Just two years ago it was considered routine for a visiting motorist to be greeted by a drug addict wielding a blunt instrument and demanding money. It may have been the world's most intimidating welcome ceremony. (Some travelers argued that New York wasn't as bad Kinshasa, Zaire, where soldiers routinely pulled over tourists' cars and extracted money at rifle point. But at least the soldiers weren't smoking crack.) The squeegee men became a national symbol of New York's mean streets! They starred in a commercial for a car-security system. They even became a metaphor for the problems of New York-style municipal government. Indianapolis's Republican Mayor, Stephen Goldsmith, likes to cite them in his speeches on reinventing government. During the 1993 New York campaign, on his way into Manhattan to meet with Giuliani, he watched a squeegee man smear dirty water on his cab's windshield.

"It occurred to me that traditional city government is a lot like a squeegee guy," Goldsmith says. "It's doing a job you don't want it to do. It's doing it badly. And then it's charging you."

To Giuliani, squeegees epitomized New York's moral decay - its propensity far "defining deviancy down," as Senator Daniel Patrick Moynihan put it during a luncheon speech in April of 1993. One of Moynihan's listeners at the luncheon was Mayor Dinkins, who became visibly enraged. Giuliani wasn't there, but he got the speech that night from Raymond B. Harding, the Liberal Party leader. "We figured," Giuliani recalls, "that if Dinkins is so insulted by it, we ought to take a look at this speech." Giuliani made "squeegee" a buzz word in his campaign speeches about quality of life. Activists howled - William Kunstler came forth to represent the squeegee men's rights - and newspapers published paeans to these hard-working entrepreneurs. Giuliani was called a bully for picking on them and ignoring the city's real problems.

"It was amazing to me that people thought the squeegee problem wasn't important or couldn't be solved," Giuliani says. "A civilized society can't let people go around the streets intimidating other people. But a weird philosophical thinking had emerged about these quality-of-life issues. If somebody was urinating in the street, the reaction would be, oh, we can't do anything about that. And then the idea would start to develop that there must be some inherent human right to urinate on the street. So the police started ignoring all kinds of offenses. They'd even stand by wined drug deals were going on. The police became highly skilled observers of crime."

The police stopped observing under Giuliani's Commissioner, William Bratton, and the impact has extended far beyond the squeegee men.

In the past two years overall crime has dropped nearly 30 percent, and the rates of robbery and murder have fallen even more sharply, to the lowest level in 25 years. Some of the credit belongs to the Dinkins administration, which hired extra police officer and some of the decline might be due to social trends linked to falling crime in other cities, too. But New York's decline has been much more dramatic than other cities - so sudden and so pronounced that it defies traditional thinking about crime.

"Since the 1960's social scientists have been telling police that they can't really prevent crime, because its root causes are beyond their grasp," says Lawrence W. Sherman, a professor of criminology at the University of Maryland. "Giuliani and Bratton have led a revolution against that dogma and proved just the opposite. The result is that a lot of police departments are scrambling to copy New York's tactics." Crime rates started plummeting as soon as the department adopted its new tactics: tracking crime statistics daily with computerized maps, sending extra officers immediately into trouble spots, giving local commanders autonomy and having officers crack down on offenses that used to be ignored, like painting graffiti or drinking in public. One consequence of the aggressive police presence seems to be fewer guns on the street and therefore fewer shootings. Another consequence is that neighborhoods feel safer, less out of control. Banishing squeegees sends a message.

Giuliani's critics argue that the quality of life has declined in other ways, particularly for the poor. Giuliani didn't seriously try to prevent the subway fare from rising. (And the cutback in state aid to the subways was due partly to his disastrous decision last year to endorse Mario Cuomo for Governor.) Because of budget cuts, there are fewer new books in libraries, less new equipment on playgrounds, longer waits at city hospitals, delays in obtaining some social services. But considering the magnitude of the current fiscal problems - comparable with the 1975 crisis that devastated the city - it's remarkable that so many services and public spaces have been maintained and sometimes even improved. Thanks to a reorganization of the city's engineering and contracting practices, for the first time in memory the reconstruction of a major street - Columbus Avenue - is being finished ahead of schedule. Surveys show that streets and parks are cleaner as well as safer, a fulfillment of Giuliani's first campaign promise to reduce crime and improve the quality of life.

