In the mid-1970s New York was on the edge of the abyss, only to be followed by the biggest growth in its recent history. John Cassidy reports.
New York has had a bad rap, as the locals say. Turn to any British newspaper and you will probably find the publication's American correspondent - including this one - waxing lyrical over the latest atrocious rape or teenage crack murder to hit the Big Apple. Flick to the financial pages and you are likely to read about yet another once-mighty New York firm brought to its knees by the recession. Donald Trump, Citicorp, Chase Manhattan, the Daily News, First Boston, Bloomingdale's, Madison Avenue virtually in its entirety, Spy Magazine - the list of New York institutions which swaggered through the 1980s only to find themselves convalescing at the start of the 1990s is almost as long as Fifth Avenue.
The evidence that New York is in a severe cyclical slump - including a $3 billion deficit on a city budget of $28 billion - is undeniable. But the downturn has prompted many commentators to make a giant step of reasoning and predict that New York's days as the greatest metropolis in America (and arguably the world) are numbered. This argument comes in various forms: New York is too violent, expensive and dirty to attract affluent professionals; New York's economy is too dependent on Wall Street, and the rest of the Fortune 500 are deserting the city; New York's labour force is too unskilled and heterogeneous to support a 21st century city; and so on.
Three things can be said about these arguments: they are not new; they confuse cyclical movements with long-term trends; and they have been disproved by recent economic history.
But in the mid-1970s the city's fiscal situation was far more desperate than it is now. Films like "Taxi Driver" and "Mean Streets" were portraying the city as a terrifying urban hellhole, and tens of thousands of young professionals were fleeing to the suburbs. What followed this encounter with the abyss? The greatest period of growth in new York's recent history.
During the 1980s the Big Apple created more than half a million new jobs. The yuppies poured back into the city when they discovered that Westchester was no substitute for Columbus Avenue. And the city's self-confidence returned.
Even now the scale of the recession has been exaggerated. Despite the downturn, many sectors of New York's economy are still creating jobs. All in all 44,500 jobs were lost last year - only 1.5% of the city's total workforce - and another 40,000 are expected to go this year. This is significant but hardly catastrophic given the huge growth during the 1980s.
Even more surprising is where most of the jobs are being lost: construction and manufacturing. The service sector actually created 16,000 new jobs last year. Clearly, for every $250,000-a-year investment banker who received his notice, there was a new job for a data processor or a health service worker. Although this development clearly has some negative implications for the economy, it shows that New York has not lost its knack of employment creation. It also suggests that the underlying advantages of the city's economy have not disappeared in the past couple of years.
This is hardly surprising because New York's main strength is its immense human capital reserves - ie. its people - and they are still here.