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The Tragical History of New York

1.

One hot day in the summer of 1991 I lost my way in the middle of Brooklyn. Driving aimlessly along rutted Broadway under the elevated tracks, I soon saw that I was heading for Bushwick, where I had not been for thirty years or more. But as I passed a stretch of burned-out stores and shattered side streets where only a few rotted and abandoned houses stood, nothing was familiar to me. I remembered Bushwick as a self-satisfied Brooklyn neighborhood, warm but not welcoming, a small city in its own right, with three-story wooden houses along treelined streets, churches, ice cream parlors, children on bicycles. Bushwick, when I had known it, had its own minor league baseball team and had made its money mostly from breweries. I remembered the sharp smell of hops and yeast on clear mornings. Now it was a slum.

The sight of a devastated New York City neighborhood was nothing new, but Bushwick, which lay in ruins along either side of Broadway, was different from other New York City slums, most of which had shallow roots. The Bushwick that I had known began as a Dutch village some three hundred years ago, and prospered well into the twentieth century as a largely German and Italian working-class neighborhood, the site not only of breweries but of knitting factories and other small manufacturing plants, whose owners and employees had once lived in mansions along Bushwick Avenue and in the frame houses along the now desolate side streets.

Bushwick’s taxpayers had, in their day, contributed as much to New York’s prosperity and stability as the millionaires on Park Avenue, maybe more, for Bushwick was not one of those barracks neighborhoods like Brownsville, thrown together along newly built subway lines by speculators before the First World War to house immigrant factory workers, neighborhoods that were never more than temporary roosts on the road to something better or worse. Bushwick had a rooted culture and an economy of its own well before the Civil War, when Park Avenue was still undreamed of. Now, after some three centuries of more or less steady growth, it was, as I could see, no longer a source of wealth, but a festering claim against the city’s already overburdened taxpayers and hell for those who had to live there.

When I first visited Bushwick in the late 1940s, returning veterans with their GI loans and FHA mortgages were already leaving for the suburbs, and a few ambitious black families from Bedford-Stuyvesant and other ghettos had begun to move in. Playing on the fear of white homeowners that these blacks were only the first of many and that their property would lose its value as Bushwick itself became a black ghetto, real estate speculators, hoping to turn fear into panic, moved the most “boisterous, undesirable people” they could find into houses vacated by the departing whites.1 Then they distributed circulars saying, “Houses wanted. Cash waiting. Don’t wait until it’s too late.” Buying cheap from panicked whites and selling dear to incoming blacks, these blockbusters soon turned the neighborhood predominantly black.

When the new owners could not meet the mortgage payments on their overpriced properties, other speculators took over and moved welfare families into the vacated buildings, at exorbitant rentals, which the city, with its long tradition of generosity to the poor, had no choice but to pay. Where else but in such deteriorating neighborhoods as Bushwick could it house such people, many of whom were abandoned mothers with dependent children who had drifted, often with the encouragement of hometown politicians, to New York and other northern cities as part of a vast and ill-prepared migration from Puerto Rico and the rural South, where new technologies and old racial hatreds had made them economically useless and politically expendable? Partly because welfare regulations required that the father be absent before a mother of dependent children became eligible for public assistance, family life disintegrated further, and the familiar pathologies followed.

By the 1960s Bushwick, with its new welfare population, had already become a burden for the city’s taxpayers. Banks would no longer grant mortgages, and “a cycle of disinvestment began which had a devastating effect on Bushwick.”2 During the city-wide blackout of 1977 Bushwick’s embittered residents looted the few businesses that remained, and the wreckage is still visible along Broadway today. Except for some public housing built across from St. Barbara’s church after the blackout, the city government has largely ignored Bushwick’s hundred thousand residents, now mostly Hispanic, few of whom vote or pay taxes.

But there is probably no longer much that the politicians can do for Bushwick even if they wanted to, given the city’s own budget problems, to say nothing of the state, which faces a four billion dollar deficit in the coming year, while most of its bonds have recently been assigned the second-lowest rating of any state bonds in the nation. Nor can the city look to the debtridden federal government, which under Reagan and Bush has sharply cut its contributions to state and city treasuries while it continues to promote tax policies favorable to the rich. All three of these governments, measured by their lack of ready cash, are hardly better off than the hapless citizens of Bushwick themselves, a few of whom, on the blazing hot day of my drive along Broadway, were sitting amid hovels that they had built for themselves in the rubble of their burned-out neighborhood, unrepaired some fifteen years after the riots that accompanied the blackout.

Nor is there much that the defeated residents of Bushwick seem likely to do on their own. New York’s once booming industrial economy, based almost entirely on small manufacturing plants exporting a bewildering variety of goods to all corners of the world, had provided opportunity for generations of immigrants, some of them no more qualified than many of those who had begun drifting north in the early Fifties to settle in neighborhoods like Bushwick, and whose descendants are now stranded there. But since the early Fifties the city’s industrial economy has been declining and in many city neighborhoods where it once flourished is now all but dead.

