714. Why NYC's Socialist Mayor Can't Create More Housing

Hello, everybody. Welcome back to another episode of The Way the World Works. Today, I want to talk about the ever thrilling and exciting topic of housing policy. Yes, I know. It is the most exciting thing we've ever covered on the show, but it is important and we have a really interesting real-world experiment going on in New York City where basically

every horrible democratic socialist policy is going to be played out and we're going to get a front row seat to see what happens. And I think most of us are probably right in guessing it's not going to work out. Unfortunately, even if it doesn't work out, the odds of government saying, oh, we messed up. This isn't going to work.

And then reversing course, it's probably not going to happen. It never does. But we can hope, right? We can naively hope that maybe some people, some government politicians will see the air of their ways. But why?

Why is New York the stage right now for democratic socialism? And it is because they elected a new mayor and his name is Mayor Mamdani and he is an avowed democratic socialist. So the things we hear people like Bernie Sanders or AOC saying, Mamdani agrees with all those, but the scarier thing is that when you're a mayor, you actually have more power to put those into play on the local level.

And so it's going to be really interesting to see. Also New York is a huge, that's one of the biggest, there's so many people there. And so the policies that happen in New York City, everybody's looking at them. It's such a major city that we're all always kind of following along with what's going on there. So Mamdani has some housing policies that aren't great.

Specifically, he has a housing secretary that has said some things that are just so crazy for those of us who understand how the economy works. So I want to talk about those a little bit today. And we've talked about housing policy before and we've talked about housing shortages and what causes them in incentives. And we're going to go over some of that again today.

But I want to focus on just how crazy it is that we're seeing all of this play out in the real world. So for starters, I think just a little refresh, the country is going through a housing shortage right now. And New York City, a city that has so many people in it and so congested, you're going to see these problems really happening there.

Because there's always somebody looking for housing and housing is so expensive. When I'm scrolling through TikTok or even Instagram, a lot of people will do these tours on this is what this amount of money will get you in New York and it's absolutely crazy. You see people spending like $4,000 a month to live in a literally a room that can only fit their bed in. They share bathrooms with people like in a hallway, it's almost like a dorm.

They don't even have full kitchens. It's wild. I can't imagine living that way. Obviously there's a big problem because when you do have housing shortages, costs go up because their supply is not is not robust, right? There's not a lot available to you.

And so what causes this? Well, we've talked about this before. What causes this is bad policies, right? There's never a shortage of people who want to build. There's always entrepreneurs, there's always investors who want to, who are eager to build new homes, but they're not always able to because the government steps in with whatever policy

and restriction that they are putting in at the time and place and they make people jump through all these hoops, right? To build a house, you have to get like dozens of permits and you have to get each of those permits costs money and it takes time to get it approved. And if you've ever tried to get something approved through the government, it takes forever. When I got global entry, which is where you get to skip the line, it's like TSA, but when

you're coming from another country back into the United States, it took me almost a year to get it. It was crazy. So, so crazy. But that's government bureaucracy for you. So when people want to build houses and they're prevented from doing so because of all these

permits and all these costs, sometimes they just give up and think like, no, this isn't worth my time. This investment is not going to get me any money. And then let's look at New York specifically, New York has rent control sounds kind of good on paper, right? Rent control.

I'd like my rent to be controlled and not go crazy and I'm not paying too much money. But what happens with rent control is the government steps in and says, you're only allowed to charge this much for rent. Well, how does that incentivize landlords to want to become landlords or want to pay money to maintain their properties when they know they're not going to get any more out of it than than what the government says they can get out of it.

