Topic: The "Occupy" Movement

[ballz]

ballz - I think you missed the thrust of my question.

Yes, it seems that way. I certainly have no answer to how it can be so frequent. You're right, the CEO's and Boards are still at the mercy of the share-holders. I can only guess that it usually has something to do with the fact that minority of shareholders hold the majority of shares and they are usually on the board, and so the other shareholders hold a small amount, if any, real influence.

By the way, I'm not sure of your experience working in private industry but when I ask these questions, I ask them with some experience under my belt. I have worked for over 25 years in the private sector, from working in huge companies (Emerson, Proctor and Gamble) to small two-man shops. I have been a union member. I have worked in a variety of manufacturing sectors. I have also worked in the service industry (electrical egineering) and the public sector (State of Arizona for a large University). For over half of those 25 years, I worked in various levels of management. I am also finishing up my management degree from NAU, so I have some book-learnin' when it comes to management and organizational theory as well.

Sorry, the stuff where I started saying "I agree entirely with MCG..." and so on wasn't meant to be directed at you. It was just some general thinkin' outloud. I've got a small amount of private sector experience, and I don't consider my book-learnin' very valuable to be honest In other words, I certainly don't mean to come across as an authority on the subject. Just another arm-chair entrepreneur with his two cents worth

[muskrat89]

And I wasn't trying to wave my resume around - just framing my questions with some context and trying to demonstrate that I am not firmly in anybody's camp, necessarily.

[recceguy]

The power to address this lies with large shareholders.

Some, like this fellow, (a former Army officer (1960s/70s) by the way) have taken a role in demanding lower executive compensation when (as is too often the case) business results, return on shareholders' investments, are not good.

I'll not disagree Edward, however, I have to think if they were serious about it (major shareholders) I'm sure they would have done something about it by now.

I think what I was trying to say was that no 'outsider' is going to tell anyone (big corporation) what they can, or can't, do without legal recourse (none), especially when it comes to upper management salaries.

[E.R. Campbell]

I'll not disagree Edward, however, I have to think if they were serious about it (major shareholders) I'm sure they would have done something about it by now.

I think what I was trying to say was that no 'outsider' is going to tell anyone (big corporation) what they can, or can't, do without legal recourse (none), especially when it comes to upper management salaries.

It is, I think, a long, laborious process ... and not all CEOs of e.g. pension funds and insurance funds, probably not even many of them, are convinced, yet, that anything needs to be done. But, I think that some, a few, are strarting to take some action now.

[MCG]

So, why didn't they? Not being argumentative, your post actually made sense to me. But assuming profit is the motive of most of these big companies, and they are being run mostly by Boards, or at least more than one person I'm curious as to why they didn't do what you just suggested. ...

Good question, and one for which I do not believe there is a single unifying answer.  Why will some sports teams pay exponentially more for a single superstar player who does not deliver the corresponding exponential increase in chance to win "the cup"?  As ballz points out, there is a vested interest in board members to not rock the system as they are typically amongst the elite group who do (stand t)o benefit from the exponentially high CEO salaries.  There is also a possibility that boards are motivated by a tendency for the stock market to provide short term rewards as "the pigs" rush to buy into a company for the status of its new celebrity CEO.

Another factor may be the decision making process that boards are using to select a new CEO.  I recall once having been presented with the idea that most decision making (including strategic decisions) within organizations is done through intuitive decision making models even where other financial or statistical models might have been available.  I did a quick dig through my little library and couldn't find the reference  ... so lets demote this idea to being just a theory.  Even as a theory, this is a fairly compelling explanation.  I am sure we have all seen examples where someone identified the "silver bullet" to all their problems and, costs be damned, the organization was going to get it ... the First World War even provides a huge shopping list of such examples in which the currency was human lives.  As a more current example, many of the Army's current major capital initiatives are based on an intuitive decision of "I must have X."  In many cases, organizations resort to intuitive decisions because they lack either the information (or the ability pull together the information) to apply more rigorous methods - as recently as three years ago (and probably still), the Army was completely unable to look at existing fleets of fighting vehicles and conduct accurate life-cycle cost analysis (LCCA) or replacement analysis (I am given to understanding the RCAF and RCN do a better job with their fleets).  When you consider the challenge of devising a financial model to contrast investing in one CEO vs investing in hundreds of employees, it is not unimaginable to think boards would avoid miring themselves in the work.  And as a final step in this, lets consider Donald Trump's Apprentice - sure it is built for entertainment, but he used it as an interview process to actually hire new executives and he rewarded quick intuitive decision making.  Donald Trump is reflective of the decision makers on these boards.

