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A future for the Rust Belt?

I've unearthed three blog posts from brainy people who talk the pros and cons about the economic rationale for using high speed-rail to connect Rust Belt cities, along with larger issues.

This is some of what economist Ryan Avent had to say last March on his blog:

The Rust Belt has plenty of capable cities, but they’re a lot farther apart than the ones in the northeast. They’re also separated from the northeast juggernaut by a big damn mountain range, which slows the movement of goods and people. If you need a low cost alternative to a big northeastern city, it’s just not feasible to look west of the mountains. And if you need a low cost alternative to Chicago, well, most of the big cities are a long way away. New York to Washington is only 200 miles, between which is a lot of stuff. Chicago to Detroit is closer to 300 miles, and there’s a lot less in between, because so much of the Rust Belt urban geography is clustered along the lake shore. In general, the Rust Belt is a much looser and poorer version of the northeast. If you need a high-powered, high-density location for your firm, then you’ll end up in the northeast. If that’s not that important, well, you may as well move somewhere in the Sun Belt.

So what would I do if I were the midwest? First, I’d work hard to concentrate economic activity in dense downtowns. And second, I’d work hard to develop a high-speed transportation network anchored on Chicago and Toronto. The Sun Belt can afford to plan poorly and develop willy-nilly. The southern economy has performed well, housing is dirt cheap, and local governments don’t have a century’s worth of decrepit infrastructure to support. The midwest doesn’t have those advantages. People aren’t going to flood back.

To rejuvenate the Rust Belt economy, then, governments have to find ways to allow their citizens to punch above their weight. That has to mean improved connections within and across Rust Belt cities. Deep, connected pools of human capital fuel the economy of the northeast, and the midwest has to try to marshal and mobilize its resources by moving them closer together.

Richard Florida, a Tor-Buff-chester advocate and professor at University of Toronto, followed up with this post in which he said:

I sure wish policy-makers were listening because Avent’s nailed it. Stop tearing out downtown neighborhoods to put up corporate towers, or faux malls or gigantic stadium-convention center complexes. Increase density, improve neighborhoods, focus on internal and external connections. Amen! And I’d add: attract immigrants, retain college students, and become more open-minded.

Interesting thing is the great Chi-Pitts mega (46 million people, $1.6 trillion is not a whole lot smaller than Bos-Wash  (54 million people, $2.2 trillion in economic activity).  They’re the second and third largest mega-regions in the world. Tor-Buff-Chester (22 million people, $350 billion in economic activity) is no slouch either.

Not everyone agreed, however, including this Souther Cal professor:

His basic argument is that all it would take is high-speed intercity transport and revitalized downtowns to do this job. I am skeptical...

I have always rather liked cities like Cleveland, Milwaukee, St. Louis, and Duluth. I think Pittsburgh is absolutely lovely (you read that right) and is a terrific university town.

But these places (along with Detroit, Buffalo, Syracuse, etc.) have a history of concentrated manufacturing employment, which in turn created labor markets where workers had few incentives to become well educated ...

All these places are, moreover, cold. Two of the most important predictors of population growth since World War II have been education levels of the population, and climate.

Who is right? I'm not sure, although I think climate change gives cities on the Great Lakes an important  asset to work with. High-speed rail, if done right, could be part of the mix, as well. But certainly, a lot more would have to fall into place.

More on high-speed rail

My post yesterday generated a lot of traffic and reader comments, so let's keep it going.

As I said Wednesday, I think high-speed rail is a good idea -- in theory.

Given pollution caused by auto emissions, unstable gasoline prices and the susceptibility of air travel to both price spikes because of fuel costs and terrorists, high-speed rail could be an important piece of public infrastructure.

But if we're going to do it, we need to do it right. And we need to make sure it makes economic sense.

First the doing-it-right part.

High speed trains When Eisenhower proposed a nationwide interstate highway system, he wasn't talking about taking two-lane roads and making them super highways. But that's kind of what the thinking is behind high-speed rail, hence travel speeds that would lag way behind the systems that operate in Europe and Asia.

