There’s nothing that the rising progressive movement hates more than billionaires. But there’s nothing they love more than their money.

New York mayor Zohran Mamdani may bask in his new status as a “Congressional kingmaker”, with candidates he backed in recent primary elections winning against three liberal Democrats. But the essence of his politics, and that of his California mini-mes, attacks the very source that keeps the government budget from collapse.

Like contemporary London, New York City and California depend on the rich, both the billionaires as well as the larger, also much despised top 1 per cent. New York City is essentially a financial ward of Wall Street and the rich who serve them, like lawyers, accountants, marketers, and PR agencies.

The top 1 per cent pay about 40 per cent of all the city’s income taxes, higher than their overall share of city income. But the number of people paying these taxes has dropped, making getting more from those who remain a priority. Between 2010 and 2022, New York City’s share of all Americans earning over a million annually dropped from 6.5 to 4.2 per cent.

New York’s dependence on the rich few will likely grow as employers head to more accommodating places like Miami and Dallas Ft Worth. Meanwhile, California, notes economist Gad Levanon, is losing high-end business service jobs faster than anywhere else in the country.

All this makes the neo-socialists all that more dependent on upper-class money, particularly from the stock market. California’s top 1 per cent pays 40 per cent of the state’s income tax revenues, much of it from capital gains proceeds.

This money has allowed both New York and California to indulge in expanding their welfare states. New York’s state budget has grown significantly since 2020, even as the population has dropped. California has accelerated its spending by a remarkable 60 per cent over that period, even as its once burgeoning population has stagnated.

But socialists like Mamdani seem to have given little thought to broad-based wealth creation, preferring to focus mostly on redistribution. The mayor has seen fit to fill 40 positions at the Bolshevik-style office of “mass engagement” but has yet to appoint an economic development director.

Growth is not popular among neo-socialists. The very people who have advanced California’s controversial wealth tax have also partnered with European intellectuals, such as France’s Thomas Piketty, to create an agenda that effectively seeks no growth in the industrialised countries, to protect the environment while transferring wealth to poorer nations.

Yet eschewing broad-based growth means an unhealthy addiction to asset inflation. California’s tax revenues tumble with stock market corrections, as occurred in 2000, 2008, and in 2022. New York is, if anything, more vulnerable.

Outside asset inflation, the job markets in both places are fundamentally compromised as companies and entrepreneurs flee. New York and California are among the states with the largest surplus of workers. California alone has a surplus of nearly 500,000 employable people.

In New York, high-wage employment, including finance, is stagnating. Firms are moving their operations to places like Texas and Florida, and their employees are taking their money with them. New York and California have been leading in the race to lose taxpayers, particularly the affluent.

In the short run, this set the stage for the socialists. The campaigns that are electing people like Mamdani, after all, are no rebellion of the working class, or racial minorities, but one of the downwardly mobile children of the bourgeois. According to the New York Fed, 42 per cent of recent graduates are underemployed .

Along with welfare recipients and government workers, the socialists’ drive is underpinned by a vast class of largely childless, overeducated and often underpaid young people. The “yuppie dream” of yesterday has faded, as the New Republic snidely reported recently, as young urbanites embrace Mamdani’s warm “collectivism” in lieu of making their own way.

As a result, policies linked to past failures, such as expanding public housing, rent control and reducing police ranks, suddenly are back in favour. There’s something child-like about this new socialist drive. Perhaps, like Mamdani, many are nepo-babies who may be slow to realise that you have to pay for things yourself. There’s little thought, particularly as the affluent leave, about who is going to fund the free buses, state-owned food stores, care for undocumented migrants, or the salaries, much less the pensions, of the state apparat.

Yet economic logic means little in modern America. Mass discontent allows the Democratic Socialists of America to win, particularly in low-turnout elections, aided by a well-developed turnout the vote operation. This pattern is being replicated across the country, not only in New York, but Seattle, Washington DC and, quite possibly, Los Angeles this fall.

For those parts of the Democratic Party long aligned with Wall Street and the tech oligarchs, this is a bitter pill indeed. But many Democratic leaders seem unwilling to take on the “hot” winners in deepest blue America even, as their establishment incumbents lose safe seats to more radical candidates.

But if there’s a sustained decline in the markets, the socialists may find themselves forced to operate in a cash-short environment. At the same time, their calls for such things as the ownership of the means of production, open borders, kneecapping police, abolishing the Senate, and emasculating the independence of the Supreme Court may not sell in the rest of a country; in America, people still favour capitalism over socialism by a four to one margin.

The next big battleground for the socialist-establishment fight will be in California. Governor Newsom and his possible successor, former Biden cabinet member Xavier Becerra, have rejected a proposed state wealth tax on billionaire assets, although the governor recently embraced a national wealth tax. Unlike the socialists, they know the tech oligarchs and the rich have funded not only their expanding welfare state, but also their campaigns. Socialist ambitions to ban data centres are a direct attack on the tech elite’s AI plans.

Increasingly unpopular in deep blue states, the rich and their companies keep leaving, taking their money with them, and making places like Miami their new Valhalla. The growing power of the socialists will not slow this trend.

Such realities are not something many progressives even think about. But someday, perhaps sooner rather than later, they will feel the consequences of their actions, as will the rest of us.

This piece first appeared at Telegraph UK.

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Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com, follow him on Substack and Twitter @joelkotkin.