Wednesday, February 02, 2005

The 51st State

When you are visiting another state and people ask where you are from, you can usually get away with just naming your home state. Say you are from Idaho, Arkansas or Ohio and people get your point. Usually, state names mean something to most people. It is different for New York State. If you are from New York and tell people that’s where you are from, they will immediately assume you are talking about the dense metropolis in the southeast corner of the state. It doesn’t matter if you are from Syracuse, Elmira or Buffalo, they will assume you are talking about NYC and you will get the inevitable follow-up questions: Wow how’s it like living in such a large city? Do you take the subway? Which borough?

I do not usually care much about something so trivial. The state and the city have the same name. Honestly, people are far more likely to want to discuss New York City than any of the other modest-sized towns dotting the upstate landscape. It’s therefore only natural that people will assume you are talking about the metropolis rather than the whole state considering the former’s international significance. I anticipate this, so when people ask where I am from, I say “Upstate New York.” If they know or care enough to want further details, I simply say Central New York, between Syracuse and Binghamton, or the actual city name. I try not to sweat the small stuff.

That being said, it is beginning to seem as if the shared name for the city and state represents the woes of those living north of Yonkers. Let me tell you why. Ask yourself, what are the poorest states in the country? I would bet that most guesses would include Mississippi, Arkansas, South Carolina or some other southern state. Well maybe those states languish in the bottom rung of per-capita-income, but if Upstate New York was its own state it would be anywhere from the poorest state to the bottom five. Few Americans know about this fact and I suspect that some of this comes from how little consideration Upstate New York receives from the public at large. I will outline several reasons why the upstate region should split off from the downstate region, but unmasking the poverty and stagnation found in Upstate New York is the most crucial reason. Clearly stated, Upstate New York would be better off as its own state.

I can see you easily objecting to what I just said. First off, you could claim that New York City sends a lot more money to Albany than it receives in return. Secondly, you could say any state could be selectively cut into two halves and find another poorest state in the union. Either reason indicates that Upstate New York benefits staying with the status quo. To address the last objection first: most other states do not have a clear marking point between two dramatically different areas of the state like New York does. I will not deny that New York City gives more money to upstate New York than vice versa, but this is quickly changing. A recent court ruling will force Albany to send billions and billions more dollars downstate for education than it ever did before. Besides, the main problem is that NYC’s affluence masks poverty in upstate New York not that it actually causes it directly. How does it mask it? First of all, if upstate New York was its own state, the problem would be right out there screaming for something to be done. “The State of Niagara is one of the poorest states in the country. This is a travesty! The federal government must intervene!” Also, being its own state, Upstate-New-Yorkers would have a much greater ability to elect politicians to solve their own problems and not just be a constituency that has to compete with NYC for attention.

A large problem is that having NYC part of their state forces Upstate-New-Yorkers to accept public policy decisions that exacerbate their woes. Obviously, unemployment and low-paying employment are making the upstate area poor. There are three main reasons for employment problems: the transition of the American economy from a manufacturing economy to a service economy; the advent of A/C making living in the south more pleasant than living in the north and the higher cost of doing business in New York State. The first reason is affecting every state in this country, so it does not explain why the upstate economy is doing so much worse than other parts of the country. The second is a problem facing all of the north half of the country, yet so many areas are booming economically. Why is Pittsburgh having so much more success rebounding from job losses than Buffalo? Why is Massachusetts doing so much better now? Why did Wisconsin survive the recent, short-lived recession so much better than other states? Clearly being in the north with its more depressing weather puts the North and the NE at a disadvantage now, but it’s clearly not the destiny of the region.

So this leaves the third reason as the real problem for upstate NY and the only one that can really be addressed. Simply put, the high cost of doing business here is driving companies away and the ones that remain can simply get away with not paying as much. So what do I mean by high cost of doing business? Well there are number of policies coming from Albany that raise it. Friendliness to tort lawyers and more prohibitive red-tape certainly makes business more time-consuming and risky. However, taxes are an extremely large part of it. Studies have shown that one of the primary determinations of where a company is located is how much taxes the top executives of a company are paid. Wonder why Connecticut has so many companies were formerly located in New York? The comparative tax-rates for CEOs is why. Redistribution of wealth may make you feel all warm and fuzzy, but it does not just hurt the rich guy living in that mansion, it also hurts you because of the jobs it drives away. If you want to do redistribution, lobby for it on the federal level. People are much more likely to skip the state than skip the country. This of course is in addition to the general fact that higher property, sales and income taxes paid by workers means that equal employees in each state need to be paid more if all things being equal, the taxes are higher in one state or the other.

So this begs the question: if all of these policies are detrimental to the overall economic health of the state, why don’t the residents of the state simply force the government to make a change here. It’s not the inertia from the inept legislature; the problem really is New York City. New York City ends the possibility of any change in Albany’s policy make-up. First off, NYC doesn’t need to worry about business leaving in the same way that upstate cities need to. There’s a certain cachet to a firm being located next to Wall Street, a major port and the most important city in the world. Suffice it to say, Buffalo doesn’t offer the same bang for the buck. NYC also just matches the pattern of any other large city: a large appetite for government services. And, of course, they need state taxes to pay for a lot of these desired services. It’s more than just religion making Republicans getting support from the rural areas and suburbs while Democrats gaining support from the largest cities. The latter just want more government help in their life, the former simply do not. No value judgment there; it is just that the lifestyles are different for each and this pattern repeats itself in the upstate/downstate divide.

Presidential helicopters aside, life isn’t getting much better for the upstate economy. There’s great education here given to people who just end up leaving for a more vibrant place. I will soon be following the people I grew up with. Leaving less money to pay for the great education, leaving higher costs for the businesses remaining here, leading to less jobs and so forth, leaving more costs for social welfare, etc., etc. They have been trying to fix the problems in the existing framework for many decades, what makes anyone think that continuing to work with the same conditions is going to change things?

A new state consisting of upstate New York would allow the more economically-starved area control its own fate, make the best decisions for its residents and have its own identity. What would we really lose? A connection to the Yankees? Marx encouraged the workers to rise up because they only could lose their chains. Well, upstate New York, I am calling on you to rise up, all you have to lose is your crappy economy.

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