JumpStart: How to Tax the Golden Goose, Then Wonder Why It Moved Across the Lake

There is a certain type of city government that looks at a successful private economy the way my cat looks at unattended fried chicken.  It does not think, “How did this get here?” It thinks, “How much of this can I eat before anyone notices?”

Seattle’s JumpStart payroll tax is a fine example of the genre.

JumpStart was sold as a progressive tax on big corporations with highly-paid employees.  It passed in 2020 and targeted large employers with big Seattle payrolls and workers earning above high compensation thresholds.  The theory was simple: Seattle had rich companies, rich workers, and not enough money for housing, homelessness, climate programs, and various other progressive civic ornaments.  Therefore, Seattle would tax the payroll of the successful firms and use the money to do good things.

This is the sort of idea that sounds marvelous in a city council chamber, where money arrives as “revenue,” not as something previously owned by someone else.

Katie Wilson, now Seattle’s mayor, was not some innocent passerby, who wandered into this mess carrying a sandwich board.  Her own campaign material says she played a “key role in designing and passing” the JumpStart payroll expense tax.  Seattle Magazine likewise described her as having played an instrumental role in designing and passing it.  So this is not a case of Mayor Wilson inheriting an alien machine from a previous civilization and wondering what all the smoke is about.  She helped build the machine. 

At first, the machine produced money…Lots of it.  JumpStart generated hundreds of millions of dollars, which allowed supporters to declare victory.  This is the standard first act in a tax drama.  Politicians pass a tax, money comes in, and everyone applauds as if they have discovered fire.

The second act begins when the people being taxed notice and in Seattle, they did notice.  More importantly, they noticed Bellevue.

Bellevue sits just across the city line—incorporated, convenient, and waiting.  As Seattle began taxing employers through JumpStart, some of those employers discovered that moving just beyond Seattle’s reach was not exactly a moonshot.  In less than six years since JumpStart was implemented, Bellevue’s city population has grown by only about 2,300 people, but the community has added more than 10,000 jobs and roughly 4,000,000 square feet of office space.  In other words, the people did not necessarily move, but the payrolls sure as hell did.

Seattle’s problem is that its tax was aimed at exactly the people and companies most able to leave.  A small restaurant owner cannot move his lunch counter to Bellevue without actually moving his life.  Amazon, Microsoft contractors, tech teams, consultants, software divisions, and professional-service firms are another matter.  Their workers do not need to be chained to a particular block of downtown Seattle.  They need laptops, managers, conference rooms, fiber optic cables, and nearby coffee.  Bellevue has all of those, plus the added virtue of not being Seattle.

Bellevue is not Mars: it is just across Lake Washington.  If Seattle makes it more expensive to employ highly-paid workers inside Seattle, a rational company does not need to issue a dramatic press release titled, “Goodbye, Ungrateful City.”  It simply lets leases expire, shifts teams, places new hires elsewhere, and tells the HR department to update the office map…which appears to be exactly the pattern.  Amazon is still in Seattle, but its Seattle headcount has fallen from its peak, while its Bellevue headcount has risen.  Broader reporting has described Bellevue as a major tech alternative to Seattle, with companies are citing taxes, downtown conditions, and quality-of-life issues as part of the attraction. 

Meanwhile, downtown Seattle’s office market has looked less like a triumphant progressive revenue laboratory and more like a partially abandoned corporate aquarium.  Axios reported that downtown Seattle’s central business district vacancy reached 30%, with availability at 34%.  The Wall Street Journal, summarizing the Bellevue boom, described prime Seattle office vacancy at 34.6%, the highest for a large city in the nation.

An analysis backed by Downtown Seattle Association says downtown Seattle lost roughly 30,000 jobs and that taxable office-building value fell dramatically, while Bellevue gained jobs and saw commercial values rise.  Since that is an advocacy-backed report, we should not treat it as holy scripture chiseled onto stone tablets.  But the general direction is not hard to believe.  Tax mobile jobs and some of the mobile jobs move. 

Let us put numbers on this.

If Seattle loses 30,000 jobs, and we assume an average compensation of only $100,000, that is:

30,000 × $100,000 = $3 billion in annual payroll.

If these are high-end tech and professional jobs, the real number could easily be much higher.  Even at the conservative figure, that is $3 billion a year in wages no longer circulating downtown in the same way.  That means fewer lunches, fewer coffee runs, fewer dry-cleaning tickets, fewer happy hours, fewer parking receipts, fewer office leases, fewer business-service contracts, fewer transit trips, and fewer reasons for the next company to locate there.

The office-value loss is even more dramatic.  If downtown office values fall by $10 billion, that is not just a sad day for landlords wearing expensive shoes.  It is a destruction of taxable wealth, collateral value, construction incentive, investment appetite, and long-term urban confidence.  Property-tax systems can disguise the loss for a while by shifting burdens and adjusting rates, but they cannot make dead office value rise from the grave by passing a resolution.

