For four centuries, New York City has been the place where strivers come to prove themselves on the world stage. From Ellis Island to Wall Street, the city has staged a recurring human drama built on a familiar plot: New Yorkers endure the hustle that would be intolerable elsewhere in exchange for the possibility of achieving more than they could anywhere else. Rich and poor alike endure long hours, punishing commutes, and relentless competition as the price of admission to a life of greater opportunity.

The election of 34-year-old Democratic Socialist Zohran Mamdani as New York’s next mayor represents the clearest modern challenge to that market-driven ethic of ambition. Running on a platform centered on expanded affordability, Mamdani mobilised a growing bloc of young, progressive, well-educated professionals who reject the old bargain. Unquestionably, the city’s $116 billion budget funds a robust array of social services, but most direct public assistance has long been targeted at the poor. Mamdani’s agenda – rent freezes, fare-free buses, no-cost childcare, and more services – signals a shift toward a governing philosophy that emphasises government-guaranteed security for upper-middle-income professionals, funded through higher taxes on the city’s top 1 per cent of earners and its largest firms. His pragmatic challenge will be financing these promises, estimated to cost $10 billion annually, at a time of slowing economic growth.

The fundamental question confronting New York is not simply who governs but which moral sensibility will define its future: the old ethic of economic opportunity built on risk-taking and personal responsibility, or a new one, rooted in government protection from market pressures.

New York City’s government once experimented with providing greater stability for its residents at the expense of its fiscal stability. From the mid-1950s to the mid-1970s, under the mayoralties of Mayors Robert F. Wagner, Jr. and John Lindsay, New York City’s workforce expanded rapidly. Wagner’s father, a US senator, had been a principal architect of President Franklin D. Roosevelt’s New Deal and the foundational Wagner Act, which established the right to collective bargaining in the private sector. In 1958, the junior Wagner recognised municipal employees’ right to bargain collectively through Executive Order 49, which he dubbed the ‘Little Wagner Act.’

Over the next two decades, the number of city employees grew, and unionised public workers quickly became one of the most powerful political groups in the city. The unions’ reach extended well beyond wages and benefits, as they lobbied aggressively for no staffing reductions and work rules that hindered managerial discretion and worker accountability. Municipal unions organised mass demonstrations and paralysing strikes that entrenched their priorities in the city’s budget and governing culture.

Generous wage settlements and increased costs created a bloated city government whose spending spiralled well beyond what the city collected in taxes. As the Manhattan Institute’s E.J. McMahon explains, Wagner’s $3.87 billion final budget in 1965 was $255.8 million short of what it would collect in revenues, prompting him to borrow to cover the shortfall in a ‘borrow now, repay later’ scheme that the New York Times Magazine would characterise a decade later as the way New York became a ‘fiscal junkie.’ Despite the obvious fiscal unsoundness of this approach, the state legislature, which controlled the city’s taxing and borrowing power, permitted it. Between 1965 and 1975, the city budget doubled.

Local spending pressures mounted further under President Lyndon Johnson’s War on Poverty, which offered federal matching funds for social-service outlays. John Lindsay, the liberal Republican who became mayor in 1966, seized on this opportunity to expand the city’s public-assistance rolls – even though securing the federal match required local contributions. His administration sought to enroll as many recipients as possible, relaxing eligibility rules and imposing no limits on how long benefits could be collected. The results were as predictable as they were striking: between 1965 and 1972, New York City welfare recipients swelled from 538,000 to 1,250,000, reaching 16 per cent of the city population and 10 per cent of all Americans on public assistance. So prodigal was Mitchell Ginsberg, Lindsay’s welfare commissioner, that he earned the moniker ‘Come-and-Get-It Ginsberg’ from the New York Daily News.

Lindsay, a complicit state government, and equally lavish Governor Nelson Rockefeller funded this public largesse through new and increased taxes, including the city’s first ever tax on residents’ personal incomes, corporate taxes, and sales taxes. So long as banks were willing to extend credit to a borrower they knew was fiscally unsound, the city’s leaders believed they could keep pushing the limits.

