Thursday, December 23, 2010

Economic "development"?

Killing Us Softly

Andrew Cuomo has an opportunity to change the state's development strategies.

Can we survive New York's economic "development" plans?

Here in Buffalo, we need to care about an obscure economic fact called the Canadian consumer debt-to-income ratio. Canadians are just like Americans except more so: Canadians consume more than they earn, and pull off that trick by borrowing money. Statistics Canada reported last week that the ratio of household debt to disposable income reached a new record this year when it hit 148.1 percent. The US number is 147.2 percent. A senior Conservative consultant told me a few months ago that Americans shouldn’t plan on Canadians coming down to Buffalo to buy much stuff for too much longer, because the banks in Toronto would probably start tightening things up in the new year. It’s December, and not only are they doing so already, but the Canadian government is warning about interest-rate increases in the coming year, and fretting out loud about Canadians’ ability to pay their old bills, much less come to Buffalo to shop.

Canadian shoppers kick in a few millions of dollars of sales tax to Erie and Niagara Counties, although that amount wobbles up and down depending on the exchange. It’s been as much as five percent of the take in Erie County in good years. But it’s not written in stone that Canadians will put up with US Customs inspectors at the bridges. And now, we’re being warned not to rely on Loonies and Twonies.

If Canadian disposable income is iffy, American is more so, according to the most recent numbers from the US Bureau of Economic Analysis. Personal income is just not rebounding in our part of the country, notwithstanding the assertions of other agencies that the Great Recession has ended. Retail trade seems to have made a modest recovery for Christmas 2010, but many economists suspect that there is much to be resolved. Even the Wall Street Journal has reported that a slight uptick in private economic activity is being hampered by government cutbacks, layoffs, and public-school downsizing as governments experience the so-called lag effect. Here in the Buffalo area, we see that $74.5 million in federal stimulus money received by Erie County is sitting in Erie County coffers, and that 200 county workers are being laid off, funding for libraries and culturals is being cut, and federal grants-in-aid to county health, social service, and environmental programs are being turned away, because Erie County Executive Chris Collins and the Erie County Legislature have chosen anti-government ideology over basic economic arithmetic.

Yet despite continued low income-growth, continued regional population decline, warnings from the Canadian government about the new realities facing even prosperous and more numerous Canadian households who come here to shop a little, New York State’s key economic development agencies stick to plans that area based on the idea that we and our neighbors have lots of money and nowhere to spend it all.

The events of December 16

Last Thursday, the leading New York State economic development agency endorsed spending more than $50 million of a unique and irreplaceable pot of public money on building replicas of canals in what was once America’s largest inland port so that Erie Canal Harbor can become a retail and entertainment hub. The $50 million is part of a plan to spend $153 million over the next couple of years on “[c]reating tenant spaces suitable for a mix of uses, including office space, hotel space, ground level retail and community facility spaces, to ensure that Buffalo can capture its share of future economic growth and new jobs,” according to the Modified General Project Plan. Nowhere in the official document is there any mention of the current economic context, including the glut of downtown office space in every category from A to C, or the glut in retail space in the area. (Buffalo metro has somewhere between 32 and 34 square feet of retail space per capita, compared to a normal ratio of about half that, while Portland, Oregon has less than 10 square feet per capita.) Also missing from the plan for Erie Canal Harbor are items that were part of the press releases of November, in which the agency that has authority over the historic terminus of the Erie Canal pledged to build a pavilion, create a “tent city” that would be something like an ongoing summer art festival, spend public dollars on the arts, and engage consultants with experience in “place-making.” The documents instead reflect what these economic development agencies have been planning for more than a year—namely, using a finite and unique public revenue to build replicas of canals, plus five parking garages, and hundreds of thousands of square feet of commercial, retail, restaurant, and hotel space.

So there are grounds on which to question the appropriateness of this use of public funds. Some also question the propriety of the deal. Without ever having gone through the usual public procurement process, in which potential developers for a publicly funded project are required to offer bids, the designated developer—which will use public funds to create the hundreds of thousands of square feet of new commercial space—remains Benderson Development Corporation, which has a sweet deal: It will pay $10 to take title to the development after it is built out.

At the very same time that Empire State Development Corporation was voting approval of the Erie Canal Harbor Development Corporation’s plans last Thursday morning, State Supreme Court Judge Frederick Marshall was delivering his decision in the Goldman v Bass Pro Shops case. Judge Marshall decided that the taxpayers who brought the lawsuit did not have standing to sue to stop this use of public dollars, dollars which came from the 50-year stream of payments that the Buffalo area was scheduled to receive from the New York Power Authority to compensate it for the Niagara Power Project’s environmental consequences. That 50-year stream of public money will become a one-time shift of cash to an economic development agency that has decided, notwithstanding all the meetings, protests, and questions about the existing glut of retail, parking, and commercial space in the Buffalo area, and amidst the crisis in public support for the arts, to build more retail, parking, and commercial space. And replica canals.

A coda came two days later with news reports that the president of the Seneca Nation of Indians is reaching out to ECHDC to see how to coordinate the Seneca Gaming Corporation’s plans for expanding its Michigan Street casino. Jordan Levy, who chairs the board of ECHDC, serves on the board of the Seneca Gaming Corporation. According to its own records, the Seneca-affiliated casino corporation’s Buffalo operation draws its clientele from within 15 miles of the intersection of Michigan Street and South Park.

A few years ago, Erie County and local citizens sued the Bush administration to stop the Seneca Gaming Corporation from building a casino off Seneca reservation territory, arguing that while the Senecas have every right to build whatever they want on their own territory, it’s not only illegal but economically destructive to locate a sovereign nation’s tax-exempt entertainment enterprise—whose goal is to keep visitors inside its walls, spending money on Seneca-owned products and services—in a marketplace where locally owned, tax-paying businesses have to follow normal business rules. The current Erie County executive removed Erie County from that lawsuit. The Obama administration has been silent. The Seneca Gaming Corporation continues to compete with locally owned businesses and entertainment venues for local disposable dollars.

Welcome to the world of “economic development” in Upstate New York, where the state’s agencies will spend over $8 billion of taxpayer money in various direct subsidies, tax abatements, and project-specific infrastructure investments so that politically connected bankers, construction management firms, real estate developers, engineers, architects, and others will keep this system going.

Do note that the system has produced the following results: a drop in population to 1.1 million, which is below the region’s 1974 peak of 1.4 million, with a continued decline expected to continue at least until 2030. Meanwhile, because of direct and indirect subsidies for what is termed “development,” 76 percent more land in the Buffalo Niagara metro area is being used than in the 1970s, even as the population of the urban core has dropped from more than 400,000 to less than 280,000. As Rolf Pendall of Cornell University and the Brookings Institution noted, Buffalo and all other Upstate New York metros has experienced “sprawl without growth.”

Will Cuomo change any of this?

The “economic development” entities that taxpayers fund, directly and indirectly, are allegedly busy at work in the public interest, tasked to help bring new economic activity to aggrieved and challenged parts of New York State. Many observers question their efficacy. This past August, another report on the dysfunction of local industrial development agencies (IDAs) showed how public funds result in lower local tax revenues and fewer rather than more jobs. The Coalition for Economic Justice and its partners are now engaged in a broad campaign to help elected officials in Albany, and taxpayers, understand that the current system rewards insiders but doesn’t increase net employment or return any net positive on the public’s investment. But when Buffalo Assemblyman Sam Hoyt and his colleagues broached the prospect of public accountability, the blowback was intense: Construction unions joined with the financiers and developers who love the status quo to protest any enforcement of standards.

Few elected to public office in New York State seem to want to change this system. Elected officials are generally intimidated by the rhetoric of what in Washington used to be known as the “loophole lobbyists.” The Fiscal Policy Institute, a labor-affiliated think tank in Albany, continues to provide the intellectual horsepower for the accountability movement through its reports and analyses—including its most recent piece on “job-creating” tax breaks and handouts that add $5.4 billion to the state’s deficit without creating public benefit. This institute produced a sensible and moderate agenda for economic policy in 2006, giving special attention to the problems of Upstate metros.

But the worm may have just turned.

The recent hubbub over the Erie Canal Harbor, plus public outrage over Erie County government’s refusal to adequately fund quality-of-life amenities including libraries and culturals, has sent a signal to local elected officials that irritation with the status quo has a certain anti-elitist energy that endures. The political energy of 2010 is not spent.

And there is some evidence that even the business elite in Buffalo may have just figured out that Empire State Development Corporation’s plans and the Erie County executive’s policies cause more burdens than they’re worth. While ECHDC’s leaders press ahead with their plans for replica canals and 725,000 square feet of new commercial space, the board of directors of Buffalo Place—which is the business-improvement district that serves the companies that own existing real estate downtown—succeeded in getting Mayor Byron Brown on board with a letter to HSBC, imploring the bank to stay inside HSBC Tower rather than let Empire State Development Corporation and ECHDC build the bank a new, taxpayer-subsidized office.

And the business community seems to have awakened to the price-tag of County Executive Chris Collins’s anti-stewardship policy. While Collins hoards the $74.5 Obama stimulus funds in a surplus that is over $88 million, he has shifted responsibility to local businesses and philanthropies to not only continue their customary support of the 19 theaters, several small art galleries, dance groups, and other arts groups, but to make up for the county support that he cut.

Meanwhile, ECHDC has already spent $5.1 million on a single consultant, a New York City architectural and engineering firm that designed the replica canals. Empire State Development Corporation has endorsed spending $51 million on building those replicas, on a path toward building out the plan that has not changed much, except in its phasing, since last summer.