Then comes the truly comic part.  JumpStart was originally sold as dedicated money for housing, homelessness, climate, and equitable development.  But once the city got used to the money, it started using it to plug ordinary budget holes.  Axios reported that Seattle redirected $287 million in 2025 and $223 million in 2026 from JumpStart’s intended uses into general-fund needs. 

Let us add that:

$287 million + $223 million = $510 million.

That is more than half a billion dollars shifted into the general city budget because the city needed the money elsewhere.  In plain English: the tax that was supposed to fund special progressive priorities not only became a crutch for ordinary city spending but also created larger deficits.

And the hole is not gone.

Recent projections show Seattle facing deficits of $175 million in 2027, $164 million in 2028, and $149 million in 2029. 

Add those together:

$175 million + $164 million + $149 million = $488 million.

So Seattle has already shifted about $510 million of JumpStart money into general revenue for 2025 and 2026 and is looking at another $488 million in projected deficits from 2027 through 2029.

That gives us:

$510 million + $488 million = $998 million.

Call it a one-billion-dollar problem, give or take the usual municipal rounding error, which in Seattle seems to be measured in endangered coffee shops.

This is the great irony.  JumpStart was supposed to be a way to make big business pay for Seattle’s ambitions.  Instead, Seattle has become dependent on the tax while the new tax erodes the tax base, making income  less dependable.  And this will only get worse every year.

The city may have gotten the first check, but it seems to have lost the account.

The defenders of JumpStart can still point to money raised, which is true, but it is also something any robber can do.  The question is not whether the city raised money, but it is whether the city’s new tax is chasing off other revenue.  If the tax helped encourage highly-paid jobs, office demand, business investment, and future growth to migrate across the lake, then Seattle did not harvest wealth.  It harvested and ate their seed corn.

That is the part progressive tax designers so often miss.  Capital is not a statue, jobs are not fence posts, and payrolls are not geological formations:   they all move and adapt. Worse yet, they flee quietly—often without leaving a forwarding address.

JumpStart may have been a success in the narrowest possible bookkeeping sense: it produced revenue.  But since the price is a weaker downtown, emptier offices, fewer high-value jobs, lower property values, and a city budget still staring at nearly half a billion dollars in future deficits, then perhaps the name was more honest than intended.

The program actually did “jump-start” something.

It’s just apparently not Seattle.

Five Foolish Ideas from Economically Challenged Legislators

Every now and then a legislator comes up with an idea so pure, so compassionate, so utterly detached from reality that you almost have to admire it.  Not because it will work.  Good Lord, no.  But because it takes a special kind of mind to look at a grocery store, an apartment building, or a checkout lane and think, “You know what this needs?  A mandate from someone who has never had to make payroll.”

There is a particular type of modern politician who believes that prices, wages, rent, inventory, staffing, food waste, and profit margins are not economic facts.  They are moral failures.  If groceries cost too much, command them to cost less.  If food is thrown away, order it donated.  If rent is high, cap it.  If self-checkout annoys someone, regulate the scanner.  If billionaires have money, announce that you will take it and then act surprised when they begin browsing real estate in Florida.

This is economics by bumper sticker.  And, as usual, the bumper sticker fits neatly on the car because the actual explanation would require a trailer.

Let us consider five recent ideas from the economically challenged wing of the legislature.

1.  The Ten Percent Self-Checkout Discount

Some genius in New York has proposed that grocery stores should be required to give customers a ten percent discount for using self-checkout.  The theory seems to be that if you scan your own groceries, you are now an unpaid employee and deserve compensation.

This has the surface appeal of one of those arguments made by a sophomore who has just discovered injustice, marijuana, and sex in the same semester.  “Why should I scan my own soup and not get paid?”

The problem is that grocery stores do not have ten percent profit margins.  They do not have a secret room in the back where they roll around in canned-bean money.  Grocery retail is a low-margin business.  A ten percent mandatory discount is not a reward for the customer.  It is an instruction to sell the food at a loss.

So what would happen?  Exactly what any adult would expect.  Stores would raise prices, remove self-checkout machines, restrict their use, reduce staffing elsewhere, and build the cost into everything on the shelf.  The legislator imagines a shopper saving money.  The grocer sighs and makes more cuts to customer service while demanding more productivity from a shrinking labor force.

This is the recurring problem with economically challenged politicians: they think the first move is the whole game.  They pass the law, everyone claps, and the curtain falls.  In the real world, people respond.  Businesses respond.  The board changes after every move.

If you make self-checkout a guaranteed loss, you do not get cheaper groceries.  You get fewer self-checkout lanes, higher prices, and another small lesson in why arithmetic should be required before holding office.

2.  Mandatory Staffing Ratios for Self-Checkout

Not content with misunderstanding self-checkout once, some places are also considering rules that would require one employee for every few self-checkout machines, along with item limits and other helpful little instructions from the Ministry of Retail Wisdom.

