It Sounded Like A Good Idea At The Time

Yes, they pay taxes and whatnot:

It’s hard to know just how badly a crippled Wall Street will affect life in the city. New York is a better place to live than it’s been in decades, and Harvard economist Edward Glaeser has noted that the city’s long-term vitality is assured by its concentration of bright, creative people. But what are all these smart people going to do while the financial world remains in intensive care? One of the Street’s leading obituary writers, Michael Lewis, contends that any industry that pays young, clueless college grads exorbitant salaries to do things they have no idea how to do — like it once did him — must be doomed.

But he’s wrong. Wall Street paid well to lure the callow hordes away from other career choices. It was, for the big firms, a relatively cheap way to ensure a deep talent pool from which to pluck the brightest and most ardent moneymakers. The vast majority of junior employees at Goldman Sachs don’t make partner, or ever come close. They end up seeking their fortunes elsewhere, like Lewis did. Wall Street has a warped incentive ecosystem, but it’s evolved that way because, over the years, it’s worked.

One solution is for the city to simply not gamble on Wall Street for tax revenue. Another thing they could do is a rainy day fund, which New York City doesn’t have (blame Boss Tweed, I’m told). Until then there’s not much incentive for the City to either change the way they collect taxes or spend them.