Former mayor Ed Koch: fight makes right.

Edward I. Koch served three terms as the mayor of New York from 1978-1989. In 1989, he ran for a fourth term and was defeated by David N. Dinkins. Previously, Koch served nine years as a congressman and two years as a member of the city council.

He arrived on the New York political scene in the early 1960s, an issues-oriented, reform Democrat who opposed clubhouse politics and those associated with the Democratic party machine. An Election Day endorsement by the Village Voice in 1967 called Koch a "front-line urban fighter, and the best example of the new, effective, urban politician," He predicts that former U.S. attorney Rudolph Giuliani - a Republican who lost the 1989 mayoral election - will be elected next year when Dinkins' term expires.

Koch, currently a partner in the law firm Robinson, Silverman, Pearce, Aronsohn & Berman, is widely credited with having restored fiscal stability to New York following the city's brush with bankruptcy in 1975. Riding boom times brought on by explosive stock market growth in the go-go 1980s, he rapidly increased city spending and employment. Perhaps ironically, he's labeled his successor a spendthrift, but adds the reason in that tougher times call for much tighter measures. CE editors J.P. Donlon and Joseph L. McCarthy caught up with Koch in his 31st-floor midtown office.

Participants at the CE roundtable perceive Mayor David N. Dinkins to be indifferent to business. Is that true?

Hostile is a better word. The current administration wants to continue social services spending no matter what the cost. But if you want to provide services to people who don't pay taxes, then you must keep here those who do. Businesses compose a substantial part of the tax base.

Is it possible to reverse current spending trends?

We're first in the nation in most areas of social services spending. What we should do it bring that down to No. 5.

Governor Cuomo heard me make that suggestion on the radio and he responded, "If Koch owned a baseball team, would he want to own the No. 5 baseball team?" My response is that if you don't have the money, No.5 is all you can afford. You don't go on a spending spree like a drunken sailor. At that reduced level of spending, the city would save $2 billion.

What should the city do about the tax burden?

The mayor had to be pushed by business officials and the city council to declare a four-year moratorium on new taxes. He should have taken the lead. Taxes make New York businesses noncompetitive. We should be in the mean on taxes among the 50 states.

Regarding some specific areas of social spending, do we need 15 hospitals?

While I agree that we overspend on some social services, the health-care question is particularly problematic. One difficulty is that private doctors have left the ghettos. That leaves city hospitals - which overwhelming serve blacks, Hispanics and other minorities - to fill the gap. One alternative might be to put welfare recipients into cost-effective health maintenance organizations.

You've recently come out in favor of privatizing certain city services. Which are the most likely candidates?

In garbage collection, the city should allow private-sector companies to bid on residential pickup. To successfully bid for contracts, the Department of Sanitation would have to reorganize along the lines of a private corporation.

You didn't suggest such schemes while you were in office. Was that because of fears about union reprisals?

The unions present an obstacle both for businesses and politicians. But while in office, I took them on anyway. Partly as a result, they supported David Dinkins over me in 1989, and Dinkins won the election. But regardless of the consequences, the unions must be confronted. Even the tough times in recent years haven't softened them enough to hear the voice of reason.

Now, Dinkins says he wants the unions to close $250 million of the budget gap through restructuring initiatives, but the can't get a nickel from them. I'll tell you what will work. What the mayor should do is to send out pink slips to 25,000 workers then say to their unions, "You can save these jobs by helping us to close the budget gap. You don't want to save them? These jobs by are gone."

What can the business community do to make its concerns known?

I think they have to educate the public. They should take out ads in the New York Times, saying, "You know, it's easy to throw mud at business people and to say we're privileged, but we create the jobs and provide the tax money for New York City."

To the mayor, business should simply say: "This is what we want you to do." Other special interests operate that way: blacks, Jews, environmentalists. That's New York.