Now, I will freely admit that self-checkout can be irritating.  There are few things in modern life more insulting than being accused by a machine of stealing bananas while a clerk with a magic key has to come pardon you.  The machine says “unexpected item in bagging area” with the moral certainty of Cotton Mather spotting a witch.

But stores already know this.  They know when customers hate the machines.  They know when theft is too high.  They know when one employee can monitor six kiosks and when three kiosks are too many.  These decisions depend on the store, the neighborhood, the product mix, the technology, the time of day, and the customers.

The legislature knows none of this.

A government-mandated staffing ratio is not consumer protection.  It is anti-automation policy with a little smiley-face sticker on it.  If lawmakers want to preserve cashier jobs, they should say so.  But then they should also admit the tradeoff: longer lines, higher labor costs, higher prices, and fewer stores willing to operate in marginal areas.

This is the old habit of pretending that the cost will be paid by “business,” as if business was a large anonymous creature living in a cave.  But the cost gets paid by everyone.  Customers pay it in prices.  Workers pay it in fewer hours elsewhere.  Stores pay it by closing locations or not opening new ones.

The law does not repeal cost.  It merely disguises the invoice.

3.  Paper Copies of Digital Coupons

Then we have the proposal that if a store offers a digital coupon, it must also provide a paper version of the same discount.

I have some sympathy for the complaint.  Digital coupons are often obnoxious.  You walk into a store and see that butter is $3.49, only to discover that this price is available only if you have downloaded the app, created an account, confirmed your email, remembered your password, sacrificed a goat, and allowed the store to track your movements until the Second Coming.

For older customers especially, that is a real problem.  A grocery discount should not require a technology support call from a grandson.

But turning every digital coupon into a mandatory paper coupon is how government turns an annoyance into a department.  Now the store has to print, stock, track, honor, explain, police, and audit the paper coupons.  Employees have to deal with fraud, confusion, arguments, expired coupons, missing coupons, duplicate coupons, and customers who saw the sign but did not bring the paper.

And the predictable result?  Fewer coupons.  There is no way to lower prices by raising costs.

The legislator thinks he has made the discount more accessible.  The store thinks, “Fine, we will offer fewer discounts.” Once again, the law assumes behavior will not change after the mandate.  Once again, this assumption has the life expectancy of a snow cone in Las Cruces.

A sensible rule would be simple: if a store advertises a digital price in the aisle, let the cashier apply it for customers who ask.  Done.  Problem mostly solved.  No paper-coupon bureaucracy.  No compliance circus.

But sensible rules lack the grandeur of a bill-signing ceremony.

4.  Mandatory Donation of Near-Date Food

This is the one that really sounds wonderful, right up until you think about it for twelve seconds.

Grocery stores throw away food.  Poor people need food.  Therefore, require grocery stores to donate food that is near its sell-by date instead of tossing it out.

At first glance, this sounds like kindness.  At second glance, it sounds like kindness written by someone who has never ordered lettuce.

The great mistake is the idea that “the food already exists.” Yes, it exists the first day.  But after the law is in place, the grocer is not making decisions about yesterday’s food.  He is making decisions about tomorrow’s order.

Before the mandate, the manager might order 100 units, expecting to sell 85 at full price, mark down 10, and lose 5.  That is not ideal, but it is part of the abundance customers demand.  We want full shelves.  We want ripe produce.  We want bread available at 6 p.m., not just a sign saying, “We sold the mathematically correct amount at 3:14.”

After the mandate, those last five units are not merely possible waste.  They are a compliance problem.  They must be sorted, stored, refrigerated, documented, separated, perhaps logged, maybe inspected, and coordinated with a charity that may or may not arrive on time with refrigerated transport.

That is not free.  It takes labor.  It takes space.  It takes management.  It takes training.  It creates risk.  It creates overhead.

So next week the manager orders 92.

The legislator sees less food in the dumpster and declares victory.  What he does not see is the food that was never ordered.  The produce that was never stocked.  The bread that was never baked.  The farmer who got a smaller order.  The distributor who handled less volume.  The customer who came late and found empty shelves.  The poor shopper who used to buy markdown meat and now finds there is none.  Everyone loses because of the loss of economy of scale.

This is the difference between physical surplus and economic surplus.  The food is physically there today.  But the legal obligation changes the cost of having surplus tomorrow.  And when you raise the cost of surplus, you get less surplus.

That may sound good until you realize that grocery abundance depends on tolerating some waste.  A perfectly efficient grocery store is one where the last apple is sold to the last customer just before closing.  It is also a store that exists only in the imagination of someone who has never met customers.

The better policy is obvious: make donation easy, voluntary, safe, and legally protected.  Encourage it.  Provide tax incentives if necessary.  Standardize date labels so people stop throwing away food that is still perfectly edible.  Help charities build cold-storage capacity.

