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.

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.

But forty years ago, when the authoritarian government of Singapore, for years a British colony and still ravaged by the war, was imposing sacrifices upon its people in order to create a modern industrial economy, New York City enjoyed important advantages that partly offset its high labor costs, including a competent work force and a strong school system, a tradition of industrial innovation, incomparable scientific and marketing skills, and access to large sums of capital, the prerequisites for a high value added economy. Billions of dollars in federal subsidies were available to employ New York’s construction workers on highway projects, and the city offered generous tax concessions to developers of high-rise buildings to accompany the federal tax benefits accorded developers in the form of depreciation allowances. But it occurred to no one in New York or Washington that part of these subsidies might be diverted to reorienting New York City’s fading industrial economy rather than simply replacing it with office towers to house an economy narrowly committed to financial, legal, and other relatively specialized services. A political commitment to high-rise development and highway construction was not, however, the only reason for this devastating error in which New York City’s leaders joined a national trend toward deindustrialization.

For more than a century New York City’s industrial economy had grown more or less spontaneously, like an untended garden which miraculously produced one crop after another of viable hybrids, so that future crops had to be planted out of town in less precious soil. As a result, New Yorkers were not accustomed to nurturing their miraculous industrial economy. Thus neither the habits nor the institutional arrangements by which industrial life was deliberately cultivated elsewhere existed in New York, nor do they exist yet. Not only did New York’s business and political leadership agree with Washington that there was no need to stimulate industrial work, as their Asian competitors were attempting to do by enforcing high rates of saving and investment, training their work forces, and mobilizing to seize world markets for everything from microwave ovens to industrial robots. The local leaders opposed such strategies viscerally and elevated this distaste to ideological principle. Thus New Yorkers, like Americans generally, failed to see that what they opposed as political interference with the free pursuit of profit was about to become a new and powerful form of capitalist development, a form, however, uncongenial to the individualistic strain within the American temper.


This is not to say that New York was a free market in which all interests competed without external hindrance in an unsupervised Darwinian soup. Compared to Boston and Philadelphia, which were dominated by a few leading families whose bankers concentrated their local investments in a handful of favored industries for the sake of preserving a traditional social hierarchy, New York had always been open to newcomers and competitive innovation. But within this competitive anarchy a powerful convergence of interests had nevertheless formed, and by the 1920s had begun to assert itself under the auspices of the so-called Regional Plan Association, a nongovernmental but powerful group of well-meaning citizens—bankers, real-estate men, architects, and foundation executives—who wanted to rationalize New York’s future growth and whose Regional Plan of New York and its Environs became “the most ambitious planning effort ever carried out under private auspices,”16 and “the first fully comprehensive regional plan ever undertaken by an American city.”17 Like Henry James a generation earlier and Robert Moses a generation later, these planners were disturbed by the apparent mess of New York’s pullulating industrial economy and the immigrants whom it employed. They were determined to replace both the workers and their factories with something more orderly, less congested, and cleaner.

It was this narrowly aesthetic concern, a passion for the appearance of order—for neatness—rather than the desire for profit, that appeared to motivate the original authors of the master plan for New York’s future development, a plan that anticipated if it did not actually determine New York’s transformation from a polymorphous manufacturing center to a highly specialized and fragile world financial headquarters manned by people who soon learned to speak, dress, and otherwise behave like the Regional Planners themselves.

The degree to which the Plan shaped New York’s future development or was merely the by-product of this transformation—its embodiment as public relations—is a matter of opinion. But by 1933,

large-scale progress had been made in implementing many of the 470 specific proposals advanced [by the Plan, including] park and road developments that could be paid for by the various Depression-era public spending programs…. Under the guidance of the RPA a…fundamental shift in development had taken place….18

“A stone’s throw from the stock exchange the air is filled with the aroma of roasting coffee,” one of these planners complained in 1929.19

A few hundred feet from Times Square [there is] the stench of slaughter-houses. In the very heart…of Manhattan Island south of 59th Street…nearly 420,000 workers [are] employed in factories. Such a situation outrages one’s sense of order. Everything seems misplaced. One yearns to rearrange the hodgepodge and to put things where they belong.

