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The Tragical History of New York

As of 1989 more than 200,000 of New York City’s 800,000 drug addicts were HIV positive, and both the city hospitals and the criminal justice system are severely strained and may collapse under further pressure. The cost of intensive care for an addicted infant is $90,000. To maintain a city prisoner costs $58,000 a year. In the 1980s the inmate population increased from 8,541 to 19,589, for whom the city hired an additional 8,608 correction officers. In 1989 the city spent $500 million to enforce the drug laws and a similar sum on health care for drug abusers. Despite costly federal efforts to interdict the drug supply, drugs are more plentiful than ever in neighborhoods like Bushwick. There is little the police can do to discourage their use, and there are inadequate funds for treatment centers. Nevertheless, declining city revenues make reductions in such already underfunded centers inevitable, and the drug problem may worsen as a result.

New York City’s 450,000 or so unionized municipal employees have become the city’s real source of organized political power and the chief beneficiary of the few rewards its politicians, most of whom rely on union support, still can offer. The number of municipal employees has increased by more than 23 percent8 in the past ten years, while population grew by less than 4 percent and services such as sanitation, public education, and street maintenance have deteriorated, and, according to a union leader, will deteriorate further under the mayor’s most recent austerity plan.9

By 1990, 41 percent of Bushwick’s population depended on public assistance. Only 5,000 of the original white population were left. Like the rain forest or Florida’s coral reef, Bushwick, which had been growing for three hundred years, is dying or already dead, its streets dominated by a dozen teen-age drug gangs. “It’s a tug of war of drug dealers,” a Bushwick pharmacist told a reporter for The New York Times through a bulletproof plexiglass panel in his shop. “This is the worst neighborhood in the whole United States. The worst.” But other New York neighborhoods are just as bad.


As I waited at a stoplight beside a smoke shop, dark inside, and crowded with teen-agers in expensive basketball shoes, some of them wearing gold chains around their necks, many of them, I assumed, armed and dangerous, I contemplated the economic desert that Bushwick and much of the rest of the city had become. In 1890, Manhattan alone, with a population of 1.5 million, employed 365,000 people in manufacturing jobs. This was some 50,000 more than are employed now in manufacturing in all five boroughs with a combined population nearly five times greater than Manhattan’s had been a century ago, when, according to census figures cited by Baedeker’s Guide to the United States, “if we exclude the children of foreign born parents, probably not more than one-fourth or one-fifth of the inhabitants [of New York City could] be described as native Americans.”10

It was mainly by means of these manufacturing jobs and jobs in shipping and wholesaling, many of them associated with the port, nearly all of whose activity has now moved across the river to New Jersey, that most of the city’s newcomers supported their families, and through which many of them accumulated bits and pieces of capital, set up businesses of their own, and educated their children. New York’s manufacturing economy for years served a double purpose. It turned immigrants into workers and workers into a bourgeoisie, and it produced abundant public and private wealth.

By 1951, however, as Bushwick’s sons and daughters were leaving for the suburbs and thousands of unskilled migrants from Puerto Rico and the deep South were trekking northward to replace them, the number of jobs in manufacturing in the five boroughs peaked at just over a million and commenced its long decline. For the next two decades New York would still enjoy by far the greatest concentration of manufacturing jobs the world had ever known. Brooklyn had little heavy industry but it alone manufactured, among countless other things, Brillo soap pads, Kirkman’s laundry soap, Eberhard-Faber pencils, and Topp’s chewing gum with its famous baseball cards. Its Merri-Lei factory in Bedford-Stuyvesant was the world’s largest producer of leis, which it exported to Hawaii where they were sold for fifteen cents each, perhaps in souvenir shops that also sold Brooklyn’s bubble gum and pencils and its Rockwell’s chocolate bars. But one by one such businesses as these disappeared, until today hardly any are left.

As New York City’s manufacturing economy began its steep decline, the black and Hispanic immigrants of the 1950s and thereafter became the first major group of newcomers in New York City’s history to confront a shrinking industrial base. Today factory work is less than a third of what it was some forty years ago when New York City as yet had no trouble assimilating its newcomers, financing its schools and hospitals, its public university, its generous welfare system, and the spectacular cultural life that only the richest city on earth could afford. By the winter of 1991, the number of manufacturing jobs in New York City had fallen by more than 70 percent to just under 320,000, from 1,099,000 in 1951. Nearly half the manufacturing jobs that remained were in the front office. The mechanism by which New York had converted previous immigrant generations into taxpaying citizens no longer existed.

Since 1951, as New York was losing nearly 700,000 manufacturing jobs and another 250,000 jobs in wholesale and retail trade, it was adding 200,000 jobs in state, local, and federal government and about 500,000 nongovernment service jobs, of which about a third were in finance, insurance, and real estate, the industries that are now in decline for structural reasons. By 1991 New York’s mandarins were still exporting—i.e., selling to people from outside the city—four times their proportionate national share of public relations counseling and services provided by psychiatric hospitals,11 but with the financial services industry that had replaced the old industrial economy in serious, perhaps permanent, trouble, and with no replacement of its own in sight, New York City is adrift on an uncharted sea, and its engine has begun to die. Meanwhile the officers on the bridge have yet to acknowledge, and often seem unaware that, with storms on the horizon, headway is essential.

Cities, unlike countries, do not keep track of their trading balances with the outside world, but this is not to say that such balances do not exist or are not a matter of life and death for cities and city neighborhoods, just as they are for families and individuals. Cities and city neighborhoods flourish only as long as their residents produce more than they consume, only as long as the value of their exports, whether of goods such as beer or services such as tourism and psychiatry, exceeds that of their imports. When this balance turns negative cities eventually consume their capital and fall into debt. Taxes rise, services decline, and middle-class taxpayers leave.

