’s plans already exist and that they could be expanded at lower cost than investing in splashy new programs. Low-income New Yorkers get free or reduced fare cards. Expanding that program would cost more, but tying it to SNAP benefits (what used to be called food stamps) would make administering and funding it a breeze. Publicly-owned supermarkets exist, with mixed success, in places from Kansas to Colorado and St. Paul, Minnesota. And the U.S. operates hundreds of grocery stores at military bases around the world with prices some 25% below retail. The city could give tax breaks or space in City-owned buildings to existing food pantries that can sell lower-priced and healthy groceries to SNAP recipients. No need for a City department of grocery stores. Free day care just expands the existing Pre-K program. Pre-pandemic, Mayor Bill De Blasio opened a free universal pre-K program in less than two years. The real key to making New York City affordable, say both Willis and Economides, is doing more with less.

“Maybe we can't afford to build the highest quality for everybody. Maybe just providing people with basic amenities, and that's it,” said Willis. He said allowing more home-sharing and even bringing back single-room occupancy buildings could help.

“We should live within our budgets and make things work better and give better services to consumers,” said Economides. “The rest of the world, the rest of the United States, is much more efficient, and that's what we need to do. New York has to become much more efficient, less corrupt, and more productive.”

—Peter S. Green

Big Businesses mentioned this week:

• $QSR ( ▲ 1.74% )  

• $WEN ( ▼ 0.29% )  

• $ANTHROPIC ( 0.0% )  

• $AMZN ( ▼ 2.4% )  

• $SFTBY ( ▼ 9.96% )  

• $NVDA ( ▼ 3.63% )  

• $META ( ▼ 0.23% )  

• $BRK.A ( ▲ 1.41% )  

• $APO ( ▼ 3.2% )  

• $GS ( ▼ 3.88% )  

• $BLK ( ▼ 2.67% )  

• $STT ( ▼ 2.25% )  

• $JPM ( ▼ 3.41% )  

This week, big business!

• The usual suspects

• The short stack

• Elon’s World

• Want more Cheddar?

The usual suspects

• Who’s gonna keep getting clobbered by the shutdown? Airlines. Even if the government is back open by the time you read this, it will still take several weeks for all the U.S. air traffic controllers to return to full schedules. The FAA ordered a 6% cut in traffic this week and already, airlines have collectively cancelled about 1,000 flights a day, with thousands more were delayed. “Even before the shutdown, there was widespread recognition that we were dealing with an ailing air traffic control system,” an airline trade group wrote Tuesday. America's 14,000 air traffic controllers need another 3,000 hires just to be staffed for current travel demand. But the flight cuts have been a boon for people with their own Learjets or those who lease them. Those planes use about 10% of the air traffic network resources, but thanks to some swift lobbying, they only pay 2% of the cost. And their traffic is rising. Private jet departures rose 5% last month from a year earlier, the New York Times reports, citing business aviation tracker WingX. Jet share company Flexjet said flying hours were up 42% in the first week of November over last year. 

• Burger Blues: Restaurant Brands’ $QSR ( ▲ 1.74% ) Burger King, the patty everyone's forgotten in America, has just struck a deal in China, where local PE firm CPE promises to invest $350 million to open new burger joints. CPE says it wants to double Burger King’s restaurant count in China to around 2,500 in five years, and to at least 4,000 within 10 years. Meanwhile, Wendy’s $WEN ( ▼ 0.29% ) said it's closing hundreds of its 6,000 U.S. locations because of what CEO Ken Cook called “pressure on the lower-income consumer,” and said the company sees no sign of that letting up. Wendy’s share price has fallen more than 50% in the past year. Burgermakers might get some relief if the feds actually break up what President Trump suggested is a “cartel” keeping meat prices artificially high. The White House says JBS, Cargill, Tyson Foods, and National Beef are targets of a “price-fixing” probe. Together, they slaughter 85% of American beef. Ranchers note that they get paid less per head every year, even as beef prices continue to rise.