Perhaps because many of the real estate developers and financiers, especially the Rockefellers, who supported the Regional Plan, shared this squeamishness, the Plan would soon justify the destruction of entire industrial areas, especially insofar as it became the inspiration, if not literally the blueprint, which Robert Moses, the city’s master planner and malign geometer, generally followed for the next three decades. But it was not Moses alone who transformed the Plan into a political force that made large scale real estate development New York City’s dominant postwar industry and, so it seemed, the reason for its existence. The Plan would eventually be supported by the city’s entire institutional leadership, including its newspaper publishers, its bankers, its politicians, and its unions. To the extent that they thought about it, the taxpayers must also have liked this plan to create the city of the future, since much of the money for the transformation would come from federal programs and not from local taxes. For the politicians, high-rise construction meant greater tax revenues even if it also meant the displacement of the industrial economy which employed the majority of the city’s work force and which had been the engine of New York’s spectacular growth for nearly a century.

The Regional Plan assumed that New York City’s major asset was not its industrial economy and the people who made their livings from it, but its rentable land, a portentous assumption for the city’s future development. Accordingly the plan listed, in descending order of profitability, the uses to which the city’s land should be put. On this list industrial work was the least profitable and office space in the financial district the most profitable use, followed by the best retail businesses, the best residences, wholesaling and some industries, and finally other industries and residences for low-paid workers.

Not only were industrial workers scorned as the least profitable tenants of city real estate, they were personally obnoxious. According to a spokesman for the Fifth Avenue Association, a cultural ally of the men who would soon begin work on the Regional Plan,

Hundreds of thousands of garment workers swarm down upon the Avenue for the lunch hour…. They stand upon or move slowly along the sidewalks and choke them up…[in] a steady stream of humanity…. Shopkeepers complain bitterly of financial loss (because) women shoppers tend to avoid the section.

The Fifth Avenue Association, which issued this complaint in 1913, wanted merely to remove these garment workers from the vicinity of the great department stores and the women who patronized them. The Regional Plan would soon propose to move them and other workers out of the city altogether. Yet by 1919 the garment industry, according to Robert Fitch, who has written the best study of the Regional Plan as an instrument of class warfare, “ranked second to steel in value added by manufacture and was the city’s largest employer with 125,000 workers in the ladies’ garment industry alone.”

Fitch goes so far as to compare the assault by the Regional Plan on New York’s industrial diversity to Stalin’s Five Year Plans, but the same could be said for any master plan that attempts to impose itself upon the random and individualistic energies of an economy like New York’s that for years had been prospering spontaneously without any plan at all. In its attempt to impose a particular form of development upon the city’s economy, the Regional Plan was yet another instance of the unending conflict between the centralizing impulse and the spirit of individualism that had characterized American economic and political life from the beginning.

In its desire to remove these garment workers from the valuable land that their workplaces occupied and disperse them to outlying areas in Long Island and New Jersey, the Plan also reflected the utopian anti-urban bias of the time: “Whatever merit there might be in centralization, or in…relieving congestion by decentralization,” the Regional Plan announced in 1927,20

it did not consist in the mere transplanting of industries and population but in the opportunity this afforded for better planning. If opportunities given by the removal of industries and population to new areas were taken advantage of, so as to plan such areas in advance and…avoid a repetition of the evils of congested areas, there would appear to be no question regarding the advantages of a wider spreading of industry into suburban or rural areas…. The advantage of concentration of industry and business could only be maintained if there was a proper balance kept between building densities and the means of securing proper circulation.

This rationalization for the removal of city industry to outlying areas in keeping with the Plan’s hierarchy of land use values was either dishonest or selfdeluded. It must have been obvious to the planners that high-rise construction would create the greatest urban congestion on earth,21 but the desire to move industrial work out of town to make way for high-rise construction was compelling and the pretext for its removal to strategic hamlets in outlying areas would be traffic schemes and the creation of open space.

The urban critic Lewis Mumford and a few of his friends objected to the disingenuousness at the heart of the Plan which would merely exchange one kind of congestion for another. But Mumford, who wanted the central city to dissolve altogether, was dismissed by the planners as an “aesthete sociologist who has a religion that is based on high ideals but is unworkable.” The Plan’s Bonaparte would be Robert Moses, who believed that “when you operate in an overbuilt metropolis you have to hack your way through with a meat axe.” The federally funded Cross Bronx Expressway, which Moses later had built, ruined a vast industrial area together with several working-class neighborhoods, creating the great South Bronx slum. It followed the route proposed by the Regional Plan and, as Mumford feared, became a major artery bringing commuters into the congested central city from Long Island and New Jersey.

