The company that owns the New York Stock Exchange "might consider" taking the "New York" out of its name, and replacing it with something more generic, like "World," or "Global," the Wall Street Journal's Aaron Lucchetti reported over the weekend. The NYSE's merger with Euronext means that it is no longer exclusively a New York-based institution, and much of the trading these days takes place in cyberspace rather than on a floor in lower Manhattan.
We're all for institutions adapting dynamically to meet the challenges of modernity, rather than statically growing obsolete. But the supposed logic of such a name change got us thinking. Is this the exchange's way of getting back at Governor Spitzer, who, as attorney general, sued the exchange's chairman, Richard Grasso, for being overpaid? Is it the exchange's way of getting back at Mayor Bloomberg for not following through on the promise by Mayor Giuliani and Governor Pataki to give the exchange a $1 billion public subsidy to build a new headquarters and trading floor?
And what could be next? Will the Bank of New York change its name to the World Bank? Already taken. Will the New York Times, which has long since lost its focus on New York, rename itself the International Herald Tribune, a name it already owns? Will the New York Post start calling itself the Wall Street Journal? Likelier now than it was last year. Will the New York Yankees start calling themselves just "The Yankees" in order to broaden their appeal to fans in Japan and Latin America? Once our city's institutions start dropping New York from their names, it's a slippery slope.
For our part, we'd like to believe that the words "New York" signify to investors around the world a belief in capitalism and a respect for the rule of law that aren't always in evidence in the rest of the world's markets. We think in particular of China, where on June 1 the Communist government announced a new "stamp tax" on stock trades. Shares in Shanghai were down 2.7% the day of the announcement and 8.3% the next day, according to a Washington Post report from Shanghai that said Chinese investors were talking of organizing to storm Tiananmen Square in protest.
The Democratic Party's candidate for mayor of New York in 2005, Fernando Ferrer, proposed a similar tax, and, fortunately, he was rejected by the voters. But who knows what the effect would be on the markets if Senators Clinton, Obama, and Edwards were empowered to implement their plans to repeal some of the Bush tax cuts? Democrats may not even wait until after the next presidential election to try raising taxes — the Washington Post reported over the weekend that Democrats, including Rep. Charles Rangel of New York, are considering a imposing 4.3% surtax on income over $500,000 a year.
The Democrats may be a far cry from the Chinese Communists. But one of the things about the advent of "global" or "world" financial markets is that money has a way of traveling to places where it can be invested securely. For the past two centuries it has been New York. Increasingly, hedge funds are basing themselves "offshore" in low tax jurisdictions such as the Cayman Islands or the British Virgin Islands or Bermuda. London is gaining. The thing to watch in respect of the stock exchange will be whether a name change would mean New York is trying to increase its attractiveness to global capital or whether it is admitting it is losing out in the competition. There's a lot in a name, after all, but what's more important are the values and policies for which it stands.