This crisis is the first time that I fully realized, emotionally, that I am no longer a New Yorker. The city of my birth is in crisis, and I am far away, surrounded by people whose company can't go out of business.
But my father was down this weekend, and over breakfast this morning he pointed out that New York City may be in big trouble. The anchor of New York's financial community is the independent investment banks that are all headquartered there. If their corporate center of gravity starts shifting towards Charlotte and London, will other firms begin to question whether it makes sense to pay $50 per square foot just for the privilege of being in Manhattan?
That would crush New York's renaissance like a bug. 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. New York can afford to have things like a gold-plated Medicaid program, laws that tilt negotiations overwhelming in favor of public service unions during negotiations, and an outrageously expensive workman's comp system. The financial system just throws off so much money--and it's very good at dealing with regulators.
If the Golden Goose goes away, downstate may start looking like upstate. Western New York is trapped in a downward economic spiral where the affluent leave, and the needy, who are now a higher percentage of the electorate, vote themselves even more programs, the burden of which chases out still more affluent people, and the businesses that employ them.