Response To Comments On "Letter To A Manhattan Resident"

A post I wrote a couple of weeks ago titled "Letter To A Manhattan Resident" has drawn a large number of comments (more than 50 to date), most of them over at the City Journal website where the article was first posted.  Some of the comments raised points that I thought deserved a response, so here goes.

Several commenters somehow came away with the impression that I was describing a New York in "shambles" where the people are miserable.  For example, here is Ed Johnson:

I get out often, and not many of them [New Yorkers] look miserable to me. Come, enjoy the smell of Pretzels roasting over live charcoal by Rockefeller Center while you look at the windows at Saks, Macy's and Lord and Taylor.  This image you've been sold of a NYC in shambles full of violent homeless and Liberals is, well, you know. A stupid lie.

Well, you won't find anything about New York being a "shambles" or the people miserable in the article he's commenting on, or for that matter elsewhere on this website.  Actually, over on my "About" page my summary of living in New York over the past 40 or so years is "All in all, it has been a great place to live and raise a family."  My criticism is not that things aren't pretty good,  particularly after 20 years of Republican mayors who did great work in bringing the City back from the brink.  Rather, my criticism is that it could be so much better.  We fall far below our potential, mostly due to the drag of way over-expensive progressive policies that completely fail to accomplish their stated goals of ameliorating poverty, income inequality, homelessness and the like.

On a closely related subject, a number of commenters point out what appears to them to be a contradiction between the obvious wealth in Manhattan and my contention that high taxes and expensive redistributionist policies are a drag on the economy.  For example, a commenter calling himself "I love NY" writes:

You point out that we live in the richest county in the country and that we have the highest taxes. By the simplistic logic your favorite news channel often employs does this not prove that high taxes are not a problem for wealth creation?

Another commenter named Nancy Groutsis collects some data on per capita GDP by state, grouped Red and Blue:

Gallup’s top red states (Utah, Wyoming, Idaho, North Dakota, Nebraska, Kansas, Alabama, Montana, Alaska) had an average state GDP of $43,738 which is less than the $48,843 per capita GDP of its top blue states (Hawaii, Maryland, Rhode Island, New York, Massachusetts, Connecticut, Vermont, Illinois, Delaware) (Real Per Capita Gross Domestic Product by State, University of New Mexico, 2013).

The fallacy here is looking at a snapshot rather than at rates of growth and change.  High taxes and overly-expensive government do not bring about economic devastation overnight.  As I have written many times, for example here, the consequence of high taxes and overly-expensive government is a slow, gradual decline relative to other areas that have lower taxes and less expensive government.  New York (state) does have higher GDP per capita today than most of the most-Red states (however, not Alaska, North Dakota or Wyoming), but the recent trend is that most of the Red states are growing solidly and some rapidly, while in New York the economy of the City is growing a little and the economy upstate is somewhere between stagnation and absolute decline.

Go back to the 1920s, and New York was enormously dominant in the national economy.  Check out this IRS publication of income data from 1920:  New York State represented about 17% of the national total.  Today it's down to about 7%.  Slow, gradual, relative decline.  Per capita taxable income in New York was about two and a half times that of Texas in the 1920 data, and at least 50% higher than even "rich" states of the time like Pennsylvania; today, we're hanging on to about a 15% edge in per capita GDP over Texas.  How much longer will that last?  The decade of the 1920s was before New York's taxes and spending got way out of line, and for a time its growth and economic dominance continued.  In just the ten years from 1920 to 1930, New York City's population grew from 5.6 million to 6.9 million, reaching about 5.7% of the entire population of the U.S., with over 23% growth in one decade.  But in the 1950s and 60s New York adopted the model of government spending as the solution to all human problems, to be financed by ever-accelerating taxes.  By the early 1970s combined New York State and City income taxes for the top bracket had reached about 19% -- and the City lost about 800,000 people, about 10% of its population, in the decade of the 70s.  Today, we've gotten the combined top state + city tax rate back to about 12%, and all of our neighboring states have helped our competitive position by adopting their own income taxes.  That plus 20 years of decreased crime and competent management in City Hall, and New York City's population has grown from about 8.0 million to 8.4 million since 2000, 5% growth in 14 years.  But our taxes are still the highest in the country, if not by so much, and the relative decline continues.  Our population of 8.4 million people is now only about 2.3% of national population, and low tax jurisdictions like Texas and Florida are far outgrowing us.  It is only a question of time until they overtake us in per capita income as well.

