New York City likely in trouble for another generation or even more
Just a year before David Berkowitz started his infamous crime spree, and two years before the carnage of looting and broken glass of the blackout of 1977, New York City stood at the edge of an abyss. It faced bankruptcy and spiking crime. When you stepped off the plane in 1975 at Laguardia Airport, you were greeted with a pamphlet emblazoned with a skull and bold letters that said “Welcome to Fear City.”
The survival guide offered stark advice on how to hide your property, how to avoid violence and robberies, and most of all, “until things change, stay away from New York City if you possibly can.” Plainclothes police officers handed them out as a clear warning. Now there is further tumult almost a generation later. Step out of a cab in Brooklyn or the Bronx today and the same pamphlet may as well be making the rounds.
The incredible run of New York City under both Rudy Giuliani and Michael Bloomberg today seems like a distant memory. There were two decades of political stability, economic revival, and falling crime rates. But due to the perfect storm of Bill De Blasio, rioters, and the coronavirus, New York City today is looking far more like the abyss of 1975.
Middle class and high income families have been darting for the exits in record numbers. Over the last year, the overall wealth of New York City residents fell by more than 11 percent, representing over $330 billion in lost economic power. United Van Lines has reported that 61 percent of residents leaving Manhattan earn over $100,000. State tax collections from New York City dropped dramatically since the pandemic started, down 32 percent in May and 46 percent in June.
New York City has a $9 billion budget deficit, and the state deals with a $30 billion budget deficit. Even before the pandemic, New York City had faced fiscal armageddon. Lacking money from the backbone of its high taxes, the social programs and public payrolls need extensive cuts. New York City is now bracing for 22,000 layoffs, and the state has instituted a salary freeze and slashed $4 billion from its budget. But these relatively conservative actions are not enough to stem the coming decline.
The collapse in revenue from taxes also follows projections of economic depression. Many businesses have been closed, while a third of the small businesses in New York City will likely not return. Projections include the decline of gross domestic product of $115 billion. New York City is simply losing more middle class and high income residents than it can afford to continue as the financial and cultural center of the world.
New York City may return, but just as in the 1970s, it may take a hiatus lasting decades. The hollowing out of the core of economic growth will leave it an unlivable hell hole for those unable to leave. Increasing crime rates and financial panic will only worsen as the liberal wish list of more taxes and defunding the police comes to fruition.
Those unable to leave will face a very different New York City than their parents knew. The prosperity and safety of recent decades were already eroding. Then the pandemic hit, and the decay accelerated. Many of the small businesses that lower income and immigrant families count on will no longer be there. Many financial firms and companies like Amazon are being chased away by taxes and crime.
The decline also coincides with a loss of confidence. Similar to bulls and bears of the stock market, the psychological effects of the decline will be hard to shake. For the average person, blocks of shuttered businesses and headlines about murders curb their ability to be a part of society. Parents will not want to send their children to schools in a concrete jungle or risk their lives just by going to the grocery store. Where there was confidence yesterday, there is great concern tomorrow. For all the issues of working people, politicians are challenged by a Gordian Knot.
For De Blasio and Andrew Cuomo, fiscal salvation comes in only one form, which is the election of Joe Biden and Kamala Harris. The Democratic duo could push forth an economic bailout that would bring Gerald Ford back to life. Liberal localities and blue states are simply riding out the current crisis hoping for a lifeline to continue their fiscal waste.
Whether Trump or Biden takes the oath of office in January, the issues in our burned out cities remain the same. De Blasio and his socialist cronies managed to kill the goose that laid the golden egg. Their policy proposals mean only one thing, and residents who remember what it was like before Giuliani know what is next. Welcome to Fear City.
Kristin Tate is a libertarian author and an analyst for Young Americans for Liberty. She is a Robert Novak journalism fellow at the Fund for American Studies. Her newest book is “The Liberal Invasion of Red State America.”