Metropolis now

Before the financial crisis, New York and London walked hand in hand as “the two greatest cities in

It is a warm May morning in London and Boris Johnson has just wandered into his mayoral press conference. He is surrounded by press officers, who appear to double as nannies. They lead him around and record his interviews with journalists, wary, perhaps, of his tendency to make gaffes. We are in the middle of a global recession, and Johnson is launching his economic development strategy for London. But despite the seriousness of the subject, there is a sense that the daily performance of being mayor - of shuttling around the city, opening things, riding trains and pontificating - is one long, wonderfully elaborate joke. A joke, crucially, that Johnson is in control of; the myth that he is a bumbling fool brilliantly disguises his political ambition. He plays the hapless clown, and has audiences following his every word, waiting for the punchline. As he takes to the stage, the crowd starts to laugh before he has spoken, like an audience at a comedy gig, expecting hilarity.

A few weeks later, in New York City, Michael Bloomberg walks into the room. We are in the basement of the Tweed Courthouse on Broadway - now home to the city's department of education. Mayor Bloomberg is flanked by security men and, as he enters, the band of noisy New York journalists falls silent, like an obedient class of schoolchildren. Bloomberg, the richest man in New York, with a personal fortune valued at $17.5bn, has a hushing effect. But he dismisses his intimidating wealth by saying: "I think the real answer is that if you have a good message, people are going to be responsive . . . It's not money, it's whether or not you have something of substance to say."

In London, Mayor Johnson's message begins, as always, with a joke: "I came here, of course, on my bicycle. I do that because unless you're completely insane, or devious, or a Liberal Democrat, there's no way you can fiddle your bike expenses." The audience erupts. He then extols the virtues of London's diversity - the prowess displayed in medical science, law and the creative industries. But it is a few days after the MPs' expenses scandal broke, and that's all anyone wants to talk about.

“I never claimed for a bath plug," Johnson says. "I never claimed for a moat." No longer an MP, he is able to distance himself from the news coming out of Westminster. "I find myself rather amazed by the whole thing."

Johnson stood down as the Conservative MP for Henley after he won the mayoral contest against Ken Livingstone in May 2008. The decision to run for mayor was, he said at the time, simple: "the opportunity is too great and the prize too wonderful to miss . . . the chance to represent London and speak for Londoners". Livingstone suggests that his motivations were more complex. "For Boris, this is just eight years he's got to get through without anything going wrong . . . It's always been about Boris: he's got his agenda, which is to be back in parliament in the middle of the next decade and succeed Cameron as prime minister."

At their respective press conferences, the two mayors fielded questions on an array of topics, but both were principally concerned with their city's economy. The recession, and the near-ruin of the global financial system, has clearly had a huge impact on London and New York. Wall Street and the Square Mile were the epicentres of the earthquake. Only months earlier, the two cities had seemed invincible. In May 2008, Bloomberg wrote: "We are - and here, please forgive the modesty of a New Yorker - the two greatest cities in the world . . . no two cities combine such staggeringly rich and diverse economic and cultural opportunities as New York and London."

Since the collapse of Lehman Brothers in September last year, the mayors have been forced to become defenders of their cities, fighting to restore their global pre-eminence. The question is how. Finance made London and New York great, but reliance on the banks also made them vulnerable when the system defaulted. In both cities, politics and money have always intertwined - a closeness that is played out in their geography. New York's City Hall, a grand, neoclassical building, is a short walk up Broadway from Wall Street. In London, the glassy barrel of City Hall squats on the south bank of the Thames, across the river from London's financial centre. From his office on the sixth floor, the mayor can see the gleaming towers of commerce - the old NatWest building, the Broadgate Tower, the Gherkin.

It isn't the first time that London and New York have been the settings for economic calamity. The Great Depression, provoked by the New York stock market crash in October 1929, led to soaring levels of unemployment in both cities (reaching 13.5 per cent in London by the early 1930s and 50 per cent in Harlem in 1932). In the 1970s, after years of strikes and civil unrest, New York was close to being bankrupt. A million people left the city to live in the gentler suburbs. London plunged in parallel, with unemployment reaching 400,000 in 1976. Mounds of rubbish filled the streets of both cities as refuse collectors went on strike.

