NYC: Koch Goes but the Crisis Stays

Against the Current, No. 26, May/June 1990

Andy Pollack

IT WAS HARDLY surprising that millions of New Yorkers, especially Blacks, would be enthusiastic over the prospect of the election of David Dinkins as New York’s first Black mayor, despite the explicitly moderate tone of his campaign. The Koch administration’s open racism, police brutality, kowtowing to financial and real estate interests, and general social suffering fueled hopes for something better.

Dinkins said openly in the campaign that he would be a “healer,` not only of the wounds suffered in interracial strife, butbetween all social sectors in the city. His acts in the first few months in office have begun to define the terms on which the reconciliation will take place. As always happens when a politician tries to achieve a rapprochement between groups with different material interests, that accord comes on the terms set by those with the power.

During the campaign Dinkins’ advisers included leading city business figures such as Felix Rohatyn, investment banker and architect of New York’s ‘recovery” from its debt crisis in the 1970s.(1) Since his inauguration Dinkins has displayed continued fealty to the financial elite, both in his appointments and his policies. His new budget director is Philip Michael, a former finance commissioner under Mayor Ed Koch, and a former head of the Emergency Financial Control Board. Also giving a voice to corporate views in the new administration is Norman Steisel, formerly of Lazard Freres, as first deputy mayor.(2)

The New York Times reported that Dinkins’ financial advisers also included David Rockefeller of Chase Manhattan, James Robinson of American Express, and Reginald Lewis of TLC Beatrice International. Dinkins formalized Wall Street’s consultative role in March 1990 with his creation of a seventeen-member Council of Economic Advisers. The only council member with any labor connection is Carol O’Cleireacain, Dinkins’ commissioner of finance, who formerly served as economic analyst for the city’s biggest municipal employees’ union, AFSCME D.C. 37.

Since taking office Dinkins has received high marks from the business community for his fiscal conservatism. In a major address to 1,000 business and civic leaders at a breakfast of the Association for a Better New York, Dinkins warned that there was no money available to expand services despite the proliferation of such problems as drugs, AIDS and homelessness. After Dinkins announced his first round of budget cuts upon taking office, the Financial Control Board (FCB) issued a report demanding even more, a demand with which Dinkins quickly complied.(3)

In justifying Dinkins’ austerity budget, city officials even harked directly back to the practices of the 1970s, arguing that municipal unions should defer wage increases as they had during that crisis. When asked why he was making deep cuts in the city’s hospitals and education budgets, Dinkins replied that’s where the money is. On the surface, of course, he meant by this seemingly callous remark that these services were the biggest part of the city budget in absolute terms. For a pragmatic politician this logic is flawless. But this pragmatism assumes that one looks for financial salvation only through the budget the elites have left you to tinker with, and not, for instance, by challenging the notion that payments on the city debt are the first priority.

In 1988 city comptroller Harrison Goldin reported that New York still owed the banks $13.9 billion in long-term debt, up from $12.2 billion in 1978. Service of the debt had declined in the 1980s as a percentage of city expenditures, thanks to five years of budget surpluses. But those surpluses have now vanished, and the city is scrambling to find money for both day-to-day operations and debt repayment So despite Rohatyn’s “recovery” plan, the city has never really recovered, and is now in for the second wave of austerity, given the impact of the 1987 stock-market crash, the attendant layoffs in the financial sector and the nationwide anticipation of a depression.

With its shrinking manufacturing base and deteriorating social services, combined with a gathering in of capital produced by enterprises around the world, an obscene display of wealth flowing from that capital, and a growing impoverishment of the majority, New York City no longer depends on its local “natural” industrial base for its revenue. Instead it serves increasingly as a center for multinational corporations and banks. New York City is to be a safe haven for capital, wherever produced, and for the office operations necessary to organize the activities of that capital—if the overhead is low enough.

After years of a virtually all-white, all-male city administration under Koch, Dinkins has made a number of appointments of women and people of color But the Blacks, Latinos, Asians and women appointed by Dinkins will head service agencies, the ones distributing band-aids (and increasingly less even of those) to the city’s victims. The real power positions went to the Lazard Freres types.

Those who thought Dinkins would diminish racial tension in the city have been severely shocked. Shortly after his inauguration the police went on a rampage, shooting down seventeen Blacks on the usual flimsy pretexts (resisting arrests, fleeing a crime, etc.).—with no reaction from Dinkins.