At the moment, the “economic development” strategy of New York State consists of ignoring the crisis of the existing culturals, the existing libraries, and the existing landlords of downtown Buffalo; ignoring or not addressing the coming challenges to cross-border commerce; endorsing a policy of downsizing public employment at a time of anemic consumer demand; and adding to destinations for disposable income without adding to the region’s ability to produce income.

As soon as Governor-elect Cuomo takes office, the question becomes this: Will these be his policies too?

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Thursday, December 9, 2010

DC deals and Rust Belt ripples

Once Were Creators

As Obama surrenders, the Rust Belt wonders

The viral video of the moment stars Senator Bernie Sanders of Vermont. He is the white-hair standing at his desk in the US Senate giving a passionate speech, a speech that recites disturbing facts about how different the rich in our country are from everybody else.

At least since the 1980s, progressives have been warning about how much richer America’s rich are getting, and why their self-isolation is a problem for democracy and a sense of a shared national destiny. But the language progressives use to describe this problem is numbing. We are accustomed to hearing about “income polarization,” and “tax regressivity.” But on YouTube, Bernie Sanders makes it simple. He explains how eight out of every 10 new dollars of new income reported in the past 30 years have gone to the richest one percent of Americans. He says that the rich are conducting a “war” on the American middle class, and that America is turning into a banana republic. He is mad as hell that any Democrat would consider extending the Bush administration’s tax cuts for people whose incomes are over $250,000 a year because doing so will add $750 billion to the federal deficit over the next 10 years. Sanders raises his voice against the hypocrisy of Republicans who would cut aid programs for the elderly, the sick, students, and other members of the broke-oisie in the name of ending deficits, but he almost shouts about how repealing the estate tax, as Republicans advocate, will cost the Treasury more than $1 trillion over the next decade, all to benefit the top one-third of one percent of American households. He is contemptuous of Exxon-Mobil’s $19 billion in 2009 profits, on which it paid zero federal income tax.

Sanders gave his speech last week. This week, President Obama, who campaigned vigorously against the Bush program of tax cuts for high-income households, agreed with Republicans to extend precisely the tax policy against which he campaigned.

This move came only a few days after the president’s blue-ribbon commission on the federal deficit produced its report, entitled, melodramatically, “The Moment of Truth.” Not since the 1980s has there been so much elevated and urgent discourse about the federal deficit and the national debt. In the 1980s, America learned that the central claim of Ronald Reagan’s “supply side” policy was a fantasy: Cutting tax rates on high-income individuals and corporations does not result in such great economic expansion that tax revenues lost today are more than made up tomorrow. Arithmetic has proved more reliable than fantasy: When Bill Clinton and the Democratic Congress raised tax rates in 2004, Ronald Reagan’s deficits went away. When Clinton left office in 2000, he left a surplus. When George W. Bush and the Republican Congress did Reagan Redux and cut tax rates but kept on spending, the surplus went away, deficits were created and the national debt mounted.

Now comes the deficit-reduction commission and its surprising report. The headlines have been all about cutting Social Security, squeezing Medicare and eliminating the home-mortgage interest deduction. In reality, it is a genuinely progressive plan.

The 59-page commission report, like Bernie Sanders’s speech, is all about cutting defense spending and taking care of poor people. The commission’s recipe-book includes the most far-reaching tax-reform package anybody has seen since 1986. This “Truth” plan would close almost all tax loopholes on both individuals and companies, and in return, would cut income tax rates. Clinton’s top rate was 36.9 percent. Bush cut it to 35 percent, which Obama, contrary to his campaign promises, accepts. The “Truth” plan would cut the top rate to 24 percent. Interest on municipal bonds wouldn’t be tax-free any more; you’d only be able to deduct your mortgage interest on mortgages under $500,000, which is still very generous given the collapse of real estate in most US metro areas. The only tax breaks that would remain are those for childcare, for some health plans, and for low-income workers. There wouldn’t be any other deductions, exclusions, preferences, or deals available. Capital gains would be taxed just the same as ordinary income, which is the same deal enacted in 1986, only to be gradually done away with. Corporations would lose all their loopholes.

American industry might actually have a chance were this plan adopted. The document has tables that show exactly how much more or less federal income tax would be paid by individuals and corporations. It is a strongly progressive plan, meaning that the effective tax rate of the people Sanders complains about would go up, even though the nominal tax rate would still be a dozen points lower than even George Bush set it. Almost immediately, the incentive for financial speculation, rather than for industrial production, would be curtailed.

The political problem this “Truth” plan has is that most people believe that it would screw old people out of their Social Security. The plan does indeed propose raising the retirement age to 69—but that wouldn’t happen for 40 years. The plan would reduce the benefits of high-income retirees, but it would boost the low-income retiree. It is indeed a progressive plan.

But in the current penumbra of Obama’s capitulation to the anti-progressives in the Republican Party, the commission’s call for progressivity may be just whistling in the darkness.

Hitting home

Sanders complained about shopping for Christmas presents and finding only “China, China, China” stamped on every manufactured item for sale in American stores. We are living the consequences of Richard Nixon’s presidency, for it was he and Henry Kissinger who opened the US to trade with China. High-wage manufacturing jobs in the United States were doomed once Nixon met Mao and began the flood of investment capital to a place where wages are a buck an hour or less.

Today, 40 percent of households in the Buffalo-Niagara metro, according the Internal Revenue Service, make $20,000 or less per year, which is minimum-wage work. In Buffalo-Niagara’s great industrial age, when almost 40 percent of the workforce was engaged in manufacturing, the effective wage rate was more than double that level; median household income was at or slightly below the national average. Not today.

The bipartisan, pro-investor, anti-union, anti-high-wage “free-trade” policy became Bill Clinton’s policy, too. Now it’s Obama’s. And the local consequences of globalization include this: Most of the local dollars we spend on consumption flow out of our region, which is why globalization is a chief reasons that the American Rust Belt has become more and more superfluous.

A new report from the Brookings Institution that reviews 150 metro areas worldwide reaffirms that Buffalo-Niagara is in decline; we rank 40th out of 50 American metros in terms of recovery from the recession. Quibbling about the yardsticks used in reports like these misses the point, which is, sadly, this: The export of American manufacturing has been a disaster for everybody except the financial elite.

The reason our waterfront it available for new use is because it’s no longer economically relevant. Back in the American Century declared by William Henry Luce, the Great Lakes industrial economy—plus a steeply progressive federal income tax whose proceeds bought highways, college degrees for vets, and global economic hegemony—meant our waterfront was where our wealth was created.

We’re still looking for the wealth-creating industries that other former industrial towns now have, especially the ones with pretty waterfronts. San Jose, California was nothing to shout about until the combustion of intellectual property and venture capital created Silicon Valley. Ditto Seattle and Portland. Boston was going nowhere in the 1970s until science and money combined to create innovation, patents, and then all the high-tech jobs of Route 128. The stories of other places are similar: Public money, often through universities or through the military and intelligence services, created great opportunity, and then subsequent to the opportunity, folks needed a place to spend their money, and voila, suddenly old waterfronts and warehouse districts and brownfields became zones of play, redevelopment and vitality. But before the frosting came the cake. In Buffalo and most other places in the Rust Belt, we await the cake.

Vanguard Buffalo

The hard-working and hopeful folks of the Great Lakes Urban Exchange and of the Rust Belt-focused Cities in Transition network are working hard on imagining the next Great Lakes economy. At the conference in Buffalo in 2009, the meetings in Cleveland and Dayton and Youngstown in 2010, and at the upcoming “virtual conference” next week, the focus is the same: We’re wondering what the next industry will be for places that have been exporting their intellectual property the way they used to export cars, planes, metal parts, glass and other manufactured goods that contained our ingenuity inside those finished products. These Rust Belt towns used to be vertically integrated producers: We’d design stuff here, then we’d make it, then we’d market it, and use our ports to ship it. Now, with globalizing speculators running the show and getting every Washington tax incentive imaginable to keep doing so, we do some designing and inventing here in the Rust Belt, but not much making any more, because making things is cheaper overseas.

So the question today is this: How do we get the capital to turn patents and processes and designs created in Buffalo and Detroit and Cleveland and Akron into income-creating, job-producing enterprises in these historic centers of innovation that used to be centers of production, too?

One way to frame the question locally: Should public money for Rust Belt economic development be put into investments that will create wealth- and income-creating industry, or should public money buy the Rust Belt more places to made things made in China? The pending Goldman et al. v. Bass Pro lawsuit against the New York State Power Authority and Empire State Development Corporation is precisely on this issue, because the rules say that public money has to help industry, not retail and commercial development.

While we debate that issue here, Obama just cut a deal that hurts our prospects. Obama ran against the incentives for exporting jobs and for financial speculation, but he has just this week flip-flopped. At the moment, the loudest voice in opposition to that deal belongs to a white-haired senator from Vermont.

“China, China, China,” complains Senator Sanders. “I give up,” says President Obama. Where does that leave the non-investor? Right here is where, in one of those metros that Brookings surveyed, wondering whether the Rust Belt’s dreams of economic renaissance can ever be realized in a place whose waterfront once created wealth. If you ever imagined that Buffalo was a leading-edge metro, wonder no more: Buffalo’s fate may be a preview of America’s.

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Thursday, December 2, 2010

Waterfront progress in Buffalo?

Inching Toward Sanity

Too much supply, not enough demand on Buffalo's waterfront

UB Professor Bruce Jackson’s photography exhibit of Buffalo’s grain elevators will open in January at the Anderson Gallery up in the University District. His collection of images of these concrete megaliths is entitled Buffalo’s Chartres, in reference to the massive 12th-century cathedral in France that is the defining example of the Gothic style. Buffalo’s grain elevators brood above the troubled Buffalo River, having largely lost their economic relevance as grain-storage devices and, despite the two decades of effort by Lorraine Piero and the Industrial Heritage Society, as a destination for mass tourism.

