Early in 1982, President Ronald Reagan arrived in New York City to speak with an audience of business leaders gathered at the Waldorf-Astoria Hotel. A year into Reagan’s first term, the country had fallen into a deep recession. In his speech to the enthusiastic crowd, though, the president found reason to hope.

Wearing a scarf decorated with an “I ♥ NY” logo, a gift from Mayor Koch, Reagan praised the way that New York had pulled together when it faced bankruptcy in the 1970s. “When New York was in trouble, groups which had quarreled for years joined together for the greater good of saving the city,” he insisted. “Labor, business, voluntary associations all pitched in.” What had saved the city was “private initiative”—and this, Reagan was sure, would save the nation as a whole. “I think we’ve made our choice and turned a historic corner. We’re not going back to the glory days of big government.”

The notion that fiscal rectitude meant opposing organized labor and cutting back on services would resonate throughout the early 1980s, both in the United States and internationally. Only five months before his appearance in New York, Reagan had fired more than 11,000 striking federal employees—the nation’s air traffic controllers—breaking their labor union. Seven months after Reagan’s Waldorf-Astoria speech, the Mexican government defaulted on its debts and was pressed by the International Monetary Fund into a program of austerity, privatization, and structural reform. A few years later, Margaret Thatcher broke a year-long strike of coal miners in Great Britain, insisting that she did so in order to demonstrate that labor unions could not dictate the public policy of the nation.

In the United States, as Reagan’s speech suggested, New York’s story would be held up time and again as a cautionary tale of the dangers of Great Society liberalism and the virtues of the free market and private enterprise. Reflecting on the crisis ten years afterwards, Felix Rohatyn observed that it had “redefined the political dialogue” in New York City. The crisis had underlined “in the most brutal way possible the limits of any unit of government to create money itself and to promise all things to all citizens without a very solid private sector base.” In the future, he said, there would be an understanding that “business has to be supported and not just tolerated.”

The framework of “crisis” generated a sense of inevitability, making it seem that there were no alternatives.

Rohatyn was right: The nature of political life changed markedly after the crisis. There was no premeditated plan to seize and transform New York’s government, nor were the actors who gained power during the crisis acting upon an ideology constructed in the abstract. But the scare of the near-bankruptcy brought together the elite groups within the city, and enabled them to act in concert in ways that otherwise would have proved difficult to attain. The framework of “crisis” generated a sense of inevitability, making it seem that there were no alternatives. Across the Atlantic, “there is no alternative” would soon become one of Thatcher’s favorite slogans.