A healthy local economy is neither totally self-sufficient, nor parochial but is clear on its priorities. One of its goals it to slow the rate at which money leaves the region, and maximize the number of times it changes hands before it does finally depart. Another goal is to plug what economists call “leaks” in the local economy. Leaks are the loss of money and economic activity for products or services that could be provided locally.
Writer and local advocate Michael Shuman sums up this strategy as LOIS, Local Ownership and Import Substitution. Local ownership is important because such businesses are not likely to leave the area and take their jobs with them. Money earned by local businesses stays in the region in banks that loan it out to people to start businesses or for individuals to buy cars or houses which spurs further economic activity.
Import substitution is local production of goods and services that have been previously provided from outside the region. For example, a family or small business that heated with oil or natural gas and switches to wood, wood pellets, or wood chips. While it is true that a local distributor of heating oil or natural gas also provides jobs, there are still important differences. Such concerns are local representatives of companies from outside the region. Ultimately, money they earn leaves the region to create jobs and opportunities in the community of the home office. What is so compelling about import substitution is that often that money is already present in the community and there for the taking. It is being spent year in and year out; it just needs to be redirected in ways that benefit the local community.
For both individuals and businesses one of the most important strategies is to “shop local first”. A wonderful example of this is a local food service that purchases in a series of expanding circles. What they can buy locally, they buy locally, what they can by regionally they buy within the region. If they can buy something that comes from the Midwest rather than California, they do so. As long as prices are reasonably comparable, they will pay a little more to buy locally or regionally. This makes sense both economically and in terms of what is sustainable. One of the ways that individuals can contribute to the economic improvement of the region is to localize their spending. If enough of St. Lawrence County’s 40,000 plus households and 4000 small businesses did this, the impact could be significant.
There are tens of millions of dollars at stake here. As an example, television advertising encourages St. Lawrence County residents to “take that short drive” to purchase their car in another county. If 3000 cars are purchased in this way at an average cost of $18,000 each that is $54,000,000 in lost sales for the local economy. If more people decided to shop locally and only 1500 cars were bought elsewhere, there would be $27,000,000 stimulus to the local economy, new jobs for mechanics, salespersons, and office help. Currently, these jobs are being created in a neighboring county.
St. Lawrence County’s four thousand businesses could also benefit the local economy by patronizing other local businesses first. During the several years I operated a small online business I shopped locally as much as possible.
Going through the various sectors of our economy, food, energy, autos etc. it is not hard to see that there are tens of millions of dollars that could have a local impact. The ingredients for creating a more healthy local economy are present, but locked up in ways that do not benefit us to the extent they could. Shopping in our communities at locally owned businesses is a key step that is also very doable.
Tuesday, November 3, 2009
Tuesday, October 27, 2009
Changing the Narrative: The Story We Tell About The North Country
The narrative I am talking about is the story we tell ourselves and others about Northern New York. There is power in that story. What we choose to share, and whether it is positive or negative, will have a huge impact on how we all view and think about the region. Narratives can vary; some are mundane and journalistic and full of facts. Others are mythic or heroic, such as how we all pulled through the 1998 ice storm together, someone’s bigger-than-life personality, or dramatic work related stories.
Some narratives can be summarized as “awful North Country” or “poor us.” The former is about cold weather, no jobs, or no shopping while the latter includes, but is not limited to, upstate downstate conflicts, higher taxes, or intrusive government regulation. Other narratives are more positive, about a good place to live, work, and raise a family.
The power of the narrative is most profoundly seen in what we communicate to our children, both verbally and nonverbally. The loss of our young people is a real concern for many North Country residents. At the same time, the narrative is there is nothing here for them, that if you are a winner you will leave the area; that they will want to or should move away. Not everyone can or should want to live in the North Country. Still, as they leave for college or to work we need to hand them a mail box and a map of Northern New York, not a suitcase and a one way ticket. We need to communicate that coming home is a viable option.
Perhaps we need a new narrative that goes something like this: “We understand the need to see the world and get an education. Gaining experience in your chosen work is a good thing. But, in a few years, we hope you will consider coming home. The North Country is a good place to live, to work and to raise a family of your own. You have relatives and friends here, and your skills and your presence can make it a better place to live. It is possible to come home, and do well, if you decide that is what you want to do.”
In the end, changing the narrative is not about being a Pollyanna or overlooking our problems and challenges. This is not just a task for individuals, but community leaders, media professionals, and economic developers as well. Creating a narrative is about thinking things through and coming up with a coherent story that expresses the region’s identity and what we would like the North Country to be, stated in such away to appeal to those who would like to be a part of the region’s unfolding story.
