Equally to blame are the wealthy backers and enablers of the
American right, from the Koch brothers to Rupert Murdoch and including a large
fraternity of wacky or nasty billionaires such as Sheldon Adelson, Robert
Mercer, Robert Rowling, Bob Perry, Rex Sinquefield and others. It is a classic
morality play first staged in Czarist Russia, Fascist Italy and Nazi Germany
and now unfolding in the United States, as supposedly smart – or at least
shrewd – men (and, in the US, a bunch of women, as well) help raise a monster
who they hope will do their bidding simply because they foot its bills. Some of
those men will likely go to their graves relatively soon, but many others will
yet live to regret what they have wrought.
The ever-liberal New York City, on the other hand, is gearing
to vote for Hillary Clinton en masse and to provide major financial backing to
the Democrats in order to defeat Trump. In his native New York – his home and
the scene of his best business ventures, including the Grand Hyatt, the Trump
Tower, the Plaza Hotel and the Wollman Rink – he has long been thought of a
megalomaniacal buffoon, regardless of his business successes – always over the
top, plastering his name onto his vulgar buildings, using bankruptcy to swindle
his creditors and investors and shamelessly chasing publicity and eurotrash
models.
Other New York developers – a close-knit community of wealthy
and politically connected families – loathe him. Wall Street will no longer
back his ventures.
And yet, New York has contributed its fair share to the rise of
Trump as a political force. If Confederate flag-waving, hate-spewing,
reality-denying Trump supporters are the facade of the Trump movement, New York
is its reverse side – in a very much the same way as the booming, overpriced,
cosmopolitan London is the reverse side of the blighted industrial parts of the
UK which voted last June to leave the European Union.
New York City is fabulously successful. It has definitively
pulled itself up by its shoestrings out of the financial and social crisis of
the 1970s to become once more a magnet for educated and talented young people,
a dream destination for ambitious immigrants and a playground for the rich.
Its population is expanding by about 75,000 a year, real estate
prices are skyrocketing, 60 million tourists come to see it every year, new
buildings are going up on every block, neighborhoods are gentrifying and jobs
are being created. True, the average folks – the school teachers, the fire
fighters, the urban poor and the minorities – are being pushed out to the
outskirts, but a rising tide still raises most boats.
It’s a success story but it’s built on a flawed economic model
– especially if considered in the context of the national economy. Its success
has not been duplicated in other cities that became blighted during the 1960s
and early 1970s. Some, like Chicago, St. Louis and Philadelphia, have
relatively prosperous parts but are also impoverished and crime-ridden. Others,
including Detroit, Cleveland and Baltimore, as well as countless smaller places
like Youngstown, OH and Camden, NJ have sunk even deeper into depression. New
York is unique as a rehabilitated former industrial city.
Worse, it stands as a symbol of Inequality and income gap in
the United States and massive neglect of large swaths of the country and its
people. America conducts its domestic policy as a zero-sum game, so that New
York City’s gain becomes everyone else’s loss.
New York’s rise, not coincidentally, has paralleled the growth
of Inequality that has been building up since the early 1990s, as Alan
Greenspan’s Federal Reserve pursued increasingly lax monetary policy with low
interest rates and plentiful credit. In economics everything is connected and
loose money went hand-in-hand with a strong dollar, cheap imports, weak exports
and transfer of production – and jobs – abroad as corporations sought to cut
costs.
Cheap imports kept consumer price inflation under wraps, which
allowed the Fed to keep lowering interest rates, creating dangerous speculative
bubbles and enriching those who stood at the financial tough – i.e. finance
industry professionals.
The impact of cheap, plentiful liquidity was not entirely
negative. In particular, it allowed for the development of a thriving high tech
industry and the IT revolution.
Moreover, loose monetary policy was accompanied by fiscal
laxity, a tax revolt and shrinking of government activity. It’s been the best
time to be rich in America – not only could you make oodles of money but your tax
burden was very light and social obligations nonexistent.
The antigovernment philosophy had the effect of destroying the
education system at a time when newly created jobs required increasingly
high-level professional skills. Rather than pressure the government to improve
the level of training of Americans and footing the bill for it in the form of
higher taxes on corporations and the wealthy – as they had done from the early
19th century onward – businesses chose to import professionals trained abroad.
At the same time, Americans had no interest in doing a variety
of lower level service jobs that have been created over the past two and a half
decades – in restaurants, hotels, grounds keeping, health care, etc. – leading
to an influx of a mass of unskilled immigrants, both legal and not.
Looking from Middle America, what you increasingly saw was a
changing face of the country and an influx of immigrants with many – but by no
means most – doing exceptionally well.
The 2008 crisis and the Great Recession exacerbated these
trends. It had its roots in the financial services industry which is centered
in New York. Despite clear evidence of malfeasance, no banker was ever
punished, no one charged with fraud. The banks were saved and their executives
prospered.
While the crisis was the result of monetary laxity, central
bankers actually doubled down on it in order to rescue troubled financial
institutions. Even more money was poured in to fund an obscene orgy of
money-grabbing. Corporate profits went to create wealth for executives and
shareholders, not jobs or raises for workers.
New York has been in the center of the boom of the past seven
years, with its banks, hedge funds, private investment firms, advertising
agencies, corporate lawyers and real estate developers doing very well.
Especially the latter. New York City, along with London and Miami, has become a
money laundering capital of the world, where drug lords, corrupt government
officials, Russian Duma members, children of Chinese party bosses and other
shady characters park their money in specially constructed apartments costing
tens of millions of dollars.
It has been a boom not really felt in most other parts of the
United States. Moreover, it has been a shaky boom, in which solid values have
been sacrificed for a quick buck.
One example illustrates the character of this boom. A block in
Manhattan on East 33rd Street between Park and Madison was once home to Arbater
Ring, or Workmen’s Circle, a workers’ self-help organization set up by Jewish
immigrants early in the 20th century – one of those community groups that
underpinned the prosperity and stability of America’s working families. During
the current building boom the historic building was torn down and replaced by a
shoddy prefab Hilton Garden Inn, built in record time to take advantage of the
tourism boom. Once tourists stop coming, it would be impossible to adapt this
cheap eyesore for any other use. Along with other such temporary structures it
will lay the foundations for another round of urban decay.
The fact that the rest of the country hasn’t participated in
the New York boom doesn’t mean that when the bubble finally bursts – either as
a result of another financial blowout or a massive slump on the overbuilt New
York real estate market or in some other, as yet unknown way – that the crisis
will be confined. As in 2008, everyone in America – and indeed in the rest of
the world – will be affected.
It is a stunning irony that a New York City developer, a man
who exemplifies the excesses of New York City and the hot air on which its
glittering success is built, has become a standard-bearer of the anger of Middle
America. It is also a sign of the country’s moral decay that they see his
self-serving demagoguery and his siren call of hatred as a solution to their
problems.