This creates problems and, you know, it's almost not worth the risk. You know, during COVID, a lot of states put in these mandates where you couldn't evict somebody because of COVID days as a national emergency, you couldn't evict somebody for not paying their rent. So that we really saw these problems come into head, especially in places like California, because you had people who just decided to stop paying their rent because the government

was like, well, we're not going to make people evict you. So you get a free pass and can you imagine that turned into huge problems where people who could afford to pay just weren't paying because they knew nothing was going to happen to them. So all these rent controls, all these restrictions, they create a lot of problems. So those of us sitting here and we know the free market, we know economics, we know that

the answer to that is what, get rid of the government regulation, right, encourage people to build. There's so many people who want to rent apartments and rent, you know, houses, there's never a shortage of people looking to rent, at least not right now, or looking to buy, you know, a new property. And so we need to be building more.

So that's kind of so simple, right? Well, what is the solution to not enough housing? Build more housing, right? But the reason that they're not able to do this is because all of these policies and now that brings us to Ms. Sia Weaver is her name. She is ma'am Donny's secretary of, you know, housing and she's going to come in here and

fix this problem. The problem is she does not know what she's talking about. And she, there was an interview from, I think it was actually Reason Magazine that came out years ago before she has her new position or had her new position. And she talked about how the problem is that there's private ownership of housing, that in her ideal world, what we need to do is have housing owned collectively.

And she said ideally government, but I think she didn't even specify that it had to be government. So she was saying that there is some sort of authority who is, you know, collectively owning these, this housing and people are able to rent, but they're never paying like more than a certain amount of what they have. And it's this just wildly socialist, delusional policy that will never work because it ignores incentives.

And part of me, part of me almost wonders what it would be like to live in a mind that is just so blissfully ignorant or chooses to ignore real world market, you know, market principles like incentives and how we respond to those because in this interview, she doesn't seem to understand that. And it's great on paper to say everybody deserves a house. We should give everybody a house.

You know, it's like, it's, it's like saying everybody should have a pony. I want a pony. Everybody should have a pony. That's great. What a wonderful world that would be. It's not realistic.

It's not the world we live in. And so see a weaver saying this and now becoming into a, coming into a position of such power in New York City is kind of scary, right? Cause it's like, oh my goodness, what are they going to do? You know, I know I, I sound kind of harsh saying, oh, these ideas are ignorant, even though they are.

But let's talk about why they believe in them. Because one thing that I do think we forget is that sometimes this comes, actually a lot of the time it comes from a good place, right? This girl probably thinks like, I want everyone to have housing. That's, that's nice. That's a lovely thought.

But let's talk about, you know, where are these stem from? Cause the ideas of where they stem from are just very incorrect. So some people think that housing is a right. You have a right to housing. You hear this a lot in these, in these circles, but what do you have a right to? Now you have a right to life, liberty and property.

And through property, you have the right to, to own something and turn it into something. And that gives you honestly, that gives you the power to create a new housing for people. When a developer comes and they buy a plot of land and they turn that land into maybe a dozen, maybe more apartments that's creating new housing for people, all of that is possible because of property rights and, and the way that our country was honestly founded on them.

Now you have democratic socialists saying, no, no, no, property isn't a right, having housing is a right. And so everybody should, you know, deserve housing. Interestingly enough, there have been places that experimented with giving, you know, homeless people free housing and in their minds, it was like, oh, who would turn that down? That's great.

And sometimes in those experiments, people end up still living on the street because there are personal choices, there are personal reasons that we choose things that nobody can really know, right? This is part of that high acknowledge problem. There are things that, there are ways that we make decisions. And you know, with some homeless people, you have some mental illness involved, sometimes

you have drug use involved, there's so many different factors that we don't really know how their minds are making decisions or what their personal preferences are. And we can't pretend to know that, right? And so in those situations where they were trying to give away free housing, it didn't work, there were still homeless people because even though they had this apartment given to them, they still chose to sleep in the park.

And for us, we think that's crazy. Why would you do that? But again, it's not for us to say what someone's preference is, right? That's why you can't have a planned economy. So there's this, this reasoning that housing is a right. And as we just went over it, it isn't, you know, that's, that's not how things are set

up. That's not what our natural rights are. You have no natural right to live in an apartment. You have a right to buy property. You have a right to work hard and keep the fruits of your labor, that money, and use that to get housing, but you don't have a right to housing.

