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Time to Vacate Wall Street

Wall Street as we know it may not be long for this world—though the movement that occupied its parks has little to do with it. The New York Times reports that, despite good years for America’s investment bankers, the number of mid-level financial positions on the Street is slowly dropping as banks escape the city’s regulations, high taxes, and high labor costs to open offices in friendlier states like Utah, North Carolina, and Florida.

New York city is looking more and more like a Potemkin Village these days. The middle levels of the city’s private sector are hollowing out, with fewer positions between the high wage titans and the low wage service-sector workers. Wall Street’s CEOs may still keep their high-rent digs in Lower Manhattan, but the cohort of well-paid but not super-rich employees that forms the middle class of any investment bank is quietly moving out of the city for cheaper rents elsewhere.

This is a textbook case of how the blue social model creates exactly those conditions that Americans deplore. New York’s complicated regulatory structure, high rents and high welfare costs make it almost impossible for even wealthy companies to maintain mass middle-class employment.

This is especially bad news for New York City, whose famed “luxury city” revitalization has been largely financed through taxes on its flagship industry. As Wall Street jobs flee the city, the tax base erodes, making it even harder to maintain.

New York has some of the bluest laws and policies around. But the net result isn’t a city that becomes more and more prosperously and stably blue. The result is a city from which the middle class is steadily exiled. The bluer you are, the more likely you are to turn into a wealth-polarized dystopia of tycoons and hotel maids.

Thanks to the financial bubble and the huge federal bailout, New York has managed relatively well for the last few years. But it’s very hard to see what jobs will replace the Wall Street mid-level positions—and where the tax revenue will come from to support the city’s huge bureaucracy and high fixed costs.

The blue social model devours its own.

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  • Jacksonian Libertarian

    Why live anywhere your god given right to a Big Gulp is stolen away from you? The Blue Model is accelerating into the crash in New York City.

  • thibaud

    If it’s all due to the “blue social model,” then why is that other deep “blue” world financial capital thriving and growing by leaps and bounds?

    Could it be that there are other critical success factors involved here that go far beyond “regulations, taxes and labor costs”?

  • Mark

    Four reasons are given for jobs leaving the area, regulation, taxes, high salaries and high real estate costs. The article does not specifically say, but regulation, I think, would mean financial regulation, and firms do not escape this by moving.

    So that leaves us with the other three. If the article had only mentioned local taxes, and if local taxes was a big factor, then the whole premise of your article blog post would make more sense.

    But your post merely says that costs are high and jobs will be leaving until there are no jobs left. But at some people people and jobs leaving will put downward pressure on real estate prices and New York salaries. Jobs can move and the market can fluctuate. But at some point it will stabilize. I fail to see your logic that all the jobs will leave.

    So I can’t say exactly how the market will stabilize. But it makes no sense to say, (1) a lot of people want to live here, so costs here are high, (2) making it difficult for companies to exist here, (3) so everybody will want to leave.

    Reminds me of this logic: The more you study, the more you know. The more you know, the more you forget. The more you forget, the less you know. So why study?

  • Jordan

    I’m in the midst of this: do I stay in NY/NJ, buy a really expense house, endure a really long and expensive commute, and pay high taxes, or should I take my skills to another state, where I can buy the same house for half the price, work close to home or even at home, and have low taxes. I would likely take a hit on pay, but still perhaps make out better.

    In fact, a few of us were talking about this today at work, looking around a floor of software engineers wondering why we needed to be here.

  • Anthony

    WRM, can a healthy city (New York in this instance) be organized around single pursuit of wealth? New York’s predicament may not be blue model obsolescence as much as declining social trust; the social trust that enables a city to pursue long-term planning that sustains a whole city (not a bifurcated one).

  • Tom Gates

    Up until the 1970s if you were looking for money you went to NYC and Wall Street. This produced some of the wealthiest counties in the US being located in NY and NJ. Now if you want money you go to Washington DC Now the wealthiest counties in the US are in Virginia and Maryland. Add this to the continuous loss of congressional seats and power and the trend down will continue. However, those in the Northeast have no one to blame but themselves.