Then, during the 1980s, the Thatcher-Reagan era of free-market fundamentalism, the cities changed again. According to the British historian Dominic Sandbrook, "You had the simultaneous growth of extreme wealth and extreme poverty", exemplified by "the grotesque contrast of Trump Tower going up in one part of Manhattan and people living out of cardboard boxes just a couple of streets away". Nowhere was this contrast more apparent, Sandbrook says, than in London and New York.

Tony Blair's government, elected in May 1997, wooed the City with even more fervour than the Thatcherites. London and New York grew exponentially, mostly as a result of the burgeoning success of their financial services. From 1999 to 2009, New York's financial services industry was responsible for roughly a quarter of the $1trn output of the regional economy, and generated 20 per cent of state income-tax revenues. Meanwhile, London's financial services grew to employ half a million people in the capital alone, contributing 11 per cent of the UK's total income tax. Financial institutions multiplied - the number of hedge funds, concentrated in London and New York, grew from 610 in 1990 to 9,462 in 2006.

By early 2007, the two cities had transformed into hubs of intense wealth, home to the growing ranks of multimillionaire financiers. Property prices had become grotesquely inflated: in London, luxury properties were selling at £18,000 a square metre; in New York, at £11,000 a square metre. The cities had responded relatively well to the terrorist attacks of 11 September 2001 and 7 July 2005. Their rivalry flourished, inflamed by the competition to host the 2012 Olympics. In March 2007, New York magazine depicted London and New York as figures wearing boxing gloves, battling it out for the global crown. Now, after the debilitating events of the past year, the terms of the battle are different. It will be up to the mayors to lead their cities in the race to recovery.

On 15 September 2008, the day that Lehman Brothers collapsed, Michael Bloomberg had been in office for six and a half years; Boris Johnson for just over four months. Bloomberg should have been coming to the end of his mayoral reign this year, but in October 2008 he amended New York's term limits law to allow him to run for a third term. The ballot is on 3 November.

The amendment was an audacious act of manoeuvring and Bloomberg is keen to ensure its success. He has spent $36m of his own money on his campaign so far this year. Asked in May if he felt his wealth in effect killed off the opposition, he said: "I don't know why it drowns out any honest debate . . . I'm spending my own money, so I'm not beholden to anybody." He has a point. Part of Bloomberg's appeal is the sense that he is self-made, able to pay himself a nominal $1 a year for the honour of doing the mayor's job. It also means he can distance himself from lobbyists and interest groups, focusing more on the pragmatic elements of the mayor's job than the political. Ken Livingstone, mayor of London from 2000 to 2008, worked closely with Bloomberg for six years. "He's only interested in what works. He's not an ideologist at all," he told me.

Johnson and Bloomberg first met as mayors on 9 May 2008 in London, a few days after Johnson had taken over at City Hall. Bloomberg presented Johnson with a Tiffany box containing a crystal apple; Johnson gave Bloomberg a shirt with the Tube map printed on it. Their styles are as different as their backgrounds. Johnson, although born in New York in 1964, with Turkish and German ancestry, comes across as aristocratically British, having been educated at Eton and Oxford. Bloomberg's beginnings were more modest. Born in 1942, he grew up in a Boston suburb in a middle-class Jewish family. He won a place to study electrical engineering at Johns Hopkins University, and paid his way by working as a parking attendant during the summers. In 1981, forced out of his bank job at Salomon Brothers after a merger, he started a financial information service, Bloomberg LP. He was "too pig-headed to go look" for a job, he has said, and thought it would be "fun to be an entrepreneur . . . I have an ego that tells me anything is possible if you work hard." The company now operates in 161 countries, has 275,000 subscribers and employs 10,000 people worldwide.

Where Bloomberg made his name and fortune from shrewd business, Johnson lasted a week at a management consultancy firm, LEK Consulting, before becoming a journalist at the Times, where he was sacked within a year for falsifying a quotation. After retreating to a local paper in Wolverhampton, he moved to the Daily Telegraph in 1987 and in 1999 became editor of the Spectator - a role he combined, sometimes erratically, with being an MP. Now, he writes a weekly column for the Telegraph, for which he is paid £250,000 a year (an amount he has described as "chicken feed"). Unlike Bloomberg, he has little chance of running a self-funded campaign for re-election; his original campaign was supported by hedge-fund managers and property developers.

