Welcome to Fear City: A Survival Guide for Visitors to the City of New York

Did you know one of the wealthiest cities on earth ran out of money?

Towards the end of the 1950s, U.S. postwar prosperity decelerated, marked by the Eisenhower recession of 1958. In response to the inflation and unemployment, every administration up to Nixon had used various Keynesian measures to ease the recession (Johnson’s Great Society, notably).

By the time Nixon won the election, the unemployment rate was at a 15-year low of 3.4% (BLS). Despite early signs of good economic tidings, his policies would worsen the inflation, increasing the cost of living dramatically. Not only did import tariffs do this directly, but U.S involvement in the Yom-Kippur war resulted in OPEC Countries embargoing the U.S, resulting in the most drastic rises in cost of living seen at the time (because of how car-dependent the U.S. is, if gas prices go up…all prices go up).

All the while, the country, and especially New York City, change in two key ways:

1. Decline of U.S. manufacturing and disappearance of manufacturing jobs, as liberal profit incentives attract capitalists to more exploitable labor markets (Asia, largely in a neocolonialistic phase). Needless to say, this meant less economic stability for the average worker, and less tax revenue for the city.

2. Suburbanization and “white flight” phenomena significantly dropped municipal tax revenue for decades at this point. Homeownership was a better prospect to those that could afford it than renting, and racists were attracted to segregated suburbs advertised as white-only all throughout America.

In the early 1970s, all this downturn culminated in the City of New York not having enough revenue to pay for its budget (payroll, public services, etc.). So, city officials began to borrow money from NYC banks to cover the gap in revenue (which leaders thought would be a temporary measure).

By 1975, the city was over $400 million in debt. The banks had no faith in extending NYC’s credit. Gerald Ford saw it as just punishment for the “insidious disease” of spending, refusing to help in any way when asked (thus the infamous “drop dead” headline).

To cut costs, Mayor Abraham Beame planned to lay off 16,590 municipal employees (including 1,000 policemen). In response, the Council for Public Safety (a trade organization of 80,000 city employees, many of them police) passed out pamphlets titled Welcome to Fear City: A Survival Guide for Visitors to the City of New York (pdf) warning tourists of the dangers of visiting the city. It was a sort of argumentum ad baculum (intimidation tactic), implying that laying off 1,000 policemen would make the city more dangerous and tourists would fall victim to crime.

Though property crime in NYC hit a then all-time high in 1975 (FBI), it was already rising substantially in the years leading up to the crisis with full police faculty (following the trend of cost of living and unemployment). It would then get even worse in the 1980s under austerity policies and even higher unemployment rates.

As for the city’s debts, unions and banks struck a deal to cover the debt and Ford eventually came around to loaning money to NYC. But in exchange, the city lost control over its finances. Under the terms of its new contract, the finance sector restructured New York City’s economic policy: no more free higher education, thousands of layoffs of city employees, and transit fare hikes. The city became less and less livable to those of lower income, and became the playground for the wealthy it is today.