As liberals from different parties, Wagner and Lindsay shared a conviction that government should play a central role in alleviating poverty. Public employment, under their administrations, served not only to deliver services but also to provide stability and upward mobility for hundreds of thousands of New Yorkers. Like Mamdani’s vision, this belief sought to protect these workers, who might otherwise have struggled in the more competitive, less secure private labour market.

Yet these intentions could not obscure the fiscal reality that was rapidly deteriorating. By 1974, when John Lindsay’s successor Abe Beame took office, New York was carrying $3.4 billion in short-term debt – most of it accumulated since 1969. Beame inherited a city on the brink of collapse. A rising tax burden, combined with recessions in the late 1960s and early 1970s, pushed corporations and higher-earning residents to flee. Between 1970 and 1975, New York City lost roughly 470,000 private-sector jobs and 430,000 residents. Beame responded by cutting the city workforce and implementing wage freezes, prompting loud and chaotic labour protests.

The city leaders throughout this period often assumed that state or federal aid would eventually arrive to bail them out. Yet the Nixon administration, far less sympathetic to welfare expansion, compounded the strain by tightening federal reimbursement rules, leaving the city to shoulder more of its growing social-service costs.

Instead, in 1975, the banks abruptly stopped lending, triggering a fiscal crisis that would reshape New York City’s governance for decades. As the documentary Drop Dead City vividly portrays, in the tumultuous months that followed, Governor Hugh Carey administered a restructuring of the city’s finances. In June 1975, he established the Municipal Assistance Corporation (MAC), tasked with refinancing the city’s bonds and secured through the city’s sales tax revenues. MAC, chaired by banker Felix G. Rohatyn of Lazard Freres, proved successful in stabilising the city’s short-term borrowing needs, thanks to investment from the city’s public-union pension funds and $2.3 billion in loan guarantees from the Ford administration.

That September, Carey and the legislature then placed control of city finances in a new entity, the Emergency Financial Control Board (FCB), which Carey chaired and appointed most members. The FCB imposed strict spending limits for the next decade to balance the budget. The resulting austerity resulted in service cuts, public-workforce reductions, and an end to the city’s habit of papering over structural deficits.

New York eventually climbed out of its fiscal crater under the mayoralty of the pragmatic Ed Koch – ‘a liberal with sanity’, as he called himself – who rebuilt the tax base through private-sector investment, especially high-earning Wall Street jobs. Breaking from predecessors who had focused on public employment as a vehicle for middle-class advancement, Koch focused on drawing in ambitious, upwardly mobile professionals from around the world – the era’s emerging ‘yuppies.’

In 1981, Koch had achieved the city’s first balanced budget. The FCB ended its control period over the city budget in 1986, though city budgets were (and are) still subject to annual FCB review. By the time Koch left office at the end of 1989, the city’s economy had revitalised its government’s fortunes, with a record budget and public employment rebounding to more than offset the losses sustained during the fiscal crisis. The financial structure enacted after the 1975 crisis, such as an annual balanced-budget requirement on strict GAAP principles, still operates today to prevent city government from overextending.

New York’s liberal ambitions were chastened. Fiscal accountability reoriented New York City’s leaders towards delivering value for its residents in the way that businesses deliver value for customers. They recognised that the credit market set an ultimate limit for government action.

The administrations of Rudy Giuliani and Michael Bloomberg represented the zenith of the post-crisis governing model that rewarded ambitious strivers in the private sector. Giuliani, who ran on a law-and-order campaign against incumbent David Dinkins at a time when murders regularly neared or exceeded 2,000 per year, proved that it was possible to make astonishing reductions in crime through greater enforcement without substantially alleviating poverty. Under commissioner William Bratton, the New York Police Department adopted innovations such as the CompStat crime data mapping system, hot-spot policing, and quality-of-life enforcement. Between 1993, the year before Giuliani took office, and the time he left it, annual murders declined about 66 per cent, while the seven major ‘index’ crimes fell by half. This safer environment encouraged professionals to flock to the city to partake of its cultural richness and booming jobs market.