So, we very well likely have boards using intuitive decision making models and comprised of members who personally stand to benefit from the superstar CEO paradigm.  Intuitive decision making models will bias decision makers in favour of what has been seen to work before, and from the perspective of these decision makers the exponentially higher paid CEO has been seen to benefit their social circle.

Why no push-back from share holders?  Maybe the initial stock-jump when "the pigs" rush in keeps them placated until the hiring is no longer a fresh memory.

[Infanteer]

I can't recall it, but there was another good article in Macleans about the process most boards use to hire CEOs and other Chief Execs.  Most use consulting firms which come up with their estimate based upon what other corporations are doing.  I recall saying that by taking a hands off approach, most boards allowed the inflationary process to take over when compensation and benefits are considered.

Basically, it isn't a matter of what the guy is worth or what is reasonable, but more along the lines of "well they are paying X".

[tomahawk6]

Alot of envy with this mob. Even in a dictatorship there are the haves and have nots. Protest against a dictator and you risk death or imprisonment. Its a fact of life the bosses are paid more than the help.The General or Colonel make more than the Private or Sergeant. The Union President makes more than the rank and file.

[Thucydides]

#occupyfail

http://www.washingtonpost.com/blogs/post_now/post/city-rat-population-has-exploded-around-occupy-dc-camps/2012/01/09/gIQA6AoylP_blog.html?tid=sm_twitter_washingtonpost

City: Rat population has ‘exploded’ around Occupy D.C. camps
By Annie Gowen

The rat population around the two Occupy D.C. camps at McPherson Square and Freedom Plaza has “exploded”since protesters began their vigil in October, according to Mohammad N. Akhter, the director of the District’s Department of Health.

Akhter said in an interview Monday that city health inspectors have seen rats running openly through both camps and spotted numerous new burrows and nests underneath hay-stuffed pallets occupiers are using for beds. Both campsites had working kitchens for weeks until last week, but protesters at McPherson Square voluntarily closed down theirs after health inspectors pointed out unsanitary conditions during an informal monitoring visit.

Akhter said his concerns about the health and safety at the camps prompted him to order a city-wide review of conditions there, including input from health inspectors, mental health professionals, experts on the homeless and others. He is reviewing their findings this week.

“I’m very supportive of their rights and ability to demonstrate but I have concerns about their personal safety,” Akhter said.

The National Park Service has official jurisdiction over the two camps and will make the final decision whether to evict protesters. But Akhter said he will advise the federal government to close the camps if sanitation conditions warrant doing so. He also said he would unilaterally move to evacuate the camps if there were a blizzard or severe winter storm.

Akhter, who is originally from Pakistan and has worked for the District government for over 20 years, said that the situation in the two parks is reminiscent of refu­gee camps he has toured overseas in the Middle East and Africa during his public health career. He said he fears disaster could strike during a severe winter storm.

“Going down to these camps, it’s no different than refu­gee camps,” Akhter said. “People are living in very primitive conditions and they’re doing it by choice. They are very brave and thoughtful people, but my concern is that they should also take care of themselves. When the weather goes bad suddenly we’re watching a tragedy unfold in the middle of Washington, D.C. ”

[E.R. Campbell]

More, related to what think is the core issue and an issue that matters - income and opportunity inequality, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/in-canada-unlike-the-us-the-american-dream-lives-on/article2303230/

In Canada, unlike the U.S., the American dream lives on

BARRIE MCKENNA

OTTAWA— From Monday's Globe and Mail
Last updated Monday, Jan. 16, 2012

We know the gap between rich and poor in Canada is large and growing.

One need look no further than Attawapiskat and other northern communities for evidence that not all Canadians are living the dream.

But income disparity shouldn’t be confused with equality of opportunity.

And guess what? Canada is a world leader in economic mobility, right up there with Denmark, Norway and other Scandinavian countries.

A recent front-page story in The New York Times highlighted new research that “turns conventional wisdom on its head” – namely, that Americans enjoy less economic mobility than their peers in, gasp, Canada.

Yes, the U.S. is richer, but it’s also significantly more unequal, and a lot less mobile. Inequality is inherited, much like hair and eye colour.

