The Streets Were Paved with Gold - Ken Auletta [144]
Democracy in New York—America, the world—is suspended between what it wants to do and what it can do, between its divergent political and economic goals. New York cannot cope with its powerful “factions.” America cannot cope with its energy or balance-of-payments woes. Italy cannot cope with terrorism; Japan, with corruption; France, with the rich who don’t pay taxes; England and Sweden cannot cope with their unions; Canada, with Quebec. No nation has learned to cope simultaneously with inflation and unemployment. In addition to not working, the tension between our social goals of equality and our economic systems’ ability to pay the bill pulls government in opposite directions. To further social justice, New York City undertook tax, spending and borrowing policies which undermined its economy. The requirements of social democracy and greater equality clashed with the requirements of a free market (capitalism) and the liberty of people to move.
“Liberal democracy’s crisis is real,” Alan Wolfe, author of The Limits of Legitimacy: Political Contradictions of Contemporary Capitalism, has written. “Its roots lie in the fact that in Western societies the economic system is liberal and capitalist while the political system is formally democratic and therefore potentially socialist. This is why some … argue that the political system must be revamped to bring it in line with the economy. It is also the reason why others work to transform the economy according to the principles of democracy. The impasse of liberal democracy will not be resolved until one side or the other has its way.”
The clash was obscured as long as there was a growing economy—more for everyone. But in New York, as is becoming evident in America and around the world, everyone cannot be satisfied. For many, there is no more more. There are limits to what New York can spend, tax or borrow. There are limits to what the federal government can do or spend to reduce unemployment or curb inflation. Coal miners cannot capture 39 percent pay hikes without affecting consumer prices, including the prices that they themselves will have to pay. There are limits to what the growing Sunbelt will spend to rescue the lagging Northeast, to what the middle class will voluntarily pay to help the poor. Private capital expansion may not be possible under a socially just tax system, just as true tax reform might threaten capital formation. Alaska cannot enjoy unrestrained growth and an unspoiled environment. Japan and the Western European democracies cannot reduce America’s balance-of-payments gap without harming their own economies, at least in the short run. Someday, we know, the warming of the earth’s surface will melt the ice caps, the oil wells and coal mines will lie fallow. Eventually, the light from the sun will be extinguished.
We know all this, and yet even when we know what to do we can’t or don’t know how to do it. Peter Jay, the British Labor government’s ambassador to Washington, wrote some years ago, “Democracy has itself by the tail and is eating itself up fast.” With the exception of England, New York was one of the first to complete the meal.
* Democracy, by which I mean representative government, presupposes meaningful competition in elections; elected officials who feel accountable not just to pressure groups but to an electorate, believing there is a broader public interest that is not necessarily determined from bargaining among groups; and a public which believes its government is honestly searching for the broader public interest.
* The press, particularly the Times and News, did do a good job exposing Beame’s phony layoff figures in 1975. As it should have, this reporting had a profound effect on “investor confidence.”
Chapter Eight
Politics: The Melody of the Fiscal Crisis
DURING A LONG, weary night in autumn of 1975, when it appeared the city would plunge into bankruptcy, Mayor Beame’s Contingency Committee on bankruptcy was summoned