Wednesday, November 6, 2013

The beginning of the end for New York City?

The election for the new mayor of New York City was something of a walkover, as Democrat Bill de Blasio easily defeated Republican Joe Lhota by garnering over 73% of the vote. In many ways, it was an historic victory, not only because de Blasio will be the first Democratic mayor of NYC since David Dinkins (who left office in 1993), but because de Blasio is an openly self-described Progressive in a very real ideological sense. As such, he has the full support of pretty much every major progressive across the land, all of whom are anxiously awaiting his reign to begin. Witness Robert Reich's effusive praise for de Blasio in his "analysis" of yesterday's elections:
The biggest game-changer, though, is Bill de Blasio, the mayor-elect of New York City, who campaigned against the corporatist legacy of Michael Bloomberg -- promising to raise taxes on the wealthy and use the revenues for pre-school and after-school programs for the children of New York's burdened middle class and poor.

Those who dismiss his victory as an aberration confined to New York are overlooking three big new things:

First, the new demographic reality of America gives every swing state at least one large city whose inhabitants resemble those of New York.

Second, de Blasio won notwithstanding New York's position as the epicenter of big business and Wall Street, whose money couldn't stop him.

Third, Americans are catching on to the scourge of the nation's raging inequality, and its baleful consequences for our economy and democracy.
The issue of inequality is fundamental to the Progressive movement; those in it believe--quite earnestly in my opinion--that they can substantially level society through policy and that such a goal is a noble and worthwhile pursuit. De Blasio's victory speech is rife with the same kind of talk:
Tackling inequality isn’t easy; it never has been, and never will be. The challenges we face have been decades in the making, and the problems we set out to address will not be solved overnight.

But make no mistake: the people of this city have chosen a progressive path, and tonight we set forth on it, together, as one city...

I’ve spoken often about a Tale of Two Cities. That inequality – that feeling of a few doing very well, while so many slip further behind – that is the defining challenge of our time. Because inequality in New York is not something that only threatens those who are struggling.

The stakes are so high for every New Yorker. And making sure no son or daughter of New York falls behind defines the very promise of our city.

New York is the brightest embodiment of the idea behind American greatness: It doesn’t matter where you were born what you look like what your religion is, or who you love.

If you have brains and heart and guts and faith, this city – more than any other in the world – will offer you a real chance at a better life.
He goes on to note the legacy of boot-strapping in New York City--how people came to the city with nothing and made their way to the top--and to do some more ego-stroking of New Yorkers in general, to talk about how great they are, how compassionate and bold the people of the City have been and remain today. Much of the latter is typical victory speech stuff, no matter if one has just won a race for city council in a small town or won the Presidency. That said, there is some truth in the first part, when it comes to New York City: the opportunities there have been greater and more available for rags-to-riches stories than any current American city. Indeed, they have been greater there than in any city in any country across the last eighty years or so. And there's a very clear and obvious reason for this, a reason that has nothing to do with the character of the city or its inhabitants, whatsoever.

The reason? Very simply, there has been more such opportunity in New York City than elsewhere because there has been more money, more financial action in New York City, than anywhere else, at least--again--for the last eighty years.

Historically, there has almost always been a "king of the hill" when it comes to financial markets, though this is a much easier thing to establish after the rise of global capitalism. Prior to this period, arguments can be made about such designations particularly because of an Orient/Occident divide. But by the seventeenth century, Amsterdam clearly was the financial capital of the world, partly because of the tulip market of all things. Fernand Braudel--in his three volume work Civilization and Capitalism, 15th-18th Century--argued that prior to the ascension of Amsterdam, the financial centers of the world were, in order: Venice (in the 13th and 14th centuries), Genoa (in the 14th and 15th), and Antwerp (in the 16th, until replaced by Amsterdam around 1570). Amsterdam would remain as the world's financial center until 1733--according to Braudel--when it would be supplanted by London.

London would reign supreme in this role for nearly two centuries, until the aftermath of the First World War and--somewhat paradoxically--the Wall Street Crash of 1929. After that point, New York City was the unquestioned center of finance for the world. Of course, within the U.S. proper, New York City had been the financial center since Independence.

The point of this stroll down the lane of economic history? Simple, the boot-strapping de Blasio characterizes as so prevalent in New York City was every bit as prevalent in all of these other cities when they occupied the financial pinnacle of the world. Which begs the question: what happens to such boot-strapping, such opportunities to climb the economic ladder, when the cities cease to be at the top of the heap? Moreover, why did they lose their places in this regard and is New York in danger of losing its place?

The answer to the latter question is, I believe, a resounding "yes." As to the first, there is a huge danger of severe decline, but even without such a decline, opportunity necessarily diminishes.

Which leads us to the question of the hour: will de Blasio's Progressive agenda work because of the boot-strapping he takes as a given in New York City, or will his Progressive agenda undercut the forces that allow such boot-strapping, dooming both his agenda and New York City, itself? Because here's the thing: if he really goes after the financial industry in the city, it may just pick up and move elsewhere, destroying the tax base required to institute his agenda. Sound like any other American cities you might have heard about?

Cheers, all.

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