Walter Russell Mead writes in The American Interest, Time to Vacate Wall Street, 7/2/12
This is a textbook case of how the blue social model creates exactly those conditions that Americans deplore. New York’s complicated regulatory structure, high rents and high welfare costs make it almost impossible for even wealthy companies to maintain mass middle-class employment.
This is especially bad news for New York City, whose famed “luxury city” revitalization has been largely financed through taxes on its flagship industry. As Wall Street jobs flee the city, the tax base erodes, making it even harder to maintain.
New York has some of the bluest laws and policies around. But the net result isn’t a city that becomes more and more prosperously and stably blue. The result is a city from which the middle class is steadily exiled. The bluer you are, the more likely you are to turn into a wealth-polarized dystopia of tycoons and hotel maids.
Thanks to the financial bubble and the huge federal bailout, New York has managed relatively well for the last few years. But it’s very hard to see what jobs will replace the Wall Street mid-level positions—and where the tax revenue will come from to support the city’s huge bureaucracy and high fixed costs.
The blue social model devours its own.
The reality that few face is that there are not enough of the super wealthy to fund the incredible expansion of the welfare state. The burden must fall on the middle class. The result is that we become more class ridden and bifurcated- not less.
“The problem with socialism is that you eventually run out of other people’s money.” – Margaret Thatcher. I would add that once you are no longer able to soak the rich for the redistribution schemes, the middle class will left holding the bill.