I look at New York's proposal for high-speed rail and I come away thinking it's kind of like the plan to sink hundreds of millions of dollars into the foot of Main Street to create Canal Side while leaving the Skyway up in the middle of it. When I look at the model, I'm not focused on the canals and shops, I'm asking why the noisy, polluting eyesore is still there and why can't we do this right. 

Does high-speed rail make economic sense?

The key question isn't so much "would fares be subsidized?" -- although that's certainly a fair question --but would it help promote economic vitality?

In the case of Buffalo, for example, would connecting to, say, Toronto, promote economic growth by presenting opportunities? How? What else would have to happen to exploit the opportunity? Can we get there from here?

And where exactly are the Canadians on this?

(Sorry, but this region has a lot more to gain with a link to Toronto than points east. Not that going east doesn't have potential merit. But I'm looking for the biggest bang for the buck.)

These are questions that ought to be considered right now. Getting at those answers would allow for some sort of cost-benefit analysis and clarify the other pieces that would have to fall into place. Only then could an informed decision be made.

As it is, there's too much "sounds like a good idea" and/or "if we build it they will come" thinking at play.

I'm sure thought has been put into at least some of these issues and I'd appreciate reader comments that can help fill us in.

The Buffalo Pundit, by the way, has a third installment of an interview with Sam Hoyt on high speed rail.

High-speed rail going nowhere fast

I'm sorry, but I just can't get excited about all the sudden chatter about high-speed rail. Not that I don't think it's a good idea -- actually, I think it's a great idea -- but the Tonka Toy approach being bandied about represents much less than a half-a-loaf. And a soggy one, at that.

I covered high-speed rail some 25 years ago when I covered transportation for the Orlando Sentinel. Even went to France on assignment to, among other things, travel their high-speed system. Their TGV tops out at more than 300 miles per hour and routinely hits 200. Acceleration was akin to an airplane taking off.


We're not talking anywhere close to 200 mph here, more like 110. I'm sorry, but the prospect of getting to Albany in three-and-a-half-hours doesn't send me rushing out the door in search of my local Amtrak station. 

Moreover, we're talking about building east to Albany, not north to Toronto, which makes a lot more sense for WNY. After all, Toronto is a lot more vibrant than the carcass economies that line the Thruway corridor. Utica, full speed ahead? I think not.

The talk is accomplishing something over the next 20 years, which ..... is ..... a ......long ....time. This year's college grads will be in in their 40s -- and most likely living in North Carolina -- by the time Mission Accomplished would be declared.

And we're talking use of federal money that (1) will cover only a portion of the cost and (2) will be fought over by various states like raw meat at a convention of wolves.

For high-speed rail to make a real difference, it needs to link WNY with Toronto, in addition to Albany and NYC. It needs to be high speed -- 110 mph doesn't cut it. It needs to happen sooner than later.

And to make any of the above happen, state government would need to belly up to the bar with billions of dollars, but that won't happen so long as Albany continues to shower money on the usual suspects. Nope, we're spending those billions on bloated bureaucracies, retired government employees and corporate welfare.

If you insist on learning more, Wikipedia has this overview of high-speed rail, the Washington Post has this takeout of the issue and the Buffalo Pundit has two video interviews with Sam Hoyt. Meanwhile, Buffalo Rising has this on the prospect of an express train between Buffalo and Niagara Falls.

Sagging economy rendering subsidies even more obsolete

I've got three points to make, so stick with me.

The New York Times had a story on the economy over the weekend that is getting a lot of attention. It says, in part:

As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the American economy.

The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Rather than riding out the storm, economists said the time is rapidly approaching to retool the economy and train workers for the next generation of jobs.

In short, we will not be returning to business as usual.

Meanwhile, Jeff Jarvis - author of What Would Google Do? - has weighed in with a blog post that portends Future Shock.

It’s not a great depression, neither is it a great recession we’re going through now. At the Brite conference this week, Umair Haque called it a great "compression" as an economy built on perceived value reconciles with actual value ...

