New York City is a strange place in many, many ways. This is to be expected. After all, squeezing that many people into that small a space defies both logic and common sense. Then there is the economic absurdity of the place. The average annual income in New York City is $50,000, while the average rent is a staggering $3,000 per month. Which raises the question: “how can poor people afford to live in New York?” In a rather interesting article in Bloomberg View, Megan McArdle gives answers to this question that most observers (journalists in particular) prefer to downplay, if not ignore. The answers, which can be summed up charitably as “dependency,” are downplayed because they throw light on just why it is that New York City is such a center of “progressive” politics, and why its denizens skew electoral politics throughout the nation.
Ms. McArdle finds the secret of “poor New York” in a package of redistribution schemes, taxpayer-funded benefits, and in some cases actual freeloading. It is a picture of where America is headed under our current policies, as we continue to heed the advice of “progressive” intellectuals of the New York type and protect the fortunes of New York bankers and stock brokers with government programs and regulations. And it isn’t pretty.
The essential elements of the New York City Way begin with rent control. Well over half the housing units in New York City have city-regulated rents or are owned outright by the government. This makes it easier for many people (some, though far from all of them, relatively poor) to afford to live in the city. It makes it all but impossible for members of the middle class who aren’t “connected” enough to score a rent controlled unit to live there. About 45% of the rental units in New York City have to subsidize the rest. And that means higher rents and, more important, a tight focus among developers on building only luxury units, which can maximize profits in the crowded “free” market and which the city is less likely to commandeer for rent control. The result: as in most socialist systems, you get a combination of connected rich people, a few clever operators in the middle, and quite a few people at the bottom of the income spectrum who depend on government benefits.
In addition, New York City has expanded upon various federal programs. 3.2 million residents of New York City, almost 40% of the total, are on Medicaid. The city also provides other “generous” government benefits: 91,000 residents receive section 8 housing vouchers and fully 2 million receive food stamps. Again, the numbers clearly show a huge proportion of New Yorkers receiving benefits from government programs.
Then there are the kids. No, I’m not talking about the children being raised in poverty. That social tragedy is known in urban areas throughout the United States. It is exacerbated by a government that worries more about redistributing wealth than about creating an environment in which parents can find decent jobs. Here I’m referring to perhaps the most interesting of Ms. McArdle’s explanations, one I hadn’t formulated for myself, though it makes sense of many anecdotes I’ve heard from New Yorkers and others who know them. How do people manage to afford to live in New York City? Their parents pay for them to live there. Those thousands of young people who went to Ivy League or snooty Liberal Arts schools and decided to “live the dream” by working for peanuts at a New York City fashion house, or publishing house, or other “prestigious” job, or to “save the world” through some form of activism, may be living with roommates, they may be taking the bus, but they also, in rather high numbers (Ms. McArdle doesn’t have statistics, but the point remains worth considering) are living off their relatives.
I don’t mean, here, to disparage a little intra-family income redistribution. That’s what college tuition involves, too, after all. What’s more, most of my generation (just past the baby boom) are facing the fact that our parents emptied the cookie jar on Social Security, leaving us to pay for our own retirement as well as theirs, and also to try and help our kids survive in the new world of reduced economic opportunity in which we live. The problem is that this intergenerational support isn’t so much aimed at setting up the children in business or otherwise getting them started in life, as it is in supporting them until—and unless—lightning strikes. What is more, it takes place in New York City, in an atmosphere of more general dependency, in which getting something out of that cookie jar is a normal part of everyday life, breeding an attitude in which income is separate from work, life expectations separate from character, skills, and pride.
Many people in Eastern Europe were much less happy than they thought they would be when communism fell. Sure, the secret police were no longer the threat they once had been, but now people were expected to work hard, to show up on time, and in many instances to find or even create their own jobs. Social Democracy, whether in Europe or New York City, is an attempt to get around those unpleasant work-related difficulties without the secret police. Many New Yorkers seem to think they’ve succeeded; they at any rate were willing to elect a mayor whose policies and attitudes seem more appropriate to a People’s Republic than to the American republic. And the reason is simple: dependency is working, for now, if you aren’t in the middle class and don’t aspire to moving into the middle class. The most rational response to all this is to do what Ms. McArdle did, namely, move away (though I’m not sure her new home, Washington, DC, is that much of an improvement). The problem with the “move out” solution, of course, is that New York City and its big city brethren want the rest of the nation to follow them as they make “progress” toward ever more government dependency. Their representatives and their industries are helping in this move, and it is doing damage to the nation.
The New York response, after some choice four-letter words, would be to deny that New York is “doing” anything to the rest of the country. Yet we still are paying for the Wall Street bailout, the bursting of the housing bubble caused by the same companies we’ve bailed out, and the regulatory/subsidy structure that keeps the financial services industry afloat. The same goes for other big city boondoggles, particularly on the coasts. How does New York, or San Francisco, or Los Angeles, or Washington, pay for its culture of dependency? By playing host to an industry (financial services in New York, high-tech in San Francisco, entertainment in Los Angeles, and government in Washington) that uses government-enforced barriers to entry (financial regulations, draconian copyright and trademark laws, etc.) to suck enough wealth into itself that its host city can live off the externalities. In all these cases, the rich get to feel good about themselves for the generous benefits their accountants and tax lawyers keep them from having to fund, even as the middle class is squeezed out to the exurbs (the suburbs are still too expensive). That the poor people among them are trapped in government dependency is something in which the elites (almost all of them liberal to far-left) take pride, despite the high cost to people’s long-term life prospects and character.
It may be easy for those of us who find ourselves living in forgotten small-town America to blame it all on “those big-city folks.” And old factory towns in particular have had much to do with their own hard times. But as we consider the advice coming from supposedly sophisticated centers of commerce and culture, we had best remember the type of life they have made for their own people and the effect its spread would have on the rest of us. It is nice to believe that we, too, could be limousine liberals. But most of us would end up washing the limo’s windows, hoping for a decent tip.
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