Reason Foundation

http://reason.org
http://reason.org/news/show/an-economic-lesson-from-911

Reason Foundation

An Economic Lesson from 9/11

How capitalism helped save lower Manhattan

Ira Stoll
September 6, 2011

In the week ahead you will see a lot of September 11 anniversary columns about terrorism, about heroes, about war, about loss. This is a September 11 column about the economics of cities and how free-market capitalism is the best disaster recovery method ever invented.

On September 11, 2001, some partners and I were in the middle of starting a new daily newspaper in New York City. The closing of the deal to create the company to bring out the paper had been scheduled for that day, and it was delayed for a few weeks by the attack. But that fall the initial few staffers of the New York Sun were out looking for office space in Manhattan.

Some of us had wanted to be downtown to begin with—closer to City Hall and the courthouses, closer to staff who lived in Brooklyn, closer to the city’s historic Newspaper Row where the original New York Sun had had its printing press generations earlier. The attack more or less sealed the location issue. Of all the far-reaching and grave consequences of the terrorist attacks of September 11, 2001, it seems almost irreverent to mention that all of a sudden lower Manhattan real estate was a buyer’s (or, in our case, renter’s) market. But so it was.

In December of 2001, the New York Sun set up its newsroom on Chambers Street, five blocks to the north of ground zero. The sidewalks were gritty and chaotic, even by the standard of New York City’s ordinarily gritty and chaotic baseline. Telephone and electric cables ran along the streets as if it were a movie set. The gutters were full of a muddy reddish brown combination of what seemed to be the remnants of both water that had been used to fight the fires and the debris and dust that came down in the collapse of the Twin Towers. Many stores and even entire buildings were vacant or for rent.

This week, I returned and took a walk around that Chambers Street block, along with a few of the streets one block in each direction. What a remarkable place. Food-wise, the options include at least two high-end Italian restaurants and two low-end pizza joints, sushi, “Tex-Mexican,” two French restaurants, a Puerto Rican restaurant, and the Pakistani Tea House, whose window displays, along with two brief New York Times write-ups, a certificate issued by the New York Press newspaper in 1998 naming it “Best Halal Cab Stand.” Chains, such as McDonald’s, Subway, and Starbucks, coexist with one-of-a-kind establishments.

What was in 2001 a vacant two-story building at the corner of Chambers and West Broadway has been replaced with a fancy 11-story hotel. One storefront offers Chinese traditional acupuncture; another, Brazilian waxing. Businesses catering to children and parents—a paint-it-yourself ceramics studio, the Tribeca Treats cupcake bakery, Gymboree—mix with bars, dry-cleaners, cellphone dealers, a health club, and a school of barbering. A sign advertises a multimillion-dollar duplex apartment for sale above a thrift shop.

At Zucker’s Bagels and Smoked Fish, the bulletin board bristles with advertising for yet more businesses, these mostly too small for storefronts—“At-Home Pilates,” “Marlene’s Cleaning,” “LSAT Tutor,” “Need Child Care?” “Learn HTML.” Someone is even trying to turn the poster business into a business—“Get paid to post flyers!”

Perhaps 60 percent of the businesses are newly created in the past decade. At least one, a grocer, has been there since 1885.

The contrast with ground zero, where a government agency was in charge of rebuilding and a decade later there are still no buildings complete or businesses open, is stark. Of course, the challenges of the ground zero site itself were and are much greater, including the sensitivities of victims’ families. And government provided some incentives in the neighborhood that surrounded the site as well. But the greatest incentives were the potential rewards that come to entrepreneurs who pursue their dreams in a free enterprise system.

Had the cleverest government urban planner or even Disney Imagineer tried to plan this neighborhood from scratch, it would have never happened this way. A pediatric endocrinologist’s office next to a bar? Luxury housing above thrift-shops or around the corner from check-cashing joints? A barbershop six feet wide, so narrow that the barbers need to stop clipping mid-cut and pivot aside to make way for incoming customers to squeeze by into the open chairs deeper inside? Who would approve those plans? Never mind the hassle of signing separate leases with dozens of little-known small businessmen of unknown creditworthiness rather than pursuing a few long-term deals with large, well-known companies.

Yet when the decisions are left to dozens of individual property owners and potential renters rather than to central planners or quasi-public development corporations, deals have a way of getting made, and risks have a way of getting taken. The quirky, dynamic energy that draws visitors to New York wins out. The city does more than merely recover. It prospers.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life. This column first appeared at Reason.com.



Print This