But do not turn every unsold tomato into a legal obligation.  Once the government starts punishing inventory risk, the market responds by taking fewer risks.  That means fewer tomatoes and fewer choices in the store.

5.  Rent Control, Wealth Taxes, and the General War on Incentives

For the fifth foolish idea, I am going to cheat and include an entire category: laws based on the belief that incentives are optional.

Rent control is the classic example.  Rents are high, so government limits rent increases.  The current tenant benefits, at least for a while.  The politician takes a bow.  The newspaper runs a photo of grateful renters.

Then landlords stop building.  Maintenance declines.  Units disappear into other uses.  New renters get locked out.  The people already inside the system are protected; everyone outside gets to press his nose against the glass.

Rent control is not housing policy.  It is musical chairs with nicer slogans.

Then there are wealth taxes.  These usually begin with the discovery that billionaires have a lot of money, followed by the belief that they will remain politely seated while the state rummages through their pockets.

But billionaires are not fence posts.  They can move.  Their assets can move.  Their lawyers can move even faster.  Announce a “one-time” wealth tax and every affected person hears the words “first installment.” If the state says, “We will tax you because you were here on January 1,” the obvious lesson is: do not be here on January 1.

Politicians imagine the money sitting still.  Money does not sit still.  Capital has legs, wings, attorneys, accountants, and a deep personal relationship with Delaware.

The same error appears in all these ideas.  Legislators look at the current arrangement and assume it will remain unchanged after they impose new costs.  Grocers will order the same amount.  Stores will offer the same coupons.  Landlords will build the same apartments.  Billionaires will stay put.  Customers will pay less.  Workers will earn more.  Farmers will sell the same produce.  Everyone will behave exactly as before, except in the one narrow way the law commands.

That is not policy.  That is a snow globe.

Shake it, admire the flakes, and ignore the fact that nobody inside is real.

The recurring question in economics is not, “Wouldn’t it be nice?” Of course it would be nice.  It would be nice if groceries were cheaper, rent were lower, food were never wasted, checkout lines moved faster, and billionaires mailed checks to the treasury out of civic affection.

The real question is: and then what?

And then the grocer orders less.
And then the store raises prices.
And then the landlord stops building.
And then the billionaire moves.
And then the discount disappears.
And then the checkout line gets longer.
And then the farmer plants less.

And then everyone wonders why the compassionate law produced such uncompassionate results.

The economically challenged legislator never gets to “and then what?” He stops at the press release.

The rest of us live in the “and then.”

The Fort Worth Nude Scandal of 1959

The scandal occurred when I was six years old and I remember my mother and father talking about it.  Either my memories were incorrect or my mother’s version of the story was different from what really happened. In any case it turns out that what I thought happened was a country mile from reality.  I’ve done some research and here is the real story. 

I suppose we have to start, as many Texas stories must, with two cowboys named Goodnight and Loving. 

The Goodnight-Loving Trail sounds less like a cattle route than a firm of frontier attorneys specializing in unpaid whiskey bills, but Charles Goodnight and Oliver Loving managed to turn it into one of the great Texas enterprises: pushing longhorns north and west through country so dry the trees chased dogs and selling beef to soldiers, miners, and anyone else who was willing to pay cash for something that could walk to dinner under its own power.

Their story had everything Texas requires for legend—cattle, dust, danger, Comanches, bad water, worse judgment, and men with beards who considered sleeping indoors a sign of moral decline.  Loving died after being wounded on the trail, Goodnight kept his promise to bring the body home, and the whole thing became the sort of story Texans admire because it proves that if a man is stubborn enough, he can turn dehydration, bankruptcy, and poor road planning into glorious heritage.

The story of Goodnight and Loving, and their work with their friend John Chisum, became the foundation for dozens of movies, countless books, and, more or less, the beating heart of Lonesome Dove.  Texans have been dining out on the story ever since.

By the 1890s, the grandson of Oliver Loving had opened Ellison Furniture Store in downtown Fort Worth.  It became a profitable business and, by the 1950s, occupied an eight-story building at the corner of Seventh and Throckmorton.  I remember being in that store…Dimly, but I remember it.  There was a different kind of furniture on every floor and there was an art gallery (which seemed to me at the time like something adults had invented so children would learn patience).

By the time I went into the store, it was run by Bob Ellison, the great-great-grandson of Oliver Loving.   I think the cowboy heritage had petered out by the time Bob was born; he had a degree in philosophy and had spent extensive time touring art museums in Europe.  It was his wife’s suggestion that he turn the first floor of the furniture store into an art gallery.

In 1959, artist Ben Johnson submitted a painting called The Song to the Fort Worth Art Association.  It was an abstract, colorful depiction of a nude woman.  The Art Association rejected it on the grounds that it was vulgar.  This pissed off Bob Ellison, who was unimpressed by the cultural judgment of the local fig-leaf brigade, so he displayed the painting in a street-facing window of his furniture store as a protest for artistic freedom.