But don't get me wrong -- it can be a lot of fun hanging around in a decadent, very slow-growing, but very civilized place.  Can anybody say "Europe"?

On Scams And Hoaxes, And Those Who Fall For Them

My wife regularly accuses me of thinking that most everything about life is some form of a scam or a hoax.  That is an exaggeration, but like all exaggerations it starts from a germ of truth.  I definitely think that huge numbers of things accepted by many and most people without questioning or thinking are scams and hoaxes, and that if you don't have your scam and hoax radar up all the time you will regularly get taken in.

Most recently we see this phenomenon playing out in the UVA gang rape story that appeared in Rolling Stone on November 19.  By now, just two weeks later, the story has substantially fallen apart.  Is the story a complete hoax or does it have some underlying elements of truth?  That's impossible to know, and I'm certainly prepared to accept that the large majority of reports of rape are truthful.  But this one had lots of objectively verifiable details that were easily ascertainable to be false.  Examples:  the fraternity had no event on the alleged date of the event, September 28, 2012; UVA fraternities accept new pledges in the spring rather than the fall; the victim alleges she was led out on a side staircase, but the fraternity's building has no side staircase; and so forth. 

Meanwhile, lots of the usual suspects had not only accepted the story hook, line and sinker, but had also declared skepticism on the subject of allegations of rape to be completely out of bounds, and on that basis gone aggressively after anyone who dared to express it.  Michael Moynihan at the Daily Beast has a good roundup of some of these, like Mark Hoofnagle at Denialism Blog ("Can we call this anything but typical victim smearing? How dare the New York Times thoughtlessly promote this unethical critique of Rolling Stones reporting and this rape victim."), or Amanda Marcotte (“it’s really time for people to understand that rape denialism is like Holocaust denialism: a broad refusal to face reality.”), or Rebecca Traister of The New Republic ("symptomatic of exactly the patterns of incredulity and easy dismissal of rape accusations that keep many assaulted women and men from ever bringing their stories to authorities or to the public.”)  And Moynihan has lots more of same.

Sadly, as much as rape victims need and deserve support, skepticism is just a necessary approach to dealing with human beings.  Rule skepticism out of bounds on any given subject, and it follows as the night the day that the scamsters will come out to flourish.  One would think we had learned that lesson in the area of spectacular gang rape allegations from prior incidents that include the Tawana Brawley hoax of 1987 and the Duke lacrosse allegations of 2006, both of which were completely debunked, but only after upending the lives of falsely accused perpetrators.  In the end, lack of skepticism is no favor to those who truthfully report rapes.  For example, it would be far preferable from the point of view of the next legitimate rape victim for the Rolling Stone reporter to have asked a few questions, uncovered a few discrepancies, and then not run with this story, as opposed to the current situation of having it blow up spectacularly.

If you think there are areas where truth and justice are so sure to be on one side that all skepticism can be ruled out of bounds, well, you are going to get taken in by lots of hoaxes.  Plenty of people who should know better find themselves with egg all over their faces for exactly this reason.  A good example are the 88 members of the Duke faculty who signed a statement of support for the accuser in that situation at the early stages of that process. 

Meanwhile, the phenomenon of attempting to rule skepticism and dissent out of bounds is by no means limited to the area of allegations of sexual misconduct.  Indeed it is a key part of the playbook to today's political Left on many subjects.  Exhibit B is the field of climate alarmism, where even mild questioning of any element of the orthodoxy brings upon oneself the epithet "denier" and the comparison to holocaust deniers (as Marcotte does with rape allegation skeptics above).  Among those heaping abuse and name calling on anyone daring to question the climate orthodoxy, see for example Think Progress here, or Canadian environmentalist David Suzuki here.  Result: lots of people who should know better getting taken in by preposterous claims about global warming and the supposed dangers of fossil fuels.  How about over 200 members of the Harvard faculty here?