  • Lorenzo

    thibaud London is competing with cities with markedly less free labour markets on the Continent. New York is competing with cities with freer labour and other markets. Makes a difference.

  • Dutch 1960

    Just got back from NYC, first visit in decades. My take is that entrepreneurialism is dead, the only people starting businesses sell cheap luggage or electronics, or drive a cab. Everyone else works for chain stores or big business. Wall Street as we knew it is gone, it is now a tourist trap. As is the Twin Towers site. As Mrs. Dutch pointed out, there is nothing sacred about that spot, as it is dominated by queues for tour tickets and sales of commemorative junk.

    I saw little productivity, mostly consumption. Perhaps a microcosm of our broader culture these days.

    I will say that the crush of people everywhere enforced a certain minimum level of civility from everyone. Don’t know if that will last when the money truly runs out and things start burning down.

  • Brendan Doran

    ‎”The blue social model devours its own.”

    And that’s at both ends of it – Poor and Rich.

    thibuad – you are ignoring Sarbanes/Oxley as well..that made the City of London the Financial Capital of the World over the last decade. But worry not – we have limits on re-hypothecation*, and the UK…does not.

    *that’s what Corzine did with the missing money, especially the Gold.

  • chase

    I always thought that a big part of the fun of being an investment banker was that you could live in NYC and enjoy being part of the whole Wall Street lifestyle.

    Utah, North Carolina, and Florida are fine, but probably pretty boring in comparison with the big apple.

  • Thrasymachus

    WRM, I’m afraid that you’re using the slender reed of the facts in this Times article to support a heavier weight of argument than it can decently bear. A few thousand support jobs being lost in the financial sector isn’t enough to turn New York City into Detroit, or any of the other decaying Rust Belt basket cases that this blog is in the habit of using as illustrations of the Blue Social Model’s implacable decline.

    New York City has hardly been left unscathed by the Great Recession (in point of fact it scathed us plenty) but it is hardly a city in decline. By the standards of, say, Tulsa our government is technocratic and meddlesome and our culture is licentious and prone to blasphemy; but there are precious few New Yorkers who would willingly trade our city’s economic and social challenges for those faced by Tulsa. Or Houston. Or Kansas City.

    We’re not a “free market paradise” of the sort prescribed by conservative economists, and yet paradoxically we compete in the free market, on a truly global level that most of America has yet to so much as dip a toe in, and we win. Constantly, and commandingly, against all comers, from Biloxi to Bangalore and Beijing.

    It’s not necessary, for the “BSM Declinist” argument to be persuasive, that the Blue Model be in headlong catastrophic collapse at all times and across each and every sector of society. Sometimes it’s worth acknowledging the existence of an exception that proves the rule.

  • silia
  • Kenny

    Another symptom of the blue model that is hurting NYC is rent control — laws that were established ‘temporarily’ during WWII.

  • DirtyJobsGuy

    Here in Connecticut we are making the same mistake. A subset of the Financial business was lured to Stamford/Greenwich 20 years ago. Near enough to NYC to make meetings in the City but close to home for folks living in CT (plus at the time no state income tax!) Combined with insurers in Hartford, the State started spending heavily based on high Financial industry incomes. Now the Hedge fund guys are moving to Florida with no personal income tax and a better financial regulation system. You can still fly your private jet to NYC for meetings and make and keep more money

  • Lorenz Gude

    Even prior to the crash Fareed Zakia pointed out in “The Post-American Century” that London had stolen a march on New York because Wall Street had been too busy pursuing lucrative deals with Washington DC. Tom Gates comments above that the wealthiest counties have migrated to the area surrounding Washington DC. Land o’ Goshen, Martha, what do your think could have happened? Ah, to paraphrase the Bard, the American Republic shall never vanquished be, until Great Gotham Wood to high Capitol Hill shall come. Lay on MacDuff! And damn’ed be him that first cries “Hold, enough!”

  • David H Dennis

    Thibaud, from the article: “And London had a great deal going for it: international connections, a useful time zone and, by the 1980s, a free-market government.”