Perhaps there was a little cowboy left in Bob after all.

This instantly caused a furor in Fort Worth, a city that was deep in the center of the Bible Belt.  Fort Worth had its own movie censorship board tasked with making certain that Hollywood didn’t undermine the morality of the frontier metropolis.  The city had churches over a century old, one of which was the First Baptist Church, which was the largest church in the United States and the home of Frank Norris, the nationally-known, fire-breathing fundamentalist preacher famous for leading the fight against “that hell-born, Bible-destroying, deity-of-Christ-denying, German rationalism known as evolution." 

Naturally, the Fort Worth Ministers Association stepped forward.  This was a group deeply committed to making certain that no one in the city accidentally had any fun without proper supervision.  They began a concerted effort to have the painting removed on the grounds that it was vulgar, obscene, and a threat to the morals of a cowtown that had built much of its early reputation on whiskey, whorehouses, and gun fights. 

Letters to the editor described The Song as obscene graffiti or etchings suitable for an outhouse.  Of course, the publicity did what publicity always does.  Citizens of Fort Worth flocked to see the painting for themselves.  Some viewed it from across the street, presumably so that if moral contamination occurred, it would have to travel through traffic.  Many were outraged and some even returned several times to see if they were still outraged.  Vehicle traffic on Seventh Street slowed to a crawl.

There is no spectacle quite like a city insisting it does not want to look at something while lining up for a better view.

At this point, you probably want to know what this scandalous painting looked like.  Unfortunately, the current whereabouts of The Song are unknown.  As far as I can determine, only two black-and-white photographs remain, both showing the artist, Ben Johnson, and two women standing in front of the painting.  Sadly, the photographs do not show the colorful, pre-abstract painting to its best advantage.

However, there is another Johnson painting that was included in the show at the Ellison Furniture Store.  This painting, known simply as Nude (1957), gives us an excellent idea of what the missing painting looked like.

By today’s standards, the painting is so innocent, the public debate so trivial, and the Art Association’s refusal to show it so silly, that the whole episode makes the guardians of public virtue look like the sort of sanctimonious buffoons who wander through museums at night gluing fig leaves on statues.

Evidently, Bob Ellison thought so, too.  He moved to New York City, where he continued to collect art.  A few years later, he sold the Ellison Furniture Company.  When he died, part of his collection was donated to the Metropolitan Museum of Art.  Not surprisingly, Ellison did not leave his collection to the art museums of Fort Worth.  One suspects he had decided that if Fort Worth did not want to see a painting in 1959, there was no need to trouble the city with the burden of seeing the good ones later.

We may never know what happened to The Song.  It might be hanging quietly in someone’s house, or rolled up in an attic, or misidentified in storage, or gone forever.  But if you would like to see Johnson’s Nude, you can travel to New York City and walk down Broadway to the Schoelkopf Gallery, where it has been on display.

You should no hold your breath waiting for it to be shown in Fort Worth.

Rent Freeze Today, Housing Shortage Tomorrow

Zohran Mamdani promised to freeze the rent, and, to his credit or blame, depending on which end of the lease you occupy, he has now delivered the essential part of that promise.  Mayor Mamdani did so, not by standing on the steps of City Hall and personally ordering every landlord in New York to reach for the smelling salts, but through the New York City Rent Guidelines Board, which voted to freeze rent increases on roughly one million rent-stabilized apartments.  Since Mamdani appointed six of the ten members of the board, it amounts to the same thing.

That distinction matters: he did not freeze every apartment in New York.  He did not freeze luxury towers, market-rate brownstones, or the rent on a closet in Brooklyn now advertised as “cozy, sun-adjacent, artist-friendly space.”  What he froze were the allowable increases on the already rent-stabilized apartments—the giant middle category of New York housing that is neither free-market nor old-fashioned rent-control.  These are the units where tenants already have strong renewal rights and landlords are already limited in what they may charge.

Still, as campaign promises go, this one was not merely symbolic.  The board approved a zero percent increase on both one-year and two-year leases.  That is the important part.  Prior rent freezes usually gave tenants relief for one year.  This unprecedented move extends the logic to two-year renewals as well.  Mamdani promised tenants that their rent would not go up.  For covered tenants choosing a renewal lease beginning under this order, that is now essentially true.

The immediate political benefit is obvious.  If you are a tenant in a rent-stabilized apartment and your rent was about to rise, this feels like someone finally threw you a rope.  New York rents are absurd.  Working people are squeezed.  Families are doubled up, priced out, or forced to spend the grocery budget on the privilege of living near a subway stop that smells faintly of hot brake dust and despair.  A rent freeze is simple, understandable to the uneducated, and immediately popular with the people who receive it.

But economics has a nasty habit of showing up after the applause ends.

