The kleptocratic mayor of New York

July 14, 2010

Danny Katch looks at the actions of billionaire New York City Mayor Michael Bloomberg, who is firing teachers even as he resists taxing hedge funds.

IN THE past year, the mayor of New York City has become $2 billion richer while his city has grown $1 billion poorer.

When this type of thing happens in a country in Africa or Central Asia, we call it a "failed state." Their failure, apparently, is a lack of subtlety. Looting your country's grain reserves to build the world's largest tetherball arena makes you a kleptocratic dictator. But if you get stinking rich selling information technology to the banks that have looted your treasury through bailouts, well, you're just Mayor Mike.

Of course, the real saving grace for Michael Bloomberg is that, unlike a banana republic strongman, he hasn't kept all the wealth to himself, but generously shared it with a few thousand of his city's 8 million inhabitants.

These hedge funders and investment bankers are too numerous to depict themselves in a 200-foot golden statue that rotates with the sun, as did the late Turkmenistan dictator Saparmurat Niyazov. Instead, various smaller monuments to gluttony dot the city's boutiques and restaurants in the form of bejeweled flip-flops and $150 hamburgers.

New York City Mayor Michael Bloomberg
New York City Mayor Michael Bloomberg (David Shankbone)

If countries like Nigeria are said to suffer from an "oil curse" because petroleum revenues have corrupted their political system, does New York have a "bank curse"?

Consider that Bloomberg is eliminating 2,000 public school teachers to close a budget gap caused by bailouts to Goldman Sachs execs who could each pay a teacher's salary and benefits with the money they spend on their own children's private school and tutoring. (This isn't an exaggeration. Wealthy New Yorkers routinely pay $25,000 to $50,000 on private tutors for the SATs and academic help--on top of $30,000-plus tuitions for private schools.)

Each of these public school teachers would have taught this year about 100 children whose parents didn't love them enough to become bankers.

LAST MONTH, New York's lame duck Gov. David Paterson dared to suggest a small tax on hedge funds run by the folks who brought you the recession. Parents and teachers might have expected their mayor to back this plan. Not exactly.

"I think it's the best thing that ever happened to Connecticut," Bloomberg sneered. "I can't imagine why every hedge fund wouldn't pick up tomorrow and move."

Our mayor is advising them to leave. He may even round up some friends and a van to help. In most cities, mayors are civic boosters, tireless pitchmen for their towns armed with pie charts showing why East Shitsburgh is a great place to start a business and raise a family.

But the mayor of America's business and cultural capital can't think of anything New York City has over Stamford, Conn. After all, "Hedge funds are a bunch of desks with terminals on them--they can be anyplace." Um, mister mayor, those are "Bloomberg terminals", correct? There wouldn't be any conflict of interest going on between your business interests and mayoral duties, would there?

Nonsense, says Mayor Mike. He's just following basic economics: "The first common sense rule of taxation is, 'Don't tax people that can leave.'" Left unstated is the obvious corollary to this rule: Grab what you can from everyone who can't.

Like any good predator, Bloomberg has his eyes on the young (public schools), the old (25 senior centers and a day of library service cut), and the sick (cuts to HIV services).

According to the anti-corruption group Transparency International (TI), the kleptocrat in recent history was Suharto, who embezzled over $15 billion during his three-decade reign in Indonesia. Michael Bloomberg has almost matched that in only nine years as mayor, quadrupling his net worth from $4 billion to $18 billion.

Here's the silver lining: Almost everyone on TI's corruption list was eventually deposed by popular movements, from Suharto to Ferdinand Marcos in the Phillipines to Mobutu Sese Soko in Zaire.

What would it take for that to happen here? Three simple words: Tax the rich. One of two things would happen. Either they shut up and finally pay their share. Or they leave for the suburbs as threatened, and their mayor leaves with them and starts a government in exile, leading search parties for doggie spas and $50 sashimi.

Then the real New Yorkers, the ones who can't leave, could go about rebuilding our democratic and civil institutions after years of Bloombergian misrule.

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