What's remarkable is how little substance either mayor demonstrated in a meeting that seemed largely focused on the bullpen layout for city hall, which was compared to some (mythical) newsroom where open space means information is freely shared. To be fair, they also discussed Bloomberg's successful bid for mayoral control of New York City's schools.
Still, both men got their fair end of the deal. Fenty called Bloomberg the “standard-bearer” and said “we’ve learned a lot from him.” And Bloomberg said of Fenty that "I predict great things… I think this mayor is a breath of fresh air for Washington." the problem is that Fenty seems to be not simply basking in reflected glory, but mistaking that glory for substance. in a TV interview Tuesday night, it seemed clear that Fenty has swallowed Bloomberg's unsubstantiated claims of educational success whole without bothering to have examined the incontestably unimpressive numbers. Washingtonians should hope he'll cast a more critical eye on his own budget numbers.
Two stories in yesterday's New York tabs offer a crash course in the law of unintended consequences. The Daily News cover story, Cops pay big price for 25G salary, makes the obvious but significant connection between the new starting pay rate, a 40% cut to 1986 entry levels, and a force that's shrunk by 300, despite plans for an 800 officer increase. And even those who join reconsider—the drop-out rate among recruits has doubled to 20%, and at least one cop has applied for food stamps.
In short, Bloomberg was outfoxed by the PBA, which agreed to lower pay for new rookies in exchange for pay raises for veterans, knowing that the rookie pay would have to be pushed back up—and that the raises, of course, would not be scaled down in return. In a nice judo move, the union is actually using screwed-up young cops as an argument for paying young cops more:
Meanwhile, the Post reports on that rare crime drop the city is less than eager to claim credit for, or explain, in this short dispatch, here in full:
Police brass want more arrests to com bat rising rates of murders and shoot ings, so they're eliminating limits on over time pay to encourage cops to haul in more perps.
"The more bad guys you put in jail, the less likely they are to shoot and kill people," said a source familiar with the thinking behind the shift in policy.
Department Chief Joseph Esposito announced the change - effective immediately - in a meeting Thursday with borough chiefs and brass in the transit, housing, narcotics and detective bureaus, a source said.
Traditionally, overtime pay is capped at the end of every month or quarter, depending on the command, with a typical limit of about $8,000 per quarter. Additional overtime hours are compensated with time off. But those rules may discourage some officers from making arrests after they hit their limit, because the average collar is a time-consuming process, often running into overtime.
The new policy is a response to the spike in murders in the city this year - almost 10 percent over last year.
As of Dec. 24, there had been 579 murders, compared with 527 during the same period last year. Shootings are up 2 percent, to 1,530.
But overall crime is down 4.6 percent citywide, and busts were up this year 5.5 percent over last year.
Esposito reportedly warned chiefs to keep an eye out for overtime abuses - like deliberately making an arrest at the end of a shift to rack up bigger paychecks.
The Daily News touches on the impact of overtime in their story, closing with
Though overall crime fell 4.7% last year compared with 2005, the murder rate rose 9.2%. Last week, police brass put out the word that overtime would be easier to get, ideally to allow cops to make more arrests.
"It's the old 'dollars for collars,'" said a police official who asked not to be identified. "Is some of it fueled because there are less cops out there? No doubt."
Bloomberg, having been badly out-manouvered, is likely to be forced to push rookie salaries up, and has already restored more generous overtime rules that amount to a de facto raise.
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December 19, 2006
Unfortunately, Mayor Bloomberg's big new idea to help the poor looks an awful lot like the billionaire once again buying political support by recycling failed ideas. The Times, of course, sees it otherwise, editorializing in its news dispatch that "the effort is classic Bloomberg in that it emphasizes nontraditional solutions and enlists the private sector to tackle problems that have historically vexed governments." The dispatch goes on to claim that
The administration’s efforts would place an emphasis on rewarding good behavior and promoting self-sufficiency. Officials plan to spend $42 million annually on the tax credit, $25 million to reward actions like attending schools or prenatal education classes, and $11 million to help poor adults save money and learn sound financial practices.
If only dignity and self-sufficiency were so easily achieved by giving people free money. See: The Saudi Royalty and Paris Hilton. That giving the poor the material circumstances of the better-off and expecting them to then behave the same way has been rather definitively disproved over the last 60 years, since projects became a four-letter word, seems to have escaped the mayor’s notice, or at least his interest.
