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By Root 1168 0

Corporation to monitor Beame’s budget and hold hostage certain revenues to repay investors. When that scheme failed to restore investor confidence, three months later the state imposed the Emergency Financial Control Board to hold Abe Beame himself hostage. The Board, composed of three nonelected businessmen (plus the governor, state comptroller, mayor and city comptroller), was granted sweeping “emergency” police powers. “The people we’ve been appealing to throughout this crisis,” Governor Carey’s Chief of Staff, David Burke, said at the time, “are not so much the voters as the investors.” When the Control Board also failed to restore investor confidence, the federal government was ceded a voice in the city’s governance. The unelected MAC representatives forced the transit fare to be raised 40 percent. The unelected business representatives on the Control Board vetoed city-negotiated contracts. Officials in Washington demanded the abolition of free tuition. Those in Albany compelled the Mayor to replace his closest aide, Deputy Mayor James Cavanagh, and others. Since 1975, the banks and the unions, whose investment in city paper is crucial, were granted a virtual veto power over elected city officials, reviewing their budgets and management. Ironically, democracy was abrogated in order to avoid the failure of democratic government—bankruptcy—where a nonelected judge tells elected officials what to do.

New York’s democracy collapsed because New York was, paradoxically, the victim of too much—and too little—democracy: a plethora of special-interest groups combined with short-sighted politicians and a self-centered electorate. The dilemma was anticipated by the Founding Fathers. In Federalist Paper No. 10, Publius—in this essay, James Madison—urged the Constitution’s ratification because, he said, the elaborate system of checks and balances would prevent any “faction” or special interest from dominating the common public interest. But Madison did not want to banish “factions.” Quite the contrary. He understood that they were as necessary to the functioning of a democracy as air to breathing. “The inference to which we are brought,” he wrote, “is that the causes of faction cannot be removed and that relief is only to be sought in the means of controlling its effects.” The effects would be controlled by dividing power between the state and federal governments, between the executive, legislative and judicial branches, between a popularly elected House of Representatives and a more elitist Senate, between the right to vote and the Bill of Rights. America was to be both a democracy and a republic. And for a democratic republic to work, said Publius, elected officials need search for the broader public interest and not “sacrifice it to temporary or partial considerations.”

In New York, the “factions” went unchecked. City Hall was bombarded by what Douglas Yates of Yale has aptly called “street-fighting pluralism.” Groups vied to get theirs. The party organization demanded patronage. The banks angled to sell their services for interest-free deposits, underwriting fees and extortionate interest rates. The politically connected wanted their day-care center leases; the construction unions, their public works; the builders, their permits. The municipal unions, their lavish benefits. David Rockefeller, his World Trade Center. Tenants, their rent control and subsidized middle-income housing. Blacks, their own community control; Hispanics, their bilingual education. Government did not just protect; it rewarded. Interests inevitably clashed. The federal poverty program pushed for more community participation and local politicians for more control. Cops were pitted against community forces in opposition to a Civilian Review Board. As were teachers in opposition to local school boards. Often, there was “right” on both sides. Community school boards said they wanted the freedom to choose who would educate their children, and teachers said they wanted the protection of seniority and due process. The city administration wanted to further the