Wonk Wars: What's The Future of NYC's Financial Jobs?
The financial industry has fed New York’s economy for more than two decades. Finance quadrupled its share of nationwide corporate profits between the early 1980s and the 2006 credit-bubble peak. As finance competed with the economy nationwide rather than supported it, New York benefitted, at least in the short term. Finance’s contribution to New Yorkers’ wages and salaries topped out at over 35 percent in 2006, an increase of 50 percent in less than two decades.
Such growth can’t go on forever, though, or finance eventually would be the economy. Properly governed free markets should prevent this distortion. Banking and finance need the same kind of creative destruction that invigorates the rest of the economy.
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Unfortunately, we don’t have properly governed free markets in finance. Washington’s banking “reforms” indemnify much of the financial industry from such forces and from the renewal that they bring about. Brand-name banks are still too big to fail. The Federal Reserve’s current policies, too, artificially prop up finance. The Fed’s attempts to jumpstart inflation by purchasing more than a trillion dollars’ worth of assets - possibly much more in the coming months - have encouraged speculation in currencies, commodities, and bonds - meaning business for finance, even as other businesses remain paralyzed by uncertainty.
Washington’s treatment of finance as its favored “private” industry may seem good for New York. But it’s not. New York needs to wean itself off an economy where middle-class job creation doesn’t matter and where public-sector costs can rise and rise because there are always a few rich bankers at the top to pay for it all. We need middle-class jobs to define our private sector. But a government-coddled Wall Street suffocates what otherwise would be a natural, healthy evolution.
Washington’s treatment of finance isn’t good for Wall Street, either. No business can thrive globally when its business model is not customer-oriented innovation but rather maintenance of its status as a protected political class.
This piece originally appeared in WNYC
This piece originally appeared in WNYC