Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

Wall Street Journal

 

Ed Koch: Entertaining but No Reformer

February 04, 2013

By Fred Siegel

He saved New York City from an immediate fiscal crisis but mortgaged its long-term future to public unions.

After the death of former New York Mayor Ed Koch on Friday, the outpouring of affection focused largely on what he said, not nearly so much on what he did. And so it was with his mayoral administration. There was the ebullient Ed Koch who first came into office in 1978 and governed in part like a good magician who keeps the audience focused on his spiel and not on his hands, and the Ed Koch who continued in office for eight more problematic though generally prosperous years after an ignominious gubernatorial run in 1982.

Between 1969 and 1977, New York lost an inconceivable 600,000 jobs and 200,000 housing units. The city had vast stretches of abandoned industrial sites, vacated apartment buildings, gas stations and storefronts as well as empty lots over run with garbage. Crime kept rising and morale kept falling.

But not even the collapse could shake New York’s political culture. The city’s 1977 Democratic mayoral primary brought out a pack of traditional liberals, including Congresswoman Bella Abzug, New York Secretary of State Mario Cuomo and the hapless incumbent, Abe Beame. They all had union backing of one sort or another, and the next mayor seemed certain to emerge from their ranks.

Then came the July 1977 blackout and widespread looting and arson. Most of the Democratic candidates talked about how the city needed to become a more caring place. Only one candidate, Ed Koch, who was an also-ran until then, called for bringing in the National Guard to knock heads. He surged to the fore.

Speaking in the voice of the outer-borough white working class, he understood their disgust with standard-issue liberal rhetoric. He described himself as a "liberal with sanity," as opposed to the "wackos." It was, he realized, not just your position on crime but how you conveyed your feelings about crime that counted. Koch won the primary by a hair and then took the general election.

It’s true that his wit and sarcasm raised the city’s morale, but perhaps more important was his close cooperation with New York Gov. Hugh Carey, who has gone virtually unmentioned in the encomiums to the former mayor. Koch’s willingness to control spending allowed Carey to effectively aid the city’s finances from Albany. Even more crucial was the collaboration of the two former members of Congress in blitzing Capitol Hill to win the renewal of federal loan guarantees for the city. The guarantees allowed the city to restructure its enormous local debt, the annual cost of which would otherwise have left the city insolvent.

After Abe Beame, Koch seemed like a giant, but the real giant—the power of the public-sector unions—remained intact. Koch entered into his first set of labor negotiations with a list of 61 givebacks he intended to demand, but he didn’t get a single one. Instead the unions lobbied for and won pay increases. During Koch’s first four years, the public unions, though diminished in the 1975 fiscal crisis, increased pay at a compound rate of 26% so that the city’s total compensation costs continued to rise.

Koch’s attempts at even small-scale structural reform failed. He got nowhere with civil services or welfare reform. He couldn’t even eliminate the uniform allowance for city workers who didn’t wear uniforms. But the inflation that sunk President Carter came to the city’s rescue by reducing the cost of its debt. Ronald Reagan’s 1980 victory, also virtually unmentioned in the encomiums, led to a revival of Wall Street that once again began to pump money into city coffers.

Buoyed by both a landslide victory in the 1981 mayoral election and the reviving economy, Koch foolishly—he later ascribed it to "hubris"—decided to run for governor against one of the candidates he had defeated for mayor, Mario Cuomo. After his statewide defeat, Koch took his eye off the ball in New York City. While his patter was as snappy as ever, he began to reinstitute the very policies that had sent the city into the ditch in the first place.

Koch the reformer, with city funds overflowing, was replaced by Koch the conventional New York politician. He made peace with the collection of social service agencies, "community activists," "civil libertarians" and public-sector trade unionists who lived off the city payroll. A massive new housing program paid off in some solid results but also saddled the city with an unsustainable cost structure.

Between 1980 and 1989, the city budget nearly doubled, growing almost as rapidly in absolute terms, and relative to private-sector value added, as it did in the 1960s. Koch added 57,000 full-time positions to the city payroll, more than offsetting the job cuts instituted during the 1975 crisis. By 1990, when Koch was succeeded by David Dinkins, the size and cost of municipal government was as big as it had ever been.

David Dinkins’s four years in office were shadowed by the threat of the Financial Control Board, which had temporarily taken over the city’s finances under Beame, coming back into power. Mr. Dinkins fought them off with threats of a racial confrontation. It wasn’t until the first term of the Rudolph Giuliani administration, when it became clear that his welfare reforms were beginning to reduce the city’s cost burdens, that the threat of a Financial Control Board takeover receded.

Ed Koch was a wonderful figure, a great tummler, but he was not, despite the suggestion of all the tributes, an effective manager of New York City.

Original Source: http://online.wsj.com/article/SB10001424127887324445904578281503336989988.html

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

On Obamacare's Second Birthday, Whither The HSA?
Paul Howard, 10-16-14

You Can Repeal Obamacare And Keep Kentucky's Insurance Exchange
Avik Roy, 10-15-14

Are Private Exchanges The Future Of Health Insurance?
Yevgeniy Feyman, 10-15-14

Reclaiming The American Dream IV: Reinventing Summer School
Howard Husock, 10-14-14

Don't Be Fooled, The Internet Is Already Taxed
Diana Furchtgott-Roth, 10-14-14

Bad Pension Math Is Bad News For Taxpayers
Steven Malanga, 10-14-14

Proactive Policing Is Not 'Racial Profiling'
Heather Mac Donald, 10-13-14

Smartphones: The SUVs Of The Information Superhighway
Mark P. Mills, 10-13-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494