    Doesn’t sound like “deep blue” to me.


  • thibaud

    @7 Lorenzo – Maybe I’m wrong, but I thought the global financial centers competed on a global basis, not just in their backyards.

    @16 – I agree with the Economist’s writers that the issues that Mr Mead focuses on are not the key drivers here.

    In general, the term “blue” as our host uses it varies from being so vague as to be all but useless to signifying narrow good-governance issues that none of us has a quarrel with.

  • ThomasD

    Thibaud, try not to confuse the issues.

    Global financial centers may very well compete on a global basis, being global and all that entails. But this article is about the people who inhabit the cities that purport to be such centers.

    As the article notes, most of those people do not have to live in those centers. They can move out to other, more favorable locals, while still working for the titans.

    You are either quite new to this blog or being very disingenuous if you think the author’s blue descriptor is vague.

  • cubanbob

    In the guise of revenue enhancement President Romney can drive a stake through the heart of the blue states by changing the tax laws to no longer allow for the deduction of state and local income taxes. There is no reason why Texas and Florida federal taxpayers should pay a disproportionate portion of their income in income taxes to subsidize NYC.
    And to make sure the beast is dead, require local and state pension funds be held to the same actuarial standards as private plans.

  • swlip


    London is a successful financial center for a number of reasons, one of which is that regulations are less restrictive (the joke around London is that they should erect a statue of Mssrs. Sarbannes and Oxley in the center of London’s financial district). It is also the most important global travel hub, with direct flights to every major business center in the world. Its visa requirements are less restrictive, as well, which makes doing business there more convenient.

  • M. Simon


    From one of your links up thread:

    Yet London is not entirely at the mercy of external forces. Policies matter. Just as the British government unwittingly accelerated London’s decline after the second world war, so politicians today risk driving away some of the people on whom this city, and this country, depend for their future prosperity.


  • Happy in Florida

    This article is spot on. I’m living proof of it, as are my co-workers here in Florida. The Blue denialists above (like Thrasymachus) don’t even want to admit what has happened, let alone where the trends are going.

    Many banks have official or unofficial “no hire” policies in New York. All the new hires are nearshore or offshore. Plans are in the works to even move trading to nearshore offices.

    First it was back office. Then even professionals in risk and legal. Now even the bankers are relocating.

  • Dave in Houston

    Hey, Texas is open for business, if you catch my drift, and I think you do.

  • Russ

    Actually, the author’s supposition is right on: it’s a pretty predictable pattern with every “blue” city I’ve ever lived in.

    1. San Francisco/Bay Area – middle class flees to east-bay suburbs.
    2. Chicago – middle class flees to “Chicagoland” suburbs
    3. Los Angeles – middle class flees all over the place
    4. Dallas* – middle class flees to “metroplex” suburbs
    5. New York – out to NJ, recently “out to ‘anywhereville’ ”
    6. Seattle: bucking the trend, primarily due to a considerably-sophisticated approach to city management (though the Bellevue/Tacoma suburbs remain more popular)
    7. Detroit — obvious.
    8. Philly — middle class imploding, monthly headlines.

    [*Yes, white-flight WAS a factor in Dallas (experienced this personally) but the city’s more than once hired consultants who warn of precisely the kind of “blue” mismanagement WRM writes about.]

    I don’t think it’s a huge stretch to justify a little pattern-recognition on the author’s part here.

  • Holdfast

    It makes a lot of sense. When it takes a minimum $250k/yr to be middle class (and it does), NY is simply pricing itself out of the market as a domestic workplace. Sure the MDs (that’s Managing Directors) at the big banks, Hedge Fund guys, CEOs and Oil Sheiks can afford NY prices, but the accountants, IT guys and lawyers who do the grunt work in their businesses can’t. So you end up with a population with a few people making 7 and 8 fig salaries, and everyone else in the low 5 figs – while all the 6 fig HENRYs (High Earner, Not Rich Yet) types head for Houston, Florida or Raleigh. Sure, they’ll miss Broadway and Daniel and Sparks, but those things aren’t worth the cost any more.