That may change now that the Erie Canal Harbor Development Corporation has nodded toward Mark Goldman, his brother developer Tony Goldman, and their friend Fred Kent, who may be hired by ECHDC to advise this New York State board on how to integrate its thinking about Erie Canal Harbor with the possibilities of the Buffalo River shoreline.

Earlier this week, ECHDC’s board voted on some proposals that activists, demonstrators, preservationists, and others have been shouting, whispering, and nudging about for years. ECHDC’s mission is (from its website) “to revitalize Buffalo’s inner and outer harbor areas and restore economic growth to Western New York, based on the region’s legacy of pride, urban significance and natural beauty.”

But until recently, ECHDC had been focused on the 20-acre Inner Harbor area. The plans for which it obtained approval from its parent body, another board called Empire State Development Corporation, included developing 725,000 square feet of mixed-use real estate, building five parking ramps, constructing replica canals in their approximate historic location, and exploring future development options for the 150 or so acres of vacant land on Buffalo’s Outer Harbor area. That land is currently held by the US Coast Guard, the Niagara Frontier Transit Authority, and the New York State Power Authority. ECHDC’s budget is $153 million of public money, mainly from the 2005 settlement with the power authority, plus some state and federal funds.

Broad community opposition to using those funds for subsidizing private development joined with broad community opposition to using those funds to build replica canals. ECHDC decided to take a couple of weeks for public comment. Many public and private meetings were held. Some of the private meetings were uncomfortable.

Then came this week’s vote. ECHDC remains committed to developing 725,000 square feet of mixed-use real estate. ECHDC remains committed to using $39 million for subsidies for an “A-1” tenant, and four of the five parking structures in its original plan are still on-line, as are the replica canals that will remain unconnected to the Buffalo River or Erie Canal Harbor.

Buffalo’s front yard

Buffalo’s grain elevators, part of the distinctive architectural fabric of Buffalo that New York Times architecture critic Paul Goldberger and others have praised, have long been celebrated by enthusiasts and specialists. Out-of-town visitors cite our “genuineness,” and praise us for being distinctive. Local folks who share these sentiments have new hope because ECHDC chairman Jordan Levy has been astute enough to invite their participation in shaping part of ECHDC’s program. When Buffalo historian and restaurateur Mark Goldman obtained private philanthropic support to bring award-winning developer Tony Goldman and waterfront change-agent Fred Kent to a large community meeting on November 6 at City Honors School, Jordan Levy attended. Discernible community enthusiasm developed quickly for the “lighter, faster, cheaper” approach that Kent has advocated successfully in many waterfront cities. And this past week, Levy’s board endorsed much of what has been suggested—including the preservationists’ dream of an open-air pavilion for Erie Canal Harbor, where vendors of art, snacks, and crafts might quickly set up shop, thus cheaply and quickly creating a destination and some hope for more continuous activity. By embracing the 1,000 or so folks who moved themselves to attend the City Honors forum and two others held at the Burchfield Penney Art Center, the leader of the ECHDC responded nimbly.

Levy understood the need to get some buy-in from the arts community; he is on the board of the Albright-Knox. He knows that there is no better or higher use for the 120 acres of the Outer Harbor than for it to become a public space, and for its very spaciousness and greenness to become part of the new brand for a city still burdened with brownfields. He asked for an environmentalist to join his board, and now, after his predecessors stiff-armed preservationists, he has asked for Tim Tielman, the community’s cocklebur nudger-in-chief, to come in to advise. Levy is slow to see the economic utility of bringing the advocates of a “living wage” around despite low-wage work being such a drag on the region’s economy. He is dismissive of the idea of retail workers earning $12 an hour rather than minimum wage, and is unlikely ever to agree to a community benefit agreement that includes a wage standard. He speaks often among friends about bringing a franchise operation like 5 Guys Hamburgers to Buffalo. He speaks of constructing a site for Dinosaur Barbecue, so that it can open up a joint like its restaurant in Rochester, as a good use of public money, even if all the customers for these out-of-town businesses will be local. Levy gives the impression that he has concluded something about Buffalo, which is that its suburbs’ culture—especially suburban tastes in entertainment, branded restaurants, play spaces, and shopping—is permanently in the ascendant, that it’s naïve to resist that culture, which people here like and want, and that we can’t have a bunch of cultural elitists sitting here lecturing people about the story of how Daniel Davis was rescued from slavery at the Commercial Slip in 1851, or how Dart invented (yawn) the grain elevator, or how our towering concrete guardians of the Buffalo River are like a French cathedral, because they may be smart but there aren’t very many of them. Levy respects the acumen of successful developers like the Benderson family, which have successfully catered to suburban tastes in retail, entertainment, and play-space.

If Empire State Development Corporation rubber-stamps the ECHDC plan when it meets on December 16, then all the features that the “faster, lighter, cheaper” advocates want will—if ECHDC does what it says—start happening in the spring of 2011. But then so will the 725,000 square feet of retail, restaurant, office, hotel, and residential space, and so will four of the five proposed parking garages that are also laid out in great detail in the Modified General Plan that ECHDC just voted to accept.

If ESDC approves the ECHDC plan, then in 2011, the Outer Harbor park will start to be created out of what is currently NFTA-owned scrubland. The replicas of canals will start being constructed. Over the next five years, the $153 million of public funds will get spent, and the expensive synthesis of programming, of green space, of “water features,” and of suburban sandwiches, or at least the space for them, is going to happen. What is new about the Levy synthesis is that the arts people, the troublesome Tielmans, the aspiring Goldmans, the buskers, the hawkers and performers, the puppeteers and imageers, are going to get their shot. That’s new. That’s news. The rest of it is a big, expensive gamble that will have dirty Buffalo River water flowing next to it but not through it, as the replica canals won’t be connected to the Buffalo River. And the 725,000 square feet of subsidized commercial space will get built.

But if ESDC has a rationale for rejecting the ECHDC plan, it’ll probably be this: economic fundamentals. Downtown Buffalo’s existing commercial landlords are seething that the state is going to shove hundreds of thousands of square feet of new inventory into an already oversaturated market. The value of existing buildings will be pummeled if brand-new subsidized office and shop space is created at great public expense. The taxable value of existing real estate—and thus the tax payments that go to the city and to the county—will drop. The HSBC tower currently leases more than 700,000 square feet to HSBC, which is one of the largest financial institutions on this planet. If HSBC Tower loses HSBC to a subsidized development, the domino effect will occur: The empty space will become available; the value of the building will drop; the owners will probably declare bankruptcy and then figure out a way to buy it back at a much lower price; the assessment will drop, which will cause city and county tax receipts to drop; then rents everywhere in town will drop. And thus state intervention in the marketplace will once again demonstrate that the road to hell is paved with great intentions—but because there simply is not the demand for office space here that would warrant spending a nickel of public money to create more, when the state creates more, the consequences will be negative.

Meanwhile, the dirty old Buffalo River-Buffalo Harbor-Black Rock Canal system won’t get a taste of the $300 million federal fund President Obama set up in order to help cities clean up the Great Lakes—because access to that pot of money, which is specifically for helping Rust Belt cities fix their leaky sewer systems with new green infrastructure, requires some up-front local matching money. If ESDC salutes the ECHDC plan, then there won’t be any source of local matching money to help us get the federal money, because the local money will all have been spent on replica canals, festivals, and 725,000 square feet of new commercial space.

Buffalo in 2015

Five years from now, the grain elevators Bruce Jackson and so many others photograph will still loom above the Buffalo River. The Ohio Street corridor will happen, if there’s any demand in the marketplace. The Outer Harbor park could be well established by then.

If ECHDC follows through on investing the $2 million, then the Buffalo Olmsted Conservancy could turn the Outer Harbor scrublands into a park, giving the region a front yard that is something like Chicago’s, except that Chicago’s has the Field Museum of Natural History, the Shedd Aquarium, the Adler Planetarium, and the wonderful new art-filled community play zone called Millennium Park. A century of philanthropy by tycoons named Field, Shedd, and Adler gave Chicago its distinctive waterfront, which stretches for 21 miles without a single restaurant, shop, or office building, unless you want to count Soldier Field where the Bears play as an office building. We have tycoons a-plenty, but we seem fresh out of Fields, Shedds, and Adlers.

Five years from now, we could be winding up the fourth season of Tim Tielman’s tent city in the Inner Harbor. Five years from now, we will still have the majestic arch of the Skyway rising above it all, giving Buffalo-area residents their only glimpse of the vista of our harbor and of our peaceful international waterway, of our rolling Allegany foothills to the south, and of our winding parade of grain elevators along our river.

Will Jordan Levy’s replica canals have attracted any private investment by then? In 2015, according to demographic estimates done by Cornell, the University of Pennsylvania, and the US Census, one in four residents of the Buffalo-Niagara metro will be over 60 years old. In 2015, the proportion of the workforce that works in low-wage work will be about the same as it is today unless high-wage opportunities come; the latest available figures from the IRS indicate that about 40 percent of the Buffalo-Niagara metro workforce earns less than $20,000 a year, and that the number of households with incomes over $100,000 a year is fewer than 9,000 (out of about 300,000). The numbers today and the trend-lines we see today indicate that we are bound for an Erie County population of about 800,000 by 2020, down from a little more than 900,000 today.