Since 1980 New York City’s white population has declined by 540,000, and 520,000 blacks and Hispanics along with 250,000 Asians have been added.12 In all, 854,00013 immigrants settled in New York City in the 1980s. No doubt most of them came with hope and energy, but unlike previous generations of immigrants to New York they found an economy that no longer needed most of them to perform the routine manufacturing and entry-level service jobs by which their predecessors had gained a foothold here. By the year 2000, 56 percent of New York City residents may be foreign born,14 but by then, if current trends continue, one wonders how they will make their livings at all.

Had New York’s leadership nurtured its assets as if the city were a corporation responsible for the profits of its subsidiaries, Bushwick’s factories would have been treasured, earning far more from their beer and other exports to other city neighborhoods and beyond the city’s boundaries than Bushwick paid for its imports. The evidence of these surpluses can still be seen in what remains of the churches and mansions along Bushwick and Central avenues. Had the city been solicitous of these assets it would at the very least have tried to discourage the real estate speculators from destroying in a few years a still prosperous neighborhood that had taken three centuries to create. Had its leaders known that such solicitude is a matter of life and death, the greatest of civic duties, they might also have looked for ways to preserve or replace the vulnerable or obsolete industries that Bushwick and other neighborhoods were losing.

But what could even an enlightened city leadership have done to rescue an economy which sustained more than seven million people largely by making a great many everyday products in competition with low-cost producers elsewhere? Could an alert city leadership have planned in the 1950s for the kind of broad-based, low wage, high value added15 industrial development that the governments of Japan, South Korea, Taiwan, and Singapore were at that moment setting out to create, just as New York’s industrial employment had crested and was starting its long decline? Could New York have avoided economic decline by replacing its pencil and chewing gum factories with plants making such high value-added products as semiconductors and microwave ovens?

New York City’s industrial economy declined not because the production of goods had become inappropriate to city life, as some postindustrial theorists believe, ignoring the example of highly industrialized Asian cities and the few New York City neighborhoods where industrial work still flourishes. It faltered because of changing technologies over which the city’s leaders had no control, and whose significance most of them, unlike their Asian counterparts, ignored: more efficient machines were displacing many workers, and many more were losing their jobs to low-wage producers who were now only an overnight flight away from the New York market. Many New York producers, as their businesses matured and grew, moved to less expensive places, taking with them not only their own payrolls but often those of their suppliers and other dependent enterprises, from accounting firms to barber shops. Many manufacturers of low value added products found that New York’s standard of living had risen too high, along with its energy costs, wages, and taxes. Such losses were inevitable, as capital sought to optimize its return and new technologies made manufacturers less dependent on a given location.

But many other New York industrial jobs were deliberately and needlessly sacrificed to politically more powerful interests, mainly commercial real estate development, and it was probably this concentration on high-rise construction in the central city that distracted the city’s leadership from what in retrospect was a more important task: creating the conditions, as Asian governments were doing, for a competitive industrial economy based on high value added work to replace the traditional manufacturing jobs on which most New Yorkers depended. New York’s high labor and other costs put the city at a competitive disadvantage compared, say, to Singapore, which set out after the war to create an electronics industry and is now the world’s largest producer of disc drives for small computers. Today Singapore faces a labor shortage as its per capita annual income approaches $9,000, only $1,400 less than Kuwait’s before the Gulf War.

  1. 8

    The Bureau of Labor Statistics shows an increase from 380,800 in 1980 to 467,500 in 1991. The city acknowledges an increase of 51,221 from 1981 to 1991, but excludes certain categories which are funded wholly or in part by separate agencies not under the mayor’s jurisdiction. The BLS figures give a more realistic picture of how New Yorkers are employed and of the political power available to the municipal unions.

  2. 9

    The New York Times, January 31, 1991.

  3. 10

    Baedeker’s United States (Scribner’s, 1893).

  4. 11

    The value of this curious fact should be judged by its source. An export industry, according to the Report of the Deputy Mayor for Finance and Development, is “one that has a presence in the local economy which is greater than the city’s share of national employment.” In proportion to its share of total US employment, New York City employs four times as many providers of psychiatric services working in hospitals as the rest of the country does. Statistically this means that New York City sells those psychiatric services that exceed its own needs to non-New Yorkers who come here for treatment, just as Akron once exported tires made by those of its rubber workers who exceeded Akron’s proportionate national share of tire makers. This assumes that the psychiatric needs of New Yorkers are as typically American as the need of Akronites for tires. But statistical judgments are narrow. New Yorkers may produce more psychiatric services than other places because New Yorkers consume more of them. It is unlikely, however, that New York’s consumption is four times the national average. Thus a significant share of these services is probably sold to people who come here from other places for treatment, though perhaps not as great a share as the deputy mayor’s statistical analysis leads her to believe. From an economic point of view, psychiatric and other services which are paid for with dollars earned elsewhere are exports just as if the doctors and their drugs had been put on a truck and shipped out of town.

  5. 12

    Community District Needs, fiscal year 1993, Brooklyn, issued by the Department of City Planning, City of New York.

  6. 13

    Report of the Deputy Mayor for Finance and Development, p. 37

  7. 14

    Report of the Deputy Mayor for Finance and Development, p. 37.

  8. 15

    The term “high value added” refers to certain products—computers, designer clothing, jet fighters—whose design, manufacture, and marketing add more value to their component materials and overheads than that of such commonplace products as pencils and bread add to theirs, and can thus create and attract more capital for further investment and eventually raise the standard of living.

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