Big Problems in the Big Apple? Socialism Steps into the NYC Mainstream.

“Capitalism is the worst economic system, except for all the others that have been tried” - Winston Churchill 

• Zohran Mamdani's victory in New York City’s Democratic mayoral primary offers an eye-opening moment for all voters and investors

• The self-proclaimed democratic socialist aims to reshape economics in the world’s most important financial hub

• We review historical lessons learned and time-tested economic principles to remind everyone of the importance of political literacy and freedom

Many New Yorkers were shocked when they woke up on June 25, 2025. Zohran Mamdani, a 33-year-old democratic socialist and state assembly member from Queens, defeated former New York state governor Andrew Cuomo in a stunning Democratic mayoral primary upset. 

For investors, it was yet another reminder that those who forget history are doomed to repeat it. While we don’t know who will replace Eric Adams, the current NYC mayor, this fall, citizens in the most consequential city to capitalism’s vitality will likely face a clear choice, one that so many societies have encountered before.

At Allio, we believe in transparency and the power of informed decisions. The only way to preserve our freedom and prosperity is to uphold America’s founding principles, and socialism contradicts the country’s core socio-economic values. We see a dark road ahead if New York City pursues socialism’s lofty promises. 

History and macroeconomics are littered with cautionary tales on all that goes awry when a government eventually runs out of other people's money, as Margaret Thatcher put it. Let’s take a tour through time, highlighting instances where socialism was tried and failed, but first, let's find out more about the Democratic candidate.

Who Is Zohran Mamdani?

Zohran Mamdani’s political career began not long ago, when he was in high school. He ran for vice president at The Bronx High School of Science. Now, just 16 years later, he’s a step away from running a $1.3 trillion economy, about the size of the Netherlands or Indonesia economies, larger than Saudi Arabia’s. 

He could become New York City’s youngest mayor since 1914 and its first Muslim and Asian American political leader. He doesn’t call for an end to private enterprise, but his platform is built on government wielding extreme power to fix so-called injustices within the five boroughs.

Meet the Man: Zohran Mamdani

Source: TikTok

Wall Street’s Bearish Reaction

In the trading sessions following the primary results, some stocks with significant exposure to the New York City real estate market declined. For example, Vornado Realty (VRO) and SL Green (SLG) were down over 5%. While market movements are attributable to many factors, some media reports linked this downturn to the election's outcome.

The ‘Zohran Effect’

Source: NY Post

Real Estate Investment Trusts (REITs) traded lower on fears that if Mamdani were to claim the Gracie Mansion as his home in 2026, then rent freezes, “free” public housing, and higher taxes on billionaires could crush the capitalistic spirit. On NBC’s “Meet the Press,” the presumptive Democratic nominee for NYC mayor even said, “I don’t think that we should have billionaires.”

To be clear, mayoral primaries often bring out the extreme wings of both parties, and it turns out that millions of the city’s Democrats did not vote. It’s possible that the selection of an ultra-left-wing candidate could spur interest among Independents and Republicans in the general election, but that remains to be seen.

Mamdani Garnered Just 432,305 Votes Among 6.6 Million Registered Democrats in NYC

Source: Wikipedia

Gen Z Drove Mamdani’s Win (Vote Count by Age)

Source: The New York Times

Looking Back: Where Socialism Has Failed Historically

Mamdani ran a bold, social-media-focused campaign. He promised free bus and subway rides, universal childcare, and government-controlled grocery prices. New York City’s young voters and those who embrace the ethos of Alexandria Ocasio-Cortez and Bernie Sanders surely took a shine to the up-and-coming politician. Securing just 44% of the vote, however, Mamdani faces an uphill climb to convince older, more mainstream voters. Additionally, history is not on his side.

Socialism, while it may appear compelling to some in theory, has failed time and again, throughout centuries and societies. When ideals clash with economics, “the money” always has the final say. Here are the most stark instances of Socialism flops:

1. The Soviet Union’s Planned Economy Collapse

President Ronald Reagan and UK Prime Minister Margaret Thatcher devoted their political careers to ending the Soviet Union’s tyrannical rule. Seventy years of Marxist central planning within the confines of the Iron Curtain resulted in chronic shortages of key resources for its people, economic inefficiencies and stymied growth, and devastating famines that lasted for decades.

The USSR’s failed tries to plan the ideal society wreaked havoc on households and businesses. There were no market incentives to drive progress. As the United States rose in the post-World War II era, the Soviet Union’s economy stagnated. Productivity lagged, and innovation was to the east and west of the bloc—in Japan and Europe. 

