The Financial Times has reported the results of a poll which indicate that London and New York City are losing ground to up and coming financial centers, particularly in Asia. The results of the study highlight the risks that are run when markets face enhanced scrutiny and regulation. At the same time, it is likely that politicians in both London and Washington are currently more concerned with righting faltering financial systems than in poll results.
In reality, it will likely be a long time before any second-tier financial hub overtakes either city. However the poll does emphasize the growth of cities such as Hong Kong. This is particularly apparent when it comes to specific segments of the financial industry, such as insurance.
I think NYC will definitely lose a lot of its financial luster in the coming decades. One reasoning is the onerous tax rates.
ReplyDeleteFrom wikipedia: "...New York City, where there is both a state income tax of up to 6.85%[4] and a city income tax, up to 3.648%[5]. The maximum rate in the city limits of New York City (as of 2007[update]) is therefore 45.498% (approximately one-half of marginal income), or 1.3 times the 35.0% rate (approximately one-third of marginal income) inside "federal income tax only" cities such as Seattle, Houston, Dallas, and Miami."
If I am an investment professional in NYC and getting taxed at an almost 50% rate - which much of is transferred to overpaid union workers/pensions, decrepit housing projects, and failing schools - on top of having to pay high transportation costs, Miami would look quite nice.
However, the exodus wont begin because of the average investment professional or banker. It will have to be driven by Wall street executives. Why would they want to leave the luster of NYC? Besides the exorbitant taxes, many of these guys have been demonized as thieves and criminals by hack attorney generals like Eliot Spitzer and Andrew Cuomo.
I predict the unabated harassment from these cowards in the AG offices, combined with high tax rates, and an out-of-control leftist media advocating for the jailing of many corporate executives (see the media reviews of Michael Moore's latest anti-Wall Street movie), will cause these executives to slowly move their operations to more cooperative cities and states.
Good points, and your conclusion could be true.
ReplyDeleteI think more likely than an internal shift from city to city however would be a shifting of operations to more tax and regulatory jurisdictions all together, leading to the growth of other existing global financial centers rather than the development of new ones in the States.
However, the infrastructure, connections and experience available in NY and London are likely to keep them on top for the forseeable future.