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Let’s Hope New Yorkers Are Not Suicidal

Let’s Hope New Yorkers Are Not Suicidal

Dom Serafini (October 25, 2013)

With Bill De Blasio As Mayor: More Taxes, Crime. A Return to 1974-93


By Dom Serafini. Just for the moment, with the New York City mayoral election approaching, political ideology should be replaced with survival pragmatism. Unfortunately, looking at the “Taliban” Republicans in Congress who aimed to destroy the economy of the nation to assert extremist ideological positions, this pragmatism is understandably hard to harvest.

But luckily, Republican mayors in New York City have not been of the Islamist type. Instead, a problem for the city could be the victory of Democratic candidate Bill De Blasio.

Looking back over my four decades in New York City, I remember that its decline started in 1974 with the election of Mayor Abraham Beame and ended after 1994 with the administration of Rudolph Giuliani. After Beame, came other Democrat mayors such as Ed Koch (1978-89) and David Dinkins (1990-93), before the Republican Giuliani (1994-2001), followed by the pseudo-Republican, the current mayor, Michael Bloomberg.

Now, what could determine the decline of a city like New York? In my opinion, the main factor could be a lax crime environment orchestrated by real estate speculators. When people are afraid of going out at night, are afraid to cross the parks, when walls and subway cars are covered with graffiti and the city is full of abandoned buildings and homes with broken windows, people flee from the city to take refuge in safer places to raise their children. This is when consumption, trade and the stock market collapse, as it did in 1987 with the so-called “Black Monday,” which, though it struck several stock exchanges, had the most dramatic impact on Wall Street.

What happened in the period 1974-1993 may re-occur with De Blasio as mayor. He’s a bit of Beame, Koch and Dinkins put together and to win, he has the strong support of labor unions and minorities, as did the disastrous aforementioned administrations.

Instead, this should be the time for unions to assert the interests of the city by supporting long-term strategies, and forgoing short-term gains achieved through wage increases that will be offset by higher taxes and increased cost of living. The unions have a choice: Either be a problem for the city or the solution. The challenge for the city’s minorities is whether they want to return to a time of being afraid to venture outside, living in neighborhoods with broken windows, or instead keep the value of their current property and quality of life high.

One could ask, but why did the 1974-93 mayors allowe crime to rise, making the city nearly unlivable? An answer could come from analyzing real estate speculation.

On August 26, 2006, the New York Times published a chart outlining the costs of houses, buildings and apartments starting in 1890. It clearly showed that crime increases corresponded to property value decreases. The first sharp decline in prices was during the period 1920-1933 with the introduction of Prohibition, which increased crime. The second drop in real estate prices (albeit with ups and downs) was in the period 1974-1993, and that too coincided with another crime wave.

Today, it is almost impossible to buy a home in the city due to the sky-high costs and therefore people are forced to rent, creating a scarcity of apartments and causing more price increases. According to some reports, Manhattan alone would need 500,000 new apartments for rent to stabilize (according to the NY Times so far, in 2013, only 5,160 apartments were available to rent in Manhattan). With regard to purchasing, the average price in all boroughs is $1,307 per square foot, an increase of 11.2% since 2012. Clearly, this is an unsustainable condition and the same situation that occurred from 1945 to 1974, when the cost of real estate increased by 40 percent.

Going back to my experience, toward the end of the 1970s, in the midst of a crime wave, the owner of the building in which I was renting, reportedly purchased the 60-apartment property for the below-cost sum of $5 million and sold it during Giuliani's administration for $60 million, when, as crime declined, New York City began to repopulate.

         There! I do not want to return to the era when real estate speculators dictated New York City’s standard of living. 

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