This passivity in the face of murderous racism was particularly galling for those who had hoped Dinkins would represent a counter trend to the racist episodes in Howard Beach, Bensonhurst and the South Bronx, where Blacks and Latinos have been beaten and murdered by racist thugs or the police.

Gay and lesbian activists were furious at Dinkins for appointing to his cabinet Woodrow Myers, who had established a city policy in Houston quarantining AIDS victims. Larry Kramer, a founder of Aids Coalition to Unleash 1wer (ACT-UP), which is probably the only force in the city holding regular militant demonstrations and mass, democratic meetings, sent a letter to ACT-UP supporters announcing “We have been betrayed!”

Background to the Dinkins Victory

David Dinkins has neither made waves within the local Democratic Party nor a name for himself in the city’s turbulent racial politics. He is a quiet politician with little apparent ambition. Thus he became the “perfect” candidate and during the primary a significant wing of the city’s establishment shifted its support from Ed Koch to Dinkins. For them, Dinkins might be able to alleviate racial tension, which has simmered just below the exploding point over the last few years. He could also “manage” the multitude of other social tensions that have been aggravated by the city’s worsening economy. But although the “progressive” community supported Dinkins, he was not a populist figure who could be co-opted out of a large, vibrant movement fighting against the city’s social crisis.

Although there are hundreds of groups rallying and mobilizing almost every day in New York around AIDS, housing, abortion rights, racial violence or union demands, none of them are very large. The links between the groups are fragile, thus they pose no substantial political threat to the ruling elite. Dinkins’ ascension to power, therefore, represents more a recognition by the New York elite of a deep-seated objective crisis that needs to be ameliorated before a mass movement develops rather than a victory of the mass movement.

In September 1989, Yusuf Hawkins, a 16-year old Blackman, was the victim in a racial murder in the predominantly working-class Italian neighborhood of Bensonhurst This neighborhood, which is also a local Mafia base, had been the scene of a racist beating two years before, shortly after the racist murder of a Black man in nearby Howard Beach When Hawkins was murdered many of the more militant groups in the Black movement who had called prior marches called for demonstrations. But their mobilizing ability was hampered by two factors.

First, there was internal wrangling among the groups, none of which have a well-developed political program or democratic organizational style. Second, government officials and local media have launched a series of attacks on various Black leaders since the 198687 demonstrations in Howard Beach. This has taken the form of both outright repression, such as the New York Police Department’s “Black Desk,” created to monitor Black activism, and media promotion of figures such as Al Sharpton, a self-acknowledged police informer.(4) Sharpton was at one and the same time vilified by the media for his role in the Tawana Brawley case, and enabled by this same media to promote himself as the number one organizer of anti-racist events.

Sharpton became the leader of the demonstrations in Bensonhurst by default—a default not only of the more militant groups, but also of the more moderate Black leaders who had participated in the massive Howard Beach marches. But after a couple of marches through Bensonhurst, Sharpton called off his marches so as not to “embarrass” Dinkins.

Although massive, and involving significant labor participation, the Howard Beach marches were only a blip on the steadily slipping pulse of New York’s antiracist movement That movement has yet to recover from the police repression and political divisions of the late 1960s and 1970s. Each time over the last twenty years that a racist outrage has been perpetrated, rallies have been held and platforms put forward, but no permanent mass organizational structures have been built to sustain the momentum from one crisis to the next.

A Declining Movement

In this context it is worth noting the absence from the Bensonhurst struggle of Local 1199, the New York City hospital workers’ union. Historically, from its founding as a Communist Party-led union in the 1930s to its involvement in the civil rights movement, Local 1199 has been more active on racial issues than almost any other union. Dennis Rivera, who had earlier marched at the head of the huge procession in Howard Beach, had just become president of the union. Reunified after years of internal squabbling, Local 1199 was in the middle of a successful contract mobilization. They were holding mass rallies and one-day strikes in front of hospitals. These successfully united tens of thousands of Black, Latino, Asian and white workers.

Conceivably this mobilizing could also have been turned to use in search of racial justice in the city’s streets as well as in its hospital wards. But Rivera limited his response to signing on to a full-page ad in the New Yoi* Times denouncing the murder The ad, issued by “Business and Labor Leaders Against Racial Hatred and Bigotry,” was signed by the most powerful forces on both sides of the class divide, from union-busters to the leaders of the most powerful city unions.

Although there is a joint recognition by the financial elite and the labor bureaucracy of the need to defuse racial tensions, the elite wants the city’s poor of all races to continue paying for the city’s precarious economic position—which helps keep those tensions at the boiling point—and the labor bureaucracy continues to accede to the elite’s dictates. While more outspoken on social justice than any other labor official, Rivera did no more in action than they did.

