As the Bloomberg era ends, there has been much discussion about where we stand economically. By many measures, we are doing well — record employment, growing population, new industries. Of course, the recent elections showed many New Yorkers feel that we also face challenges.
As the incoming mayor, Bill de Blasio, prepares to take the helm, an important question for New Yorkers is this: How do cities remain economically competitive? There are two models.
First, there are cities that are competitive in particular environments at particular times. When the environment changes, they decline. Detroit is one tragic example.
The second model is more desirable. This applies to “evolutionary cities,” or cities that remain competitive even as conditions change around them.
Historically, New York has fallen into this category, evolving from maritime hub, through industrial powerhouse, global service and financial center, and, seemingly now, an ideas-based economy. But how do we ensure that we do not stumble?
Three characteristics distinguish successful evolutionary cities: Superior infrastructure, a conducive regulatory and taxation environment and an activated population.
When it comes to infrastructure, we learned during the 1970s that it is ignored at our peril. In effect, disinvestment represents a tax on the future. This lesson must be internalized by our new mayor, who should continue to invest in New York’s existing infrastructure, while creating new infrastructure.
The second ingredient is a rational regulatory and tax environment. This is not an environment without regulation or taxation, but one where regulation and taxation are done smarter.
Such an environment will require our next mayor to put in place new regulations and taxes only where their economic burden is outweighed by their long-term benefit — a high (though not impossible) bar. It also means ensuring that, in addition to looking for more resources to spend, we are ensuring that the money we have is spent efficiently.
So, for example, when the next mayor negotiates with city unions, he must ensure that, if we pay premium compensation, we receive commensurate productivity. A balanced approach also requires seeking ways to eliminate regulations and taxes that have outlived their original purpose.
The last critical element of evolutionary cities is people. Large populations allow for more innovative individuals and greater resources with which to make transformational investments. Accordingly, quality of life must be a priority for the mayor-elect. This means preserving gains in public safety, and continuing to nurture our city’s cultural institutions, public spaces and school system, so we remain a magnet.
Not all large cities are successful, though. Evolutionary cities must have large and activated populations — populations that are catalyzed by interaction and innovation.
This is where affordability enters the conversation. If a city cannot retain those who found and manage its businesses and work within them, over time, competitiveness suffers.
Historically, New York’s central strategy has been support for affordable housing. In many ways, this has been a ringing success, rebuilding neighborhoods, from the South Bronx to Central Brooklyn.
However, there are two ways in which Mayor-elect de Blasio can improve upon this approach. First, we must ensure that, in creating affordable housing, we are not only focused on our most vulnerable, but also on our economic backbone, including teachers, nurses, firefighters, and young people starting their careers. For this critical population, our next mayor should invest in revitalization and development around transit nodes to expand the options they have for living and working in the city.
Second, we must take a close look at both the positive and negative sides of our historic approach to affordable housing. This means looking at whether these programs operate as efficiently as they could. It also means looking at potential unintended consequences of these programs — asking, for example, whether they tilt the playing-field towards housing in a manner that disadvantages the marginal businesses that employ the vulnerable at good wages (potentially exacerbating our affordability challenge).
And, it means considering other approaches to dealing with affordability, including using economic development subsidies to attract good jobs at good wages, viewing these subsidies not as inherently bad, but as tools that, if used judiciously, can achieve ends that are as noble as those achieved by the subsidies we provide to developers of affordable housing.
History is replete with examples of this city overcoming seemingly impossible odds by adapting as our environment changes. This is New York’s strength. So long as our new mayor taps into this capacity, I am confident that our future will be bright.
Pinsky is executive vice-president of RXR Realty and former president of the New York City Economic Development Corporation.
