There is a motivational speaker trope—popularized by then Senator John Fitzgerald Kennedy (and driven home by Lisa Simpson)—that repeats the inaccurate translation of the Chinese word for crisis as a combination of danger and opportunity. Naomi Klein, in her interview with author Kim Philipps-Fein, compares Philipps-Fein’s new book Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics to her own The Shock Doctrine: The Rise of Disaster Capitalism and discusses how the former shines a bright light on how a young Donald Trump wielded fear to build his real estate wealth.
Klein, writing in “Fear City” Explores How Donald Trump Exploited the New York Debt Crisis to Boost His Own Fortune for The Intercept, begins:
When I published “The Shock Doctrine” a decade ago, a few people told me that it was missing a key chapter in the evolution of the tactic I was reporting on. That tactic involved using periods of crisis to impose a radical pro-corporate agenda. They said that in the United States that story doesn’t start with Reagan in the 1980s, as I had told it, but rather in New York City in the mid-1970s. That’s when the city’s very near brush with all-out bankruptcy was used to dramatically remake the metropolis. Massive and brutal austerity, sweetheart deals for the rich, privatizations. In classic Shock Doctrine style, under cover of crisis, New York changed from being a place with some of the most generous public services in the country, engaged in some cutting-edge attempts at racial and economic integration, to the temple of nonstop commerce and gentrification that we all know and still love today.
New York’s debt crisis is an incredibly important and little understood chapter in the evolution of what Nobel Prize-winning economist Joseph Stiglitz calls market fundamentalism, a process the Trump administration is in the process of rapidly accelerating, which is why I was so happy to receive Kim Phillips-Fein’s remarkable new book, “Fear City.” In it, she meticulously documents how the remaking of New York City in the ’70s was a prelude to what would become a global ideological tidal wave, one that has left the world brutally divided between the 1 percent and the rest. She helps us to understand many of the forces that Trump exploited to win the White House, from economic insecurity to crumbling public infrastructure to fearmongering about black crime, all amid previously unimaginable private wealth.
So, where did President Trump’s fascination with the power of fear arise from:
>KPF: Well, he’s really emerging out of the shadow of his father, who was a developer and landlord in the outer boroughs. He’s emerging out of a milieu of a kind of embittered lower middle class white ethnic population in the city’s outer boroughs. Not that Trump himself was lower middle class. He wasn’t. But those were the people who lived in his father’s buildings, and those were the people who I think really shaped his worldview.
And they’re also the people who really blame—this is obviously not universally true of the city’s white working class at this time — African-Americans and Latinos, especially Puerto Ricans, for bringing the city to the edge of bankruptcy; a sense that they were the people who were using the public services, and that they were the ones who kind of pushed things too far and brought it into the fiscal crisis.
NK: And that, by the way, is incredibly important in terms of understanding the intersection of racism, of racial politics, creating the justification for a tax on the public’s fear, which I think we’re seeing more and more of. That’s really key in this period.
Klein continues, looking at perhaps the first lesson Trump learned:
NK: So how does Trump take advantage of the city’s desperation in this period? Tell me about the Commodore Hotel.
KPF: Well, so Trump is very ambitious, and he wants very much to break out of the outer boroughs and come into Manhattan and make it big there. A lot of people have observed this about Trump at this moment, but I think he views Manhattan as this aspirational space, and he is eager to transcend his Brooklyn-Queens past and get into what he sees as the big-time. And his idea is to redevelop the Commodore Hotel. So the Commodore Hotel was a previously very fancy hotel from the early 20th century. I think it opens in 1919 at 42nd Street and Lexington Avenue. And it’s owned by the Penn Central Railroad. And the hotel kind of falls into disrepair and near collapse after Penn Central itself goes bankrupt in 1970. Its management has stopped paying property taxes and is very eager to unload the property. Trump sees this as an opportunity at the same time as the city government sees it as a potential disaster. The city is terrified that if the Commodore Hotel goes into collapse, the blight of Times Square will spread east and to the area around Grand Central Terminal. And so, the plan that they hatch is that Trump can purchase the Commodore Hotel.
What he actually wants to do is buy it and sell it to a state agency, the Urban Development Corporation, which has its own interesting story. And then the UDC will lease it back to Trump, working with the Hyatt organization. And I think it’s also important to remember, it’s not Trump acting alone. He’s actually working with this hotel chain.
NK: And this is before he has started splashing his name in gold on the fronts of buildings. But this is his first Manhattan jewel.
KPF: This is his first big Manhattan deal. They’ll lease it back to Trump and Hyatt. And this arrangement where they’re not actually owning the property will enable them to pay property taxes that are lower than the normal rate for many years to come. The New York Times reported that as of 2016, this tax arrangement with the Hyatt had cost New York City about $360 million in uncollected taxes in the years since the development.
This strategy will be very familiar to those who have followed Roldo Bartimole over the years here in Cleveland; a strategy that opened floodgates in New York, Cleveland and around the globe. Fear sells:
KPF: this is not just a one-time thing for the city. The city government views this as a model for the future, and as a signal to the broader business community that there has been a change in the city government’s relationship to business. It’s not just Trump acting alone. There actually is a context in which this kind of development is promoted and a sort of enabling community that allows it to happen.
NK: So it sets the stage for the Helmsleys, and for a whole change in the city.
KPF: It sets the stage for the city’s new receptiveness to certain kinds of luxury developments, to using different kinds of tax breaks to stimulate the development of properties that are really dedicated to the very rich. And more generally, I think, the various different kinds of corporate subsidies that went to Disney around Times Square.
Philipps-Fein closes with this thought:
[T]he last thing I would say is that the atmosphere of fear is incredibly important for understanding what happens in New York at this moment — that there’s this deep level of fear about bankruptcy, fear of the future. And it’s that kind of fear that really makes possible the cutbacks of the time, and also the sense that, you know, the city needs a savior in the first place. And I think that I’ve thought about that a lot over the past month and since November — the way that fear can make things that seem politically impossible suddenly feel as though they’re the only alternative. And so I think that is one of the things that we need to fight at this moment, and to find ways to resist that sense of overwhelming fear and chaos, and to find forms of solidarity that can counter it.
Because it really is that context that makes it possible to wreak havoc, and the kinds of cuts that happened in New York in the ’70s, and the kind of broader reshaping of our country that we see taking place now.
We are not living in a crisitunity.