Because most philosophies that frown on reproduction don't survive.

Wednesday, July 29, 2015

Along for a Bad Ride

One of the things that puts Greece in such a bad situation is that it's significantly poorer, more corrupt, and less market oriented than the rest of Europe, yet it's in a currency union run by France and Germany. The more affluent EU countries set the monetary policy, but if the result is that Greece is trapped in an economic malaise, they don't provide tax money's to run Greece's safety net as unemployment spikes above 25%.

The US also has regions which are economic backwaters compared to the places where decisions are made, the difference is just that the federal and state governments end up having to provide a certain amount of funding to keep the lights on. Still, having your lights kept on while the regulations and economy are set to someone else's convenience and your detriment are no fun. People are not happier stuck on handouts than they would be with a good job in a thriving local economy.

This struck me tangentially while reading a Megan McArdle piece on New York State's decision to raise the minimum wage for workers at fast food chains with 30 or more locations to $15/hr -- a decision which probably makes a lot of sense in the affluent parts of the state near New York City, but rather less so in the northern and western parts of the state where average wages and cost of living are much lower.

I've joked that New York state is "West Virginia lashed to Connecticut," but economically, that description is not far off. The rural north is so economically depressed that prisons are fondly regarded as sources of employment, and the deindustrializing western portion of the state has many of the same problems, plus large brownfield areas from long-departed factories that no one can afford to clean up, and a structural overhang of buildings, government programs and people left over from flusher times. The more young people depart in search of work elsewhere, the worse the problems become, as the depleted tax base struggles to provide for the old and the poor who have been left behind.

It's not fair to say that these problems are all caused by Albany. Upstate New York is a cold, snowy place far from the coast, and those places have been declining for decades. On the other hand, it is completely fair to say that Albany has made the problem much worse, by layering on taxing, spending and regulatory mandates that may be affordable in a downstate region driven by easy-flowing financial industry profits, but are catastrophic in a region struggling to hold onto its last manufacturing jobs. And Albany's policies make it impossible for upstate to leverage the assets it does have -- such as an incredible number of colleges graduating educated workers, and lower wages that could potentially attract new businesses -- into some sort of recovery.

Being a west coast boy, I always kind of forget that New York state is quite large and mostly unlike New York City -- though California is much the same, with vast swathes of sparsely populated inland areas (with an agricultural economy) seeing their state run by a few densely populated cities on the coast. The layout and history of New York are different, but disparity is similar. Buffalo and Rochester are about as close geographically to Cleveland and Pittsburgh as they are to New York City, and in economy they're much close to the rust belt metropolises than to the finance, fashion and media empires of the city.


BenK said...

Connecticut is also West Virginia lashed to Connecticut, if you will. In fact, there are the equivalent of rust belt cities, even along the coast, and a former rural heartland bordering western MA. Meanwhile, in certain cities lie the insurance industry, hedge funds, the legal system, and the key universities. These populate the governance of the state.

Government of whom, by whom, and for whom doesn't necessarily end up with one referent to whom. Two and three tend to attract.

Darwin said...

I didn't know that, though it stands to reason.

One of these days I need to actually get to New England and learn a bit about it. Now that I've lived in Ohio for five years, I've finally lost my California-based impression that Ohio counts as "the east coast".

Timotheos said...

Something similar to this has happened here in Texas; if you draw a triangle from San Antonio to Houston, to DFW, the area inside the triangle represents less than 25% of Texas's land, but around 75% of both its economy and population. This means that there are vast treks of Texas that even many Texans have a hard time remembering about (for instance, the Piney Woods, and the rest of East Texas for that matter, anything south of Houston that's not on the coast, the big bend area, the panhandle, etc...).

Now I know the impression given in the movies is that Texas is all just desert, but the reality is that we barely even have any desert (about 10-15% of Texas's area), and most of that backs up into the mountains of west Texas. In other words, it's all perfectly good land, it's just that nobody's bothered to develop it yet, and so it's almost completely forgotten about. It will be interesting to see how that changes in the coming 50 years.