The Streets Were Paved with Gold (44 page)

Like Prince Prospero, New York leaders often acted as if the city were a nation unto itself, its walls sealed. Until the courts blocked him, Mayor Wagner, with widespread support, ignored the nation’s policies and unilaterally tried to raise the city’s minimum wage to $1.50 an hour. Wagner wanted to do what he thought was right, sealing his eyes to the many jobs that would shift to other states with no such laws. Just as the Lindsay administration, also with widespread support, didn’t believe Wall Street firms would flee to New Jersey when the stock transfer tax was imposed.

Businesses came to be viewed as a source of taxes, not jobs. Liberal politics dominated sound economics. Profits were somehow wicked. Unlike many cities and states, New York discouraged tax and other incentives for private enterprise. We worried about ripoffs, the rich soaking the poor, the inequality of wealth. The sound proposition that the rich should pay more doesn’t work unless it’s uniform national policy. It wasn’t. This is a free country; as local and state taxes climbed, people were free to move—or go out of business.

When businesses moved, many liberals, including Episcopal Bishop Moore, charged they were “immoral.” Righteousness infused our politics. When the transit fare was raised in 1975, a City Hall rally attended by a cross-section of political and labor leaders urged citizens to resist. Who would pay the wages of the transit workers? Who would subsidize the deficit-ridden Transit Authority? It didn’t matter. Consequences were less important than speaking out, than taking a “moral” position. In their 1977 mayoral campaign, liberal candidates Bella Abzug and Herman Badillo urged a public takeover of Con Edison, the giant utility. In their book
The Abuse of Power
, Jack Newfield and Paul Dubrul summoned the city to sock Con Ed with higher taxes. Ignored in this tumult of liberal and left posturing is a glaring fact: 23 percent of each citizen’s Con Ed bill is already earmarked to pay city and state taxes. This is six times greater than Detroit’s tax rate, five times Philadelphia’s, four times Los Angeles’. If Con Ed were publicly owned, how would the city, which can’t tax itself, make up the $470 million in city and state taxes Con Ed says it paid in 1977? If taxes were raised, how would that translate into reduced utility bills for consumers? A compelling argument can be made for public ownership or at least a feasibility study—even after taking into account high taxes and fuel costs (60 percent of a resident’s electricity bill), Con Ed’s rates exceed those of neighboring utilities. Its management, materials and services, and wage costs exceed, for instance, those of Long Island Lighting Co. or the New Jersey Public Service Electric and Gas. Under public ownership, 4 percent dividends would not be paid. But before the public could own Con Ed, it would have to purchase their reported $10 billion worth of plant and equipment (unless the city were to expropriate this private property, which is illegal). Such action would invite the escape of other businesses—and jobs. To make the public ownership argument, one must be prepared to show that the gains from public ownership will exceed the expenditure or tax loss.

A similar confusion extends to the city’s credit crisis. The banks, many liberals charge, are to blame for refusing to lend New York money. The private credit market—composed of thousands of individuals and investment opportunities, of amorphous terms like “investor confidence”—are abstractions. It’s assumed that a handful of avaricious individuals conspire to make decisions, and that pure selfishness is to blame when they say no. Banks and investment houses can be faulted for many things—including lying to
small investors—but not for acting selfishly. They’re in business to make money, not to be social reformers. Because they’re amoral about their money, since the spring of 1975 investors have been unwilling to bet on city securities because they fear a city default. Neither David Rockefeller of Chase nor Walter Wriston of Citicorp can change that.

The same confusion surfaces when liberals fault landlords for acting like landlords. When landlords urge legislation to pass on increased fuel costs to tenants, City Council members, galvanized by a bleacherful of critics, blast it as a give-away. Raising rents to cover inflationary costs is also a give-away. Of course, landlords can be predators. But many liberals try to have it both ways: claiming they believe in private enterprise—yet condemning business profits. One might differ with Marxists, but at least they’re consistent.

Not only did New York liberalism believe too little in profits, they believed too much in money. “The ultimate problem is money—or rather, the problem of not enough money,” intoned John Lindsay’s 1969 book
The City.
The “problem” was not defined as a declining economic base, steep taxes, crime, the way services weren’t delivered. No, the city could not be held responsible for helping drive people and businesses out. Since the absence of money was defined as the cause, it logically followed that more money would be the cure.

