Closer to the Edge: New York City and the Triumph of Risk DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Joseph Andrew Arena, M.A. Graduate Program in History The Ohio State University 2014 Dissertation Committee: Professor Kevin Boyle, Advisor Professor Paula Baker, Co-Advisor Professor David Steigerwald Copyright by Joseph Andrew Arena 2014 Abstract “Closer to the Edge: New York City and the Triumph of Risk” explores the historical construction of “the culture of risk.” The dissertation posits the culture of risk as an alternative to neoliberal frameworks of American society in the contemporary period. The work begins in 1973, with the city already unraveling from structural economic decline alongside racial and class polarization, a graphic example of the failures of mid-century “high-modernist” planning. It then moves to the city’s 1975 brush with bankruptcy, which became a starting point for New York’s elite to reimagine the city’s economic future. Financiers, with the cooperation of political leaders and the city’s labor movement, created an urban economy based on the most speculative kinds of deregulated financial capitalism. The city’s leadership deliberately risked social disintegration by using funds from public health, safety, and welfare to attract and retain global capital. The dissertation examines the historical impact of these policies on the city’s role as a financial center, its real estate market, and on the lives of the very poor. The city that was created by taking these risks radiated its influence outward to the nation as a whole through capital markets, intellectual discourse, cultural production, and new activist movements that arose in the midst of the AIDS epidemic. By 1992, the resulting belief in business/government risk-taking as a social good or as a necessity had become the dominant ethos of both New York City’s politics and of the United States as a whole. ii As recent events such as the 2008 financial crisis have demonstrated, the influence of the culture of risk endures to the present day. iii Acknowledgements As the author of this dissertation, I take full responsibility for the arguments, facts, and interpretations, along with any errors or omissions, presented in this work. I would never have had the chance to make that statement, however, without the people and institutions that gave me the opportunity to complete this project. So it gives me great joy to express my thanks. Without time, money, and the right infrastructure, nothing can be accomplished in a city, or in research. The Ohio State University has supported this project through a University Fellowship, a Humanities Summer Research Award, and two College of Humanities Small Grants. The Department of History provided a Research Fellowship and the opportunity to work as an instructor, teaching assistant, research assistant and grader. Thank you to my students who inspired me to write for a wide audience. The help of archivists and librarians in New York included those at the Archives on Municipal Finance and Leadership, Baruch College, The LaGuardia and Wagner Archive, Fiorello H. LaGuardia Community College, the Center for Oral History and the Rare Books & Manuscripts Library at Columbia University, and the Tamiment Library & Robert F. Wager Labor Archive at New York University. Further afield, I wish to thank the Digital Collections and Archives of Tufts University in Boston and the M.E. Grenander Department of Special Collection and Archives at the University at Albany. Closer to home, the Ohio State University’s Libraries provided further assistance. iv None of what follows would have been possible without Kevin Boyle. He opened the door to a world that I had dreamed of joining. When I got his first e-mail, I felt like the luckiest aspiring writer in America. I still do. In all of our work together he has combined the sharpest professional skills with the deepest sense of patience and compassion. He gave me the freedom to push the envelop of historical writing and insight, then supported me every step of the way. He shares his prodigious gifts with me, and so many others, without counting their cost to him. For all of these acts, and so much more, I give him my deepest thanks. From the earliest drafts of my master’s thesis, Paula Baker has been a guiding light for my graduate studies. Our many conversations about political history and everything related to New York grounded this dissertation in time, space, and the daily cut-and-thrust of making a city and a state work. Her sense of humor kept me going. David Steigerwald provided vital insights into the intersection of money, culture, and the intellectual life, then and now. His combination of unflinching rigor with warm friendship is a model that I hope to follow. At the University of Wisconsin-Madison, Nan Enstad taught me the historian’s craft as an undergraduate and exemplified