Niall Ferguson: New York - the new Venice?
[Niall Ferguson is Laurence A Tisch Professor of History at Harvard University.]
... [Venice] is the ideal place to ponder the vast economic changes we are witnessing in our time. For what befell Venice roughly 500 years ago may well be the imminent fate of the city's North American counterpart: New York.
Just as the world economy tilted away from Venice in around the year 1500, condemning it to relative decline, slow stagnation and ultimate relegation from metropolis to museum, so it could now be tilting away from what was once the greatest entrepôt of the Atlantic world.
It's not just the American investment bankers fretting that London is doing more deals than New York. Much more financial restructuring is needed in Europe's still fragmented economy than in the United States, so London's lead is hardly surprising, regardless of regulatory differences. Far more impressive is the coming shift identified by Princeton's Alan Blinder in a recent working paper entitled How Many US Jobs Might Be Offshorable?
Looking closely at which activities are most vulnerable as Asian competition ascends the value chain from manufacturing into services, Blinder estimates that "somewhere between 22 per cent and 29 per cent of all US jobs are or will be potentially offshorable within a decade or two". That could be one in four jobs.
Right now, much more attention gets paid in the US media to illegal immigrants, most of whom come from Mexico. But they compete only with the least skilled Americans: fruit-pickers and hotel maids. The new generation of high-skilled but still low-paid Asian graduates can stay at home and still compete, not only with computer programmers and telemarketers, but also with accountants and financial analysts. Even with corporate lawyers and derivatives traders. In short, with New Yorkers.
For more than a century, Manhattan has been the financial hub of the Atlantic economy, the place where North American financial services attained critical mass. If Blinder is right, that could change - and soon. The more business opportunities arise to the east of New York, the less advantageous its location becomes. And the more New Yorkers' skills are replicated elsewhere, the less need there is to employ New Yorkers.
Now think what happened to Venice. In 1500, the city was at the very zenith of its economic power. It was the hub of the European economy, the place where Christendom, the Levant and the Orient met. The wealth it derived from trade and finance was what made possible the monuments we admire today, just as it made possible the armies and navies with which the Venetians vanquished their rivals.
Then came Columbus. The discoveries and conquests in the New World after 1492 began a profound reorientation of the world from East to West. As silver and sugar flowed one way across the Atlantic, migrants and slaves the other, new business opportunities arose that favoured Amsterdam and London. In effect, the merchants of Venice found their jobs "offshored"....
Read entire article at Independent (UK)
... [Venice] is the ideal place to ponder the vast economic changes we are witnessing in our time. For what befell Venice roughly 500 years ago may well be the imminent fate of the city's North American counterpart: New York.
Just as the world economy tilted away from Venice in around the year 1500, condemning it to relative decline, slow stagnation and ultimate relegation from metropolis to museum, so it could now be tilting away from what was once the greatest entrepôt of the Atlantic world.
It's not just the American investment bankers fretting that London is doing more deals than New York. Much more financial restructuring is needed in Europe's still fragmented economy than in the United States, so London's lead is hardly surprising, regardless of regulatory differences. Far more impressive is the coming shift identified by Princeton's Alan Blinder in a recent working paper entitled How Many US Jobs Might Be Offshorable?
Looking closely at which activities are most vulnerable as Asian competition ascends the value chain from manufacturing into services, Blinder estimates that "somewhere between 22 per cent and 29 per cent of all US jobs are or will be potentially offshorable within a decade or two". That could be one in four jobs.
Right now, much more attention gets paid in the US media to illegal immigrants, most of whom come from Mexico. But they compete only with the least skilled Americans: fruit-pickers and hotel maids. The new generation of high-skilled but still low-paid Asian graduates can stay at home and still compete, not only with computer programmers and telemarketers, but also with accountants and financial analysts. Even with corporate lawyers and derivatives traders. In short, with New Yorkers.
For more than a century, Manhattan has been the financial hub of the Atlantic economy, the place where North American financial services attained critical mass. If Blinder is right, that could change - and soon. The more business opportunities arise to the east of New York, the less advantageous its location becomes. And the more New Yorkers' skills are replicated elsewhere, the less need there is to employ New Yorkers.
Now think what happened to Venice. In 1500, the city was at the very zenith of its economic power. It was the hub of the European economy, the place where Christendom, the Levant and the Orient met. The wealth it derived from trade and finance was what made possible the monuments we admire today, just as it made possible the armies and navies with which the Venetians vanquished their rivals.
Then came Columbus. The discoveries and conquests in the New World after 1492 began a profound reorientation of the world from East to West. As silver and sugar flowed one way across the Atlantic, migrants and slaves the other, new business opportunities arose that favoured Amsterdam and London. In effect, the merchants of Venice found their jobs "offshored"....