Some narratives can be summarized as “awful North Country” or “poor us.” The former is about cold weather, no jobs, or no shopping while the latter includes, but is not limited to, upstate downstate conflicts, higher taxes, or intrusive government regulation. Other narratives are more positive, about a good place to live, work, and raise a family.
The power of the narrative is most profoundly seen in what we communicate to our children, both verbally and nonverbally. The loss of our young people is a real concern for many North Country residents. At the same time, the narrative is there is nothing here for them, that if you are a winner you will leave the area; that they will want to or should move away. Not everyone can or should want to live in the North Country. Still, as they leave for college or to work we need to hand them a mail box and a map of Northern New York, not a suitcase and a one way ticket. We need to communicate that coming home is a viable option.
Perhaps we need a new narrative that goes something like this: “We understand the need to see the world and get an education. Gaining experience in your chosen work is a good thing. But, in a few years, we hope you will consider coming home. The North Country is a good place to live, to work and to raise a family of your own. You have relatives and friends here, and your skills and your presence can make it a better place to live. It is possible to come home, and do well, if you decide that is what you want to do.”
In the end, changing the narrative is not about being a Pollyanna or overlooking our problems and challenges. This is not just a task for individuals, but community leaders, media professionals, and economic developers as well. Creating a narrative is about thinking things through and coming up with a coherent story that expresses the region’s identity and what we would like the North Country to be, stated in such away to appeal to those who would like to be a part of the region’s unfolding story.
Thursday, October 22, 2009
No Easy Solutions to Rebuilding the North Country Economy
Call it wishful thinking. Call it magical thinking. Call it a belief in a silver bullet. It is a common belief here in Northern New York that someone or something big is going to come along and save us, or at least repair our economic life. It comes up in public forums and discussions and is in the back of many of our minds: if we can just get the right someone or the right project, things will be different. There will be more jobs, there will be more prosperity, and our lives will be materially better. We will be just like other parts of the country. Perhaps it has always been this way, or, it has been this way for so long, that it is hard to know when and how it started.
Going back over 50 years, the St. Lawrence Seaway, which according to historical accounts was a tough sell until Canada was prepared to go it alone, soon became the object of North Country residents’ hopes and dreams. These were best summed up in a series of articles that appeared in the Watertown Times and written by a young reporter named Alan Emory. The picture painted by the articles was of jobs, and theaters and restaurants spread from Lake Ontario to Lake Champlain. Northern New York, readers were lead to believe, would be completely transformed. Decades later, we know different. Other than some jobs related to NYPA and the Seaway Development Corporation the vast majority of residents go about their daily lives largely unaffected by this project, or even give it much thought.
There have certainly been other projects over the years. The Super Collider comes to mind. More recently, there was the Bion proposal, which seemed more of a concept than an actual project, and the proposed race track. A recent pamphlet for the I-98 road proposal has a familiar ring. Job creation, ending five decades of rural poverty, and ending “transportation” isolation are all mentioned. This is a lot to expect from one little road!
It never hurts to dream, but in each case the project has involved thousand hours of time from local officials and the public and a huge amount of energy; time and energy that might have been better spent on other activities that will make our shared lives better in the long run.
The “hit the home run" approach is also common among the economic development community in Northern New York. The tendency is to try to land the project that will bring hundreds of well paying jobs, but never seems to pan out. When you think about it, it is not surprising. Nationwide there are so many communities, and so few sizeable projects.
Is economic development pointless? No, but having unrealistic expectations is. Perhaps we need a different strategy. No one else is going to do the hard work for us.
Going back over 50 years, the St. Lawrence Seaway, which according to historical accounts was a tough sell until Canada was prepared to go it alone, soon became the object of North Country residents’ hopes and dreams. These were best summed up in a series of articles that appeared in the Watertown Times and written by a young reporter named Alan Emory. The picture painted by the articles was of jobs, and theaters and restaurants spread from Lake Ontario to Lake Champlain. Northern New York, readers were lead to believe, would be completely transformed. Decades later, we know different. Other than some jobs related to NYPA and the Seaway Development Corporation the vast majority of residents go about their daily lives largely unaffected by this project, or even give it much thought.
There have certainly been other projects over the years. The Super Collider comes to mind. More recently, there was the Bion proposal, which seemed more of a concept than an actual project, and the proposed race track. A recent pamphlet for the I-98 road proposal has a familiar ring. Job creation, ending five decades of rural poverty, and ending “transportation” isolation are all mentioned. This is a lot to expect from one little road!
