Tuesday, August 22, 2006

The problem with upstate New York is not because of who’s in office, it’s because it’s upstate New York:

Every major election cycle New Yorkers are subject to politicians complaining about the gradual decline of upstate New York and how if elected this time will be different. This unfortunately is just wishful thinking and voting for a candidate because they say they can fix the problem will only set you up for disappointment later.

What makes upstate a problem is also what makes the United States the most prosperous and efficient developed nation in the world. Many times I have referred to Adam Smith’s, “the invisible hand”, when it comes to explaining markets and upstate is no different.

Its entrepreneur’s and risk takers that decide the economic growth in this country. These individuals, groups and companies do not discriminate when it comes to finding opportunities to make a great return on their investment and will start up businesses and make investments anywhere it makes sense. That is why New York City is what it is.

New Yorkers just have to face the fact that upstate New York’s problems are telling us that Adam Smith’s “invisible hand” no longer finds opportunity in that part of the state. Whether it’s location, skilled labor or any other reason, risk takers and entrepreneurs don’t see a place to make money. This is why Pataki’s move to give tax breaks to AMD to build a plant was necessary in an attempt to get something going. It gave that region of the State an immediate “comparative advantage”, to take a term from my other favorite classical economist David Ricardo, where it now made sense for someone to take a risk.

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