There’s only so much erosion a tax base can take before it starts to crumble from the inside

Thursday, September 24th, 2020

A former Bloomberg mayoral campaign manager says that New York City is in deep trouble:

In local political circles, it’s now fashionable to scoff at doomsday predictions and say that just as New York City came back in the 70s, came back in the 90s, and came back after 9/11, it will now too. It’s fashionable to say that even if some traditional office-based industries cut back significantly, the cheaper rents will lead to an artistic and technological renaissance that will spark new industries, trends and energy that will make the city better than ever.

Unfortunately, that’s probably more wishful thinking than anything else.

What we’re facing now is different: the beginning of a far more transformational shift in how we work, in many ways echoing the flight of manufacturing from the United States in the mid-late 20th century. Until now, there was a basic assumption that most white-collar employees would work in an office. Only something like a six-month quarantine could have challenged a norm so ingrained in our society.

[...]

There’s only so much erosion a tax base can take before it starts to crumble from the inside. Great American cities like Detroit, Baltimore and Cleveland were all decimated by the flight of manufacturing. Despite some well-intentioned marketing campaigns to the contrary, none of them really ever recovered.

New York has always been resilient because we’ve always been the physical home of industries like finance and media, law and advertising and health care. And not just one industry like some insurance towns, but many industries.

But that’s only because the idea that you don’t have to be anywhere else never occurred to anyone before.

[...]

Short term, the answer is to do everything possible to keep the city as appealing as possible. That means investing in quality of life measures like trash pickup and graffiti removal. It means figuring out how to curb abuses by law enforcement against blacks and Latinos while still bringing down the rate of shootings.

It means making the city an attractive place to do business. If you want to save jobs and help working people, raising taxes and adding regulations will only have the opposite effect.

Longer-term, it means trying to use newly vacant office space to spur new industries. It means reducing the cost of operating municipal and state government so that spending meets what the new tax base can actually afford.

It means having a mayor willing to personally call every major employer to ask what she or he can do to make them happy here, rather than having a mayor who is constantly trying to drive jobs away. And it means knowing that none of this may be enough and having five more approaches ready to go.

Comments

  1. Harry Jones says:

    “New York has always been resilient because we’ve always been the physical home of industries like finance and media, law and advertising and health care.”

    Industries?

    Some of these things are not like the others. And only one of them produces something of indisputable value.

  2. Kirk says:

    Note also that instead of trying to get out ahead of this, New York’s leaders are actively working to drive everyone away with the increased lawlessness and rioting.

    News flash for Mayor DeBlasio: Those jobs ain’t coming back, and those stores ain’t gonna reopen. The internet is finally realizing the promise of destroying centralization as represented by cities, and I think the future is going to be a hell of a lot more spread out than anyone ever considered.

    It’s actually a fairly wise move; decentralization is a good idea in the era of WMD. New York is easy to target with a terror attack or a nuke; a more spread-out proposition where there is no central office hub? Not so easy.

    We really should have been doing this before, if only for mental health reasons.

  3. VXXC says:

    “…rather than having a mayor who is constantly trying to drive jobs away.”

    People with jobs have the option of not voting democrat. Of course he wants to drive jobs away.

  4. Harry Jones says:

    The only reason most megacities exist is because of deep water harbors. Unfortunately, deep water harbors will matter for the foreseeable future.

    We can certainly dissolve the inland megacities. But those ships have to dock somewhere.

    Perhaps mulligan harbors?

  5. Borepatch says:

    This article could have been written in 1880 about how industrial production of course will remain in England.

  6. Mike in Boston says:

    those ships have to dock somewhere.

    How much does it matter where they dock?
    Here in Boston, the big cargo ships do dock very close to downtown; but isn’t that the exception, not the rule? Thinking of the New York area, they dock in Elizabeth, New Jersey where containers are loaded onto rail and trucks. I doubt the whole operation would be affected much even if Manhattan’s population and GDP dropped by half.

  7. RLVC says:

    “And only one of them produces something of indisputable value.”

    Advertising?

  8. Harry Jones says:

    Mike, I don’t think dropping by half will be enough. The population density needs to drop about an order of magnitude for the NYC metro area to be livable.

    An area like Atlanta or DFW is purely a Schelling point. Everybody lives there because everybody lives there. When everyone wises up, these artificial concentrations will dissipate. It may take major disasters to bring about that mass epiphany.

    New York is a different case. There’s a reason they don’t unload container ships along the South Jersey shore.

  9. Sunoma 69 says:

    It is easier to provide services to x thousand people if they live close to one another. Cost of living is higher in the suburbs. New York is full of wellfarees. They can’t go anywhere, so what is going to happen to them when the city gets poorer and poorer?

  10. Harry Jones says:

    Sunoma, the “providing services” mentality is a big part of what’s wrong with urbanization. I think Jared Diamond has a chapter about why this is so.

    And I have my doubts that cost of living is higher in the suburbs.

  11. Dave says:

    “[The welfarees] can’t go anywhere, so what is going to happen to them when the city gets poorer and poorer?”

    They’ll continue to live in NYC and collect welfare, just like in Newark. Only problem with turning a productive city into a welfare slum is that after a decade or two, buildings start falling down for lack of maintenance.

    That’s why Americans don’t build stuff to last anymore. Why bother, when the place will probably be a welfare ghetto in 20-30 years’ time?

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