Giuliani also oversaw a steep reduction in the city’s public assistance rolls. He diverged sharply from the city’s network of social-services non-profit organisations by emphasising work over welfare, championing individual responsibility and self-reliance over the circumstantial determinism of his detractors on the left. Giuliani strengthened the requirements stipulating that assistance recipients should work and aggressively fought fraud by requiring measures like fingerprint identification and home visits to verify applications. As a result, the welfare rolls declined by 650,000 by the end of Giuliani’s second term, down from about 1.1 million at the start of his tenure in 1994.

Mayor Bloomberg, in turn, brought top talent from the private sector into government roles and gave them the political backing to achieve results. He modernised government operations through widespread digitisation, replacing paper-based systems with online platforms and collecting granular data across city operations. And he kept spending growth aligned with revenues, even in the painful years after 9/11 and the 2008 recession, using hiring freezes and repeated rounds of budget cuts to maintain fiscal discipline.

Under Bloomberg, formerly industrial waterfront areas in Brooklyn and Queens were rezoned for housing. Glass residential towers rose over long-dilapidated stretches of Long Island City, Williamsburg, and Greenpoint, remaking them into fashionable enclaves for young professionals – including Mamdani’s eventual voter base. Bloomberg entered office in the chaotic aftermath of 9/11, facing enormous overlapping problems. Twelve years later, he handed his successor, Bill de Blasio, a stable, highly attractive city, with a resilient tax base, expanding economy, declining crime and disorder, and a leaner, digitally empowered public workforce.

With limited exceptions, between 1977 and 2013, during the mayoralties of Koch to Bloomberg, the post-crisis model of New York governance prioritised private-sector investment over state and federal contributions, personal responsibility over government dependency, and a tacit consensus that New York should remain a magnet for talented strivers and high-paying firms. The result was a revitalised city, one that supported record private-sector employment and city government budgets.

The election of Bill de Blasio marked the first significant break from the post-crisis governing ethos. A lifelong leftist, who in his youth had supported the Sandinista Party in Nicaragua, de Blasio came to office in 2014 vowing to reduce income inequality that had grown during Bloomberg’s time – labelling the situation as a Dickensian ‘Tale of Two Cities.’

He would address this inequality partly through expanded and more generous government employment. Unlike Bloomberg, who had reduced the city headcount after 2008 and refused to sign new labour contracts before he left office unless he secured cost-saving concessions on healthcare and other benefits, de Blasio struck generous deals with the unions. He granted retroactive pay raises covering the previous five years, contributing to a $5 billion (6.6 per cent) increase in the city’s budget during his first year alone. Over his eight years in office, he added roughly 35,000 to the city workforce – more than a 10 per cent increase. And in general, he showed little interest in linking this growing public payroll to greater workforce accountability or measurable improvements in service delivery or quality of life.

The pragmatic Eric Adams, who took over from de Blasio in January 2022, accepted the post-crisis consensus in principle, but lacked the managerial competency and professionalism that animated it during the Koch, Giuliani and Bloomberg administrations. His uncritical loyalty to those in his inner circle and instinct for personal patronage led him to surround himself with ill-suited advisors and appointees, producing highly uneven results across agencies and multiple corruption scandals.

In this sense, Adams did not replace the Bloomberg-era model, but he proved a poor exemplar of it. Though his legacy will likely improve over today’s perceptions because of lasting achievements in land-use and sanitation, the vacuum he left through his indictments and personal flaws, when coupled with the election of Donald Trump, created space for a more radical alternative on the left to emerge.

Enter Zohran Mamdani, whose remarkable victory was built on a singular promise: greater affordability. His agenda – rent freezes for tenants in regulated units, fare-free buses, and no-cost childcare beginning at six weeks, at an estimated cost of $10 billion – amounts to an attempt to free New Yorkers from the pressures of higher housing and other everyday costs. In rejecting the premise that growth, competition, and private investment should set the terms of city life, Mamdani’s agenda pivots from economic expansion to a zero-sum promise of security for existing residents. His message is clear: no one should have to struggle against market forces simply to live a stable adult life in the city.

What distinguishes the mayor-elect from earlier progressive leaders like de Blasio and Lindsay is the scope of the recipients of Mamdanian largesse. His predecessors were largely concerned with alleviating the plight of poor and working-class New Yorkers. Mamdani, by contrast, would extend government benefits to nominally upper-middle-class residents.