Start with tenant behavior.  If both the one-year and two-year lease options carry a zero percent increase, what rational tenant planning to stay in the apartment would choose only one year? The two-year lease becomes the obvious choice.  It is not greed.  It is arithmetic.  Why lock in one year of protection when you can lock in two? If the Rent Guidelines Board comes back next year and allows an increase, the tenant who chose one year is exposed.  The tenant who chose two years is protected.

That means a large share of tenants will likely pick the two-year lease.  The landlord will not merely lose one year of increases, he may lose two.  Meanwhile, the building does not get a rate freeze from the insurance company.  It does not get a tax freeze from the city.  (And Mayor Mamdani is proposing to raise property taxes by 9.5%). The plumber does not say, “Never mind, this one is for the revolution.”  The boiler company does not repair the heat out of solidarity.  Labor, insurance, taxes, utilities, repairs, debt service, compliance costs — all of these keep moving.

This is where the romance of rent control collides with the plumbing.

A building is not a moral abstraction—it is a physical object with a roof, pipes, wiring, elevators, boilers, bricks, locks, stairs, fire systems, trash areas, and tenants who quite reasonably expect all of those to work.  If rent is frozen while costs rise, the owner has fewer dollars available for maintenance.  Large landlords may be able to absorb that for a while.  Some may even deserve little sympathy.  But New York also has small building owners, older buildings, marginal properties, and landlords already struggling with post-2019 rules that limited how much renovation cost can be recovered through future rent.

The result is predictable.  Necessary repairs get delayed.  Cosmetic repairs disappear.  Marginal buildings become more marginal.  An owner who would have renovated a vacant apartment may decide not to bother.  A unit that needs $50,000 in work but can only legally rent for an amount that will never repay the investment, is not an affordable apartment.  It is a stranded asset with a broken stove.

That brings us to the problem of “ghost apartments.” New York already has over 57,000 vacant rent-stabilized units.  These are units that are sitting empty because owners say the rent laws make renovation uneconomic.  In plain English, they are apartments that exist on paper, languish behind locked doors, and do absolutely nothing for the people who need housing.

A city with a housing shortage cannot afford ghost apartments.  It cannot afford tens of thousands of legal apartments standing empty while politicians give speeches about affordability.  Every empty unit is a small confession that the policy system has failed.  The tenant does not get the apartment.  The landlord does not get rent.  The city does not get a functioning housing unit.  Everyone loses—except perhaps the lawyer explaining why nothing can be done until the next hearing.

New York has already run this experiment, and the results in the 1960s and 1970s should make everyone a little less smug about today’s rent-freeze promises.  Wartime rent control began as an emergency measure in the 1940s, but by the postwar decades the emergency had somehow become a permanent feature of city life, like rats in the alleys or a subway performer with a guitar.  The theory was simple: keep rents low and tenants safe.  The reality was less charming.  In older buildings, especially in poorer neighborhoods, rents were held below the level needed to cover taxes, repairs, heat, insurance, plumbing, roofs, and the thousand other indignities suffered by buildings that have the nerve to age.  Landlords responded exactly as arithmetic said they would: they delayed repairs, cut maintenance, walked away from marginal properties, or let buildings deteriorate until abandonment became the business plan.  By the late 1960s, New York’s vacancy rate had collapsed to crisis levels, and through the 1960s and 1970s entire neighborhoods saw disinvestment, abandonment, arson, and decay.  Rent control did not cause all of that by itself—crime, poverty, population loss, bad city finances, and urban collapse all had supporting roles—but strict rent control helped turn ordinary housing into a financial trap.  Eventually, the city’s own housing authority begged to end rent control.

The real solution to high rents is not mysterious.  New York needs more housing.  Not slogans about housing.  Not hearings about housing.  Not a blue-ribbon commission to study whether people prefer sleeping indoors.  Actual housing.  More apartments.  More density.  Faster approvals.  Lower construction barriers.  A system in which building rental housing is treated as a public necessity rather than a suspicious activity requiring seven consultants, fourteen signatures, and a goat sacrifice before the zoning board.

A city cannot simultaneously tell private capital, “Please build and maintain rental housing,” and “By the way, your future income may be politically frozen whenever rents become unpopular.”  Developers and lenders are not sentimental creatures—they are experts who price risk.  If New York becomes a place where the return on rental housing is increasingly controlled by politics, fewer people will build rental housing unless the city pays them, subsidizes them, gives them tax breaks, gives them land, or forces them through zoning mandates.

That may be Mamdani’s actual preference: more publicly-driven housing, more subsidized housing, more city-guided construction.  Fine.  Then the question becomes whether the city can actually build at that scale, at that speed, and at a cost that does not turn every affordable apartment into a marble monument to bureaucratic process.  Promising 200,000 units is easy.  Delivering them in New York is where campaign poetry goes to die.

