"The global credit panic has swept away many illusions, and we're about to find out is that includes those of the politicians who have feasted for years on Wall Street tax revenues. Ground Zero is New York, which has lived a tax-and-spend fantasy thanks to the long bull market and 'progressive' tax rates. Reality is now biting. The financial services industry employs between 2% and 3% of nongovernmental workers in New York, the same as it did in the late 1970s. What's changed is the share of total wages in the state represented by Wall Street jobs, which had skyrocketed to nearly 20% last years from a little over 2% in 1977. 'This is 212,000 people making nearly $80 billion in wages and salaries last year,' explained E.J. McMahon of the Manhattan Institute at a recent panel discussion on the financial crisis. ... New York's revenue coffers are set to take a hit. The only question is how big. ... Governor David Patterson ... is urging labor unions to renegotiate contracts on behalf ofpublic employees. And he's proposed trimming as much as $2 billion from this year's budget, including cuts to health care and education. ... New York spends more money per pupil ($14,000) than any other state", Editorial at the WSJ, 13 November 2008.
Does anyone remember mayor John Lindsay's (JL) handling New York's (NYC) 1966 transit strike? Transit workers union (TWU) chief Michael Quill (MQ), said, "The judge can drop dead in his black robes", when the judge signed an injunction prohibiting the strike. I still remember MQ's voice! JL became mayor in January 1966. The TWU went on strike. NYC was in chaos for about three or four days. Then New Yorkers figured out how to get into Manhattan even if it meant hitching a ride with a stranger. Crime fell. Traffic began returning to normal. MQ was panicked! NYC's peasants had decided "we will beat the TWU. Come hell or high water". But MQ knew who he was dealing with. A man he derisively called "Linsley". After 12 days, JL caved and gave the TWU whatever it wanted. My mother cried and said, "The damn Yale movie star. He's bankrupted the city". So JL had. I remember when NYC had 128 Fortune 500 headquarters! Any firm can move jobs out of NY State, NG. Financing and operating decisions are separable. If an operating decision makes sense, it doesn't matter who the owners are!