Advice for the New Mayor
Savas, E. S.
Heinemann, H. Erich
Wriston, Walter B.
H. Erich Heinemann Chief Economist, Landberg, Thalmann & Co.
There is little evidence that the city government has identified, let alone confronted, its most basic issue-the long-term structural barriers to job creation in New York City. The number of payroll jobs in the city dropped to 3.26 million in September 1993, after having peaked at 3.61 million four years earlier, a decline of nearly 10 percent. There are a variety of reasons for the city's economic stagnation. Among those that deserve your attention:
Rent control has destroyed construction jobs and reduced the supply of housing. Switching to means-tested, taxpayer-funded cash subsidies and allowing the market to determine the rate of return on investment in residential real estate would spark an explosion of building.
New York's efforts to micromanage small business through regulation have bred corruption and driven entrepreneurs to the suburbs.
Outlays per pupil by the Board of Education increased more than 25 percent (in current dollars, including capital expenditures) between 1989 and 1993, with little evidence of an increased return on the city's $8 billion annual investment in human capital. Basic reform in education is long overdue, and examples like the Mohegan School, a Core Knowledge elementary school in the Bronx, point the way.