HE HAS MADE some progress on his second promise, shrinking the government and expanding the private economy. The municipal work force has fallen 8 percent since he took office and is still declining. The radio and television stations are being sold. Three city hospitals are on the market. The city has stopped being the landlord of last resort - it is letting private owners take over tax-delinquent buildings instead, and it is unloading the 5,000 residential buildings it already owns. Private companies have replaced some city workers who pave roads, maintain parks, clean buildings and run homeless shelters. Now that they're competing against private companies, municipal unions that used to protect their turf at all costs are rewriting work rules and welcoming extra manpower from participants in the city's workfare program, which now has 23,000 welfare recipients employed in 25 agencies. These new workers have doubled the size of the labor force in the Parks Department. While they're getting experience, the city is getting labor that would otherwise cost about $500 million a year.

It's hard to compare New York's reforms with those in other cities, because no city has anything remotely like Fiorello Hall. "Giuliani deserves special credit for overcoming huge political obstacles," says William D. Eggars, author of "Revolution at the Roots," a new book surveying municipal reform around America. "But he also has huge opportunities because the government is so bloated. After two years he's in the middle of the pack of the reform-minded Mayors -way ahead of Los Angeles, approaching Philadelphia and Chicago, behind Indianapolis."

Giuliani forced the school custodians and the sanitation workers to rewrite their notoriously lax contracts, and he bullied the transit and housing police into merging with the regular police force a goal that had eluded previous Mayors because of union opposition. But he settled for peace during the crucial negotiations this fall with the teachers' and municipal workers' unions. The new contracts are an improvement over the past, but they're not the great leap forward that reformers hoped for. The teachers' union still has mandarin rules that stifle innovation. You could call it a disappointing lapse in Giuliani's moral zeal - while he may be willing to take on welfare recipients, he'll compromise with middle-class teachers whose support could determine the next election.

You could also call it a bit of political realism. Giuliani could be doing more to reinvent government, but he can't afford to be as visionary as other cities' Mayors. A true conservative revolutionary would be advocating school vouchers, sweeping privatization and tax cuts, an end to rent regulation - but a true revolutionary wouldn't get far in New York. Giuliani has at least begun to change the city's philosophy. No one anymore dares to suggest raising taxes or expanding government social programs. To preserve existing social programs, liberals are proposing the kind of austerity measures that used to be called union bashing.

New York's economy seems to be recovering under Giuliani, but slowly - a gain so far of 50,000 private-sector jobs. The tourist, media and computer industries are doing better, tax revenues and retail sales are up. The city is wooing megastores instead of keeping them out, and it's starting to rezone thousands of acres of industrial sites - vacant for decades as previous administrations dithered - so that New Yorkers can live and shop there. But the city's taxes, reduced only slightly by Giuliani, continue to drive away businesses, and the budget problems continue. The projected budget deficit for next year is nearly $1 billion, which is encouraging only by comparison with the nearly $5 billion in deficits over the Giuliani administration's first two years.

Giuliani's third promise, better schools, remains unfulfilled. His battles with the Board of Education have only confirmed people's fears about his personality the Holy Terror unleashed on schoolchildren and their kindly protector, Chancellor Ramon Cortines. Disregarding the school board's autonomy, Giuliani forced Cortines to cut the staff at headquarters and tried ordering him to fire his budget director. When that didn't work, Giuliani hounded Cortines out of office and tried to install a successor whose main qualification was loyalty to the Mayor, all the while denouncing everyone who dared to object as "brain dead." Two-thirds of New Yorkers disapprove of his handling the schools, and the latest showdown with the Board of Education has sent his overall approval ratings to 42 percent, his lowest yet.

