Mayor Michael Doomberg's Plan for New York: "Let them Eat Cake"

Mayor Michael Doomberg's, er, Bloomberg's recent plan for New York reminds me of Marie Antoinette's apocryphal counsel to France's hungry peasants: "Let them eat cake". To a great extent, New York has become a city of hungry peasants, of hotel-cleaning women, low-wage restauarant workers and store clerks. This was not always the case. In 1849, Alfred Beach, owner of Scientific American and the New York Sun conceptualized a non-polluting subway system and in the 1860s built the first "pneumatic" subway, although it was opposed by New York's corrupt but then-limited government. William I. Walsh in his Rise and Decline of the The Great Atlantic and Pacific Tea Company notes that A&P was founded in 1859 on the site of what is now Ground Zero. On September 4, 1882, Thomas Edison opened the first commercial power station on Pearl Street in lower Manhattan.

Since World War II, New York has not been a center for entrepreneurship or invention. There has been an exodus of the world's true elite--the inventors and business people who create progress, as opposed to the financiers who finance it. For instance, unlike A&P's founders Gilman and Hartford, Howard Schultz, a native Brooklynite, moved to Seattle to create his vision for Starbucks. Little of the technology of the past boom reflected New York's imagination. Unlike Tesla and Edison, Jobs and Gates had no need to set foot in New York. Mayor Bloomberg's own company sells a specialized stock ticker service servicing Wall Street.

The chief feature of post-World War II New York City has been the decline in its economic importance. In 1960 125 of the (then- industrial) Fortune 500 were housed in New York. Today, fewer than 40 of the Fortune firms are based in New York. In the early twentieth century businesses of all kinds were comfortable here. Today, only Wall Street, and similar high-margin services like law and advertising, flourish along with tourism. New York is no longer an economic leader. It is no longer an engine of job creation. It is no longer a place where economic visionaries like Gates, Buffett or Walton are welcome. Indeed, it is more likely to be a place where they are excoriated and their firms attacked, to include Spitzer's attacks on Buffett a few years ago and the City Council's violence against Wal Mart. Eliot Spitzer has not encouraged one private sector job except for the law and accounting industries, and he has destroyed many in the state's one key surviving industry, finance.

But where economic leadership flags, cultural and intellectual leadershp will flag as well. New York is moribund. Today, the New York Sun carries an article that tells us that New York is one of only four states losing population. Only hurricane-ravaged Louisiana and Michigan, the home of all-thumbs car companies, have seen worse declines. New York City's birth rate hit a 25-year low in 2005, an indication of lack of faith in the city. Today's Sun article quotes Robert Ward of the Business Council:

"People are moving elsewhere in search of opportunities that they're not finding in New York."

There are three chief reasons for the decline in New York's economic importance: costs, to include taxes, wages and rents; regulation since the 1920s; and urban planning, especially the large-scale eminent-domain-based projects of Robert Moses post-World War II.

With respect to taxes, New York's are among the highest in the country. Coupled with high taxes is fiscal corruption. There is considerable systemic waste, as Nelson Denis points out in yesterday's Sun. Public sector labor unions have run amok. Teachers in upstate New York receive $80,000 and even $100,000 pensions. Likewise, private sector construction unions and contractors have had considerable influence in Albany, boosting costs ever-higher through legislative requirements that ensure excess costs and corruption. Health care workers have also had a field day.

With respect to regulation, New York has led the nation in anti-business regulation since the days of Al Smith's reforms in the 1920s. Some of the reform was needed, but the state did not not know when to stop. Manhattan rents have been controlled since World War II, resulting in a housing shortage as renters keep unused apartments that they would have vacated in a free market. Construction of new dwellings is inhibited through a byzantine housing code. Major projects are stalled or killed throughout the state by meddlesome public officials on the take.

Urban planning also has been responsible for New York's economic decline. In the post-World War II era, Robert Moses oversaw the condemnation of thousands of factories, stores, and housing units, to build highways, skyscrapers and upper-class residences in the name of "urban redevelopment" and "housing for the poor". Since the days of Robert Moses, New York has led the country in private-use eminent domain. There has always been a patina of corruption surrounding private-use eminent domain, and the corruption has always been associated with New York's newspapers. As Nicole Gelinas pointed out in the Sun on Tuesday, the proposed Atlantic Yards project in Brooklyn is but the latest of a long line of central planning projects. All of the city's newspapers (except the Sun) are for the project, but none mentions that the New York Times obtained its own new office building in partnership with the same Forest City Ratner that is building Atlantic Yards through the same corrupt private-use eminent domain process that Ratner is using vis-a-vis the Atlantic Yards.

What has been the success of urban planning and private use eminent domain? Over the past sixty years New York has led the country in urban planning and private use eminent domain. Today, it is one of four states with a declining population.

According to the December 13 Sun article, the Mayor's plan involves a "sweeping set of energy and infrastructure goals" to prepare the city for signficant population growth of 16% over the next 25 years. These goals include water, electrical, parks, tunnels and subways. The Economist (paid access), calls the Mayor's plan visionary. The plan has ten goals to include affordable housing, more parks, and less pollution. The plan does not include any thinking about how to attract business to New York. It does not acknowledge the century-long decline in New York's business community. It does not discuss the high taxes, high public employee costs, government bloat, or "unforeseen" ill-effects of past eminent domain projects, where claims for improvement of housing for the poor have led to devastation of such housing and the creation of urban-blight-through-city-projects (a subject covered by public television on PBS's and Ric Burns's excellent New York: A Documentary History). It does not discuss the exodus of jobs. Presumably, Mayor Bloomberg believes that New York's citizens ought to work in hotel and restaurant jobs. Middle management jobs don't make a billionaire's life easier. If New Yorkers complain about lack of professional opportunity, "Let them eat cake!"

Mayor Bloomberg is a graduate of Johns Hopkins and Harvard Business School. But his poor education alone should not be blamed. The Economist calls his silly, ill-informed plan visionary. Only the Sun had the courage to publish Edward Glaeser's article debunking Mayor Doomberg's myopic vision.