Sunday, October 09, 2005

NY Times Reviews Bloomberg on Economic Development: Jenny (not) From the Bronx

The Times' review of the Bloomberg record on economic development, while continuing much of the cheerleading style sanguinity that its reporter Jennifer Steinhauer demonstrated when she was covering the mayor at City Hall, at least begins to analyze some of the mayor's shortcomings in this area. We are grateful for the increased nuance but a fuller and more balanced evaluation still remains to be written.

The good news in the piece is Steinhauer's recognition that the Bloombergers have, at least to the small business folks, favored larger businesses at the expense of the little guys. The centerpiece here is her use of a quote from Stanley Mayer of the Bronx Terminal Market Preservation Association:
Countless politicians have said that small businesses are the backbone of New York City, and yet we're being steamrolled over here
In addition Steinhauer recognizes that the administration might have a "tin ear" for local politics within the economic development debates. This is a point that Jonathan Bowles, who is cited later approving much of what the mayor is trying to do in this arena, has emphasized as a major drawback in the mayor's approach and Bowles' analysis would have been at least as appropriate here as it was later on when he was more approving of the mayor's strategy.

Steinhauer also gets credit for the recognition that the mayor's budget balancing has come at some cost to the city. The money quote: "And on the fiscal front while it is true that the administration has kept its budget balanced with targeted cuts, tax increases and surging tax revenues from a booming real estate market, it has failed to grapple with longer term structural deficits caused by creeping increases in the number of city employees (something the mayor controls) and rising pension and Medicaid costs (something he does not).

Also on the positive front is her discussion of the stadium debacle and how the mayor and the rest of his economic development team were "unavailable" to address important economic issues because of the obsession with the West Side. As an anonymous source said."...attention and resources were diverted."

Missing Pieces

While Jenny and the Times deserve credit for the discussion of some of the less flattering aspects of the Bloomberg approach to economic development one still gets the feeling that they are mentioned in a more or less obligatory fashion. Certainly their juxtaposition with the more laudatory emphases tends to give the overall impression that they are relatively minor flies in the ointment.

What's missing is a real critique, one that recognizes some of the mayor's achievements but at the same time provides a more balanced and in-depth evaluation of his shortcomings. This in not simply a matter of special pleading on behalf of a small business sector that, under the current mayor, would have actually benefited from a greater inattention. It is rather a recognition that there are some serious weaknesses in the mayor' approach from the standpoint of sound fiscal public policy.

The Bronx Terminal Market is a case in point. The ability of the Doctoroff team in particular to simply jettison these firms with no plan for their relocation underscores a mindset that has no awareness of the importance of nurturing the existing small and minority business sector. This top down mentality is ironically indicated in the Steinhauer piece when she relates how Doctoroff and Alper "began to fly around the country and the world...trying to persuade companies to bring their corporate headquarters here."

Precisely so. This is the $1 a year team's Mt. Olympus perspective. Isn't worth pondering what the impact might be of so many of Bloomberg's top economic and planning people (and the mayor himself) working for no remuneration? How could this crew possibly understand the struggles of small entrepreneurs trying to make a go of it in a neighborhood store? There is simply no one in this administration with any real feel for the immigrant businesses that are so vital to the reinvention of the city's economy every generation. In fact it is quite symbolic that Bloomberg's Commissioner for Immigrant Affairs (Or is he only an advisor?) is none other than Guillermo Linares, the Dominican elected official who sold out his own business class during the East Harlem Pathmark fight.

It is true, however, as Doctoroff points out, that the Bloomberg proactive approach, at least as it applies to the larger economic picture, is a decisive improvement over the reactive approach of EDC under Guiliani but it also further underscores the total lack of awareness or concern for the 186,000 neighborhood retailers who were particularly hard hit in the post 9/11 recession (a sector experiencing record bankruptcies and foreclosures).

Which brings us to a major omission in the Steinhauer piece: the complete absence of any discussion of city regulatory policy. The proactive economic machers allowed Gretchen Dykstra's DCA to go on a scorched earth enforcement rampage that that treated store owners like piƱatas and that contributed, along with the real estate taxes, to the aforementioned record level bankruptcies.

This is particularly egregious since Steinhauer had access to the Citizens Budget folks (she quotes Charles Brecher at the end of the article in a manner that we wonder if he would have sanctioned if asked) and it was this group that collaborated on a report that pointed out that taxes and regulation are key variables in the ability of small businesses to compete.

Which highlights the fact that the Times story fails at any point to see if the small business sector is part of the glowing picture the paper paints of the city's economic recovery after 9/11. JS's use of the Mayer quote obscures the issue because the BTM case is about mega-development mania and not about overall policy vis-a-vis small business. There is a great deal of citing of the Kathy Wylde types but none from the Sung Soo Kims, the Rob Bookmans or the Jose Fernandezes (forget the Alliance, we didn’t' expect that JS would call us since we have been less than flattering to her in the past).

Falling Out of the Twelth Floor Window

One final point on JS's rather rosy evaluation of the mayor's record tax increases ("nor did tax increases hamper economic growth, as conservatives warned they would"). It reminds of the anecdote of the man falling out of the 12th floor window, When he flew past the third floor a man who was looking out the window asked, “How’re you doin?" The falling man responds, "So far so good."

Since Steinhauer hasn't really looked beyond the Manhattan-centric pictures painted by the Partnership types, she is unable to see, not only the hurting in the neighborhood business sector, but the aggravated poverty rates and structural unemployment in the city's minority communities (as is evidenced by Times article that also appeared on Sunday). In addition, there is no analysis of what might happen if the "superheated real estate market" bursts in the face of an emerging $4.6 billion projected budget deficit (so far so good indeed).

This failure is underscored in the article's endpiece when Steinhauer describes the mayor's strategy of raising taxes as an approach designed to prevent the city from falling into the "lamentable state of the 1970's." This is a complete misrepresentation of what got the city into trouble then. It was precisely a refusal to cut the size of government and a belief that the city's businesses were destined to remain here even when faced with escalating and crippling taxes that led to the fiscal collapse of that decade.

It is a mentality that the mayor often eerily replicates when he says that it is a privilege for companies to be in New York and, if you are sticker conscious, you really don't belong here. It is also manifested in Bloomberg's sanguine view of government, one that sees the delivery of more services, and not doing more with less, as the sine qua non of good municipal policy. It is right at this point that a quote from Charles Brecher of the CBC would have been apropos. We doubt that Brecher would have described the Bloomberg tax and regulatory policy as "prescient."