antoine-roquentin:

But the power imbalance between the city and the banks was not simply conjunctural — it was structural. As Doug Henwood points out in his book Wall Street, “the bankers have the advantage in a debt crisis; they hold the key to the release of the next post-crisis round of finance. Anyone who wants to borrow again, and that includes nearly everyone, must go along.”

By the fall of 1974, the banks forced city officials into an austerity program against their will. As a City College graduate, Beame was himself a product of the city’s welfare state and genuinely did not want to cut programs or impose layoffs. But during the winter of 1974–75 the city began to lay off workers, and even though many were subsequently hired back, the signal was clear; the crisis would be resolved at the expense of New York’s working class, whether their elected officials liked it or not.

In the summer of 1975, the state established a new agency called the Municipal Assistance Corporation (MAC) to oversee the city’s financing. Led by Felix Rohatyn, the investment banker and liberal Democrat, MAC’s board was dominated by a group of businessmen whose first priority was to pay back investors and cut municipal spending.

As Phillips-Fein observes, while MAC was technically a vehicle for marketing the city’s bonds, “its real purpose was political. It had to force the city and its unionized workers to accept a staggering array of budget cuts.”

New Yorkers protested the cuts, and some of them even won. Phillips-Fein devotes inspiring chapters to the successful campaigns to save Hostos Community College in the Bronx and what became known as the People’s Firehouse in Brooklyn. But despite protests in the streets and fulmination from City Hall, business got its way.

Unelected, business-controlled bodies like MAC and the Emergency Financial Control Board (EFCB) succeeded in pressuring the city to lay off tens of thousands of workers, close public hospitals, raise subway fares, and begin charging tuition at CUNY. By the early 1980s, the municipal budget was back in balance, the city could borrow in capital markets, and the stage was set for New York’s transformation into the gilded playground it is today.

In the popular mind and in much of the academic historiography, the death of postwar liberalism is primarily attributed to a backlash of racist working and lower-middle-class whites. This is an important part of the story, and outbursts of racial animus in neighborhoods like Bensonhurst or Forest Hills should not be minimized or overlooked.

But the backlash against New York’s postwar order was led from boardrooms high above Manhattan — not the white ethnic strongholds of the outer boroughs.

the first 2 neoliberal coups were 1973 in chile, and 1975 in new york city