And don't even get me started on the "poverty" scam.

A Tale Of New York's Thoroughly Corrupt Advocacy Community

Bill de Blasio has been our Mayor for almost a year, and if you are a typical (meaning "progressive" and ridiculously naïve) New Yorker you very likely think that he must have started to make some progress against the scourges that he talks about so endlessly like poverty, income inequality, homelessness, and so forth.  Without doubt, the tide of stories in the mainstream press complaining about inadequacy of City efforts on these issues has greatly ebbed.  Surely, that must be an indication that something is working.

Of course, the truth is exactly the opposite.  What's actually going on is that de Blasio is making income inequality, homelessness, etc. worse by his progressive policies, but the advocacy organizations and the complicit press are refraining from criticizing him precisely because more income inequality and more homelessness are the best things that could happen for their business.

The Wall Street Journal (and thank God we have them) puts a fairly deep scratch in the surface of this issue with an article in yesterday's Greater New York section by Mara Gay titled "Antipoverty Groups Give Mayor Wide Berth."   Gay reports on various groups that spent the previous 12 years going after Mayor Bloomberg but now can't be heard to say a critical word about de Blasio.  Groups that Gay identifies as having suddenly gone silent on de Blasio range from the New York City Mission Society, to The Black Institute, to The Children's Aid Society, to the Coalition for the Homeless, to the New York City Coalition Against Hunger, and several more.  For example, here is Joel Berg of the Coalition Against Hunger:

Mr. Berg said it “makes no sense” to criticize the mayor over a single issue when he had “done more for our issues in the last year than his two predecessors did in the previous two decades.”

Or Mary Brosnahan of the Coalition for the Homeless, questioned as to why her group has not criticized the City over the case of a 3-year-old kid who was beaten to death in a homeless shelter:

Ms. Brosnahan, of the Coalition for the Homeless, said in a phone interview that her group’s response to inquiries about Jeida’s death was “more a matter of logistics,” which were challenging because she was receiving conflicting reports about the incident.

So if de Blasio is "doing more for these issues" than his predecessors have done in decades, what is the measurable progress?  As to poverty and income inequality, those numbers come from the Census Bureau with big lags, so we don't yet have them for the de Blasio era.  But not so for homelessness, where New York City puts out up-to-the-minute numbers regularly.  From another article in the Wall Street Journal Greater New York section, this one by Laura Kusisto today:

The city put the number of people sleeping in its homeless shelters at 58,562 as of Nov. 20, including more than 25,000 children. A year ago, the population was 51,110.

Yes, that would be a 14.5% increase in the homeless shelter population in the less-than-one-year of de Blasio's tenure.  Some would call that an "explosion."  What's going on?

It's not too hard to figure it out.  Here's the back story.  New York's subsidized NYCHA public housing, approximately 170,000 units, has a waiting list of over 200,000 families.  But since nobody ever leaves, only about 5000 families get in off the waiting list each year.  Some people (e.g., victims of domestic violence) get priorities on the waiting list, and given the length of the list, if you don't have one of these priorities you are never going to get in.  Back in the early part of the Bloomberg administration, the City gave priority on the waiting list to families that had been determined to be "homeless."  That created a scramble among thinking low-income people to get themselves into homeless shelters in order to claim the priority.  In 2005 the Bloomberg administration figured out what was going on and ended the priority for those in homeless shelters.  From the WSJ November 24:

In 2005, Mr. de Blasio’s predecessor, Michael Bloomberg , ended the policy of giving the homeless priority for NYCHA apartments. The Bloomberg administration argued that giving preference to homeless families encouraged people to enter shelters to jump to the front of the line on the public-housing waiting list.

That Bloomberg administration policy was reversed by the Housing Authority in July 2014.  The Daily News reported it here, saying that the reversal was done "quietly" and "during a special meeting that was not listed on a public schedule."  Kudos to the Daily News for picking up on it promptly.

Of course, the inevitable has occurred.  Poor people may be poor but they are not stupid.  A subsidized NYCHA apartment could well be worth the equivalent of $50,000 annual income or more.  The scramble is back on to become "homeless" and get to the top of the NYCHA list.  The homeless shelter population is surging.