I try to argue in my book that what we’re living through is instead a great restructuring of the economy and society, starting with a fundamental change in our relationships - how we are linked and intertwined and how we act, nothing less than that.

Yes, entire swaths and even sectors of the economy will disappear or will change so much they might as well disappear:

America may well not be in the auto industry soon.... Financial services will have to be completely remade (by government). ...Large-scale retail will shrink and consolidate and then be transformed by a search-and-buy economy ... Residential and commercial real estate will have to restructure around a new capital structure ... Consumer productsof all sorts will have to change in the face of empowered customers and, in some cases, with competition from small competitors given the benefits of scale on platforms (see: eBay, Etsy, Amazon, et al) ...Government will grow but thanks to the empowered populace, it, too, will face fundamental change.

There are opportunities here, of course. There always is in change if you’re willing to see and seek it.

This is the time when startups start. I agree with Reid Hoffman that founding new companies is our way out of this mess. Given the profound nature of the restructuring, starting new businesses - not fixing old, doomed ones - is the only sensible path.

Ah, yes, the sensible path. The road not often taken here in Western New York.

Look folks, the hand writing is on the wall. We're going to get hammered. In fact, it's already happening.

What are we big on? The legacy manufacturing and financial services that many economists say are going bye-bye.

And where do we come up short? Technology and entrepreneurship - the future according to Jarvis and others.

We've got two choices.

We can keep doing what we're doing - which is the choice we always seem to take. As in: "Hang on to what we have, regardless of the cost, both in dollars and lost opportunities."

Or, we can look around and start to retrofit our regional economy, building off our legitimate strengths to meet the needs and demands of the economy that emerges from the current carnage.

It's going to take some time to figure things out, but that's no reason not to get started. The government subsidy programs we've come to rely on, in lieu of lower taxes and other steps other states have taken to make themselves more conducive to economic growth, are a good place to start.

They were mostly out of step and ineffective before the economy started to tank. They're even moreso today in the face of the Great Recession.

Think about it: The Empire Zone program is widely regarded as a failure - the whining of local developers like Rocco Termini notwithstanding about reforms proposed by Gov. Paterson. But even those reforms, which in part would focus future benefits on industry and financial services, look suspect, given the prospect of a permanent decline of those very sectors. I think this means the reform requires reform.

It doesn't stop there.

The New York Power Authority expects to open negotiations later this year with more than 100 local industries regarding the sale of low-cost hydro-electricity. The major customers are pushing hard for long-term extensions and NYPA boss Richard Kessel, for all this talk of reform, keeps sending signals that suggest he will oblige, despite the wasteful subsidies showered on some of the largest customers whose best days are far, far behind them.

These subsidy programs represent a finite resource. Every megawatt of power given to a fading industry  is a megawatt that can't be provided to help power a company with growth prospects. Every tax break given a developer to put up a building whose tenants will employ people at sub-par wages means another project that might create good-paying jobs goes without them.

We've got some things going for us as we look at the pending new world economic order. Our access to fresh water. Our capacity to generate renewable sources of energy. A similar capacity to retool some of our industrial wherewithal to service that renewable energy sector. Our proximity to Toronto, a mega-region that has long been spitting out investment dollars we haven't figured how to attract. Colleges and universities churning out a lot of educated people. Our border location - despite our ineptitude in exploiting the opportunities it presents.

Look at who we've helped bankroll of late through subsidies.

Citigroup, whose stock is now worth the price of merchandise you can pick up at the Dollar Store.

General Motors, whose financial books left auditors holding their noses. 

Olin and Occidental chemical companies, whose best days were back in Happy Days.

Folks, we've got to be a lot smarter. 'Cause if you think the last 25 years haven't been pretty, you ain't seen nothing yet.

   

Piggybacking on Ontario's green ambitions

As I noted a week ago, Ontario is planning to go green in a big way. Sweeping legislation has been introduced that's expected to pass in slam-dunk fashion that, among other things, is projected to create up to 50,000 green-sector jobs and allow the province to leapfrog any states south of the border that fancy themselves sustainable showcases. Business, labor, greens and farmers all seem to be on board.

