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New York City - fight or flight?

New York is coming to grips with a financial crisis far more serious than its brush with bankruptcy in 1975. But its struggles are also being monitored by other U.S. cities wrestling with their own demons.

When the sci-fi thriller Escape From New York hit movie theaters in 1981, its creators couldn't have known the title would capture the mood of the city's business climate a decade later. Recession has hit New York particularly hard: Nonagricultural employment nationwide fell 1.4 percent between June 1990 and November 1991, according to the Bureau of Labor Statistics. Private sector employment in New York, meanwhile, plunged a whopping 11 percent between April 1989 and February 1992.

Roundtable participants unanimously agree on the causes of New York's malaise: massive shrinkage in the financial services sector, overspending, overtaxing, and a government long on bureaucracy and short on entrepreneurial verve. But the CE group vented particular ire toward David N. Dinkins, New York's major, whose pandering to labor unions, bureaucrats, and strident special interest groups, they quip, has institutionalized a welfare state mentality and gained notoriety for the city as the last command economy in the Western Hemisphere apart from Cuba.

Participants also concur that New York's current crisis is even more serious than its brush with bankruptcy in 1975. Shifting demographics, they say, mean companies can no longer depend on a steady supply of educated, high-quality workers. Crippled banks cannot back the city's commercial paper as they did in decades past. Advances in communications technology, too, have enabled more and more U.S. firms to flee New York for greener pastures in New Jersey and Connecticut. In that sense, New York represents a paradigm for other U.S. cities in trouble. Similar centrifugal forces are pulling apart Philadelphia, Detroit, and Chicago, producing a bevy of corporate boomtowns in the suburbs. Likewise, these cities have shown a propensity to elect free-spending officials quick to dole out public assistance and other benefits.

Statistics bear out the severity of New York's financial crunch. Stephen G. Craig, an associate professor of economics at Hunter College, notes that New York's $3,000 per capita spending figure exceeds that of runner-up Los Angeles by 50 percent and outstrips the average of 10 other large cities by 75 percent (see chart on page 47). Per capita spending on lower-income assistance alone totals $1,084 four times the modern city average, Craig writes in The City Journal, a quarterly published by policy research concern Manhattan Institute. Spending on social services for the poor often comes at the expense of such basic services as police, sanitation, and education.

Sniper fire from a conservative think tank? Hardly. On the flip side of the spending coin - taxation - the bearer of bad news is none other than New York's comptroller, Elizabeth Holtzman, a liberal Democrat. According to a report by Holtzman's office, businesses and individuals in New York carry a state and local tax burden roughly twice that of other U.S. localities (see chart on page 47). When city taxes alone are tallied, that burden swells to three times the nationwide average.

But perhaps most important, the report deals harshly with New York's propensity to close its budgets gaps by raising taxes. It found that a rapid increase in taxes beginning in the 1960s contributed to the city's financial problems in the late 1970s. In addition, the study contends, state and local tax increases of $822 million and $974 million in fiscal 1991 and 1992, respectively, could lead to the loss of as many as 265,000 private sector jobs by 1994.

"Clearly, raising taxes is not the way to go during a period of economic decline," says Stephen Kagann, chief economist with the comptroller's office.

Crawling from the wreckage in recent years - or planning to - have been a spate of large corporations, including pharmaceutical giant American Home Products, Swissair, and the Tastee division of Stroehmann Bakeries. In 1963, 175 Fortune 500 companies had headquarters in New York. By 1990, that figure had dwindled to 48. New Jersey utility Public Service Electric & Gas says one business every four days migrates to the Garden State. Economist Kagann reckons more than half that numbers cross the Hudson River from New York City.

