It's almost as if capital has legs
One of the maxims I was continually hammered with when I was an undergrad was "Capital has legs". I understood the concept well enough but not the typical reasons behind it. In b-school they talk more about economies of scale, competitive advantage, capital formation, strategy vs. structure etc. As I remember it, we only talked about regulatory pressure and its effects in international business courses. That said, I've been beating my head against this particular wall with local liberals who have no concept that the businesses that have been lured here by the State are not here only for the Court of the Chancery and the well defined case law. Rather, Delaware allows the highest possible interest rates for lending as well as very good deals for corporations in terms of taxes and fees. Wall Street and it's attendant industries are the lifeblood of NYC. Without Wall Street and its employees to tax NYC is broke and I fear what would become of the place should they leave in numbers. Hedge funds are now thinking of leaving, not for Connecticut as they've been doing for years but rather, heading for Florida. The quote from the article that poked me in the eye was this:
Finance industry running from high taxes to the warmth of the Sunshine State - NYPOST.com: "The firms can easily pick up and move out of the New York region because technology allows them to do their work anywhere, she said."
As technology has been advancing we've seen the advent and the rise of the virtual employee. Hell, I've been one. I was on a project for two years and was only in the office once every other week. As this phenomenon accelerates I suspect more and more people will be virtual employees and where you live in relation to your job will matter less and less. The valence for living in or proximate to a city will very likely decline and perhaps quite rapidly. Could this lead to a stronger stratification in cities between the very rich and the rest? As the middle class leaves for STEM/IT jobs that are online why stay in the city? What value does it hold? It seems more logical to me for a couple who are looking to save some money and start a family to head for a smaller town where housing and land are cheaper. Lower crime rates and potentially better schools (although not so much in Florida). However, what if Professor Reynolds is right? What if we're seeing not just a higher education bubble, but a lower one too? What if they both burst and The Khan Academy is the new model? In that scenario the whole chessboard is upended and frankly I have no idea what comes afterward.
I can tell you now if I could keep my job and didn't have to worry about schools or going in to an office I would not be in Delaware. Don't get me wrong, I don't hate Delaware but there are far finer places to live. (Hello Tahiti!) To be fair, family concerns would preclude the mass exodus for the doors in my case and likely many others too. But look at Wall Street and look at Miami. Where do many New Yorkers retire to? This may well be two birds with one stone here. Imagine you're a Wall Street Titan with aging parents in NYC. You move your business to Florida and pack up Aging Mom and Getting On In Years Dad and head for sunnier shores. Alternately, imagine they're already retired to Florida. Moving to Miami saves you from having to make the trek down every year at Christmas. You're already there.
All in all hedge funds are the most mobile. They have little infrastructure to support and most of them a small shops with big funds. Their customers are institutional investors so they're hands off and not dropping in to the office to see you.
Remember well that equities is a forward looking business. These guys have to be 18 months ahead at all times. They're looking past Bloomberg to see what the future holds and they don't like what they see. New York is going to survive. But if those who stay see that those who've left are faring better it would be hard to see a reason to stay.
Finance industry running from high taxes to the warmth of the Sunshine State - NYPOST.com: "The firms can easily pick up and move out of the New York region because technology allows them to do their work anywhere, she said."
As technology has been advancing we've seen the advent and the rise of the virtual employee. Hell, I've been one. I was on a project for two years and was only in the office once every other week. As this phenomenon accelerates I suspect more and more people will be virtual employees and where you live in relation to your job will matter less and less. The valence for living in or proximate to a city will very likely decline and perhaps quite rapidly. Could this lead to a stronger stratification in cities between the very rich and the rest? As the middle class leaves for STEM/IT jobs that are online why stay in the city? What value does it hold? It seems more logical to me for a couple who are looking to save some money and start a family to head for a smaller town where housing and land are cheaper. Lower crime rates and potentially better schools (although not so much in Florida). However, what if Professor Reynolds is right? What if we're seeing not just a higher education bubble, but a lower one too? What if they both burst and The Khan Academy is the new model? In that scenario the whole chessboard is upended and frankly I have no idea what comes afterward.
I can tell you now if I could keep my job and didn't have to worry about schools or going in to an office I would not be in Delaware. Don't get me wrong, I don't hate Delaware but there are far finer places to live. (Hello Tahiti!) To be fair, family concerns would preclude the mass exodus for the doors in my case and likely many others too. But look at Wall Street and look at Miami. Where do many New Yorkers retire to? This may well be two birds with one stone here. Imagine you're a Wall Street Titan with aging parents in NYC. You move your business to Florida and pack up Aging Mom and Getting On In Years Dad and head for sunnier shores. Alternately, imagine they're already retired to Florida. Moving to Miami saves you from having to make the trek down every year at Christmas. You're already there.
All in all hedge funds are the most mobile. They have little infrastructure to support and most of them a small shops with big funds. Their customers are institutional investors so they're hands off and not dropping in to the office to see you.
Remember well that equities is a forward looking business. These guys have to be 18 months ahead at all times. They're looking past Bloomberg to see what the future holds and they don't like what they see. New York is going to survive. But if those who stay see that those who've left are faring better it would be hard to see a reason to stay.
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