A comparison with Buenos Aires is useful because Argentina recently tried the opposite experiment.  Argentina’s earlier rental law had heavily regulated lease terms and rent adjustments.  When President Javier Milei repealed those controls, the Buenos Aires rental market changed rapidly.  Landlords who had withheld units put them back on the market.  Rental listings rose sharply.  Real rents fell or stabilized after inflation, at least in the first period after repeal.  Landlords are now competing for tenants by offering lower rents or improved amenities.

This is a lesson worth noticing.  When the rules made renting unattractive, supply disappeared.  When the rules were loosened, supply came back.

New York is choosing the opposite, protecting current tenants by squeezing future returns.  In the short run, that works for the people lucky enough to have a covered apartment.  In the long run, it risks creating fewer available apartments, worse maintenance, more ghost units, and even higher pressure on the uncontrolled market.

That is the oldest problem with rent control.  It is wonderful if you are inside the lifeboat.  It is less wonderful if you are swimming beside it.

Mamdani delivered what he promised.  That should be acknowledged, but delivering a promise is not the same thing as solving a problem.  Freezing rent may help today’s tenant sign a two-year lease, but does not fix the boiler, finance the renovation, lure the builder, or bring the ghost apartment back to life.

The first step to achieving affordable housing is to have housing.  That sounds almost too simple to say, which may be why politicians avoid saying it.  New York does not need a better way to ration scarcity.  It needs less scarcity.

The Social Security Mattress Fund

Back in 2005, George W.  Bush suggested that maybe, just maybe, Social Security ought to let some money should be invested in the market.  Naturally, Washington reacted as if he had proposed funding retirement by making seniors fight raccoons for loose change behind the Cracker Barrel.  We were told this was dangerous.  Reckless.  Radical.  Possibly the end of civilization, or at least the end of the entitlement system as a sacred government-operated mattress stuffed with IOUs.

The idea was simple enough: instead of putting every Social Security dollar into the federal government’s own weird bookkeeping system, take some portion of the incoming payroll-tax money and invest it in the productive American economy.  Not in tulip bulbs.  Not in Uncle Louie’s alpaca ranch.  Not in a cryptocurrency named RetireCoin bearing a cartoon eagle wearing sunglasses.  Just something boring, broad, and dull enough to make a Vanguard brochure seem like a Tom Clancy novel: an S&P 500 index fund, the darkest blue of blue chip investments.

Now suppose we had taken half of new Social Security payroll-tax receipts beginning around 2005 and invested that half in a broad S&P 500 index fund.  The other half would still have gone into the regular Social Security system to help pay current benefits.  This was not a proposal to stop paying Grandma.  Grandma would still get her check.  She might even get it while glaring at CNBC and demanding to know why Pfizer was down three-eighths.

Under a rough model, investing half of the incoming payroll-tax money from 2005 through 2025 in the S&P 500 would have produced a gross investment account of roughly $38 trillion.  That is not a typo.  It is not $38 billion, which is the kind of number Congress loses in a sofa cushion while looking for a defense contractor.  It is $38 Trillion, with a T.

Of course, that gross number is not the same as saying Social Security would have had $38 trillion sitting in the vault, stacked neatly between the Ark of the Covenant and Jimmy Hoffa.  Social Security still had to pay benefits during those years.  People retired.  Checks went out.  Medical alert bracelets were purchased.  Grandchildren were slipped twenty-dollar bills and told not to tell their parents.  If we subtract the continuing cost of paying benefits from the fantasy version where all of this was magically self-contained, the more realistic rough net figure comes down to something like $16.5 trillion to $17 trillion.

That is still an astonishing number.  The actual Social Security trust fund was about $2.6 trillion at the end of 2025.  So instead of limping along with a fund that Washington keeps warning will be exhausted in the foreseeable future, we might have had a net fund in the neighborhood of $16.6 trillion.  That is a difference of about $14 trillion.  Fourteen trillion dollars is not walking-around money.  That is not “rounding error.” That is not the amount the federal government spends because someone in a subcommittee discovered there are still three counties in America without a federally funded interpretive dance center.

And here is where it gets really irritating.

This period was not exactly a golden escalator ride to prosperity.  Anyone who says, “Well sure, the stock market did well, but only because everything went perfectly,” should be required to sit quietly in a room and watch financial news from 2008 on a loop until they apologize to the nearest index fund.  Since 2005, we have had the housing collapse, the financial crisis, the Great Recession, the COVID crash, inflation panic, interest-rate panic, recession panic, bank panic, election panic, European panic, China panic, debt-ceiling panic, and the recurring American tradition of yelling “This is unsustainable!” while continuing to sustain it with borrowed money.

The S&P still won. 

That does not mean stocks always go up.  They do not.  Sometimes they fall down the stairs, burst through the screen door, and land in the shrubbery.  But over long periods, owning pieces of profitable companies has historically done better than lending money to the federal government so it can write itself a note promising to repay itself later.  The Social Security trust fund is not exactly Scrooge McDuck’s money bin.  It is mostly a pile of special Treasury securities, which is Washington’s way of saying, “We spent the money, but we left ourselves a very formal Post-it note.”