I would prefer that our state government not purchase more supply of things we have in over-supply, like office space. I would prefer that our state government direct its various boards and commissions charged with this elusive goal called “economic development” think more about sustainability and stewardship than about giving out-of-town consultants free rein to raise expectations. I would prefer evidence-based practices, because I intend to be here in 2015, and I would prefer to be wrong about replica canals, commercial space, water quality, and other such issues, but I fear that I won’t be.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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Wednesday, November 24, 2010

Buffalo's soul

A Time To Rally

The Party for a Lighter, Quicker, Cheaper Waterfront

When: Saturday, November 27, 2-5pm

Where: Commercial Slip, Erie Canal Harbor, foot of Pearl Street at Marine Drive, next to the Naval and Serviceman’s Park.

Why: Celebrate with great music and arts and food, and let the Erie Canal Development Harbor Corporation know: We can do better. Working together, we can start right now on projects that are “lighter, faster, cheaper.” We can win a community benefit agreement that ensures real community planning, green design and operations, quality jobs, and local businesses on our historic waterfront.

Preventing the fake canals

Erie Canal Harbor wouldn’t exist if it hadn’t been for a couple of hundred volunteers showing up one spring morning with snow shovels, rakes, garden spades, and fearsome-looking red and yellow plastic sandbox tools to demand that an appointed state board restore the original Commercial Slip, which is the actual terminus of the Erie Canal, instead of a fake, “replica” canal-like structure with a bit of water and no reality. The message then was simple and potent: The protestors said, “Dig the real canal or we’ll do it for you.” The state board then, as now, had advanced a plan to make a replica of the Erie Canal terminus. The state board then, as now, had spent a great deal of public money on a New York City architectural and engineering firm. Buffalo folks rallied, petitioned, wrote letters to the editor, and went to court, too, to stop all that.

And when the volunteers won, every politician in town was there to celebrate. Then-governor George Pataki came to town on the 175th anniversary of his predecessor DeWitt Clinton’s inauguration of the Erie Canal one fine October day. Pataki was presented with a jug of Lake Erie water, just as Governor Clinton had been in 1825. Clinton took that water down to New York harbor and performed the “wedding of the waters.” Pataki did, too. Schoolkids cheered. Everybody had a great day, and all the acrimony of the fight was set aside. It took another few years to get all the details ironed out, but by 2004, the court fight had been settled, and the government agencies and their recalcitrant personnel had been tasked to do the new plan, which was the volunteers’ plan—the plan to restore the Commercial Slip, the bowstring bridge, a long stretch of the Central Wharf, and as much of the historic street pattern as could be exhumed from the area that lay between Marine Drive and the Buffalo River.

The volunteers didn’t get everything they wanted. They’d proposed that a couple of buildings be reconstructed to the exacting specifications of the National Parks Service, an agency that activists have been hoping for decades would come to Buffalo and set up an interpretive center, similar to the one they have in Little Falls, New York, toward the eastern end of the Erie Canal. There wasn’t the money in 2004.

The deal was, however, close to being done. By 2007, the Commercial Slip had been excavated and re-watered. The Bowstring Bridge was up and walkable, as was the Central Wharf. The historic street pattern had been laid out again, and the foundations of many of the old canalside buildings had been revealed. Much archaeological work had been done—including an emergency bit of salvage archaeology one sunny weekend, when Tim Tielman and about 400 other volunteers successfully followed a trail of dump trucks out to a dump in Tonawanda where they scratched through all the cinders, slag, busted-up asphalt, and fill that Empire State Development Corporation had carted out of the Canal District.

The public got a lot of its wish: Our own historic site was finally accessible. We’d all hoped for some bathrooms, after all those millions of public dollars, but whatever—it was finally accessible. Local historians were finally able to lead tours there, to show the place where, in August of 1851, one of the great dramas of the movement to abolish slavery was played out—right there, right at that very spot where the Commercial Slip meets the Buffalo River. You can stand where Daniel Davis stood, and see what Daniel Davis saw: Buffalo Harbor, and across it, the Canadian shore, where he went to escape the Fugitive Slave Act that Buffalo’s own President Millard Fillmore had signed into law just a year before.

Local schoolkids and tourists alike could finally get the story about Dart and his grain elevators. A new generation of Italian-Americans could come to the place that their grandparents had known, because the Canal District was a dense Italian neighborhood until it stopped being a neighborhood. The Irish connection to the place is genetic, too, because the descendants of both 19th-century canal-builders and 20th-century grain-scoopers still dominate the neighborhoods just upstream. So many immigrants came through that very place between 1825 and World War I, first on canal boats, then on the railroads that ran into the Canal District, that some allege that Buffalo saw more newcomers into North America than even Ellis Island.

We were on track to have not only a good-looking, authentic historic site— unlike the mall-like Baltimore inner harbor, with its fake fiberglass replica cannons—and with it, a whole bunch of development parcels for entrepreneurs willing to risk their own dough, just as their historic predecessors did, long before Empire State Development Corporation and its various subsidiaries came along. It was a sensible plan, the 2004 plan: restore the old stuff, lay out the design criteria so that the Canal District actually looked like the Canal District, and let some brave soul step in, buy cheap, build, work it, and see if it caught on. As Niagara University’s Eddie Friel tells it, that’s what happened in the Docklands development in Dublin in Ireland. The development authority there did the infrastructure, then sold a few parcels quite cheap. Entrepreneurs moved in, then more, then suddenly, the tornado effect, where it caught on as a destination, and the land that had previously been worthless was the hottest property in the whole damned town.

That’s not what happened in Buffalo. The promise, or the threat, of Bass Pro is what happened here, and suddenly, all talk of small-scale local entrepreneurship, of authenticity of specialness, all went by the wayside. The local architects who had followed the memorandum of understanding that had settled the court case were dismissed, and the previous firm, the New York City firm, was brought back in. Suddenly, the community’s work on restoring the Central Wharf and the historic street pattern—with the 95-plus developable parcels—was set aside for a Bass Pro store that was going to go on the public space, and glass-in the historic street pattern for this particular iteration of this chain store.

Since 2007, the state board has spent more than $5 million on the New York City architectural firm whose previous work led to the rallies, the letters, and the court case—the firm that today offers architectural plans, drawings, animations, and presentations, all at great public expense, that feature fake or replica canals in a design that would put a big-box chain retail development where the 2004 plan envisioned local entrepreneurs.

It’s time to rally.

At press time, the Erie Canal Harbor Development Corporation was still scheduled to hold a meeting on Monday, November 29, at which they will vote on their modified general plan. Here’s what’s in the plan:

• 398,650 square feet of retail space;

• 182,150 square feet of restaurant space;

• 263,600 square feet of office space;

• 120,000 square feet of hotel space;

• 194,400 square feet of residential space;

• 20,000 square feet of cultural space;

• 2,471 off-street parking spaces, including “five parking garages spread across the project area.”

The plan calls for $36 million of public funds for parking, $39 million for the “A-1 parcel development” and “anchor tenant allowance,” and $12.25 million for architectural fees and “soft costs.” Total public expenditure: more than $150 million.

In the past few weeks, while another group of volunteers awaits action by State Supreme Court on another lawsuit against a New York State board, the “lighter, quicker, cheaper” movement has taken shape.

Among its leaders are Tim Tielman and Mark Goldman. Tielman is aiming to convince ECHDC that its money would be better spent, with $100 million left over, on finishing the 2004 plan, including a new version—or even a re-construction—of the pavilion that Frederick Law Olmsted and Calvert Vaux built and which used to stand in what is now Martin Luther King, Jr., Park. The pavilion would allow all those quickly setup, quickly changing events, vendors, artisans, marketers, and entrepreneurs to do what they do, which is to take a public space and make of it a destination. Goldman sees the Erie Canal Harbor as part of a string of venues along the Ohio Street Connector, a string that will include Erie Canal Harbor, Peg’s Park along the Buffalo River, the grain elevators, and the riverfront spaces that are naturals for arts and festivals and programming that could feature the works of our own creative class.

The rally on Saturday, like the 1999 rally of the sand-shovels and the snow-shovels and the garden-spades, is an effort, once again, to let the elected officials and the appointed ones, too, know that local creativity, local culture, a sense of authenticity, and a dogged persistence are all still here, thriving, energized, and also utterly opposed to subsidies for somebody else’s leftover shopping mall.

Perhaps it was easier a decade ago, when the rallies happened in the spring, and when there was a sense of hope in the air. This time, the weather will be a challenge, but the task is arguably more urgent, for if the new state board decides to blow the public’s money on fake replica canals and parking garages and retail and office and restaurant space in a place that has too much of all of it already, we won’t have a popular new governor coming to town anytime soon to embrace the hopes of volunteers, smile at the cheers of schoolchildren, celebrate Buffalo’s liberation heritage, or promote the legacy of his visionary predecessor DeWitt Clinton. If the community shrugs at its challenge today, or stays home around the post-Thanksgiving hearth, chances are quite good that the governor on whose watch our money is spent won’t have anything but another derelict Buffalo commercial development to explain when he runs for re-election in 2014.

So get out there Saturday, and help the poor guy, before he gets stuck with a true turkey.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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Thursday, November 18, 2010

Rethinking Buffalo's waterfront

Two Weeks in Timeout

Can the tide be turned on development of the city's waterfront?

The Buffalo State College Center for Economic and Policy Studies will host the third in a series of Citizens Waterfront Project meetings Thursday, November 18, at the Burchfield Penney Art Center auditorium. After previous sessions at the Burchfield Penney and at City Honors, this time the focus is economics—costs and benefits—and more specifically on weighing the claims of economic benefit contained in the official documents prepared with millions of taxpayer dollars by consultants to the Erie Canal Harbor Development Corporation.