The Times reports that: The effort would involve the creation of a new city office that would operate in part like a philanthropic foundation and in part like a venture capital company. The program, called the Center for Economic Opportunity, would administer a $100 million fund to support experimental programs, like giving cash rewards to encourage poor people to stay in school or receive preventive medical care, or matching their monthly bank deposits to foster greater savings.
This sounds an awful lot like a new private capital twist on the old game of so-called poverty programs that in fact function as job program for the working class, creating an enshrined social service bureau with every incentive to retain the impoverished class their livelihood depends on.
It also seems the mayor is, yet again, working at cross-purposes. On the one hand, he’s preaching a gospel of self-sufficiency, while on the other, the economic rewards he’s offering all suggest that poor people will not make good decisions unless immediately rewarded for them, just as they lack the self-control to avoid trans-fats and other unhealthy foods.
With all that said, there are a few positive signs. First off, that the plan was developed in consultation with, among others, the honorable, intelligent and effective : Inclusion of the honorable intelligent and accomplished Geoffrey Canada, founder of the Harlem’s Children Zone, is very promising.
And Errol Louis has a sharp dispatch in the Daily News pointing out that the plan was announced in the lobby of one of New York’s 28 credit unions, and hoping that this means some of the $150 million in new funds will flow into these grass-roots financial institutions that he correctly calls “a smart, proven way to combat poverty.”
Louis also is impressed that “The city plans to spend $150 million on anti-poverty initiatives, of which $100 million will go to a new Innovation Fund, designed to put dollars in the best and most effective programs.” And if money is allocated strictly according to impact, this would be worth touting (to be fair, $5 million is being put aside to monitor program results). Then again, since the city got rid of its Department of Burning Tax Payer Dollars, efficiency is always a goal, and we’ll believe that the city has the will to eliminate inefficient but politically popular programs when we see it.
America Works founder Peter Cove writes in, and doesn’t see much that’s new or worthwhile:
The Mayor's poverty proposal relies on discredited strategy and wishful thinking. Rather than tackling the tough stuff, it panders to providers of poverty programs long found to be ineffective or worse. Why isn’t the creation of jobs the first strike in the reduction of poverty, instead of incentives to create independent development accounts. For unemployed fathers?
Rather than encouraging men to return to their children and their mothers, we are fed programs to send nurses to poor first time mothers. What say we encourage the fathers back first?
Thirty more programs are said to be in the offing. One hopes that they will focus not again on peripheral issues, but strike at the very heart of New York's poverty problem-work and the missing fathers.
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December 04, 2006
Regarding this morning's post on Spitzer, Schumer and SarbOx reform, I somehow missed this item from Ben Smith of the Daily News. Ben, a man in the know, says that while Spitzer "doesn't quite seem to buy Schumer's premise of New York's threatened competitiveness," he's open to some changes to Section 404, which lays out the onerous internal controls that critics charge are the main reason for the IPO exodus overseas, and that the two men are discussing specific changes.
That said, the idea of a governor of New York disinterested in Wall Street's troubles (in his CNBC interview, Spitzer flatly states that the IPOs have gone overseas almost entirely because Europe and China are growing, and not very much at all because of regulation) is disturbingly passive. The trouble with this argument, of course, is that while Europe may have a booming IPO market, it has little other economic growth.
An interesting point over at The Conglomerate—only six of the report's 32 recommendations are focused on SarbOx, and those propose relatively minor changes:
Mostly, the report seems to see the problem as the upsurge in white-collar prosecutions or the 'liability risks' associated with being a public company in the US. The report does focus on the need to enhance shareholder democracy (a point I will post on later) as well as the need to reform the regulatory process. However, many of the recommendations center on ways to reduce the nature and intensity of corporate prosecutions. Hence, the report recommends such reforms as allowing directors who act in good faith to be insulated from out of pocket damages in securities actions, ensuring that entity liability is sought only in exceptional cases, prohibiting the DOJ from seeking waivers of attorney-client privileges or seeking denials of attorneys fees for their officers and directors, and protecting auditing firms by creating safe harbors for certain conduct or otherwise capping their liability.
In short, less power to the Eliot Spitzers of the world.
What's striking is that Spitzer and the Greenberg Commission agree on the key point—both argue that SarbOx reform is not the main reason for the IPO exodus. While Ben mentions that in his editorial board meeting with the News, "Schumer had nothing but praise for Spitzer, and expressed the hope that he could bring Eliot along with some of the changes to Sarbanes-Oxley, including ending the requirement that CEOs personally attest to the accuracy of their annual reports," it still seems to me that the governor-elect's indifference places him on a collision course with Senator Schumer and Mayor Bloomberg, who have been public and impassioned in their calls for reform. And the question remains: Where does Hillary stand?
