What a battle. No, not the presidential campaign, but the contest between what one might call Old New York and New New York that is playing itself out right here in our city. On one hand is a discouraging series of disclosures about old-style behaviors characterized by political connections, government as a vending machine, no respect for free markets, entrenched interests. The governor has a rent-stabilized $1,250 a month two-bedroom apartment in Manhattan in addition to the governor’s mansion and a house upstate.

The speaker of the City Council is collecting campaign contributions from the library board of trustees while extending the library’s hours by increasing its funding. Other City Council members have been using pork-barrel grants to attract campaign contributions and political support outside their council districts as they plan campaigns for other offices. The public employee unions are seeking sweet early retirement deals from Albany on the basis of research done by what the New York Times disclosed was an actuary paid by the labor unions.

It would be enough to depress even the optimists among us, were it not for an offsetting stream of news about the New New York, featuring new-style solutions that are characterized by promoting growth and dynamism, understanding that free markets are the basis of benefits for all, without needing to give political contributions to get favors. In Harlem, charter schools and Catholic schools showed up at a fair actually to compete for students. The freedom from central control allows charter schools such as Eva Moskowitz’s Harlem Success Academy to do things like pay teachers as much as between10% and 15% more than the government-run schools and use a defined contribution pension plan, while also giving students a longer school day that runs from 7:20 a.m. to 5 p.m.

Elsewhere in the New New York, we’ve reported on the stirrings of efforts to experiment with selling off some government housing projects in pricey neighborhoods and using the funds to support housing for more families elsewhere. The Federal Aviation Administration is planning to auction off scarce takeoff and landing slots at New York airports to the highest bidders, replacing a status quo system of allocating those slots with a market-based one that would encourage new entrants.

We’ve seen a building boom unleashed in part via the repeal, by Governor Pataki and Senator Bruno, of the Cuomo Tax, the 10% surtax on gains on commercial real estate transactions of more than $1 million. After the tax, imposed in 1983, was repealed in 1996, real estate investment trusts came to New York and invested in a building boom that has seen annual building permits soar to 111,000 from 51,000 and the total value of all taxable real estate in New York City grow to $540 billion in 2005 from nearly $294 billion in 1996.

Mayor Bloomberg, at his best, has embraced this New New York by speaking out for the benefits that immigrants — literally, New New Yorkers — bring to the city, with their skills and work ethic and contributions to the growth and energy of the city.

For each step forward in the New New York, there’s a corresponding backlash from the Old New York. In the face of talk of selling housing projects, local politicians wrote to the Department of Housing and Urban Development demanding that the idea be disavowed. The teachers unions and Albany politicians imposed a cap on the number of new charter schools in the state, and the government school monopoly bureaucracy, even though it is led by a charter school proponent in Chancellor Joel Klein, has done its best to starve the charter schools of the space they need to flourish.

The Cuomo tax has its defenders who would like to see it restored to this day. Anti-immigration forces at the national level are able to restrict the amount of new human capital flowing into our city to the point where this year 6.4 million applicants applied for 50,000 national slots. As for the idea of auctioning off airport slots, Senator Schumer is heading up the reactionary forces, warning that an auction would be a dagger in the heart of passengers.

The optimist in us predicts the New New York will eventually triumph over the Old New York, but on the basis of the evidence so far, it isn’t going to be easy. We have a new governor, elevated unexpectedly, who is teetering between old New York ideas and the new dynamism and liberalizing approaches long championed by the Manhattan Institute. It is going to be a hard fought campaign with a lot of ups and downs, but all the greater the fun for it.