Money was free. New York would get it from a “Marshall Plan for cities,” from “reordering national priorities,” from a new President, from new spending by Washington. It was assumed that the nation’s taxpayers would pay more in taxes but city taxpayers wouldn’t. Billions for national welfare reform or health insurance would, somehow, be free.

“I used to say, ‘Get it from the Defense Department,’ ” Jean Larkin, an early foe of the Vietnam war and a supporter of businessman Joel Harnett for mayor, told an audience of the reformoriented Village Independent Democratic Club (VID) in 1977. “I must confess, I’ve been wrong. There’s no way to restore the city to solvency without encouraging the private sector to create jobs.” Ms. Larkin now knew that HEW’s budget dwarfed the Defense Department’s. She had become a realist.

Bella Abzug had not, as her visit to the VID Club demonstrated. The peeling paint and wall posters of past liberal glories—
MCGOVERN FOR PRESIDENT, KRETCHMER FOR MAYOR, ABRAMS FOR ATTORNEY GENERAL
—were an appropriate backdrop for
Bella’s old-time religion mayoral campaign. She would seek this club’s endorsement by spouting the same message she had for years. “The money and the programs are there in Washington,” boomed Arnold Weiss, former Chairman of the liberal New Democratic Coalition, introducing Bella. “Why Bella? Because Bella’s the one person who can break those doors open.… Bella Abzug is what we need.”

Enter Bella, sliding a cape from her shoulders, adjusting her hat, letting loose on “the issues”—her issues. All this recent right-wing talk about austerity and fiscal responsibility and management and productivity and what the city must do for itself—
STOP!

These were not her issues. Although Bella was speaking on Manhattan’s West Fourth Street, her mind was in Washington. She lugged a copy of the new city budget—but only to point out those programs she helped navigate through Congress. “Much of what we have to get is from the outside,” she declared. “… we’re gonna have creative managers, we’re gonna have manager-managers. But I’m gonna fight for this city.… I’m gonna lead a national policy, a national urban coalition.”

In a sense, Bella wasn’t really running for mayor. Like Lindsay, she was campaigning for something else: a “national urban policy.” The unglamorous task of governing more than sixty agencies, policing the expenditure of almost $14 billion, balancing budgets, pushing economic development, fighting for productivity improvements and changes in union work rules … boring. What was of interest? More programs, more money, the hidden pot of gold in Washington. When Bella complained about the poor education system, she was not wondering what taxpayers get for the $2,600 the Board of Education spent on each child. Instead, she wondered why we didn’t spend more. Spending money was assumed to equal the delivery of service.

Bella’s belief was central to the liberal faith. “I think it’s fair to say,” economist John Kenneth Galbraith told a
New York Times
symposium in July 1975, “that no problem associated with New York City could not be solved by providing more money.” He said it was “remarkable” and “outrageous” that “so many people of wealth had left.” The “fiscal crisis would be over,” declared author Michael Harrington, if Washington passed “three laws”—federalized welfare costs, national health insurance, and the Humphrey-Hawkins full-employment bill. These views were echoed by others on the left, including economists like Robert Lekachman. As General
Westmoreland would say, if only we had a few more troops …

This preoccupation with money leads, as the social scientists would put it, to a preoccupation with “inputs” rather than “outputs.”
Whether
money is spent becomes more important than
how
it is spent. New York State’s liberal Medicaid law was “good” because it promised money and “free medicine,” though, as some warned, it led to inflated medical costs and outrageous abuses. “To dismiss policemen, firemen, sanitation workers, park employees and teachers is not an alternative when the greatest need of a city is for more police protection, more fire protection, better recreation and competent education,” Galbraith exhorted
Times
Op-Ed page readers in 1977. The assumption, commonly shared, was that better services come from more money, not better management; by hiring more cops rather than getting those on the force out from behind their desks or inducing sergeants to sacrifice any of their forty-six vacation and chart days off. Though labor allies say it represents a return to the sweatshop, the Koch administration did say taxpayers could potentially receive 20 million extra hours of service if all city employees worked a forty-hour week, as most other Americans do. Yet most liberals were silent. Fewer layoffs would have been necessary if all workers volunteered to forgo some of their bloated fringe benefits. Yet most liberals were silent.

