New York Comeback Has Come and Gone : Convention: Since the Democrats’ 1980 visit, the city built a ‘bonfire’ and saw it flame out. But residents are still warmed by embers of possibility.

When Democrats arrive in New York this weekend for their national convention, they will find a city in which “The Bonfire of the Vanities” has been reduced to a mere flicker.

Crack, AIDS, homelessness, racial tensions and the deep recession all have damped the flame that burned so brightly during the soaring ‘80s.

The city has undergone profound political, social, economic and demographic changes since it hosted delegates to the Democratic convention a dozen years ago. Differences are clear in both the skyline and the psyche.

“The city came through a huge economic and cultural binge in the ‘80s,” said Felix Rohatyn, the Lazard Freres investment banker who was the chief architect of New York’s financial rescue a decade earlier. “ ‘The Bonfire of the Vanities’ was truly written in New York. The embers are still glowing, but the fires are certainly banked.”

It has been a long fall. Since 1988, New York has lost a third of a million jobs. Since the stock market crash of Oct. 19, 1987, which signaled the end of the bullish days of the ‘80s, Wall Street is slimmer.

Many of the Masters of the Universe, the young Wall Streeters Tom Wolfe described in “The Bonfire of the Vanities” who felt they were small fry if they did not make $1 million a year, are small fry, even though Wall Street again is hitting records.

“It’s a different world,” said Samuel Ehrenhalt, regional commissioner of the U.S. Bureau of Labor Statistics. “The nation was in a recession in 1980. New York sailed through that with flying colors. Now New York is at the tail end of a long and severe recession, which has eroded all of the gains of the 1980s. All of that glorious comeback is gone. The jobs are gone. It’s a very different time.”

In some sectors, the stamp of recession is stark. Unemployment stands at 11.5%, compared with 7.8% for the nation. Macy’s and Bloomingdale’s, two venerable retailing institutions, operate in bankruptcy. Two others, Alexander’s and B. Altman & Co., were forced to close their doors. Vacant shops stand on many streets.

When the gavel descends on Monday, it will mark the fifth time New York City has hosted a Democratic convention. Each time, the convention had a particular tone--and so did the city.

In 1868, when politicians, according to the New York Tribune, were “crammed to suffocation” inside Tammany Hall in Manhattan “for whiskey could be had for nothing in the back rooms,” Gotham also got a bad rap.

“With the Democrats have come, apparently, all the thieves in the country,” wrote the New York Times. “Washington, Baltimore, Philadelphia, Boston and Cincinnati have contributed full quotas of these undesirable visitors, and the detectives report that the thieves and pickpockets swarm in all parts of the city.”

In 1924, when John W. Davis of West Virginia gained the nomination on the 103rd ballot at 2:25 a.m. on the 16th day of the convention, Democrats were exhausted. But the New York Herald and Tribune, in a front-page story, noted:

“Practically the entire personnel of the Charles Street Station on the lower West Side has been transferred to other precincts as the result of a fight in the back room of the station house last Friday night when six patrolmen gave Sgt. George W. Smith, known in the department as ‘hard boiled Smith,’ a terrific beating.”

In 1976, excitement and relief reigned when Democrats gathered to nominate Jimmy Carter from Georgia. The convention came days after the tall ships sailed through New York’s harbor, marking the nation’s bicentennial. New York had also escaped its serious brush with bankruptcy.

In 1980, when Democrats squeezed into Madison Square Garden, New York was poised on the springboard of tremendous growth. Delegates heard Carter accept his party’s nomination for a second term and Sen. Edward M. Kennedy acknowledge defeat. Mayor Edward I. Koch was at the height of his popularity and was beginning to dream about running for governor. The lieutenant governor, who would later defeat Koch in a primary, was barely known beyond Queens.

His name was Mario M. Cuomo, and on Wednesday night, the enigmatic politician who has riveted party professionals with his oratory--and his refusal to enter the 1992 presidential race--will nominate Bill Clinton.

Construction cranes dotted the skyline when the delegates met in 1980. New York City was beginning one of the biggest economic and building booms in its history. The flame of excess and conspicuous consumption had been kindled.

A guidebook of new buildings 12 years later shows enough structures to easily fill the downtowns of lesser cities.

Just a glimpse at the skyline quickly reveals the scope. New hotels stand in Times Square. The Jacob K. Javits Convention Center--the largest convention center under one roof in North America--stretches five blocks under 16,000 panes of glass on the West Side of Manhattan. For trivia buffs, it takes four window washers a full year to clean all that glass. The World Financial Center, by the Hudson River near Wall Street, dominates downtown.

But vast areas of many skyscrapers are deserted, and some top economists aren’t sanguine in the short run.

“Now we have a lot of skeleton buildings. The shells are up on the outside, but there are no walls on the inside because they have not been rented. Commercial real estate is taking a bath in 1992,” said Joseph W. Duncan, vice president and senior economist of the Dun & Bradstreet Corp. “There is so much overbuilding, it will take a decade to correct the situation.”

Some New York boosters claim they see a silver lining: Because of the space glut, Manhattan office rents are now competitive with the suburbs and serve as an incentive, they say, against corporate flight.

A dozen years ago, when the delegates last gathered, New York’s physical plant was crumbling. Because the city had been perched on the brink of bankruptcy, repairs had stopped. New York has spent vast sums--sometimes $5 billion a year--to remodel. The subways are better, and bridges no longer seem in danger of toppling.

Seismic shifts have shaken New York’s politics in the decade since the last Democratic convention. Voters ousted Koch from office after 11 years and elected David N. Dinkins as mayor. No two men could be more different temperamentally. Written off by some potential opponents as a one-term occupant of City Hall, Dinkins has shown strength in crises--most notably this week’s disturbances in Washington Heights near the George Washington Bridge in Manhattan and last summer’s disorders in Crown Heights in Brooklyn. Recent polls show his popularity is rising.

The New York City Charter was revised, so the mayor now divides power with a strengthened and expanded City Council. More women have come into political prominence since 1980 and now hold positions as city controller and as presidents of two of New York’s five boroughs.

And the constituency is changing too. New York is no longer a city where whites are the majority. About 25% of people in the city live below the poverty level. Few if any neighborhoods are immune from drugs, AIDS and homelessness.

Huge numbers of immigrants have changed the face of neighborhoods, and economists believe New York’s newcomers constitute a source of strength in the decade ahead.

“They tend to be young, they tend to be aggressive, they tend to be entrepreneurial,” said Ehrenhalt, noting that these are the characteristics that brought success to previous waves of immigration.

Economists and business leaders see the new immigrants at the core of recovery. They remain optimistic the flame of good times will burn again. Economists note that, despite the recession, the city is in far better shape than in the 1970s, when New York had run up $6 billion in debt.

“New York, in its painful and wrenching transition, is coming to grips with its competitive edge,” Ehrenhalt said.

“New York is still an international and a global economic fulcrum,” said Dun & Bradstreet’s Duncan. “We are truly moving into a global economic era now. . . . As the U.S. economy strengthens and the global economy corrects itself, I think New York will come back, to many people’s surprise. The gloomers and doomers, I think, will be proven wrong. But the people who will be visiting next week will hear a lot of gloom and doom.”