Soundings

William J. Stern
The Wrong Prescription for Upstate
Mrs. Clinton wants to heal the region’s ailing economy with big government—exactly what made it sick in the first place.
Spring 2000

During her pre-campaign "listening tour" through up-state New York, Senate candidate Hillary Clinton made a big discovery, only too familiar to the area's residents: the upstate economy is a disaster.

Though it has recently begun to add jobs at a rate slightly faster than the national average, upstate missed out on most of the nineties boom, expanding employment only 1.2 percent from 1990 through the first half of 1999, even as the rest of the nation robustly created 15 percent more jobs over the same period (see "Down-and-Out Upstate," Autumn 1999). What's even more disturbing is that the area continues to hemorrhage population, especially educated young people, who depart for rosier economic opportunities elsewhere.

What is Mrs. Clinton's prescription for upstate's economic ills? Just one day after officially launching her campaign in early February, she flew to blighted Buffalo to announce it: fostered by federal subsidies, high tech should blossom there and heal the region. Among her specific proposals: broadband development grants to extend high-speed Internet connections in rural areas; government assistance to small and medium-size businesses to help them acquire new technology; and making sure that the feds no longer give New York the short end of the stick by collecting more in taxes from state residents than Washington returns to the Empire State.

In short, Mrs. Clinton promises a big-government solution for a region whose problems big government caused. The high taxes and intrusive regulations of New York's massive welfare state were what drove businesses out of upstate in search of low-tax, less-regulated locales. Mrs. Clinton doesn't say much about this, because the special-interest groups sponsoring her candidacy—the teachers' unions and other municipal unions, the trial lawyers, the social service providers—all are major beneficiaries of that oversize welfare system.

To make upstate economically vibrant would require following the lead of states like Michigan and Wisconsin, which have reined in spending, deeply slashed taxes, and pared away regulations, sparking a decade-long economic boom in rust-belt regions many thought condemned to permanent decline. A low-tax upstate, freed from unnecessary regulations, would likewise encourage investment and begin to make the area attractive again to the educated young. Upstate might become a high-tech Mecca, as Mrs. Clinton hopes—or maybe something completely unimagined: it's misguided for politicians arrogantly to decide ahead of time what an unleashed market might create.

If Mrs. Clinton really wanted to help upstate, she'd campaign hard to embarrass New York State politicians into emulating their midwestern counterparts and making the area much more business-friendly. Until then, she's like a doctor who visits you in the hospital and says, "You're sick and you need to get better"—and prescribes more of what made you sick in the first place.

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