This concern with “inputs” surfaces throughout recent city history. The liberal impulse argued that it was better to borrow from the capital budget rather than cut expenses. Their passion blinded them to the consequences. In the long run, it cost more. And in the winter of 1978, New York couldn’t remove snow from its trenchpocked streets because 40 percent of its equipment had broken down and there was no money for repairs. More federal training funds were good, even though Comptroller Goldin found, in 1978, that thirty days and $10 million after graduation almost one-half of the trainees were unemployed. “Why can’t liberals … talk about fiscal responsibility and productivity without feeling uncomfortable?” Senator Muskie asked the state Liberal party in a 1975 address. His own answer: “Our emotional stake in government is so much that we regard commonsense criticism almost as a personal attack.”

Ed Koch learned his lesson early in his term as mayor. He and Deputy Mayor Herman Badillo had zeroed in on the “poverticians,” those who siphoned federal poverty funds to build local political machines. “The resistance to change is enormous,”
the usually ebullient Mayor told me three months into his first term, his vest unbuttoned, his shoulders now slightly stooped. “Everyone protects their own turf. They storm into your office like you’re supposed to roll over and play dead.” Then Koch recounted the problems he was having with black officials. For years, guilt-ridden liberals exempted minority programs from criticism for fear of being called racist. But Koch wasn’t a traditional liberal. When he thought Mike Holloman, the black head of the Health and Hospitals Corporation, was incompetent, he was the first prominent white official to say so. With the exception of labor leader Victor Gotbaum, he was almost the only one. “I invited the Council of Elected Black Officeholders to a reception at Gracie Mansion,” Koch recounted. “Yet today I was told they had a meeting and none of them liked what I was doing to change the way poverty funds were spent to ensure that the poor received them. Some said they were going to picket the reception. Others said they wouldn’t cross a picket line. One official called me up and said, ‘What do we do?’ I said, ‘Easy. I’m canceling the reception.’ ”

Early in the 1976 Presidential campaign, the late Hubert Horatio Humphrey, the knight-errant of American liberalism, tore into critics of big government while attending a dinner at the Americana: “Ronald Reagan is setting the rules for this campaign. Less is good. Government is too big.… Well, I’ll tell you, I’m not about to fall for it.” Humphrey was getting into the old rhythm, cranking up the old-time religion, whacking the podium first with his right hand, then with his left. “I am not ashamed to tell you I am a New Dealer,” he proclaimed. “I want to warn you, my friends, that when people turn their back on our family, your heritage … you will lose, and deservedly so.… There are some people today who are running against Washington [presumably Jimmy Carter]. They are not positive.… The ‘less government’ theme is just a code word for neglect, a code word for ignoring our cities.… Neglect of our cities is a new form of racism.”

Wild cheering. Humphrey’s enthusiasm was always infectious, but this time he reached his audience because he reminded them of their faith in money and programs; of their faith in compassion, their desire to right wrongs—immediately. Liberalism’s appeal has always rested on a big heart. For all his flaws, Humphrey touched a wide range of people because of his obvious humanity and concern. But liberals’ very humanity led to an overheated conscience, to demands for instant solutions. After the blackout rioting and looting
of 1977, there were loud demands for the federal government to do something. The solution,
Daily News
columnist Pete Hamill briskly declared, was to “Ask Congress for immediate authorization to create 200,000 goods-producing jobs to be located in New York. Not make-work jobs, shoveling sidewalks or cutting grass. The army can do that work. But building factories that employ New Yorkers in the creation of material goods that can be sold to other people. The government can do that in partnership with private enterprise.” Just like that—presto!—200,000 jobs. In partnership with private enterprise in the sixties, President Johnson initiated the National Alliance of Businessmen to attract jobs for the hard-core unemployed. In 1968, their first full year, they created but 100,000 jobs in the entire nation. It’s not easy to induce profit-making institutions to make socially desirable decisions. Even when government tax or training subsidies are available, white-dominated business is not adept at dealing with the minority-dominated unemployed.