Progressive Economic Ignorance In New York

Keeping up with the economic ignorance of New York's "progressive" politicians is often a game of "can you top this?"  Every time you think it just can't get any stupider, it does.

For example, consider rent regulation.  In the aftermath of World War II New York City instituted a system of rent control on the price of all apartments in buildings more than minimal size, exempting new construction; and then in the early 1970s they applied a different system of rent regulation ("rent stabilization") to all the subsequently-constructed apartments, and to apartments that had previously exited the control system.  And thus when I moved to New York in the mid-70s we had the bizarre situation of a universally-recognized desperate shortage of housing and simultaneously almost no new construction in the private market.  Who could have foreseen that?  In the mid-1990s (with a Republican Mayor, Governor, and State Senate) we got modifications to the rent regulation laws that made it possible for owners to decontrol most apartments on vacancy.  This has led to a very, very gradual process by which the rent regulations have been phasing out.  And surprise! -- Lots of market construction is back.

So of course you can guess what is happening in the world of the "progressive" politicians.  Today Mayor de Blasio issued a press release calling for the elimination of essentially all provisions of the rent laws, most notably vacancy decontrol, that enable owners to remove apartments from the system.  Capital New York has the story.  Here's an excerpt from the Mayor's press release:

"This is a vital priority for New York City. Our working families and our neighborhoods are depending on stronger rent laws. Rent is the number one expense for New Yorkers. Unless we change the status quo, tens of thousands of hardworking families will be pushed out of their homes," de Blasio said in his release. "This has to be a city for everyone. It cannot just be a city of luxury apartments out of everyday New Yorkers’ reach."

So Bill, if this is such a great idea, why not just decree that all rents shall henceforth be zero?

And I'll bet you're thinking that that one cannot be topped.  But that just proves that you don't follow the news closely.  If you did, you would have seen that the New York City Council -- with the support of de Blasio of course -- a few days ago passed a resolution opposing the so-called "fast track" authority that President Obama is seeking from Congress to negotiate free trade deals with Asian countries.  Crain's New York Business has this story.  Why would New York City want to meddle in that one?  Here's the take of Crain's:

Labor unions and progressives like the mayor see only the local losses, as workers in foreign countries make the products that once were made in the U.S. -- eliminating millions of jobs here.

But here's the bizarre thing.  Manufacturing jobs started leaving New York long ago, and today they're almost all gone.  When I moved to New York in the 70s there were over a million manufacturing jobs in the City.  The number today is only about 75,000, and those are specialized things like "craft" breweries in Brooklyn.  It's hard even to try to understand how a new trade agreement with, say, the Philippines, is going to affect those jobs one way or the other.

But meanwhile, what is the main business of New York today?  It's what all those hundreds of thousands of office workers in Manhattan do.  A good summary is that they are engaged in the internationalization of the world economy.  Another way of putting it is that they work on choosing the best investments for money, which means allocating capital to the place where it can be most efficiently deployed, in a process where international boundaries are increasingly irrelevant.  This "investment business" broadly defined is much more than just what goes under the banner of "Wall Street," and includes substantially everything that the major banks, financial firms, private equity firms, hedge funds, asset managers, law firms, accounting firms, financial consultants, and lots of others, do.  And substantially all the rest of the New York economy -- from real estate to insurance to entertainment to travel and on and on -- lives off the fruits of the investment business that drives the whole enterprise.

The New York City Council and Mayor de Blasio would gladly hobble this gigantic economic engine in some kind of quixotic effort to "save" the pitiful remaining 75,000 manufacturing jobs.  Really, do they have any idea at all what they are doing?  Oh, I should mention that the support for the anti-fast track resolution in the City Council was unanimous.

UPDATE, May 6, 2015:   Indeed, they most assuredly have no idea whatsoever what they are doing.  Today Mayor de Blasio has announced new funds in his upcoming budget to provide services to manufacturing businesses, including training "to give workers the skills that industrial employers seek."  From Crain's New York Business today:

"Thriving industrial and manufacturing businesses that provide quality jobs for New Yorkers are vital to combating inequality and diversifying our economy," said Mayor Bill de Blasio in a statement provided to Crain's. "Businesses from furniture-makers in Sunset Park, to metal finishers in Crown Heights, to film studios in Greenpoint employ thousands of New Yorkers of all backgrounds in good-paying jobs. We're investing in the crucial services and the skilled talent our industrial and manufacturing businesses need to grow."

Newsflash to Mayor and City Council:  Manufacturing is not coming back as a significant part of the New York City economy in this lifetime.  Granted, the on-budget part of what the Mayor proposes is a de minimus amount of money (about $1.5 million).  But it's also accompanied by more of the usual crony capitalist accoutrements, like land use restrictions to keep vast swaths of land in industrial use even though there are hardly any industrial users left.  And anyway, pure waste is pure waste.  If they can't tell this is pure waste, how can you have confidence in anything they do?