The school battles have been Giuliani's greatest public failure, although not for the commonly supposed reasons. The public and the press have blamed him for rudely refusing to cooperate with the school board the way his predecessors did; but what did New York gun by their good manners? The board's enormous bureaucracy absorbed most of the extra funds that were supposed to improve New York's schools during the past decade. Its bureaucrats there were. Its independence had made it irresponsible. Giuliani came to office with sensible proposals endorsed by a wide range of reformers: make the board politically accountable, cut the bureaucracy, draw up a comprehensible budget, send the money directly to each school instead of through headquarters.

Two years later, against all odds, some of these reforms might actually be implemented It remains to be seen whether the new chancellor, Rudy Crew, will be a more zealous reformer than Cortines, but he seems more aggressive and has already brought in outside executives, rather than making do, as Cortines had, with the existing hierarchy. Meanwhile, leaders of both parties in the state legislature are vowing finally to restructure the board so that it's more politically accountable. By ignoring everyone's advice against throwing public tantrums, Giuliani may end up getting his way.

"The schools could turn out to be big victory for him," says Mitchell Moss, director of the Taub Urban Research Center at New York University. "Once again Giuliani has been able to control the agenda, not only among New York's good government types, but among politicians. They're afraid to confront hire. He has proven over and over that if you want to make reforms, fear is a great source of power."

It is not, however, a great source of affection, which is important if you want to be re-elected. Giuliani may be right about restructuring the school board, but voters are not yet convinced that he really cares about their children. He has mastered La Guardia's techniques at bullying people, but he still hasn't figured out how La Guardia also managed to get them to like him.

AN EVENING IN BED-STUY

Giuliani persevered When his lecture attacking the Board of Education's bureaucracy was interrupted by shouts that he was ruining the schools, he snapped, "If you're happy with them, then go ahead and leave them the way they are." When the shouting got worse, he gave a finger pointing lecture about respect and ignored the person who shouted back: "You have no respect for us! You have no respect for our color of people!" He managed to hold his own except for one moment, just after a woman gave an emotional speech - which sounded suspiciously prearranged - thanking him for his personal attention to her son's problems. Giuliani started walking up the aisle toward her. Another female voice rang out, "Don't you go hugging that black woman!"

The crowd loves it. Giuliani ignored the laughter and gave the woman a hug, but it was an awkward sight: the grim-faced white Mayor stiffly embracing a black woman while the crowd jeered. Maybe no one could have pulled it off gracefully. Maybe not even La Guardia could have won over the crowd on this night. But he might have enjoyed the moment more. La Guardia had a flair for the grand gesture, a personal warmth. He happily played to audiences and the camera. Giuliani still flinches when the shutter clicks. He is not television-friendly.

"I've gone through two campaigns trying to make him come across less harsh on TV, but it's not going to change," Peter Powers says. "A lot of politicians can project an image, not Rudy. You can say to him, 'Let's do it this way because it will show you softer,' and he'll say, 'Let's just do it and not try to stage it.' He's not comfortable with it."

Giuliani's toughness plays well with some New Yorkers, notably the middle-class whites who chant ROO - DEE at the town hall meetings in Queens and Staten Island, but he's had less luck with Hispanic voters and little at all with blacks. "He hasn't picked up on the nuances in the world outside where he's lived," says Richard D. Parsons, the president of Time Warner and one of Giuliani's few prominent black supporters. "Any black leader

can point to any white leader and say he's against us, and you have to mount your case in defense. Rudy hasn't done that. In 20 years I've never seen any evidence of bias in him, but he can be accused of insensitivity. A good politician has to have the ability to empathize. People don't want to be told that they're wrong they might know they're wrong, but they want a leader to feel their pain."

Even if he had La Guardia's empathy, Giuliani would have a harder time reaching poor voters. Starting social programs is more popular than cutting them back. Giuliani's initiatives, like loans for low-income people to buy homes, don't have the emotional appeal of a new housing project. "I think I have a caring message, but it's very, very hard to convey that," Giuliani says. "I'm trying to get people away from this sort of subsistence politics. Let's try property ownership. Let's try involvement in business. Let's try more personal responsibility. Let's try workfare. These are premised on a lot more history in the development of human beings than the things we have been doing.

