September 3, 2007

Finding a Path for Upstate New York

Upstate New York is trapped by its past and offers a glimpse of the rest of the country's future.

Its past was one of wealth and innovation, providing a place where the ideas and commerce of New York City melded with that of the rest of the country. Canals and railroads brought people, goods, and ideas through it and to it. The "Empire State" was more than just the city that shares its name, a much larger place that grew wealthy in prosperous times and developed its own sense of place.

That glorious past came to an end after World War II. At least symbolically, Upstate's decline can be marked from the opening of the St.Lawrence Seaway. What had been a vibrant transportation corridor since the Erie Canal's opening in 1825 began a slow drift into a world of uncertainty. The Port of New York's steady decline, the rapid growth of road networks, and the shift of manufacturing toward ever-cheaper places took away Upstate's powerful position as a good place to start or run a business.

The place most obviously damaged by these shifts in transportation was Buffalo, the city where the grain elevator was invented to ease the transfer of grain between the Great Lakes and the Erie Canal. Its decline as a transfer point reduced its advantages dramatically, though Niagara Falls still provides hydropower. It's not just Buffalo or even the "Thruway cities" (formerly "canal cities") - Hornell's Erie Railroad repair shops shut down, as did shops across the state. Manufacturing now had less reason to be here, as new transportation corridors opened all over the county. New York agriculture found it harder to compete against California produce, which could break the seasonal cycle thanks to cheap transportation.

As hard as current New York State residents may find it to believe, an intricate web of business relationships used to connect Upstate and Downstate tightly together. The New York Central might have been most famous for Grand Central Station, but its core routes roughly followed the old Erie Canal route before shifting south of the Great Lakes. Goods flowed to and from the Port of New York, and to and from the incredibly diversified manufacturing that flourished in New York City. As both of those keys to New York City's importance declined, the value of placing businesses along those routes declined too. New York City doesn't have any intrinsic need to get much - except for its water supply - from Upstate. (Connections to the midwest simultaneously declined in importance, as did the old ties to Pennsylvania coal transport.)

New York City itself recovered by shifting to an economy based on less tangible goods, like finance, publishing, and media, but those industries don't have the same kinds of spillover effects on the surrounding area that a port and manufacturing center could claim. While Upstate still benefits from the taxes that pour out of New York City's financial district, and from the students that come from downstate to Upstate's many colleges and universities, the ties are much looser than they used to be.

Upstate's peaking in the 1950s meant that it had already accumulated so many of the things that were considered good then and "Rust Belt" later. Unions (fewer than New York City, but enough), lots of heavy manufacturing, high expectations for municipal services, a tolerance for regulation (less than downstate, but more than many places), and a sense of stability that made it hard to imagine and respond to substantial downward change.

We still have a hard time imagining and responding to our diminished place in the world, and the last ten years, in which New York City accelerated while the Upstate economy seemed to settle into permanent stagnation, led to a lot of people thinking that Upstate somehow needs to become North Carolina. Somehow, if we can just make our government as small as their government, all the businesses that left for the South will come back.

We seem to forget, however, that the businesses that headed south have often kept moving. "Right to Work" states seemed less exciting when the bold new vistas of Mexico and China opened up. They offer cheaper wages, less regulation, and transportation costs that don't demolish the profits created by making products cheaply and selling them into a market used to paying dearly.

Upstate New York may well be a few decades ahead of the rest of America, facing challenges today that the rest of the country is only starting to notice. Finding new ways for Upstate to thrive means - I think - that we can't simply try to be what the rest of America is. We've been there, watching the collapse of the advantages we used to enjoy because of our location and our infrastructure.

I don't have a simple answer for the path ahead. I have a few suggestions to get started, though:

  • We need to look carefully at the natural advantages we have - notably water and decent soil - and figure out how they can help us over the long term.

