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August 17, 2015

Wanna know a secret?  Andrew Cuomo never believed in economic development policy. It was never his thing. To get a sense of that, just think about his jobs policy when he first ran for governor. What was it again? Oh yeah, he wanted to rebuild the Erie Canal. Snicker.

Until very recently, Cuomo’s stubborn opinion was that there wasn’t much a state government could do to turn around a regional economy.

Thankfully, this belief didn’t keep Cuomo from launching some bold initiatives – the Buffalo billion, Regional Economic Councils, START UP and a massive expansion of the state’s nano-tech investment.

That’s an impressive array of initiatives. It really is. But now for some, ahem, qualifiers:

The Buffalo billion? It was a brilliant repackaging of a lower level of economic development assistance going to the region.

Regional Economic Development Councils? Rather than being “a total recast” of how economic aid is doled out and “a new empowering” of local decision makers, it was and is an exercise in total Cuomo-nian control. All the participants in the regional councils privately acknowledge this.

START UP? It’s a massive PR campaign which, if you had to do an accounting analysis right now, would show the state paying $350,000 for every $50,000 job created.

Nano? There’s been this bizarre uprooting of nano-science capabilities from Albany where it appeared to be taking hold to Utica. Why exactly? Well, other than to disprove the notion that Utica is “the City that God Forgot,” there wasn’t and isn’t a strong rationale.

All of that said: The Buffalo billion has worked; there is a turnaround in WNY. The Regional Councils have indeed involved locals like never before. START UP could end up being the most successful economic development policy since the … you guessed it… Erie Canal. And upstate New York is now known worldwide as a nanotech center.

As a result – Comptroller Dinapoli’s recent jobs report didn’t lie – there’s tangible economic progress for the first time in decades. Cuomo’s economic policies are working!

Pause. Exhale. Reflect. What we’ve written so far was a introduction for a conversation we overheard recently at the Saratoga track.

We don’t know who they were exactly. They were well-to-do individuals, four guys, 40-somethings, tech guys, engineers, engineers with MBAs, perhaps. They were drinking. They weren’t drunk, but they were lubricated. In their midst was a woman, very attractive, but not a girlfriend, it was one of the men’s sister or cousin, or so it seemed. She, too, was professional, very smart and quick, and she was the one asking questions about Global Foundries Malta chip fab plant.

The conversation started out with the woman asking how things were at the plant. At that, the eight eyes of the engineers rolled in unison and they all took a long drink. What ensued was a really spirited discussion that boils down to this:

The project at Malta is a joint venture of five or six high-tech companies with different corporate styles that haven’t meshed and will never mesh.

There are actual products being produced at the facility, but there are no customers for the products.

Billions of dollars in public money has been expended on the project, but the best thing the state could do now, in the estimation of the four engineer types, is to pull the plug.

OK, OK, so what should we – meaning our little group at this blog and you, dear readers, and all New Yorkers – make of this?

Well, as always, let’s be skeptical.

Maybe these guys didn’t know what they were talking about and were just making it up. That’s possible, but we don’t think so. Their conversation was animated with details of what had happened at the plant that very day. And the way they were talking was not loud-mouthed or boastful. No, it was a thoughtful group. It was a serious conversation.

Maybe these guys have too narrow a focus. Maybe their perspective is cabined somehow to sub-sectors of the technology market and not the big picture. That’s always possible with engineers. They can be experts about some facet of the technology and perhaps miss entirely on market dynamics.  Maybe, but it really didn’t seem so. On this point, the woman whom we think might have been an academic was pressing the right overarching questions about competition and the state of the technology and whether the great experiment of having five tech companies all engaged in chip fabrication was a workable model, one that could be sustained over the long run. The answer wasn’t quick and dismissive at all. They talked at length about how other firms in the same sector already appeared to be moving ahead of Malta – in part due to a streamlined administration that allow those individual firms to move so much more quickly on technological developments. On this point they kept talking about how the management at Malta had layer upon layer and that simple decisions take an inordinate amount of time to complete.

Or maybe these guys had some special interest, or maybe they had an ideological bent, or maybe they were somehow anti-New York. We NT2-ers were listening for evidence of that and trying to be really skeptical about them, it’s just that we never got a hint of any of it. To the contrary, they seemed to us to be well informed and reasonable and sincere as hell. In fact, at one point one of the men noted that New York and its political leaders had to do something to reverse the state’s decline and that Malta was “a good and noble effort.” Everyone agreed with him – but they all kept coming back to the same thing: Malta has no customers and few prospects for getting them and that at some point, somebody has to pull the plug.

After a lot of reflection, the irony of the situation occurred to us: Billions of dollars later, was Cuomo right in his original belief about economic development?

3 Comments leave one →
  1. Pete permalink
    August 17, 2015 4:22 PM

    Perhaps they knew NT2-ers were listening in and wanted this theory perpetuated on this blog. Just kidding. I agree with their basic premise and have long thought the heavy state investment in nanotec and the flamboyant, Ferrari driving, and grossly overpaid Alain E. Kaloyeros at SUNY Politech Institute will eventually be exposed as major boondoggles and frauds, respectively.

  2. Anonymous permalink
    August 17, 2015 6:43 PM

    I live near Malta and the positive effects of the plant are apparent. There’s a lot of development — new homes and businesses on every corner. But from friends and neighbors who work there, I sense uneasiness. Nobody comes out and says what you overheard. They just hint at it. I hope you’re wrong. I hope there’ll be some big order from the feds or something like that.

  3. B Sarbane permalink
    August 18, 2015 3:38 AM

    To understand econ dev under Cuomo, you first have to understand he is a passive-aggressive control freak. I don’t mean this as a political statement, but rather as an observer of his behavior as Gov and having read The Contender, the bio about his career. I’m no shrink, but the guy has some problems. He must control everything, absolutely. If he can’t control it, he ignores it. If he can’t ignore it, he tries to kill it. If you look at his administration, including econ dev, through that perspective, it all makes sense.

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