The conclusion is based partly on the work of University of Ottawa professor Miles Corak, a social policy economist and former director of family and labour research at Statistics Canada.

Prof. Corak has quantified the opportunity divide between the two countries and his conclusions are startling. Canadians are up to three times more economically mobile than Americans, and it’s almost entirely due to the conditions faced by those living at the very top and bottom of society, according to a new study he co-authored: Economic Mobility, Family Background, and the Well-Being of Children in the United States and Canada.

“What distinguishes the two countries is what’s happening at the tails,” Prof. Corak explained in an interview. “Rich kids grow up to be rich adults and poor kids stay poor. In Canada, that’s not so much the case.”

The American dream that anyone can rise from humble beginnings to vast wealth has become a myth. And as the gap between rich and poor widens, the middle class is shrinking.

For now, at least, the dream of upward mobility in Canada is still alive. Canadians can thank a legacy of sound public policy and a more progressive tax system.

Even the poorest of Canadian children have access to good schools, quality health care and decent homes (Attawapiskat notwithstanding).

A new Finance Department analysis found that seven million mainly low-income Canadians out of 24 million tax filers got a net cash transfer from the federal income tax regime in 2008. The Child Tax Credit, for example, has successfully mitigated poverty by shifting federal tax dollars to poor families.

The labour market, thanks partly to the paid parental leave benefits of Employment Insurance, likewise encourages parents to be parents. Canadian children are also more likely to grow up in two-parent homes and in homes where at least one parent works part-time to provide home care.

Compare that to the United States, where schools are financed primarily by wildly variable local property taxes rather than state income taxes. Neighbourhoods with low home values and marginal businesses have underfunded and failing schools, which become magnets for perpetual failure.

But it’s a country of extremes, and life is good if you’re at the top in the United States. A child’s chance of staying at the wealth pinnacle is much greater than in Canada.

The divergence of opportunity in the U.S. grows even more pronounced with higher education. Tuition fees, which can easily run into the tens of thousands of dollars per year, essentially put the best schools out of reach for many Americans. Wealthy Americans, on the other hand, can literally buy opportunity for their children, paying their way through the best colleges, hiring tutors and providing access to family connections.

“It’s not that the fathers are getting their sons jobs, but they are getting them into the right college and networks, and that pays off a lot more in the U.S.,” Prof. Corak said.

Canadians shouldn’t be complacent. Ottawa and most of the provinces are running large budget deficits, and education and health care are already targets as governments hunt for savings.

There’s another cause for concern. Rising income inequality is chipping away at the opportunities of future generations. Prof. Corak worries that wealthy Canadians may be forming exclusionary institutions in a drift toward Americanization. It’s reflected in increasingly polarized cities such as Toronto, where neighbourhoods are becoming more sharply divided along income and ethnic lines, he said.

The dream of upward mobility may be alive for the current crop of young Canadians.

That dream is an essential component of a healthy economy, and policy makers should ensure it’s passed on to future generations.

The last bits are important: we still have pretty good equality of opportunity but we must maintain a strong economy to keep the "dream" (of doing better than one's parents did) alive and "living the dream" will help keep the economy healthy. The 'right' answer, for the 99%, is to use the equality that exists to improve their own lot in life, and that of their children. The 'right' answer for the 1% is to protect their children's (and grandchlidren's) wealth by making and implementing policies - in business and governments - that protect and promote equality of opportunity (but not equality of outcomes - a silly and destructive goal).

[kstart]

Democracy Watch has some interesting suggestions re: cleaning up of government corruption, conflict of interests which can affect how our taxdollars are allocated, whether that's for unconditional bank bailouts and subsidies (e.g. 2009, we gave 70 Billion to CHMC, and together with other subsidies to the amount of over $200 Billion), or in how we award lucrative contracts re: energy, infrastructure, etc. or how corporate lobbying can affect the very laws we pass and don't pass re: e.g. public safety, health and environment regulations, policies, etc.   It's a legistlative approach, vs. radical revolution and it's aimed at more fairness, more truly open-competition among bidders for goverment tax dollar investments (not just who has the most $ and power to influence).