Facing mounting pressure from the developed world after seven decades of financial foibles, the system dissolved in 1991. In a dramatic fashion and on the global stage, the Cold War came to an end, proving that even Mikhail Gorbachev's more modern attempts at perestroika (economic restructuring) and glasnost (openness) were ultimately futile. 

Of course, it’s a stretch to suggest that Mamdani seeks to revive such plight, but his calls for a government-led city may sound concerningly similar to some of the Soviet Union’s goals from decades ago.

2. Venezuela’s Socialist Collapse

In more recent times, we can find another perilous instance in which the government’s influence destroyed a society, not overnight, but over time. Venezuela’s economic collapse, under socialist policies led by Hugo Chávez from 1999 to 2013 and then by Nicolás Maduro, is something that can be viewed in real-time, but its roots date back more than a quarter-century.

Chávez’s government nationalized key sectors, including oil, agriculture, and manufacturing. Mamdani, similarly, aims to restrict areas like housing, transportation, and certain retail segments. Venezuela’s price controls on basic goods, such as food and medicine, might have sounded appealing when first described, but once enacted, only those at the top benefited, while the people suffered. Black markets, not the middle class, flourished under Chávez, and currency manipulation fostered corruption, not equal wealth creation.

Venezuela is most infamous for its hyperinflation. The country’s two most prominent leaders since the late 1990s probably didn’t wish for a worthless currency, but that’s the kind of ramification that can occur when capitalism is suppressed. Inflation peaked at over 1,000,000% in 2018, making the bolívar currency worthless to would-be trading partners, and the nation’s GDP contracted by over 60% between 2013 and 2020, one of the worst economic declines in history for a country not at war.

Mamdani would be served well by reading up on Venezuela’s downfall—hyperinflation, GDP collapse, extreme unemployment and poverty, and mass emigration. It devolved into an outright humanitarian crisis in South America. Moreover, there’s now a bastion of freedom and capitalism thriving in Argentina, led by President Javier Milei. 

Cuba’s Economic Isolation

Closer to home, Cuba remains an economic and political basket case in the wake of its decades-long flirtation with socialism. The island nation’s tribulations date back to Fidel Castro’s 1959 revolution. Its commitment to universal healthcare and education may be commendable, but the resources simply aren't enough; it’s a classic case of running out of other people's money. 

To this day, Cuba operates a centrally planned economy rooted in Marxist-Leninist principles. The state controls most industries, including agriculture, manufacturing, and services, with private enterprise constantly suppressed. Over the decades, the country has become cut off from modern society. The US embargo was enacted in 1960, and with the collapse of the Soviet Union, external support was virtually eliminated.

While it is true that Cuba’s universal healthcare system is a model for some first-world countries, the cost is economic dynamism. And that’s the American spirit. The hope for a better life based on hard work and risk-taking is what makes our country, including New York City, great. Significant changes in tax and regulatory policy have historically influenced business and talent location decisions. It remains to be seen how potential new policies in New York City could impact its standing as a financial hub.

3. East Germany Before the Wall Fell

A centrally planned economy was attempted in East Germany from 1949 to 1990, under the influence of the Soviet Union. It was a similar situation to what would later transpire in Cuba, including notable achievements such as high literacy rates and, at times, near-full employment, facilitated by state-sponsored education and healthcare. But the government couldn’t orchestrate the economy writ large.

Centralized control led to high prices, poor-quality goods and services, and weak productivity. As the US recovers from a period of sharply rising consumer prices of our own, the last thing families and businesses want is a return to above-trend inflation. Furthermore, as AI advances, the focus should be on achieving higher productivity. Finally, state and local governments must center on cutting the waste and running leaner—that means putting the power in the hands of job creators, not bureaucrats.

East Germany took the socialist route, contrasting West Germany’s prosperity. As the divide grew, the former’s citizens turned discontented. Millions of people fled to West Germany before the Berlin Wall’s construction in 1961; those who stayed faced decades of repression. Tensions rose, and by 1989, mass protests ensued, eventually overwhelming the regime. The Wall came tumbling down in October 1990, ending another botched attempt at successful Socialism.

Common Threads

From the Soviet Union to Venezuela to Cuba to East Germany, across geographies and through time, it’s clear that socialism only brings about financial distortions, including command-and-control systems, suppression of entrepreneurial ambitions, and skewed resource allocation. These kinds of market punishments can't be ignored—even well-intentioned central planning leads to suboptimal outcomes. 