  • We need to consider what "the long term" will bring. I don't, for example, believe that cheap energy will last forever. How long it will last is an open question, one we should look at closely. Upstate New York is a rare place that could actually benefit from higher energy prices worldwide, because that would restore much of our geographic advantage as a transportation corridor.

  • We have to stop thinking that Albany is the right place to fix Upstate's problems. It's a key place to negotiate our relationship with the rest of the state, but we lack the power and the credibility to make demands of Albany, expecting the rest of the state to listen.

  • We need to evaluate our relationship with New York City, and figure out how that huge metropolis is helping or hurting us west and north of the Hudson Valley. What used to be a mutually benefical relationship seems to have diminished into a story that is much more mixed. Recognizing the good while identifying the bad should make it easier to start a conversation about the future.

  • We need to look around our cities, villages, towns, and counties to see what local systems we have that we can build upon. There may be new opportunities in rearranging things - consolidating in some cases, but empowering smaller or different areas in others.

  • We need to find a way out of the liberal-conservative battle that takes up so much political energy. It's not that the issues aren't important - they are. It's not that we shouldn't look outward and help others far away - we should. The problem is that the battles make it very hard to build coalitions willing to work together on regional issues that won't fall apart every time there's a national (or even a state) election. Politics will (and should) continue - we just need to find ways to focus them more on what's happening here. (I also suspect that the meaning of liberal and conservative will shift as we look at more local issues, but that's a more complicated philosophical conversation...)

  • We need to look outside of New York State to see what's happening in other places suffering from similar problems. The Northeast and Midwest have lots of places which are suffering from related difficulties, and we need to look beyond the boundaries of the Empire State.

None of those suggestions come with an easy answer to the obvious question of "how do we do that?" I don't see a lot of it happening yet, except in the percolating thoughts of a few bloggers and some offline conversations. For a start, though, I'd like to get these ideas out, and hope the seeds germinate. Maybe eventually there will be an Upstate Focus political party, unaligned with the traditional parties. Maybe we'll see a magazine, or an Upstate-focused think tank. It's hard to know right now what path is best - but it's time to start looking through the brambles for a clearer path forward.

Posted by simon at September 3, 2007 1:45 PM in , ,
Note on photos


Robinia said:

This is a very thoughtful post-- appreciate you posting it both here and at TAP. I'm having trouble posting comments there right now (possibly my security software on the work network) so, congratulating you here.

annsulliva said:

What a good piece.

Irene W. Stein said:

Simon, I appreciated your piece. You may be interested in the Discussion Paper, "One New York" put out by the Fiscal Policy Institute.

smiley said:

I would love to live in New York State but the economy and high taxes are a serious concern. Thank you for your insight.

Frank said:

Great article. I have had similar ideas. I live in VA, visit NY and family 2 to 3 times a year. My taxes are $1100/year on a $172,000 property, my sister has a $150,000 property in Sullivan County and pays around $5,000 in taxes. I cannot justify living in NY. I love it, I grew up there and would like my kids to know the joy of living there, however it's not going to happen, taxes are just the start gas being $3.40/gallon in NY, my gas is $2.77/gallon. NYers and govt. officials have taxed themselves to death. God bless all NYers. I will visit as much as possible.

Jeff said:

I left upstate NY in 2003 for NC and have never regretted it. Low taxes and jobs still are available in the USA. In NY, it was hard to buy a job, let alone put up with the ridiculous taxes, poor schools, high crime at least in Rochester and in Cortland where I grew up. Paid property taxes of $5000 dollars A YEAR on a $130,000 house in Rochester back in 2002, plus the highest sales tax in the country. Small wonder why NY has to bribe businesses to come there. What company in their right mind would choose NY, there are so many laws? NY is progressive, in law making, they are the first to pass laws in the country, is that a good thing? Best bet is to work for the government in NY, job security for life sad to say that, but it's true.

Every now and then this site and especially this piece gets a random comment from someone who's glad they left and can't help sharing how glad they are and how crazy this state must be.

