Stratospheric subsidies--or back to basics?(Commentary)(Column)

Do all of America's cities have something to learn from New York? Does New York have something to learn from places like Los Angeles and Houston?

"Yes!" says a groundbreaking report on New York's shaky post-9/11 future, financed by the Rockefeller Foundation and written by a New York nonprofit, the Center for an Urban Future (www.nycfuture.org).

New York, says the report, needs to shake its preoccupation with Manhattan and "giantism"--its signature economic development strategy of multimillion-dollar tax incentive packages to induce (i.e., bribe) large corporations not to relocate to the suburbs.

The New York Stock Exchange wanted a staggering $1 billion not to migrate to New Jersey. That deal was never consummated, but between 1988 and 2000 the city did offer about $2 billion to roughly 80 large firms. In "thanks," roughly half the companies--among them Merrill Lynch, Dillon Read, Kidder Peabody, Ziff Davis, Chase Manhattan, and Citicorp--reduced their work force in New York or moved jobs out of the city anyway.

No one doubts that New York's globally leading collection of great corporations has been a massive asset. But their appetite for subsidies depletes the city's treasury and threatens basic services. Why continue payoffs, the new report asserts, when the big firms, once bedrocks of stability, are gobbling each other up, restructuring, sometimes going bankrupt, all at a time when technology makes it easier to move skilled jobs to the suburbs?

New York needs a better vision than being "Capital of the World," argue authors of the report. Instead, first priority should be on its grass-roots economy--thousands of smaller businesses, neighborhoods, and ordinary people including the city's millions of modern-day immigrants.

Or in Jane Jacobs' words, "a metropolitan economy, if it is working well, is constantly transforming many poor people into middle class people, greenhorns into competent citizens.... Cities don't lure the middle class, they create it."