Mayor Bloomberg defends the financial sector

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New York Times Publisher Arthur Sulzberger, Jr. and Mayor Michael Bloomberg traded jokes this morning, but on one matter they were serious, and that was New York’s leading industry. “People have forgotten that the economic engine for this country is finance that nothing else works without it,” Bloomberg said. “Credit derivative swaps don’t have a touchy-feely name, let’s go after them! That’s potentially very damaging for this country, not just for New York City, but for all commerce.”

The mayor pointed out that to start a business you need a loan, and for that you need strong banks. “You can’t have it both ways.”

The conversation between Sulzberger and the mayor was brief but covered a wide range of topics, from finance to immigration to education and schools. Bloomberg started out with a quip about The New York Times. “I read the NYT every morning to see what I should do and I blindly follow every recommendation that you make,” he said.

Finance drives the US economy, but the mayor admitted that boosting growth is tricky. Government’s main job is to promote economic activity, yet state protection of Detroit’s car industry only helped to destroy it by quenching the city’s ability to compete, he said. And while he praised moves to bring more disclosure to the financial sector and increase consumer protection, Bloomberg added, “Let’s not forget that the public has to be somewhat responsible for their own actions.”

His take on the stimulus was ambivalent: cash injections cause government to rachet up expenses, and these stay in place after stimulus money is gone. “There’ll be plenty of PhD theses written on whether the stimulus program has made a difference,” he said.

In addition to its finance sector, New York’s biggest asset is intellectual capital. Bloomberg singled out the city’s cultural preeminence, describing the city as “edgy place”. He explained that close living quarters of different groups eliminates racial tensions and promotes ethnic diversity. But current immigration policy is one threat to this blend. Bloomberg argued that the US is missing out, educating the brightest in students and then declining to give them green cards, which means that even people with PhDs can end up driving taxis. He described the current immigration legislation as “national suicide”.

So what challenges does the future hold for the city? Education reform is vital, and offers Obama his biggest chance to make a lasting mark on the US, according to Bloomberg. In New York, it’s uneducated and underprivileged young men who will cause the biggest problems in the future, he said.

Bloomberg hopes his own education reforms, in which charter and private schools compete with the public school system, will go a way towards addressing these issues. “Competition is what drives all of us,” he said.