What a difference a mayor makes to a city

London's leader may have limited powers, but New York's experience suggests the post can be a force for good or ill

Does it matter that London is about to elect a mayor from the unreconstructed left? Many Britons do not think so. They will admit to unease that Ken Livingstone is leading the race. It is, after all, unseemly for the land of the Third Way to have such a prominent politician going around likening international capitalism to Hitler.

But the same people are also quick to play down the consequences of a Livingstone victory next Thursday. Thus Mr Livingstone is described as a sort of irrelevant accident of domestic politics, Londoners' revenge on Tony Blair for his control freakery. Then there is the fact that Mr Livingstone is a devastatingly talented campaigner. Given that the mayor's job has limited powers, they argue that he can have little effect on London's high rank among capitals of finance.

This last bit is self-deception. When the impatient allocators of capital cast their eye across the globe for places to invest or build headquarters, they do so in the manner of a hungry tourist thumbing through Zagats. These global diners are not looking for nuance, or a long explanation. They are looking for a fast rating, a thumbs-up or a thumbs-down.

A mayor in this context gains outsized importance that may go beyond his capacities. He may not be the only indicator of the outlook on unfamiliar territory, but he can still represent the difference between a city that is shunned and one that draws the globe's crowds. This is true whether it is fund managers or tourists who are doing the picking.

Doubters might like to consider what Rudolph Giuliani has done for the rating of New York. Unlike the puckish Mr Livingstone, Mayor Giuliani is a grating fellow, belligerent, even self-destructive. His achievements have been amplified by a powerhouse of a boom. Still, the New York turnround is very much his work and, as such, worth reviewing.

A decade ago, New York bore a metaphorical thumbs-down beside its name. High taxes - the nation's highest - and unreasonable regulation drove business away. Then there was crime and the general risk of unrest. In 1993, for example, news of riots in Brooklyn's Crown Heights - and of the city government's tardy reaction to them - penetrated the international press.

This telegraphed a clear signal to outsiders: stay away. Each time such a riot occurred or a friend was mugged, they duly curtailed their exposure. Over the decades the city haemorrhaged jobs. This was so even during the Go-Go 1980s, when Wall Street lost jobs by the tens of thousands to the more tranquil south-west.

Now, within just six years, Mr Giuliani has managed to convert New York into a model capital of almost embarrassing self-confidence. Silicon Alley, New York's technology sector, is booming, and city and state together are generating private-sector jobs at a rate of 2.8 per cent, higher than the national average. West Coasters, for the first time in memory, are migrating to New York. To be sure, Mr Giuliani has his battles. He is locked in a spectacular Senate contest with America's First Lady, and, just last week, has been diagnosed with prostate cancer. Still, even his Democratic opponents concede his achievement.

Interestingly - and to the dismay of free-market purists - this miraculous regeneration has occurred without steep tax cuts. Economics are not Mr Giuliani's strength, and he has let stand many of the city's more offensive levies.

It turned out that none of this was so important. For, as became clear in the 1990s, what mattered to people was whether they could count on a mugger-free evening when they purchased tickets to Cats. In other words, that New York cut crime and restored the rule of law so that tourists - and investors - might partake of its manifest charms.

Here Rudy led a screamingly unsubtle campaign to make New York more liveable. His first step was to apply the now legendary zero-tolerance philosophy, which said that even minor irritations - in-your-face squeegee men, needle-strewn sidewalks - would no longer be overlooked. As important was his support for a police force demoralised by his predecessors.

Naturally, Mr Giuliani's strongman policy has provoked Livingstonian storms of criticism, particularly in instances of police violence against minorities. They have also hurt Mr Giulani's poll numbers. His seemingly callous response to cases such as the deplorable shooting of Amadou Diallo, an unarmed black man, have also done damage. But the reality is that blacks and Hispanics, New York's greatest victims of crime, have benefited enormously from the halving of the violent crime rate - a drop more dramatic than in any other big US city.

As for the Giuliani police policy, it has resulted in less police violence. The Diallo shooting in 1999 was one of only 11 civilian fatalities caused by police that year, the lowest figure on record. Overall, police violence has decreased 77 per cent under the mayor - a huge plus.

Once you take in all this context, the prospect of Mayor Livingstone becomes something more than a local embarrassment. It becomes a negative for London at a moment when the competition among capitals has never been fiercer. Mr Livingstone has said that he hopes to lock international finance in vast stocks so we can throw stuff at them in an organised way. Can the new anti-globalisation gadflies hope for a clearer thumbs-up?

To be sure, Mr Livingstone's presence may prove benign, and that a year hence London is no different from a city with a mayor hand-picked by Margaret Thatcher in her heyday. But to the quicksilver global investor weighing his options today - shall it be London, Dublin, or Frankfurt? - this realisation may come too late.

© Copyright 2000 Financial Times

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