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New York governor-elect Eliot Spitzer come out swinging against the new report from the Committee on Capital Markets Regulation's calling for Sarbanes-Oxley reform on Friday in an impassioned CNBC appearance:
"What this report is really about is reining in prosecutorial fraud," Spitzer claimed. "The heart of this report is an effort to rein in state prosecutors."
Part of this is personal—the blue-ribbon private group is funded in large part of Spitzer target and foe Hank Greenberg, the former head of insurance giant AIG, and is surely all for stripping away the prosecutorial discretion of state A.G.'s.
But Spitzer is yet again missing the forest for the trees.
Having run on and originally dedicated his Attorney General's office to a largely unsuccessful anti-gun agenda, Spitzer then began aggressively using the Martin Act, a then-obscure, nearly century-old statute granting the attorney general very broad powers to peruse criminal or civil charges against anyone involved in fraudulent stock or bond trading in New York, to go after Wall Street firms. While a state prosecutor pursuing stock market fraud is itself odd, and speaks volumes about the lax environment at Bush's SEC, what's odder still is the self-defeating nature of New York's A.G. policing Wall Street. It's the equivalent of the California A.G. taking on the movie business.
And despite the state's reliance on Wall Street, which provides more than 20% of all tax revenues, Spitzer seems more interested in maintaining A.G.s' prosecutorial prerogatives than in Wall Street's long-term health.
His stance also sets up a fight with Senator and new hero of the Democratic Party Chuck Schumer and New York City Mayor Michael Bloomberg, who last month took to the pages of the Wall Street Journal to call on Congress for SarbOx reform, arguing that New York's future depends on its financial markets remaining competitive.
Spitzer, though, claimed that the migration of IPOs overseas had little to do with over-regulation and was mostly a result of increased capital in China and Europe—none of which explains why only 5 per cent of the value of all IPOS was raised in America last year, down from 50% in 2000. He also declared that the Committee's proposed reform package "is dead-on-arrival in Congress."
In the Times Of London, the Manhattan Institute's Walter Olson the big question: "New York's other highly visible elected official, Hillary Clinton, has conspicuously kept her distance from the cause of reform. Could one of her constituents perhaps approach her, before the tumbleweeds arrive?"
This looks to get fast and furious: Treasury Secretary Hank Paulson has called for a review of corporate laws and regulations and is planning a high-level conference early next year to discuss the options in detail. Later this month the SEC chairman will release updated guidance on how section 404 of Sarbanes-Oxley should be interpreted and early next year the US Chamber of Commerce will produce its own blueprint for action. Before then, the results of a McKinsey study on US market competitiveness commissioned by New York Mayor Mike Bloomberg and Democrat congressional heavyweight Charles Schumer should be out.
More to come…
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November 21, 2006
New York's Court of Appeals, the state's highest court, has drawn down its own number for how much additional aid New York City's schools are due to fund a "sound and basic" education from at least $4 billion to about $2 billion. While both numbers are more or less made from whole cloth (and while the court is in fact unable to compel the legislature to spend any given sum, which is part of why the case is now in its second decade and still ongoing), the lower number is good news for Eliot Spitzer, who when all is said and done just gained about a billion dollars in loose funds he'll badly need as he inherits the state's fast-spending, slowly sinking ship.
There's an irony in the court backing into a lower number to "correct" the state's school funding mechanism, since the state formula is itself a political agreement dressed up as a formula, so that the winners fight furiously against any sensible reform that might reduce their cut.
Factor in the extent to which education spending in the state outside of New York City is a function of local property taxes, and the complicated set of state rebates to shift the burden around, and you have a system intended to defy analysis and reform. So far, it's working perfectly.
More coming in our next featured essay…
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November 15, 2006
Education expert Sol Stern takes a look in the latest issue of City Journal at the magic jump in test scores at PS 33 in New York, a school in one of the poorest parts of the Bronx, where 100% of the students qualify for free lunch, which last year had an unheard of 50 percent election year jump in reading scores. While the mayor held a press conference at the school to tout the incredible gains, he's been unable to explain what he called an "historic" and "record-breaking" improvement.
And this year, the same students have suffered an equally historic collapse–of the 87% of last year's fourth graders who read at or above grade level, only 47.5% have managed to achieve the same standard as fifth graders.
