Financial Crisis Impact on New York City

Megan McArdle writes:

All of New York’s rebound has been paid for by the taxes on the financial industry–a few hundred thousand people in the industry pay the lion’s share of the taxes for the entire city.  Take them away, and the city will rapidly lurch back towards bankruptcy.

Of course, that’s not the sort of thing that happens overnight.  But the City and State of New York are remarkably business-unfriendly places; they usually end up ranked at the very bottom of the league tables in terms of the ease of doing business there.  That isn’t just taxes, though that’s part of it, but the massive, overgrown regulatory apparatus that can be perilous and expensive to negotiate.

Read the whole thing.  And after that, her post on rethinking regulation is quite worthwhile.

3 Responses to “Financial Crisis Impact on New York City”

  1. Robb Allen says:

    If they are so bad for business, then WHY are there so many businesses there??

    I understand the “prestige” of being a NY NY company, but does that make up for the burden?

    Then again, companies don’t pay the toll, we do as consumers. Still, seems wasteful.

  2. Sebastian says:

    In most cases it’s because you locate where the talent is. That’s why a lot of major metro areas, despite their business unfriendliness, still thrive. Boston has numerous universities which feed into business there, so business locates there. It’s much harder to attract people to places like Fargo than it is to locate your business close to the talent.

  3. Guav says:

    For the past 30 years there were net capital rules that limited broker dealers debt-to-net capital ratio to 12-to-1. The SEC made a conscious and willful decision to allow a select few firms to legally violate those existing net capital rules and allowed them to lever up 30 and even 40 to 1. The exemption was given only to 5 firms : Goldman, Morgan Stanley, Merrill, Lehman, and Bear Stearns.

    Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers