Op-ed column: Big ideas, bad ideas

New York state is a high-tech disaster area. According to a recent survey reported by the American E
John Daly/For The Sunday Gazette
PHOTOGRAPHER:
John Daly/For The Sunday Gazette

New York state is a high-tech disaster area. According to a recent survey reported by the American Electronics Association, New York has the third-largest high-tech work force in the nation, at roughly 301,000 people, consistent with our position as the third most populous state.

That’s the good news.

The bad news: Among the top five states, our job growth rate is the lowest. For the period 2005-2006, the latest period for which data is available, we added high-tech jobs at a rate of 0.5 percent vs. an average rate of 2.7 percent for the other four states.

The really bad news: For the period 2004-2005, New York’s high-tech employment actually declined while the other four states grew.

The really, really bad news: Since 2000 we have lost 37,000 high-tech jobs, 11 percent of our high-tech work force, again, the worst performance among the top five states.

Meanwhile, from 2000-2006, Virginia added 60,000 high-tech jobs and, if current trends continue, both Virginia and Florida will soon surpass New York. It might be tempting to attribute this job loss to some kind of Northeast effect. However, Massachusetts grew its high-tech work force by 4 percent over the same period.

These numbers tell me a story. First, our approach to high-tech job creation is not producing meaningful aggregate results. Second, even if a megaproject, such as the $1.2 billion effort to lure Advanced Micro Devices’s chip fabrication plant, is successful, the few thousand new jobs they might create pale next to a loss of 37,000. All the associated hoopla is simply noise masking dreadful results.

Billions of dollars

Think about it. If we tried to replace each

of those 37,000 jobs via megaprojects at a cost similar to that of attracting an AMD job, it

would cost us the taxpayers $37 billion, give or take a few tens of billions.

There are thousands of high-tech employers in New York. Creating a business climate where each adds a few jobs every year is one of several keys to sustainable, efficient growth.

Megaprojects are mega losers. They give a sense of progress where none exists. They are financed by debt, so they mortgage our future. They sap resources from existing businesses. They are indistinguishable from mega pork. They deaden entrepreneurship. They create a deal mentality instead of one that strives to continuously improve the business climate. An uncompetitive business climate burdened with nonproductive megaprojects is a mega destroyer of jobs.

To see what underlies a megaproject, let’s look at the Albany Convention Center Authority and its mission: “To develop and operate a dynamic convention center facility that maximizes its economic potential. . .”

Note first that the mission can be accomplished even if the economic potential is negative, as long as it is maximized! Second, look at how risks and rewards are distributed. Firms are hired to produce market studies, which are used to justify the project. They are paid for their services, whether the project succeeds or fails. Builders will build, and will be paid. Downtown hotels and restaurants gain revenue from the public investment, and their property values will increase. Salaries for the Authority employees will be paid.

What about the risk? It is fully borne by the taxpayer.

Yes, we might benefit, but the benefits are neither direct nor guaranteed, and the taxpayer will be last in line to reap them. The incentives built into the financing system are simply wrong. A sound project has risk and reward bundled together so that all parties sink or swim together. That is one clear message from the sub-prime crisis.

New York must love dysfunction, since we have so much of it. Our statewide expenditures grows voraciously, like the plant Audrey in “Little Shop of Horrors.” We give money to business without accountability. Instead of a perp walk for failure to deliver promised jobs in Empire Zones, we hand out new aid applications. We subsidize moves of jobs from one part of the state to another, as with the Beech-Nut plant relocating from Canajoharie to the town of Florida.

We create barriers to competitive bidding on public projects. An army of overlapping economic development agencies takes credit for creating jobs, yet overall state job growth is lackluster. Huge sums of economic development money are doled out based on politics, not sound economics. And, yes, we the people bear some of the blame. We rejoice when our special interest gets an increase in its share of state resources, and fail to recognize that we are all competing for the best cabin on the Titanic.

Big PR campaign

If the actual performance is so bad, why does all the news seem so positive? One reason is that our state government is a giant PR machine. Think Senate photographer. Think member items. Think public buildings named after current office holders instead of deceased heroes, buildings that could create revenue through the sale of naming rights. We have state agencies with news release machines that publicize every minor accomplishment. Recently, one agency hired an organization that had previously given an award to the CEO of AMD to study the benefits to be expected if AMD came to Luther Forest. Surprise! They produced a glowing report, which was duly provided to the press.

The first step in fixing a problem is recognizing that one exists. If your state representative is not giving you the big picture, and a credible plan to fix it, he or she is part of the problem. It’s time to hold our leaders’ feet to the fire, or to replace them. We owe it to ourselves, to our children, and to those legislators who are the exemplars, and who are acting in the best interests of both their constituents and of the state as a whole.

The report of the Commission to Study Local Government Efficiency and Competitiveness will be a good starting place for total reform of the system. The alternative to reform is a state in continuing decline, and a leading indicator is our high-tech employment. Demand efficient, productive economic development with meaningful missions and goals. Demand accountability and results. Demand a better business climate. We need to do better.

Walt Berninger lives in Niskayuna. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.

Categories: Opinion

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