Take note, New Yorkers.

Mamdani’s Socialism Contradicts Economic Principles

Incentives matter. As Milton Friedman said, “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” 

The Democratic candidate’s TikTok and YouTube videos are compelling...to voters unfamiliar with history. Indeed, for young people struggling to keep up with the rising cost of living and fearing what AI might do to the employment market, rent freezes, government-run bodegas, and further taxing “the rich” may seem like good ideas.

However, these policies raise red flags familiar from past socialist experiments. Namely, government attempts to fix prices and "equalize outcomes," all while dismissing valuable feedback from market price signals. They are known pitfalls confined to history books, and they must be brought to the forefront. 

The truth is, there are no do-gooders who will equally distribute wealth so that all the city’s citizens are content. It’s only by ensuring that free-market incentives are in place that everyone has the chance for a better life. Competition, not government, is the engine that can deliver such progress. 

The Importance of Sound Economic Principles and Financial Literacy

At Allio, we believe in transparency and the power of informed decisions. Our ethos is built on providing all investors with the tools and insights they need to confidently grow their wealth.

Our goal is not to convince readers that Zohran Mamdani is the boogeyman. Rather, we seek to merely remind investors that foundational economic precepts are more important than ever. As we often say, the US is the cradle of capitalism, but our nation also faces significant challenges, including a growing national debt and an increasing reliance on the federal government. 

The call to action? Embrace sound economic principles. Successful countries, cities, and communities adopt these principles:

1. Adherence to Market Price Signals

Resources are best allocated when there are accurate price signals. If demand is high for a good or service, its price tends to rise. Over time, without artificial barriers in place, entrepreneurs and innovators bring new supply to the market—the risk-takers profit while consumers benefit from higher-quality, lower-cost offerings.

2. Embracing Incentives

The expectation of profit is key. That’s the financial incentive that drove the likes of Henry Ford, Steve Jobs, and Elon Musk to bring world-changing goods to the market. Individual effort and risk-taking must have the unfettered potential to yield significant rewards, including the opportunity to get rich. Incentives matter, from the early 20th-century assembly line to today’s young social media stars meticulously editing TikToks shorts.

3. Ensuring Private Property Rights

Secure private property rights foster investment and economic dynamism by giving individuals control over assets. It’s among our inalienable rights. John Locke's concept of natural rights, including life, liberty, and property, greatly influenced the American Founders. We must be reminded of the importance of those truths today. 

4. Opting for Limited Government

Capitalism and wealth available to all rely on free markets and a smaller government. The state should indeed provide basic services, including funding the police and fire departments, entitlement programs such as Social Security and Medicare, and the collection of taxes. But it’s a limited government, one with modest influence, that can breed economy-wide prosperity.

5. Fiscal Responsibility

Whether left, right, or center, you are likely displeased with the state of federal finances. The US national debt is spiraling toward $40 trillion, and it’s difficult to envision a period of actual fiscal restraint from any politician, be they Democrat, Republican, or Independent. There’s work to be done regarding this economic principle.

Financial Literacy: The Path to Economic and Political Freedom

So, it boils down to education. Voters wise to history’s cautionary tales on the dangers of socialism can make more informed choices about what they want their city, state, and federal government to look like. We want each person to find their way using their own compass. It’s this freedom, this power, that our Founding Fathers intended to endure. 

Freedom spurs innovation, and education on liberty and open markets is crucial for maintaining our nation’s competitive edge against global challengers. You can adopt the same principles with your wealth:

• Budgeting: Citizens and governments alike should be prudent with their finances, always setting aside cash for near-term needs and investing for the long haul.

• Long-term Financial Health: Focusing on accumulating gains and compounding investment returns over years and decades is key, not succumbing to short-run overspending and peer pressure.

• Risk Management: A margin of safety should be built into both the government’s fiscal construct and your budget. Dry powder and downside protection can come in handy when disaster strikes.

• Education: A healthy economy and a sturdy personal financial plan come about only from learning about history. Study trends, analyze from objective sources, and make informed and unbiased decisions.

By applying these principles, not only will New Yorkers be better off, but you too can achieve true financial freedom.

The Bottom Line

Economic literacy is more than numbers—it’s the key to unlocking opportunity, independence, and lasting prosperity. At Allio, we’re driven by the idea that when people understand how economies work, they gain the power to make smarter decisions, build resilience, and shape their future.

New York City faces a path-setting moment ahead. Gotham can either follow the dark road of socialism or retain its American values. Where do you stand?

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