I think we basically concur about the limitations of American Pharaoh, though you seem to admire the book a bit more than I do. We're also in accord about the more interesting matter of what you might call Chicago's relative non-demise vis-à-vis other big cities. As you point out, Chicago didn't suffer New York's devastating fiscal problems in the 1970s and has bounced back in the 1990s much more readily than many places with similar problems. I wonder, though, whether we fully agree about how much Daley has to do with that.
In your terrific book Mayors and Money, which I commend to anyone who wants to understand the fiscal problems of cities, you give Daley some credit. But you emphasize to a greater degree the structural and historical factors behind Chicago's health. If I might summarize (and I'm not doing your argument justice), New York took on greater social welfare obligations than Chicago did beginning during the Great Depression, making its municipal government inherently more expensive. And whereas Chicago was always able to share its major costs with county, state, and federal governments, New York had to bear more of the burden itself. You also make the fine point that long before Daley,
Chicago had a political machine that was able to centralize budgetary decisions, whereas New York since the 1930s has had no machine and so faces a process of interest-group haggling that undermines fiscal discipline.
Even in these matters, Daley's part was not negligible. After all, Daley kept alive an all-powerful machine that was capable of resisting interest group demands and making its claims stick in Springfield and Washington, long after similar power structures collapsed everywhere else. But I would give credit to Daley for protecting Chicago's well-being in a number of other ways as well.
First, I think you have to give Daley his due for recognizing that basic services are the lifeblood of municipal government. As Cohen and Taylor remind us, Daley took immense pride in running a clean, orderly city. Daley viewed his primary obligations as keeping the streets in good repair, picking up the trash, plowing the snow, maintaining the parks, and so on. By the 1960s, the primacy of such things was no longer taken for granted elsewhere. (Daley to Mayor Lindsay of New York: "John, you forget why you were elected--to collect the garbage.") When Rudy Giuliani focused attention on cleanliness and order in New York in the 1990s, he based his efforts on George Kelling's "broken windows" theory. Daley didn't need the Manhattan Institute to justify his obsession--which may be why, as you correctly note, neoconservatives have never really embraced him. In the war against dirt and disarray, the patronage system guaranteed a certain level of efficiency. A ward committeeman could get his second cousin a job with Streets and San. But that same committeeman had to be able to get a sidewalk fixed when a constituent complained.
A second place where I think Daley deserves some credit for Chicago's good shape today is in his ability to continue to develop the city by fiat. Daley decided that Chicago should have the world's biggest airport (the Second City Complex you refer to dictates that Chicago must have the biggest and best of everything). So he streamrolled opposition, annexed hundreds of acres in the suburbs, and built O'Hare Field. Daley decided Chicago needed the world's largest convention center. Up it went. When McCormick Place burned to the ground, up it went again, better than before. Perhaps Daley's greatest legacy in terms of planning was his effort to preserve the Loop, Chicago's central business district. When Fortune 500 companies were moving their headquarters to the suburbs, Daley donated a city street to help build the Sears Tower--the world's tallest building, naturally. Nowhere else were Pharaonic projects like these still happening in the 1970s simply because a mayor wanted them. Daley did some awful things with this power, such as leveling the old Harrison Street neighborhood south of the Loop to make way for a University of Illinois campus. But on balance, his development choices were intelligent. They not only meant jobs and dollars but also left the city with a sound infrastructure, especially for transportation. Again, you can draw a favorable comparison with New York, whose airports are horribly overcrowded and can't be accessed by rail.
A final contribution of Daley's is one you refer to: his determination to keep his city afloat through hard times. The clearest division in Daley's mind was between people who meant the city well and those he thought intended it harm. His powerful proprietary sense about Chicago explains a lot of his biggest disasters, such as his "shoot to kill" order during the 1968 riots. Daley didn't just tell the police to shoot arsonists. He said that if he were there and saw someone about to throw a Molotov cocktail into a building, he would shoot that person himself. The times Daley lost it were times when he thought people were out to hurt Chicago, either by causing it physical damage or by making it, like New York in his era, ungovernable. But all of Daley's mistakes--unlike, say, Rudy Giuliani's--were made out of love for the city. That's why the city was always willing to forgive him.