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A terrific deal for Mr Silverstein — but will Governor Pataki get his monument?

A terrific deal for Mr Silverstein — but will Governor Pataki get his monument?

20 September 2006

4:43 PM

20 September 2006

4:43 PM

Larry Silverstein, the 75-year-old property developer who bought a lease on the twin towers of the World Trade Center six weeks before they collapsed, has been a lonely defender these past five years of his right to build the office space of his choosing on what to others is sacred ground. But he has played a difficult hand well — not least because he is, by all accounts, a difficult man. Facing off against the Port Authority, which owns the World Trade Center site, and the state government, which half-owns the Port Authority, and the city government, which has had its own ideas for the site, he has haggled doggedly over who gets the last say on what gets built. The state and city would have loved to find a way of squeezing him out cheaply. Instead he is likely to be bought out partially and expensively.

Roughly speaking, the compromise now taking shape is that the Port Authority will emerge with rights to build the headline-grabbing 1,776ft-tall Freedom Tower beloved of George Pataki, New York’s state governor. Mr Silverstein will get the rights to build three further towers on a better part of the site, plus $2.6 billion in subsidised loans — a terrific deal, even if he will never admit it.

A couple of weeks ago, just before the fifth anniversary of 9/11, Mr Silverstein showed plans for his three intended buildings from Lord (Richard) Rogers, Lord (Norman) Foster and Fumihiko Maki. They looked as sharp as you might expect and, since these blocks will flank a new railway and subway station, they should be relatively easy to let. Silverstein received a fine politician’s compliment that day from New York’s deputy mayor, Dan Doctoroff. ‘What we are unveiling today,’ said Doctoroff, ‘is a true testament, Larry, to you and to your vision, to your perseverance, which we all sometimes wish you didn’t have as much of.’

Which still leaves the Freedom Tower. I doubt that it will ever be built, though here it is my opinion against George Pataki’s. The fortress-like design of the tower assumes that it will be a prime target for terrorism. The only big tenants currently willing to look at it are the federal and state governments. They are good people, to be sure, but if the aim is to show that the tower can pay its way, then a private-sector tenant would have been a reassuring touch. The Freedom Tower is Mr Pataki’s monument, but it will not be much advanced by the time he leaves office at the end of this year, and his likely successor, Eliot Spitzer, a Democrat, is much less keen on it. Some new housing might yet be a nice alternative.


Not long ago, it seemed that everyone in business class was reading Malcolm Gladwell’s book The Tipping Point and discovering that the world was full of moments when small changes produced big effects. Now your in-flight neighbour is likely to be reading The Long Tail by Chris Anderson, editor of Wired magazine, who points out that the online world is full of new ‘abundant markets’ in which everything can be offered to everyone at once. Think of songs on iTunes: a vendor holding little or no physical inventory can afford to offer limitless niche products in addition to the best-sellers. Selling this ‘long tail’ of small things becomes a surer strategy than betting the store on a few blockbusters.

The long tail has swished its way into business and academic jargon. If you are selling beer you no longer talk about ‘microbreweries’, but about ‘the long tail of beers’. The Yale Law Journal has just published a paper on ‘The Long Tail of Legal Scholarship’. I have yet to hear about the long tail of politics, so let this be my contribution to the field. I predict that the market for politicians is one in which consumers will continue to favour scarcity over abundance.

Great wealth is so commonplace in New York that I feel increasingly eccentric or deficient in not being rich myself, having been too stupid or cowardly to seize the opportunities afforded by the stock-market and property booms of the past 30 years. But in this, my income stagnation, I merely share the fate of the typical male American worker. His wages have barely kept pace with inflation, while the incomes of the very rich — the financiers, entrepreneurs, chief executives, sportsmen and entertainers — have soared.

It may seem obvious enough to you and me that some people are going to be rich and others are going to be poor, and that capitalism, given the chance, does a pretty good job of sorting out who belongs in which category. But a visibly widening gap between rich and non-rich does require a bit of explaining, if the non-rich are to swallow it. So far President Bush is failing to strike the right note. The more he bangs on about the strength of the American economy, which is real enough, the more he makes the working stiffs wonder why all the benefits seem to be accruing either to Paris Hilton or to the directors of Exxon or to some hedge fund manager in Connecticut. It is this restlessness among the middle classes, as much as the erratic course of the Iraq war, which is going to sink the Republicans in November’s Congressional elections.

I doubt it is the sort of argument which will be of much help to the Republicans, but one thing to be said for inequality on the American scale is that it gives a few people enough money to do wonderful but completely silly things. Sotheby’s New York office has been showing a 144-piece dinner service in Royal Copenhagen porcelain commissioned by a private collector, Richard Baron Cohen, and decorated with 303 different portraits of hippopotamuses alone and in family groups. Sotheby’s calls the service ‘probably the single most important commissioned service of the past 100 years’. Mr Cohen, a member of the International Hippo Society, and no known relation to the actor who created Ali G, was a little more modest when talking to the Wall Street Journal about his $400,000 caprice. ‘You look at it,’ he said, ‘and [you] think it’s either demented, or just right.’

Robert Cottrell is the deputy editor of Economist.com.


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