• Chips off the AI block: Another day, another huge AI investment deal. On Wednesday, Anthropic $ANTHROPIC ( 0.0% ) said it will spend $50 billion on a nationwide AI infrastructure construction spree, starting with centers in New York and Texas. While that pales alongside OpenAI’s promised $1.4 trillion buildout, it shows Anthropic hopes to compete with the big players. Last month, Amazon $AMZN ( ▼ 2.4% ) opened a 1,200-acre, $11 billion AI computing center for Anthropic in Indiana, near Lake Michigan, and using only Amazon's own chips, one of the first AI megacenters to go operational. Anthropic says it's on track to make a profit in 2028, while OpenAI predicts an operating loss of $74 billion that year, about 75% of revenue, and says it won't see a profit until 2030. The difference appears to validate Anthropic’s go-slow approach, using revenue rather than debt and investment to fuel growth. But both add to the growing concern of a circular finance bubble in AI, with chipmakers buying stakes in AI companies, which use the investment to buy… chips.

• AI stocks slip: Softbank $SFTBY ( ▼ 9.96% ) , in fact, just sold its entire $5.8 billion stake in Nvidia $NVDA ( ▼ 3.63% ) to plow the money into OpenAI, which uses its cash largely to buy chips from Nvidia. One result of this circle has been a slip in the sky-high P/E values of AI stocks this week. Bellwether Nvidia $NVDA ( ▼ 3.63% ) was down more than 6% since Nov. 3, and Meta $META ( ▼ 0.23% ) shares plummeted 19% since the end of October, despite higher-than-expected revenue, as the company projected massive spending on new AI data centers next year. If you have any doubt that the bubble is forming, look no further than financing. Unable to raise cash to cover the $7 trillion needed to fuel AI data centers over the next five years, data-center owners are using a stack of exotic (translation: over-leveraged) debt financing tools, including the famous commercial mortgage-backed securities, secured by the data centers themselves. Those are the babies that collapsed the last time tenants couldn't pay the rent on overvalued real estate, and launched the Great Mortgage-Backed Recession of 2008.

• Build it and they’ll sail? The Trump Administration's effort to revive U.S. shipbuilding by charging Chinese-made freighters a fee every time they dock in America just got sucker-punched. As part of the China trade reset, those fees are cancelled. Now, U.S. shipyards are in a pickle: American boats still cost four times the price of Chinese boats.

• Buffett’s Farewell? Outgoing Berkshire Hathaway $BRK.A ( ▲ 1.41% )  CEO Warren Buffett said he’ll be keeping somewhat quiet when he leaves at year's end, and will give away his $150 billion fortune to his children’s philanthropic foundations. In his annual Thanksgiving letter, Buffett wrote that the U.S. is “capricious and sometimes venal in distributing its rewards,” but investors should “remember to thank America for maximizing your opportunities.” And while he’ll no longer write the company’s annual report and his famous letter to investors, the Thanksgiving notes will keep coming.

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The short stack

• Basta, Pasta! It’s not the red sauce that’s killing Italian pasta; it’s the red ink they'll face when the U.S. formalizes 107% duties on Italian pasta imports. That’s a 92% anti-dumping tariff on Tuscan tagliatelli, plus a 15% tariff on all European Union exports. Pasta makers say they’ll go broke paying tariffs like that: “It’s an incredibly important market for us,” Giuseppe Ferro, CEO of family-run pasta-maker La Molisana, told the Wall Street Journal. “But no one has those kinds of margins.” Italy sells $770 million worth of noodles to America. The potential tariff was triggered by complaints that the Italians were selling pasta below cost, which came from two U.S. spaghetti-spinners: Ronzoni owner 8th Avenue Food & Provisions, and Prince spaghetti owner Winland Foods. If the tariffs go ahead, every day will be Prince Spaghetti Day!

• Goal! Spanish soccer league La Liga’s second-best Madrid team, Atletico Madrid, is selling a majority stake to U.S. asset management fund Apollo Global Management $APO ( ▼ 3.2% ) in a deal that values the team at $2.5 billion. Buying European soccer teams has become a big business for U.S. investors. In 2022,  Clearlake Capital paid more than $5 billion for London club Chelsea, and RedBird Capital paid $1.2 billion to take over Italy’s AC Milan. The Glazer family that owns the NFL’s Tampa Bay Buccaneers has a controlling stake in the UK’s Manchester United soccer team. Winning teams can earn $100 million a season in European football, but that takes time and an expensive roster.

