The Politics of (Mamdani) Rage

New York’s Mayor-elect represents a different kind of rage

Could you keep it down, Serena?

In the summer of 2011, Serena Williams repeatedly interrupted a delightful, wide-ranging conversation that I was having with an amazing intellectual. I had the good fortune to be invited by my then boss, Michael Tennenbaum, to his courtside box at the US Open, and to be seated next to his long-time friend, bankruptcy lawyer Harvey Miller. Sadly, for tennis devotees, Michael’s amazing seats were wasted on Mr. Miller and me as neither of us paid much attention to Miss Williams’ dominating forehand. We instead discussed economics, politics, legal theory, and, of course, bankruptcies, interrupted only by Miss Williams’ loud grunts. Mr. Miller was taking a well deserved break that afternoon from two particularly intense cases: Lehman Brothers’ $639 billion bankruptcy and General Motors’ $173 billion bankruptcy. For you see, Mr. Miller wasn’t just any bankruptcy lawyer, he was the undisputed world heavyweight champion of bankruptcy law.

Strange action at a distance

You may be asking yourself what Harvey Miller has to do with the City of New York electing Zohran Mamdani as its mayor over the establishment candidate, former Governor Andrew Cuomo. These seemingly unrelated events, like entangled quantum particles light years apart, are strangely connected as I will explain.

When only the best will do

Stop to think about one lawyer being simultaneously involved in the (then) two largest bankruptcies in US history. Despite knowing that he was already busy with Lehman’s extremely complex case, GM sought Mr. Miller’s expertise when it filed for bankruptcy. Why? Because when hundreds of billions of dollars are on the line, the second or third best lawyer just won’t do. In fact, both Lehman and GM hired teams of top bankruptcy attorneys, not just Mr. Miller, both to obtain the best possible advice and to prevent their creditors from accessing them. Such blocking maneuvers, called “conflicting out,” are commonplace in many areas of law.¹ The same principle applies to stratospheric CEO salaries as JPMorgan made clear many years ago when it bought rival Bank One with the stated intent of acquiring its CEO, Jamie Dimon.² “Winner-take-all” talent has become the norm across industries and is a critical driver of both the trend rise in income inequality and the political backlash against it.

To the winner the spoils

There are two main factors behind the phenomenon: globalization and technology. Globalization created bigger markets, bigger deals and greater returns to any intellectual property (IP) from Harvey Miller’s legal genius to Apple’s design to Serena Williams record WTA winnings and endorsements. This aspect of globalization is not being unwound by Localization. Indeed, localized automation likely intensifies winner-take-allism: the IP underlying its technology benefits from the same market expansion as other forms of IP. Technology, the other force behind winner-take-allism, relentlessly pushes value higher up the skills ladder by allowing the most talented to access and capture ever larger market share, squeezing out lesser talents and turning their labor into a commodity.

All the world’s a stage

Thespians were among the first to experience technology’s winner-take-all effect. Before the invention of motion pictures, actors worked in local theater markets with small rewards and little competition. Movies allowed a few actors to capture huge national, and later globalized markets, commanding tens of millions of dollars per film, while leaving most other actors unemployed or squeezed onto Broadway or the West End on far smaller wages. But the process never stops: Mr. Beast now makes millions on YouTube without Hollywood studios’ distribution machine. Publishing and even Wall Street research have undergone the same transformation, first through wire services, then internet distribution, and more recently on platforms like Substack.

Coders and engineers, too

But it’s not just arts and media. Everyone, even the coders and engineers, face the same winner-take-all winnowing from both globalization and technology. Alphabet, Apple, Facebook, and Microsoft, facing winner-take-all markets in software and platform technologies, compete for the top coders and engineers, soliciting them with multi-million dollar compensation packages. As I showed in The Magnificent Seven slay the zombies, they also appear to engage in the same hoarding of top talent that bankrupt firms and rich divorcees do with lawyers. Meanwhile, less-talented coders and engineers attract much less demand and commensurately lower wages.

Increasing university competition

For employers, winner-take-allism presents a problem: who are these top talents, especially among the new job market entrants? The simple solution was to recruit exclusively from the top universities, intensifying the competition for entrance to those universities. This added another layer of socio-economic stratification as entrance requirements to elite universities rose exponentially, even as general access to universities was expanded to ever-greater segments of society. The breadth of the 2020 university-admissions bribery scandal showed that it also increased the incentives to cheat.³

Along came Chat

The advent of generative artificial intelligence (AI) and large-language models (LLMs) accelerated winner-take-allism. The flipside of these tools’ evisceration of demand for many soft-skilled and/or inexperienced university graduates, described in Educational debAIsment, is that they vastly expand the value of experienced workers and IP creators. While YouTube allowed Mr. Beast to cut-out studio distribution, generative AI is on the verge of allowing individual screen writers to generate Hollywood-style movies on a laptop, decimating an industry full of unionized key grips and best boys, and $20-million-per-film actors.

Seriously, Marvin?!

