In 2013 New York City elected not only its first Democrat mayor since 1993 but its first openly socialist mayor. Of course Bill de Blasio has a long way to go to prove he’s more socialist than Republican Nanny Bloomberg.
New York City is a strange place in many, many ways. Let’s face, squeezing that many people into that small a space defies both logic and common sense. Then there is the economic absurdity of the place. The average annual income in New York City is $50,000, while the average rent is a staggering $3,000 per month. Which raises the question: “how can poor people afford to live in New York?”
In a rather interesting article in Bloomberg View, Megan McArdle gives answers to this question that most observers (journalists in particular) prefer to downplay, if not ignore. The answers, which can be summed up charitably as “dependency,” are downplayed because they throw light on just why it is that New York City is such a center of “progressive” politics, and why its denizens skew electoral politics throughout the nation.
Ms. McArdle finds the secret of “poor New York” in a package of redistribution schemes, taxpayer-funded benefits, and in some cases actual freeloading. It is a picture of where America is headed under our current policies, as we continue to heed the advice of “progressive” intellectuals of the New York type and protect the fortunes of New York bankers and stock brokers with government programs and regulations. And it isn’t pretty.
The essential elements of the New York City Way begin with rent control. Well over half the housing units in New York City have city-regulated rents or are owned outright by the government. This makes it easier for many people (some, though far from all of them, relatively poor) to afford to live in the city. It makes it all but impossible for members of the middle class who aren’t “connected” enough to score a rent controlled unit to live there. About 45% of the rental units in New York City have to subsidize the rest, which of course means higher rents and more importantly, a focus among developers on building only luxury units, which can maximize profits in the crowded “free” market, which the city is less likely to commandeer for rent control. The result, as in most socialist systems, you get a combination of connected rich people, a few clever operators in the middle, and quite a few people at the bottom of the income spectrum who depend on government benefits.
In addition, the city government has expanded various federal programs. 3.2 million residents (almost 40%) are on Medicaid, 91,000 residents receive section 8 housing vouchers, and fully 2 million receive food stamps. Again, the numbers clearly show a huge proportion of New Yorkers receiving benefits from the government, worried more about redistributing wealth than about creating decent jobs.
Then there are the thousands of young people who went to Ivy League or snooty Liberal Arts schools and decided to “lie the dream” by working for peanuts at some fashion house or publishing house or other “prestigious” job, or to “save the world” through some form of activisim, living with roommates, taking the bus while living off their relatives, according to Ms. McArdle.
Many people in Eastern Europe were much less happy than they thought they would be when communism fell. Sure, the secret police were no longer the threat they once had been, but now people were expected to work hard, to show up on time, and in many instances to find or even create their own jobs. S ocial Democracy, whether in Europe or New York City, is an attempt to get around those unpleasant work-related difficulties without the secret police. Many New Yorkers seem to think they’ve succeeded; they at any rate were willing to elect a mayor whose policies and attitudes seem more appropriate to a People’s Republic than to the American republic. And the reason is simple: dependency is working, for now, if you aren’t in the middle class and don’t aspire to moving into the middle class. The most rational response to all this is to do what Ms. McArdle did, namely, move away. The problem with the “move out” solution, of course, is that New York City and its big city brethren want the rest of the nation to follow them as they make “progress” toward ever more government dependency. Their representatives and their industries are helping in this move, and it is doing damage to the nation.
The New York response, after some choice four-letter words, would be to deny that New York is “doing” anything to the rest of the country. Yet we still are paying for the Wall Street bailout, the bursting of the housing bubble caused by the same companies we’ve bailed out, and the regulatory/subsidy structure that keeps the financial services industry afloat. The same goes for other big city boondoggles, particularly on the coasts.
How do big cities like New York, San Francisco, LA or D.C. pay for its culture of dependency? By playing host to an industry that uses government-enforced barriers to entry such as regulations, draconian copyright and trademark laws, etc., to suck enough wealth into itself that its host city can live off the externalities. In all these cases, the rich get to feel good about themselves for the generous benefits their accountants and tax lawyers keep them from having to fund, even as the middle class is squeezed out to the exurbs (the suburbs are still too expensive). That the poor people among them are trapped in government dependency is something in which the elites, almost all liberal to far-left, take pride despite the high cost to people’s long-term life prospects and character.
You can read Bruce Frohnen’s article in full at this link.