It’s a tough topic, but a necessary discussion at a time when fantasies abound. The list of proposed uses for the $153 million in public funds under the Harbor Corporation’s control is comically long, and include many ardent proposals for museums about sports, weather, Erie Canal history, bicycles and even meat-packing. Creative citizens have been attending ECHDC sessions, and the corporation has just announced a series of “open house” meetings at which the corporation’s lead consultant, which has received over $5 million in public funds, will be present to answer questions about the new, modified plan—which is just a version of the retail-centered plan that would have given us Bass Pro at one of America’s most important Underground Railroad, immigration, and commercial history sites.

Ideas can be expected to keep flowing in: Skyway observation decks, new $100 million bridges, even an idea for a “22nd-century library” have been floated. With $153 million in public funds available—funds that, sadly, are being depleted by the numerous expensive consultants, attorneys, staff, and expenses of ECHDC—everybody from a bicycle collector to a green-energy consultant is stepping forward with a compelling presentation.

ECHDC listens to them all, but stays strictly on plan—that is, the new plan. Since 2007, the corporation has been more or less ignoring the hard-won community consensus that led to the re-watering of the Commercial Slip, the construction of the Central Wharf and the bowstring bridge, and the uncovering of old foundations and streets—the elements for which preservationists marched and went to court, and which they succeeded in convincing state and local officials to keep authentic. The new, post-2007 plan has been all about retail stores—and about the parking garages that big-box retail stores have when they’re located in suburban shopping malls.

But nowadays, the “creative class”’s view of Erie Canal Harbor is resurgent. Elements of the coalition that defeated the previous state agency in control of waterfront development—then as now an offshoot of Empire State Development Corporation, then as now advised by a New York architect named Stanley Eckstut—have stepped forward again.

At Thursday evening’s presentation, Tim Tielman from the Campaign for Buffalo History, Architecture and Culture will join the Canalside Community Alliance, historian Mark Goldman, and others in a community briefing session that will include some of the history, the context, the analysis, and also some recommendations that are distinguished from the many hundreds of new museum, library, and subsidized-store ideas that have been so prevalent—mainly because Thursday’s presentations will be squarely consistent with the original plan that the community thought it had achieved in the first decade of the new millennium.

Our special money

Meanwhile, in the world beyond Buffalo, New York State’s fiscal crisis is deepening, and this crisis has a special significance to the Erie Canal Harbor, the Buffalo River, the Outer Harbor, and to all the plans being promoted for the front yard of our moderate-income, over-retailed, housing-glutted, depopulating region. In the extra two weeks of comment that ECHDC is allowing on its modified plan, Buffalo will be doing something that the rest of New York State can’t do—namely, relying on a special source of funds for our waterfront planning.

Just this week, experts in municipal finance began warning of a potential crisis in the multi-trillion-dollar debt load of distressed states, including our own. The word is hitting Wall Street and Main Street alike: A new age of austerity is upon us, because there is no more “stimulus” money coming from Washington, and there is no will in any capitol, including Washington and Albany, to raise taxes to pay for anything new, or even for existing commitments. One consequence is that the standard practice of Empire State Development Corporation, which is used to being able to offer credit and financing to the normal run of politically favored projects, is abruptly over. Personnel in New York State’s primary economic development agency are being told that accounts that still contain project money are going to have to be emptied so that the overextended and underfunded health, welfare, and education budgets of state government can be kept whole. With the election of a Republican majority to the House of Representatives in Washington, the days of extra federal matching funds for New York’s huge Medicaid budget are also over. Earmarks—also known as Congressional pork—are a target of the new Tea Party-flavored majority, so we cannot expect money for infrastructure except from special funds like the Great Lakes Restoration Act fund, which is for sewers, not bridges, convention centers or stadiums. Already, projects across New York State are being put on hold.

But the situation is different for Buffalo’s waterfront. While there are state and federal funds involved, most of the money is from a unique source—namely, the 2005 settlement with the New York State Power Authority, which grants Erie Canal Harbor Development Corporation, as well as the Niagara Greenway Commission, a special revenue stream for the next 50 years. It’s special money from a special source—money that will almost certainly be left in place. But once this money has been spent, it won’t be backfilled in the usual way from the various legislative slush funds and executive reserves. Those are about to be gone.

So the question facing Western New York just became more urgent: If $105 million of the $153 million in ECHDC’s coffers is a one-time, single-source pot of gold, how can it last through coming age of austerity? If that’s all we get, then what’s the most sensible use?

The two-week timeout

On Tuesday, ECHDC announced a two-week delay in submitting its revised plan for approval by its parent body, Empire State Development Corporation. Previously, Empire State had rubber-stamped whatever ECHDC sent it—which is one of the complaints of the plaintiffs in the Goldman v. Bass Pro lawsuit pending in New York State Supreme Court. (I am a plaintiff in that case.) The new, “modified” plan is largely identical to its previous plan, which was notoriously centered on Bass Pro Shops. The new plan is also still focused on bringing retail stores and restaurants to the historic Erie Canal Harbor area. More than $50 million of the proposed $152 million public investment is still programmed for parking. More than $10 million is proposed for various architectural, planning, and other “soft costs.”

But as the old coalition reasserts itself, and joins with the Canalside Community Alliance and the Buffalo Common Council—which has endorsed the Canalside Community Alliance’s call for a community benefit agreement—five strong themes are emerging.

First, there’s strong interest, once again, in authenticity. ECHDC insists on committing $40 million of public funds for water features that it characterizes as “canals,” but neither Buffalo preservationists nor visiting experts like Fred Kent nor Tony Goldman salute this flag.

An idea Buffalo could emulate: projections on Qubec City's riverfront grain elevators.

Second, there’s a recognition that it’s a diverse group of activities—art shows, light shows, concerts, “tent cities” such as the one that forms each June for the Allentown Art Festival—that gains the support and interest of the regional audience. The region’s historic waterfront is seen now, as it was a decade ago when it was first saved from the Horizons Waterfront Commission and its New York City consultant, as the logical home for these light-footed, quickly assembled and quickly disassembled activities. A pavilion that could house such activities—and some permanent potties—might be the only structure needed. Some of the remaining funds might go to a program fund, leaving the bulk of what’s left for cleaning up the filthy water of our waterfront.

Third, a quiescent but very strong element of Buffalo’s 20th-century identity is reasserting itself: the indigenous avant-garde sensibility. In the next two years, a recently arrived curator at the Albright-Knox Art Gallery will mount an exhibition on the extraordinary flowering of culture created 40 years ago here when the late Governor Nelson Rockefeller put public money and his brand-new SUNY flagship known as UB at the service of musicians, painters, filmmakers, and literary artists. Suddenly, discussion of Erie Canal Harbor is being contextualized as a historic zone where new expressions can find a home as they did back then. A few years back, Quebec City’s riverfront grain elevators became the projection screens for towering images, and tens of thousands of tourists joined hundreds of thousands of natives when the shows went on. Buffalo is much closer to the rest of North America than is Quebec City, the thinking goes, and we do things in English. With appropriate observations about the distinctiveness of each place, there is an emerging sense that dramatic art displays based in our own Buffalo psyche might inspire us, attract the world and create some jobs along the way—all for a lot less than the subsidy cost of a retail “anchor tenant” and some ersatz “canals.”

Fourth, there’s a growing recognition that the money is going fast, and if it is to leverage any other money, it had better happen soon. That’s why proposals for new museums and libraries are inherently flawed, while cleanup-greenup investments that leverage federal matching funds have a more compelling logic. Even the advocates of a new Erie Canal Harbor heritage center have a hard case to make, made more difficult because of the behavior of local politicians like Erie County Executive Chris Collins. Collins has slashed cultural funding by more than 25 percent from the level of his two predecessors. Collins has also cut the Erie County library system by more than 20 percent. Construction, staffing, maintenance, and programming for the comedy museum, the weather museum, the bicycle, sports, green-tech, lake ecology, immigration, canal heritage, or children’s museum would all be partly public for the duration of the new museum’s lifespan. The stewardship of existing cultural assets is questionable. So is future philanthropy. Spending today without leveraging new money looks worse and worse.

Fifth, there’s a hunger for green space and clean water, not new, prefabricated destinations.

Clear-eyed thinking

As the public discussion goes forward, decisions on spending public funds will ultimately be made by ECHDC and by Empire State Development Corporation. The two-week comment period will inevitably result in more proposals being floated, and more money being spent on out-of-town consultants. Meanwhile, the message from the Buffalo Common Council remains as clear as the day when that body first endorsed the community benefit agreement concept earlier this year: The Council will not turn over the Erie Canal Harbor land to ECHDC unless it negotiates a CBA. The Goldman v. Bass Pro Shops lawsuit remains pending in State Supreme Court; until it is resolved, ECHDC does not have all the funds that its revised plan requires in order to pay for parking garages, replica canals, and consultants galore.

If there is a moment for clarity, this is it. Buffalo had that clarity with the 2004 plan for Erie Canal Harbor, but that was before the New York Power Authority money, Bass Pro, and the old crop of consultants arrived. Sadly, unless the new governor and his staff understand the need for the state-created development agencies to seize their true opportunities in the harsh new economic climate, the current generation of Western New Yorkers may be stuck with its own planning disaster to rival a previous generation’s nightmare. The economic consequences of squandering $153 million of public funds that could have re-branded Buffalo while cleaning its filthy water might turn out to be worse than the decision made almost 50 years ago, the one that sent so much of Buffalo’s intellectual capital and prospects for self-generating renewal out to the swamps of Amherst.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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Tuesday, November 9, 2010

October 21, 2010

Global and Local Carbon

Why we should be investing in clean water and public transportation instead of bridges for cars

At the annual meeting of the New York Economic Association last month in Rochester, Kent Klitgaard of Wells College gave a disturbing paper about how everything we know about economics is going to be upset by the crisis of global climate change. Klitgaard and other economists have been trying to assess how the various carbon mitigation schemes will work, reviewing such proposals as cap-and-trade and the fuel-efficiency and renewable-energy sourcing standards now in place in many states.

