Following the end of World War II, the United States emerged as the global economic powerhouse, largely thanks to selling weapons in return for the world’s gold reserve and being the only major industrialized nation to emerge unscathed. As the largest city in the nation, New York City became the crown jewel of American success. Thanks to just plain ridiculous levels of prosperity, the people of the Big Apple were more than happy to pay high taxes to fund all sorts of social programs; such as city run hospitals, free universities, and one of the most generous welfare systems in the country. Thanks to these programs, the aspiring and poor flocked to the city, providing cheap labor for its factories and other such businesses. The high taxes also paid for lavish wages and pensions for city employees, but after all, when you’re rich you can afford to be generous.
Unfortunately, this success was not to last forever. As early as the 1950’s, manufacturers began to figure out that cheap labor was available in all sorts of places in the United States, many of which did not have high taxes. As a result, factories began to close and the city began to lose some of its sweet sweet tax revenue. To try and make up the difference, the city tried raising taxes further, but it only accelerated the problem. To make matters worse, despite the lack of jobs, poor and aspiring people continued to flock to the city, attracted by the inertia of the Big Apple’s past reputation and the generous safety net available. Unwilling to curb spending, city leaders instead began borrowing money from Wall Street bankers to keep the city afloat, confident they were facing a problem that would eventually right itself. The only cost saving measure put into place was putting long-term infrastructure improvements and repairs on hold.
Unfortunately, instead of righting itself, the problem instead continued to grow. By the start of the 1970’s, factories closed at such a rapid rate that some 15 percent of the city’s population was largely dependent on welfare. Drug use and crime rates began to skyrocket, and those who were able began to leave the city, resulting in a 10 percent loss in population. Formerly prosperous neighborhoods became abandoned. By the mid-1970’s, the city began to resemble a dystopian hellscape of abandoned buildings and graffiti. Arson was a daily occurrence, fueled by desperate attempts to collect insurance money and heroine addicts just liking to watch things burn. Police were basically fighting a war with various street gangs, utilizing increasingly violent tactics in an attempt to maintain control. Bridges and subway tunnels were at risk of collapsing. City services were completely overwhelmed and about the only businesses that did well were porno theaters and drug dealers.
In 1975, the bankers of Wall Street announced that they had no interest in loaning the city any more money. Facing bankruptcy, city leaders turned to the federal government for help, but President Ford, facing a primary challenge from the more fiscally conservative Ronald Reagan, announced he would veto any bailouts. Faced with collapse, the city announced massive budget cuts, including laying off some 20% of city employees and cutting the wages of those who remained. This rather pissed off the unions who represented these employees, who were already completely overwhelmed, and as a result a massive strike shutdown the city. Trash began to buildup, fires went unfought, hospitals and schools closed, subways and buses stopped running, and bridges were closed. Going a step further, the police not only stopped working, but their union created a pamphlet declaring the Big Apple to be Fear City, which they handed out to tourists at the airport. However, rather than break the city, the resulting descent into anarchy broke the unions. Not wishing to see their home collapse, the unions instead decided to utilize their pension funds to bail out the city. Of the public service unions, only the teacher’s union balked at this, but their leader was convinced after the other union leaders threatened to throw him out an eighth story window. By the end of the year, facing increasing political pressure both at home and abroad, President Ford also backed down, giving the city vital access to a federal credit line.
New York City avoided bankruptcy, but hard times were still ahead. Austerity measures throughout the 1980’s resulted in the number of city employees being cut by over 35 percent. Public services were slashed in order to allow taxes to be cut to attract in new businesses and draconian law enforcement measures were put in place to lower crime, falling largely on the city’s minority populations. The city staggered on, not truly recovering until the tech boom of the 1990’s and the resulting gentrification in the early decades of the twenty-first century.