NYC: Just Another
Banana Republic

From Welfare State to Real Estate: Regime Change in New York City, 1974 to the Present, by Kim Moody, The New Press, $26.95.

It’s a rare occurrence these days that something called a “welfare state” is remembered fondly, but Kim Moody does just that in this analysis of a generation of fiscal and economic policy in New York City. In this thoroughly researched and enlightening book, Moody argues New York was the target of a "structural adjustment program" established when business elites grabbed the reins of governance during the fiscal crisis of the 1970s.

In "Welfare State," Moody, a labor economist and activist who taught labor studies at Cornell University and is now a research fellow at the Centre for Research in Employment Studies at University of Hertfordshire, finds a telling connection between the global financial capital and developing countries. He posits that the way to understand the economic shift named in the book's title is via comparison with the “structural adjustment” packages imposed on struggling economies by the International Monetary Fund, World Trade Organization and World Bank. For many Americans, these were first brought to light by anti-globalization activists at a WTO meeting in 1999 – the “Battle of Seattle” – and continue to be protested de rigueur at Davos and other international capitalist conventions.

Ever since the Financial Control Board in 1975 imposed “fiscal discipline” on a city that had been operating like a western European social democracy, New York has been run for the benefit of big business, Moody contends. This movement is most dramatically exemplified by the scourge of “developmentalism,” in which city government functions are sublimated to the priorities of mammoth development projects, á la the once and future World Trade Center, Atlantic Yards and the far West Side. The city pays wealthy corporations to stay in the city, builds them new campuses, and in the process makes the city harder for the rest of us to live in. In Moody’s analysis, what he calls the "crisis regime" of the 1970s – followed by permanent quasi-public fixtures like the Partnership for New York City, Empire State Development Corporation and others – redistributed economic resources to Wall Street and away from social-democratic services like the higher-ed-for-all CUNY. Thus New York was ever more a company town increasingly dependent on finance, insurance and real estate (the so-called FIRE industries) and ever more vulnerable to the winds of international financial boom and bust cycles.

This makes the few winners fantastically wealthy and increases the ranks of the poor. Thirty years of structural adjustment have led to lower real wages for the mass of workers who serve business elites, a dramatic squeeze on housing affordable to anyone other than the very wealthy and increased income stratification, Moody writes. Backing up these claims, on nearly every page he cites a flurry of statistics: In 1980 the wealthiest 20 percent of New Yorkers earned 21 times that of the poorest 20 percent, but by 2005 that had risen so the wealthiest fifth of the population earned 52 times that of the poorest fifth. Real wages for all New Yorkers dropped 4.8 percent between 2000 and 2005 alone, from an hourly median of $15.13 to $14.40, according to a Fiscal Policy Institute study Moody cites. And the inflation rate for one-, two- and three-family houses in NYC was 4.1 percent, double the national rate, as housing prices are pushed ever skyward by upscale development, he argues. Meanwhile, the ravages of capitalism on the world stage drove hundreds of thousands of globalization’s refugees to New York. Waves of immigration brought a huge pool of Latina maids, Pakistani taxi drivers, Mexican construction workers and Jamaican nannies to New York to burnish the glittering skyline.