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Making The Case For Confidence In New York, And For The Future Of The U.S. Economy
BY KEN OLIVER-MENDEZ
August 1, 2002
The mayor speaks out: Nearly one year since 9/11, New York City Mayor Michael Bloomberg speaks candidly about the U.S. economy and the spirit of recovery in the Big Apple
During his first seven months in office, New York City Mayor Michael Bloomberg has faced daunting challengesmany never even imagined by those pundits who decades ago first called the job he now holds "the second toughest job in America." But in a wide-ranging interview, Bloomberg said none of those challenges has dampened his confidence in the future of the city and in the U.S. economy as a whole.
"I was hired by people [New York city voters] who knew they were going to go through tough economic times and wanted somebody to stand up and make the tough decisions," Bloomberg told CARIBBEAN BUSINESS.
In Puerto Rico to represent President Bush at the 50th anniversary celebration of Puerto Ricos Commonwealth constitution, the financial-news-mogul-turned-mayor offered his perspectives on the relative strength of the U.S. economy and on the surprisingly optimistic spirit of recovery that prevails in the Big Apple almost a year after 9/11.
The impact of 9/11
"We cant recover the 2,800 victims that perished that daywe lost them," Bloomberg says when asked about how the people of New York City have recovered since 9/11. "But weve been doing everything we can to help their families recover and look to the future."
Thankfully, Bloomberg says that over the last 11 months President Bush and New York Governor George Pataki have given the Big Apple everything it has asked for as far as federal and state assistance. Immediately following the attacks, Bush pledged $20 billion for the recovery and redevelopment effort. Since then, Bloomberg says the funds have been flowing in from Washington and Albany at a steady pace.
The spirit of recovery and redevelopment has also firmly taken hold in the hearts of New Yorkers, as measured by a recent comprehensive Hunter College survey. Among the findings: 85% of New York City residents agree the tragedy inspired a stronger sense of community and togetherness, and 86% of Lower Manhattan residents in particular feel that New York, as a place to live, is the same or better than it was a year ago.
The mayor is also grateful that the cityas well as the rest of the U.S.has been spared to date from suffering another surprise terrorist blow, although he points out that threats of additional attacks continue to hang over the cityas they also reportedly do over every major U.S. city since 9/11.
However, something must be working rightinasmuch as those threats have been successfully deterred so farand he acknowledges that his government and the New York City Police Department (NYPD) have been decidedly proactive on the homeland security front.
"We now have a deputy mayor for counter-terrorism and a deputy mayor for intelligence, which the city didnt have before," Bloomberg revealed. "And under the deputy mayor of intelligence, the NYPD has developed a presence of NYPD intelligence officers in five strategic countries, because we thought all the services we needed werent getting to us through Washington and we decided to do it directly."
Citys economic recovery
Bloomberg says that economically, things are generally looking up in the city. The latest encouraging sign is that even domestic U.S. tourism has returned to its pre-9/11 levels. Only nondomestic tourism, he said, continues to be down.
He also spoke about his efforts as mayor to retain and promote industry and service-sector firms in the city. "Ive had a number of CEOs whove said to me, If it wasnt for you, we wouldnt be staying or we wouldnt be thinking of coming," says Bloomberg.
He says that on his watch, few firms have moved out, some new companies have come in, and other companies that had previously moved out are looking to return.
For example, through a city-state job creation and retention programfunded by the U.S. Housing and Urban Development Community Development Block Grant fundin April alone more than a dozen major companies (including Deloitte and Touche, Ambac Financial Group, Brown Brothers Harriman, Century 21, and Fried Frank Harris Shriver & Jacobson, among others) made long-term commitments to remain in Lower Manhattan, retaining over 10,000 direct jobs and more than 10,000 indirect jobs in the area.
Altogether, nearly 6,000 businesses in Lower Manhattan were approved for World Trade Center Business Recovery Grants, and Bloomberg has indicated that the city is now turning more of its attention to retaining and attracting small businesses with between one and nine employees.
