Recently, the New York City’s Rent Guidelines Board (RBG) approved a cap on the rent increase landlords can charge to their tenants beginning October 1st, 2026. Also known as “rent freeze,” the policy aims to reduce rent costs for New Yorkers, who face some of the highest rents in the country. What Mamdani and his board are missing is that rent freezes or policies of the kind don’t work, and that you can’t solve problems caused by socialism with more socialism.
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Firstly, it is worth remembering that prices are signals. When markets smell excessive government intervention in pricing and costs, they will react accordingly. In the event of a rent freeze, the incentives to rent one’s unit out there fades away, as landlords can’t charge the price they deem appropriate to keep their profit margins intact.
As a result, some landlords end up taking those units off the market, reducing home supply as a result, and therefore increasing rents even further.
Rent freezes disincentivize building as well. When builders know that the government will intervene in rent prices, it becomes less profitable for them to build at the optimal output, due to some units being less profitable than they otherwise would be. Such an effect leads to a decrease in the supply of homes, which doesn’t just affect rents, but home prices at large, which end up ticking up as a result.
California is the perfect example of this. Studies suggest that in California, the landlords subject to the state’s draconic rent control laws ended up .
Such supply crunch led to rents ticking up due to more competition between prospective tenants for an ever-shrinking number of available rental units. It is simple supply and demand. The result is that the very policy intended to make housing more affordable ends up making it worse.
Secondly, there’s an ever-prevailing fallacy within the Democrat party base which spells that economic issues can be simply solved through political will. That is far from the truth. If anything, the opposite is true.
From Gavin Newsom’s $20 minimum wage for fast food workers fiasco and national billionaire tax proposal to Nordic utopia, the Democrat party of today believes that collective screaming and entitlement will solve economic issues of national magnitude. That is of course fantasy, rather than reality.
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The solutions are often found inside markets and in the incentive of private enterprise to turn a profit. In the meantime, economic populism can be costly.
Bernie Sander’s “Medicare for All” nonsense, if it ever came to fruition, was projected to cost over $32 trillion, exceeding the U.S.’s GDP and national debt. Mamdani’s enaction of the pied-à-terre wealth tax on second homes in New York, has caused over 5,000 businesses to leave the city. Studies point out to around 18,000 jobs lost due to Governor Newsom’s $20 minimum wage law in California.
AOC’s Green New Deal, also , is estimated to cost over $93 trillion over a decade. At a time of an ever-ballooning national debt whose burden on the taxpayer is growing by the day, such irresponsible proposals would lead the country into bankruptcy and economic chaos.
Lastly, the affordability crisis across the country is a supply crisis. Supply, on its end, is restricted due to a myriad of regulatory policies from local and state governments including but not limited to zoning laws, minimum lot sizes, parking mandates, permitting delays, environmental review processes etc. If a government were to put an end to the excessive regulatory footprint on builders and developers, rents and home prices would go down as a result.
The problem, however, is that increasing supply is politically inconvenient. Reforming zoning laws, streamlining permitting, or rolling back excessive environmental reviews takes years to produce results and often faces fierce opposition from activist groups that have turned obstruction into public policy. Freezing rents, on the other hand, produces an immediate political headline, even if it makes the problem worse over time.
Critics of the neoclassical approach claim that markets tend to fail, and that government intervention is necessary to remedy the negative externalities of such failures. That is not totally wrong, but it neglects the fact that those market failures were caused by misaligned production incentives because of excessive government regulation. In other words, you can’t claim the need to use the government to solve problems caused by that very same government in the first place. Such logic falls flat with reality.
All in all, rent freezes might win elections but in economic terms, they’re dysfunctional pieces of legislation. Economic problems do not need the next socialist proposal disguised as sound public policy. What they do need is solutions rooted in the undeniable reality of supply and demand. On that note, Mamdani’s rent freeze proposal is pure fantasy. A dangerous one.
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