Extreme wealth inequality creates a fundamental risk beyond social unrest. When the most powerful citizens extricate themselves from public systems—schools, security, healthcare, transport—they lose empathy and any incentive to invest in the nation's core infrastructure. This decay of shared experience and investment leads to societal fragility.

Well-intentioned government support programs can become an economic "shackle," disincentivizing upward mobility. This risks a negative cycle: dependent citizens demand more benefits, requiring higher taxes that drive out businesses, which erodes the tax base and leads to calls for even more wealth redistribution and government control.

Unlike most countries that fund legislation upon passing it, the U.S. Congress passes laws first and separately debates funding later. This fundamental disconnect between approving work and approving payment is a structural flaw that repeatedly manufactures fiscal crises and government shutdowns.

In a final, desperate move, the very unions whose members were being laid off became the city's lenders of last resort. By investing their pension funds in the newly created MAC bonds, they effectively bailed out their own employer, a high-stakes move that ultimately averted total bankruptcy.

The city wasn't simply bad at accounting; it effectively had no centralized system. Finances were tracked on scraps of paper and in drawers, making it impossible to know the true state of its debt. This systemic failure, not just policy choices, made the collapse inevitable.

Congress uses its spending power to enact policies in areas where it lacks direct authority, like education or local transport. By offering "conditional spending," it creates powerful incentives for states to comply with federal standards to receive necessary funds.

Beyond headline-grabbing scandals, the most insidious impact of a kleptocratic administration is its refusal to enforce existing laws, from financial regulations to anti-corruption acts. This quiet dismantling of the legal framework fosters a culture of impunity where bad actors thrive, ultimately harming ordinary people and destabilizing the entire system.

Ford's refusal to bail out New York wasn't purely a fiscal decision. It was a strategic political move to outflank Ronald Reagan on the right ahead of the 1976 Republican primary. This shows how national political calculations can directly and severely impact municipal-level crises.

The debate over CUNY's free tuition was more than a line item. For bankers, it symbolized fiscal irresponsibility. For New Yorkers, it represented the city's social contract and a path to mobility, crystallizing two competing visions for the city's future and what it means to be a citizen.