"This sounds really strange," he continued, "but I've thought through this a lot, and I think things are going to change very quickly, the way the destruction of Communism occurred in Eastern Europe. It came as a tremendous surprise to many people, particularly to Western intellectuals. Just as in Eastern Europe, there's a building sense in the minority community that the principles enforced by the so-called leadership aren't going anywhere - the battle over more entitlements and more welfare and more government solutions. When you find the right person who can connect to those feelings, you're going to see a major sea change."

He does not expect to be that person. "I don't think the connection is there. The leaders that presently exist won't allow that to happen.

The will try to demonize me. I can make marginal changes in people's thinking, but the major shift has to be done by someone they can identify with on a kind of intuitive level."

Contrary to predictions made during the campaign, Giuliani has presided over two years of uncharacteristically peaceful racial relations in New York. The search for the new schools chancellor proceeded without the traditional ethnic wars. Some community leaders complain that the newly aggressive police are harassing blacks, but there have been no full-blown racial crises memorable enough to merit a name like Crown Heights or Bensonhurst. It may just be Giuliani's luck so far. It may also be because of his tough policing and his refusal to be intimidated by leaders like Al Sharpton. Last year Giuliani resolved a bitter controversy in Harlem (one that David Dinkins had ducked) by evicting a mass of illegal vendors from 125th Street and simply disregarding Sharpton's protests. Giuliani interprets the relative calm as a vindication of his refusal to bend the law or negotiate racial spoils. His critics say that it's a sign that blacks have abandoned hope of any help from City Hall, and that Giuliani will eventually pay for it. As the two last Mayors discovered, one racial crisis in an election year can be fatal.

Giuliani won the last election by barely 50,000 votes, and that was with crucial support from Koch, who is threatening to abandon him if he keeps insulting people. Koch insists he's not running himself, which leaves three likely Democratic challengers: Fernando Ferrer, the Bronx Borough President; Mark Green, the Public Advocate, and Ruth Messinger, the Manhattan Borough President. For now, the conventional wisdom is that Giuliani's record on crime alone will make him hard to beat, especially if his challenger is perceived as a traditional liberal. But it's also conventional wisdom that a Republican can't make any mistake - Democrats have a 5-to-1 advantage in registered voters - and that Giuliani is particularly vulnerable because he has no reservoir of good will.

"That's adorable!" he said. "I love it! That's great!"

Adorable is not necessarily a word you expect to hear from the Holy Terror. His family and friends insist that this is the real Rudy Giuliani, a genial sentimentalist, and it was easy to believe these on this night. He told how his love for opera had blossomed at age 14, when he had started going alone to standing room at the Met on Friday nights. He had been ashamed to tell his friends about this passion until his senior year - and then, already the proselytizer, he started an opera club and somehow persuaded several dozen Brooklyn teen-age boys to join it.

This evening he was unfailingly charming with the other operagoers, even those who disputed his taste in sopranos. After watching Tosca stab Baron Scarpia, he did a good impression of a prim lady at the Metropolitan Club who had once asked if he would prosecute Tosca for murder. ("I replied that it would be quite impossible even for me, because she's dead at the end of the opera. However. I believe she would have had a very go good argument for self-defense.") During intermission, standing outside on the sidewalk, he chatted with some grunge rockers from the club next door, CBGB. He promised to listen to one's tape, and he nodded amiably when one dazed teen-ager asked, "Are you the guy who was on Letterman?"

There was just one bit of unpleasant business, before the third act, when he phoned an aide negotiating this evening with organizers of the San Gennaro festival Giuliani, believing the Mafia was profiting from the street fair, had vowed to cancel it unless he could appoint an outside monitor of its finances. Threatening he city's mostly moderate was a controversial move -- his vocal critics ranged from the fair's vendors to Ed Koch - but Giuliani shrugged nonchalantly when asked if his threat had been a difficult decision.

"It was a calculated decision," he said cheerily. "I can't believe they won't go along, because they can't live for the next year if they don't do the feast. I think they'll have to do it under our conditions."