What replaced these miscellaneous factory jobs is a concentrated service economy, dominated by a few thousand highly paid mandarins—bankers, corporate managers, advertising executives, designers, publishers, deal makers, and their courtiers and staffs—lawyers, publicists, psychiatrists, jewelers, entertainers, writers, and so on. These producers of financial and other professional services and their thousands of employees have been “largely responsible,” according to an optimistic report issued last summer by the deputy mayor for finance and economic development, “for the city’s recovery and growth since [the fiscal crisis of] the mid-1970s.” But according to the more sober year-end report of the federal Bureau of Labor Statistics, Manhattan, where much of this work takes place, has lost 149,000 jobs since the downturn began in March 1989, equal to its entire gain since 1980, and “has experienced steep cutbacks in its export oriented finance, business and professional services complex….” In the past thirty-two months the financial services sector, including insurance and real estate, has lost 60,000 jobs city-wide.

According to the usually sanguine Samuel M. Ehrenhalt, commissioner of the New York-New Jersey region for the BLS, the decline in business, financial, and professional services “preceded the onset of the national recession by seventeen months.” This suggests to him that permanent structural changes rather than temporary cyclical forces are primarily responsible for the weakness of New York City’s professional services economy, the result of mergers and consolidations by banks, advertising agencies, and similar businesses, and competition from firms in other, more congenial or less expensive parts of the country or the world, as well as the contraction of certain troubled industries such as network broadcasting. This decline in professional service jobs is “unprecedented in the post-war era and suggests that there is something different going on,” and not merely the effect of the national recession, Ehrenhalt told a reporter for The New York Times. Despite its generally optimistic tone, the deputy mayor’s report agrees:

While New York City’s producer services industries performed very well during the 1980s, the sector now faces fierce competition in every market, whether regional, national or international and will increasingly look to merge and relocate back office operations out of Manhattan in order to reduce costs…technical change, primarily information technology, has allowed for the decentralization of functions such as investment management, trading related activities and client servicing.

Meanwhile the tourist industry, with its theatrical producers, taxi drivers, chefs, museum curators, and chambermaids, though it is currently in decline, continues to be a major employer, especially since the weak dollar has kept American tourists from traveling abroad while attracting foreign tourists here. New York’s medical industry is another major source of jobs, but only fragments remain of the factory work to which millions of New Yorkers had once gravitated.

Protecting, transporting, healing, educating, and cleaning up after these providers of revenue-producing services are more than 450,000 unionized municipal employees,3 some of them skilled as teachers, firemen, police officers, transit workers, and bureaucrats. But the majority are less skilled, serving mainly the poor in hospitals, jails, and other public institutions. Some of these workers are paid by independent agencies such as the Transit and Housing Authorities or are funded partly by state and federal grants, but whoever pays them, payroll costs now consume 53 percent of the city’s annual operating budget, compared to 50 percent in the mid-Eighties, an expense that the city, with its welfare population once more approaching a million (two thirds of whom are children), with its professional services economy in decline, and with its industrial economy greatly depleted, can no longer sustain. Further cuts in municipal employment and city services are inevitable.

New York City now faces an operating deficit of $333 million in its $28.5 billion budget for the fiscal year that ends on June 30, 1992.4 A recent bond prospectus issued to the city’s lenders showed budget “gaps” amounting to a total of $7 billion that have to be closed over the next four years. But these grim estimates are based on optimistic assumptions, including the end of the national recession in 1991, investment earnings of 9 percent for the city’s pension fund assets, and continued strength in its professional services area. State officials have estimated that the cumulative “gap” could be $3.2 billion greater. All such predictions are, of course, highly speculative since they depend on future economic circumstances and political choices which are unknowable, but they do suggest the extent to which the city may have to raise taxes and reduce expenses unless economic conditions significantly improve.

New York City taxes, however, are already 80 percent higher as a proportion of gross city product than the national average, according to a report by the city comptroller.5 If taxes are raised further in response to the projected “gaps,” many of the 200,000 well-to-do families that now contribute more than half the city’s personal income tax6 may join the thousands of tax-paying families that have moved away in the past decade. According to an astonishing New York Times poll taken in December, 60 percent of New Yorkers would like to leave within the next four years and 51 percent say they already plan to do so. The city’s debt has grown from $17.5 billion in 1989 to $22.5 billion as of June 1991. For 1992 the city will pay $2.5 billion in debt service or about $300 per citizen. Under Reagan and Bush federal contributions to the city have fallen from 20 percent of the budget to 9 percent, a loss to the city in 1991 of more than $3 billion, nearly a tenth of the budget,7 and only a major and unlikely reorientation of federal policy will reverse this trend.

  1. 1

    Elliot Yablon, director of the Bushwick Neighborhood Preservation Office of the Housing and Urban Development Administration, quoted in the New York Daily News, August 2, 1977.

  2. 2

    Yablon, Daily News.

  3. 3

    According to the US Bureau of Labor Statistics, New York City had 472,500 municipal employees in 1990. The city claims to have cut 14,000 jobs in 1991.

  4. 4

    According to the State Financial Control Board staff, The New York Times, December 14, 1991.

  5. 5

    New York City Comptroller’s Report on the impact of the local tax burden, April 1991, cited by the deputy mayor for finance and economic development.

  6. 6

    According to former deputy mayor Kenneth Lipper, New York Post, July 18, 1991.

  7. 7

    According to Ruth Messinger, Manhattan borough president, The New York Times, May 7, 1991.

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