The plan to shut a large baking plant in New York by Stroehmann, a unit of Toronto-based George Weston Ltd., is particularly emblematic of New York's plight. Despite numerous concessions by City Hall, the Weston unit says economic pressure are forcing it to close the plant in July. New York's Economic Development Unit facilitated a $5.2 million triple-tax-exempt bond issue to help Stroehmann finance the acquisition in 1988. It also gave the company breaks on property and sales taxes totaling some $800,000. But when the baking industry began to consolidate during the 1970s and 1980s, the costly New York location became a prime downsizing target. The 500 jobs to be lost at the plant are expected to be transferred to a nonunion plant in Hazleton, PA. In retaliation, the Dinkins administration announced that it will not renew the city's $868,000 contract with Stroehmann, and that the company should not expect to win any of the $3.9 million in city bread contracts to be awarded later this year.

What to do? Some companies have chosen to stay and fight, particularly utilities. "We can't just pick up our pipes and move." observes roundtable participant Robert B. Catell, president of Brooklyn Union Gas. As a result, Brooklyn Union and electric producer Consolidated Edison now offer rate discounts, particularly to companies willing to stick it out in battered inner-city neighborhoods.

Some in New York, including former major Edward I. Koch, also suggest that the city privatize some services, including sanitation (see sidebar on page 54). Such a move wouldn't be without precedent: In the throes of a tax revolt in 1978, Phoenix, AZ, decided to contract garbage collection to the private sector. The upshot: The city's Public Works Department was forced to downsize and become more cost-efficient. Eventually, it won a seven-year contract for Phoenix's largest district.

Others, however, doubt such changes can be made in New York, given the city's unyielding labor unions, oppressive taxes, and soaring crime. "Why would a midsized business come to this city?" asks Joel Smilow, chairman and CEO of Playtex Family Products, which migrated years ago to Stamford, CT, a 90-minute drive up the Connecticut Turnpike. One answer might be that New York houses a first-rate telecommunications system, particularly important to banks and other financial services companies. High vacancy rates have pushed down rents. Then there's New York's claim to be the cultural capital of the world.

But the list of business reasons to stay is dwindling, and the city's growth prospects are growing darker. Municipal officials nationwide likely will be watching intently to see whether Escapes From New York, in which characters flee en masse from a blighted Manhattan Island, plays out in real life.

DINKINS' VIEW OF NEW YORK

Edward N. Costikyan (Paul, Weiss, Rifkind, Wharton & Garrison): At present, the administration of Mayor David N. Dinkins holds the key to New York's fortunes. And to understand that administration and its priorities, you have to understand Dinkins' background.

David grew up politically in the 1960s, in what was left of the Democratic machine, serving as a member of the assembly for one term, and then as president of the Board of Elections and city clerk. After two unsuccessful runs, he was elected Manhattan borough president.

This was an era of populist politics for the Democratic party. From the party's perspective, government's role was to provide social services for the less fortunate and jobs for those who needed them. This is oversimplification, but I don't think it's unfair. There was always enough money coming in to justify increased government involvement and higher spending (see chart on page 47), except during the five years from 1975 to 1980. But by 1981, the city was black in its traditional role. The Koch administration used inflation-driven revenues to enlarge the bureaucracy and to add government programs.

By the time Dinkins became mayor in 1989, the economic basis for government expansion had come to a halt and started to slide backward. A mayor attuned to the long-range forces at work would have started a retrenchment early in 1990. But such an approach would have been contrary to the forces that produced the new mayor. Cutting the workforce meant firing people, and firing people was not part of Dinkins' concept of the job. He saw the need for more jobs for people, not less. More social programs, not less. And he especially saw the need for hiring more minorities to redress the many years when minorities were the last to be hired and the first to go.

These views of government have dominated Dinkins at a time city government was being thrust into a new era. It's an era of downsizing, privatizing, contracting out, and seeking to reduce costs and increase efficiency through new mechanisms.

As the crisis has grown worse, Dinkins has stuck to his guns. He sought tax increases at times when these were not acceptable. Most of his efforts have been accompanied by the kind of grandiose public relations campaigns we became familiar with in the 1950s, 1960s, and 1970s - such as those accompanying the Mandela reception and the trip to Africa. The Dinkins administration has continued to behave as if it were still in an earlier era.