Inevitably the reformers of the Regional Plan Association were joined by developers and other promoters, and by the construction trades which, by the end of World War Two, were organized within a politically irresistible Trades Union Council representing nearly 125,000 construction workers who voted as a bloc. Soon Moses and a group of politically connected contractors, engineering firms, and developers, encouraged by the press and various betterment groups, were rearranging “the hodgepodge” by replacing one industrial or working-class neighborhood after another with federally funded highways, housing projects, and other development schemes.

In the 1920s the Regional Plan proposed a crosstown highway linking the Holland Tunnel and the Manhattan Bridge as a way to relieve traffic created by the newly built tunnel. The scheme to “relieve congestion on the lower east side and provide more space…for parks and playgrounds…”22 was absurd on its face. No matter how broad the highway might be, it would be choked at either end by the narrow entrances to the bridge and tunnel. The expressway and its access roads would, however, destroy the thriving and diverse industrial neighborhood now known as Soho, as well as the Chinese and Italian working-class neighborhoods to the east. A spur joining the Williamsburg Bridge would uproot the largely Jewish working-class neighborhood to the north.23 The proposal languished until 1941, when Moses presented it to Mayor La Guardia, to whose tidy instincts it immediately appealed. But funds would not become available for the Lower Manhattan Expressway until 1956, when the road became eligible for federal funding as an interstate highway under the National Defense Highway Act. Washington would pay 90 percent of the costs. Since the other 10 percent would come from the state, the city could demolish a major industrial neighborhood free of charge.

As the Expressway was eventually conceived, it would extend for six lanes with service roads at either edge and destroy much of the industrial and working-class residential area between Houston and Canal streets, forming a barricade between lower Manhattan and the northern part of the island. It would be the Manhattan counterpart to the disastrous Expressway that Moses, following the Regional Plan, had built in the Bronx. Moses claimed that the Expressway would create 2,000 construction jobs, but neighborhood opponents of the road said that it would destroy 10,000 existing jobs and displace 1,500 families. Had it been built, it would have done far greater damage. The Expressway would also have destroyed what Moses’s engineers called old “buildings constructed before the turn of the century [and] dangerous for occupancy,” but which the city’s Landmarks Commission called some of “the best cast iron architecture in the United States,” and which now comprise the expensive and fashionable loft buildings of Soho, a major tourist attraction whose design studios and art galleries are a large component of New York’s export economy.

Thirteen years after it was proposed, this scheme to destroy one of Manhattan’s great industrial neighborhoods—part of the same industrial area which the Regional Plan had compared to a fetid slaughterhouse—was abandoned under pressure from the local residents. Today, like the emigrants from Bushwick forty years ago, most of the Italian families who had once lived in the path of the proposed Expressway have moved away, leaving only a few old people and the tourist area known as Little Italy behind. But some 100,000 Chinese immigrants have moved in, and their expanded China-town, which embraces much of the old Italian neighborhood as well as the once Jewish neighborhood to the east, is now a self-supporting industrial, residential, and tourist area with hundreds of garment factories, food wholesalers, metal fabricators, printers, and innumerable restaurants, food stores, and other retail businesses, a vibrant example of the hodgepodge that the Regional Plan had yearned to rearrange. The prosperity of this area is reflected in several new banks that have recently been built along Canal Street. In 1990 their deposits totaled $3.2 billion, slightly more than was deposited in the thirty-four banks that serve the Asian population of Flushing, the neighborhood in Queens to which Chinatown’s immigrants move as soon as they can afford it.

But for all their enterprise and the stability of their family life, most of these Asians, like most of the West Indian and other third world immigrants who have also settled in New York, work in restaurants and garment factories for low wages, or sell vegetables and other neighborhood goods at retail and novelty goods at wholesale, much the same kind of work that New York’s immigrants were doing a century ago. So far few of them have found in New York the fertile entrepreneurial soil upon which to create the products and enterprises of the future, as some of their ambitious counterparts in Hong Kong and elsewhere have been able to do or as earlier generations of New York’s immigrants did when the most enterprising of them moved up from their sweatshops and pushcarts to help build the industrial economy that has now all but disappeared. Despite their hard work, the educational success of many of their children, and the formidable accounts on deposit in Flushing and along Canal Street, enhanced no doubt by flight capital from Hong Kong and drug money from Chinatown’s wholesale heroin trade, most of these immigrants have improved their incomes or their prospects little more than the southern blacks and Hispanics did who settled in Bushwick.