Or consider my experience. By myself, with only the aid of LLMs and other new technology, I turn out more and better research on the global political economy and markets than I did managing a global research team of a dozen economists and strategists, supported by the immense resources of Europe’s largest bank. I am currently beta testing an LLM module trained on my life’s work (IP) that will, for my paid clients, effectively replicate the dozens of “portfolio strategists” that Bridgewater, the world’s largest hedge fund, employs at exorbitant wages to explain its investment strategies to its clients. Seriously.

Billion-dollar baby

This is what Sam Altman, cofounder of OpenAI, meant when he said that AI agents will enable the first “one-person billion-dollar company” soon.⁴ Technology is increasingly allowing individuals, or small teams, to replicate what previously took large firms or even nation states to achieve. For now, this is likely to be confined to the realm of services. Even with the help of LLMs, Elon Musk still needs skilled workers to build Tesla cars and SpaceX rockets. Yet, as robotics improves, someday even goods production may eventually require only IP and capital.

Political fallout

Whether or not individuals will soon be ringing the NYSE bell at their personal initial public offerings, the political consequences of winner-take-allism are already upon us. I was prompted to write this article by an X thread from law professor David Bernstein that dovetails with my theory on the sources of rising structural unemployment in Educational debAIsment. Mr. Bernstein postulates that young, university-educated voters’ support for New York Mayor-elect Zohran Mamdani is rooted in resentment. They are angry that they can’t find jobs befitting their elite university degrees and are instead struggling to afford living in New York while making onerous student loan payments with waiters’ wages. I suspect Mr. Berstein is right.

Rhymes with Rage

Yet, I would distinguish this from what I coined as the Politics of Rage a decade ago. Across Western economies, the Politics of Rage has been defined by working-class voters angry at their political disenfranchisement by political, educational and bureaucratic elites representing their own interests over their less-educated peers. This is why the movement targets globalization and immigration, both of which complement elites’ skills but create competition for blue-collar workers. Mamdani rage rhymes with the blue-collar variety but is very different in source and intent. Young, university-educated workers are being economically challenged by technologies that now compete with their skills but – for now – complement skilled blue-collar workers (someone has to build those datacenters!). Yet Mamdani voters continue to value open borders and delegation of power to bureaucracies that are friendliest to their skillset.

Harvard-educated drug dealers

The book Freakonomics questioned why many urban youths turn to drug dealing despite low-economic rewards for most “foot soldiers.”⁵ The authors’ answer was that the respect it brought from peers – over working at McDonalds – plus the chance of making it big, even if low, made it worthwhile. A similar argument holds for aspiring actors waiting tables in Los Angeles: it’s prestigious to claim to be an actor, and if you get your big break, the rewards can be huge. These same incentives likely explain Mamdani voters’ political stance: they want open borders and politically powerful bureaucracies on the chance they get their break – in international media, banking, or bureaucracies – but they also want to socialize immense winner-take-all gains. This is precisely the tack actors and American professional football players have taken through the Screen Actors Guild or NFL Players Union: high base wages for everyone admitted to the guild at the expense of the most talented.

Different coalitions...for now

This is why the Mamdani coalition is unlikely to appeal to Trump-coalition voters (or vice versa) for the present. The two sides are fundamentally opposed on both incentives and desired outcomes. Trump voters want closed borders that encourage reindustrialization that demands their skills, without competition from immigration, and are warry of the bureaucracies needed to socialize winner-take-all gains. The Mamdani coalition instead wants to maximize their chances to break into the winner-take-all ranks, wherever in the world that might be, and desire large bureaucracies that might hire them. That may change when robotics advances to the point that it can effectively replace blue-collar workers, but for now these two political coalitions are likely to be like oil and water.

The infamous “Bell Curve”

As an epilogue I feel compelled to acknowledge the long-derided and deeply misunderstood work of Richard Herrnstein and Charles Murray in The Bell Curve.⁶ Yes, that Bell Curve. Messrs. Herrnstein and Murray foresaw these developments three decades ago. That was indeed the thesis of their book: that technology and globalization would exponentially increase the relative returns to talent, creating huge economic inequality and resultant political turmoil. Sadly, that critical insight into our present and future was lost in the controversy created by their inclusion of a chapter on differences in psychometric outcomes by race.

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1. “How ‘Conflicting Out’ Top Divorce Attorneys Can Impact Your Divorce,” Jeff Landers, Forbes, 17 April 2012.

2. “Jamie Dimon’s $4 Trillion Machine,” Gary Sernovitz, New York Magazine, 7 December 2023.

3. “Lies, Money and Cheating: The Deeper Story of the College Admissions Scandal,” Marco A. Treviño, KQED/NPR, 1 October 2020.

4. “The One-person Billion-dollar Company,” Evan Armstrong, Every, 8 February 2024.

5. “Why Do Drug Dealers Still Live with Their Moms?” Chapter 3 in Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, Steven D. Levitt & Stephen J. Dubner, William Morrow, New York, 2005.

6. The Bell Curve: Intelligence and Class Structure in American Life, Richard J. Herrnstein & Charles Murray, Free Press, New York, 1994.