In short, our neighbors to the north want to to be the top (green) dog in North America, and see both economic and environmental benefits to being so.

What's in it for us here in Western New York?

I posed that question to some green and economic development types, and what I heard back confirms my own gut feeling. That is to say ...

WE NEED TO GET IN ON THE ACTION!

Or, as Jim Allen, head of the Amherst IDA put it: "This could be an exciting opportunity to revitalize the Great Lake states' economies and as such we should pursue it aggressively."

Let's hear more from Allen, who, for my money, is one of the best mainstream economic development thinkers in the region. 

"All of the Great Lake border states should explore this initiative with Ontario province to determine whether a joint venture would be possible. 

"If all of the US border states and the province of Ontario were to make a collaborative effort to achieve the goals imagined in the Ontario proposal, the Great Lakes region would have a competitive advantage over most other regions throughout the world. 

"An initiative such as this could be a first step in creating the mega-region that Richard Florida has talked about." 

Next up is Dave Bradley, perhaps the brainiest of the wind power experts we have in the region:

"This appears to be a seismic shift in the North American renewables scene. To quote a famous saying.....'It's huge, Buffalo.'

"The GEA is a very logical response to this bad economic news.

"If only Ontario does this, and combined with Quebecs huge RFP policy (which produces the same electricity prices, but mandates production of equipment in Quebec in clever ways that NYPA might want to study), the new renewable energy center for the Great Lakes will reside in
Quebec and Ontario.

"After all, they have steel, copper, aluminum, chemicals and glass production, cement production/resources, a sophisticated workforce and industrial infrastructure, lots of workers
willing to work (and no health insurance problems - single payer, government run, no private insurance stuff), and huge electricity demand centers in metro Toronto and Montreal, plus lots of other sites like London, Sarnia, Windsor, Sault St Marie, Hamilton, Niagara Falls, etc.

"I'm jealous. Good beer, and now good renewable energy law. How can NY hope to stay competitive? Well, if you can't beat them, join 'em."

Last, but not least, is Walter Simspon, co-founder of the Western New York Climate Action Coalition:

"The renewable energy and green jobs proposal under consideration in Ontario puts claims of New York energy leadership to rest and may have the unfortunate effect of sucking green jobs north of the border unless leaders in Albany and Buffalo respond with similarly aggressive policy changes and programs. 

"It is time that NY seriously consider feed-in tariffs to accelerate renewable energy development. 

"And locally, we need to see Mayor Brown, our WNY state delegation and Rep. Brian Higgins step up to the plate and commit to attracting a major wind turbine builder to Buffalo before all regional wind energy manufacturing is in Ontario. 

"The bottom line is that we are not doing enough to switch to sustainable energy technologies and address global warming. One result of that failure may be that our much hoped for green economy does not take off, hurting the economic recovery and our hurting pocketbooks."

My own take on this is that this can't be entrusted to the usual suspects in the political, business and economic development community. They're not going to get anything done, they probably don't even see the need.

Nope, the people who are smart on this issue need to act quickly to piece together at least the framework of a plan and start pushing it. Starting, like, now. Step 1 is weighing in here.

Less green, more broke

Some random reports ...

Green, we ain't: There are several rating systems that assess the energy efficiency and/or green qualities of buildings. I wrote about LEED standards last April, reporting that the Buffalo Niagara region has relatively few buildings designed and constructed to those standards.

Another indicator is based on the Energy Star rating system, which just issued new data showing where buildings meeting those standards are located. Some 3,305 buildings nationwide made the grade in 2008. There are 128 in New York State, including 13 in Rochester, eight in Albany and -- a drum roll, please -- one in Buffalo, a facility the VA built on Bailey Avenue. There's another one in Williamsville and one other in Attica.

That gives us all of three in the region.

By contrast, the Detroit region has 65, Milwaukee 62 and Grand Rapids -- Grand Rapids! -- 42.