The Cauldron of Institutional Racism

After the Howard Beach murder, Koch, whose pro-corporate and reactionary policies fueled race and class polarization in the city, set up a commission, which concluded that a predominately Black New York was a “community in crisis.” The commission noted that “in a city where 90% of all entry-level jobs require a 12th-grade education, the Black dropout rate remains high,” and that this dropout rate is due in part to “an educational system that devalues their culture and does not expect them to achieve.” The commission cited an earlier study by the Community Services Society (CSS) on exclusion of Blacks from the various industries in New York, concluding that Blacks are “relatively excluded from 130 of 192 industries in the private sector.”

Both private- and public-sector employment took off in the 1980s as New York recovered from the impact of its own fiscal crisis and the nation’s recession, but two-thirds of that growth came from the financial and business-services sector, according to the regional commissioner of the Bureau of Labor Statistics. The commissioner noted that New York’s economy was becoming evermore dependent, in its competition with other American cities, on “the quality of its labor force.” Job growth was occurring in areas calling for “first-class education and training … the stock in trade is knowledge.” It is estimated that 90% of the new jobs to be created by the year 2000 will require a high school diploma—in a city where 40% of today’s workers lack this qualification, and the dropout rate is currently 33%.

The CSS report stated that whites dominate all of the twenty industries that grew fastest between 19781982, and that over two-thirds of the Black workers remain concentrated in only twenty of the city’s 212 industries. Furthermore, manufacturing, traditionally the sector where Blacks—like most people from the working class—could most easily find high-paying jobs with little training, was the biggest loser In the 1970-1982 period 315,000 manufacturing jobs disappeared.

The biggest gain was in the service sector, which increased by 164,000. Fully 60% of the jobs in the service sector are clerical, maintenance or general service (janitors, housekeepers, etc). Almost all are low payin, due largely to the fact that they are non-union, Ironically the low-paying clerical jobs require more educational background than higher-paying, but union-organized manufacturing jobs. However two market crashes have led to massive layoffs in even the service sector By 1988 the only expanding sector was local government, which is now likely to halt under the bipartisan calls for austerity.

Given the barriers of institutionalized racism, New York’s Black community was unable to compete effectively for jobs during the decade of job growth. Now the city faces a period of stagnation in employment growth. Of course, working-class whites have suffered from the city’s lone-term downslide, not only from the decline in city services and general livability, but in employment. That has, in fact, contributed to a rise in racial tension. In a Village Voice article published shortly after the Yusuf Hawkins’ murder, some of the Bensonhurst youth who know the perpetrators explained quite eloquently how the decline in the construction jobs their fathers held, and which they had assumed would be theirs, left them unemployed, marginalized, bitter, ready to strike out.

While whites monopolize the highest-paying, high visibility stockbroker and professional jobs, 51% of the white males in New York’s private sector hold traditional working-class jobs, as operators, craftsmen, laborers, salesmen, clerks. In addition, 45% of the white women in the city are in office and clerical jobs.

In a city where the number of college-educated workers far exceeds available supervisory jobs, Blacks and Latinos with only high-school diplomas end up competing with college-educated whites for the same promotions—a competition bound to embitter both sides. Thus the city’s racial tensions, which get most publicity when they explode around issues of violence, crime, housing or drugs, have the same material base they’ve always had, a material base now exacerbated by local and nationwide economic shifts.

The “Progressive” Union Strategies

Some unions, such as Rivera’s 1199, claim to be uniting Black and white workers to overcome these divisions. But they do so by establishing a quid pro quo with mainstream politicians—You speak at my strike rally and I’ll help elect you”—rather than by building a grassroots movement uniting working people for real changes in the social structure.

Dinkins expressed his support for 1199s demands and drew heat from his opponents who claimed that this proved he would not stand up to labor when he became the city’s head manager. But the union called a halt to the mobilizations it was engaged in and turned its energies to assuring Dinkins a primary victory. In fact, 1199 provided office space and staffing to the campaign. After the Dinkins victory, Rivera was given a role in the new mayor’s transition team, helping to pick appointees to key city posts.

Another traditionally “progressive” local, Teamsters Local 237, also supported Dinkins. Shortly before it became the first municipal union to announce its terms for the 1990 negotiations, itspresident Barry Feinstein voted with the rest of the Metropolitan Transit Authority board for a fare increase. Instead of supporting the interests of the city residents, Feinstein betrayed those interests and also jeopardized his own union’s need for public support.