And how do they feel about this over at the Coalition for the Homeless?  Do you think they would be horrified by policies that cause a surge in homelessness?  If so, then you really need a little understanding of what this organization and its ilk are about.  For some insights, check out their most recent Annual Report here.  Do you think that they actually provide housing to the homeless?  Puh-lease.  Here are a few key facts:

• Their total annual budget is about $10 million.
• The total amount they spent on "housing" is a big $718,675.  Contrast that to the amounts they spend annually on "advocacy" ($1,184,399), "fund raising" ($981,267) and "management and general" ($350,224).  In short, these people do not deem it a worthy use of their own money to house the homeless; instead they lobby to have you be forced to spend your money on housing the homeless.
• Of the $10 million budget, about $3.1 million comes from "government grants."  Likely these are for some specific purpose, but still it's the same corporate entity whose core focus is lobbying to have the government spend more money on services to the homeless.  Am I the only one in the world who thinks that's just not OK?

Meanwhile, the budget of public funds of the New York City Department of Homeless Services is over $1 billion.  In other words, the extent, if any, to which the Coalition for the Homeless actually provides some meaningful services to the homeless with its own funds is completely insignificant in the overall picture.  That's not what they're about.  What they're about is lobbying for more government funds for homeless programs, some small part of which they can then skim off for themselves.

And for that purpose they are always better off with more homeless people rather than fewer.  That's why, when push comes to shove, you can find them advocating for policies that they know will drive up the number of homeless, like public housing priority for those in shelters.  As long as their buddy de Blasio is in office and the homeless services budgets balloon along with the number of homeless, they'll keep their criticisms to themselves.  As soon as someone comes in who actually tries to decrease the number of homeless, or get some of the homeless into a life free of government dependency, or -- God forbid -- get some control over the budgets spent on the homeless, then these people will scream bloody murder.

MTA Reinvention Commission Misses The Elephant In The Room

Back in June, Governor Cuomo and his MTA announced, to some fanfare, the appointment of a Reinvention Commission to think some big thoughts on how to improve regional transit in this area.  Co-chairs would be Ray LaHood (recently exited Secretary of Transportation under Obama) and Jane Garvey (head of FAA under Clinton).  Uh-oh, already the signs are not good.

Now, God knows that our transportation infrastructure around here needs some help.  We are very geographically challenged, with a huge mile-plus wide river/estuary on one side and an only-somewhat-less-huge half-mile-wide river/estuary on the other side, and a couple of million people needing to cross those rivers twice a day to get to work and back home.  For a long time our population and job count were stagnant, but recently they have been increasing.  This has put capacity strains on the existing transportation network, let alone people have noticed that large areas -- notably much of Queens and northern New Jersey -- have inadequate access to the trains into Manhattan.

And yet, every time some project gets proposed, a price tag gets attached to it that is so enormous that next to nothing can or does get built.  Most famously, priority number one for the region is and should be additional tunnel capacity under the Hudson River from New Jersey.  In the early 2000s New Jersey Governor Christie's predecessors got that state into a plan to build a new tunnel supposedly to cost about $8.7 billion, of which New Jersey's share would be $1.25 billion.  In 2010, after some $600 million had already been spent on the project, Christie announced that a review commission appointed by him had told him that the projected cost was now $11 - 14 billion, with New Jersey on the hook for the entire cost overrun; whereupon he canceled the project.  Yes, this project was going to go under a big river; but it was only about 2 - 3 miles long.

Price tags for other proposed and actual projects are similarly eye-popping.  According to Benjamin Kabak of Second Avenue Sagas, a recently-discussed proposal to extend the PATH train less than four miles from downtown Newark to Newark Airport has been given a price tag of $1.5 billion and a five year construction schedule.  This line would be at grade over an existing right-of-way.  Is this even possible?  In the underground category, we have the currently-under-construction less-than-two-mile three-station first phase of the Second Avenue Subway, currently said to cost about $4.45 billion -- close to $3 billion per mile.  Or, over on the West Side, the  1.5 mile, one station extension of the number 7 subway line, costing about $2 billion -- a bargain at only about $1.3 billion per mile.

