New York as dysfunctional Latin American nation

When I’m not blogging, I spend quite a lot of time writing about Latin America.

Latin Americans generally have political systems based on that of the USA: a

powerful president with checks and balances provided by the legislature and

the judiciary. But the system in most Latin American countries doesn’t work

very well. The legislature almost never cooperates with the president, and on

the rare occasion that the president can get laws passed in Congress, those

laws are frequently found unconstitutional by the Supreme Court.

What this means in practice is political paralysis, lots of presidential decrees,

lots of pork and backroom dealings, lots of (often corrupt) judges handing down

bizarre opinions, and lots of loud fights between politicians which generate

much more heat than light. Oh, one other thing: so long as anybody, anywhere,

will lend them money, these countries run huge and ultimately unsustainable

budget deficits. In other words, far from becoming similar to the USA, these

emerging democracies seem to be doing their utmost to emulate… New York.

Elizabeth Kolbert has an

excellent piece in this week’s New Yorker explaining that "to make

sense of Albany, you have to turn everything on its head." Kolbert takes

a wry look at state politics, pointing out that 210 of New York’s 212 legislators

"are, for all intents and purposes, superfluous." The more you read,

the more that countries like Argentina or Venezuela come to mind:

Such are the ways of Albany that when things seem to be proceeding in an

orderly, democratic fashion it is an almost sure bet that they are about to

spin out of control. Thus, the first sign that the budget process had broken

down last month came when it began to move forward…

A particularly neat illustration of how Albany has reinterpreted the rules

of democracy is provided by the so-called message of necessity. As its name

suggests, the measure is supposed to be invoked only in emergencies… Eighty

per cent of the major bills that were approved in the past several years have

been passed under messages of necessity. This spring, the state was facing

a genuine fiscal emergency, so, by the logic of Albany, the Capitol had to

revert to actually observing the constitution.

Many of the problems with New York politics right now can be laid squarely

at the feet of our governor, George Pataki. (Pataki was re-elected, by the way,

in a campaign against Carl McCall, who in turn won the Democratic primary by

default, when his opponent pulled out at the last minute when he realised he

wasn’t going to win. Sound

familiar?)

Pataki is a man facing record budget deficits but who simply refuses even to

consider raising any taxes at all to help pay for government services. His friend

Michael Bloomberg wants a commuter tax? Don’t even think about it. The legislature

wants to raise income taxes on individuals earning more than $100,000 a year?

No way, José: that’s "job destroying," that is. Rather, Pataki

wants to borrow against future revenues which may or may not be coming New York’s

way from the 1998 tobacco settlement, and use the cash for routine operating

expenses. Oh, and he also wants to put video poker machines inside New York’s

betting stores. Everything he does, on both the taxing and the spending sides

of the budget, is fiscally disastrous: if Pataki were in charge of any Latin

American country, the IMF would cut him off without a second thought.

But if New York has an incredibly wasteful legislature and an unsustainable

fiscal situation, at least it stands head and shoulders above Latin America

in one respect: its universally-admired judiciary. The Southern District Court

in New York is home to most important litigation in the financial world, and

contracts written in countries from Belgium to Brunei specify that they’re governed

by New York law. There might be crazy shit going on in Albany, but New York

City, at least, stands up to much more scrutiny.

Right? Er, wrong. State Supreme Court Justice Louis York showed himself today

to be fully the equal of any of his counterparts in Ecuador or Peru, when he

found

the MTA’s latest fare hike to be "in violation of lawful procedure and

not rationally based". The last thing that New York needs right now is

lower revenues, but the MTA says it stands to lose $1.2 million a day

if this verdict is upheld and the fare hike – which went into effect on

May 4 – is repealed.

Thankfully, there are some sensible judges in New York, and this verdict is

probably going to be overturned. Even Pataki will not remain governor forever.

(Heaven help us, everybody seems to think he’s actually serious about running

for president.) But the broader problems in this state are bigger than individuals

like Pataki and York; they’re systemic, and need to be tackled at the constitutional

level. The chances of that happening, however, are roughly the same as the chances

of all of Latin America moving to a prime ministerial system overnight. As Kolbert

says:

Albany is a fantastically inefficient place in all ways except one. For the

last nineteen years, the Legislature has not managed to pass the state budget

on time even once, but during that same period ninety-nine per cent of incumbent

lawmakers held on to their seats in general elections. Viewed in these terms,

Albany does what it does all too well.