Rudolph Giuliani in one of his first actions as mayor of New York City, eliminated a controversial set-aside program that had been instituted in 1991 by the Dinkins administration. Considering the extent to which the use of quotas now permeates American society, any victory for the merit system is reason for celebration.

The policy in question was, if nothing else, a tribute to those who are determined to balkanize people along lines of race, ethnicity, and gender. It authorized the awarding of city contracts to businesses owned by—who else?-“women and minorities,” even if their bids were as much as 10 percent higher than the lowest bidder. Under this affirmative action policy, the city’s goal had been for the politically correct firms to perform 20 percent of its contractual work.

During last year’s mayoral campaign, David Dinkins frequently pointed out that the policy had increased from 9 to 17 the percentage of city contracts awarded to “women and minorities,” wowing the sort of folks who keep track of such things. The fact that Mr. Dinkins considered this one of his proudest accomplishments as mayor tells you all you need to know about his unlamented tenure.

Giuliani’s executive order was greeted with predictable cries of outrage from the usual liberal suspects that have brought a once-great city almost to its knees. “No small business can compete against the giants of the world,” said an “incensed” Harriet Michel, president of an outfit called the National Minority Supplier Development Council. Her comment raises the question of why the policy’s beneficiaries were not “small businesses,” instead of the standard “women and minorities.” “Our members are only trying to compete and this was a way to help,” said Roy A. Hastick, president of the Caribbean-American Chamber of Commerce. For the purposes of affirmative action, foreign-born blacks are classified as a “minority,” unlike, say, Russian or Irish immigrants.

In issuing his executive order, Mayor Giuliani called the policy “indefensible” as a constitutional matter. His opinion was validated a few days later, in the form of a state supreme court ruling in favor of one of several white male-owned construction companies that had sued the city after their low bids went for naught. Justice Walter B. Tolub of Manhattan held that the 10 percent price preference violated a New York State law requiring government to accept the lowest bids for all contractual work. The city has canceled a number of the tainted contracts and is in the process of taking new bids for projects that have not yet gotten under way.

Giuliani criticized the set-aside policy using the rhetoric of fiscal restraint that New Yorkers have come to know so well. The three million dollars in revenue lost last year as a result of the policy, however, is a pittance in a city that currently faces a two billion dollar budget deficit. More revealing is the mayor’s statement that he wants the city’s contract system to be “ethnic, race, religious, gender and sexual orientation-neutral.”

Giuliani’s recent rhetoric has heartened his conservative supporters, who had suspected he was secretly one of them. Though he twice ran for mayor as a moderate Republican, he has occasionally adopted since taking office in January a notably hard-line stance on a range of social issues. He repeatedly stresses self-reliance as the antidote to the culture of dependence fostered by a runaway welfare state. He is going ahead with his “race-neutral” plan to lay off 15,000 city employees, despite strong criticism from black and Hispanic legislators who fear that their constituents will be disproportionately affected. And he has said that the role of government should be far less expansive than has been the norm in New York City.

But there is a dark side to Giuliani and his politics that is as discouraging as the above policies are promising. During this summer’s Gay Pride festivities, the mayor set a dangerous precedent by refusing to prevent militant homosexuals from staging an illegal parade. He has also not spoken out against the Board of Education’s latest proposed curriculum, a watered-down version of the infamous Rainbow Curriculum, which triggered last year’s parental revolt that toppled Schools Chancellor Joseph Fernandez.

Giuliani’s position on the hot issue of illegal aliens is equally cause for concern. His chief of staff, David Klasfeld, wrote in a memo: “The Executive Order which advises City agencies not to report people to the Immigration and Naturalization Service is for the good of all New Yorkers. We need to encourage all people who live here to seek necessary medical attention, social service help, or to report a crime without fear that they will be reported to the INS.” This statement left the public wondering whether the mayor believes that breaking immigration laws is not a crime and that welfare benefits for illegal aliens are somehow “for the good of all New Yorkers.”

With mixed signals such as these. New Yorkers are left wondering: “Will the real Giuliani please stand up?”