  • Holdfast

    Hey Dave – how bad is the Texas Bar Exam?

  • ChrisGreen


    It is true that global financial centers compete globally for business, but they do not necessarily compete with other cities within their own nation for jobs. Regulatory differences between two cities in a single small-midsized nation like Great Britain are probably much smaller than those between somewhat autonomous states in a huge continent spanning nation like the US. While regulatory and tax structures are vastly different in Utah compared to New York, I would imagine they are less different between London and Bristol. On the other hand, a country like Switzerland whose different counties are even more autonomous than US states (and even more different from each other than US states are in terms of taxes and regulations) probably sees cities directly competing with each other for jobs like in the US.

  • Claude Hopper

    #3 Mark, you didn’t include a 5th reason for moving, the internet. I used to work in the 4th largest commerce center in the US, Houston. Several years ago, I moved to a hick town in the center of Oregon. My most recent job was contracting for a German company doing a risk analysis for a state owned oil company. Once your employment network is established, your work place (location) can be as you choose.

  • ChrisGreen

    From the Economist Article that thibuad references:

    “And London had a great deal going for it: international connections, a useful time zone and, by the 1980s, a free-market government. In 1986 the Big Bang, which deregulated the City’s financial services, set off a spate of growth that restored London to its place as one of the world’s great financial centres.”

  • Tom

    If the federal gov made states calculate pension plans the same way as private companies, it would have to do the same for social security and medicare, and the US’s $90T (that’s trillion) deficit would go on balance sheet. Obviously that can not happen…

  • BoogieWoogie

    I appreciate your concerns over inequality, but I think your analysis is off-base.

    To start with, take a look at the states’ Gini coefficients:
    Both the high (less equal) and low (more equal) ends of the list show a mix of blue, purple, and red states. Yes, there’s New York right at #50 (least equal), but right along with it in the bottom 10 are purple-to-deep-red states like Louisiana, Florida, Texas, and Tennessee. (Various maps of red vs. blue, depending on how you define them, can be found here: )

    But OK, given the presence of NY, CT, and MA at the bottom of the list, let’s grant for the moment that Blue states tend to be somewhat less equal. But does this indicate a Brazil-like gulf between rich and poor? I’d suggest instead that these these places attract and/or produce a relatively small number of wildly rich people who skew the Gini results, but everyone else does pretty well too.

    Let’s compare with median income (data through 2009 here: ) and poverty rates (data through 2009 here:–state_and_local_data.html ).

    By median income, the top states are strongly Blue: among the top 20, 14 Blue, 3 Purple, and only Alaska, Utah, and Wyoming representing Red (this is using Wikipedia’s determination of Red/Blue, which seems reasonable to me, but of course there is no “official” definition of those categories).

    Meanwhile, among the bottom 20, only 3 Blues and 2 Purples join the sea of Red.

    Moving to the poverty list, the top 10 (most poverty) is almost all Red, except for New Mexico. The bottom of the list is more of a mix, but is at least half deep Blue (MN, MA, NJ, CT, MD), along with NH, AK, WY, and ND.

    My analysis of this is that Blue states, on the whole, do an admirable job of helping EVERYONE do better. A few are able to be wildly successful and are rewarded for it, but that doesn’t prevent the middle and bottom from doing well, in fact better than they would in other states.

  • thibaud

    Again, the term “blue” adds no value here.

    If you mean to use it as a proxy for excess regulation, well, there are smart regulations and there are dumb regulations. SOX would seem to fall into the latter category; the Volcker Rule seems to be one of the smarter regulations. Calling SOX an example of “blue”-ness (“bluitude”?) doesn’t add anything to our understanding of those broader “social model” issues, as the level of state intervention we should have, that Mead presumes to address.

    When you start applying it to state-by-state comparisons, the term “blue” as Mead uses it only adds more noise.

    California, a “blue” state, has lax regulation of mortgage lenders, which gives rise to epic failures like Countrywide. Texas, a non-“blue” state, has much stronger regulation of mortgage lenders.

    Most of the states with the worst-managed public pension funds are non-“blue.” Most of the best-managed public pension funds are in “blue” states.

