New York City and the Brain-Based Economy

by |December 9, 2019

I admit that I am as parochial as they come: I’m a loyal New Yorker and despite my city’s major faults, I love the place and wouldn’t live anywhere else. New York City has survived the near bankruptcy of 1974 and the terror of 2001 and as the second decade of the 21st century draws to a close, this diverse, dynamic and intense place continues to attract people and business. Last week we learned that even without the $3 billion subsidy our mayor and governor wanted to give them, Amazon is renting 335,000 square feet near Hudson Yards to house 1,500 marketing and media employees. It’s not the 25,000 that were eventually heading to Long Island City, but it’s a nice start. Facebook is looking at 700,000 square feet of new space. Google already has over 7,000 people here, Apple has over 4,000 people in New York and this imported growth of media and tech companies does not include our home-grown communication and strategy firms like Edelman, currently employing close to a thousand people.

Along with these high-tech firms, New York City’s universities, like the one I work for, its hospitals, and media companies are all growing. Why is this happening? It’s essentially the same reason that tourists keep coming: New York is a people magnet. In the past three years, New York’s tourism has grown from 62 million in 2017 to 65 million in 2018 to an estimated 67 million this year. One reason for this dynamism is the active partnership between economic development and environmental quality first articulated in then Mayor Mike Bloomberg’s PlaNYC 2030. When faced with the prospect of a population that would grow by a million people in two decades, Bloomberg’s team set about to ensure that the city’s quality of life improved even as our population grew. They invested in parks, tree planting, transportation (including bike lanes), water supply infrastructure and following Hurricane Sandy, climate resiliency. The city’s public-private partnerships proliferated, bars became smoke-free, live theatre thrived, and entertainment and attractions of every kind popped up everywhere. Movies and TV shows were filmed all over the city and the images of New York City became impossible to ignore all over the world. Many of these trends have continued under Mayor Bill de Blasio and New York continues to attract talented people from everywhere. Even the anti-immigration policies of the Trump White House have not stopped this global city from maintaining its attraction to people from other nations.

I do not want to minimize the challenges we face. Over 60,000 homeless people are on our streets and over 100,000 of the city’s million public school children have experienced homelessness in the past year. All these highly skilled and highly paid technical and creative people coming to New York are competing with our working families for the same apartments. The housing crisis in New York City is not going to be solved by the free market. The current strategy of development set-asides is insufficient. Just as in the past, government must directly engage in the housing business, hopefully with more competence and resources than the New York City Housing Authority has managed to deploy. And unlike the past, we cannot count on federal government dollars to help us: We are on our own.

Since the Dutch arrived in 1624, New York has evolved from a trading outpost to a manufacturing powerhouse to a center of finance and finally to its current global prominence. While the United Nation’s presence guarantees its role as a center of world diplomacy, New York City’s economy is as multi-dimensional as any in the world. It is a city of great health care institutions, universities, cultural institutions, media, fashion, finance, strategy and technology businesses, and wonderful places for people to engage with each other. Each New York City has been built on the previous one. The High Line, a public park for the 21st century, was built on freight train tracks constructed during our manufacturing peak in the 20th century. Columbia University’s finance staff is housed in the Studebaker Building, originally built as a vertical automobile factory in West Harlem. Many of the clothing factories that dominated the “garment district” of my youth are now art galleries and restaurants. In the coming decades, New York will be transformed into a sustainable city with decarbonized energy infrastructure, comfortable mass transit, and decent places for working people to live.

When the Amazon subsidy proved controversial, and Amazon withdrew from Long Island City, some editorialized that New York might be seen as hostile to technology businesses. Despite that misstep, high-tech businesses remain a growing part of the city’s emerging economy. As Keiko Morris reported in the Wall Street Journal last week:

“Many in the New York business community worried that Amazon’s withdrawal would signal to other tech giants and large companies that New York had become inhospitable to business. Instead, Amazon’s continued expansion marks the latest sign that tech companies are scrambling for prime Manhattan real estate to attract the city’s large and well-educated talent pool. A tech corridor stretching several dozen blocks is emerging on Manhattan’s west side, where Facebook’s search for new office space has led it to consider the Farley Building, a landmark post office under redevelopment across the street from Penn Station, according to people familiar with the matter… New York is emerging as an East Coast hub for technology because of the size of its labor force, its extensive transportation system and the cultural and entertainment activities that come with a big city, analysts and real-estate executives said.”

New York has come a long way from its near-death experience in the 1970s, but it faces great challenges as it seeks to balance economic dynamism with fairness and equality of opportunity. Access to education is a requirement for those seeking full citizenship in an economic life built on expertise. We can never assure equality of economic outcomes, and we shouldn’t even try, but we must work to provide learning opportunities to all. The homeless child doing her homework on the subway and the man sleeping in the doorway of the vacant store epitomize the stark contrast to the couple toasting their success in a four-star restaurant. It is our responsibility as a community to care for and nurture our neighbors in need. As our economy continues to be transformed along with our lifestyles, we need to do a better job of ensuring that those who are left behind, are brought along. That does not mean we shouldn’t work to attract the tech firms that might be enticed to come here, but it does mean that we can’t depend on the wealth generated by the brain-based economy to address issues of justice without intervention by our community and by our government.

What does that mean? It means that the people who make the lowest salaries shouldn’t be forced to commute for hours each day to and from work. We need to build and maintain a housing stock that enables working people to live in New York City. It also means that we need to ensure that those who somehow lose their homes have access to decent temporary shelter that leads to permanent housing. And finally, it means that we need to ensure that our public school system prepares students for the economy they will grow up in, not the one we’ve left behind.

New York City has met these challenges before and made progress in translating our great wealth into great opportunity. We built public housing, hospitals, libraries, parks, schools, colleges, and provided an environment of opportunity. My late father and his four brothers were children of immigrants who all became professionals and were educated right here in New York’s public schools. I too am a graduate of PS 236, JHS78 and James Madison High School: all public schools in Brooklyn. Our schools can transform our children, just as these technology companies can transform our economic life. We need fresh thinking and creative problem solving to generate the revenues, programs and institutions that will continue New York’s tradition of opportunity coupled with compassion and a measure of equity.

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