Here's the complete list

Poorer we are:  Federal bankruptcies nationwide rose 31 percent last year. Big surprise, huh?

Our per capita rate In New York was 2.42 per 1,000, better than the national average of 3.62.  

Poorer we are II: The lead on this story says it all:

 New York state, in the final quarter of 2008, lost over 25 percent of the jobs it had gained since the last downturn, a statistic that reveals the deepening recession, the labor department said on Thursday.

This means 110,300 people working at private companies lost their jobs in just three months.

Hmmmm: For those of you interested in such things, the U.S. Department of State is maintaining a map tracking the travels of Hillary. Gee, ya think Hillary has a tracker on Bubba?

Double hmmmm: A blogger called Street Corner Conservative has this latest missive on Richard Kessel, head of the New York Power Authority, and the move by the governor and Legislature raiding his shop for big bucks to help bail out the state budget. Read into it what you want. The post left me wondering if Kessel wasn't grimacing on the inside as the Three Men in the Room made off with the cash.

Perhaps, like me, he thinks the three could at least have had the decency of wearing ski masks.

Chris Collins is tone deaf

It's a good thing Chris Collins isn't political.

Too bad he's tone deaf.

As you no doubt recall, a company partly owned by the county executive recently won a bid to repair small motors for the county sewer system. Such contract awards are usually subject to review first by the county Legislature before being passed on to  the Control Board. The contract for Volland Electric Equipment Corp. was sent directly to Control Board, however.

To add insult to injury, the county put Volland to work even though the Control Board hasn't acted on the contract.

All this takes brass ones. First to bid in the first place, then to try and bypass the Legislature, and finally to authorize work before the Control Board acted.

Does Collins not realize how this looks? Or does he simply not care?

I guess he gets it ... kind of  ... belatedly. He now says he'll ask those running the companies he owns to not bid on county business.

"Even the appearance of a conflict of interest is something I cannot allow," he now declares, his hand stuck firmly in the cookie jar.

He said this not in an interview, but through a "statement." That's the way pols like Collins hide from fielding questions from those pesky reporters. Besides, he needs to keep busy his growing roster of PR people hired at taxpayer expense.

Elsewhere in his statement, Collins takes a shot at "career politicians."

This from a guy who promised the GOP line to a Democrat if she was willing to run against County Comptroller Mark Poloncarz, who was out beating the bushes for a candidate to run to succeed Tom Reynolds in Congress, and who is now said to be trying to drum up opponents to run against county Legislators he doesn't like.

Collins may be new to the game, but he is neck deep in it just like the rest of 'em.

For more on this, read Donn Esmonde's column in today's paper.

Opines Donn:

I can think of a few things wrong with it: It looks bad. It makes people think you are using your public position for personal gain. It chips away whatever is left of people’s faith in government.

What was obvious to most people was apparently a blind spot for the leader of county government. After a few days of blowback, Collins —to his credit— Monday tore up the contract and said companies he has a stake in will no longer bid on county work.

Collins can claim from now until forever that all was fair, and maybe it was. But somebody needs to remind him that the days of people taking a politician’s word for anything expired about a dozen scandals ago.

What do you think?

More bad economic news for WNY

The "why" of the story is unclear, but the "what" is distressing.

The growth in the value of imports and exports between the United States and Canada in the 12 years following the 1995 North American Free Trade Agreement grew by about 40 percent at the border near Vancouver and 25 percent at Detroit, while dropping slightly at the four bridges in the Buffalo-Niagara region.

In other words, the other major border crossings are growing their free trade commerce while ours is stagnant. Great.

The folks who put the report together, the Border Policy Research Institute and the University at Buffalo Regional Institute, don't provide a lot of reasons for WNY's inability to cash in on free trade to the degree others have. But another study by the Border Policy Institute sheds some light.

In a nutshell, the traffic jams known as the Peace Bridge and Queenston-Lewiston Bridge are choking commerce.