It brought to mind the aria that had just been sung by Scarpia,, the chief of Rome's secret police, in anticipation of his late-night negotiations to extort sex from Tosca: "She'll give in to my desires if only to save her Mario's life. . . . For me, my violent conquests are far more exciting and intriguing than sweet surrender could ever be." Giuliani was justified in challenging the festival, but was he enjoying the fight a little too much?

Later that evening, over a bottle of wine at his favorite restaurant, Jim McMullen's, on the Upper East Side, Giuliani was asked why he was so relentlessly combative. Why not show people his kinder, gentler side?

"I don't know that I have a choice," he said "The only way I could be less combative would be if I would compromise more. If I compromised more I would achieve less."

But why the prosecutorial style? Why the hostile language? Wouldn't a simple "I disagree" work as well as "You're wrong"?

"Well, maybe somecimes I do it wrong. Sometimes you don't intuitively or rationally figure out exactly the right way to approach it." He did not want to dwell on that possibility for long.

"I'm not a politician by profession, which has its pluses and its minuses. I think the pluses outweigh the minuses for New York City right now. I have a theory that you should not get involved in politics until after you've done something else with your life. If you get involved in politics at a young age, you lose any sense of substance and can't accomplish anything except public relations. The city is used to politicians who submit to whatever is the safest thing to do or the safest way to say it. I think the city needs to be broken of that."

The city must be broken - there he went again, sounding like Scarpia dealing with Rome's heretics. It's always frightening to see someone who thinks himself above politics. La Guardia's moral passion eventually prevented him from seeing his errors - the well-intentioned public hospitals that provided terrible care, the projects the city couldn't afford. He ended up resorting to budgetary scams much like Tammany Hall's, convinced that it was for the city's good because his intentions were pure Giuliani is prone to the same self-delusion, and he seems to be even more rigid - La Guardia could occasionally admit good-naturedly that he'd made a mistake.

But Giuliani is an improvement over La Guardia in one crucial respect. He's not trying to rebuild the city himself. When La Guardia was riding around with a writer for this Magazine in 1934, he marveled at the discovery that a well-managed open-air market was privately owned - and then suggested that government could run it even better. When Giuliani rides through neighborhoods, he talks about encouraging more small businesses, about getting poor people out of housing projects and into their own homes. "The ownership of property," he preaches, "is what motivates people to think greater and do greater things." La Guardia envisioned the government building the City of Tomorrow, Giuliani envisions the classic New York of entrepreneurs building it themselves.

"This city was failing because it was governed by the wrong ideas," he said as midnight approached at McMullen's. The amazing thing is, the minute you open it Up, the city has an enormous capacity to do everything better than any place else. It's got more talent than any other place in the country. It just needs the freedom to think new ways to do things."

It would be refreshing if Giuliani himself were more receptive to new thoughts, even all those "idiotic" ones of his enemies. It would be comforting to have a leader with more self-doubt and less moral passion. But until now no such leader has been willing to stand up to Fiorello Hall, and maybe no such leader could do what Giuliani has done. Moral passion is useful in certain situations. Giuliani may have Scarpia's prosecutorial style, but when you consider the establishment he has taken on, he has a lot more in common with Tosca.

"The most moving moment for me," he said, "en asked about the evenings performance, "was the duet at the end." He sang its key word, "trionfal" - triumphant, the feeling of Tosca and her lover in their "ecstasy of passionate love" as they stand on the castle platform preparing to flee. "What moves me about opera is that you can express emotions in a way that you can't when you just speak. When the orchestral accompaniment stopped and they stood there singing, it connected you to the feelings of these two who have gone through torture, political oppression, contemplating death -and now they're going to triumph. He is so in awe of her, because she did the unthinkable. She killed Scarpia, who controlled Rome."

A moment later Tosca would be leaping to her death, the victim of an unforeseen political backlash - an inconvenience, of course, but beside the point. She had done the right thing. The city was a better piece, and she had the conviction not to bother negotiating with the silly soldiers who arrived for revenge. "It was an excellent jump tonight," Giuliani said. "Firm, strong, befitting the character of Floria Tosca. No indecision at all."