Despite such reticence, the good news is that other public officials are looking in new directions. They're beginning to recognize that they've got to find a more efficient and less costly way of providing government services. They're questioning political principles that have been entrenched since World War II. In the process, they're devising new strategies that will eventually form the basis of a new government.

At best, Dinkins' chances of reelection are slim. His potential opponents recognize the need for massive changes in the way the city is governed. One of these reform-minded individuals eventually will get an electoral mandate to do what other cities are doing throughout the country - to inject entrepreneurial spirit into the governmental process.

LABOR PAINS

Lawrence I. Sills (Standard Motor Products): Under your scenario, even if someone wins the election with a mandate to implement change, aren't the unions going to be a tremendous obstacle?

Costikyan: The power of the unions has been greatly exaggerated. The real power is the city government's power to pay them. Besides, New York's union leaders aren't as inflexible as some union leaders. The last time we got into a crisis and the city needed money, union leaders agreed to allow the trustees they had appointed to use retirement funds in a risky investment. If I had been a union fiduciary, I would have hesitated to make such a deal.

New Yorkers seem to think that our government is unique, that we can't make improvements in the process that other cities have made. But that's not true.

Union leaders can be rational - if they are confronted with the possibility of losing contracts and jobs.

Richard N. Daniel (Handy & Harman): Another problem with the unions is that they have a built-in desire to protect jobs. But what's worse: Unions think they can do this by resisting changed. For example, often when there's a water main break, it would be cheaper for a city to replace a pipe rather than repair it. But because repair work is so lucrative, the union's response to that kind of thinking is, "Are you crazy?"

Unions are inflexible. The private sector deals with generally accepted economic principles. Unions don't.

Costikyan: That's why one of the solutions is privatization.

Richard Voell (Rockefeller Group): Nobody suspects that labor leaders are going to back down easily. They have a vested interest in what they do; they have to worry about getting elected. On the other hand, these people are not stupid. Labor knows the city is in terrible shape, and what they're looking for is leadership. They just haven't been getting any.

Costikyan: Let's be realistic. People expect the city government to control the private unions and their demands. But the city can only control the price of its own union labor. One of the reasons city government costs so much is because they're trying to do things they can't do. The best thing government can do is get out of the way when the private sector wants to accomplish something.

Put another way: All that local government can effectively provide is basic services - adequate police, sanitation and educational systems. We should not ask it to do anything else. Politicians aren't trained to think like businessmen.

Dwight C. Minton (Church and Dwight): Indeed, the city's government must take a narrower focus. It will never property address more involved problems if it can't deal with the basics.

THE 1980S HANGOVER

Edwin Rubenstein (Manhattan Institute): New York is still in the grip of an economic contraction that started with the stock market crash of 1987. That's the moment things started to unravel. Locally, the downturn gathered momentum when the national economy went into recession in the summer of 1990.

In New York, the severity of the present downturn is a mirror image of the 1980s boom. At the height of the bull market, there were 60,000 jobs created in New York City each year. It was fun while it lasted. But the growth was unsustainable.

More than 253,000 New Yorkers - mind you, that number is greater than the entire population of some small cities - lost their jobs in the past two years, including 185,000 in 1991 alone. By all measurements, last year was the worst in the city's history since the Great Depression. One upshot: New York has lost its traditional role of manufacturing center, retail hub, and preferred residence for the middle class. As in most cities, employers have shifted routine back-office jobs to the suburbs, where entry-level workers can find affordable housing.

Meanwhile, the recession is still very much with us, but at least the rate of descent has slowed. In recent months, home sales have bounced back. Office vacancy rates began to improve last summer.

The securities industry, too, is doing well. We'll probably never see a Wall Street as powerful and arrogant as in the 1980s. But the city's financial role is only one facet of what is far and away the nation's most powerful information economy. It embraces advertising, law, public relations, accounting, computer services, publishing, television, and radio. A close cousin of information, the health industry, has also been expanding.