But if New York City has lost its capacity for industrial renewal, the once powerful forces that had for years frustrated this vitality are themselves now dying or dead. The construction trades unions, their numbers depleted, their industry moribund, and their leadership in disarray, have now lost their political power. In the past thirty-two months 26,000 construction jobs have disappeared, a 20 percent reduction. When a phalanx of construction workers marched on City Hall in the winter of 1991 no one listened to them.

Meanwhile the Regional Plan Association, along with the class that had promoted it, has lost its political power to the largely black and Hispanic municipal unions and to community groups which, following the example of the coalition that defeated the Lower Manhattan Expressway, now successfully oppose almost every scheme that threatens the integrity of existing neighborhoods. When the Lower Manhattan Expressway was finally defeated, its backers, determined to find another use for the federal highway funds which they were now in danger of losing, proposed instead to build Westway, an equally preposterous highway, along the Hudson River waterfront.24 Its estimated cost, to be provided mostly by the federal government, was $4 billion. It would be the most expensive highway, mile for mile, ever built.

The ostensible purpose of Westway was to replace the existing West Side Highway, a lightly traveled and usually uncongested road, with an unnecessary multi-lane highway, much of it underground. The actual purpose was to use the construction debris as landfill to create several hundred new acres of Manhattan real estate along the Hudson for high-rise residential and commercial construction. But Westway and its access roads would devastate several existing middle and working-class neighborhoods. Though Westway was supported by The New York Times, Governor Cuomo, Mayor Koch, and remnants of the old Regional Plan coalition, the absurdity of the project was presumably evident to most New Yorkers, who offered no objection when it was defeated by a community group much like the one that had defeated the Lower Manhattan Expressway. The old Regional Plan coalition that had done such damage to the city began to die when Westway did.


With the collapse of the high-rise ideology that once dominated the city and the sharp structural decline of its financial services economy, New York City’s leadership, if there is one, faces an opportunity and a dilemma of the sort that only great emergencies provide. New York City is at risk of becoming the fortified island of opulence within a sea of misery and violence that many of its patricians now fear as they, along with the majority of New Yorkers polled by the Times, contemplate their escape.

The usual response to an emergency is to deny that one exists, and when denial fails, to hope that someone will think of what to do. This is what happened during the fiscal crisis of the 1970s, when Governor Carey, Felix Rohatyn, the investment banker, and the labor leader Victor Gotbaum conceived a plan to restructure the city’s debt and discipline its politicians who had recklessly been borrowing to meet the city’s operating costs. Their plan worked long enough for the artificial prosperity of the Eighties, based largely on borrowed money, speculative profits, and foreign capital, to provide the illusion of recovery, provided one ignored the homeless in their cardboard tents amid the glitter of Fifth and Madison avenues.

Rohatyn’s Municipal Assistance Corporation, or MAC, as it came to be known, might have been a permanent solution had New York’s crisis in the 1970s been merely the result of temporary fiscal irregularities to compensate for a cyclical dip and not the symptom of a long-term decline, measured by hundreds of thousands of jobs permanently lost. But MAC was not designed to rebuild the city’s shattered economy. Can New York City now create a new industrial economy upon the wreckage of the old one? Can Bushwick, for example, regenerate the positive balance of payments that it lost forty years ago?

In the 1950s, when New York City’s work force dominated world markets for countless products including Hawaiian leis, world population was just over 1.5 billion, much of it without capital, industrial skills, or access to distant markets. World population now exceeds four billion people and in thirty years may exceed eight billion. Most of this growth is concentrated in the southern hemisphere where many poor, overpopulated countries now manufacture simple goods for themselves and for export. Some have learned to export sophisticated components and even finished products to world markets. Low-wage Filipino auditors in Manila, for example, now work by fax and satellite for New York accounting firms. Unemployed New York City computer programmers drive cabs, while programmers in Calcutta, who earn less than cabdrivers in New York, transmit their programs back to the New York firms for which the cabbies once worked.