    If you want to attack bad governance and dumb regulations, I’m with you. All for it.

    But don’t prejudice people against those key areas where the market does fail, massively, and in which the smart approach is the centralized one. As opposed to the insane and financially-ruinous pseudo-market that is our current healthcare system.

  • thibaud

    #12 Simon: Yes, “policies matter.”

    An astute observation. Indeed.

  • thibaud

    Joel Kotkin, a self-described “Truman Democrat” and an expert on urban development, makes many of the points Mead makes, in prose that’s less elegant but also much more precise.

    Kotkin emphasizes that he is NOT against regulations and does not favor “starve-the-state”, take no prisoners-style Norquist policies.

    From Kotkin’s wise and balanced viewpoint, some regulations are wise, some not. California’s taxes are nutty, but New York’s may or may not be. Lots of mayors in the US pursue “cool cities” nonsense aimed at attracting hipsters; maybe NY or London do this as well, maybe not.

    Kotkin on Pittsburgh:

    Kotkin on “livable” city rankings and the advantages of New York, London and other “messy, dirty” big global cities:

  • Christy

    Careful! We red states don’t need more blue voters.

  • Snorri Godhi

    As others have pointed out, part of London’s success is due to deregulation. Low taxes on the financial sector probably help as well. And btw the UK now ranks higher than the US in the Economic Freedom of the World index. Given that, in my experience, the middle class enjoys more economic freedom in the US, that means that business and finance must enjoy much more economic freedom in the UK.

    Speaking of which: London, like NYC, is a place that middle class families escape from. Its saving grace is that, unlike Manhattan, it is relatively easy to commute into.

    We could also discuss the growing role of London as a hub of Islamic terrorism, a problem that the London-based Economist has whitewashed for years if not decades (and for which Thatcher seems to be at fault) but that would be going off topic.

  • Ed

    “but there are precious few New Yorkers who would willingly trade our city’s economic and social challenges for those faced by Tulsa. Or Houston. Or Kansas City. ”

    Perhaps because they have already left…watch a Yankee game some time, not at the Stadium, but an out of town game, where at every stop the stands are full of ex-pat NY’ers. I moved to LA thirty years ago and the place if full of fellow New Yorkers, as is every other city outside ot the Northeast.

    New York is not Detroit only because New York has more wealth to squander than Detroit had. Keep in mind, it took the Soviet Union seventy years to waste what they took from the czars.

  • Mkelley

    It is simple to spot the “blue” cities and states. They are places that have been mostly run by Democrats over time. Most are in decline due to crime, high taxes, and over-regulation. Some prime examples are Detroit, Chicago, Cleveland, LA, Illinois, and California.

  • Lexington Green

    This is long overdue.

    Mike Bloomberg should visit Detroit so he can plan for a smooth transition from premier business city on Earth to depopulated, dangerous, dirty, burned out husk-of-its-former-self.

    Schadenfreude is an ugly sentiment, but sometimes it is really hard to suppress it.

  • Snorri Godhi

    “Keep in mind, it took the Soviet Union seventy years to waste what they took from the czars.”

    A bit off topic, but…
    There was precious little to take from the czars: the Soviet Union survived 70 years because
    (a) it killed lots of people, thus postponing Malthusian problems;
    (b) much more important, it discovered lots of oil, and stirred up trouble in the Middle East to keep up oil prices.

  • Tom Gates

    I am all about what Christy says, Blue Staters emigrating to Red States are not good for Red States. Yes they are nice people(for the most part)Yes they bring wealth, but they also bring high, high expectations from municipal and civic resources.

    My beloved Virginia is next generations New Jersey. Due to the growth of the Federal Government, new Obamacare departments require some 4 to 6 million additional square feet of office space, Northern VIrginia is beginning to take on characteristics of Northern New Jersey. In my hometown of RIchmond, we are afraid of becoming the next White Plains. And sure enough, this deographic is starting to turn the state into a Blue one. In the next ten years I am off to TN.

  • Otis McWrong

    Thibaud said: “Most of the states with the worst-managed public pension funds are non-”blue.” Most of the best-managed public pension funds are in “blue” states.”