To all of you, please enjoy wherever you're living, but remember that your choices aren't necessarily the choices for everyone.

I've lived in New York City and I've lived in North Carolina. I'm presently blessed with a work-at-home job where I could live anywhere I wanted with access to a cable modem and FedEx. Where do I choose to live?

In beautiful Upstate New York. I pay the taxes, sure - but it's the right place for me.

I think, over time, it's going to be the right place for a lot more people. There's a lot of work to do, certainly, but I'd rather start with what we have in NY than what I had in NC.

(And if you want some visions, good or bad, for the future here, you might try Upstate 2050. The tax-obsessed should probably start here.)

mike said:

I've lived in new york most of my life,and i regret coming to florida.What i wouldn't give to go back with my son.He cannot find a
job down here.I know it's better in NY.I love Upstate NY,especially Middletown.I also lived in long island for 17 years.Maybe one day

David said:

It is hard to see a future for upstate New York. The job base has eroded horribly and there isn't much to be done about it. We have thousands of taxing entities. They impose a crushing burden on the average citizen. I have a modest home that cost $140,000 ten years ago. My taxes today are over six thousand dollars a year despite the fact that I don't receive services such as sewerage and water. Evey year the taxe rise at a rate far higher than both income growth and inflation. I have decided to sell my house because eventually, the taxes will simply become unpayable. Smart Money Magazine reports that if upstate taxes continue on their present trajectory, there will be whole sale abandondment of building because they will not generate sufficient income from rents to cover the taxes imposed. This has already happened in the Utica Rome area.
The only good jobs are in government. The state pays well and has excellent benefits. For those who have to pay for those generous salaries and benefits, life is a struggle. Nearly a third of the population aged 24 to thirty has quite sesnibly left the state. I wish I had made that decision a quarter of a century ago. I have urged my nieces and nephews to leave upstate New York. The economic decline and population loss will continue for decades. Efforts to reverse it, such as paying AMD a million dollars in benefits for every job they produced, are not going to succeed.
Rising energy costs are going to escalate property tax rate increases and cause an over all economic contraction that will shrink revenues. Home owners burdens will increase, driving more upstaters into foreclosure.
I hope I can unload my house before the summer ends. The market is bad and will only get worse.

G. Rapp said:

I left NY 9 years ago, after not being able to find employment for a year even though I had a college degree and years of experience, work and landed in NC. We have done well ever since. We have family back in NY and they continue to struggle with declining home prices, esclating RE taxes, bad schools and a genral decline in the standard of living. It really is a shame because NY is such a wonderful place, unfortunately its very hard to make a good living there. I spent many great years in the Catskill Mtns and our family still owns a home and a large tract of land.Its sad.

Randy said:

Hello, I'm from MA, more specifically, the Boston area. What I'd like to say is that for the most part, prosperity is leaving the northeast, and this will eventually encompass, even the highly vaunted Boston area, as manufacturing, followed by R&D, moves abroad.

The reason why Buffalo is no longer the Boston of the Niagara region is that manufacturing had reached a high water mark, in the early 1960s, followed by multi-decade cascades of declining business cycles. Likewise, starting in the 60s, hi-tech: the computer chip, etc, started to make its in-road and that's when R&D became the wealth generator for the areas which had it, see metro-Boston and Silicon Valley as prime examples. Basically, these are capital accumulative, university township, coastal areas. Today, these areas have also reached their metaphorical early 1960s plateau, as manufacturing did for Buffalo and upstate NY in general back then.

The point of the above is that for the most part, a large chunk of the US, especially the northeast, will start to became more of a socialist state as we discover that for the most part, we can't really compete against emerging nations and established R&D centers in the Asia-Pacific region for the global market. Unfortunately, I don't have a solution for this as there's no way that the hedge fund industry can bankroll the entire northeast corridor for the sake of propriety, as they always move from one part of the globe to another, looking for tax shelters while keeping a facade in one of the New England towns/cities to be near Wall St and the Ivy colleges.