The institute, in its Winter 2009 Policy Brief, notes that cross-border trade dropped off after the 9-11 attacks. U.S. exports to Canada largely recovered by 2005, but not so with imports heading into the U.S. The reason, according to the report: "The increased cost of cross-border trade, likely associated with the higher cost of security compliance, is thought to be the problem."

Congestion seems to have something to do with it, as well

The report notes that 44 percent of the shipments entering the U.S. at Detroit use FAST lanes, designed to speed clearance. Here, that rate is 23 percent, or about half. Little wonder the Motor City's free trade business is growing while ours is treading water, why it's doing nearly double the volume we are.

The report also looks at automobile traffic. Our region represents the busiest crossing, an average of 16,509 cars per day, or one-fifth of the total traffic between the two nations. But our region, along with Detroit-Windsor; Blaine, Washington (south of Vancouver), and Port Huron, Michigan, all have seen their auto traffic fail to recover to the degree it has at other, less-traveled border crossings.

"It seems likely that discretionary travel was disproportionately impacted by either the harsher nature of the post 9-11 inspection process or by the congestion resulting from the new processes," the report said.

This rings true to anyone who has ever sat in a long line of traffic Peace Bridge. I know I make the crossing less frequently than I used to because I don't want to deal with the traffic.

All this hurts the WNY economy.

It means fewer Canadians coming here to shop and otherwise spend money. It also partly explains why our import-export trade isn't growing like it is at the other major border crossings.

This is a big deal because our border location is a strategic advantage that we're squandering.

What to do about it?

Well, the Obama administration needs to clean up the mess Dubya and Co. made of border inspections. Doing what needs doing with the Peace Bridge and Queenston-Lewiston Bridge is another piece of the puzzle.

PS: On Monday I said I'd follow up my post on Ontario going green with local reaction today. That's going to have to wait a few days, as I'm tied up with negotiations on behalf of my union dealing with proposed layoffs here at the paper. I hope to get to the local reaction to what Ontario is doing by the end of the week. It's kind of involved and will take more time than I presently have to piece together.

Ontario going green

I've got to hand it to our neighbors north of the border.

A decade ago, the provincial government decided there were too many overlapping, duplicate layers of government in Ontario, and almost overnight, they consolidated.

Now, Queen's Park, as their Albany is known, has decided the province is going green. Big time green.

As in, the green leader in North America.

As in, 50,000 new jobs over the next three years. (Now that's a stimulus package).

As in, we're not messing around with half-measures.

Gristmill has this excellent summary of the legislation, complete with links to other useful resources.

For a quick overview, here's what the Ottawa Citizen reported last week:

Homeowners in Ontario will be forced to conduct energy audits before selling their property as part of new legislation introduced Monday at Queen’s Park.

The change is one of many provisions in the province’s new Green Energy Act, a law the government claims will generate 50,000 new jobs in the next three years while raising the average electricity bill by only one per cent.

Energy minister George Smitherman said there will be “vast job opportunities in more efficient building design and retrofits for architects, engineers, contractors and installers.”

“Work for builders, financiers, electricians and inspectors … in construction, manufacturing and assembly, servicing and installation, engineering and trucking,” he said.

Smitherman said the jobs numbers were derived from economic modeling. Officials could not provide any projections, however, on how much the government will spend to support the provisions.

The legislation will also streamline project approvals, amend building codes for new construction, mandate more efficient appliances, and provide zero or low-interest loans to homeowners who wish to build their own small scale solar, micro-wind, ground source heat pumps or solar thermal projects.

The government will also offer a guaranteed price – and will require a certain amount of local content - for all renewable power, including wind, solar, hydro, biomass, biogas and landfill gas. That price has not been set.

Smitherman said that provision, known as a feed-in-Tariff, would put Ontario on a level of “global green power leaders like Denmark, Germany and Spain.”

The legislation sets out broad-stroke intentions. Details could take years to develop regulations that bring those intentions into effect.

Tomorrow, I'll report what some folks in WNY's green and economic development communities have to say about this. I'll add my 2 cents worth, as well.

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