OK, the numbers seem big, but are they really out of line?  Yes, way out of line.  We know because they also build subways and rail lines in other cities around the world.  For example, in London, they currently have under construction something called Cross Rail, a huge 73 mile line going east-west from one end of the city to the other, with 26 miles of new underground tunnel.  Projected cost is $15.9 billion pounds, or about $24 billion dollars, which is only about $300 million per mile.  If $15 billion of that is for the 26 miles of tunnel, that would be about $650 million per mile of tunnel, around a fifth of what we are spending for the Second Avenue Subway.  In Paris, they have an even more grandiose plan for something called Grand Paris Express, 200km (125 miles) of new subway/suburban rail with 72 new stations.  Le Monde here does not give a breakdown of underground versus at grade, but there is plenty of tunneling.  Price tag:  27 billion euros (about $34 billion), which comes to about $270 million per mile -- less than a tenth of the per-mile cost of our Second Avenue Subway. 

OK, New York is an expensive city.  But so are London and Paris.  Maybe there are legitimate reasons why we might spend 20% more than those cities, or even 50% more, to build a subway line.  But the actual numbers are more like 5 to 10 times more.  And thus, they build and we don't.  Sorry Eastern Queens -- you're never getting a subway.  I wouldn't even bet that the Second Avenue Subway will be built beyond the first three stations in my lifetime.  And why are our costs so wildly out of line?  Hint:  it's very hard to blame it on the contractors, because the same international consortia of contractors bid on the jobs in all these cities.  So it really can be only one thing:  ridiculously low labor productivity over here, driven by crazy union work rules.

Now, let us turn to the recently-issued Report of the MTA Reinvention Commission, dated November 2014.  Actually, saying that they missed the elephant in the room is one of the nicer things that can be said about this Report.  It's mostly just one meaningless platitude after another.  The phrase "fully-functioning, resilient, world class" must appear 40 times.  Climate change must come up at least 20 times.  There is considerable discussion of potential new funding streams, mostly of the opaque variety to keep people from being able to figure out how much this is costing them.

At Pedestrian Observations, Alon Levy has a very thorough review.  Here are some of the key quotes:

The worst problem for transit in the New York area is that its construction costs are an order of magnitude too high, but this is not addressed in the report. Instead of tackling this question, the report prefers to dwell on how to raise money. As is increasingly common in American cities, it proposes creative funding streams, on the last page of the first part and the first six pages of the second part: congestion pricing, cap-and-trade, parking fees, a development fund, value capture. With the exception of congestion pricing, an externality tax for which it makes sense for revenues to go to mitigation of congestion via alternative transportation, all of these suffer from the same problem: they are opaque and narrowly targeted, which turns them into slush funds for power brokers.

Amen to that!  The problem with the "new funding streams" thing is that we are already at the level where taxes are seriously degrading our economic performance, and if de Blasio and his buddies can actually come up with new funding streams their priorities are not going to be transit projects, let alone wildly overpriced transit projects. 

In a future post I'll make some suggestions about what they might be able to do to add some capacity with minimal additions to the existing infrastructure.

The Unfolding Pension Disaster, Federal Edition

If you are a politician, what is the perfect way to pay off your supporters to the tune of hundreds of billions of dollars while totally hiding from the public what is going on until long after you're gone?  The answer is pensions.

I've previously covered multiple times the ongoing disaster of state and local government employee defined benefit pension plans, for example here.  Today's topic will be the related issue of the federal government guaranteeing all private defined benefit pensions through something called the Pension Benefit Guaranty Corporation, or PBGC.  In one of PBGC's programs called the "multiemployer" pension plan program, there is taking place an ongoing transfer of some hundreds of billions of dollars from the taxpayers to union supporters of the President and of the Democratic Party.  Literally nobody knows about it.

On November 14 the PBGC came out with its latest annual report covering the year ended September 30, 2014.  Do you recall reading about that in any news source?  My own Google search cannot find any reference to it outside of specialty stuff for lawyers.  I came across it because I happen to get at work something called Bloomberg BNA Pension and Benefits Reporter, which is of course pay wall protected.  Who in their right mind would read something like that if they didn't have to?  Just another reason why pensions are the perfect place to hide a few hundreds of billions of dollars of payoffs to your supporters.