That’s because the ranks of the struggling now include many educated professionals. They expected a college education – sometimes with hundreds of thousands of dollars of debt attached – to provide them with a comfortable urban lifestyle. Many had chosen careers which, though intellectually or morally satisfying to them, did not align with market needs. They hold degrees and steady jobs – sometimes paying into the six figures – yet work in fields whose wage increases and promotion prospects cannot keep pace with the city’s extraordinarily productive and demanding finance, tech, legal, and professional-services sectors.

This group has also contended with a severe supply crunch caused by the city’s decades-long failure to build enough housing to keep pace with its job growth. Today, the median rent is $4,600 in Manhattan and $3,950 citywide, putting urban life out of reach for what the Manhattan Institute’s President Reihan Salam calls ‘downwardly mobile elites.’ These urban progressives are primarily attracted to the city for its cultural amenities and are disinclined to decamp to the suburbs or even to less convenient, less fashionable corners of the outer boroughs.

Many, however, reside in the city’s roughly one million rent-stabilised apartments, where the median rent paid is only $1,500 per month. These units are not means-tested, so relatively high-earners stand to benefit directly from Mamdani’s proposed rent freezes – at landlords’ expense. Most of these units are in buildings constructed before 1974, many of which are rapidly deteriorating for lack of investment. But Bloomberg’s rezoning along the East River helped draw many of these professionals to neighbourhoods offering new urban amenities. In exchange for the tax abatements necessary to make these developments financially feasible for developers, these buildings’ units were placed in rent stabilisation, albeit at a near market rent. A rent freeze for a $4,000 a month unit, however, could translate to thousands in savings each year. Mamdani’s proposal to freeze rents for four consecutive years thus offers security to this core segment of his voter base.

Even if legal (an uncertain prospect), his plan would place owners of rent-stabilised apartments in severe financial distress. Many of these buildings have already been pushed to the brink of insolvency by a strict regulatory regime enacted by the state legislature in 2019, which makes it nearly impossible for owners to raise rents above what’s allowed annually by the Rent Guidelines Board. Since 2019, they cannot, for example, raise rents more after a tenant leaves or deregulate units if rents rise above a certain threshold. Buildings composed mostly or entirely of stabilised units – such as those in the lower-income neighbourhoods in The Bronx – would be the first pushed to insolvency by a four-year rent freeze.

Amid the city’s widely acknowledged housing shortage, up to 50,000 stabilised units – representing nearly two years of the city’s recent housing production – sit vacant because owners cannot recoup the repair costs at higher rents, making renovation uneconomical. These forced vacancies have grown so severe that a group of small property owners and the Institute for Justice, a property rights organisation, recently filed a federal lawsuit against the city and state accusing the regulation of causing a government taking of private property without just compensation.

For New York’s far left, however, this situation presents an opportunity to seize control of regulated housing currently in private ownership. In mid-November, reports surfaced that the council was poised to pass the Community Opportunity to Purchase Act (COPA), which in its most recent iteration, would oblige sellers of certain buildings with four or more units to notify the city’s housing department and all qualified non-profit organisations listed on the department’s website of their intent to sell. Non-profit entities that submit a statement of interest within 25 days would enjoy an exclusive 80-day period in which to make an offer, during which sellers could not accept private bids. Following this period, if sellers reject the non-profits’ bids and intend to sell to a private party, the first qualified non-profit that previously made an offer would have a right of first refusal, or the opportunity to purchase the property on identical terms to the private-market offer.

If enacted, financially distressed owners of increasingly unprofitable rent-stabilised buildings, particularly those who are highly leveraged, would undoubtedly feel pressure to sell to a non-profit. The delay and additional transaction costs imposed by the law would also drive sales prices down, further pressuring owners.

The law’s thinly veiled motive is to tilt the balance of ownership away from private hands – including thousands of small, family‑based property owners – and towards quasi-public housing non-profits. These groups already form a core part of the city’s progressive power base, fuelled by the city’s annual procurement of $15.6 billion in human-services contracts. Notably, Mamdani’s transition team is filled with many non-profit-sector leaders, including in the housing sector.