Their sober summary is this: Nothing anybody in America is doing so far measures up to the challenge.

Meanwhile, just north of us in the growing mega-metro that stretches from Toronto to Hamilton, a bipartisan political consensus on public transportation investment was reached two years ago—a consensus that will redirect billions of dollars away from roads and put the money instead into electric streetcars and commuter rail. The Canadians call their project The Big Move. They will go from about 250 miles of streetcar lines to 750 miles, reducing their carbon footprint even while preparing for population growth.

Tragically, 2010 seems to be the year that some see as the irreversible turning-point for man-made climate change. Scientists dispute not whether irreversible change is happening, only when the tipping point will come. Some think that 2010 is the year. The timing is tragic because 2010 is also a political year in which climate-change deniers are running strong in the mid-term and gubernatorial elections. Candidates aplenty may be elected on a platform that man-made global warming is a left-wing theory, that oil will remain in plentiful supply because it is made by geological rather than biological processes, and that terrorism, covert action, and other forms of political violence that stem from the global fight to control oil are all issues that can be controlled so long as we let our soldiers use methods that American law generally refers to as torture.

The pessimistic expect that the national consensus American politicians developed 20 years ago on the question of chlorofluorocarbons, which threatened the ozone layer, won’t be repeated in the case of greenhouse gases. The scientific evidence and the near-universal consensus about the reality of man-made climate change—which results mainly from burning oil and coal—is being met with phenomena like the Democratic Senate candidate from West Virginia, who is running on a platform of opposition to climate-change legislation, a position quite comfortable for every Republican. But as British think-tanker Nafeez Mossadeq Ahmed’s new book shows, not only is there a consensus among scientists about catastrophic climate change, there’s a growing recognition that climate change, looming global food shortages, recent and future financial crises and the ongoing plague of political violence and terrorism are all linked by the fossil fuel business.

Ahmed’s A User’s Guide to the Crisis of Civilization is a tough read. It is dense, brilliant, and frightening. Ahmed has done the job that has needed doing: He has connected the dots for the non-specialist. His first depressing achievement is to have collated the dense scientific literature on global warming into a chapter that sums it all up simply: The governments of the major industrialized countries have all come to understand that climate change is for real, and that the catastrophe of a four degree Celsius rise in global temperatures will happen by 2050, but because we are stuck in a global system dominated by petroleum, the governments that should be taking urgent, radical steps to move us to a post-carbon economy are not doing so. Nor, Ahmed says, can they be expected to do so.

Ahmed follows his summation of what the scientists are saying with a still-salient report on the recent global financial crisis, a review of the ongoing Third World food-production crisis, and a long, unsparing look at America’s global lust for oil, a lust that has sometimes put us on both sides of the “war on terror.” The result is a difficult volume that is hard to put down. It is a truly impressive book that is terrifying, but that, sadly, because Ahmed is a Marxist, is destined to be ignored. But you can’t ignore his sources, which include US military documents that concur on the inevitability of major climate change, but that strangely do not map out energy alternatives for America.

Where is President Obama on this? One would think that Obama and his Nobel Prize-winning secretary of energy would have galvanized the nation and created a crash national program on wind and solar power, instead of hurrying up the construction of nuclear power plants—of which there could never be an adequate supply, according to Ahmed’s sources. The creator of the Gaia hypothesis, James Lovelock, pooh-poohed wind and pushed nuclear, but wind power is gaining: Google executives just last week announced that they will spend $5 billion of their pocket change to create a near-shore East Coast wind-powered grid to power more than million homes. Ahmed’s book reports on the astounding strides that the government of Germany has already made in fostering alternative, renewable, carbon-neutral energy. He also gives kudos to some local British successes. But it’s hard to be hopeful in the US today, as the fossil-fuel lobby may be about to retake the House of Representatives.

As we read the consistent warnings of economists and scientists, there is another disconnect—a local one. Predictions of the consequences of global warming are downright scary, especially the part that says that the time for action on reducing carbon-fuel emissions (including from biomass fuels like corn-based ethanol) is now. Why, if this crisis is galloping toward us, are local and regional policy-makers committing public resources to roads, bridges, and other long-lasting infrastructure that are all about oil?

Where is the commitment to public transportation?

And why are our public officials dithering about the one resource the Rust Belt may control—namely, our fresh water lakes—that may be our salvation, if it doesn’t poison us first?

Leaders and choices

Imagine that you are in public office. You have just read Nafeez Mossadeq Ahmed’s book. You may have dispatched your capable staff to hunt down some of Ahmed’s primary sources, like that National Security Agency document that somebody leaked during the Bush administration, the one that lays out all the contingencies for war over resources like fresh water. If you’re an elected official who takes the job seriously, you’ve looked at the table that shows oil prices rushing sky-high by 2015 as supplies fall. (Go to and read economist Richard Janszen’s time-line for a similar view of the “peak oil” hypothesis and its projected impact on global energy, commodity and financial systems. Janszen thinks that the sky-high prices will happen before 2015.)

After reading these documents, somebody shares with you a map of where the fresh water will be in 2050—not globally, just in the US. The map is from a new study by Tetratech, commissioned by the Natural Resources Defense Council (

These researchers found that one-third of American counties “will face higher risks of water shortages by mid-century as the result of global warming.” California, Arizona, Texas, Florida, the Atlanta area, Washington, DC, and many other areas will be suffering.

Guess which counties won’t be suffering?

Answer: The old Great Lakes urban areas are where the water is and where the water will still be, thanks to the Great Lakes Compact signed two years ago. But the current state of our wisdom includes discordant information: The water will be here, but the people won’t. By 2050, California’s population will surge another 20 million over its current population, which is already north of 35 million today. Back home in the Rust Belt, where the population is not projected to increase (in fact, our population is expected to decrease radically by 2030), one could say that we will have the most precious of resources in oversupply, and users in under-supply.

So as an elected official, here are the facts: Your population is shrinking, but you have a precious resource that could, when today’s college students are old enough to be the parents of college students, be the great differentiator in economic survivability as climate change raises sea levels for our coastal cities, shrinks California mountain snowfall, dries out the Sunbelt, and generally causes distress everywhere but here. What would you, as a far-seeing elected official, want to invest today’s scarce public dollars in?

Here are the choices: a) invest like the Province of Ontario is investing, $2 billion a year for 25 years, in public transportation, so that 80 percent of the residents of the Greater Toronto and Hamilton Area will be no more than 1.2 miles from an electric train or trolley car; b) invest in the technology that will replace oil and create a more localized system of carbon-free or at least carbon-neutral power; c) clean up the water you do have so that the toxic waste, the sludge, the brownfields, etc., that characterize your waterfront today are gone by the time the demand for development arrives.

Those would seem to be smart choices. Instead, our local government leaders have no plan for extending trolley cars or replacing the filthy and dangerous coal-fired power plant on River Road or the one in Somerset. And instead of using public money to clean up the unique natural resource—water—they are in a rush to get Obama’s money to build more bridges for oil-fueled cars and trucks, including a redundant bridge over the Buffalo River that will connect downtown to a waterfront brownfield.

The Canadians are creating jobs by building their infrastructure. The Canadian manufacturer, Bombardier, is producing the new trolley cars that will start life in downtown Toronto and downtown Hamilton in the next year or so. Using the uncrowded Peace Bridge, where the only delays you’ll ever encounter come when Canadians are on the way to Bills games, you can drive north and see the future that local leaders evidently cannot imagine for us.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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October 28, 2010

The Winners: How Wall Street Runs Our Politics

How Wall Street runs our politics

Austerity is the word the British use. Smaller government is the phrase we Americans use. The Democratic president who got Congress to go along with his plan for more than $700 billion in emergency economic stimulus spending has now become a deficit hawk. Both the Republican and the Democratic candidates for governor of New York are pledging to reduce government spending and to balance the budget without raising taxes. From London to Manhattan, from Washington to Wisconsin, there is not a candidate in the land who is ready to defend or even explain the role of government in the economy. The rhetoric is all Reagan, all the time.

This drives some economists nuts. Joseph Stiglitz, who won the Nobel Prize in 2001, told a New York audience last week that the American economy desperately needs another round of stimulus spending by the federal government—and a much more robust public works program. “Without a second stimulus, we will have a long recovery period,” he said. State governments need more federal help, not less, because states “were the innocent victims of economic mismanagement at the national level.” Stiglitz made headlines, but not many politician friends, when he called for a “millionaire’s tax” in 2008. Readers of the New York Times are familiar with this approach because Paul Krugman, another Nobel Prize-winning economist, writes a twice-weekly column in which he makes these same points.

The counterpoint is that government spending of any kind is bad. This view is on display every single day of the week in the Wall Street Journal, on Fox News, and in the position papers of every candidate who bothers to write them.

It would sound like a replay of the traditional liberal versus conservative rhetoric, except for one new reality—which is that it’s bipartisan. Meanwhile, there’s a third group of economists, the students of the bubble, who are critical of both the borrow-and-invest liberals and of the cut-and-divest conservatives. These are the folks who are warning that the speculative bubble that former Federal Reserve Board chairman Alan Greenspan created during the George W. Bush presidency, the bubble that started bursting in 2007 with the subprime mortgage crisis and that threw the world into crisis and recession in 2008, was nothing compared to the speculative bubble that is growing in China today. The Chinese bubble will burst as soon as next year, wreaking havoc of the kind the world hasn’t seen since the Great Depression.

