In Prospect

Summer 2000

This issue of City Journal brims with optimism, much of it focusing on the promise the Information Revolution offers to cities. In "The Coming Digital Polis," former Indianapolis mayor Stephen Goldsmith shows how information technology, which has already transformed private industry, now stands poised to work its magic for governments, too: shrinking bureaucracy, cutting costs, speeding up transactions, tailoring services to individual citizens, and sparking the rethinking of assumptions that, in private industry, led to huge efficiencies and an Aladdin-like world of choice and ease for consumers. The process has already begun in many city halls and statehouses; what’s needed now, Goldsmith argues, is political leadership that can overcome the resistance bureaucrats and public-employee unions are sure to oppose to any change that threatens their power and prerogatives. The stakes are high: cities that don’t achieve the small, cheap, efficient government that urban reformers like City Journal have advocated—and that today’s entrepreneurs demand—will find themselves losing business to cities that do achieve it.

Part of the digital revolution’s promise is already coming to realization in New York City, as Steven Malanga shows in "The Triumph of Silicon Alley." When the Internet-based New Media industry first began to sprout in lower Manhattan several years ago, observers tended to dismiss it as a flash in the pan. The real action in the digital world was happening out West, they said, in the latte towns and suburban geek valleys where techies go to create their virtual realities, linked to the larger world via modem. Cities, the pundits sniffed, were so twentieth century. But a new industry that almost overnight has created 138,000 new jobs in New York City, with an $8.3 billion annual payroll and producing revenues of $16.8 billion in the metropolitan area, is not negligible. And this industry flourishes in New York precisely because of its urbanness: its thick concentration of creative, ambitious, plugged-in people who produce the needed content for New Media, its storehouse of accumulated business and old-media expertise to update for the digital future, its forward-looking investment bankers and venture capitalists willing to bankroll the new companies, and the rich cross-fertilization that can occur when so much energy pulsates in so finite a space. New York has the talent, and the Information Revolution just allows it to project that talent all over the globe.

As with the digital polis, though, this is a happy development that old-paradigm politics can retard. Politicians at the state and local level have to decide if they will create the low-tax, business-friendly environment that will allow this industry to flourish as it begins to produce taxable profits, or if high taxes will chase it out of town. The choice is between a twenty-first-century city, vibrating with energy and nurturing middle-class, entrepreneurial life, or the big-government, municipal-welfare-state model that is slowly crumbling into the dustbin of history.

One key factor in allowing Silicon Alley to bloom has been the Giuliani administration’s extraordinary success in cutting New York City’s crime in half. Crime, it turns out, is a giant, business-killing tax, and once customers and employees can come and go in safety, commerce and culture flourish and the middle class grows—as urban thinkers have known for centuries. It is thus a notable peculiarity of Gotham at the turn of the millennium that the city’s political and intellectual elites, led by the newspaper of record, and the minority community’s self-appointed leadership, led by the egregious Al Sharpton, should have teamed up over the last year to discredit that epochal accomplishment, the greatest urban triumph of the last half-century. Heather Mac Donald’s "America’s Best Urban Police Force" demolishes the distortions with relentless logic and sets the record straight with irrefutable facts. Don’t miss it.

A great friend of City Journal, William E. Simon, died in June. As president of the John M. Olin Foundation, he was one of the magazine’s staunchest supporters and most generous benefactors. On a larger scale, as Gerald Ford’s secretary of the Treasury, he was a great friend of New York, too, though few thought so at the time. He refused a federal bailout when the profligacy of the city’s political leaders brought Gotham to the precipice of bankruptcy, and by doing so, he forced the city to rein in its spendthrift ways. His is a lesson the city needs to recall as it looks to nurture its New Media future.