No, we don't need more Murdochs and Trumps!

Arguing that cities should attract more billionaires to increase their tax base ignores what made cities great

By Michael Lind
September 10, 2013 9:45PM (UTC)
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Rupert Murdoch, Donald Trump (AP/Noah Berger/Reuters/Steve Marcus)

The stakes could not be higher. Two leaders with radically opposing political philosophies face off, in the run-up to a potentially epochal vote. Whatever the outcome, it may have ramifications for years, far beyond the zone of the immediate power struggle.

No, I’m not talking about President Barack Obama vs. Syria’s President Bashar Assad. I’m talking about New York Mayor Michael Bloomberg versus the individual who is the leading candidate to be his successor, Bill de Blasio.


As primary voters go to the polls today, De Blasio has shot to the top of the pack of Democratic candidates for the top job in New York City by portraying himself as the anti-Bloomberg. De Blasio describes Bloomberg’s New York as “a tale of two cities.” Symbolizing a radical departure from the Bloomberg era, the populist progressive wants to fund a universal pre-kindergarten program by raising taxes on residents who make more than $500,000.

Although he is not running for reelection, Bloomberg has sought to defend the policies that de Blasio is denouncing. In doing so, the current mayor has made it clear that his vision of economic growth boils down to luring taxpaying billionaires to move in.

Bloomberg told New York magazine:  “The way to help those who are less fortunate is, No. 1, to attract more very fortunate people.”  According to Bloomberg, “If we can find a bunch of billionaires around the world to move here, that would be a godsend, because that’s where the revenue comes to take care of everybody else.”


The reason to lure these nomadic globetrotting billionaires is that “[t]hey are the ones that pay the bills. The people that would get very badly hurt here if you drive out the very wealthy are the people he professes to try to help.”

Ironically, Bloomberg reinforces the image of “two cities” by imagining New Yorkers as belonging to two classes — billionaires who pay for public services, and the non-rich recipients of public services: “He’s a very populist, very left-wing guy, but this city is not two groups, and if to some extent it is, it’s one group paying for services for the other.”

Bloomberg’s vision of attracting affluent or rich residents as the model for economic growth is not uncommon in state and local government. In the last decade, influenced by the urban theorist Richard Florida, many cities competed with each other to increase their tax bases by creating artsy downtown areas and high-end loft apartment neighborhoods as bait for upscale professional members of what Florida called “the creative class.” Many state governments like those of Gov. Rick Perry’s Texas, particularly in the American South, dangle the prospect of low or nonexistent personal income or corporate income taxes to lure rich individuals and businesses away from other states.


In a resort town like the celebrity meccas of the Hamptons, a strategy of becoming a mecca for the 1 percent — and taxing them to subsidize schools and other public services for the local hired help — might be able to work. But New York City became America’s dominant city and a world economic capital by making and shipping things, not by enticing Wall Street rentiers, Russian oligarchs and Arab sheiks to buy trophy apartments and spend lavishly at overpriced restaurants and hotels.

As a candidate, and possibly as New York’s next mayor, Bill de Blasio has an opportunity to define an alternative to Bloomberg’s move-here/trickle-down economics. And because national trends tend to originate in particular cities and states, a backlash against plutocracy in the American city most identified with it could have far-reaching implications.


But there are traps as well as opportunities for De Blasio and like-minded progressives.

For one thing, the Great Recession exposed the danger of economic development strategies that depend too much on high taxes on the locally resident rich. In the aftermath of the crash of 2008, New York City and New York State suffered from the plunges in tax revenues that accompanied the drop in net worth and income of Wall Street elites. California also discovered the downside of a policy of hoping to fund spending largely with taxes on Silicon Valley tech billionaires enriched by an endless bubble.

The lesson of the Great Recession is that a broad, highly diversified economy and a strong middle class provide more stable tax revenue than narrow enclaves of the super-rich who may see the value of their portfolios drop — or who may move away. Taking this lesson seriously means adopting a policy that goes far beyond raising taxes on the rich somewhat, even if that is where the change begins. In the case of New York, it would mean shifting the urban and regional economy away from its lopsided dependence on finance and real estate speculation and entertainment toward the productive sector, including perhaps some forms of manufacturing.


It is not clear that conventional progressives, in New York or elsewhere, are up to the challenge of such a shift toward a more productive economy. For one thing, many well-meaning environmental, consumer protection and disability regulations may propose costs on new businesses. Post-Bloombergian progressives, in power in New York and elsewhere, may have to accept tradeoffs among conflicting values, something that movements in opposition are not required to do. That dilemma, in turn, can splinter coalitions, the way that the dispute over the Keystone Pipeline has divided some members of the labor movement interested in construction and manufacturing jobs related to the pipeline from anti-pipeline environmental activists.

The balance of power within the progressive movement might change, under a real alternative to Bloombergism. Many NGOs and other nonprofits have flourished thanks to contributions from New York’s economic elite. A post-Bloomberg New York that relied more on tax-funded public services than on philanthropy subsidized by donors in high tax brackets might see the center of gravity of the center-left shift away from the nonprofit sector toward a larger public sector constituency of teachers, police officers and first responders.

All politics may be local, but the issues at stake in New York’s mayoral race are similar to those in cities, states and the nation as a whole. Whoever Michael Bloomberg’s successor as mayor turns out to be, the campaign to replace him may pioneer themes that will resonate in American politics for years, far from New York City.

Michael Lind

Michael Lind is the author of more a dozen books of nonfiction, fiction and poetry. He is a frequent contributor to The New York Times, Politico, The Financial Times, The National Interest, Foreign Policy, Salon, and The International Economy. He has taught at Harvard and Johns Hopkins and has been an editor or staff writer for The New Yorker, Harper’s, The New Republic, and The National Interest.

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