(Figure for Bank Bailout, source: http://cancrc.org/english/relOct1811en.html )

Government Ethics Campaign:

"19 Recommendations for to Clean Up Canada's Lobbying and Ethics Rules Enforcement System"
http://dwatch.ca/camp/ethicscoal.html#19%20Recommendations%20to%20Clean%20Up%20Canada%27s%20Lobbying%20and%20Ethics%20Rules%20Enforcement%20System

Also of Interest, The Corporate Responsibility Campaign:
http://dwatch.ca/camp/corpinvite.html#15%20Recommendations%20to%20Make%20Canada%27s%20Corporations%20Responsible

[Thucydides]

I think this is a good thread for this article, since it demonstrates the polar opposite of the #occupy movement's call for greater State intervention and control. Note that the society being documented here had a far smaller capital base and a far greater disparity in wealth than exists today:

http://www.forbes.com/sites/objectivist/2011/11/18/america-before-the-entitlement-state/

America Before The Entitlement State
Yaron Brook and Don Watkins Yaron Brook and Don Watkins, Contributor

Reacting to calls for cuts in entitlement programs, House Democrat Henry Waxman fumed: “The Republicans want us to repeal the twentieth century.” Sound bites don’t get much better than that. After all, the world before the twentieth century–before the New Deal, the New Frontier, the Great Society–was a dark, dangerous, heartless place where hordes of Americans starved in the streets.

Except it wasn’t and they didn’t. The actual history of America shows something else entirely: picking your neighbors’ pockets is not a necessity of survival. Before America’s entitlement state, free individuals planned for and coped with tough times, taking responsibility for their own lives.

In the 19th century, even though capitalism had only existed for a short time, and had just started putting a dent in pre-capitalism’s legacy of poverty, the vast, vast majority of Americans were already able to support their own lives through their own productive work. Only a tiny fraction of a sliver of a minority depended on assistance and aid–and there was no shortage of aid available to help that minority.

But in a culture that revered individual responsibility and regarded being “on the dole” as shameful, formal charity was almost always a last resort. Typically people who hit tough times would first dip into their savings. They might take out loans and get their hands on whatever commercial credit was available. If that wasn’t enough, they might insist that other family members enter the workforce. And that was just the start.

“Those in need,” historian Walter Trattner writes, “. . . looked first to family, kin, and neighbors for aid, including the landlord, who sometimes deferred the rent; the local butcher or grocer, who frequently carried them for a while by allowing bills to go unpaid; and the local saloonkeeper, who often came to their aid by providing loans and outright gifts, including free meals and, on occasion, temporary jobs. Next, the needy sought assistance from various agencies in the community–those of their own devising, such as churches or religious groups, social and fraternal associations, mutual aid societies, local ethnic groups, and trade unions.”

One of the most fascinating phenomena to arise during this time were mutual aid societies–organizations that let people insure against the very risks that entitlement programs would later claim to address. These societies were not charities, but private associations of individuals. Those who chose to join would voluntarily pay membership dues in return for a defined schedule of benefits, which, depending on the society, could include life insurance, permanent disability, sickness and accident, old-age, or funeral benefits.

Mutual aid societies weren’t private precursors to the entitlement state, with its one-size-fits-all schemes like Social Security and Medicare. Because the societies were private, they offered a wide range of options to fit a wide range of needs. And because they were voluntary, individuals joined only when the programs made financial sense to them. How many of us would throw dollar bills down the Social Security money pit if we had a choice?

Only when other options were exhausted would people turn to formal private charities. By the mid-nineteenth century, groups aiming to help widows, orphans, and other “worthy poor” were launched in every major city in America. There were some government welfare programs, but they were minuscule compared to private efforts.

In 1910, in New York State, for instance, 151 private benevolent groups provided care for children, and 216 provided care for adults or adults with children. If you were homeless in Chicago in 1933, for example, you could find shelter at one of the city’s 614 YMCAs, or one of its 89 Salvation Army barracks, or one of its 75 Goodwill Industries dormitories.

“In fact,” writes Trattner, “so rapidly did private agencies multiply that before long America’s larger cities had what to many people was an embarrassing number of them. Charity directories took as many as 100 pages to list and describe the numerous voluntary agencies that sought to alleviate misery, and combat every imaginable emergency.”

It all makes you wonder: If Americans could thrive without an entitlement state a century ago, how much easier would it be today, when Americans are so rich that 95 percent of our “poor” own color TVs? But we won’t get rid of the entitlement state until we get rid of today’s widespread entitlement mentality, and return to a society in which individual responsibility is the watchword.