For all their differences, the mayors are similarly upbeat about their recession-hit cities. In May, Bloomberg insisted that New York is “doing much better than people understand"; while Johnson said that parts of London's economy "are in credit-crunch denial". Both have engaged in "hamburger" economics - Johnson suggesting that, because of the weak pound, "hamburgers are cheaper in London than almost anywhere else on earth", and Bloomberg observing that people are ordering steaks again after slipping to burgers during the crunch. Both men try hard to sound as if they are in tune with the daily life of their cities. But they are also trying to sell. The mayors have to perform like political travel agents - relentlessly marketing the importance and vibrancy of the places they represent.

They also have to keep a sharp eye on each other. "We always say we're the financial capital of the world. London says that, too," Bloomberg said. "What we've got to do is worry about ourselves."

Johnson simply insisted: "We'll win!" But he was also happy to disparage his rival city: "I'm not going to draw invidious comparisons with New York's crime rate, but I merely point out that you have far less chance of being murdered on the streets of London than you do in New York." What both cities fear is a repeat of what happened in the 1970s: the mass exodus of a high-earning population, forced out by unemployment, leaving the cities to fester amid growing crime and poverty.

When it comes to policy, however, the cities appear to be going in very different directions. Two months after his economic strategy launch, Johnson was performing again, at the Royal Opera House in Covent Garden. He had gathered hundreds of business people and was
regaling them with jokes. But he was also sending out a message - namely, that a new EU draft directive on Alternative Investment Fund Management would gravely damage the private equity and hedge-fund industries in London (the directive seeks to limit the level of debt that these funds and firms can take on).

To those present, it was something of a revelation to hear a political leader explicitly defend firms that had become emblematic of an age of dangerous excess. Bob Wigley, former chairman of Merrill Lynch in Europe, said: "I think this is, in my memory, the first time the Mayor of London has taken a real, proactive interest in City affairs and the promotion of the City. That's a very important step."

Johnson made his allegiance to the City clear from the start of his term. As Anthony Browne, Johnson's director of policy, told me: "Boris doesn't need any prompting to defend financial services. He's not doing this out of any political convenience. In fact, if anything, it's politically inconvenient at this time, defending bankers."

A week after Lehman's collapsed, Johnson wrote a newspaper column defending the banks. The mayor acknowledged that some had been guilty of greed, but accused those critical of bankers as being propagators of "neo-socialist claptrap". He mentioned the "edge" London had gained over New York because of limited regulation. When I suggested to him that stricter regulation might be a necessary response to the crisis, he looked bemused. "You're saying regulation might be a good thing, and high tax might be a good thing and all the rest of it. You've got to be very, very careful that you don't try to solve the last problem by exacerbating or creating the next one. And that's very often what regulation does."

In January this year, in an interview with the Wall Street Journal, Johnson conceded that he had approached Bloomberg with an idea to form "an alliance against ill-thought [out] regulation". He was turned down. Yet it hasn't dampened his enthusiasm. Taxation and regulation may be under the control of central government, but Johnson sees it as his duty to lobby for London and to challenge government.

“You can jolly well make a fuss about it," he told me. "Nobody else is. Maybe the New Statesman can! Come on, Staggers! Come on, stick up for the people, for energy and enterprise!" And, quickly, we are joking again.

In New York, a more nuanced message emerged. I visited the deputy mayor, Robert Lieber, who is in charge of the city's economic development. "We're looking at other industries," he said. Straight-talking and energetic (he claimed never to use an alarm clock), Lieber worked at Lehman Brothers ("it was a great industry, a great firm; it's a tragedy what happened") before joining Bloomberg's team in 2007. He said he was determined to reduce New York's dependency on the financial sector: "I think the great thing about New York is that, while we're considered . . . a financial centre in the world, we do in fact have a diversified economy already."

Like Johnson, Lieber talked about tourism, fashion, medicine and academia - the city's various talents. But then he mentioned catching "the green bug". He estimates that through regulation and investment in green industries - construction, engineering, architecture - as many as 20,000 jobs will be created over the next few years. It is all part of a plan to make New York more liveable. “Crime rates are down to all-time low levels, [and] the streets are cleaner than they've ever been . . . We're making huge capital investments to improve schools so that people can choose to raise their families here, as opposed to moving out of the city."

