Neither Mamdani nor Bernie is a Democratic Socialist

The pursuit of social-democratic projects is not a lost cause in the US

Zorhan Mamdani, the presumed front-runner in the New York mayoral race, calls himself a democratic socialist (which scares Wall Street). So did US senator Bernie Sanders in his earlier election campaigns. Historically, a socialist is usually associated with advocacy of ownership or control of means of production primarily resting with the state or other non-private entities (like cooperatives or worker-owned enterprises). I have not heard either Mamdani or Sanders being associated with the advocacy of any such transformation of most of the means of production in the US. I think they are simply European-style social democrats, who would keep the mode of production essentially capitalist (with some possible light modifications) but with a somewhat greater role of the state in education, health and other welfare services (which, of course, may require higher taxes on the rich).

Mamdani has announced some social-democratic welfare policies like free bus ride, universal childcare, rent freeze for rent-stabilized apartments, building more public housing, and a very small pilot program of public grocery stores. Most of these proposals are aimed at making city life more affordable for the poor. Of these the rent freeze program has spawned the most criticism, often applying elementary economics textbook reasoning, that rent control leads to under-investment in repair and maintenance of buildings and discourages construction of new housing, thus causing a fall in supply of housing for new tenants. Larry Summers has revived an old trope in this debate by saying: “Rent control is the second-best way to destroy a city, after bombing.” This, of course, is a blatant exaggeration.

First, Mamdani has combined the rent freeze proposal with a promise of public investment in new construction of houses and a change in zoning laws for this purpose. Secondly, the textbook model assumes a competitive market for rental housing, whereas there is often a great deal of market power and tacit collusion on the part of landlords. It is not always clear that in such a situation a rent freeze will reduce the supply of apartments in the rental market, as landlords with market power may be holding back rental supplies to make more profits. (This is akin to the valid argument that in a non-competitive labor market a higher minimum wage need not reduce employment). Third, the textbook argument ignores that market-based rents, by encouraging frequent turnovers and tenant evictions, are harmful to local community formation or neighborhood stability (not to speak of a less inegalitarian and thus a more harmonious community). Fourth, Mamdani’s proposed rent freeze does not apply to large numbers of New York City apartments which are not covered by rent stabilization (I understand that latter numbers are roughly equal to the total number of apartments that are rent-stabilized) or to much of new construction.

The proposal to have a tiny pilot program of public grocery stores in city-owned buildings in low-income areas has also attracted some attention. I am not sure this by itself will be a great success, as the cost-saving from having these stores on city-owned land may be outweighed by the various kinds of economies of scale enjoyed by the large private supermarket chains. But there is a lot a city government can do in bringing down food prices by improving competition in the retail markets and helping out the small independent grocers who face monopoly practices (including price discrimination) of the big retailers and suppliers.

Of the different Mamdani proposals the costliest may be the one for universal childcare and that of building two hundred thousand new rent-stabilized apartments over the next ten years. So how these proposals are to be financed is an essential question. His general intention of raising the city taxes on the rich is unlikely to fly very far in view of likely opposition from the state democratic leadership, not just Wall Street. He could get by issuing some municipal bonds, but there too he needs to do some hard bargaining with that leadership. (A decade back after some bargaining with the higher authorities an earlier progressive New York city mayor, Bill de Blasio—in some ways Mamdani is like Blasio plus the beard—did manage to introduce the free universal pre-kindergarten program and also fund creation or preservation of thousands of housing units for low-income families).

Of course, social-democratic projects have far less support in the population outside New York City, in much of the rest of USA. But even there some projects are more popular than others. For example, polls suggest that ‘Medicare for All’, particularly the so-called public option in health care (allowing people to choose between private insurance and a government-run plan), is quite popular, not just among Democrats but in the general population. But when it comes to higher taxation on the rich for funding such social-democratic projects, the strength of the financial elite in campaign finance in elections and in lobbying after elections is so overpowering that many such projects remain only on the drawing board. Public borrowing (which essentially means kicking the tax can down the road) is often politically more feasible, in spite of the already high public debt to GDP ratio. If Trump can go for massive borrowing for the sake of cutting taxes for the rich, the chances for popular social-democratic projects on borrowed money may not be very low.