It never hurts to dream, but in each case the project has involved thousand hours of time from local officials and the public and a huge amount of energy; time and energy that might have been better spent on other activities that will make our shared lives better in the long run.
The “hit the home run" approach is also common among the economic development community in Northern New York. The tendency is to try to land the project that will bring hundreds of well paying jobs, but never seems to pan out. When you think about it, it is not surprising. Nationwide there are so many communities, and so few sizeable projects.
Is economic development pointless? No, but having unrealistic expectations is. Perhaps we need a different strategy. No one else is going to do the hard work for us.
Sunday, October 18, 2009
Regulation and Taxes Not Top Challenges for Regional Businesses
Recent news from both Lake Placid and Plattsburgh would have us believe that state and local government regulation and taxes are somehow holding back Northern New York economically. As noted in “Other People’s Money” one of our regional myths is that large amounts of North Country money are going to pay other people’s subway and welfare downstate. The reality is that the region receives far more from the state than it pays out in taxes. While this may not be sustainable in the long run, it is filling a vacuum left by the private sector.
A corollary to this widely held belief is another myth that high taxation and public sector jobs are hurting the private sector, driving business out of the region. The role of government in the region appears as large as it does because there is the lack of a robust private sector in large swaths of Northern New York. Part of what has happened in recent decades is that businesses are abandoning rural areas of the state, while remaining in the state as a whole. For example, two of our regional companies used to maintain customer service offices and staff in NNY in local communities throughout the region. These decent paying private sector jobs are a thing of the past. Closing these offices was a bottom line decision. Now folks in our region end up talking to people who are in Albany or Syracuse. This is part of a larger trend. Nationally, more businesses have become less reliable partners in local economic development in rural areas as they have put their shareholders before their customers. It has been up to the public sector to fill the void and keep rural areas like our own from falling further behind.
Rather than discouraging private sector development in rural areas, local, county and state governments sometimes attempt to jump start or support the creation of a viable private sector. Ideally, this is a short term strategy.
In some cases the role of big business has been that of a bad neighbor. In the past few weeks I was part of an informal economic development discussion at a public facility on the Ogdensburg waterfront. At one point in our meeting, a participant pointed to the bustling shoreline across the way on the Canadian shore then proceeded to say that the reason the Ogdensburg side does not look that way is that there are at least seventy acres of waterfront properties contaminated, and unusable, left behind by previous industrial and business occupants. It will be up to state and local governments to fix this.
There are thousands of local small businesses across Northern New York and they form the backbone of our regional economy. While they may find bureaucracy and regulation frustrating, the vast majority can operate their businesses relatively free and unmolested. As a former business owner of a small online business, I had some real challenges, but regulations and taxes were not near the top of the list.
The North Country is not alone in the challenges it faces. We need to only look at other parts of the Northern Forest Region that stretches across four states from Watertown, NY to Bangor Maine. Despite their lower taxes and less regulation than in New York State, Northern Vermont, New Hampshire, and Maine are no better off than Northern New York, or other rural parts of our state. Clearly, other forces are at work here. Low population, long winters, geographic isolation, the rate at which money leaves the area, and the loss of our young people are the real factors shaping our shared economic life. These other forces, not state regulation and taxes, are likely to determine the ultimate success of a business in our area.
In the end, getting involved in a blame game about regulation and the role of state and local governments is a distraction from tackling the truly thorny issues we face. Identifying opportunities, developing and supporting local businesses that use the region’s strengths is a worthy goal, and should be a priority. Homegrown jobs are the best kind since they are less likely to move away.
A corollary to this widely held belief is another myth that high taxation and public sector jobs are hurting the private sector, driving business out of the region. The role of government in the region appears as large as it does because there is the lack of a robust private sector in large swaths of Northern New York. Part of what has happened in recent decades is that businesses are abandoning rural areas of the state, while remaining in the state as a whole. For example, two of our regional companies used to maintain customer service offices and staff in NNY in local communities throughout the region. These decent paying private sector jobs are a thing of the past. Closing these offices was a bottom line decision. Now folks in our region end up talking to people who are in Albany or Syracuse. This is part of a larger trend. Nationally, more businesses have become less reliable partners in local economic development in rural areas as they have put their shareholders before their customers. It has been up to the public sector to fill the void and keep rural areas like our own from falling further behind.
Rather than discouraging private sector development in rural areas, local, county and state governments sometimes attempt to jump start or support the creation of a viable private sector. Ideally, this is a short term strategy.