    On what do you base this assertion? The numbers are very volatile – a small move in interest rates can have an enormous effect – and one has to adjust unfunded liability for total pension assets but the most underfunded state pensions (most states have at least two – teachers, then other state employees) are in Illinois and California. Other state with >$10B unfunded liabilities include Colorado, Connecticut, Indiana, Louisiana, Massachusetts, Michigan, New Jersey, Ohio, Oklahoma, Pennsylvania, and Texas.

    Other than Texas and Indiana, all are “blue” or in the case of CO and OK sort of purple.

  • DS

    My wife and I relocated to Atlanta (I changed jobs). We still own our one bedroom apartment in NYC – it’s rented out. We now own a four BR house in Johns Creek with a finished basement. Although the wife hasn’t found work yet, there are finance jobs for investment analysts here in town. Or she could work in a neighboring state and fly back each weekend.

    So I think I’m ahead of the curve here.

  • DS

    Ah, I should say I’m working on risk management software for banks. Valuation and PD/LGD estimation, among other things. So I’m still working in quantitative finance.

  • thibaud

    Otis – it’s based on funding _ratios_. Actuarial assets as a % of actuarial liabilities. Not overall unfunded liability.

    AK, AR, KY are among the cellar dwellers. Data here:,16::

  • Bill

    Well, Thibaud, what about this:
    “In 1986 the Big Bang, which deregulated the City’s financial services, set off a spate of growth that restored London to its place as one of the world’s great financial centres.”
    Sounds like those regulations may have something to do with strangling New York after all.

  • cubanbob

    30.Tom says:
    July 3, 2012 at 12:08 pm
    If the federal gov made states calculate pension plans the same way as private companies, it would have to do the same for social security and Medicare, and the US’s $90T (that’s trillion) deficit would go on balance sheet. Obviously that can not happen…

    You are right it can’t happen because under Nestor (1960) social security and Medicare are not not considered property of the beneficiary, only general welfare schemes that congress can amend, modify or end at it’s discretion. Federal civil/military retirement benefits are mostly contractual obligations thus binding unless the government were to willfully default on them or declare them odious debts. In other words federal civil/military pensions are real for accounting terms. Your social security and Medicare are only as good as a future congress’ willingness to pay for it. Thats why privatizing them is imperative.

    The states, if they wish to be able to borrow money at anything remotely reasonable
    need to get their balance sheets in line with reality.The feds are not obligated to bail the cities and states out and frankly after the next election won’t have the will too try nor the capital to do so. The states being sovereigns can in the worst case scenario repudiate their debt, thats the risk of dealing with a sovereign, but they will pay a very heavy in any future bond offering. A benefit of putting the state and municipal pension obligations in conformity with private plans is that it eliminates the lies of the politicians and union leadership and lets the civil service workforce get a reality check along with the bond market. Another benefit is the general obligation bond market will reprice the bonds to reality, curbing local and state spending excesses and curbing to a degree the mis allocation of capital.

  • Ritchie The Riveter

    BoogieWoogie (#31), here are two potential flies in your ointment:

    1> The location of the cash register is not necessarily where the money is made; many Blue State incomes are derived from the profit of their investment in/control of Red State enterprises.

    2> I don’t see where the poverty threshold is adjusted for state-by-state differences in the cost of living (which is in part affected by the blueness/redness of the state). The effective poverty threshold is lower in a state like TX than it is in NY (where I live); if that difference is not properly accounted for, it can appear that the poverty distribution is more skewed towards the Red States than it really is in practice.

