We Were Once Detroit

NEW YORK CITY-The bankruptcy filing by the City of Detroit was inevitable considering its shrinking population and tax base; large swaths of land throughout the city abandoned; many homes, businesses and infrastructure in various states of collapse; and elected officials governing by attempting to solve structural problems with short term solutions. In contrast, we are witnessing a growing population and a tremendous appreciation in New York real estate values, which has become a magnet for money and people from all over the world. It is a very different New York than what we lived through in the 1970s.

Almost 40 years ago, New York City was teetering on bankruptcy, crime was rampant and buildings were being abandoned, while Detroit was awash in cash and the city was expanding, due to the tremendous growth of automobile manufacturing in and around the city.   In the 1960s New York City began to lose its manufacturing base and factories moved south for cheaper labor, and New York seemed doomed.  Between 1970 and 1980 New York City's population fell by more than 823,000 people and then the situation slowly started to change.  New York City still has problems, but we have survived the loss of our manufacturing base and become a global economic, finance, medical, educational, and tourist center where old factories are being transformed into expensive condominiums.  New York City survived and prospered and so can Detroit and every other American city that has to adjust to an ever changing society.  However, cities (including NYC) have to continuously evolve in order to survive especially in our fast moving information age.

The bigger question is where will NYC be in 40 years? Are the steps that are being taken adequate to maintain our growth or are they really just the functional equivalent of rearranging the deck chairs on the Titanic? There is no doubt that we need to focus on issues such as the need for more affordable housing, better schools and more blue collar jobs. Nevertheless, we cannot rely on ever increasing taxes as a way of generating revenue because we cannot afford to lose high-income residents who, in an information society, do not have to live in NYC. In order to accomplish these goals our elected officials have to be creative and not just plan on spending more. We need to modernize our housing laws, build more, smaller schools, pay qualified teachers significantly more, and formulate a property tax system that is fair, simple, and is based on everyone sharing the burden.  

The 2014 NYC Budget is $70 Billion and, like the Federal Budget, is bloated with multiple layers of departments and decades of once new programs which, once enacted, have a life of their own. Perhaps the future of New York entails looking at how the $70-billion is spent and see if it can be spent in a smarter way. The new Mayor should take a page from President Truman, who invited former President Herbert Hoover to head a commission on the reorganization of the federal government to make it more efficient. The new Mayor should appoint an individual with stature, who agrees to never run for public office, to examine NYC government including every program and every department and determine what is essential and what can be done by the private sector or the non profits and what has to be done by the City using taxpayer money. Just because a function has been done by the City in the past does not mean having the City continue to do it is the most efficient or cost effective way of having it done. In the short run, this may not ingratiate the Mayor with every possible constituency, but in the long run it will very likely provide the people of NYC with a more efficient government.

Stuart Saft is a partner at Holland & Knight. The views expressed in this column are the author's own