The Elites’ Project

Rohatyn was the most visible of that wing of the city elite that backed Dinkins and served on his campaign advisory board. Once the campaign was over Rohatyn called publicly on Dinkins to formulate a zero-growth budget, to defer raises for city workers—all of whose contracts expire in 1990—or to trade raises for cuts in the number of city jobs. Rohatyn was joined in this call by two major city business groups that called publicly on Dinkins to limit spending and steer money toward business to encourage its staying in the city.

The demand for a Dinkins payback by the city elite is not surprising, given the support they gave him in the latter stages of his campaign. Whereas in the primary, personnel and funds for Dinkins came primarily from labor, in the general election a whirlwind of fundraising raised mammoth amounts of money in the corporate community on Dinkins’ beha1f.

The corporate swing to Dinkins came at the same time as the business leaders were moving to restructure the city’s charter in accord with their interests. The city had previously been run in part by a Board of Estimate with one member from each of the city’s five boroughs. When the Supreme Court ruled this unconstitutional, as it violated proportional representation (the five boroughs vary dramatically in population), a Charter Revision Commission was established.

As Robert Fitch outlined in The Nation,(5) the Commission was dominated by big-business foundations. Although some city reformers claimed that the new charter, up for referendum approval the same day as the mayoral election, would democratize the city by granting more power to the City Council, Fitch exposed the falseness of the claim, showing that it will actually concentrate more power in the hands of the mayor and the speaker of the City Council. (The new charter was also opposed by the Coalition of African-Americans, Asian Americans and Latinos for a Just City Government.)

The key to the character of the new charter, says Fitch, is in the role of the nonprofit foundation heads who helped draft it, and in the new alliance of the latter with the city’s financial and real-estate bosses. This change in city governance means a shift in power from what Fitch calls the “kieptocrats” (the local wardheelers whose corruption ran so rampant all the way from Tammany through Koch) to the “plutocrats.”

For example, as part of an urban-reform agenda set by such longtime “friends” of the Black community as the Ford Foundation, the new charter will allow multimillion-dollar city contracts to be let to “nonprofit” agencies. The Foundation, whose role in coopting and subverting the Black nationalist movement in the 1960s was sowell-documented in Robert Allen’s BlacicAwakening in Capitalist America, is back in action, says Fitch, callin g for “corrective capitalism.” On the one hand, that means the gentrification of the inner city through “nonprofit community development corporations,” and, on the other, an expanded workfare. Workfare, as implemented under previous city administrations, has meant the contracting out of unionized city jobs to welfare recipients and prisoners.

Fitch also lays out the free flow, under Koch, of executives back and forth between city posts, foundation offices and private corporations, in a manner much akin to the incestuous careers on a national level of militarycorporate-government officials. Fitch is not convinced that, even if Dinkins had the will, he would find a way to counter the new organizational ascendancy in city government of the corporate-foundation alliance.

Dinkins fiscal conservatism in the campaign was matched by his ambiguous rhetoric on social issues. During the campaign he sought to portray himself as both the advocate of multiracial harmony(6) and as a candidate who could be as tough on crime as anyone. In a pre-election interview in the New York Times, indirectly responding to the call by several candidates for military-style “boot camps” for convicted criminals, Dinkins, said, “This is one Marine who believes in the value of discipline and respect, and I’m going to make sure that some young guys get a whole lot of it early on.” His first public act after election was to support Koch’s police action against squatters in Tompkins Square Park.

Combining Economic and Social Struggles

The irony of Dinkins’ “victory” is both enormous and tragic: just as affirmative action in employment, education and housing is taking a beating nationwide, a Black man has become mayor of the cultural and financial capital of the United States Yet this man is forced from day one in office to follow policies akin to those of his blatantly racist predecessor All the old questions raised by the Black movement in the 1960s—integration vs. separation, revolution vs. cooptation—are bound to resurface in this situation. Indeed in New York City a Black separatist trend with Cultural, religious and political manifestations is growing.

But in contrast to the 1960s, today workers of all colors are taking a severe beating, and some important struggles against this have broken out As yet, however, the labor movement has not shown a capacity to deal either with its own economic struggles or with the social problems of the most oppressed within its ranks. Some dissidents within the labor movement are attempting to develop a strategy for winning their economic battles, and the best among them are beginning to discuss again the role played by racism, both at work and in the community, in weakening labor’s economic might.(7)

The labor movement has frequently been both larger and more advanced politically in New York than anywhere else in the country. But in recent years this has meant only that New York had a milieu of TMprogressive” labor officials willing to take formally progressive positions on strikes, social issues and foreign policy, even as they were more closely tied to the city’s elite than in most U.S. cities.