Because what would that mean? Because if you had a right to housing, that would mean you had the right to someone else's free labor because somebody has to build the house. Somebody has to get all that, you know, wood that you have to build and all the other materials and concrete. Somebody has to provide that.

So you're forcing other people, you're taking other people's fruits of their labor away from them to get this thing that is allegedly a right and it's just isn't, right? You don't have the right to force other people to give you things for free. That's, that's not in the Constitution. It's not part of our natural rights. There's also this really silly belief that private ownership causes inequality.

And I even heard someone say that it's, it's like white supremacy or something. It's interesting. I'll say that where people's mind go on these things. And they say it's, you know, it represents inequality because not everyone can afford housing and not everyone can afford to live in, you know, the neighborhoods that maybe are a little nicer and a little safer.

And so it creates this in, you know, inequality among different socioeconomic classes. And the fact of the matter is inequality of that nature is always going to exist. There's unless we force everybody to live in a truly communist government where the government decides how much we make and everybody gets paid the same no matter what the job is. And we all know that doesn't work. But you're going to have inequality.

The only inequality that presents a true problem is when people are treated unequally under the law, right? The law has to treat everybody the same. The government can't give you more or less privileges or more fewer privileges, excuse me, just because of your race or because of your gender, right? That's where true inequality happens.

See, they can't favor you and they can't leave you out of something because of that. But you can't afford to live in a certain house and somebody else can. That's not inequality. That is, I hate to say it, that is life, that is the way this works. So that argument also kind of falls flat. And then of course, there's the whole thing of, for some reason, government, you know, entities

and organizations are the most qualified to control housing because, you know, government has shown us how responsible and, you know, capable. They are running things said nobody ever, right? So that's a we silly to me too, because we see government in competency all the time, everywhere. In fact, I have had a hard time finding government competency.

So it's really hard to find a good example of why we should hand over something so important to government, you know, bureaucracy that is constantly letting us down and it's constantly failing us, right? I mentioned a handful of episodes ago, Ronald Reagan used to say the scariest words where I'm from government and I'm here to help because every time the government gets involved, the problem gets much, much worse.

So that's a, that's another reason these arguments, again, just fall flat. You know, all this makes me think, you know, where does housing come from? And housing doesn't just come into existence because we want it. It's not like, you know, Dorothy and Wizard of Oz saying there's no place like home and goes back to Kansas. It's not like us clicking our heels together and saying there's no place like a home and

a house appears. And suddenly we have housing, right? That's not what happens. A new housing project, a new development, that is the culmination, that is the, the, you know, a bunch of different hands coming together. That's a developer buying a plot of land.

And then the contractors and the, you know, construction workers and the people who brought the lumber or the wood over, it's all these different people coming together. And like I said, a little bit earlier, you can't force those people to work free. That's just not how it happens. So we need to be very, very, very cautious when we hear these great plans of everybody having a house and, oh, let's just get rid of, you know, private, private housing.

That's the problem. We just need more collectivism, never works. And we're seeing in real time a mayor of a major American city trying to put all these policies into place. So watch closely. In fact, parents, you know, kids, this is a really fun family experiment.

I don't want to say fun. It's awful because people are going to be harmed from it. But interesting, let's say interesting because we are watching this unfold in real time. And it's not just in housing. You're seeing a lot of really scary education policies come out of the Memdani administration, including, you know, they want to get rid of gifted and talented programs and make every

kid average essentially. And so there's a lot to, a lot to pay attention to and maybe make some predictions. What do you think is going to happen? Do you think, do you think it's going to fail and they're going to learn from their mistakes? Or is it going to be, you know, business as usual? These are things to be watching and pay close attention to.

So I will leave it there. As always, don't forget to like and subscribe to the podcast. And until next time, I will talk to you later.