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Authors: Ken Auletta
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newer cities, such as Houston, New York could not replenish its tax base by annexing its richer suburbs. In effect, that’s what Manhattan did in 1898, after a public referendum permitted the consolidation of the City of New York (Manhattan) with the City of Brooklyn and three largely unsettled areas containing just 150,000 people—the Bronx, Queens and Staten Island. The new City of New York, which had been about equal in population to Chicago and Philadelphia, suddenly more than doubled its population to 3.4 million, becoming the nation’s undisputed first city.
New York was also the victim of outside economic forces. A healthy national economy or modest inflation eases local economic woes. When the national economy was zipping along in 1969, the country’s unemployment was below 4 percent; black unemployment in urban areas, 7.2 percent; black teenage unemployment, 27.9 percent. In 1975, when the economy was in a tailspin, unemployment more than doubled nationally to 8.3 percent and among urban blacks to 17.7 percent; black youths out of work soared to 41.4 percent.
Unavoidably, New York fell prey to what the Marxists call “capitalist accumulation.” In their book
The Fiscal Crisis of American Cities
, Roger E. Alcaly and David Mermelstein trace the roots of the crisis to “a system of economic growth dictated by capital’s need to seek ever greater profits.” It became less economical to do business in New York. Labor was cheaper in other parts of the country, where unions were less strong, taxes and costs lower, the business climate better. In a competitive system, New York lost its edge.
Larger, older cities are uneconomical in still another way: they cost more. Ponder, for a moment, the sheer size of New York City. In 1977, it generated 30,000 tons of garbage and other waste daily—more than the combined total of London, Paris and Tokyo. Each day, its public transportation system, which accounts for 29 percent of all mass transit trips in the U.S., carries 3.4 million passengers. The replacement of this equipment alone would cost $27 billion. The city maintains 25,000 acres of parks; 1,956 miles of reservoirs provide 1.4 million gallons of water a day. There are 6,000 miles of sewers, 6,200 miles of streets, 950 public schools, 223 firehouses.
It costs more to feed an elephant. New York City’s population is the size of Sweden’s; its budget is almost equal to India’s. According to the Bureau of the Census, cities of 100,000 to 200,000 people spent an average of $280 per person for local government in 1972–73. Cities of 1 million or more were two and a half times as expensive, costing $681 per person. Thomas Muller of the Urban Institute has calculated the cost of providing basic services to be three times greater in cities of more than 1 million residents than those with fewer than 50,000. This is not just a function of size. The entrenched politics and mismanagement of older cities also contributes to steeper costs.
Mayors lost control of their government. As state and federal aid grew, their control of city budgets diminished. In 1961, state and federal aid accounted for 23.9 percent of New York City’s budget. Ten years later, the figure was up to 44.1 percent. Usually, these aid programs mandated costs on the city; often, they required matching city funds. Since the federal government usually provided 75 percent “free money,” there was a natural inclination to seek more—more programs, more grants, more funds. New York got trapped. When the rate of increase in federal and state aid slowed in the early seventies, the city found it difficult to pare its budgetbecause powerful new constituents were loose and because for each dollar the city cut it could usually save only 25–50¢ of its matching local share. Increased state and federal aid also trapped the city into new borrowing. The bulk of this was reimbursable aid, meaning the city had to raise and spend money in order to qualify for
New York was also the victim of outside economic forces. A healthy national economy or modest inflation eases local economic woes. When the national economy was zipping along in 1969, the country’s unemployment was below 4 percent; black unemployment in urban areas, 7.2 percent; black teenage unemployment, 27.9 percent. In 1975, when the economy was in a tailspin, unemployment more than doubled nationally to 8.3 percent and among urban blacks to 17.7 percent; black youths out of work soared to 41.4 percent.
Unavoidably, New York fell prey to what the Marxists call “capitalist accumulation.” In their book
The Fiscal Crisis of American Cities
, Roger E. Alcaly and David Mermelstein trace the roots of the crisis to “a system of economic growth dictated by capital’s need to seek ever greater profits.” It became less economical to do business in New York. Labor was cheaper in other parts of the country, where unions were less strong, taxes and costs lower, the business climate better. In a competitive system, New York lost its edge.
Larger, older cities are uneconomical in still another way: they cost more. Ponder, for a moment, the sheer size of New York City. In 1977, it generated 30,000 tons of garbage and other waste daily—more than the combined total of London, Paris and Tokyo. Each day, its public transportation system, which accounts for 29 percent of all mass transit trips in the U.S., carries 3.4 million passengers. The replacement of this equipment alone would cost $27 billion. The city maintains 25,000 acres of parks; 1,956 miles of reservoirs provide 1.4 million gallons of water a day. There are 6,000 miles of sewers, 6,200 miles of streets, 950 public schools, 223 firehouses.
It costs more to feed an elephant. New York City’s population is the size of Sweden’s; its budget is almost equal to India’s. According to the Bureau of the Census, cities of 100,000 to 200,000 people spent an average of $280 per person for local government in 1972–73. Cities of 1 million or more were two and a half times as expensive, costing $681 per person. Thomas Muller of the Urban Institute has calculated the cost of providing basic services to be three times greater in cities of more than 1 million residents than those with fewer than 50,000. This is not just a function of size. The entrenched politics and mismanagement of older cities also contributes to steeper costs.
Mayors lost control of their government. As state and federal aid grew, their control of city budgets diminished. In 1961, state and federal aid accounted for 23.9 percent of New York City’s budget. Ten years later, the figure was up to 44.1 percent. Usually, these aid programs mandated costs on the city; often, they required matching city funds. Since the federal government usually provided 75 percent “free money,” there was a natural inclination to seek more—more programs, more grants, more funds. New York got trapped. When the rate of increase in federal and state aid slowed in the early seventies, the city found it difficult to pare its budgetbecause powerful new constituents were loose and because for each dollar the city cut it could usually save only 25–50¢ of its matching local share. Increased state and federal aid also trapped the city into new borrowing. The bulk of this was reimbursable aid, meaning the city had to raise and spend money in order to qualify for
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