And all of our candidates, Democratic and Republican, at every level, are working overtime to outdo one another in driving down the one area of the American economy that might just help avert the next global financial catastrophe—namely, government spending that might get our economy growing again.

No jobs, old sewers, no will

Liberals are complaining much more loudly that Obama blew it. Obama stuck too close to the bankers, they say. Larry Summers, Obama’s chief economic advisor, led the way for deregulation of financial markets, became a rich consultant to bankers, and drank their Kool-Aid. Liberal economists have been complaining at least since Ronald Reagan’s election in 1980 that the rich are getting too rich, the number of poor people is growing to be too large a share of the national population, and the American middle class is too stressed. Conservatives scoff at all that, and remind everybody that even liberals love capitalism. These days, as unemployment lingers at 12 percent in many states, as Food Stamp applications rise in the suburbs, as Rust Belt cities temporarily stop shrinking because their young people can find no Sun Belt jobs to move to, and as the next phase of the foreclosure crisis lurches into public consciousness, every level of government is a piñata, and incumbents are the whipping-boys. We’ll all be rich again, the rhetoric says, if we just get government out of the way of the private sector.

Here’s the problem: The private sector as we know it has changed. One struggles to tell just how greatly things have changed, and that the old rules won’t work, when even a learned professor from Harvard still argues that unemployment benefits should not be extended beyond 26 weeks because back in the 1980s, during our last hard recession, that relatively short time-horizon led job-seekers to find work quickly. What work is there to find today? Thousands of factories have closed since then. They’re all in China now.

Economists who study the bubble talk about how liberals and the conservatives are both wrong. There has been a structural change in the American economy because the financiers have come to rule politics after having succeeded in convincing American politicians to deindustrialize, which eliminated high-wage jobs. At the same time as thousands of factories (except defense factories) closed, there was a vast deregulation, as when Bill Clinton’s team tore down the New Deal wall between regular banks and investment banks, a move that encouraged risky speculation of money that was supposed to be risk-free, and that made the financially rich far, far richer than at any time in history. Meanwhile, to distract the middle class, whose incomes (the liberals relentlessly pointed out) were not keeping pace with inflation, Washington policy-makers of both parties, and especially Greenspan of the Fed, propped up middle-class finances by fabricating the real-estate bubble.

We were rich with fake money. A Florida or California or Boston or Washington house bought for three times your annual salary in 1990 was suddenly worth 10 times your annual salary in 2000. Folks from Buffalo or Cleveland or Indianapolis who got transferred to any of these hot real-estate markets in the 1990s or early 2000s experienced sticker-shock, because back home, the value of a house had by comparison changed but little over the previous decade. Suddenly, folks were taking out home-equity loans because their houses had jumped in value—using their houses like ATMs, in effect, to buy things like college tuition, SUVs, new kitchens, and even vacations. When the bubble started bursting in 2007, homeowners began finding themselves unable to pay on their loans; millions were foreclosed. Somewhere between one-fifth and one-third of all mortgages today are on houses where the amount owed is higher than the market value of the property.

Chinese bubbles

A Chinese professor of economics just in from Beijing attended a seminar on public finance the other day, and, wide-eyed at this description of recent events in America, quietly spoke about how today in China, the house he bought three years ago is now worth 300 percent of what he paid for it. As he described how buyers are rushing to get their cash into real estate, even though the Chinese buyer cannot borrow as much as the American buyer, the unmistakable characteristics of a growing bubble were revealed.

Back home in electoral America, there is not much talk today about raising federal income tax rates on hedge-fund managers or Wall Street bankers, notwithstanding new record-high bonus payments having just been reported. The Ronald Reagan rhetoric of 1980 has become everybody’s article of faith: On tax policy, one cannot distinguish Glenn Beck or Sarah Palin from any Democratic running for any office. A new study of growing poverty in America has not led to a plan, at either the state or federal level, to use public funds to create employment. Report after report is issued about the aging of our 1950s-era infrastructure, especially long-neglected sewer systems in old cities, but 2010 is not 2009, which is the last time anybody in public office spoke about creating a National Infrastructure Bank.

What’s happening now, say the non-liberal, non-conservative economists who study bubble economics, is that the Wall Street speculators have decided that austerity, smaller government, and reduced consumer demand are all just fine with them. And since they fund campaigns, everybody who wants their money sings their tune, Democrat and Republican alike.

James Galbraith calls this new situation the “predatory state.” Michael Hudson calls what’s going on today the consequence of “hitting the wall of indebtedness.” Edward Janszen of criticizes the traditional liberals who want the US to go further into debt in order to stimulate new jobs, because he thinks that our new Federal Reserve chairman, Ben Bernanke, is already proposing that America “borrow its way out of debt.” Sound crazy? You betcha.

More unemployment. More poverty. The middle class unable to borrow more, and thus unable to consume as before. Corporations holding onto their earnings. Banks speculating overseas rather than lending here, notwithstanding all the encouragement banks get to make loans here. Housing prices low and declining in many parts of America. State governments having to reduce spending even as the demand for state services goes up. These are all deflationary pressures. Deflation is the opposite of inflation.

On the websites of the bubble economists, ugly scenarios get sketched. Here’s one for a couple of years from now: America’s demand for Chinese-made goods is lower, American economic activity is still anemic, Tea Party rhetoric is hotter, the anti-spending, anti-government craze leads to a full takeover of Congress and the White House by folks who decide that warfare is the only way to spend public money that the angry, unemployed, poorer public will accept, but in order to get some meat on the table, a bubble will have to be created.

Wait, doesn’t that sound familiar? Didn’t we just live through eight years of that? Stay tuned, ladies and gents: The warfare bubble is straight ahead!

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

Reader Comments

03 Nov 2010, 16:03
Thanks for another insightful piece, Bruce. I suppose the only question now is where our next military escapade will take place - the Middle East or Asia?

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Thursday, October 7, 2010

Buffalo and its discontents

A portrait of Paladino country

Steady investment in what the federal statisticians call “performing arts, museums and related activities” led to measured economic growth in the Buffalo metro area over the past decade. The cultural sector grew from about $255 million in 2001 to $355 million in 2007, an increase of 55 percent in real, inflation-adjusted dollars into the Buffalo metropolitan economy, according to new statistics from the US Bureau of Economic Analysis. For the past 20 years or so, about $6 million of the $7 million of government support for the performing arts and museums in the Buffalo area has come from Erie County government.

These numbers should lead any prudent cost/benefit analyst to say that this particular investment is a pretty compelling winner, as $6 million in county tax dollars invested leveraged $355 million in economic output. Yet notwithstanding that nearly 60-to-1 return on public investment, Erie County Executive Chris Collins has proposed slashing that investment. He had already cut it from $6 million to $5 million last year. Now he proposes to cut support to around $4 million going forward. His justification for eliminating funding for all the area’s theaters is the same as his justification for warehousing over $74 million in Obama administration “stimulus” funds in Erie County’s bank account rather than using the funds to stimulate the economy: This elected official has decided that keeping the property tax low is his priority. He wants the average Erie County homeowner, who pays $505 a year in county taxes on a house assessed at $100,000, not to have to pay $507. That $2, which he will trumpet as a taxpayer boon next year when he runs for re-election, could keep the libraries and the theaters open. That $2 could keep a few hundred people employed. But he has decided that austerity is good politics, and he will run on keeping your wallet $2 fatter, even if that means that Shakespeare in Delaware Park and many other theaters, dance troupes, small art galleries, and other components of the regional arts marketplace are shuttered.

Many property taxpayers here, mainly elderly white suburbanites and their Baby Boomer neighbors, apparently think that this is sound policy, as evidenced by the utter silence of any of their elected representatives. Neither is a peep being heard as Collins proposes to further reduce the county-wide library system’s funding by about 20 percent beyond what he cut last year.

Welcome to the land where Carl Paladino won 93 percent of the Republican primary vote. It’s a place where the loudest private-sector voices clamor against taxes, yet where the real-estate, financial and construction industries all speak eloquently, if quietly, via campaign contributions, for a never-ending stream of huge make-work construction and development projects and subsidies, all paid for with money siphoned from faraway, resented, demonized Downstate New York.

The Center for Economic and Policy Studies at Buffalo State College has done the numbers, and they bear repeating: Downstate has about 65 percent of New York’s people, but produces 75 percent of the state’s tax revenue. Upstate is the net recipient of what Downstate overpays to Albany. In this flow of funds, the flow is one-way: toward the place where Carl Paladino rails against the Albany politicians who keep sending checks this way, and his way, too.

This dependency has produced a poisonous politics where the status quo keeps getting uglier. Democrats who should be in the vanguard against suburban sprawl, who should be leading the charge for regional governance as a way of combatting the toxic isolation of the poor inside an obsolete urban boundary, instead vie with Republicans as each tries to bash government harder than the other. Paladino Country is a place where elected Democrats introduce ballot measures to downsize their county legislature but fight to maintain town board seats. The capitol city of this special place is Buffalo, where a Democratic mayor salutes developers’ plans to spend more than $100 million of public money on subsidies to retailers rather than on cleaning up drinking water sources that are so tainted that more than a third of the fish have tumors. Paladino Country is a historic place where a historic neighborhood overlooking the Niagara River may be demolished so that a privately held duty-free chain can squat on a new sea of publicly financed asphalt.

