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OWS Gets Its Wish as Poor Suffer

Dreams have a way of coming true in New York and this week it looks like it is time for some OWS protesters to have their hopes fulfilled.  The Wall Street Journal reports that Wall Street firms are drastically cutting bonus packages for their top earners, citing:

lower trading revenue, languid deal-making, new regulations and anxiety about the global economy. Other pressures include weak financial-company stock prices and sour public sentiment that culminated in the Occupy Wall Street encampment in New York.

The more well-to-do among the protestors will no doubt feel warmed by the fact that the rapacious fat cats on Wall Street are finally being cut down to size, but this moral victory for ego-tripping upper middle class students and career hacktivists is bad news for New York’s poor.

New Yorkers have long gloated about their city’s ability to stay vital as nearby Philadelphia, Baltimore and Pittsburgh have faded to shadows of their former glory, but this vitality has been financed by high taxes on the extremely profitable financial sector. Lower profits and payrolls on Wall Street means lower revenue for the city, which in turn means layoffs, service cuts and pay freezes across the New York economy, especially in the public sector, which provides the services many poor New Yorkers depend on, and whose jobs keep many other New Yorkers in the middle class. A decidedly chill wind is in the air.

North Korea, one can’t help observing, is by some measures the most equal country in the world.

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  • silverfiddle

    Well… OWS never believed in trickle down anyway, and it’s the thought that counts, right? They mean well…

  • WigWag

    “New Yorkers have long gloated about their city’s ability to stay vital as nearby Philadelphia, Baltimore and Pittsburgh have faded to shadows of their former glory, but this vitality has been financed by high taxes on the extremely profitable financial sector.” (Walter Russell Mead)

    There is no question that Professor Mead is mostly right that the financial sector is extremely important to New York City’s economic viability, but he is wrong to imply that but for the financial sector New York’s economy would be no better than that of Philadelphia, Baltimore or Pittsburgh.

    New York City has one of the most diversified economies of any city in the world. It’s not just the financial sector. It’s the banking sector (which is not precisely the same as the financial sector), it’s Madison Avenue (advertising), it’s publishing, it’s fashion, it’s medical research and health care, it’s the needle trades (which believe it or not still exist in New York), it’s the service economy (including law, accounting and management consulting), it’s real estate and insurance, it’s tourism and the arts (including film) and it’s even manufacturing.

    None of the other cities that Professor Mead mentions come even close to New York in terms of the diversification of their economies.

    New York City is home to the corporate headquarters of 45 of the 500 largest corporations in the United States and if you include the New York City Metropolitan area as opposed to just the five boroughs, it’s 57 companies that have their headquarters in the region. Many of these companies are in the financial sector but it’s only about half of the total. New York City has a GDP of $1.28 trillion which is larger than the GDP of any American state except for California (and of course New York State).

    New York City also derives enormous strength from the fact that in terms of national, ethnic, racial and religious diversity no other city in the United States even comes close. Certainly Baltimore, Philadelphia and Pittsburgh don’t. In fact, the community of Jackson Heights, Queens, where Professor Mead resides, is one of the most diverse communities in the entire nation and perhaps the entire world.

    Is the financial sector incredibly important to New York City? Of course. Would New York City look like Philadelphia without the financial sector? Of course not

  • Jim.

    While this may partially be schadenfreude about the monstrosity that is New York City and its culture (financial and otherwise), I can’t help but think that if this helps cut Finance’s percentage of the economy back down to historical levels, that’s a good thing.

    Every dollar in the hands of a financier is a dollar that isn’t in the hands of the entrepreneur or his employees that worked to earn that dollar. It’s a dollar that isn’t in the hands of that entrepreneur’s customers in the form of lower prices.

    Every percentage that Finance skims off of productive business sets the profit margin bar that much higher; enterprises that don’t meet that cutoff are either dead companies walking, or stillborn. Our unemployment figures go up, and the amount of wealth (not mere money, but real wealth) in our economy goes down, as financiers walk away with their rent.

    Perhaps glamorous Queens will be that much less glamorous, with finance’s reduction. (Or worse, perhaps finance is still sucking up its bloated share, even in its reduced state.)

    But our economy will not recover until Finance’s share is reduced to historical levels. There’s just too many downsides to money spent that way, and not enough upsides.

  • Kenny

    The more municipal layoffs in NYC, the better. The public sector’s bloat is such that it could be a contestant on the “Bigger Loser.”

  • Eurydice

    This isn’t the first time Wall Street has cut salaries and bonuses. Anybody who’s been in the business for a while has seen more than a few ups and downs. One day a firm will let go 700 mortgage traders and a couple of years later it’ll hire 700 different mortgage traders. And every time the city takes a hit for a while. But this is probably not what catastrophists and/or city planners would like to hear.

  • Luke Lea

    “ego-tripping upper middle class students and career hacktivists”

    I guess Walter doesn’t think very highly of OWS does he? Is it the people or their cause he despises?

  • Luke Lea

    Sorry, WigWag, but I don’t think diversity is strength. Diversity is a challenge.

  • Luke Lea

    A challenge to what? A challenge to equality, a challenge to social justice, a challenge to democracy, a challenge to all the social values I know we both share. It is also a fact and we are going to have to deal with it.

  • WigWag

    Another thing that differentiates New York City from Philadelphia, Pittsburgh or Baltimore is that it has a thriving city center (the borough of Manhattan) where people not only want to work but where they also want to live. Demand is so great that rents in Manhattan are unbelievably high as is the asking price for coop and condominium apartments. It’s far more than executives at financial firms clamoring to live downtown.

    One other difference between New York City and the other cities mentioned by Professor Mead is that New York is a Mecca for young people. Youngsters in their 20s and 30s flock to live in NewYork; only a tiny percentage of them enter the financial industry.

    It’s not that Professor Mead doesn’t have a point in this post; it’s that he exaggerates the point he is trying to make.

    Note to Luke Lea: New York’s prosperity is linked in part to its diversity. Young people come here with their ideas, enthusiasm and their money because they find diversity attractive. This diversity also plays a major role in the hospitality and restaurant business. One reason foreign visitors come to New York is that wherever they’re from, their is likely to be a large New York community that includes their countrymen. The fashion industry and the advertising industry also benefit from this diversity.

    One other thing worth considering is that New York City’s incredibly onerous taxes and it’s difficult regulatory burden don’t seem to be much of a hinderance to the City’s attractiveness. More new businesses are started in New York City than any other location in the United States. The City also is the home to more millionaires and billionaires than any place else in the United States. These rich folks could live anywhere; they chose to live in New York City despite the high taxes.

    By the way, for those who are unfamiliar with it, Professor Mead’s community of Jackson Heights, Queens is a remarkable place (although it’s really hard to find a parking place). What makes it a fun place to live, shop and dine, Luke, is the diversity. Professor Mead is not a native New Yorker. Perhaps some day he will share with his loyal readers why he chose to live in Jackson Heights.

  • Luke Lea

    @ WigWag: “Note to Luke Lea: New York’s prosperity is linked in part to its diversity. Young people come here with their ideas, enthusiasm and their money because they find diversity attractive.”

    Yes, I grant that. I think we’re talking about two different things. You’re thinking NYC, I’m thinking USA. OWS is really about what’s gone wrong in the country as a whole, of which Wall St. is a symbol. Do you live nearby?

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