The financial-market implosion and the coming transformation of the securities industry will expose the fundamental flaw in New York State’s woefully overextended public finance model. The state budget is today geared to run on an ever-expanding stream of high-octane revenues from a Wall Street that no longer exists—and the rest of New York’s economy isn’t nearly robust enough to make up the difference.Of significance to us Upstaters, Mr. McMahon points out
. . . the state’s financial dependence on Wall Street has grown steadily for more than a quarter-century. As New York’s once-mighty manufacturing sector shriveled, the securities industry’s share of all private wages in the state more than quadrupled, growing from 3 percent to 14 percent between 1980 and 2000. And after the 2000–02 downturn, Wall Street’s share of the state revenue base took another giant leap.This is what happens when Downstate is given power in both houses of the state legislature . . . as resulted by court mandate in the 1960s. State policy has been made from a Downstate perspective for the last 40 years, the portion of the state based on the financial sector. New York would now be much stronger and resilient had Upstate maintained control of the Senate, because the needs of Upstate's manufacturing sector would have been better represented.
Now New York, overly dependent on Downstate's financial sector, is in trouble, and there is no strong Upstate to come to the rescue.
New York must examine its policies that make Upstate less competitive than its peers for manufacturing -- places such as Pennsylvania, Kentucky, Tennesee, Ohio, North Carolina -- and reverse them. This may wind up costing Downstate a lot (e.g., in higher electric rates so as to reduce ours), but in the end, both Upstate and Downstate may once again thrive.
Rescuing Upstate will rescue the entire state.