But most of this third world population is unemployable at home and armies of them will continue to drift northward to the great cities of the developed world, as New York City has already begun to see. Like their predecessors, many of these immigrants will be eager to work for low wages. But no matter how low their wages, they will never be as low as the wages at home. Can New York City’s entrepreneurs create a competitive economy in which these immigrants and the existing populations of places like Bushwick can earn their livings, raise their children, and pay their taxes?

The creative spirit of capitalism, especially in America, is notoriously ego-driven, rebellious, and often childishly resistant to discipline. Attempts to create master plans for American industry either come to nothing or depress economic development, as the Regional Plan’s attempt to move New York’s industry to the suburbs did, because they tend to encourage a particular form of growth at the expense of all others. A new Regional Plan for New York, devoted this time to industrial development within the five boroughs, would probably complete the destruction that the original one had begun.

Meanwhile a mayoral commission has recently proposed a fund for economic development which would invest $500 million a year, raised partly by a new bond issue, in large public projects such as industrial parks and supply additional sums to small businesses and cultural institutions. Since political factors invariably influence the distribution of such largesse, the chances are poor that this plan, if it is ever implemented, will succeed. Investments shaped by the political interests of democratic governments are as likely to fail as those sponsored by Marxist governments. But this does not mean that government can do nothing to revive industrial work in New York, provided the primary goal, as in Asian economics, is the success of the enterprise and not the political advantage of a particular administration.

The flourishing Asian economies that have largely surpassed New York and other American cities as world production and commercial centers—as American cities a century ago surpassed the cities of Great Britain—did so mainly on their own. After infusions of foreign aid in the postwar years, they grew without the help or hindrance of larger political units. Singapore, Japan, Hong Kong, Taiwan, and even South Korea, isolated at the end of its peninsula, are self-contained, insular economies, in charge of their own affairs, jealous of their autonomy, and more interested in making money than in propagating ideologies, becoming superpowers, or convincing other countries to follow their moral example. Before the 1930s Manhattan itself had been such a secular island economy. Then it became the beneficiary or victim of federal largesse and would later be fully integrated within federally designed and funded programs governing everything from monetary, defense, and trade policy to day care centers and medical treatment of the elderly, whether or not these programs furthered New York’s own interests or reflected its cultural style.

The reasons for New York City’s economic decline are complex, and it may be only coincidental that chronologically the city’s deterioration accompanied its increasing integration within an ever expanding federal system with costly worldwide commitments. But it is a commonplace to observe that the postwar economies of West Germany and Japan have flourished, compared to America’s, perhaps because they are not subservient to large, militarized systems motivated more by ideological than by commercial interests.

This is not to say that New York City would necessarily be better off economically as a separate country—an Atlantic Hong Kong—though perhaps it would be if secession were possible. But recent federal policy can be reversed so as to return a larger share of federal revenues to the cities and towns, from whose taxpayers these revenues had been extracted in the first place. Though some New Yorkers may eventually benefit from the exploration of Mars, a more urgent need is funding for technical training as an alternative or supplement to the present public school system. Of the 930,000 students served by the city’s public schools from kindergarten to twelfth grade, only 6,337 in 1990 met the statewide standard for graduation with a Regents’ diploma. On the assumption that New York City’s teenagers need usable skills more than a voyage in space, a reduction in the federal space program might release funds to provide technical training for those students who failed to graduate but who want to try again, or for young convicts and parolees who might want to acquire legitimate skills rather than commit further crimes.

A prudent federal government, looking for ways to shorten the current recession by investing in public works, might leave the costly defense of prosperous South Korea to the Koreans themselves and spend the money thus saved to repair bridges and roads and rehabilitate housing in cities like New York: projects that might employ these technically trained graduates and parolees as well as the able-bodied homeless and veterans returning from garrison duty in South Korea and elsewhere, if the unions agreed. The political mechanisms by which such resources might be reallocated are no doubt complicated and slow, but if the federal government can contemplate costly loan guarantees and outright grants to foreign governments, perhaps this or a future administration will eventually consider some such arrangement for New York and other American cities, following the example of Japan, which, like the United States a century ago, has no interest in supplying foreign aid but invests heavily where its own economic advantage is at stake.

