Monday, August 04, 2008

It's Main St., Not Wall St.

This past week we got the bad news on the state of NY's economy.
The governor, in a rare move, took to the airwaves to outline New York's fiscal problems. The state, according to projections, faces a three-year budget deficit of $26.2 billion. The reason? Wall Street, the state's financial engine, is, to put it mildly, in need of a tune up. Dwindling Wall Street profits have led to a drop in tax revenue, putting the state, Paterson said, in a recession.
Wall Street. There's the problem: The State has allowed itself to become dependent on Wall Street to be its "financial engine." Trading stocks . . . Pushing paper . . . Taking one's cut . . . Easy money. . .

It wasn't always so. New York used to have a diversified economy. New York used to depend on Main Street.

We made things: in the steel mills and refineries of Buffalo ... in the knitting mills and electronic plants of Utica, Central New York and the Mohawk Valley ... in the garment district of New York City ... in the aircraft plants of Long Island.

We grew things ... from the apples, potatoes, and dairy products Upstate to the fresh vegetables and ducks on the coastal plain.

We moved things ... by barge, rail and road, and through ports ... leveraging topography and strategic location to get products to consumers cheaply.

Main Street and New York State thrived.

But we lost our vitality somewhere along the line ... and don't make, grow, or move to the extent that we used to. Others are paid now to do these things ... people far away. Sure, national and global policy changes and happenings can be blamed for New York's decline, but the current condition started to develop well before these things came into play.

Perhaps it was the shift in power in the direction of Wall Street due to the reapportionment of the state senate during the 1960s. Perhaps it was laziness: it's easier to push papers than build factories and keep them running. Perhaps it was greed and the desire for instant riches, people playing the system to get ahead. Or perhaps Main Street's needs were simply taken for granted while others were given higher priority. Regardless, government in New York State lost focus on what made Main Street work, placed heavy burdens on Main Street, and became dependent on Wall Street -- both literally for the money it took in, and figuratively as a way of conducting its own business. "Deals" were counted upon to solve all problems.

So now New York is having financial problems, and all on Main Street are expected to sacrifice. What will the people and businesses in New York have to do without? We still need government to protect us from crime, maintain our infrastructure, protect our environment, keep our food and water supplies safe, educate our children, and, generally, create and enforce rules and maintain a "safety net" of services that allow us to get along with one another with some semblance of order, civility, and dignity. Will these things be cut 5%, 10% or 25%? That seems to be the "easy" way of making "hard" decisions... make cuts across-the-board. Share the misery.

That approach ignores the reality that some cuts could be devastating while others will not be missed by the general public at all.

Here's a short list of what we could do without:
  • $Millions for "Member items:" special projects for special people and groups that keep special legislators in office.
  • $Millions for public jobs merely created as rewards to those politically connected.
  • $Billions to school districts to reimburse most of the cost of construction projects. (Reimbursement rates above 50% (e.g. 100% for Utica's new plan) are "deals" for the construction lobby and encourage wasteful spending and experimentation rather than represent real needs of students. Old facilities are not the reason why Johnny can't read.)
  • $Millions for overtime abuse by police, corrections officers, and others who are close to their retirement and are looking for their "high 3" years to inflate their pensions.
  • $1Billion+ for the AMD chip fab in Luther Forest
  • $150 million for IBM's latest proposed facility.
  • $300+ million for the Yankees
  • $400+ million for the Albany convention center.
  • $Millions and millions more in specific subsidies for particular businesses or facilities (including $20 million for Marcy Nano)
  • $Millions on "economic development" programs.
  • $Millions for Authorities.
  • You get the picture.
The above represents a Wall Street "Let's make a deal" mindset. Which is fine if you are risking your own money, and not the taxpayers'. Anyone with real experience in business will tell you that most new business ventures fail. Cut out the deals, instead . . .

Use the savings to balance the budget, slash taxes, get rid of business-robbing nuisance fees (including the Thruway tolls) . . . And then get out of the way while Main Street NYS decides for itself what will work in New York.

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