Johnson, by contrast, is behind on the matter of greening his city. Browne admitted to me that "other cities have been making waves on this before us". As mayor, Johnson has launched tree-planting and cycling initiatives and, most recently, an initiative to boost local energy schemes through London boroughs. On 14 October, he said that he wanted "to position London as the world's leading low-carbon economy". Yet, before running for office, he was openly sceptical of the dangers of climate change. In 2006, he poked fun at the "growing world creed of global warming" - a position
he had to contradict in a speech to the Environment Agency in November 2008, when he described himself as "someone who used to write caustic articles about the religion of climate change". As Jenny Jones, a London Assembly member for the Green Party, said: "Climate change is a bit of a new idea for this mayor - he hasn't yet grasped how urgent it is."

Jones describes Johnson's record on green issues in office as "utterly shabby . . . I think he has rolled back the green agenda in London by probably a decade in some of the decisions that he's made." She is most concerned about transport - such as the decision to abandon the congestion charge expansion and the recent announcement that Tube and rail fares would rise again. But she also points out that he has lost ground on green industries. "Johnson took over an administration that was actually doing quite a lot. We were a world leader on adaptation and mitigation of climate change. He's just not picked up the reins on this. He doesn't get it."

Livingstone agrees, describing Johnson's lax approach to the environment as a "catastrophic mistake for our long-term economic interests". The former mayor worked with Bloomberg to set up the C40, a mechanism that brought together the leaders of the world's largest cities to tackle climate change. The first meeting took place in London in 2005, followed by another in New York in 2007. As the driving force behind the initiative, London held the chair. But that changed when Johnson became mayor. Of the 40 cities involved, only two (New York and London) were prepared to vote for him - the others had "read his writings", Livingstone explained to me. Johnson was quickly demoted to "honorary vice-chair", with the mayor of Toronto taking over the leadership. It was a terrible loss, Livingstone believes, both of status and of London's competitive advantage.

Johnson now says his administration is making progress on the environment. One plan is to create a "green enterprise district" in the Thames Gateway. But there seem to be inconsistencies. A concurrent idea is to build a new airport in the Thames Estuary. I asked his policy director how comfortably the green enterprise district would sit beside a new airport, imagining meetings on low-carbon technologies as planes power overhead (killing millions of birds in the process, campaigners claim). Browne scratched his stomach. "It's accepting reality that aviation is an environmental detriment, but it's almost certainly going to carry on increasing," he said. "We'd much prefer that it doesn't carry on increasing inside a west London suburb where lots of people live." A west London suburb - covering Richmond, Twickenham, Hammersmith and Fulham on the way to Heathrow - where a lot of Johnson's most vocal Tory voters live.

Exactly a year after the collapse of Lehman Brothers, Bloomberg and Johnson met again in New York. They gave a talk at Columbia University: "New York and London: Heading Back to the Top". There was the usual hilarity - Bloomberg gave Johnson a revenge gift of a hat, umbrella and tie
decorated with the New York subway map. Johnson taunted Bloomberg yet again about losing the Olympics. But he also took the opportunity to warn once more of the dangers of over-regulation, "however great our rage at the bankers may be". The purpose of the meeting was to present a united front ("We are in this together," said Bloomberg) but, in reality, the cities seem to be pulling apart.

One consequence of the financial crisis is the opportunity it offered London and New York to reinvent themselves. Their leaders could seek to re-create the booming, finance-dependent cities of the past decade, or imagine a new kind of city shaped by different priorities. Johnson has publicly made his choice, taking his strongest stand so far (apart from his war on bendy buses) in defence of hedge funds. His administration attempts to absolve the industry.

“It had nothing to do with them," Browne said, even though, for many, the collapse of three Paribas funds in August 2007 and Bear Stearns in March 2008 signalled the start of the financial crisis. In his Tory party conference speech on 5 October, Johnson, ever loyal, once again attacked the "banker bashers" who sought to undermine the City of London.

Bloomberg and Lieber seem to be on a more progressive path. After all, as Lieber said, they want to diversify so they are not as dependent on financial services. They believe that their city can grow in a new way, and it can remain a world leader through reinvention. Johnson, on the other hand, would prefer London to revert to its former so-called glory - a city with less regulation and a new airport. Given the past, it seems a strange kind of future.

Sophie Elmhirst is a contributing writer at the New Statesman