Donald Trump’s rise in 1970s New York tells us much about the current urban moment we are still living through.

Donald Trump first entered the public consciousness with the construction of the Grand Hyatt Hotel, a lavish $70m construction which replaced the derelict Commodore Hotel opposite New York’s Grand Central Station. Using his position as president of his father’s company, he went on to make a name in 1970s New York through a series of other extravagant real estate developments.

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This was a particularly opportune moment to be pursuing these kinds of projects since at that time New York City was undergoing a major shift in its urban economy, away from public housing and public works and towards private luxury development.

Since we are still very much living with its consequences, it’s well worth revisiting the history which led to this important moment in the history of modern cities.

White Flight

In 1975, New York was close to bankruptcy, due to spiralling debts and a decades-long decline in its tax base. This decline can itself be traced back to the US federal government’s housing policy in the decades following the Second World War, in which they encouraged home ownership in the rapidly expanding suburbs by offering to underwrite the loans made by mortgage companies.

By stimulating not just the housing market but also the growing markets for cars and household goods, this policy was instrumental in sparking the post-war economic boom (seen not just in the US but across the West). But in the US, it had the effect of emptying out the inner cities and also heavily discriminated in favour of the white middle class and against African Americans.

Good Intentions, Bad Policy

New York City was hit especially hard, such that by the mid-1970s, the city’s municipal government was increasingly reliant on borrowing in order to cover its budget shortfalls. While it was born out of good intentions, this was bad policy on the municipality’s part, since governments should really only borrow for capital expenditure (i.e. investment in fixed assets like infrastructure) rather than to cover operating expenditure (i.e. wages, rents etc.).

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Eventually, the banks began to worry that the municipal government might not be able to meet its debt repayments. So, at the beginning of 1975, on a day when they were expected to buy a new issue of bonds, the bank’s representatives simply didn’t turn up. It was a remarkable demonstration of power.

Throughout the rest of the year, the situation worsened until the city was forced to appeal to the federal government for a bailout. President Ford initially said he would veto any bailout of the city, in a speech sparked the famous headline “Ford to City: Drop Dead”. However, for fear that it might cause a domino effect, he eventually relented.

The biggest tax break in history

New York was saved from bankruptcy, but it had turned a corner. Rattled by their encounter with the abyss, the municipal government allowed the creation of a panel occupied almost entirely by representatives of the banks, who set about imposing sweeping austerity measures on the city, including cuts to public sector employees and welfare.

This was the context of Donald Trump’s rise to fame. He was one of the first people to negotiate large tax breaks from a desperate city government, which he used to build luxury housing. This was what was so remarkable about the Grand Hyatt Hotel project. Here, he negotiated the biggest tax break in history, an exemption of property over 40 years which would eventually amount to $160m.

Meanwhile, those same banks saw an opportunity themselves, and started lending him money to build. Without spending a penny, Trump began to transform New York into a city for the rich.

The rest, as they say, is history.

Hit 2017 video game A Night in the Woods offers the small-town rust belt representation we need if we’re going to understand how Trump won in 2016.

Possum Springs is a town that most indie video game players will be very familiar with. Providing the setting for the hit independent side-scrolling platform game A Night in the Woods (2017), it’s an essential backdrop to the story of the game’s main character Mae Borowski.
Mae is a college dropout who has moved back into her parents’ home for reasons that go undisclosed at the beginning of the game. She returns to find her group of friends somewhat distant, old beyond their years and generally worn down by the pressures of having to make a living, in work that offers little intellectual stimulation and no chance of career advancement.

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Exploring Possum Springs

Day by day, the player as Mae explores Possum Springs, talking to her friends, parents and old faces on the street and gradually builds up a picture of a town in terminal decline. One afternoon, she goes with her friend Bea to the mall (much to Bea’s bafflement, since she’s long grown out of this kind of frivolous activity). When they arrive, Mae is immediately taken aback by the fact that all the good shops have gone and only one-dollar stores and third-rate clothing shops still remain. Unsurprisingly, the whole place is practically empty (to the extent that Mae casually climbs to the roof and commandeers the controls for the central fountain, with amusing results).

A walk through a neglected city

This sense of decline is also echoed in the town centre: Mae’s favourite pizza parlour (and the only one in town) has just closed down, there’s a big derelict building at one end of the main street and in the very centre there’s underground passageway which was once meant to serve a wider underground trolley car system (with fancy trolley cars apparently imported all the way from some place in Europe) but which now serves as a hangout for a group of youths. The tunnel system itself has flooded and at one point in the game Mae encounters one of her old teachers, who looks for salvage in the flooded trolley car tunnels as a side-job (in addition to teaching and another side-job landscaping).

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Meanwhile, you occasionally get echoes of a once proud, prosperous town. In the underground passageway there’s a mural, depicting a group of miners proudly setting off to work. The town has a grand library built by the town’s rich patrician mine boss, which is now hardly used at all (incidentally, when Mae visits, she at one point spots a CV left up on one of the computers, clearly written by an ex-miner, whose only skills relate to mining, a short but incredibly revealing moment) and many of the older folks, including Mae’s dad, speak with nostalgia about the community established through gainful work. Now, the adults too are left demoralised and beset by financial precarity, with Mae’s parents themselves revealing to her that they had to re-mortgage in order to pay for her college tuition and now owe more money than the value of the house.

How much reality is in the video game?

Possum Springs is the picture of the American rust belt that we need, presenting a much more nuanced idea of the kind of places that were so influential in Donald Trump’s 2016 US presidential election victory. Cutting through the bad media narrative about an uninformed, white working class who didn’t know any better, A Night in the Woods depicts its rust belt setting as a place suffering from chronic disinvestment, job flight and a completely demoralised working class, whose unions are long since defeated and whose young people are completely alienated. It’s a sad picture, but one that ought to help outsiders grasp what drove these places to choose either to vote Trump or, more likely, not vote at all.