New York City has been the nation's premier urban economy for the past 150 years. That will not change. No city in the world is home to as many economic, cultural, and intellectual luminaries. No other urban area possesses New York's urbanity. Forty-five professional theaters, the greatest opera house in the world, 400 art galleries, 25,000 serious restaurants, and swarns of musicians, artists, and writers - all this makes us the only truly world class city in the country.

THE DARK SIDE OF THE APPLE

J.P. Donlon (CE): Isn't that an overly sentimental view of New York? From a business perspective, isn't the biggest issue that this is the highest taxed region in the U.S.?

Rubenstein: That's the darker side. Additionally, New York displays an alarming array of social pathologies with economic side effects. One out of every 100 New Yorkers is homeless. One out of 300 is a victim of AIDS. The streets are dirty and unsafe, and our infrastructure is crumbling. These social problems inevitably produce a clamor for more government action. But in New York's case the government's cure - of which taxes form a large component - is often worse than the social disease.

For example, our recent control laws have forced landlords to abandon 30,000 apartments a year since the early 1970s. That's roughly five abandoned apartments for every homeless individual in New York. Meanwhile, the beneficiaries of rent regulation are mainly higher income individuals living in Manhattan. A 1988 study by the Rent Stabilization Board of New York found that households with incomes greater than $40,000 received per 45 percent of the benefits of rent regulation. In total, that's a subsidy to upper income residents of $400 million a year.

At the same time, initiatives to increase privately built low-income housing are frustrated by a tangle of building codes and zoning regulations. On the health-care side, no other city in the country has anything like our Health and Hospitals Corporation. Thank God The HHC has been described as the last command economy in the Western hemisphere. It administers 13 hospitals, each with no incentive to provide services or collect monies due to it.

New York spends 2 1/2 times more per capita on welfare than the average of the 49 largest cities in the U.S. One million of its eight million residents now receive public assistance.

The unique thing about the city's budget is not its size but its distorted priorities. For example, each year we spend $840 per capita on hospitals and welfare, but only $660 on education. No other city spends even half as much as on hospitals and welfare as on education.

William M.H. Hammett (Manhattan Institute): There are million kids in the New York City public schools. There's a vast array of human potential in this city that public policies have been hindering. Those kids are a wellspring of creativity and a strength we can use to turn around the fortunes of this city.

Rubenstein: Clearly, our economic problems go beyond the recession. Since 1960, the city's payroll has increased 50 percent to 475,000, while its population has declined. If New York City were a state, it would rank third in the nation in total expenditures - below California and New York State - while ranking only ninth in total population.

As a result, the city has the heaviest local taxes in the nation -, $1,600 per capita. Including state taxes, the figure rises to about $3,000 (see chart on page 47). I don't think you'll find a more antibusiness tax environment in the country. Property taxes on residential units are low, while those on commercial properties are high. Per capita, New York's business taxes are three times larger than those of Chicago or Los Angeles.

Manhattan, home of Wall Street and the largest concentration of commercial real estate in the world, stands to gain more than any part of the country from lower capital gains taxes. Yet Governor Mario M. Cuomo has made it clear that although he supports a capital gains tax reduction at the federal level, he's not going to allow the state income tax to pass on that reduction.

Last year, the mayor and the governor both raised taxes to close enormous budget gaps. If history is any guide, that strategy simply won't work, and the new taxes will further weaken the economy. As a direct result of tax increases in the last two years, a total of hundreds of thousands of private sector jobs will be lost by 1994, according to City Comptroller Elizabeth Holtzman.

Last September, the governor announced his plan to save New York City. It included a massive infrastructure project - $8 billion worth of tunnels, railroads, public housing, and even a born-again Second Avenue subway. Generally speaking, this proposal was favorably received. But no one bothered to ask whether the city really needs more infrastructure. Surely, it can't maintain what it already has.

