April 13, 2015

CUT THE ISLAND LOOSE:

How high taxes and regulation are killing one of the most prosperous states in the nation (William Tucker, 4/10/15, American Media Institute)

Binghamton, New York -- once a powerhouse of industry -- is now approaching Detroit in many economic measures, according to the U.S. Census. In Binghamton, more than 31 percent of city residents are at or below the federal poverty level compared to 38 percent in Detroit. Average household income in Binghamton at $30,179 in 2012 barely outpaces Detroit's $26,955. By some metrics, Binghamton is behind Detroit. Some 45 percent of Binghamton residents own their dwellings while more than 52 percent of Detroit residents are homeowners. Both "Rust Belt" cities have lost more than 2 percent of their populations.

Binghamton is not alone. Upstate New York -- that vast 50,000-square mile region north of New York City -- seems to be in an economic death spiral.

The fate of the area is a small scene in a larger story playing out across rural America. As the balance of population shifts from farms to cities, urban elites are increasingly favoring laws and regulations that benefit urban voters over those who live in small towns or out in the country. The implications are more than just economic: it's a trend that fuels the intense populism and angry politics that has shattered the post-World War II consensus and divided the nation.

Upstate New York, the portion that lies beyond the New York metropolitan area, has become "The Land That Time Forgot," a broad swath of depressed cities and low-profit farmlands that stretches from Newburgh and Poughkeepsie in the Hudson Valley through the old manufacturing centers of Schenectady and Troy, across the Allegheny Plateau to Syracuse, Rochester and Buffalo, all the way west to Jamestown, the city with the lowest percentage of college graduates in America.

For more than half a century, this huge region -- once the nation's breadbasket and a manufacturing capital -- has been losing jobs, dollars and people. "It all began in 1959 when the interstate highway system was completed," says Carl Schramm, professor of innovation and entrepreneurship at Syracuse University. "That was also the year commercial jets went into service and half the homes in Florida were air-conditioned."
Weather was certainly a contributing factor. Of the country's 12 medium- and large-sized cities with the heaviest annual snowfall, nine are in upstate New York, with Syracuse on top of the list at 115 inches. Not for nothing is the 363-mile long corridor of the old Erie Canal called the "Snow Belt."

But other states -- New Hampshire, Minnesota, North and South Dakota, Colorado -- have similar weather and have not seen mass evacuation. The difference is that upstate New York is tethered to New York City, whose residents overwhelmingly support higher taxes, stricter regulation and bigger spending than the national averages. Those policies are blamed for upstate's economic woes by many in the region.

"Basically what you've got in New York is a state tax code and regulatory regimen written for New York City," says Joseph Henchman, vice president for state projects at the Tax Foundation in Washington. "Legislators say, `Look, New York is a center of world commerce. Businesses have to be here. It doesn't matter how high we tax them.' I hear that a lot. But when you apply that same logic to upstate, the impact is devastating."

Why stay tethered?  Just make the City its own state.

Posted by at April 13, 2015 6:48 PM
  

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