Modern New York: The Life and Economics of a City, by Greg David (Palgrave Macmillan, 256 pp., $28)
Greg Davids Modern New York is an account of the citys repeated rises and falls through the postwar decades, including the tragedy of September 11 and the economic recovery that followed. But David also identifies some troubling indicators for the future.
David was a longtime editor for Crains New York Business, and here he pulls together a series of stories about the businesses and people that made New York—and that helped the city bounce back from the debacle of the 1970s and then from the terrorist attacks a generation later. The narrative begins just after World War II. New York was then largely a manufacturing city, with factories and shipyards providing work to thousands, including many immigrants. These solid middle-class jobs remained for another generation. As late as 1966, the city employed almost 1 million factory workers. Finance, technology, and tourism, now giants in the citys economy, were far less significant. But labor issues and high costs soon moved the factories elsewhere.
The city needed other industries to take up the slack. As David notes, the biggest depression in New Yorks modern history was not the 2008-2010 financial crisis, but the ongoing malaise running from the late 1960s through the 1970s. In that period, during the mayoral administrations of John Lindsay and Abe Beame, the city not only shed over 600,000 jobs and suffered through a fiscal crisis; it also lost 1 million residents. Writers like James Wolcott fondly recall arriving in New York in those years and enjoying its vibrant and outré art scenes, but for many of those living in the city, this period was a low point. Even September 11 and its aftermath cant match it. For the shrinking number of middle-class families that, for personal or professional reasons, couldnt leave, corruption, slow dilapidation, and rampant criminality defined seventies-era Gotham.
David argues that government bears culpability for failing to arrest the decline. John Lindsay dramatically raised taxes on businesses, while union-friendly regulations and an oppressive regulatory environment made the city increasingly unattractive for many businesses and middle-class workers. David attributes the turnaround that began in the 1980s to a combination of national federal policy—Paul Volcker ended the Feds policy of setting long-term interest rates, allowing bond firms like Salomon Brothers and others to become financial innovators—and a new mayor. The inimitable Edward I. Koch was unapologetically pro-development and ended the tone of despair that had crept into city government.
That turnaround was completed with the administration of Rudolph Giuliani, whom David discusses in a chapter entitled Making New York Safe for Commerce. Giuliani won the mayors office in 1993, when the city had reached a nadir in terms of economic growth and civic confidence. A brash former prosecutor, Giuliani followed through on his promises during the campaign against the flailing David Dinkins to cut taxes and waste, and more important, to reduce crime. In the first two years of his term, New Yorks crime rate dropped 25.9 percent—and kept dropping. By 1996, homicides in the city were down 56 percent from their 1990 peak. New Yorks policing revolution not only made the city palpably safer but also brought back confidence of the middle-class families and businesses who had contemplated leaving. They stayed, and the city enjoyed another recovery.
In chapters covering real estate and the hotel industry, David identifies some of the turning points for New York after the manufacturing jobs fled. Yet many continue to cherish the notion of New York as a place where people build things. David recounts the travails of Dan Doctoroff, a former private-equity executive and deputy mayor for economic development in the Bloomberg administration who tried to bring the Olympics to New York. Though he had success in revitalizing some areas of the city through rezoning formerly manufacturing spaces, Doctoroff made the mistake of saying in 2003 that companies that actually built things do not need to be here. That prompted a backlash from those who still made things in New York. The citys traditional manufacturing operations have more recently been supplemented by a variety of artisanal efforts—from pickles to wine—that have led to a modest manufacturing revival, mostly in Brooklyn and the outer boroughs.
But small-batch pickled okra is a far cry from the output of the old shipyards and factories. David is clear that at least by the mid-1980s, manufacturing was not going to stay in New York or generate substantial economic growth. Even in the apparel industry, thousands of jobs were lost every year since 1987. The source of economic vitality through the 1990s and into the new century was finance. David does devote an interesting chapter to the dot-com boom, a period when Internet companies occupied one-quarter of all Manhattans leased space—but in the end, this was just an exciting blip in the citys history.
Finance brought money, and money brought tourists, and tourists revivified a weak hospitality industry. David sees tourism as a good entry industry for immigrants, who take jobs in hotels and restaurants because their English isnt very good, and skills can be learned on the job. Because most hotels are unionized and others need to match the pay scale and benefits, these jobs rend to pay decently and provide upward mobility. Tourism essentially replaced manufacturing. Now instead of making things and selling them elsewhere, people come to New York to spend money they have made elsewhere.
Combined with a revivified financial industry, tourism helped New York roar back after September 11. The financial and mortgage crises, however, have inflicted damage on both industries. In his penultimate chapter, David sets his sights on three sectors to the rescue: film and television production, higher education, and a more modest and grown-up Internet sector. The industries—typified by behemoths such as NYU and Columbia, Silvercup Studios, and online businesses such as Gilt Groupe—could become important supplements to finance and tourism. Already, they provide employment to thousands of middle-class New Yorkers.
So why does Modern New York leave one with trepidation for New Yorks future? Because the city has no solution for what Walter Russell Mead has called the blue social model of high taxes, high regulation, and generous welfare benefits that is losing the taxpayer base to support such arrangements. While David writes at length about industries that encourage people to stay and put money into the city—or leave and pull it out—he doesnt mention public schools, one of the key factors driving those decisions, especially for those considering raising families here. Most conservatives see much wrong with the citys public schools—from intransigent teachers unions to dubious pedagogy—but the draining away of the citys tax base certainly wont help in any way. And while Catholic schools once provided a viable alternative for many ethnic groups and religions, they have been decimated for a variety of reasons, economic and demographic. New York Citys ability to attract middle-class families will depend not only on vibrant industries, but on affordable and quality educational choices.
Besides, even if they live up to his expectations for them, Davids three promising sectors cannot equal the vitality of New Yorks old manufacturing economy or the huge revenue generated by tourism and finance. As he writes, if Wall Street fails to rise again, the next mayor will face the daunting task of leading New York into a future much less prosperous than its present. Or the next mayor could push New York into a new era of expansive government, as Lindsay did. The result could well be another economic and fiscal cataclysm. Consider yourself warned.