A plausible explanation for the historically awesome power of America’s wealth engine compared to the rest of the world is the emphasis Americans have always placed on business. It is relevant to note that for most of American history, Washington, D.C. was a sleepy southern town. To be sure, important issues were addressed there — affecting war and peace, slavery and freedom — but the business capital of the United States was unmistakably the dynamic metropolis of New York.
That unique pattern has played out through most (but not all) of the 50 states. In California, business was done in San Francisco and Los Angeles, with the seat of government in the not so internationally known Sacramento. Chicago has always been the commercial capital of Illinois, with government relegated to Springfield. Pennsylvanians do business in Philly and Pittsburgh, Floridians in Miami and Tampa — leaving government to sleepy Harrisburg and Tallahassee. Back in New York, the trip up the Hudson from Manhattan to Albany is 125 miles.
The American separation of business and state is alien to most other countries and cultures. But one may question if it is becoming a quaint relic of our own past; after all, Washington, D.C. is neither very sleepy nor very Southern (culturally) these days. The question comes to mind in light of disturbing trends in the news. Wall Street is seeing an exodus of brokers. According to FINRA, some 12,000 brokers have exited the profession so far this year. The Wall Street Journal calculates a toll of 35,000 broker jobs for the year if this pace keeps up, which is more than three times broker job losses in the previous high-water-mark year of 2002, during the dot-bomb blow-up.
At the same time our business capitals bleed, the government has gone on a hiring frenzy. Excluding postal service and defense employees and temporary Census hires, the government sector has seen a net 2 percent jobs increase in a single year and the hiring has only just gotten started. CBS News reports the average federal worker is bringing in over $75,000, including benefits.
So, brokers are being shown the door for not producing enough, but what constitutes “enough” could change overnight if Washington’s politicians lowered the cost of employment by, say, a payroll tax holiday. Instead, money is flowing to Washington, D.C. and to places and parties favored by its politicians.
This has long been the way of the world outside our shores, where economic power has resided in political capitals. However, if America is to revert to its historic norm as a land of opportunity, it must again turn on the engine of wealth in its centers of commerce.
Research magazine is humbled to receive — for the sixth consecutive year — the Excellence in Financial Journalism Award from the New York State Society of CPAs.
We congratulate Alexei Bayer, whose Global Economy column has brought us this recognition for four of those six years, and we thank our loyal readers who have made it all possible.
Robert Tyndall, Publisher Emeritus, [email protected]