The Black movement too has tended to grow first and fastest in New York, but in the current period this has meant only a flourishing of disorganized, although widespread, anti-establishment sentiment focused on figures such as Louis Farrakhan, new literary stars, or the more outspoken rap artists.

The weaknesses of both the labor and Black movements are due in large part to the failure to unite them on a grassroots basis. Neither movement has developed a detailed analysis of how the segregation of the city’s people of color into a few, low-paid, low-skilled sectors of the city’s workforce and their simultaneous segregation in residential, educational and social institutions have reinforced each other—or how their movements should respond to this overlapping segregation.

Perhaps the South African labor movement could provide a dynamic example of how such an analysis could be developed and implemented. There they have combined building democratic, militant organization on the shop-floor with organizing their members where they live around issues of discrimination, housing, healthcare, etc. One has only to look at the prominence of the Congress of South African Trade Unions in there-cent congress of the Mass Democratic Movement to see the fruits of this combined approach. This combination is what has been historically missing in the United States—an anti-racist, anti-sexist, class-based movement that uses the overlapping of workplace exploitation with community oppression to build structures that reinforce the strug1e in each sphere.

Of course it is not Just the linking of issues which facilitates this reinforcement of energies and experience, it is also the democratic decision-making in the movement, which is also sorely lacking both in New York’s unions and in its community movements.


  1. Rohatyn, of Lazard Freres, engineered this recovery by forcing the City to implement austerity measures and coercing city employees into sinking their pension funds into new municipal bonds. Decision-making powers were stripped from elected officials and vested in the hands of state-appointed bodies such as the Municipal Assistance Corporation (MAC) and the Emergency Financial Control Board (EFCB). EFCB supervises NYC’s spending, and is authorized, should budget deficits reach a certain level, to reallocate city monies on its own authority. Appointed by the governor from among state officials and business representatives, the EFCB was designed to ensure corporate confidence in MAC bonds. See Robert W. Bailey, The Crisis Regi,ne: The MAC, the EFCB, and the Political Impact of the New York City Financial Crisis (State University of New York Press, 1984) and William Tabb, The long Default (Monthly Review Press, 1982).
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  2. Steisel had served as deputy budget director under Mayor Abraham Beame and as sanitation commissioner under Koch (during which he reduced the crew size for the city’s garbage collectors from 3 to 2).
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  3. Reform leftists who supported Dinkins’ campaign have formed a Budget Action Network’ calling for raising of funds from alternative sources such as higher property taxes, higher income and capital gains taxes on the rich. Unfortunately they put forward no such alternative vision while they were buried in Dinkins’ campaign. The social consequences of the debt have included living conditions, in the worst of New York’s neighborhoods, comparable to those of Third World countiies similarly burdened by the banks: Harlem’s life expectancy and infant mortality rates vie with countries as Bangladesh and El Salvador.
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  4. More recently Sharpton has marched with Leonore Fulani of the New Alliance Party, a dangerous pseudo-leftist cult coming out of the Lyndon LaRouche milieu.
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  5. Making New York City Safe for Plutocracy, The Nation, Dec. 11, 1989. Interestingly enough, some twenty years ago Fitch co-authored a book that exposed leftists’ hopes in Kwame Nkrumah by outlining how international capital still had a tight hold on the economy of Ghana after the revolution, and how Nkrumah had failed to take the necessary steps to counter them. The point here is not to make simplistic analogies between Black leaders, but to develop an analysis of the significance in changes in political leadership posts. See Fitch and Oppenheimer, Ghana: The End ofan Illusion (Monthly Review Press, 1966).
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  6. Dinkins’ efforts to portray himself as a racial moderate led to one incident that managed needlessly and stupidly to offend both Arabs and Jews Nat Hentoff in the Village yore reported that Dinkins spurned efforts by Arab-Americans to organize on his behalf, fearing it would turn off Jewish voters. Hentoff reports that the heads of every major Jewish organization in New York say that they did not ask Dinldns to do so, but they felt by so doing Dinkins reinforced the stereotype of the New York Jewish community as an Arab-hating monolith – the very stereotype to which Dinkins was reacting by this move.
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  7. See Robert L. Allen, Reluctant Reformers, for an analysis of how the failure of successive American social movements to take up the challenge of racism paralleled their turn toward reformism in general.
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May-June 1990, ATC 26

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