Public Employee Press

Book Review
Lessons for today from the fiscal crisis of the 1970s

As we cope with New York City's current fiscal crisis, a new book on the one that devastated the city in the 1970s can give us some insights.

Many blame strong municipal union contracts and overspending on the poor for the near-bankruptcy of 1975. But in "From Welfare State to Real Estate," Kim Moody contends that the crisis developed from massive undertaxation of real estate, public subsidies for private development, reduced federal aid and the recession.

Business and anti-government forces took advantage of New York City's desperation to reverse progressive city policies, and all New Yorkers paid the price with a diminished quality of life and reduced public services.

Moody traces the city's political and economic history beyond the 1970s, pointing out how the character of New York changed with the beginning of tuition at CUNY, increasing subway fares and steadily shrinking rent regulation.

The book documents the falling tax burden on the rich, including the end of the stock transfer tax under Koch and the subsidies to developers that grew under Giuliani and have exploded under Bloomberg.

Moody shows how New York has morphed from an industrial and port city to one overly dependent on finance, insurance and real estate interests, with growing numbers of superrich and superpoor and an increasingly unequal distribution of income.

He also traces the fightback by community groups and unions, which sometimes checked the most outrageous attempts of the elite but never became a mass movement with the power to set a new agenda.

Moody's focus on the continuing undertaxation of the rich helps us see the folly of today's cutbacks and should move us to reclaim our progressive heritage. This and other books on political economy are available for members in the Ed Fund Library, Room 211.

— Ken Nash
Librarian