Anyway, here's the lead sentence of the BNA article:

The deficit of the Pension Benefit Guaranty Corporation's multiemployer plan program rocketed to an all-time high in fiscal year 2014 of $42.4 billion -- more than five times its previous high in 2013 -- the agency said in its annual report.

Yes, that's an increase of a factor of five -- 500% -- in just one year, from around $8 billion to over $42 billion -- and it was a year in which the stock market had a huge increase.  What could possibly be going on?  Here is the PBGC annual report.  The answer is that they re-classified a bunch of these "multiemployer" plans as "probable" to fail, which caused them to register the liability as to those plans on their balance sheet.  From page 20 of the Report:

The $34,176 million increase in the multiemployer program’s deficit is primarily due to losses from financial assistance stemming from the addition of two large new probables with a net claim of $26,335 million and 14 additional new probables with a net claim of $8,987 million.

But you ask, don't they have some assets, let alone premium income, to cover these losses? HAH!  The assets they hold against the $42 billion of multiemployer plan losses come to $1.769 billion (page 25); the annual premium income is a big $130 million (page 25).  Yes it's that bad.

Actually, much worse.  They only register the full liability when a particular plan becomes "probable" to fail.  In case you don't know, these so-called "multiemployer" plans are the things sponsored by unions in their unionized industries.  Essentially all of them are gradually going out of business.  There are hundreds and hundreds of these plans.  What is the dollar amount that the PBGC/taxpayers are on the hook for assuming that most to all of them fail over the next ten to thirty years?  You will not find that number in the PBGC report.  It's easily in the hundreds of billions of dollars.

Now you might think from this that the PBGC must have learned its lesson about the danger of dangling out an open-ended federally-backed guaranty to anyone who comes along.  You would be wrong.  You just have no idea how much fun this infinite credit card thing can be when you can use it to pass out lots of goodies to those who will support you politically.  And thus it seems that today, November 26, the PBGC has published a "final rule" by which it says it will now guarantee all private defined benefit pension obligations that have been created out of 401(k) plan rollovers.

Wait a minute!  Isn't that another tens or hundreds of billions of dollars of new implicitly-federally-guaranteed obligations, let alone from an organization that is already broke?  Doesn't that at least take an act of Congress?  You, my friend, are so old-fashioned, so pre-Obamacare and pre-Immigration Executive Action.  Here from back in April is PBGC's proposal for the new Rule and its statement of the statutory basis.  Some of the key text:

Rev. Rul. 2012–4 treats the amounts rolled over as mandatory employee contributions for purposes of section 411(c) of the Code.9 The ruling states that the plan satisfies section 411(c)(2) of the Code with respect to the rollover because—

1. The benefit resulting from the direct rollover is provided as an immediate annuity determined as the actuarial equivalent of the amount rolled over, where actuarial equivalence is determined using the applicable interest rate and mortality table under section 417(e)(3) of the Code; and

2. The plan further provides that, in the event payment is delayed after the rollover, interest on the rollover contribution is accumulated in accordance with the requirements of Code section 411(c)(2)(C)(iii) and the benefit derived from the rollover is not forfeitable upon death prior to the annuity starting date.

Sorry to subject you to all that bureaucratic doublespeak.  But if you make the effort to read it, you'll see that it's basically the same argument as the one for subsidies on the federally-created exchanges under Obamacare:  we'll just take a pre-existing hopelessly complicated statute that obviously deals with something else and re-interpret it to allow us to spend a few hundred billion of taxpayer money on whatever we feel like without Congressional authorization.  We will treat a voluntary contribution to a defined contribution plan as a mandatory contribution to a defined benefit plan!  Why?  Because we can!  Try to stop us!

Don't worry, Obama will be long gone when the PBGC finally blows up.  Meanwhile, it will have put the taxpayers on the hook for hundreds of billions of dollars that will go to bail out union-backed pension plans and keep the contributions flowing to the Democratic Party for decades to come.  Can't somebody but me pay at least a little attention to this?