As my colleague Stephen Eide explained recently, for an administration aligned with the activist left, expanding the non-profit sector serves multiple political ends. It creates secure, if modestly paid, jobs for Mamdani’s supporters with relatively little pressure for measurable performance. Like traditional public employment, these jobs ultimately depend on government – but without requiring the city to shoulder the long-term pension and fringe benefit obligations that come with adding workers to the public payroll.

The non-profit housing sector also represents a durable constituency on the left that will show up at the ballot box and lobby aggressively for greater government subsidies. Because many of these groups would qualify for property-tax exemptions – effectively subsidised by the broader tax base – they enjoy structural advantages over for-profit owners. Their mission-driven branding makes them far more palatable recipients of state largesse than distasteful for-profit landlords, who have asked for relief from the 2019 rent stabilisation regime without success.

In COPA, Mamdani’s promises of greater housing stability merge with Wagner and Lindsay’s ambitions for government employment. The emerging governing model of New York City’s socialist left would thus offer downwardly mobile elites secure employment in the non‑profit sector and subsidised rents in regulated apartments, funded by higher taxes on the wealthy. Eventually, these workers would earn salaries in the low-to-mid six-figure range in managerial roles.

In turn, the avenues for building wealth, whether through real estate or through new ventures, will narrow. New York will become less of a stage for entrepreneurial ambition and more of a network of bureaucratic positions in non-profit institutions.

Mamdani’s practical challenge, however, is the same faced by Wagner, Lindsay, and Beame. Barring unlikely and extraordinary support from Albany (which has its own budget issues), his agenda ultimately relies on the private sector to generate ever-expanding public revenues. In short, he needs the city economy to grow faster than it is. But macroeconomic headwinds, federal funding cuts, or a shock like the Covid-19 pandemic each pose grave economic risks to his agenda. If the local economy were to go into recession, precipitating a deep fiscal crunch, then Mamdani would be deprived of the fuel necessary to power his agenda.

As in Lindsay’s era, highly productive individuals and firms may balk at higher taxes and the prospect of diminishing services, choosing instead to grow their businesses or live most of the year elsewhere. New York’s share of American millionaires has declined for over a decade. Cities such as Dallas, Miami, and Nashville now offer lower taxes, far cheaper housing, friendlier regulatory environments, and increasingly sophisticated urban amenities. Given that the top 1 per cent of filers contribute roughly 48 per cent of New York City’s personal income-tax revenue, even a modest outflow of high earners could upend the fiscal assumptions on which Mamdani’s agenda rests.

But at the heart of the Mamdanian turn lies a philosophical question that will define life in New York City for the foreseeable future: should city government cushion well-educated, otherwise capable residents from economic risk, or should it continue to enable the conditions for robust economic opportunity and let them decide how to respond?

For decades, New York’s magnetic power rested on its embrace of the latter. It was a city that demanded sacrifice but offered more in the future, where talent, hustle, and a tolerance for uncertainty could propel individuals upward like no other place on earth. When it attempted to provide its workforce greater security during the Wagner and Lindsay eras, the social experiment ended in fiscal collapse. The post-crisis governing model has resulted in unprecedented prosperity, safety, and the nation’s preeminent urban experience, despite the city’s apparent flaws.

If the socialist vision of expanded security prevails, it would redefine widely held assumptions about personal responsibility and the appropriate scope of government in New Yorkers’ lives. A polity anchored in price controls and non-profit stewardship is likely to cultivate a citizenry more focused on preserving entitlements than pursuing enterprise. It would reward incumbency at the expense of the newcomer strivers who for generations have fuelled New York’s dynamism in pursuit of riches that, in turn, enriched their fellow citizens.

A city that consistently protects educated and skilled individuals from risk will tend also to hinder them from the full expression of their abilities. Human capital that might have been tested and refined in the fire of private-sector competition might atrophy in the comfortable security of the non-profit or public sectors. If New York abandons the aspirational ethic, it will not collapse overnight, but will probably suffer a gradual descent from its place of preeminence in American economic and cultural life. The sudden chaos of 1975 is less of a risk than the lethargy of managed decline.

For now, the question is whether, in this moment, New Yorkers – including Mamdani’s educated base – still recognise themselves as heirs to that older, tougher, more striving city, or whether they are prepared to let it pass into memory.