In the current political geography of New York State, Upstate, and especially the Buffalo-Niagara metro, is the place where antipathy to state government consistently polls most intensely. State government is blamed for the pervasive sense of economic decline, even though the numbers indicate that there was a modest but real economic expansion over the last decade. Manufacturing employment used to be the core of the region’s prosperity, but here, as everywhere in the Rust Belt, globalization began eroding that core as far back as the 1970s. Yet economic diversity has produced a resilient, if shrinking, workforce. It is not the best of times here, but neither is it the worst of times. Not at all.

What is true is that Upstate is a shrinking region. Population trends here are negative: by 2035, according to demographers at Cornell University in Ithaca, the 908,000 people who reside in Erie County today will number only 755,000. Population in Rochester, Syracuse, Binghamton, Utica-Rome, and in the smaller Upstate communities as well is expected to drop by anywhere from 10 percent to 35 percent, with some rural counties projected to lose over half their population just in the next decade. In Rochester and Syracuse, there is some official recognition that a trend toward shrinkage is underway; the mayor of Rochester’s 2009 “Green Plan” refers explicitly to population loss as a challenge that must be embraced rather than shunned. In Rochester, they’re talking about a 20-year plan to manage this change.

Such sobriety is sorely needed in Buffalo. But there is no such recognition of demographic reality in Carl Paladino’s hometown. That’s because a small cadre of real-estate developers, construction managers, and financiers dominate local politics and shape local perceptions. What they want the population to believe is that all is lost unless wages for public employees are cut but that simultaneously, massive construction projects must be undertaken at public expense. In Paladino Country, organized labor is a mere shadow of its former self, yet still serves as the whipping-boy. The Medicaid program for the poor is savaged as an unbearable burden though it accounts for less than five percent of local government spending. And every politician will agree with every radio talk-show host that local and state taxes are the reason for the poor state of things.

Paladino Country is where facts don’t matter as much as the angry demeanor of subsidy-grabbing developers who don’t want the locals to know that, were it not for them, the region would be better governed. The region would be less burdened by overbuilt infrastructure that is expensive to maintain. The region would probably be a lot greener, too. And the region’s real estate would be worth more if only developers stopped muscling politicians to let them, and too often pay them, to keep creating more supply in a place where demand is shrinking.

Projects and plans

There is very little demand for new housing in a metro where the population is shrinking. Yet a lethal combination of fractured, competing local governments plus a very active home-construction industry produces between four and six new housing units for every new household being formed in Upstate. That over-supply factory requires that Upstate’s old city and first-ring suburban neighborhoods be abandoned, so that newer construction can happen farther and farther out. This is known as “economic development” in Paladino Country.

The cycle of new-builds instead of re-use is also true of infrastructure, not just housing. One leading Buffalo politician thinks that a doubling of the international car and truck bridge, a $700 million project that will be funded by federal and state funds, is a necessary project, notwithstanding the lack of any bankable increase in demand for the bridge. (Were the operators of the crossing able to demonstrate a growth in demand, and thus in bridge tolls, the bridge itself would fund any market-driven increase in its capacity.) It’s bad enough that the proposed Peace Bridge expansion is a make-work project. It’s awful that bonds will be sold to fund a bridge to service petrochemical-powered cars and trucks when scientists all agree that their emissions cause climate change. Worse is that, just a mile downriver, a 100-year-old railroad bridge between a Canadian industrial area and an American industrial area, which is a logical corridor for a greener, more efficient mode of transport that will probably grow, is overlooked entirely. Why? Probably because no local politically connected developer can make any money from expanding cross-border rail capacity.

Meanwhile, another leading politician believes that the downtown Skyway bridge that crosses the Buffalo River and connects the city’s central business district with the lakeshore freeway should be demolished and replaced with a grade-level lift-bridge, at a total cost of more than $100 million. The Skyway has a certain utility: It is high enough to allow the numerous grain elevators that line the Buffalo River to be visited by the huge lake freighters that bring corn and wheat in from the Midwest, utilizing the most fuel-efficient transport system in the world.

The misperceptions in Paladino Country multiply because politicians here never rebut the terrible truth—that these hundreds of millions of dollars for ill-advised, anti-green, make-work infrastructure projects won’t always come down the pike. In a state with a $9 billion deficit today and a gap of as much as $37 billion by 2014, there is no guarantee of further funding for big projects, either good or bad. At the same time, a necessary project goes begging: The federal government long ago agreed with Canada that the two countries needed to clean up what they called polluted “areas of concern,” one of which is the Buffalo River. Today, whenever it rains in Buffalo, raw sewage gushes into the Buffalo River from 38 outfalls, otherwise known as storm-sewer pipes, that mix rainwater with the stuff we flush. While local politicians join the rant about high taxes, and salute make-work bridge and road projects, the Buffalo River festers with an unaddressed problem.

But it’s worse than that. Candidate Paladino, foe of government, blisters critics of the plan to lure big-box retail to Buffalo’s old inner harbor area with $150 million of subsidies. The money comes from a settlement with the Niagara Power Project, which produces hydropower in huge turbines whose blades are turned by the water that flows at 16 knots past Buffalo, down the Niagara River and through a series of tunnels dug through Niagara Escarpment limestone 60 years ago. When the Power Project was relicensed, the authority that runs the turbines agreed to pay the communities upriver about $9 million a year for 50 years so they could green up and clean up their waterfront areas. Part of this revenue stream—all public money, if not from a typical source—was meant to finish building out the old Canal district in Buffalo, which is where the original Erie Canal terminus is. The rest of the money was for environmental remediation. But the developer-dominated public board that controls the money hijacked it away from green projects and instead planned a suburban-style mall for Buffalo’s inner harbor—a mall meant to look like the South Street Seaport or Baltimore’s Inner Harbor, with big-box retail anchors and restaurants and $6 ice cream cones.

But the developer mentality ran into reality. The big anchor retailer Bass Pro Shops, known from David Cay Johnston’s expose in his book Free Lunch as one of the most notorious subsidy-gobblers, turned Buffalo down. So did the Swedish furniture retailer chain Ikea. Why? Because Buffalo is shrinking, not growing.

Yet even well-meaning and experienced business people and civic activists are so accustomed to the developer mentality in Paladino Country that they still buy into this notion of creating supply in the absence of demand. They persist in trying to steer a 50-year revenue stream into a suburban-style, big-box retail complex, augmented by historically themed cultural accoutrements, in a downtown that lost its relevance as a retail center when its last home-grown department store closed two decades ago. This is a downtown which has not been able to sustain an enclosed shopping mall. It is a downtown whose brief flowering as an entertainment district seems to be fading as fast as Cleveland’s ill-fated Flats District did. Today, despite the presence of more than 40,000 workers in the Central Business District, there is no place downtown where any of them, including the 3,000 lawyers practicing in Buffalo, can buy the shirts, suits, or shoes that they wear in the federal, state, and local courts that are all clustered within a few hundred yards of one another. Retail in Buffalo, as it is in Rochester, Syracuse, and even in Upstate New York’s smaller towns, has for decades been a solidly suburban affair, except for a very few village shopping districts that have withstood the onslaught of the big boxes in strip malls. The Buffalo-Niagara metro has, according to one study, between 32 and 34 square feet of retail space per capita. The Portland metro in Oregon, by contrast, has less than 10 square feet per capita. Sprawl wrecked Buffalo’s downtown as a retail destination, and now, even with $150 million of subsidy money on the table, money that should be spent to clean the waterfront, not even big-box retailers can be enticed to get in.

All over Upstate, in the statistics and in daily experience as well, there is vast, consistent, incontrovertible evidence of demographic change, but also of the corrosive effects of the wrong kind of development. Much of the demographic change is urban, as the cities continue to shrink, but the shrinkage is also rural throughout the region. There is an understandable feeling of dislocation and uncertainty, exacerbated by government policies that seem always to make more outside money available for projects that never deliver the hoped-for transformations. Could tearing down one bridge and building another across a couple of hundred feet of river really change the fate of a downtown which hasn’t had a retail district in decades? Could the urban or regional economy really benefit from the construction of an additional international bridge-span, vastly expanding a Customs and duty-free parking lot, expanding a plaza for idling diesel trucks, but bulldozing a historic neighborhood in the process?

In Paladino Country, there is ample money in public coffers that could sustain libraries and economically positive cultural amenities, but today, among current elected officials, there is no will to sustain them because of the relentlessly repeated insistence that local taxes are what ails the economy. There is money available to clean up the filthy and dangerous waters of Buffalo’s waterfront, but those who control the money insist on pushing for a retail complex in retail-resistant corner of a poor, shrinking, over-retailed region. A sturdy middle-class riverfront neighborhood might be able to weather the stresses of aging homeowners, economic hard times and ethno-cultural chafing, but it’s hard to see how its residents will maintain a sense of cohesion in the face of both gubernatorial candidates, a congressman and state legislators all saluting a bridge-expansion project for which there is no demand and that commits the region to an expensive, carbon-devouring technology that will lose the price competition to rail transport even before the project itself is finished.

But here is where reality intrudes. The 2010 Census numbers will have an impact. After the next reapportionment in 2011, there will be fewer federal and state representatives for this area. That will mean fewer outside dollars coming in to sustain either government operations or to build more of the unsustainable infrastructure that the developers and the construction managers and the financiers clamor for.

Change is upon Upstate. Shrinkage will continue. The region’s comparative advantages—namely, fresh water, cheap land, extensive pre-built infrastructure—need stewardship over the next couple of decades. What’s needed now is a leadership that understands the notion of stewardship, and that understands that economic development in the form of make-work projects is not economic development at all. Sustainability for the long term, especially as the region’s population shrinks, means accepting the new parameters.

Instead, in Paladino Country, we have developers who rail, and a political class that quails, and now, a railing developer-turned-candidate. Will the rest of New York State buy his bile, or count up the money it’s been costing them?

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