In some cases the role of big business has been that of a bad neighbor. In the past few weeks I was part of an informal economic development discussion at a public facility on the Ogdensburg waterfront. At one point in our meeting, a participant pointed to the bustling shoreline across the way on the Canadian shore then proceeded to say that the reason the Ogdensburg side does not look that way is that there are at least seventy acres of waterfront properties contaminated, and unusable, left behind by previous industrial and business occupants. It will be up to state and local governments to fix this.
There are thousands of local small businesses across Northern New York and they form the backbone of our regional economy. While they may find bureaucracy and regulation frustrating, the vast majority can operate their businesses relatively free and unmolested. As a former business owner of a small online business, I had some real challenges, but regulations and taxes were not near the top of the list.
The North Country is not alone in the challenges it faces. We need to only look at other parts of the Northern Forest Region that stretches across four states from Watertown, NY to Bangor Maine. Despite their lower taxes and less regulation than in New York State, Northern Vermont, New Hampshire, and Maine are no better off than Northern New York, or other rural parts of our state. Clearly, other forces are at work here. Low population, long winters, geographic isolation, the rate at which money leaves the area, and the loss of our young people are the real factors shaping our shared economic life. These other forces, not state regulation and taxes, are likely to determine the ultimate success of a business in our area.
In the end, getting involved in a blame game about regulation and the role of state and local governments is a distraction from tackling the truly thorny issues we face. Identifying opportunities, developing and supporting local businesses that use the region’s strengths is a worthy goal, and should be a priority. Homegrown jobs are the best kind since they are less likely to move away.
Wednesday, October 14, 2009
The Unwinding of Globalizaton May Benefit Region
One the most important trends of the past generation has been globalization, that is, the development of world trade. There have been numerous trade agreements by the World Trade Organization to promote trade and reduce barriers to the free flow of goods and services. In the Western Hemisphere, there was the North American Free Trade Agreement (NAFTA) creating a trade zone incorporating Canadian natural resources, American capital and Mexican (cheap) labor. Proponents maintain that such arrangements benefit everyone, that globalization is a tide that lifts all boats.
In the brave new world of globalization, local communities and regions have been advised to figure out what they do best and market that product or service to a world market, while multinational corporations at the same time dominant some sectors of their local economy.
World trade has not been without its problems, and wrenching changes. America manufacturing is disappearing. Jobs were lost first to Mexico, and then later to China. People in industrialized countries have been put in the position of competing against cheaper labor in the Second and Third Worlds. There is nagging doubt about the loss of manufacturing. After all, actually producing something of value is the basis of national (and local) wealth. And we have lost our share of good paying manufacturing jobs here in Northern New York in recent years.
Meanwhile, companies have reduced their production costs with cheaper foreign labor but continue to charge First World prices, creating significant profit margins. World Trade Organization meetings have generated protests, mainly by young people warning of corporate domination and exploitation.
It is too early to tell for sure, but we may have seen the high water mark of globalization due to the combined effects of the financial crisis and the specter of expensive and scarce energy. Capital l is the lifeblood of world trade, and the lack of money to borrow will affect many business enterprises. The closing of retail outlets is expected to reach 500,000 nationwide over a three year period, ending in 2010. Cheap energy is also crucial to global trade since product supply lines now stretch across thousands of miles. Scarce or expensive fossil fuels could make transportation of goods over such long distances untenable.
A contraction of world trade would shift attention to national and local economies. Producing goods for local and national use, and closer to these smaller markets will most likely make a comeback in the future. In that possibility, there may be more opportunities for American communities like those in Northern New York.
In the brave new world of globalization, local communities and regions have been advised to figure out what they do best and market that product or service to a world market, while multinational corporations at the same time dominant some sectors of their local economy.
World trade has not been without its problems, and wrenching changes. America manufacturing is disappearing. Jobs were lost first to Mexico, and then later to China. People in industrialized countries have been put in the position of competing against cheaper labor in the Second and Third Worlds. There is nagging doubt about the loss of manufacturing. After all, actually producing something of value is the basis of national (and local) wealth. And we have lost our share of good paying manufacturing jobs here in Northern New York in recent years.
Meanwhile, companies have reduced their production costs with cheaper foreign labor but continue to charge First World prices, creating significant profit margins. World Trade Organization meetings have generated protests, mainly by young people warning of corporate domination and exploitation.
It is too early to tell for sure, but we may have seen the high water mark of globalization due to the combined effects of the financial crisis and the specter of expensive and scarce energy. Capital l is the lifeblood of world trade, and the lack of money to borrow will affect many business enterprises. The closing of retail outlets is expected to reach 500,000 nationwide over a three year period, ending in 2010. Cheap energy is also crucial to global trade since product supply lines now stretch across thousands of miles. Scarce or expensive fossil fuels could make transportation of goods over such long distances untenable.
