Crony Capitalism Not Working Out Too Well For Upstate New York

On Saturday the New York Times, deep in its interior (page A21), had a report on the economy of upstate New York titled "Governor Struggles to Preserve Jobs and Economic Momentum Upstate."  I like the term "economic momentum" in relation to upstate New York.  As far as I know, all the economic momentum there is negative, and preserving that kind of momentum is the last thing anyone would want to do -- I think.  Another theory is that upstate New York leans Republican in its politics, and Governor Cuomo and his Democratic allies are intentionally shrinking it because they would like nothing more than to have it disappear.  You be the judge!

Upstate New York is a world center of crony capitalism, by which I mean every sort of government grant, tax break, incentive, and handout to big employers to induce them to come and bring "jobs."  The Times article goes through a litany of various of these giveaways.  Examples:

Mr. Cuomo has been aggressive about promoting business in the state, cutting or capping a variety of taxes and doling out state money, including $1.5 billion in stimulus through a regional development competition promised this year. He says such plans are necessary to reverse what he calls the “negative synergy” of job and population losses.  To that end, the state has awarded nearly $3 billion through its Regional Economic Development Councils over the past four years, nearly $2.4 billion of it upstate, to create or retain some 150,000 jobs, according to the Empire State Development Corporation, the state’s economic development agency. New York has also offered billions in other incentives dating back to previous governors’ terms.        

They hand out billions and billions, and all they have to show for it are ongoing "job and population losses."  Somehow, nobody ever realizes that in the world of handouts and tax giveaways, the politically disfavored who don't get the handouts and breaks end up bearing disproportionately high taxes, and over time they give up and close down.  Overall, the results of the game are negative.  Lots of that is reported in the Times article:

On Monday morning, the Entergy Corporation said that it would close a nuclear plant on Lake Ontario, eliminating more than 600 jobs north of Syracuse. Hours later, Alcoa said it would soon idle or close two smelting plants in Massena, on the St. Lawrence River, leaving nearly 500 people out of work. The same day, the state posted a formal notice that Sentry Safe, a safe-building company in Rochester, would close a factory with some 300 jobs next summer.      

And there are plenty of more examples.  Then there are the brilliant efforts of our political saviors to swoop in at the last minute with big government handouts to "save" some jobs:

[O]n Wednesday, . . . Mr. Cuomo and Senator Chuck Schumer, a Democrat, announced a deal with Kraft Heinz, committing up to $25 million in state funds for upgrading several of the company’s upstate plants, which make products such as mozzarella and Cool Whip, in exchange for the company’s maintaining nearly 1,000 jobs for five years.     

Without a doubt, Kraft Heinz will shortly be back for another handout, and then another, to "save" the jobs again and then yet again.

There is nothing new about this.  In upstate New York they've been trying to lift themselves up by the magic of crony capitalism for as long as I've been alive.  Check out this article from Forbes in 2000 titled "Willis Carrier's Ghost."  Willis Carrier is the Carrier of Carrier Air Conditioning, a large employer originally attracted to the Syracuse area by government handouts.  According to Wikipedia here, at its peak Carrier employed over 7000 in the Syracuse area, but now the total is more like 1000.  "Over the course of 2011 the majority of [Carrier's] manufacturing buildings of the Syracuse campus were demolished at a cost of nearly 14 million dollars."

But Carrier is only the tip of the iceberg in Syracuse's dabblings in crony capitalism.  From Forbes:

By the estimate [in 2000] of Vito Sciscioli, the city’s longtime development director, some $2 billion has been shelled out in Syracuse over the past five years in government grants, tax abatements, benefits from tax-exempt financing, infrastructure improvements and utility breaks. This is a staggering sum for a city that now has only 152,000 people in it.      

The population of 152,000 was in 2000.  By 2014 it was more like 144,000.  I guess the $2 billion didn't work out too well.  Too bad for the suckers who stuck around but didn't get the handouts!

But Cuomo and his allies have no ideas for upstate other than more of the same crony capitalism that has driven the place into the ground for decades.  Another billion dollars for Buffalo!  Four new casinos!  And of course, the one business that was ready to come in and start work right away without government handouts or help of any kind -- "fracking" for natural gas -- has been banned.  With gas prices now way down, it's probably too late for that, now, at least for several years.