The mayor insists that, as he sees it, the most important part of his economic development program is simply to deliver on basic services and to focus his efforts on core quality of life issues.
"My view is that if I, as mayor, want to do the best job for economic development in New York City, it comes down to making the streets safer (crime has gone down every month since he took office, from a relatively low base inherited from Giuliani), keeping the streets clean, keeping welfare rolls down, getting control of and improving the school system, and building housing."
If he and his municipal government colleagues can deliver on that end of the bargain, Bloomberg believes that New York Citys natural edge as an attractive location for many firms automatically will kick in. "Obviously, companies arent in the city or coming to the city because of me but because New York City is a physically attractive place to do business," Bloomberg says.
"Its where their competitors are, where their customers and suppliers are, and where the media that covers them are," the mayor observes. "Its also where their employees want to live. Those factors, especially those that have to do with proximity and concentration, are critical."
According to Bloomberg, when it comes to economic development it is those factorsmore than any others, including tax-related abatements or grantsthat are of prime importance.
Making a pointed reference to Puerto Rico and other jurisdictions past dependence on tax incentives such as Section 936, the founder of the Bloomberg LP global financial media empire insisted, "If taxes and the cost of real estate when youre renting and selecting a site are the difference between profit and loss in your company, then youre not much of a company."
U.S. economic recovery
Going forward, Bloomberg is also decidedly bullish on the U.S. economy as a whole. "Im a believer that fundamentally, the U.S. economy is in pretty good shape," he said.
"Its got its problems, sure, but would you rather play the hand of the U.S. economy, or of any other economy of the world?" Forbes magazines 82nd richest man in the world for 2001 asked rhetorically. "I know which one I would want to get dealt."
The magnate-turned-mayors confidence is based on such fundamentals as U.S. manufacturing production quality and intellectual capital. "If people were going elsewhere for their graduate degrees, Id be worried, but I dont see that," Bloomberg observed. "Thats as good a measure as any of where a true, creative spirit of economic growth is going to be."
Bloomberg also offered his take on the state of financial markets. "Stocks are by some measures still expensive in that they are trading at higher multiples of expected earnings, but the expected earnings are down so low, because of the economic downturn," he pointed out.
"I think that if you take a little more long-term perspective on the earnings, then stocks are not way overpriced," affirmed Bloomberg, who at the same time said hes never been inclined to make forecasts and has made it a practice over the years to buy only mutual funds and indexed funds. "And even there I diversify," he indicated.
The mayor lambasted the corporate accounting scandals that have plagued the market this year as "a disgrace," saying that they came about because people generally got caught up in the attraction for up markets.
"We collectively demanded a performance level that was irrational and we didnt pay enough attention when we saw it being delivered to ask, How are you doing this?" Bloomberg explains while saying that the phenomenon in no way excuses what happened.
"Some of these guys are going to have to go to jail," says Bloomberg. "Ive always thought that if you steal from large numbers of people, you should go to jail for a longer term than if you steal from one or two people, and that corruption in government should be punished even more."
Nonetheless, Bloomberg sees the sluggish recovery not so much as the product of the major corporate accounting scandals but as the ongoing effect of excess capacities that were built up, particularly in the telecommunications and related technology sectors.
"There was so much excess capacity in telecommunications, and so much money in it and in anything tech, that when it went down; everything went down," Bloomberg explains. "And some of the major mergers in that area, like AOL-Time Warner, didnt make any sense."
In the months ahead, Bloomberg sees economic growth overall gradually consolidating as excess capacities are used up, expectations are lowered, belts are tightened, and efficiency and productivity continue to register gains.
As Bloomberg sees it, from the outset of his term hes had a leg up on his predecessors in office in two important respects. Both have to do with how he got elected (he shunned contributions, spending approximately $50 million of his own money on his campaign) and with the team management style he brought with him from Bloomberg LP.
"First and foremost, Ive been able to handpick a team of smart, competent, high-caliber people to work with me," he says. "Most politicians dont have that luxury or the flexibility Ive had, because theyre not able to escape from the obligations they have to campaign donors and to the political apparatus."