Governor Cuomo claims that infrastructure building and repair will create 79,000 new jobs in the city, but I think he's only looking at half of the equation. For the next 30 years. New York State residents will be servicing the debt on the bond sold to finance this project. That's a $24 billion bill over 30 years - all of it defrayed by the taxpayers. And with each upward ratchet of the tax rate, more infrastructure users will be squeezed out of the city.

It's ironic; The center of world capitalism has so little faith in the free market and such blind faith in government. Both David Dinkins and Mario Cuomo clearly believe that prosperity requires more government planning and bureaucratic manipulation. Some day, New York politicians will extol the virtues of small government, privatization, educational choice and a free market with the same fervor they now lavish on social programs.

If Russian politicians can make such a transition, those in New York can too.

RIDING THE MERRY-GO-ROUND

Michael S. Levin (Titan Industrial): It's a supreme irony: We are the largest, most important city in the single superpower left in the world, and we're talking about taking a lead from the old Soviet Union!

It's not as if New York lacks for energy and ideas. There's no argument among business-minded people about solutions that would be appropriate for New York City today, but it's almost as if the people with the solutions are standing outside the merry-go-round, and the people in power are standing in the middle at the controls. Every time somebody tries to get closer to the center, those in charge speed up the merry-go-round and fling off the people.

Samuel J. Lefrak (Lefrak Organization):But people are developing an awareness about what needs to be done. They're no longer willing to sit idly while we shovel them grim statistics.

Levin: Particularly among business leaders, there seems to be a broad agreement on remedies to get us out of the recession. But once the recession and other social crises are averted, there are other issues that have to be addressed regarding the long-term viability of doing business in New York.

Here's one: I am more skeptical than some of you about the need for a traditional business center. Today, you can have a four-hour video conference between New York and Madrid via high-definition TV. The cost: $10,000. But that technology works in the suburbs as well as in the city.

Warren Alpert (Warren Equities): Technology aside, everything comes back to the problem of finding a leader with appropriate business and political skills. We need someone who understands the issues we've talked about, and who has the ability to make some changes.

Robin L. Farkas (Alexander's): Warren just put his finger on the whole dilemma. All the people around this table could probably point to the same four or five major problems in this city, And in short order, we could probably work out constructive solutions.

The catch? All of the solutions are politically unacceptable. An example: When Mondale ran for president on the Democratic ticket in 1984, he told the truth: You have to raise taxes pay for continued government spending. That honestly killed him. Similarly, Manhattan Borough President Ruth Messinger says you've got to keep rent control. Why? Because there's a hell of a lot more people living in rent controlled apartments than there are people who own them. That is the problem politicians always face: It takes a different set of talents to win an election than it does to do the job once you've won it.

Daniel: Here's another take on that problem: The recipients of some tax revenues - those related to welfare and other social services - are the same people who put into office the free- spending politicians. Thus, if you look at the sad history of urban politics and the people who rise to the top - if you look at Detroit, St. Louis or Philadelphia - all you see are leaders and cities in a headlong rush toward bankruptcy.

Honestly, I can't imagine anybody who really could lead us to a better New York being able to get votes. The business community's ideal "Mr. Right" would have to talk realistically about jobs, giveaway programs and labor relations. Such talk wouldn't go over too well with city voters.

MARKETING MANHATTAN

Charles Berger (Weight Watches International): I don't know follow New York politics closely, but do know something about marketing. I see New York City and its economy as a failing product that desperately needs improvement.

In analyzing any poor product, you've got to consider your market. And any market contains three distinct kinds of customers: those you have, those you lost, and those you might get. In the case of New York, the most important questions are: How are we going to lure back the customers we lost? And how are we going to attract new customers, which means getting new businesses to come to New York?

John F. Hennessy III (Syska and Hennessy): To continue your analogy, one problem is Mayor Dinkins doesn't think of businesses as customers. In his eyes, the most important customers are those who are going to vote for him. He should realize that New York City businesses employ lots of voters. But for some reason, he just doesn't make that connection.