Until such a reallocation occurs, New York will have to find its own solutions without Washington’s help. This will not be easy, especially if the Times poll is correct and most New Yorkers have already decided to move away rather than put up further with their beleaguered city. Yet New York retains some of the advantages that it neglected to exploit forty years ago when Asian entrepreneurs were first planning their successful attack on American markets. Though the public school system performs poorly, despite the addition of some 16,000 employees since 1980, there are still some superior high schools in New York and it may not be impossible even for a child born in Bushwick to find his or her way, with luck and talent, into such a school and beyond. This year students from a single New York City high school won four of the forty national Westinghouse Fellowships. Rockefeller University, Columbia, and NYU attract and train superior scientists, especially in microbiology, presumably the science of the future, as physics and electrical engineering had been a century ago. New York’s investment banks still assemble large amounts of capital and generate enormous profits. The partners of Goldman, Sachs, for example, earned one billion dollars in 1991. New York is still a world center of innovation in marketing and design.

It would be contrary to the spirit of capitalism as well as common sense to expect a handful of civic-minded Goldman, Sachs partners to form a partnership with Columbia, Rockefeller, and NYU to sell shares in a biotechnology company intended to operate mainly in New York City. No one would buy shares in a company bound by such a foolish geographical restriction. But if the city government agreed to meet or exceed the benefits provided to new industries by other areas, and assuming that New York City is not intrinsically inappropriate as the site of a biotechnology industry, perhaps a well-promoted stock offering would find a few buyers, especially if the universities, which are in need of money, confirmed their commitment to the success of the business by buying some shares themselves, and identifying a few promising students and teachers with likely products in mind who might be looking for capital.

Such arrangements may raise legal questions, but New York is not without lawyers to solve them. According to the Deputy Mayor’s Report, 25 New York City has failed “to generate a vibrant biotechnology industry, despite the…presence of…the necessary elements, [because] market forces alone are not enough to generate successful startups,” and state and city economic development policies, “particularly in the area of of financing programs, are geared to established firms…with a substantial history and available collateral.” This suggests that an opportunity may exist for private investors to create a new and profitable industry in New York if the state and city change their development policies, a remote possibility but perhaps less remote than the prospect of greater fiscal autonomy for American cities.

The Genzyme Corporation, which makes two widely used biogenetic drugs, recently chose to build a new plant in Boston rather than Cambridge. Though both these cities are nearly as run down as New York, both have “international reputations as scientific centers,” the president of Genzyme said, but Boston “could offer a larger, state owned parcel that could be quickly developed.” According to a report in The New York Times, Boston also agreed to supply all necessary approvals by April, to help prepare the site and provide discounted utility rates as well as an agreement on property taxes. Genzyme, whose sales have risen from $9.7 million in 1985 to $110 million in 1991 and which expects to double these sales by 1995, also liked Boston’s proximity to highways and the Logan International Airport. If Genzyme can grow in Boston presumably a similar business can grow in New York, which also has highways, an international airport, and great or greater universities.

If the hypothetical venture of the Goldman, Sachs partners with the three universities were to succeed miraculously and create the greatest concentration of biotechnological employment in the world, the effect on Bushwick and similar neighborhoods would still be negligible, for New York may soon be a city of eight million people, as new waves of immigrants arrive and technically skilled workers in developing countries continue to produce routine goods more cheaply than New York City workers. Nevertheless, if one high value added industry can be made to flourish here, so can others, as yet undreamed of, for in a developing economy one product leads to another. The Japanese entrepreneurs who saw the commercial possibilities of transistorized circuits forty years ago could hardly have fore-seen camcorders and walkmen, but had they not taken the first step, they could never have taken the subsequent ones. With its anti-industrial ideology exhausted and with markets in the former Soviet Union and Asia still unexplored, New York City, for all its current misery, may now be facing even greater opportunities than Japanese and other Asian entrepreneurs saw when they rose up from their own rubble forty-five years ago to plan the industries of the future, and to capture what were for them at the time great but unexplored and mysterious markets in the United States.

Meanwhile, if New York fails to retrieve a larger share of federal revenues to invest in its own needs and should its entrepreneurs do nothing to revive its industrial economy, then there is probably nothing left to do but join the majority of New Yorkers who are already planning to leave. For in the absence of countervailing pressure from a growing economy, Bushwick and similar neighborhoods will expand until there is nothing else left.

This Issue

April 9, 1992