This is the phenomina that Alexis de Tocqueville reported on in "Democracy in America", of Americans being a nation of associations, and this is one of the models that will be revived in a post progressive society where there is no longer any money for "entitlements".

[kstart]

I think the Canadian Occupy movement dropped the ball, got sideswept even with special interest groups, whatever.  I do support the democratic right to peaceful protest, but it is important to be clear on what one is protesting about and on what sorts of changes one would like to see. 

A shared concern among the Occupy movement, abroad are the actions of the government with the banks and taxpayer money spent on the bailouts (without conditions imposed-- and why do CEOs get awarded by taxpayer money, by failures, huge compensation $s and continue to gouge, and lay off employees etc.) and the ramifications for our futures, our economy, our democracy, our sovereignty (re: payback).  Taxes are part of the "social contract" we pay in for services, social safety net to weather contingencies of job loss, health conditions, old age/pensions, education, protection (army, police, ambulance), infrastructure, etc.

http://cancrc.org/english/relOct1811en.html

After the federal Conservatives weakened lending rules and created a dangerous sub-prime mortgage lending bubble in Canada, the Conservatives then used the "Extraordinary Financing Framework" in their so-called "Economic Action Plan" in 2009 to offer huge, publicly funded subsidies to Canada's big banks and other financial institutions of more than $200 billion (including up to $125 billion of mortgage-buying by the Canadian Mortgage Housing Corporation, of which $70 billion was used, incredibly with the details kept secret still today).


 

$200 Billion seems big, beyond my comprehension (but smaller vs. Trillions stateside).  We can say "oh well, mistakes were made" and they were "somewhat costly", but also do we have enough guarantees to protect ourselves from further gouging and on-the-hook?  Is it right to keep this a secret from the Canadian people?  Did this have anything to do with the fillabusting re: budget release and releasing details to the PBO/Kevin Page dramas which occured pre-election?  Who do we owe that money to and who is actually calling the shots?  Does this affect other issues, e.g. deregulation of health and safety standards from food safety to pipeline development (rules by more foreign powers vs. coming from our democracy, framework of protections for "public safety/public good"?)  No need to bite my head off, I'm just curious and would be interested in hearing other perspectives.  Is it not a big deal?  That kind of money would protect Veteran pensions and compensations better and for their families. . .

[E.R. Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, is a report on the outcome of the "occupy movement's" efforts - fiscal irresponsibility:

http://www.theglobeandmail.com/news/national/toronto/dont-be-so-quick-to-celebrate-torontos-budget-win/article2306575/

Don’t be so quick to celebrate Toronto’s budget ‘win’

MARCUS GEE

Globe and Mail Update
Published Wednesday, Jan. 18, 2012

Cheers rang out in the city hall chamber as councillors voted to scale back spending cuts in Rob Ford’s 2012 budget. The people had won!

In fact, what we witnessed on Tuesday night was a discouraging demonstration of how hard it is for politicians to take decisions to control spending. Finding a way to make governments live within their means is the project of this decade, not just in Canada but around the world. It has thrown the proud governments of Europe into disarray. It is flummoxing the Congress and the presidency of the United States. It is challenging governments at all levels. Just up the road from city hall at Queen’s Park, Premier Dalton McGuinty’s Liberal government is about to face a cost-cutting challenge that will make Toronto’s exercise look like jam on toast.

Complain about Mr. Ford if you will – and he has given plenty of reason for complaint – but he has been one of the few elected leaders to address the spending challenge head on. If Rob Ford can’t do it, who can?

He was elected with a clear mandate to rein in the ever-rising cost of government. He ordered a sweeping review of spending, vowing to spare no sacred cows. He paid outside experts to pore over every dime of expenditure. He invited the public to join in through months of consultations, surveys and all-night hearings.

The result, after months of effort, is something of a disappointment. Yes, city hall will still spend less this year than it did last, a rare achievement that Mr. Ford has a right to boast about. Yes, he managed to cut the size of the city work force through layoffs and buyouts. And yes, he kept this year’s property tax to a modest 2.5 per cent.

But many of the toughest calls have been put off to another day. Even before council sat down to deliberate on Tuesday, the more controversial ideas, like closing some less-busy libraries to save money, had been taken off the table. Thanks to our “hero” Josh Colle, council narrowly voted to back off on a bunch of other, much more modest cuts.