Berger: It's also important to worry about the businesses that could move here, not just those already here that are being neglected by the city.

How do you attract here a company that could go to Phoenix instead? Or more importantly, how can you attract European and other foreign companies to come here? New York can be a very attractive location for foreign companies, because a lot of them understand big cities. In European countries - much more so than in the U.S. - business is usually concentrated in one or two big cities. As a rule, these still have very healthy downtown areas.

Robert B. Catell (Brooklyn Union Gas): Some marketing efforts to draw in new businesses are already underway. But it's questionable whether they'll be successful; in the environment fostered by the current administration. As we've discussed, in most cases the business community's views aren't compatible with those of the mayor. But we are starting to look elsewhere for political champions.

Alpert: Let's take another perspective. Troubled companies often try to model themselves after more successful competitors. Maybe New York ought to take some cues from an international city that successfully provides basic services and markets itself to outsiders.

Daniel: The successful cities in the world all have one thing in common: a safety factor that attracts visitors. Major corporations have moved out of this city, because when they bring employees here, these people are afraid to venture out of their apartments at night.

We need people to feel good about being in New York, because that's what creates jobs. Toward that end, tourism can play a major role. If you bring visitors or business people into the city for a weekend, they'll go to the theater, go shopping and eat at restaurants. If that experience is positive, they'll want to work here.

THE WORLD PERSPECTIVE

Voell: New Yorkers are the highest taxed people on earth, yet our services are among the worst. The reason: The city is trying to run a welfare state. It isn't because it depends too much on police. It's not because it depends too much on the fire department or no other basic services.

But I don't want to continue the litany of what's wrong with New York. There's a lot that's right, and there are things we can do to make the city a better place to live and work.

I spend a good deal of time on airplanes between Europe and Tokyo. I know from experience that the Asian and European perspective of New York City is different than that in the U.S. And it's even more different than that in New York itself. The foreign perspective is not that New York is going to sink under a weight of problems and mismanagement. That's an impression fostered by local and national media. If the media continue on that track, they're just going to discourage people and investors from coming to New York.

But we're going to sink only if we continue to convince ourselves and the rest of the world that we're going to sink. If you think back a few years to when this city was really booming, there was enormous investment in New York. What the national media has done is suggest that everybody who made an investment in New York - including the Japanese - was pretty stupid.

Joel Smilow (Playtex Family Products): Maybe the Europeans and Japanese are the only ones coming to New York because they're the only ones who don't know any better. [Laughter.]

Voell: That's not true. The Japanese I work with use a 25-year time frame when they invest in New York. And they aren't overly cautious about potential cyclical downturns - their thinking is that what goes down eventually will come back up. Because of their foresight, the Japanese or the Europeans may end up being the major owners of real estate in New York City. Such an occurrence would certainly have a precedent: In the 1970s, when we had a real estate recession, Canadian investors flocked here.

People ask whether the city's problems today are worse than those it faced during the last financial crisis. To some extent, the answer is yes.

In the 1970s, the banks had a real stake in New York. The American banks were the largest, most powerful in the world. They were in good financial shape, and they helped New York prosper. Moreover, at that time, technology didn't exist that allowed companies to relocate their back offices and still operate effectively. In other words, there were some natural barriers to corporate migration.

In the 1970s, you had infrastructure problems, but you didn't have today's problems. It's much worse now, because there's been another 21 years of infrastructure decay. Also, you didn't have thousands addicted to crack cocaine. You didn't have AIDS. And you didn't have the crime that is attendant to the drug problem.

These problems are not unsolvable. But the public sector can't do the job alone. Generally speaking, leadership is the answer to New York's problems, but it has to be a combination of public and private sector leadership.

Smilow: But the main thing we've got to do is eliminate obstacles to doing business here. Let's say, Dick, I'm a company with 500 jobs, and I'm contemplating a move from somewhere in the Midwest. Why should I come to New York? Frankly, I don't think there are any reasons why a business should come here.

