The Economic Scar Left by September 11th

Friday, September 11, 2009 , , , 1 Comments

As I write this, it is a little after 8p Pacific time on September 11th and 9/11 is no longer a Twitter trending topic. It's been chased out by Jay-Z, Beyonce, Derek Jeter, and Follow Friday. The last of the 9/11 tributes are filtering across my stream, with my own Commuting Capitalist piece on that fateful day getting a little retweet play as we speak. That's always nice.

There is really no debating the emotional impact of 9/11 on America, so we'll go ahead and leave that one for now and stick to what we know: the economic impact.

It has been said that the perpetrators of 9/11 (whomever they may have been) wanted to destroy the symbols that made America what she is; culture, freedom, and of course, capitalism. Few true capitalists would ever argue that our ideals were not purposely violated that day, and some (including yours truly) insist that we have never fully recovered from that particular beating.

How does one measure the loss in life, property, faith?

I will tell you one thing. It is absolutely offensive that we can funnel $13 billion to Goldman Sachs through AIG and yet 8 years later Ground Zero is still a giant, gaping wound left in New York. $700 billion could never rewrite the collective memory of America but it could have certainly built a monument to the America that died on that day, the Americans that died that day. Instead, we have a hole, a massive sunken hole where the glittering towers of capitalism and American ingenuity once stood as a testament to our greatness as a nation. Now? 8 long, painful years later? A hole.

From the NYC Comptroller's "One Year Later", a report issued - as the name implies - by the city on 9/11/02:

My office's estimate of the cost of 9-11 is based on two types of loss. The first involves the one-time loss of wealth, which includes damage or destruction of physical structures and loss of personal income.

The second type is the loss of goods and services produced and sold -- which is measured as Gross City Product, or GCP.

As the report indicates, the impact of the attacks on the City's wealth is estimated to be 30.5 billion dollars.

The attack destroyed 13 million square feet of Class A office space in Lower Manhattan. To understand the magnitude of that figure, consider the fact that this equals the entire office space inventory of the Central Business Districts of Atlanta or Miami. It will cost 21.8 billion dollars to replace the lost buildings, infrastructure and tenant assets.

We must also consider the economic impact of the loss of personal earnings.

There is no way to place a value on human life. A person's contribution to the world goes far beyond the workplace. The person who dies is denied his or her potential. A child is left alone. A mother, or a spouse, or a brother or a loved one must continue alone.

Economically, however, we recognize the financial impact of the loss of personal income on families, businesses and our city. And, in economic terms, at their present value, the loss of expected earnings is estimated at 8.7 billion dollars.

In addition to the one-time loss of wealth, New York will lose between 52 and 64 billion dollars in economic activity, or Gross City Product.

New York's Gross City Product averages 1.2 billion dollars per day. In the early weeks after 9/11, with so much business activity slowed or brought to a halt, the impact on the City's economy was drastic.

In the immediate aftermath, the New York Stock Exchange was closed, stores were closed, the airports were closed, the transportation system was disrupted and theaters were mostly dark. And that was only the tip of the iceberg.

Some downtown businesses were able to continue operating from other locations to varying degrees. Basically, however, for several weeks, our city lost the economic contributions of the 50,000 people who worked in the World Trade Center … the 50,000 more who worked in nearby buildings … and the 100,000-plus additional people who ordinarily passed through the downtown PATH hub and subway stations, and shopping areas.

The rest of the downtown area below 14th Street was closed off to allow free movement of the rescue and recovery workers.

In just the 16 weeks from the attacks to the end of 2001, the GCP lost 11.5 billion dollars.

A hole. Remember that. A blaring hole blasted into the heart of America, of freedom, of capitalism. A hole that remains to this day.

Remember that next time outrage rises like bile in your throat as you watch bailout after bailout after bailout after bailout. That's all I'm saying.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


OldSouth said...

The best insight of the day commemorating 9/11. Thank you!