A False Notion of Prosperity

This post was originally posted on the Rochester Beacon website on February 17, 2020 under the title Albany's False Notion of Prosperity.

The factors that made Rochester a bustling, growing center of economic activity in the 19^th and 20^th Centuries are no longer relevant.  Founded around a river that emptied into the busy shipping lanes of the Great Lakes and connected to the Port of New York by the Erie Canal and railways, Rochester was a shining light on the western frontier in the early 19^th Century.  Its fortunes rose during the second industrial revolution as George Eastman founded Kodak, an enterprise that not only was a center of innovation but also attracted human capital.  

Our city has always occupied a middle space between urban centers like New York, Chicago and Los Angeles and rural company towns that rely on one major employer for their economic well-being.  In the last quarter century, Rochester has been treading water while manufacturers in company towns migrated their workforce to low-wage countries leaving them to the ravages of economic irrelevancy.  Some have taken matters in hand, embraced 21^st Century industry and created conditions that promote prosperity.

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At the end of every supply chain is a consumer.  We buy goods and services depending upon our whims and capacity of our wallets.  Companies competing for our dollars have moved us from cable TV to streaming video, from landline phones to mobile and from postage stamps to email.  The home cities of firms driving those changes benefit from the downstream effects of their success.  Those cities – Boston, Seattle, Palo Alto -- attract the attention of investors and the momentum of investments creates boomtowns.

It’s possible for smaller cities to become magnets for investment too. Chattanooga, TN (population 179,000) famously transformed itself from fading rustbelt casualty to tech center boomtown by investing $330 million to bring no-latency internet to citizens and businesses.  The non-profit Kauffman Center outlined three intertwined layers leading to the success of the initiative. The drive for 21^st Century relevance began with the mayor’s vision of his low-cost-of-living hometown as a magnet for technology startups.  Abandoning the usual dogma of the left and right, business and government worked together cooperatively to obtain a federal grant to fund one-third of the project.  Not satisfied with “If you build it, they will come” city government sweetened the pie with financial incentives for I.T. professionals to move to their city.  Small though it may still be, Chattanooga’s metro area population has grown 11% in the last decade. 

Charlotte, NC – once the same size as Rochester and now two and a half times its size – attracted new businesses and jobs the old-fashioned way.  Lower taxes and proactive city and state governments worked for decades to make the city what it is today.  Rochester could duplicate that success.  We have a highly qualified workforce, entrepreneurial energy and an enviable array of colleges and universities. 

So, how do we New Yorkers (and Rochesterians) ensure we get a larger slice of the pie?  

A group of local business organizations has created ROC2025.  Describing itself as a “powerful new alliance of economic development organizations,” they have declared themselves in favor of Mom and apple pie.  It’s difficult not to support any of their initiatives:  workforce development, support for existing businesses, enhancing new business attraction and so on. But, in the end, we’re just whistling past the graveyard.  The overhead of high taxes, a heavy regulatory burden and a city school system that doesn’t graduate students prepared for the real world of work is simply too much for our local economy to bear.  

A prominent feature of Governor Cuomo’s administration has been economic development programs targeted at upstate New York.  And, for good reason.  The state only shows good economic results by virtue of the overwhelming success of Wall Street.  The governor took office as the nation (and Wall Street) was climbing out of the deep hole dug by the Great Recession.  So, while he loves to tout his record of having “created” over a million jobs during his reign, it is noteworthy that the rate of job growth is below the national average.  Also noteworthy is that over 70% of those new jobs were created in the New York metropolitan area.  

The non-partisan Citizens’ Budget Commission estimates the state spent roughly $10 billion on economic development in 2018.  Nevertheless, New York leads the nation in population loss.  Business interests and the conservative Empire Center claim the high tax and abysmal regulatory environment is the culprit (a claim with which I agree).  The governor claims it’s our lousy winter weather. Whatever the reason, it’s fair to say that so-called investments by government haven’t created a booming upstate New York economy.  

Government is unduly influenced by special interests and even the best and most ethical participants are unlikely to get it right for one big reason: They don’t have their own money invested in the enterprises they endeavor to help.  As for the enterprises, those seeking money from the government would rather spend the taxpayers’ money than their own as they should or would otherwise.  

Economic prosperity is rooted in private capital invested in promising enterprises.  Rochester could create the conditions that enabled Chattanooga’s success with local leadership embracing a vision and seeing it through.  But that vision, whatever form it takes, would be undermined by a state government addicted to the notion prosperity should  and can only be enabled by central government.  

WHO WILL LEAD?

Borrowing Your Way To The American Dream

My leafy, little neighborhood in Fairport, NY could be the poster child for the middle-class American dream.  Located within the village limits, in walking distance of three public schools, the streets are lined with well-kept homes, the garages of which contain late model SUV’s and sedans.  Free-range children can be observed riding their bikes, playing games and rolling down the streets on scooters and skateboards. 

Were that our only reference point, we might conclude America’s middle-class is thriving.  Unfortunately, it’s not.  It’s shrinking according to a Pew Research report.  There’s good news and bad in their report.  Yes, the middle-class is shrinking (bad news).  However, more families are moving up than down (that’s good, right?).  