Principal Elba Lopez isn't around to explain—after collecting a $15,000 bonus for her incredible work last year, she promptly retired, having boosted her pension by some $12,000 a year for life.
It's time for an explanation and an investigation; we'll see if either is forthcoming.
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November 13, 2006
As best I can tell, Forbes was the only outlet to run in full this AP dispatch on the expanded use and increasingly corporate nature of drug delivery services in New York City. It's a smart article on an interesting topic:
In a city where you can get just about anything delivered to your door - groceries, dry cleaning, Chinese food - pot smokers are increasingly ordering takeout marijuana from drug rings that operate with remarkable corporate-style attention to customer satisfaction.
An untold number of otherwise law-abiding professionals in New York are having their pot delivered to their homes instead of visiting drug dens or hanging out on street corners…
Within a couple of hours, a well-groomed delivery man - sometimes a moonlighting actor or chef - arrives at the doorstep of his Manhattan apartment carrying weed neatly packaged in small plastic containers.
"These are very nice, discreet people," said Chris, who spoke to The Associated Press on condition only his first name be used. "There's an unspoken trust. It's better than going to some street corner and getting ripped off or killed.…
"It's certainly been the trend in the past 10 years in urban areas that are becoming gentrified," said Ric Curtis, an anthropology professor at John Jay College of Criminal Justice who specializes in the drug culture.…
Investigators seized customers' names and addresses from the drug operation's computer logs. But those people face little risk of prosecution, authorities said.
Delivery services are nothing new, and obviously it's near-impossible to measure a black market economy, but the piece reinforces my impression that the delivery market has boomed, as a result of better policing over the last 14 years, and the new, young money brought to New York by the drop in crime and the real estate boom.
The nut quote above may be "otherwise law abiding professionals." The implicit question, of course, is whether or not the police should be involved in doing much to go after delivery services don't contribute to crime—if outside of the drug sale and use itself, no further crime is created/no window is broken, it becomes a low police priority.
On the other hand, a fairness question—this in effect stipulates that middle class drug use is, if not quite decriminalized, not bothed with. And that those with less are far purused far more vigorously for the same sort of activities.
More on this here.
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November 06, 2006
Lyndon Johnson, the story goes, once delivered a speech in New York on the Great Society. Just as he declared America was engaged “in nothing less than an all-out war on poverty,” a small voice from the crowd replied, “Mr. President, we surrender.”
By the mid-1970s it became glaringly apparent that the Great Society efforts to uplift inner city areas were not just a failure, but exacerbated problems. But 30 years later, New Jersey state government continues its heroic efforts in Camden, at a high price in people and dollars. (This is a city where the mayor, upon hearing that Camden had dropped from America's first to its third most dangerous city, exclaimed "You made my day!")
In Manhattan, the only way to tell the post-war luxury towers from the projects of the same era is the color of the brick—the wealthy painted it white. Also, that the poor housing tended to be close to the waterfront (often with spectacular views on the higher floors) which then seemed undesirable for living. Chicago's new "stigma-smasher" is still another attempt to pretend that it's the housing that makes the people, instead of the other way around.
All of which illustrates the optimism—I'd almost say religious belief—inherent in the word "project," and the danger in using the power of the government to tamper with human nature.
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November 01, 2006
In today's Wall Street Journal OpEd [subscriber's only link] on threats to New York's status as the world's financial capital, Mayor Bloomberg and Senator Schumer list "four factors that bear close attention: globalization of the capital markets, overregulation, frivolous litigation and incompatible accounting standards," and call for a reassessment of the "balance of innovation and regulation."
So far, so good, but what all four points have in common is that they're outside of the power of New York City or State to address—and what the leaders omit from their essay is as important to New York's future as a financial captal as what they address. Here, then, are four more factors unmentioned by the senator and mayor that they should consider:
1) Eliot Spitzer is about to be elected governnor based largely on the name he made for himself as state Attorney General: The Sheriff of Wall Street. Will Governor Spitzer watch out for New York's most important economic sector, or continue to play sometimes overbearing watchdog?
2) New York City and State both tax Wall Street to the hilt to fill the coffers and support their super-sized governments. Regulatory reform is well and good; why not reform the economic climate as well to create a more appealing place to do business?
3) While London and Hong Kong are addressed, there's no mention of the Chicago merger, and the domestic threat it poses to New York's continued supremacy.
4) Terror. Obviously, terror and the fear of terror effect all business capitals. That said, it does seem an odd omission.
Here's hoping that in addition to pushing the feds for change, New York's leaders are looking at what they can do to help themselves.
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