But for some social-democratic projects the opposition from the financial elite is not the only major opposition. Peculiarly for the US, one has to consider some opposition from the working class as well for some kinds of welfare projects. An interesting 2023 article by Kuziemko, Longuet-Marx and Naidu has convincingly shown that for quite some decades working class support in the US, particularly among its more numerous less-educated members, is distinctly less for redistribution (correcting market inequality through taxes and transfers) and more for what is called pre-distribution (factors that shape that market inequality before taxes and transfers)—examples of the latter include minimum wages, unionization of labor, or trade policies supporting local jobs and industries.

For Europeans and others in the world the lack of enthusiasm on the part of American workers for the redistributive welfare transfers of which they are the main beneficiaries may look a bit strange. This probably reflects a difference between the US and, say, much of western Europe in cultural attitude toward the relative importance of individual effort and personal responsibility in determining life success as opposed to luck or circumstances beyond one’s control. So the ‘stigma’ associated with government handouts may be different between regions. A 2007 Pew Research Center survey on cultural attitudes clearly shows the difference: in this survey only one-third of the US respondents agreed with the proposition that success is determined by factors outside an individual’s control, whereas the percentage agreeing with the proposition was more than half in France and Spain, and even higher (about 70 per cent) in Germany and Italy—in India it is 80 per cent! This difference in cultural attitude of the working class may be behind the bigger support for social-democratic redistributive policies of the welfare state in western Europe than in the US.

Coming to ‘pre-distribution’ which the US working class seems to prefer, I have already discussed trade policies in my earlier substack piece on economic nationalism. Let me here discuss briefly the pre-distribution policies relating to the labor market. On minimum wages the ‘fight for $15’, i.e. raising the minimum wage to $15 per hour, has been significantly successful on many state and local levels, though not so far at the federal level. This clearly is a door to push for social democrats, and it is popular with large numbers of workers and voters.

On unionization, the US remains a laggard among advanced countries. Union-bashing and -blocking by corporations, politicians and courts have been rampant for many years. Meanwhile globalization, automation and workplace fragmentation have reduced labor’s bargaining power all over the world. In the face of all this there has been some revival in union activism in the US in recent years, possibly helped by some tightness in the labor market. Also, in some cases online mobilization of workers and coordination of their demands have now been made possible by technology. New worker demands are sometimes less about wage settlements and more about the way they are relentlessly paced by robots and monitored by algorithms. Of course, there have been setbacks like the Trump Administration’s recent attempts to break or pack the National Labor Relations Board (which was established in 1935 for safeguarding labor rights as part of President Roosevelt’s New Deal); matters are still under judicial review. A Gallup poll in a recent year suggests that nearly 70 per cent of respondents have a favorable opinion about unions (this is the highest percentage in more than fifty years). So, taking advantage of the tailwind of popular support social democrats should be pro-active in pushing the project of unionization and labor rights, particularly at the sectoral (or industry) level where they may have more strength than at the company or firm level. No doubt it’ll be an uphill battle.

Going back to Mamdani, Trump in his typical bombastic hell-with-the-truth way has called him “a 100% Communist Lunatic”. In view of this, let me end with an anecdotal digression, not about Zohran, but about his father, Mahmood Mamdani (a Columbia University professor whom I know). This is from an interview where he talked about his undergraduate days in the US, when he joined a civil rights march to Montgomery, Alabama in 1965:

“There was a knock at the door. Two gentlemen in trench coats and hats said, “FBI.” I thought, “Wow, just like on television.” They sat down. They were there to find out why I had gone (to Montgomery)… They wanted to know who had influenced me. After one hour of probing, the guy said, “Do you like Marx?”

I said, “I haven’t met him.”

Guy said, “No, no, he’s dead.”

“Wow, what happened?”

“No, no, he died long ago.”

I thought the guy Marx had just died. So then, “Why are you asking me if he died long ago?”

“No, he wrote a lot. He wrote that poor people should not be poor.”

I said, “Sounds amazing.”

…After they left, I went to the library to look for Marx. So that was my introduction to Karl Marx (through FBI).”