The report uses family income as the criteria for defining middle-class. You are middle-class if your family income is between two-thirds (about $54,000 for a five-person household) and double the median annual income ($162,000) according to Pew. 

Income is one way to look at economic status.  But Pew’s report ignores net wealth.  Think of it this way: who’s more secure? A family of five with an annual income of $100,000 and $50,000 in savings or the reverse?  

And then there’s debt. Americans are borrowing heavily to maintain their middle-class lifestyles according to the Wall Street Journal.  Many families take seven-year auto loans to afford an average new vehicle cost that exceeds $32,000, often leaving them in the predicament of needing to trade-in an aging daily driver before they’ve paid off the loan.  No worries, though.  You can simply roll your balance due into the next car loan.  At the same time, debt to equity ratios on home mortgages now equal pre-financial crisis levels.  And, credit card debt exceeds $1 trillion for the first time since the Great Recession. 

Hedge-fund investor Ray Dalio has analyzed the split between the Top 40% and Bottom 60% of income earners.  The Top 40 earn, on average, four times the average of the Bottom 60 and have ten times the wealth.  This spread has grown over the last 20 years as manufacturing jobs have disappeared and the mix of household assets and liabilities have changed.  The Top 40% are more likely to own tax-advantaged real estate, stocks and bonds while the Bottom 60% are more likely to incur expensive student, auto and credit card debt.  So, over time, the split grows wider. 

Maintaining a middle-class lifestyle has become more expensive while incomes have not kept pace.  And, I haven’t even mentioned the impact of rising tuition and healthcare costs.  We learned a hard lesson in 2008.  Sooner or later, borrowing more than we can afford to repay will lead to financial ruin.

How will that impact our leafy suburbs?

WHO WILL LEAD? 

I’m Just An Old White Guy

I decided to become a writer sometime around my sixtieth birthday.  My successes in this endeavor have been minor and infrequent.  My first book was published by Motivational Press and the editors of the Democrat & Chronicle (D&C) have graciously published my guest columns from time to time.  At least one of those – expressing the frustration of a political moderate in a Deep Blue state – was picked up through the Gannett network and published in the Des Moines Register. None of these successes have enabled me to make a living as a writer.  But I have learned a lot during my journey.

A love of language is essential to becoming a writer and there is no place language is more important than in our news media.  During my brief stint on the D&C’s editorial board, I observed true professionals as they worked to capture ideas without creating false equivalence whether writing about a sexual harassment scandal at the University of Rochester or deciding how to endorse or not endorse a candidate for mayor.  

Sometime in my journey, I created a  hashtag for myself #justanoldwhiteguy.  I fantasized that it would be followed by many on Twitter and it was NOT.  Maybe it doesn’t resonate with others as it does me or maybe other old white guys don’t know what a hashtag is for.  Whatever the reason, no one seems to care.  I am compelled to consider it in a new light this week as the media refers to white nationalism and angry white males in the wake of two mass killings within 24 hours.

The phrase ‘angry, white males’ can create a false equivalence.  It may accurately be said that the Dayton and El Paso shooters (both extremists one a conservative, the other a liberal) are both angry, white males. But that doesn’t mean all white males who are angry are likely to became mass murderers.  The broader context in which white males may become angry relates to the word ‘just’ in my hashtag.  Indeed, it’s the word ‘just’ that makes my hashtag work.  It’s obviously not meant as an adjective in the sense of being righteous.  Certainly, there are old, white guys who consider themselves righteous, render judgment and, in some cases, mete out punishment.  But, in my case, it is rather an adverb meaning ‘merely,’ as in “I’m just a temp,” the Cri de Coeur of those whose employment is not long term. 

My Cri de Coeur is that of a demographic being increasingly blamed for all the ills of society, both real and imagined.  Being a white male is now treated as an original sin as though the constitutional form of Republic asserting the equality of all and rule of law were not also created by white males.  

The word ‘old’ is also a significant factor in my feelings about such shifting social attitudes.  I am of a generation that protested the war in Vietnam but not Jimi Hendrix’ playing of the national anthem at Woodstock.  Students for a Democratic Society called for revolution, a call that was quelled as the war wound down and boomers started getting married and having babies (much as Millennials are today).  Just as the WWII generation saw us Boomers as an ungrateful lot, we have raised the generation of ungrateful rabble-rousers who now complain about our governance.  

And so, I am not justan old white guy.  I am also an angry white male.  I am angry that the Republican Party has provided us with a President who consistently fails to provide the moral leadership we need.  I am angry that the best alternative the Democrat Party can offer is a slate of candidates hellbent on destroying our prosperity through government control of the economy.  Most of all, I am angry that we are saddled with an electoral process that offers no relief.  

I’m not a gun owner or a member of a nationalist group.  I won’t find an outlet for my anger by committing mass murder.  My anger can only be resolved by political leaders who share my belief in a free American society.  Reproductive freedom means women should make their own moral choices. Social freedom means that all citizens should be entitled to equal opportunity but not equal outcomes.  Economic freedom means that capitalist transactions between a willing buyer and a willing seller should not be subject to government interference.  

Find me a candidate who embraces those ideas and I will no longer be an angry white male.  But I’ll still be #justanoldwhiteguy. 

WHO WILL LEAD?