How Bill de Blasio became the mayor for the 99 per cent

“Bill de Blasio will be a mayor for every New Yorker – and I would say that even if he weren’t my dad.”

In the evening of 5 November, in the Brooklyn suburb of Park Slope, Bill de Blasio arrived at his victory party to an unusual tune. Political playlists are usually anodyne but de Blasio strode in to the thumping strains of a new pop song, “Royals”, by a singersongwriter from New Zealand called Lorde. The crowd, young, left-wing and delirious with success, went wild.

De Blasio is seen in Brooklyn – and in Queens and the Bronx – as an antidote to Manhattan’s politics-as-usual. He ran a Robin Hood campaign, promising to be the mayor for “the 99 per cent”, to raise taxes on the super-rich to pay for education and to build plenty of affordable housing.

“Royals” is about the excesses of the music industry rather than New York but it fits the zeitgeist well. “In a torn-up town,” Lorde sings, her soulful voice draped over a thick bass beat, “we’ll never be royals . . .” It was a neat choice. The song is an anthem of anti-consumerist counterculture that encapsulates de Blasio’s campaign narrative: a surge of progressive energy, the revolt of the outer boroughs against the glittering millionaires of Manhattan.

It is partly a quirk of circumstance that de Blasio is following two Republican mayors in liberal New York. Both were elected in times of crisis: Rudolph Giuliani in 1993 at the height of an epidemic of violent crime and Michael Bloomberg at the end of 2001 while the dust from the World Trade Center was still settling. In both cases, stability, safety and security were temporarily the most important issues.

As with Boris Johnson in London, personality is also a factor. Bloomberg is not your ordinary Republican. He infuriates the right and he governs in a European style, a centraliser and a paternalist. He brought in a smoking ban, cracked down on giant servings of unhealthy fizzy drinks, brought in regulation to reduce air pollution and brought the ailing public school system under mayoral control.

Boris would love to be able to copy Bloomberg’s style but his position is much weaker. New York and London are roughly the same size, with populations of around eight million people, but the mayor of New York has wide executive powers over the city’s education, sanitation, police and emergency services and a budget of $70bn, as well as the ability to levy some taxes. By comparison, the mayor of London controls only the transport and parts of the police authority.

Bloomberg’s philosophy was to make the city more attractive for the wealthy in order to fund philanthropic policies. It worked but while New York prospered, many chafed at the widening gap between rich and poor. They felt Manhattan had become a playground for the elite; that they were being priced out of their own city.

Enter Bill de Blasio. Born in Manhattan but raised in Massachusetts, he worked for the Clinton administration before running successfully for city council in 2001, then became the New York public advocate in 2009. That is a highly visible position, a sort of city ombudsman, but has no executive responsibilities, which makes it an excellent place to build a progressive platform without having to deal with realpolitik.

Yet in the mayoral campaign, it wasn’t de Blasio’s ideology that attracted people’s attention: it was his family. At the beginning of August, de Blasio was still lagging 10 points behind the city council speaker, Christine Quinn, and even half a point behind the scandalmired Anthony Weiner, in the race to be the Democratic candidate.

Then on 9 August, de Blasio’s campaign ran an ad featuring his photogenic – and biracial – teenage son Dante. It ends, touchingly: “Bill de Blasio will be a mayor for every New Yorker – and I would say that even if he weren’t my dad.” Its effect was sensational. In the next day’s polls, de Blasio leaped ahead.

After he won the primary, the campaign turned quiet – dull, even. His Republican opponent, a thoughtful but unexciting transport executive called Joe Lhota, failed to capture the public imagination. Just 40 minutes after the polls closed, Lhota called to concede. De Blasio had won by more than 50 percentage points.

Yet the new mayor-elect already faces a battle. The city’s nearly 300,000 municipal workers have been in deadlock with city hall over pay. Their contracts urgently need renegotiating and there is already a $2bn budget deficit. Finding a settlement will be the first test of de Blasio’s administrative mettle.

Meanwhile, “Royals” is still at number one in the Billboard charts. “Let me be your ruler,” Lorde sings from a thousand cab radios, melody climactic, beat pulsing. “And I’ll rule, rule, rule, rule.”

Nicky Woolf writes for the New Statesman website from the US

A newly elected Mayor de Blasio hugs his son Dante and his daughter Chiara. Image: Getty

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

This article first appeared in the 13 November 2013 issue of the New Statesman, The New Exodus

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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