Under a motion proposed by the rookie councillor for Eglinton-Lawrence, $15-million worth of programs were “saved.” They include funding for underused swimming pools, ice rinks and daycares and mechanical leaf collection in the suburbs, hardly what you would call a core city service. Council even put back $300,000 for Live Green Toronto’s “community animator” program.

What is worse, they accomplished this by dipping into left-over money from last year’s budget that should rightfully have gone into the piggy bank. That means that there is no permanent funding for the saved programs. When budget time comes around again next year, councillors will have to struggle once again to find a way to pay for them.

Dipping into the surplus spoils what would have been one of the biggest wins in the budget process: ending the old and imprudent practice of using year-end windfall surpluses to pay for the coming year’s spending. Putting sentiment ahead of logic, the councillors who supported Mr. Colle saved a few dubious programs but rubbished their own credibility as guardians of the public purse.

Make no mistake, an overwhelming majority of Torontonians support the fiscal vandalism perpetrated Councillor Josh Colle; an overwhelming majority of Ontarians want something similar from Dalton McGuinty et al in Queen's Park and a similar majority want Stephen Harper and Jim Flaherty to leave federal waste in place. They, the majority, may not be all of the 99% but they are a majority, they are stupid (and yes, I am choosing that word with care and I am sorry, but not concerned if I am offending you)  and they are wasting good, productive money.

[GAP]

But they're entitled.....

[Brad Sallows]

By referring to the Government of Canada's offer to purchase CMHC-backed mortgage securities as a "bailout", the CCRC has essentially abrogated any claim to participate in the debate as an informed party and everything they write is suspect.

For anyone else wishing to make asinine claims about "bank bailouts" in Canada, please RTFM.

Pay particular attention to the "technical aspects of the transaction" and the "IMPP-related risks".

CCRC=partisan idiots to a man.

[Thucydides]

An interesting view of how those eeeeevil investment bankers worked out in NYC (and by extension New York State):

http://www.theatlantic.com/business/archive/2012/01/what-would-new-york-look-like-with-a-smaller-financial-sector/251523/

What Would New York Look Like With a Smaller Financial Sector?
By Megan McArdle

After a disappointing year, the big banks are pulling back on their bonus pools.  A lot.  This is going to be hard on bankers whose salaries are usually a very small part of their overall compensation--and yes, yes, before you drag out the world's smallest violin, let me agree that they have no entitlement to anything more.  Nonetheless, people tend to build their life around their expected salaries, and in New York, this choice is particularly important.  You not only acquire a large mortgage that's often difficult to unload quickly (closings in New York take months at minimum, longer if it's a co-op), but also things like enormous school fees, higher food costs, and so forth.

Nor are the bankers the only ones who have built their lifestyle around a heavy flow of easy money. Before the financial crisis, the industry payroll accounted for 20% of New York State's tax revenue.  It still accounts for about 13%, as well as a hefty chunk of the city's tax base.  Plus the Office of the State comptroller estimates that every job in the financial sector creates two additional jobs.

New Yorkers who do not work for banks spend a lot of time lamenting the existence of the bankers: buying up choice apartments for rates you can't afford, gentrifying your neighborhood retail into one teeming sea of Godiva Chocalatiers and L'Occitane en Provence body shops, bidding up the price of a private day school education to well north of college tuitions, and generally making things miserable for the rest of us.

But in a very real way, I think you can credit the financial industry for New York's revival.  Oh, one can point to all the vibrant creative arts and their near-cousins in advertising and publishing; one can sing paeans to the city's energy, its tremendous diversity, its nearly unmatched food culture.  But let those of us who lived there in the 1970s and the 1980s also recall that it was violent, crime ridden, and oh yes, depopulating.  (Between 1950 and 1980 the city lost more than 10% of its population). Its infrastructure was decaying, particularly the subway, and no one who had alternatives rode the subways after rush hour.  In the early 1970s, the city flirted with bankruptcy; after the 1977 blackout, it endured widespread looting that bordered on riots.

What turned this around was not the creative class, who were still flocking to rent-controlled apartments in the safer parts of town.  No, what made the difference was money.  Money bought peace among the city's various interest groups, repaired infrastructure that had been neglected for decades, and paid for more police.  It created jobs in construction and services and almost everything else you can imagine.  And where did that money come from?  Deregulation, and a 17-year bull market that inflated Wall Street salaries, and tax revenues right along with them.  Without the financial renaissance, these days New York might well look a lot more like Detroit or St. Louis.