Voell: I disagree. First, I don't think anyone believes that just because rent is cheaper in the suburbs, every company is going to move out of every major city in the world. A business wants to be where the action is. And New York City is that spot. This is still the financial capital of the world.

Another reason for businesses to stay here is New York's excellent telecommunications system. This is particularly important for banking and financial services businesses. The New York City Partnership, an organization comprising the city's business leaders, economics experts and public officials, recently completed a study in which it asked senior executives to rate New York's strengths and weaknesses. The city's telecom capabilities scored very high (see table on page 56.) For that reason, there are companies in Fairfield, CT, that regret having moved outside the city.

Smilow: But for most companies, these factors still don't offset the liabilities. As we've mentioned, to stop businesses from leaving the city, corporate leaders have to be convinced there's a chances they'll be able to influence New York's leaders. How can they do that?

Costikyan: The only way you get your concerns through to the city is to pound them home and then pound some more - until they have a place on the agenda.

Voell: Besides, the business community may not know it, but it has plenty of clout. We mentioned before that New York companies employ millions of voters. These voters, in turn, pay millions in taxes. What would happen if corporate New York politely suggested that it would like to stay, but can't unless something happens? By the way, something just did happen. Under pressure, the city imposed a four-year freeze on real estate taxes. Next, we're going to try to get a four-year freeze on all taxes.

It's easy to sit on the sidelines and bemoan the business community's lack of clout. But there's no substitute for involvement in the political process. Toward that end, I suggest business leaders join one of two groups. The New York City Chamber of Commerce would be an appropriate choice for the owners of smaller businesses. That organization is quite effective in addressing such tactical issues as making sure that streets in a given neighborhood are properly cleaned.

But executives and owners of larger businesses might want to join the New York City Partnership itself. We're primarily concerned with attracting new businesses to the city and retaining those already here. We're also involved in economic development, education and public safety. I head up the organization's retention and development committee.

In that role, beginning last June, I met with the CEOs of 75 percent of the major corporations in the New York vicinity. I asked them how the city could help to satisfy their business needs. Working from that feedback, the partnership developed an agenda. We're soon going to bring that agenda to Mayor Dinkins and drop it on his desk. We'll say" "If you want our support, here's what you'll have to do."

Farkas: Admittedly, change can happen. But it's time-consuming and expensive.

Levin: This is also partly a problem of perspective. Maybe the process of change is too time-consuming. Some of you may see change because you're close to the situation. That's comparable to a sophisticated art lover noticing subtle differences in the style of a minimalist painter. It takes a trained eye to detect such finer levels of change.

Voell: Yes. That's why it's also important to push for change in higher-profile areas. For example, I think it's particularly crucial to clean up the central business district, currently home to X-rated movie houses. There isn't another major city in the world that allows its downtown area to look like that in New York.

In addition, the hundreds of vendors that line Fifth Avenue should be more strictly regulated. A recent visitor to New York asked me: "What the hell is going on? Fifth Avenue is a pigsty."

In terms of the bottom line, maybe these things aren't as important as lowering taxes. But they would help to change outsiders' perceptions.

Donlon: If you could change one thing about New York, what would it be?

Berger: Make New York a city in which a middle-class family making $40,000 can educate their children and walk safely down the streets.

Hennessy: Improve the educational system so that business has a steady supply of high-quality workers.

Smilow: Educate New Yorkers to have more pride in their city and contribute to its quality of life. Maybe people on welfare could be given brooms and they could be told: "This half of the block is yours. We'll continue to provide you with assistance, but you have to clean the streets."

At best, changing residents' attitudes would be a partial answer to a complex problem. But maybe that's where it has to start.
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Title Annotation:CE Roundtable; economic revitalization
Publication:Chief Executive (U.S.)
Date:May 1, 1992
Words:5872
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