Post-finance New York

Ryan Avent hopes that New York City will take this opportunity to refocus its policy on the non-financial industry:  introducing revenue raising measures like congestion pricing, and making it possible to build a lot of new affordable housing.  This is a nice wish list.  But it's obviously from an outsider.  Any native New Yorker can tell you that the financial slump has made these things less likely.

For starters, pressure for congestion pricing comes from Wall Street people and other pricey professionals.  They can afford to pay for it.  The political pressure against it comes overwhelmingly from low-and-middle income types, and small businesses in the outer boroughs who do delivery in the city.  There are a number of areas, mostly in Queens, where the planned subways were never built out because the Great Depression halted the financing.  The land-use patterns that built up there are basically suburban, and natural selection means that the people who live there now do so because they like that lifestyle--indeed, as I understand it, have systematically blocked any mass transit development that might challenge it.  The result is that they basically don't have any way to get to work except drive or ride the bus for several hours.  And they have councilmen who are very sympathetic to their pleas.

So with finance losing the political heft that comes from providing something like a third or more of the city's tax revenues, the pressure for congestion pricing goes down.  In fairness, so does the need for it; traffic in New York has been noticeably lighter than it was a year ago the last few times I've visited.

Likewise, it's hard to overstate just how far left and economically illiterate most of New York City's council members and state representatives are.  The politically powerful head of the transit union was, the last time I checked, an actual communist.  The financial industry was the closest thing that New York now has to a vibrant business community, and with its power ebbing, so is the only remaining natural check on the left's worst instincts.  That's why there's a very good chance that the State Legislature is going to halt stabilization decontrol and renege on the phase-out deals it made with developers in exchange for building stabilized housing--and thus even more thoroughly ensure that no one in the City of New York builds any multifamily housing except luxury flats that no one will be tempted to control.  Though they won't be building anything at all, for a while--the credit crisis is shutting down a lot of projects in the area.

Richard Florida is more optimistic about the future of my birthplace than I am.  In my grimmer hours, I wonder how much of the broad urban renaissance can be sustained absent the credit bubble.  Easy money makes even distressed property look good, and brought an influx of young urban homeowners who put pressure on the political system.  As they flow out, will we be back into the territory of the ungovernable city?