New York City political observers have also noted that Bloomberg has taken a rather low public profile in comparison with his predecessors. The mayor says the relatively low media profile is deliberate, and is due to his governing style and his teamwork approach to government.
"Im not a believer that you should negotiate through the presswhich cuts out a lot of the times you would go and use itand Im not an ideologue, so having a lot of discussion about process is not something I spend time on," Bloomberg says.
"On the other hand, I am a big believer that my success will ultimately be judged by the accomplishments done by the people I put together, and thats why I want them out in front, getting the publicity," the mayor says. "So if the fire commissioner is putting out a fire, I want him to get the credit and on down the line with the police commissioner and the schools chancellor and the rest of team thats working with me."
Bloomberg also says that key elements of his approach to management include delegating full authority with corresponding responsibility to his team members and paying close attention to the measurement of results. "You have to have specific, measurable goals and hold people accountable to them," says Bloomberg. "Im a firm believer that if you cant measure it, you cant manage it."
Bloomberg points to education reformone of his top prioritiesas a prime example where performance and results can be comprehensively measured through skills testing and other statistics such as absenteeism and juvenile crime rates.
So far, Bloomberg has been able to achieve what none of his predecessors in the past 25 years were able to accomplish: mayoral control of the citys school system, which is the nations largest. As a result of an agreement reached in June with the state legislature, Bloomberg has named his own schools chancellor and now has the ability to appoint the systems 32 district superintendents as well as replace the citys board of education with a 13-member advisory panel.
Another major challenge for Bloomberg has been the citys finances. To close a projected fiscal 2002-03 budget deficit of $4.8 billion, Bloomberg has had to take such measures as borrowing $1.5 billion to help pay operating expenses and implementing across-the-board spending cutbacks.
In June Bloomberg announced the city would withhold 7.5% of the funds for every agency this year, for a savings of roughly a billion dollars. The citys total budget this year exceeds $42 billion. New partnerships with the state and federal governments are also being counted on to close the gap.
The mayor said his citys government definitely has had no discussions whatsoever with Puerto Rico or Dominican Republic government officials regarding the possibility of shipping solid waste to either island.
Bloomberg said the city currently does send solid waste to landfill sites in Pennsylvania and Virginia, and he confirmed the citys interest in options to send solid waste to other sites, which could be elsewhere along the Atlantic seaboard, Canada, or the Caribbean.
He said the solid-waste shipments could be sent to an incinerator site. "Incinerators today make a lot of sensethey dont pollutebut the trouble is the complex politics surrounding it," Bloomberg said.
Bloomberg suggested the citys plans could be beneficial to a small Caribbean island. "If an island like Montserrat, for example (with a population of about 5,000 people, an annual GNP of $50 million, and a volcano), were interested in building an incinerator and getting $100 million a year from the shipments, wed like to talk," Bloomberg said.
Bloomberg said hes not yet committed to running for re-election. "If you start worrying about a second term, you dont make the tough decisions that have to be made," he said.
On the other hand, he grants that it would be hard to say no if his employers (the people of New York, from whom he accepts pay of only $1 a year) insist he run again. "I will also say that I am a believer in term limits of two terms; I think eight years is about right in top elected executive offices."
He does, however, have his sights set on two important events for 2004. "We want New York City to be the site of both the Republican and Democratic National Conventions for 2004," says Bloomberg.
Meanwhile, in the spirit of New York Citys recovery and of the nations solidarity with the beloved Big Apple, the mayor has proposed that the city host a special one-day joint session of the United States Congress on Friday, Sept. 6, just days before the one-year anniversary of the Sept. 11 attack.
A redevelopment plan for the former World Trade Center site destroyed by the infamous terrorist attack wont be selected until later this year.
However, Bloomberg said hes convinced the memorial component that will be incorporated into the site is ultimately less important than other aspects of the redevelopment project that will be designed to ensure that, in his words, "we have jobs, schools, housing, and economic development for those left behind."
This Caribbean Business article appears courtesy of Casiano Communications.