So it's interesting to contemplate what it will look like, if the financial industry gets shrunk down to the size that many are hoping.  The last time that happened, in the 1930s-1960s, New York had a lot of other businesses: shipping, manufacturing, and for that matter, being the corporate headquarters for so many national businesses.  That's pretty much ended.  New York is now a specialist city: creative industries, finance, and tourism.

Could the creatives pay the bills if Wall Street stopped?  New York's bills are very hefty; about one in three people in the city (and one in five in the state) are on Medicaid, with the city paying half of that; the MTA has an operating budget of over $11 billion a year; and the city's annual pension bill runs about $7 billion.  New York's generous social services are what nearly bankrupted the city in the 1970s, until they finally found an industry that would just pay hefty taxes instead of moving south and west.

Raising that money from the creatives means, among other things, raising money from the less affluent--people who are less able to shrug off a tax increase as the cost of living in the Big Apple.  Creatives may also be a bit more mobile than folks who needed--until the last decade, anyway--proximity to a trading floor.

Post-Guiliani, New York has been a very good place to be rich, a very good place to be poor, and a very difficult place to be in between.  If the financial industry really did slim down to size, that might well reverse.  That might make it a more middle class city.  But it would be very difficult for a more middle class city to support New York City's cost structure.  Since it would be pretty hard to rip out the subways and bridges, and it's illegal to renege on your pension promises, I suspect that the welfare state would take most of the burden.  But not quietly.

This article available online at:

http://www.theatlantic.com/business/archive/2012/01/what-would-new-york-look-like-with-a-smaller-financial-sector/251523/

[cupper]

Anybody know where you can find a breakdown of the percentiles for income to determine where one would fall? I'm not sure I want to fit into the 99%. I know I'm not part of the 1% either.

[ModlrMike]

Anybody know where you can find a breakdown of the percentiles for income to determine where one would fall? I'm not sure I want to fit into the 99%. I know I'm not part of the 1% either.

Try this: http://www2.macleans.ca/2011/10/25/rank-your-income-where-do-you-stand-compared-to-the-rest-of-canada/

It doesn't do a direct comparison, but certainly gives you a good idea.

[cupper]

Try this: http://www2.macleans.ca/2011/10/25/rank-your-income-where-do-you-stand-compared-to-the-rest-of-canada/

It doesn't do a direct comparison, but certainly gives you a good idea.

Thanks for the link. Unfortunately it's only for Canadian income, mine's US. Just for shits and giggles I plugged my US income in (which would be slightly less than $CDN with exchange rate) and I fall into the top 7.5%.

But when you read the text below, the threshold for top 1% in Canada is $169,000, but in the US is $400,000. I have a ways to go before I can even dream of being in the 1%. Even the 7.5% ain't happening any time soon.

[mariomike]

Re: "Don’t be so quick to celebrate Toronto’s budget ‘win’ "
Reply #737

Among other "gravy", they deferred the hiring of 36 paramedics. 
Yet, year after year, people ask why,  "EMS workers top list of overtime paid by City of Toronto":
http://www.680news.com/news/local/article/281525--ems-workers-top-list-of-overtime-paid-by-city-of-toronto

[Bruce Monkhouse]

Because its cheaper to pay time and a half than time plus benefits....

[Thucydides]

A snapshot of blogs by people who's educational choices are....questionable. This is the intellectual horespower of tomorrow?

Once they are in the real world carrying huge amounts of debt to be credentialed they may discover their choices were less than inspired. They will be angry, but who will they blame?:

http://captaincapitalism.blogspot.com/2012/01/god-please-make-it-stop.html

[Sapplicant]

This is the intellectual horespower of tomorrow?

No. Those are the people who, in 20-30 years from now, will be cooking my food, or tending to your fecal impactions. The intellectual horsepower of tomorrow are too busy filling their brains to shoot their mouths off in a blog every day. Fact.

[Jim Seggie]

No. Those are the people who, in 20-30 years from now, will be cooking my food, or tending to your fecal impactions. The intellectual horsepower of tomorrow are too busy filling their brains to shoot their mouths off in a blog every day. Fact.

Good one!

I am going to "occupy" a chair for a few hours and learn stuff.

[cupper]

No. Those are the people who, in 20-30 years from now, will be cooking my food, or tending to your fecal impactions.

You have to love ambition.