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CNN Saturday Morning News
Is New York City Going to Remain America's Economic Capital?
Aired October 06, 2001 - 07:52 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Back in New York City, the city, you know, has suffered a big financial toll after the attacks of 9/11. And some are wondering when the city would bounce back and whether New York's position as America's economic capital has been damaged.
Let's talk more about it. Donald Davis, a Columbia University economics professor, live with us this morning.
Professor, good morning to you.
DONALD DAVIS, PROFESSOR, COLUMBIA UNIV.: Good morning.
HEMMER: Before we get to that very issue, there was an amazing figure thrown out yesterday. $105 billion total damage to cover all the costs here and the rebuilding effort New York City over two years alone.
Can you give a perspective for the enormity of that bill?
DAVIS: Well, you know, I think that it's very important for the federal government to be doing its part to help rebuild New York. The concerns of national security are something for the nation as a whole. And there's no reason that the city should have to pay the bill for failures in national security.
HEMMER: To the viability issue.
DAVIS: Yes.
HEMMER: How much is this damaged?
DAVIS: Well, we know what the figures are in terms of the millions of square feet of lost real estate. That, even yesterday, they were talking in "The New York Times," they are planning to rebuild definitely on the World Trade Center site. So that will come back.
The bigger question that my research with my colleague David Weinstein has been trying to look at, is the question of when you have a catastrophe that strikes a city, what's going to happen going to forward from that? Is it going to have permanent effects? Is it going to lead to a downward spiral in the city? Or is it -- are the locational advantages of particular places like New York?
HEMMER: What do you think in conclusion?
DAVIS: The conclusion we get is very simple. Cities are incredibly robust. And we've drawn these conclusions from looking at, in particular, what happened to Japanese cities. First in the wake of the allied bombing of Japanese cities during World War II. And then also, at what happened to Japanese cities, Tokyo, after the 1923 earthquake, and later Kobe more recently in 1995.
So for example, well, everyone knows about the cases of Hiroshima and Nagasaki, where nuclear bombs were dropped. Much less well known is that the United States, in the course -- in the final months of the war, targeted 66 Japanese cities. The typical Japanese city that we targeted had half of its built-up structures destroyed, must of this through firebombing.
In Tokyo itself, more than 100,000 people were killed. We had 80,000 people that were killed in Hiroshima.
HEMMER: Which is much more dramatic than New York City.
DAVIS: Vastly more dramatic.
HEMMER: Is that fair comparison then or is this applicable?
DAVIS: It's not, but the point is this. So for example, in Hiroshima, you know, we actually, instantly killed something over 20 percent of the population. We wiped two-thirds of the structures off the map instantly. And the question is, if you go back there, even controlling for the amount of government rebuilding that was taking place, if you go back there 20 years later, doesn't look different than it would've looked had this never have happened.
And the answer basically is no, that the cities that were targeted, not every city in Japan was targeted. The cities that were targeted looked, among the cities in Japan, almost as if nothing had ever happened.
HEMMER: Fast forward to today, if you could.
DAVIS: Yes.
HEMMER: Rudy Giuliani yesterday said, I want to use his words, "The city was better prepared to handle this crisis now than it has been in recent decades. Fair statement?"
DAVIS: I think that that's a fair statement in a number of regards. You know, that the city has had a relatively healthy budget, that it's had relatively strong economy. Certainly, there were some sources of weakness, you know, both in the national and the local economy.
But I think that New York is showing that it can responding very well.
HEMMER: And it's luring tourists to come on back. Indeed, it helps many times. DAVIS: Absolutely.
HEMMER: Donald Davis, professor of Columbia University. We will follow that tally that we talked about $105 billion in the coming days, weeks, and years for that matter. Thank you, professor.
DAVIS: Thank you.
HEMMER: All right.
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