– Decline of New York and Loss of Talent –

Yesterday a report from The Associated Press addressed the slipping position of New York City among the largest financial centers in the world.

According to the study, by the consulting group McKinsey & Company, New York and other U.S. cities are falling behind in financial services while cities including London, Dubai, Hong Kong and Tokyo are surging ahead.

It concludes that the U.S. is losing its advantage because of three main factors:

_The American regulatory framework, particularly Sarbanes-Oxley, is ‘a thicket of complicated rules, rather than a streamlined set of commonly understood principles, as is the case in the United Kingdom and elsewhere.’

_While New York offers a promising talent pool for its financial services work force, ‘we are at risk of falling behind in attracting qualified American and foreign workers.’

_The legal environments in other nations ‘far more effectively discourage frivolous litigation.’

I want to focus on the second aspect of the report that deals with the inability of firms to attract top talent and propose that not only are accounting standards and litigation contributing to competitive situation in New York, but also the growing atmosphere of distrust surrounding foreign workers regardless of their talent and legal status.

The following story which caught my attention was that of a newcomer, Damon Mootoo, to NYC who got lost for five days which almost turned tragic for the 32-year-old due to dehydration and exposure if not for a good samaritan.

Mootoo, who is hard of hearing but can communicate in English, said he didn’t ask for directions because he was afraid he’d be deported and because he had heard many scary stories about New York. He recently had received his permanent resident card.

It is unlikely that Mr. Mootoo is one individual that the New York financial sector is trying to attract, but the stories he has heard and the reputation America is achieving are possibly having an impact on the decision of qualified candidates considering the city and country for a career.

– World Opinion of America –

Recent polls show world opinion of America is on the decline.

“The US is still recognized as a leading place to do business, the home of desirable
brands and popular culture,” said Simon Anholt, author of the survey. “But its governance, its cultural heritage and its people are no longer widely respected or admired by the world….”

“Right now the US government is not a credible messenger,” said Mr Reinhard, chairman of DDB Worldwide, the advertising group. “We must work to build bridges of understanding and co-operation and respect through business-to-business activities.”  Such initiatives could include lobbying for less stringent visa requirements for foreign students entering the US, increased cultural exchanges between US businesses and their foreign counterparts, and courses in diplomacy and foreign languages at business
schools.

This information is backed up by a recent BBC poll.

The proportion of people believing the United States has a mainly positive influence in world affairs dropped seven points from a year ago — to 29 percent from 36, the results from 18 countries that were also polled the previous year showed.

– The Path Ahead –

On a trip earlier this year to Dubai, I was sitting in the lounge of my hotel near a business meeting between some Arab and German gentlemen. This realization came from observing both groups split off during their meeting, each speaking in their native tongues, Arabic and German respectively. Yet when the meeting reconvened, English was the language of business. There is little doubt America has had a positive impact on world business, however, with financial centers such as London, Dubai, Hong Kong and Tokyo taking a more prominent role and providing an attractive lure for both local and US candidates, how can America compete?

Will New York loose its financial clout? The answer is likely no, but with the increasing losses of key industries the US is facing in the wake of globalization, what, if anything, will we maintain as a competitive advantage in the future? Many will use this information as evidence that free trade and immigration have hindered America’s world position, but will hopefully instead serve as a wakeup call to reanalyze our foreign policy and overhaul our education system to compete in a global environment.

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