the courage that I needed to pursue my work in graduate school. At Ohio State, Judy Tzu-Chun Wu taught me early in my career how to work at the intersection of race, gender, and sexuality. She has supported my work ever since. David Stebenne shared his considerable knowledge of American political economics and his experience of living in New York during the 1980s. Daniel Rivers helped me fill in my analytical gaps on LGBT history. James Bach skillfully guided me through the maze of university bureaucracy and was always ready with his v encouragement for the project. Mansel Blackford and William Childs introduced me to the Business History Conference. The members of the BHC, through their generous support of the Alfred D. Chandler Jr. Travel Grant program enabled me to present work at the conference’s annual meetings in 2009, 2011, and 2013. In 2012, I was selected to present my work at the BHC’s Doctoral Colloquium. The experience honed every aspect of my argument. My thanks go out to BHC members Barbara Hahn, Richard John, Pamela Laird, Mark Rose, and Elizabeth Tandy Shermer for all of their input into this project and their assistance in the profession, then and now. My fellow graduate students shared everything with me, from insights into my work, to lesson plans and football tickets, to comfort, inspiration, and joy. I had the privilege of traveling on this road in good company. Thank you to my friends at Ohio State and elsewhere: Charles Carter, Megan Chew, Robert Denning, Annette Dolph, David Hadley, Gregory Kupsky, Danielle Olden, Keith Orejel, Melissah Pawlikowski, Colin Stephenson, William Sturkey, Brandy Thomas, Scott Ward, Colin Stephenson, and Matthew Yates. In New York, the Bonnie and Daniel Olson generously shared their home and table with me as well as their own takes on New York’s history. Dan also proved an intrepid tour guide to both high finance and bohemia’s past and present. My cousins, Katie, Douglas, and Emily give me faith in the power of art, whether as word, food, or photograph. In the end, as at the beginning, there are the four people closest to me. My dear sister, Carolyn Arena is the best that any brother could hope to have. She gave me no end of practical aid in New York. More importantly she has given me the gift of her love and vi joy. Her intellect is as strong as her heart. Limitless. Her husband Matthew Merguerian makes me want to take the “in-law” out of brother-in-law. Finally, I thank my parents, Jillayne and David Arena. They never doubted my path and kept their faith in me as I wrote this dissertation. For their support and love in the face of all obstacles, from the first moment of the very beginning, this project is for them. vii Vita December 19, 1983…………………………Born, Milwaukee, Wisconsin 2005………………………………………...B.A. History, Political Science The University of Wisconsin-Madison 2009.………………………………………..M.A. History, The Ohio State University 2008 to 2014………………………………..Graduate Teaching Associate Department of History The Ohio State University Publications Articles “Confronting Agrarian Crisis: Historical Food Insecurity, the Indian State, and the Green Revolution,” Archive: A Journal of Undergraduate History 8, (May 2005): 28-41. Book Reviews David Scheffer, All the Missing Souls: A Personal History of the War Crimes Tribunals, eHistory at the Ohio State University, (May 1, 2012). Steven Bryan, The Gold Standard at the Turn of the Twentieth Century, eHistory at the Ohio State University, (March 1, 2011). Field of Study Major Field: History viii Table of Contents Abstract………………………………………………………………………………….ii Acknowledgements……………………………………………………………………..iii Vita……………………………………………………………………………………...vii Introduction: Risk, New York, and Twentieth Century America.……………..….........1 Chapter One: In The Shadow of Empty Towers, New York City, 1973……………….21 Chapter Two: The City at Risk, 1974-1976……...……………………………………..88 Chapter Three: The Triumph of Risk, 1977-1981……………………………………...149 Chapter Four: The Contagion of Risk, 1982-1987……………………………………..207 Chapter Five: The Price of Risk, 1988-1992…………………...……………………....271 Conclusion: By the Daylight and the Twilight of Risk, 1993-Present……………........335 Bibliography……………………………………………………………………………366 ix Introduction: Risk, New York, and 20th Century America Don’t push me cause I’m close to the edge I’m trying not to lose my head It’s like a jungle sometimes it makes me wonder How I keep from going under? “The Message,” Grandmaster Flash and the Furious Five, 19821 This is a history of how an American city fell apart and rebuilt itself. This is the story of the price that city paid in the process and of the radically changed nation that it helped to create.2 It is the story of the creation of what I call “the culture of risk.” This dissertation argues that following New York City’s 1975 fiscal crisis, the city’s elite chose, deliberately and consciously, to take two related risks.