A Throwback Thursday Editorial: New York’s Housing Crisis and the Folly of Interventionism

By Milton Friedman, as channeled for June 5, 2025

New York City, once the pulsing heart of American enterprise, is strangling under the weight of its housing crisis. Skyrocketing rents, vanishing vacancies, and a construction pace that limps behind demand threaten to choke the city’s vitality. The 2025 mayoral candidates, as reported by Bloomberg News, propose a litany of government-driven fixes—rent freezes, zoning overhauls, and fantastical promises of a million new homes. These schemes, cloaked in the guise of compassion, are a textbook case of what I long warned against: the tyranny of good intentions. The path to resolving New York’s housing woes lies not in more state meddling but in unleashing the market’s creative energies. For this Throwback Thursday, let us revisit the principles of freedom and markets to expose the candidates’ misguided priorities and chart a better course.

The Root of the Crisis: Government Shackles

New York’s housing shortage is no mystery; it is the predictable offspring of decades of government intervention. Rent stabilization, covering one million units, distorts prices and discourages investment in new housing. Zoning laws, enshrined in the 1961 resolution, choke supply by restricting density and inflating land costs. Permitting delays and bureaucratic red tape further inflate construction costs, averaging $500,000 per unit. These are not market failures but policy failures, erected by well-meaning planners who believe they can outsmart the invisible hand.

The candidates’ responses, far from dismantling these barriers, double down on control. State Senator Zellnor Myrie’s pledge to build one million homes over a decade is a central planner’s fantasy, ignoring the fiscal and logistical realities of a city strapped for land and cash. Comptroller Brad Lander’s plan to repurpose golf courses for housing, while creative, assumes government can allocate land more efficiently than private developers—an assumption history repeatedly debunks. State Assembly Member Zohran Mamdani’s call for free buses, costing $650 million annually, diverts resources from housing while subsidizing inefficiency. These proposals, like the rent freezes favored by eight of nine candidates, treat symptoms while ignoring the disease: a market suffocated by regulation.

The Market Solution: Freedom to Build

The housing crisis demands a return to first principles: markets, not mandarins, allocate resources best. Remove the shackles, and developers will flood New York with housing, as they did in the early 20th century when the city’s skyline soared without today’s regulatory morass.

1. Abolish Rent Stabilization: Rent controls, as I argued in Capitalism and Freedom, reduce housing supply by discouraging maintenance and new construction. Landlords, facing capped rents, let properties decay or exit the market entirely. Phasing out stabilization for new units, as seen in deregulated markets like Texas, would spur investment. Tenants fear higher rents, but competition among landlords—unleashed by increased supply—would temper prices naturally. The data bears this out: cities with fewer rent controls, like Houston, boast vacancy rates double New York’s paltry 3%.
2. Slash Zoning Restrictions: Zoning laws are a government-imposed cartel, artificially inflating land costs and excluding the middle class. Upzoning transit-rich areas, as partially proposed in the City of Yes initiative, could unlock 100,000 units, per city estimates. Better yet, adopt a model like Japan’s national zoning framework, which prioritizes flexibility over rigidity, enabling Tokyo to build 140,000 units annually—triple New York’s pace. Candidates like Scott Stringer nod at zoning reform but shy away from the bold deregulation needed to let markets breathe.
3. Streamline Permitting: The Department of Buildings, a bureaucratic leviathan, delays projects by months, adding 20% to costs, per industry estimates. Privatizing permitting, as experimented in parts of Florida, could cut timelines by half while maintaining safety standards. The government’s role is to set clear rules, not to micromanage every blueprint.
4. End Corporate Welfare: Public-private partnerships, favored by some candidates, often devolve into cronyism, with subsidies flowing to politically connected developers. The Hudson Yards fiasco, where billions in tax breaks yielded luxury towers, is a case study in waste. Instead, level the playing field: cut property taxes for all developers who build, not just those with the best lobbyists. Lower taxes would reduce costs, making affordable units profitable without mandates.

The Funding Fallacy

The candidates’ obsession with funding their grandiose plans—through property tax hikes or corporate tax increases, as Mamdani proposes—misunderstands the problem. New York’s $115 billion budget is bloated with inefficiencies, from overtime abuses in the NYPD to redundant agencies. Rather than raising taxes, which drive businesses and residents away, the city should slash waste. A 10% cut in non-essential spending could free $11 billion, enough to fund infrastructure upgrades that lower construction costs. Former Governor Andrew Cuomo, despite his flaws, understood the power of fiscal discipline; his successors would do well to emulate it.

Moreover, the market itself is the ultimate financier. Deregulation would attract private capital, as seen in Singapore, where streamlined policies draw global investment. Municipal bonds, suggested by some, are a poor substitute, saddling future generations with debt for projects that markets could fund today.

The Moral Case for Markets

Beyond efficiency, the market solution is a moral imperative. Every rent-controlled apartment that decays, every family priced out of the city, is a victim of government’s hubris. Candidates like Jessica Ramos, who advocate for tenant-heavy Rent Guidelines Boards, claim to champion the poor, but their policies entrench scarcity, locking out newcomers and trapping tenants in substandard units. True compassion lies in empowering individuals through choice, not chaining them to subsidized squalor.

The candidates’ flirtation with rent freezes and subsidized housing echoes the failures of urban renewal in the 1960s, which razed vibrant neighborhoods for sterile projects. As I wrote in Free to Choose, government programs often harm those they aim to help. New York’s housing crisis is no exception: the more the state intervenes, the worse the shortage grows.

A Call to Action

New York stands at a crossroads. The candidates’ priorities—rent freezes, tax hikes, and government-led construction—promise a future of stagnation, where only the wealthy can afford to stay. For this Throwback Thursday, let us reject this path and embrace the principles that built America’s greatest city: freedom, competition, and individual initiative.

The next mayor must dismantle rent controls, slash zoning restrictions, privatize permitting, and cut corporate handouts. These steps will unleash a building boom, drive down prices, and restore New York as a city for all, not just the privileged few. The alternative—more of the same interventionist folly—will cement New York’s decline, proving once again that the road to hell is paved with good intentions. Let markets work, and watch the city thrive.

Milton Friedman, Nobel laureate and champion of free markets, would have no patience for New York’s current trajectory. His voice, imagined here, reminds us that liberty is the surest path to prosperity.