  • teapartydoc

    Thrasymachus sounds like a seventeenth century French courtier.
    Thibaud does like Wig Wag and never addresses the best points made in counter-arguments, but keeps on beating his little tin drum.
    The distinction between red and blue is not one that can be “analysed” it is a form of non-analytical reasoning based on perceived attitudes and trends. Think of it as a conservative form of nuance. Yes, states that tend to vote red in national elections can have onerous intra-state regulations and non-red characteristics, but what we are looking at is trends. Arkansas is an example of a state that is perceived to be red, but often elects democrats, but the tendency toward Republicans is steadily upward. This is because of a combination of alienation of rank-and-file voters from the national democrat party and the fact that the Republicans are more issues and ideology driven and less “country club” old semi-progressive establishment types. The average Joe now feels like he can have a beer with the local Republican county chairman, while he can’t even be sure of the gender identity of the democrat counterpart. The fact that democrats can see this even while denying it is part of the reason for the rash hatred of the Tea Party. Regulations, taxes, and other local phenomena are also not static situations but are in a state of continuous flux and must be understood, not as a set of numbers one can put up on a chart and pretend to have knowledge of, but must be seen as a mass of continua in relation to each other. Trying to make the mental chart is the same error Marx ran into when he was describing conditions in British factories that had been reformed already as if they were happening contemporarily. Looking at it this way, it is easy to see why the red-blue distinction can be denied by casuistry, but it is a distinction visible to most people, and as such, it has value in establishing a lens for discourse. I would suggest to Thibaud that if he wants to establish an alternative means of looking at what is happening on the contemporary scene that he do so by establishing his alternative by means of a dialectical discussion of the events at hand and start his own blog for discussing how that paradigm is working out.

  • thibaud

    The “tin drum” being beaten here is about starving the state. Wig and I are merely pointing out that it’s a wee bit more complicated.

    Economic vitality is not a function of simply slashing regulations and cutting taxes.

    Last I checked, London like the rest of the UK has heavy government intervention in a variety of areas, most crucially in its National Health System. London is booming. No one in London, not even the most ardent UK conservative, is calling for scrapping the NHS.

  • b

    #2 thibaud, it’s funny that to contradict WRM’s point about the blue social model hollowing out the middle class and leaving a rich/poor dichotomy, you provide a link to an article which talks about a guy whose business is selling private jets to rich people in London–this does not indicate a flourishing middle class.

    But that’s not the only example in the article which refutes your defense of the blue model. The recent growth is attributed to:

    “In 1986 the Big Bang, which deregulated the City’s financial services, set off a spate of growth that restored London to its place as one of the world’s great financial centres.”

    And the article goes on to note:

    “Europe’s only properly global city and a magnet for rich and poor, from anywhere and everywhere…”

    The article also notes that London’s moment in the sun will inevitably pass. And then what will be left? This is a parallel to NYC where things seemed great for the blue model during a (financial) bubble, but once the high wore off, the accelerating exodus of the middle class exposed the intractable problems caused by continued leftie policies.

    So “Let Me Be Clear” (TM BHO): really your link *supports* WRM’s exact point.

    Beware of commenters bearing links everyone!

  • thibaud

    b- once more: some regulations are _bad_. They should be scrapped. Some deregulation initiatives are great. But deregulation by itself is neither an absolute good nor an absolutely bad thing.

    Sometimes, high tax levels drive out talented people and stifle innovation and growth. Sometimes, in some places (cf Silicon Valley), they do not hurt growth because other factors – concentrations of talent, to take one example – are more important than low taxes or tax incentives.

    It’s complicated.

  • Better Failling

    Am I crazy or is there a real possibility that “Occupy”, “The Tea Party” and the enthusiasm behind Ron Paul are nothing but the dissatisfaction of the ‘grassroots’ about the nature of the ball game that is played on the ‘turf’ they, the grassroots, feed and support?

  • thibaud

    Speaking of regulation and oversight, looks like Barclays is now going to pay a half-billion dollar fine for interest rate manipulation. A case of regulatory capture, squared.

    So much for the quaint “BSm” theory that our TBTF banks are being strangled by excess regulation.

    For the curious, back on this side of the pond we now have Richard Fisher of the Dallas Fed getting on board the bipartisan movement to finally break up our TBTF banks. Here’s Simon Johnson, from May 12:

  • joe mack

    come on down to Raleigh or Charlotte. The Broadway shows are the road shows, the restaurants are spaced a little farther apart, your job will be closer in time, but please don’t bring your [profanity removed] blue state desire to tell us what to do.

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