The Streets Were Paved with Gold - Ken Auletta [153]
Like Prince Prospero, New York leaders often acted as if the city were a nation unto itself, its walls sealed. Until the courts blocked him, Mayor Wagner, with widespread support, ignored the nation’s policies and unilaterally tried to raise the city’s minimum wage to $1.50 an hour. Wagner wanted to do what he thought was right, sealing his eyes to the many jobs that would shift to other states with no such laws. Just as the Lindsay administration, also with widespread support, didn’t believe Wall Street firms would flee to New Jersey when the stock transfer tax was imposed.
Businesses came to be viewed as a source of taxes, not jobs. Liberal politics dominated sound economics. Profits were somehow wicked. Unlike many cities and states, New York discouraged tax and other incentives for private enterprise. We worried about ripoffs, the rich soaking the poor, the inequality of wealth. The sound proposition that the rich should pay more doesn’t work unless it’s uniform national policy. It wasn’t. This is a free country; as local and state taxes climbed, people were free to move—or go out of business.
When businesses moved, many liberals, including Episcopal Bishop Moore, charged they were “immoral.” Righteousness infused our politics. When the transit fare was raised in 1975, a City Hall rally attended by a cross-section of political and labor leaders urged citizens to resist. Who would pay the wages of the transit workers? Who would subsidize the deficit-ridden Transit Authority? It didn’t matter. Consequences were less important than speaking out, than taking a “moral” position. In their 1977 mayoral campaign, liberal candidates Bella Abzug and Herman Badillo urged a public takeover of Con Edison, the giant utility. In their book The Abuse of Power, Jack Newfield and Paul Dubrul summoned the city to sock Con Ed with higher taxes. Ignored in this tumult of liberal and left posturing is a glaring fact: 23 percent of each citizen’s Con Ed bill is already earmarked to pay city and state taxes. This is six times greater than Detroit’s tax rate, five times Philadelphia’s, four times Los Angeles’. If Con Ed were publicly owned, how would the city, which can’t tax itself, make up the $470 million in city and state taxes Con Ed says it paid in 1977? If taxes were raised, how would that translate into reduced utility bills for consumers? A compelling argument can be made for public ownership or at least a feasibility study—even after taking into account high taxes and fuel costs (60 percent of a resident’s electricity bill), Con Ed’s rates exceed those of neighboring utilities. Its management, materials and services, and wage costs exceed, for instance, those of Long Island Lighting Co. or the New Jersey Public Service Electric and Gas. Under public ownership, 4 percent dividends would not be paid. But before the public could own Con Ed, it would have to purchase their reported $10 billion worth of plant and equipment (unless the city were to expropriate this private property, which is illegal). Such action would invite the escape of other businesses—and jobs. To make the public ownership argument, one must be prepared to show that the gains from public ownership will exceed the expenditure or tax loss.
A similar confusion extends to the city’s credit crisis. The banks, many liberals charge, are to blame for refusing to lend New York money. The private credit market—composed of thousands of individuals and investment opportunities, of amorphous