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Boston, the next financial center

The birthplace of the American Revolution the next global financial center? The city that fancies itself the Hub of the Universe does possess the hubris to at least make the attempt. At the very least coordinated, concentrated efforts to do so has vast potential to create jobs and restore dynamic growth to the region. The city has much by way of financial services industry. It has also lost quite a lot in that area, but can recover. The key will be selling the public on swimming against the tide regarding how to treat bankers.

France has joined London in wanting to impose punitive taxes on evil bankers. As an aside, have you opened a credit account or used a credit card this holiday season? That came from a banker eventually, not a union or bureaucrat. Some in the City of London will face potential combined tax liabilities of up to 90%. Think of it. 90 cents of every dollar (in this case pounds) you earn taken simply because of the job you do. Pundits and industry experts speculate that human capital will flee London and not move to the equally tax hungry France but to where taxes remain amenable to business. Numerous hedge funds have already packed up and moved to much more understanding Switzerland. Boston should meditate on Swiss enlightenment and try to emulate their philosophy.

New York has already started to tax its workers heavily. And people have been leaving in droves. That city of millions (think of how many people live in a city requiring a police force of some 40,000) relies primarily on revenue from taxes taken from some 50,000 workers. The toil of hated Wall Street "fat cats" keeps that city alive. The populist rhetoric and spiteful tax policies have already led to dramatic revenue shortfalls. If the financial industry is thinking about leaving New York or London, Boston should seriously try to woo them here.

Boston has the commercial space to spare, look at all the vacant space downtown. There are also numerous unemployed financial services experts available, not just the fashionable college graduates which are also available in spades.  And since we are not actually making anything anymore building up the services sector is a wise use of available resources.  A hedge fund manager back in the recent day may have made more money than he knew what to do with, but he did do something with it. That investment has residual affects in the community creating jobs and improving neighborhoods. Fidelity moved a lot of jobs to Kentucky and New Hampshire out of Boston. ING is going to be forced to do something with its US operations. Their offices in Quincy can be lured downtown if Boston provides incentives for them to not move to Delaware. Another "stimulus" package may be coming, but sustained investment from private sector sources is the only way long term growth can be generated.

New York with all its taxes and the pressure of the nation hating Wall Street, still has a lot of hiring going on. Even compensating for size, New York to Boston, they are still growing a lot more than we are. Public/Private cooperation to quickly develop policies to encourage business growth is a good start. But then this must be followed up with the action of letting actors in the financial sector know how good Boston can be for their business. Resist over taxation and regulation, and encourage a new start for these firms with the idea of responsible growth. They can start over where the country began.

All of this does fly in the face of the stereotypical idea of modern Boston, and Massachusetts in general. Taxachusetts may have been a derogatory political term, but it actually was a well-earned one. Boston should not dream of eating goose when the bird has a history of laying golden eggs. This demands inspired and forward thinking leadership. The current business and economic environment throughout the globe is in anxious flux. With nothing certain financial institutions are looking for options. As others submit to political pressures to nudge financial operations away, Boston can do much to entice them here. Such actions provide national leadership so that the media generated hysteria demanding the blood of bankers can be cooled so that effective financial reorganization can take place. Boston as a global financial center strikes as an impossible goal, but with the understanding the process can take decades (we should have the patience after the Big Dig) the benefits of working towards the goal reap tengible rewards.  It remains to be seen if there are any counter-intuitive thinkers in the political offices who can see broader horizons.
 

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