Now, for the truly nervous, let us run a deliberately ridiculous stress test.  Suppose the invested half of payroll taxes had not earned the actual S&P returns.  Suppose it had lost 10% every single year.

Not one bad year.  Not one crash.  Not a recession.  Not 2008.  I mean losing 10% per year, every year, for twenty-one years.  That is not an investment model.  That is a financial horror movie.  That is the stock market being managed by rabid squirrels with margin accounts.  That is a mutual fund whose prospectus simply says, “Abandon hope, all ye who enroll.”

Even then, if half of annual payroll-tax contributions had been set aside each year from 2005 through 2025 and the balance had shrunk by 10% annually, the side fund would still have ended up around $3.95 trillion.  Compared with the actual trust fund reserve of about $2.56 trillion, even that disaster scenario would be ahead by roughly $1.4 trillion.

That number requires an important explanation, because otherwise someone from Washington will run into the room waving a blue-ribbon commission report and wheezing into a microphone.  The $3.95 trillion figure is the value of the side investment fund under the absurd “loses 10% every year” assumption.  It assumes benefits are still being paid through the regular Social Security cash-flow system.  If you charged all benefits against that side fund alone, then of course it would not work.  But that was never the point.  The point is that setting aside part of incoming money creates a growing asset pool, even under comically terrible assumptions.  Under real-world market returns from 2005 through 2025, that asset pool would have been gigantic.

And no, this does not mean we should turn Social Security into a day-trading app.  Nobody needs Grandma checking candlestick charts between “Wheel of Fortune” and the evening news.  The point is not speculation.  The point is ownership.  A broad index fund is not betting on one company.  It is buying a slice of American productivity.  It is owning part of the companies that make the phones, build the stores, drill the oil, run the railroads, process the payments, sell the groceries, manufacture the drugs, ship the packages, write the software, and generally keep the country functioning while Congress holds hearings about why nothing functions.

A system like this would also have changed the psychology of Social Security.  Instead of workers seeing payroll taxes vanish into the federal fog, they would know that at least some part of the money was being invested in real assets.  Not promises.  Not slogans.  Not “the full faith and credit” of people who cannot pass a budget without theatrical hostage negotiations.  Real ownership in real companies.

Imagine what that much sustained investment in the American economy could have meant.  Not every dollar would have gone directly into a new factory or a new job, because index funds mostly buy shares that already exist.  But long-term investment strengthens markets.  It lowers the cost of capital.  It supports expansion.  It helps companies grow, hire, modernize, research, build, and compete.  It also gives ordinary workers a direct stake in the growth of the country.  The people paying into Social Security would not just be funding benefits for today’s retirees.  They would be building a national nest egg tied to the success of American enterprise.

Instead, we chose the mattress.

Every year, payroll taxes come in.  Benefits go out.  The surplus, when there is one, gets lent to the federal government.  The federal government spends it.  The trust fund receives a Treasury security.  Everyone in Washington puts on a serious face and says the system is “invested.” Technically, that is true.  It is invested in the same sense that giving your brother-in-law $500 and receiving a napkin that says “I owe you big-time” is fixed-income investing.

The obvious reply is that it is too late now.  We missed the chance.  The 2005 train left the station.  The conductor retired, the station was renamed after a senator, and the tracks are now part of a federal high-speed rail study that will be completed in 2147.

But it is not too late.

We do not have to fix the entire system in one heroic act.  Washington loves heroic acts because they create press conferences, commemorative pens, and bipartisan photographs in which everyone looks as if they just smelled smoke.  But Social Security could begin modestly.  Set aside a small percentage of annual payroll-tax receipts into a true national investment fund.  Make it broad.  Make it boring.  Make it automatic.  Make it legally protected from congressional raids, which means putting it behind more locks than Fort Knox, NORAD, and a teenager’s phone.

Start with 1%.  Or 2%.  Or 5%.  The exact number matters less than the principle: stop treating every incoming dollar as if it must be spent immediately or loaned to the same government that is already broke.  Begin building an actual asset base.  Let compounding do what compounding does.  It will not solve every problem overnight.  It would not make actuarial deficits disappear like a magician’s assistant but it would move the system in the right direction.

The best time to have begun  was twenty years ago.  The second-best time is now.  The worst time is always “after the next election,” which in Washington means approximately never.

Social Security does not need a casino.  It sure as hell does not need any more immoral politicians promising the elderly the economic impossible.  It needs a savings account with ambition.  It needs a portion of its annual inflow tied to the productive economy instead of buried in the federal mattress.  We had a chance in 2005 and ran away from it screaming.  Fine.  We are older now.  Presumably wiser.  Certainly more indebted.

Maybe it is time to stop pretending the mattress is a retirement plan.