A contraction of world trade would shift attention to national and local economies. Producing goods for local and national use, and closer to these smaller markets will most likely make a comeback in the future. In that possibility, there may be more opportunities for American communities like those in Northern New York.
Tuesday, October 6, 2009
NYS Budget Deficits Starting to Look Like a Black Hole
This is a very scary graphic for New Yorkers. It is clear that New York's current level of spending is unsustainable, and that within three years there will likely be a day of reckoning.Cuts in taxes and state spending will adversely affect North Country counties. As noted in an earlier post, "Other People's Money", residents of our region receive a 400% return on taxes paid out in the form of state spending in the region. This benefit is seen in everything from schools to roads to government jobs, and much more . Unfortunately, any reduction in services would not necessarily translate into reduced taxes, as any savings would be used to address the budget deficit.
Without increased taxes or spending cuts, New York State deficits will be $4 billion dollars in 2011, $13 billion dollars in 2012, and $18 billion dollars in 2013. This is starting to sound very much like the current situation in California. Actually, the contagion is more widespread than the Empire and Golden states. It is estimated that the collective budget deficit for all 50 states will be $350 billion in 2011. Since most states require a balanced budget, taxes will have to rise or services cut.
The 11% cut to non-personnel items in state agency budgets announced on Tuesday will ripple through the region, and is just the beginning. A recovery on Wall Street would help the situation here in New York. Short of a full recovery, the choices will not be easy or painless. With so many folks in Northern New York already on the margins, we know what that means.
Coming Home: a Quiet Success Story
During the summer of 2008 I was running errands in downtown Canton at lunch. It was a lovely summer day, sunny and warm. Passing the park I saw someone I recognized, his wife, and young children, picnicking in the park. I knew their story. The family had been away and dreamed about coming back home to live and work in the North Country, and here they were. It was a poignant moment.
The young family in the park is not alone. After leaving the area to attend college, a young woman comes home to work in a county office and works tirelessly to improve the local economy. Another young woman from Ogdensburg came home. She had attended college locally and left to take a job. Now she is back in the area, with valuable experience and marketable skills, and happy to be here. A male reader is finishing up his education downstate, but is already looking ahead to coming north again. He will have no trouble finding a job in the health care field.
The return of some of the brightest and mostly likely to succeed young people is one of the region’s quiet success stories. From personal experience, there are many other people who have come home and more will be arriving in the years ahead. They have obtained an education, and a few years of experience that make it possible for them to step in good paying jobs that have become vacant or recently created.
Both St. Lawrence County and St. Lawrence University have started “Coming Home” programs to assist those who are making plans to return to the region. Over time, perhaps, some returnees will bring their business or business ideas with them as well. That is the hope, anyway.
The reasons for coming home are probably as varied and numerous as the returnees. Some are coming back to be close to family, while others want to raise their families here. Others like small towns or wide open spaces. They have seen what has been presented as the good life in the media, and found it wanting. They understand that there won’t be as many dining, shopping, entertainment, or career options, and decided the trade-offs are worth it. Kudos to them, and lucky for us. Their presence, and their skills make our region a better place.
The young family in the park is not alone. After leaving the area to attend college, a young woman comes home to work in a county office and works tirelessly to improve the local economy. Another young woman from Ogdensburg came home. She had attended college locally and left to take a job. Now she is back in the area, with valuable experience and marketable skills, and happy to be here. A male reader is finishing up his education downstate, but is already looking ahead to coming north again. He will have no trouble finding a job in the health care field.
The return of some of the brightest and mostly likely to succeed young people is one of the region’s quiet success stories. From personal experience, there are many other people who have come home and more will be arriving in the years ahead. They have obtained an education, and a few years of experience that make it possible for them to step in good paying jobs that have become vacant or recently created.
Both St. Lawrence County and St. Lawrence University have started “Coming Home” programs to assist those who are making plans to return to the region. Over time, perhaps, some returnees will bring their business or business ideas with them as well. That is the hope, anyway.
The reasons for coming home are probably as varied and numerous as the returnees. Some are coming back to be close to family, while others want to raise their families here. Others like small towns or wide open spaces. They have seen what has been presented as the good life in the media, and found it wanting. They understand that there won’t be as many dining, shopping, entertainment, or career options, and decided the trade-offs are worth it. Kudos to them, and lucky for us. Their presence, and their skills make our region a better place.
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