Ed Koch and the Rebuilding of New York

“Oh! Who owns New York, do people say?” is the first line of the Columbia University fight song. I wrote this book because I wanted to learn more about the politics of capital and who gets to decide where to invest it: the public, the poor, the pols, civil servants, or New York’s highly developed financial bourgeois class. And who gets to cut the government budget when its revenues seem unsustainable. One of the most important questions as we debate cutting government budgets is: what does austerity really cost?

In the 1970s, the New Yorkers who were involved with what was later called the Reagan Revolution, such as Walter Wriston and Treasury Secretary William Simon wanted to destroy New York’s local welfare state, redistributing wealth upwards to their own class, rationalizing it by invoking the so-called free market as a panacea. They dressed up their objective of increasing corporate power and shrinking the state, which they saw as good for its own sake, by calling it freedom and individualism. In fact, the financial bourgeoisie was the main beneficiary, as suggested by the steadily increasing income inequality from the 1980s to the present. (For a partial bibliography on inequality see the website of Prof. Emmanuel Saez of the UC Berkeley Economics Department). At the time, their program seemed rational to its supporters in the city, because it brought money into New York, though it primarily benefited billionaires, Their narrative about austerity also gained credibility because New York had overspent and overborrowed, a symptom of the ossification and inefficiency of the municipal government and the depopulation and racial segregation of urban centers across America, which also decreased urban political clout. New York City’s government needed some intelligent cutting and reorganization, but the drastic across-the-board budget cuts that Treasury Secretary Simon’s parsimony forced on New York caused great harm to the city. Instead of an intelligent pruning, during the Ford administration, New York City was dismembered with a meat-axe.

Koch interested me because of who he was, as Martin Shefter says, a “kibitzer,” a broker between the bourgeoisie, technocrats, public employee unions and Democratic machine politicians trying to bring some rationality and democratic choice to the austerity program, taking back control from the meat-axes of the Emergency Financial Control Board. He was stuck with the austerity regime and the need to satisfy bond markets. As a realist, he understood that mayors who repudiated austerity like Abe Beame and Cleveland’s Dennis Kucinich wound up losing what little influence and power they had to resist the tsunami of fiscal crisis. This put him in conflict with many of the poor, with some African Americans, who were particularly dependent on city jobs to rise into the middle class because they were largely shut out of jobs in the private sector. Nonetheless, much damage, such as the loss of a cadre of experienced middle level management in city agencies and schools, was already done by the time Koch took office and continued for years past the resumption of adequate funding. His continued cuts through 1983, necessary to restore the city’s credit, made a short term solution to the problem difficult.

While the root causes of the urban crisis predated the fiscal crisis, there is a strong case to be made that much of the austerity program imposed on the city was pennywise and pound-foolish. That it costs less to maintain a city’s infrastructure than to repair it after a decade of neglect seems obvious.  In the field of health cuts alone, Nicholas Freudenberg, a Professor of Public Health at the CUNY Grad Center, has argued (American Journal of Public Health, Vol 96, No. 3 (March 2006). 424-34) that New York’s austerity program produced a “syndemic” of TB, HIV infection and homicide that he calculates cost New York citizens $54 billion. (A syndemic is a set of linked health problems involving two or more afflictions, interacting synergistically, and contributing to excess burden of disease in a population.) Education cuts were also probably false economies. Many studies have suggested that better education reduces both the likelihood that young people will commit crimes. (For one recent story on such a study, see Kevin Lewis, “What raises murder rates,” The Boston Globe, February 28, 2010, Kevin Lewis, “What raises murder rates,” The Boston Globe, February 28, 2010 ). Indiscriminate cuts, such as the imposition of tuition at CUNY, or the firing of teachers had external costs that the budget cutters and advocates of municipal bankruptcy in 1975 seldom accounted. Even Mayor Bloomberg has questioned whether the deep cuts of the mid-70s cost more money in the long run than they saved. This is not just an academic question as we once again face massive budget cuts because of the instability of the US economic system and because government at all levels is less and less autonomous from the influence of corporate elites and the interests of even well-intentioned billionaires.

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  1. Posted September 11, 2010 at 7:07 am | Permalink

    I am intrigued and inspired by the questions you ask and am eager to read more. Thank you!