UPDATE, December 1:  The Wall Street Journal catches on, with an op-ed on page A15 by Alex Pollack of AEI.  Good job guys!  The headline really is the key point:  "A Federal Guarantee Is Sure To Go Broke".  Hmmm.  Fannie, Freddie, flood insurance, FSLIC, PBGC.  Might as well add Social Security, Medicare, Medicaid.  FDIC definitely went broke in the last financial crisis, and only got covered over by TARP.   Can anybody come up with an example of a federal guarantee program that has not gone broke?

New York City Doubles Down On "The Worst Possible Public Policy"

I promise to move on from this "affordable housing" thing after today, but meanwhile the Official Manhattan Contrarian Worst Possible Public Policy is just such an easy target.  Even as I've been heaping ridicule all over the recently-opened Sugar Hill Development, approved during the Bloomberg tenure, new Mayor de Blasio and his team have been pressing forward aggressively with new and expanded "affordable housing" initiatives.

Out on the waterfront of Astoria, Queens, directly across the East River from the Upper East Side of Manhattan, a developer named Alma Realty has proposed a large new project called Astoria Cove.   Needless to say, the local pols -- both mayoral administration and City Council -- have used the proposal as a perfect opportunity to hit up the developer for their favorite form of graft, namely affordable housing.  The developer started off proposing that 20% of his units would be "affordable," but that was just an opening offer.  After some back and forth, there now appears to be an agreement that this will go up to 27%.

Joe Anuta of Crain's New York Business wrote up the story on November 13.  He quotes the developer, John Mavroudis of Alma, as being pleased as punch about the deal: "This has been a very engaging process, and we look forward to the next stage and then moving ahead with construction."  (One of the most disgusting things about government coercion is how they buy the expressed public support of people like Mavroudis, who in reality is very likely seething with anger over getting extorted in this way.)  And then we have this from Alicia Glen, Deputy Mayor for Housing and Economic Development:

"The big story is we got 25% of the units for free," said [Glen], who called the deal a paradigm shift.  "They are permanently affordable at a range of incomes."

Yes, this is the level of mental midgetry that we are dealing with.  They should change her title to Deputy Mayor for Economic Destruction.

The New York Post this morning is on to the story.  In an editorial titled "Free-Housing Hokum,"  they point out that so much has been extorted out of the developer that it might well render the development uneconomic such that it won't get built at all.

Mayor de Blasio touted the agreement as a “game-changer.” Deputy Mayor Alicia Glen bragged to Crain’s that the city was getting a quarter of the units “for free.”  We hope it all works out. But we’d feel better if the mayor recognized that, as with lunches, even in Progressive Land there’s no such thing as a free apartment.

Well, this project may well still get built, especially given today's very hot housing market in New York.  But the broader question is, to what degree does New York's suite of housing policies --from affordable housing requirements to restrictive zoning to rent regulation to a crazy building code -- suppress housing construction and render housing less rather than more affordable?  The best way to answer that is to collect comparative statistics on New York versus other housing markets where none of these policies exist.

A website called New York YIMBY ("yes in my back yard") has helpfully gone out and collected data on construction jobs as a percent of total jobs in various markets both in the U.S. and outside.  Here is the chart:

View fullsize

Even with the current construction boom, New York only has construction jobs as about 2.8% of all jobs.  That puts it in company with other slow growth big blue cities like Los Angeles, Boston and Chicago.  Meanwhile, high-growth cities like Dallas and Houston -- where they never heard of "affordable housing" mandates or rent regulation, and the zoning is wide open -- have construction jobs in the range of 5.5 - 7% of all jobs.  YIMBY calculates that that translates into 200,000 missing construction jobs in New York.  They don't go on to calculate how many missing housing units, but over the course of decades, it is many, many hundreds of thousands.

As always with de Blasio, the nagging question is, is he just too dumb to understand that his policies harm those he is supposedly trying to help, or is he actually smart and his agenda is to grow a permanently dependent class of people trapped in his affordable housing?  I'm still going with option one (too dumb) but I'll take any contrary evidence that is offered.