Eating Away at the Big Apple

...No municipal union contract could become effective without the EFCB's approval, and the city was ordered to reform its record keeping practices in accordance wit h generally accepted account ing principles...

...For all its virtues of clarity and fairness, too, possibly even becauseof them...

...I should mention that Shefter does have a thesis...

...Within this financial context, it was possible for an ex-liberal, ex-reformer, Edward I. Koch, to win office as a declared opponent of the local unions and, implicitly, of blacks and Hispanics...

...He argues that fiscal crises are recurrent features of American urban history: Whenever city officials are compelled by the composition of their political support to spend more money than they can safely raise by imposing new taxes, they fall back upon the sort of fiscal gimmicks Beame specialized in as successively budget director, controller and mayor—overestimating revenues, understating expenditures, counting as receipts sums that depend upon unlikely grants from the Federal and state government, and so on...

...Shefter adds little to the knowledge of veteran New Yorkers...

...I tend to agree with Newfield and duBrul that there were some genuine bad guys, not least among them the bankers and brokers who cynically profited from handling the city's increasingly dubious tax anticipation, bond anticipation and revenue anticipation notes with no sense of responsibility to theinvestorswhobought them...

...It occurred at a time when the dust had yet to settle from the 1973 coup of the Organization of Petroleum Exporting Countries, when the Ford Administration took a decidedly unsympathetic view of New York, when the exodus of t he middle class and the entry of low-income blacks and Hispanics simultaneously eroded the city's tax base and created enormous demands for social and medical services...

...For two reasons at least, Sheftefs hypothesis is unpersuasive...

...Koch's probusiness development policy has meanwhile won him lavish campaign contributions from real estate developers and other beneficiaries of ihe various incentives thai have been offered to the promoters ofluxury housing, new hotels and office towers...

...In other constituencies, the non-Federal portion of such expenditures is assumed by the state...

...Charles Morris' The Cost of Good Intentions, chiding John Lindsay...

...The new agencies, particularly the EFCB, substantially limited the powers of the Mayor and the Board of Estimate...

...In one sense, the city has recovered...

...His black and Hispanic deputy mayors, Basil Patterson and Herman Badillo, soon disappeared...

...Jack Newfield and Paul duBrul's The Permanent Government: Who Really Runs New York, blaming the bankers...

...He has depended upon the Democratic regulars, installing Stanley Friedman as Bronx political leader, and directing patronage to Meade Es-posito in Brooklyn...

...Unemployment rates recently have been running little higher than the national average...

...Aside from Denver, New York is the only major city required to pay a quarter of welfare and Medicaid costs...

...He retells with almost saintly fairness to all the actors how Governor Hugh Carey, the banks and the municipal unions came to the joint conclusion that practically anything was more in their political and financial interests than outright default on the $13 billion accumulated short- and long-term debt...

...His public denigration of minorities has had enormous appeal to Irish, Italian and Jewish middle-and working-class groups frightened of street crime and inclined to believe that too much money has been channeled lo welfare recipients at their expense...

...Since I am not a political scientist, I can freely impose blame upon identifiable human beings...

...Koch's strategy has been more complex...

...Another conspicuous absence from this book is the Securities and Exchange Commission investigation into the conduct of bankers, Wall Street brokers, and bond attorneys who were variously continuing to lend the city money, hawking municipal securities only weeks before the credit markets closed, and certifying the soundness of the city budget, although they either knew better or should have known better...

...Manhattan south of 96th Street is a forest of construction cranes...

...Some signs are visible of modest revival in the shrinking manufacturing sector...

...Ken Auletta's passionate The Streets WerePaved with Gold, featuring the municipal unions as villains...

...Roger Starr's recent The Decline and Fall of New York, which places the onus upon upper-class elites that have lost confidence in old values—all these books cover the major events in Shefter's chronicle...

...When it turned out that even these restraints upon political profligacy were not enough to reassure the banking community, the city successfully appealed for Federal loan guarantees, which came with yet another set of financial monitors in the Treasury...

...As Senator Daniel P. Moynihan (no howling radical he...

...Many of the bucks Beame allegedly knew were fictitious...

...The banks, although compelled to renegotiate the terms of some of their loans to the city, came out practically unscathed...

...The down side is substantial...

...Reviewed by Robert Lekachman Martin Shefter, a Cornell political scientist, has written a clear, useful account of the origins of the Big Apple's brush with bankruptcy in the last of Robert F. Wagner's three City Hall administrations, the spread of dubious financing practices in John V. Lindsay's years, and the abrupt collapse of the city's access to financial markets in April 1975...

...Victor Gotbaum, headofDis-trict Council 37 of the State, County and Municipal Employees Union, is a second remarkable absentee...

...recently noted, New York, the international capital of glitz and glitter, the haven of the world's wealthy, is also a city of the poor...

...Its credit is good...

...Perhaps only a political scientist could speak of the Ocean Hill-Brownsville school fracas and the teachers' strikes that ensued without invoking the name of Albert Shanker, president of the United Federation of Teachers...

...These members of professional elites failed not only investors but the city at large...

...As never before, major corporations, builders and financiers were courted, coddled and all but bribed to erect highly profitable structures or retain their Manhattan presence...

...It and the Emergency Financial Control Board (EFCB)—joint inventions of financier Felix Rohatyn and Governor Carey—were imposed upon a reluctant Mayor Abraham Beame, the very man who had won office with the slogan, "He knows the buck...

...Political Crisis/Fiscal Crisis is a singularly bloodless work...

...In mercifully jargon free prose, Shefter for the most part focuses upon the support New York's mayors have solicited...

...Dramatic confrontations over the closing of Sydenham Hospital, angry sit-ins in welfare centers, police demonstrations, large personalities like George Wiley, who organized welfare mothers, and similar vivid recollections of the 1960s-'70s either also escape discussion or receive at most a few lines or paragraphs of affect-less analysis...

...Lindsay's initial combination of middle- and upper-class liberals and minorities proved inadequate because nobody, including Lindsay himself, organized blacks and Hispanics well enough to bring substantial numbers of them to the polls...

...The Mayor won a second term, partly because the Democrats fielded a particularly weak candidate, Mario Proccacino, and mostly because Lindsay made his peace with the unions and the "power brokers" whom he had earlier excoriated...

...A final point...

...Until he found it convenient to make a gesture to the black community by appointing Benjamin Ward police commissioner in 1984, in anticipation of his successful 1985 reelection campaign, he did his considerable best to win favor among white constituents by frequently feuding with black leaders...

...In the last two or three years, considerable surpluses have been registered...

...Worse, he underestimates the importance of the unique character of the 1975 crisis...

...His evidence, much of it the New York experience, is far too sketchy to support a supposedly national pattern of recurring crisis...

...Shefter makes clear that the major casualties of the 1975 crisis were low-income residents whose welfare benefits declined in real terms, who suffered from the suspension of low-income housing construction, who were compelled to pay higher and higher fares to ride on steadily deteriorating subways and buses, and whose access to health care steadily diminished...

...The municipal unions not only accepted wage cuts, deferrals of benefits and massive layoffs, they agreed to invest substantial pension funds in the securities issued by the Municipal Assistance Corporation...

...The unions got back much of the pay they temporarily surrendered...