• Kim’s Skims take shape. Kim Kardashian has big plans for her line of Skim’s body-shaping clothing, after a new $225 million investment led by Goldman Sachs $GS ( ▼ 3.88% ) valued the company at $5 billion. With net sales expected to top $1 billion this year, CEO Jens Grede is planning to expand the firm’s footprint beyond its 19 brick-and-mortar locations, enlarge its Nike partnership to footwear, and grow the beauty products line. Kardashian, the brand’s chief creative officer,”said she wants Skims to become a “global omnichannel retail brand.”

Trumplandia

• More state capitalism? President Donald Trump is exploring how to free corporate boards from what he calls “pressure” from proxy advisory firms and index-fund managers, including BlackRock $BLK ( ▼ 2.67% ) , Vanguard, and State Street $STT ( ▼ 2.25% ) . The advisors and managers help many small investors manage their portfolios or vote their shares. But lined up against the advisors are Trump frenemies Elon Musk and JPMorgan Chase $JPM ( ▼ 3.41% ) CEO Jamie Dimon. Dimon says the advisors have conflicts of interest, and Musk called them corporate terrorists when two top advisers, ISS and Glass-Lewis, recommended a vote against his trillion-dollar pay package. The fund managers have drawn the ire of aging activist investor Carl Icahn, 89, who calls the three index managers a “cartel,” and wants to block them from voting the shares they hold. 

• The 50-year mortgage? Embattled Federal Housing Finance Agency chief Bill Pulte is proposing to fight the high cost of homeownership for first-time buyers by offering 50-year mortgages. That may sound like the ultimate purgatory, though the idea’s gotten traction with President Trump. But run the numbers, and it gets real hairy real quick. On a $400,000 home with 10% down, monthly payments of $2,183 would rack up $335,720 in interest by 2055. Stretch that out, and the $1,634 monthly payments might be a relief, but the house wouldn't be paid off until 2075, and the total interest would balloon 85% to $629,939. Pulte may be feeling the heat of his alleged efforts — which he denies — to dish confidential dirt from mortgage records on Fed governor Lisa Cook, Sen. Adam Schiff, and New York state AG Letitia James. Pulte referred all three to federal prosecutors for criminal investigation, alleging possible mortgage fraud. Only James has been charged, and all three note that no proof of fraud or attempted fraud has been filed. But the Wall Street Journal reports that members of the ethics and investigations team at Fannie Mae, which Pulte oversees, were removed from their jobs while looking into how Pulte had obtained the files on Trump's foes.

• Will they or won't they? Fed Edition: After October’s quarter-point rate cut, will we see another December cut? A Reuters poll of 105 economists found 84 said the Fed will cut its overnight lending rate in December, with unemployment concerns outweighing inflation fears. But within the Fed’s decision-making Open Markets Committee, the split appears to be wider, the Wall Street Journal reports, made worse by the lack of data as furloughed government data geeks stayed home.

• Is Trump killing capitalism? That’s what his one-time eminence grise, Steve Bannon, says. “What young people in this country – being logical – have looked around [and] they haven’t actually seen [is] capitalism at work. They’ve seen crony capitalism or corporatism with the devil taking the hindmost approach. It has to stop,” Bannon said on his war room podcast this week.

Elon’s World

• It’s official: On Monday, Tesla filed a Form 4 with the SEC, formally approving Musk’s trillion-dollar pay package and laying out the 12 Herculean labors he needs to complete to take home more than 423 million shares of stock. But Elon’s never one to sit on his laurels. On a podcast with Joe Rogan last month, he said the long-delayed Tesla Roadster won’t actually need a road and will be able to fly. OK, Zoomer?! At last week’s Tesla shareholder meeting, Musk said Tesla’s Opimus robot would also “eliminate poverty,” give everyone “amazing” medical care, and prevent crime by letting convicted felons roam free while a robot walks behind to keep them on the straight and narrow.  

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Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story. Email him here.