New York City, Pauper Capital of America : The age of ‘higher information industries’ leaves a wake of human detritus.

Here’s a city where, if things had gone according to plan, Newt Gingrich’s opportunity society should already be up and running: vibrant world headquarters of the information age.

There’s no reason to be partisan about this, either. In substance, Gingrich and Bill Clinton both believe in exactly the same recipe for a new America: training and computers. Which one of them said, “How do we make sure children in Georgia are not now being educated to compete with Florida and Alabama, they’re being educated to compete with Germany, Japan and China?” (Newt.)

New York was supposed to be a pioneer in the shift from the old mixed manufacturing base to “world city,” pulsing prosperously forward on the back of the “higher information industries,” which translate into reality as finance, insurance and real estate.

It hasn’t quite worked out that way, as a devastating piece of analysis by New York economist Robert Fitch in a recent New Left Review makes clear. These days, out of the 343 main metropolitan areas in the United States and Canada, the “Places Rated Almanac” ranks New York last.

White youth participates in the labor market at rates of 20%; black youth at half that number. To get New York’s participation rates up to the national average of 66% and lower the unemployment rate to 6.2% would take a million new jobs.

New York has 1.8 million people on welfare. One out of four New Yorkers is a pauper; in the Bronx the rate is 40%.

This vast catastrophe happened in one generation, in which New York went from being one of the richest cities in the world to one of the poorest in America.

As Fitch emphasizes, New York is now a one-crop economy. In the 1950s, it had two jobs in manufacturing for every one in finance, insurance or real estate. Today it’s the other way round, with 1 1/2 jobs in those areas for every one in manufacturing. (In Los Angeles, the same ratio is 2.75 in manufacturing for every one in finance, insurance or real estate.)

But in this convulsion, New York has not gained a single job in these “higher information industries.” Sure enough, there have been surges in the booms of the late ‘60s and ‘80s, but they have ebbed. At the end of the day--now--the city has simply lost 600,000 manufacturing jobs.

“Outsourcing” and the world economy are mumbled about in one alibi for such shrinkage. This doesn’t work. Printing, metal-stamping and garment-cutting weren’t driven out because wages were cheaper in Asia. There are $2-an-hour workers in New York’s Chinatown garment industry.

Manufacturing got pushed out because the big real-estate holders evolved a plan that (though they didn’t phrase it so crudely) maximized their own assets: land for large speculative office buildings.

In the Wall Street booms, these buildings filled up nicely with stock traders pushing paper on the public, lawyers, publicists, real-estate sales folk. Land values shot up and up. In 1987, New York did $2.5 billion in office construction.

Today office vacancies in lower Manhattan amount to 30 Empire State Buildings. Things are so bad that the Downtown Lower Manhattan Assn. has suggested to the beleaguered real-estate czars that they demolish their buildings, thus saving themselves the real-estate taxes.

Amid this plunge, income in the finance/insurance/real estate sector has held up. In 1993, Wall Street had its first trillion-dollar year ever. But although the finance/insurance/real estate sector was performing flat out, it could barely hold its own employment rates. Last year the sector shed another 6,500 jobs or so.

Thus, at the level of practical economic performance, the “information economy” in its world capital has failed, despite enormous public subsidies as the city has powered the real-estate boom with tax breaks and infrastructure expenses.

The “information” elites in finance/insurance/real estate who do not themselves produce wealth, but merely claims on wealth, are now seeking further public handouts. Republican Mayor Rudolph Giuliani is calling for a mighty new program of tax abatements and kindred subsidies to build or rehab even more new structures in lower Manhattan, thus bailing out the real-estate industry. On the same day, he called for savage cuts in health and welfare benefit programs.

Gingrich says that when he sees a poor person, he sees opportunity. In New York, he is seeing his information society in action. Over the past quarter of a century, opportunities for the poor have been systematically stolen away. Now they have none.