THE $50 MILLION DOLLAR AD CAMPAIGN TO NOWHERE

The ad features Robert DeNiro’s voice extolling the virtues of New York State’s business climate.  The camera flies over mountains and valleys from Niagara Falls to New York City.  A fine actor, he tells the audience that New York has been first in many things, railroads, the Erie Canal, built empires (not sure I get that one) and then the ad does the obligatory time-lapse skyscraper-building thing, but that’s another story.  Withal, he bemoans the fact some believe New York has lost its business mojo.  The world is wrong, says Mr. DeNiro on behalf of Governor Andrew Cuomo (D), Assembly Speaker Sheldon Silver (D) and Senate Majority Leader Dean Skelos (R).  New York hasn’t lost anything, it’s still the greatest place in the world to do business, it’s just been misunderstood.

The official site announcing the ad campaign, emblazoned as it is with Governor Cuomo’s name, emblem of office etc. etc. states proudly, “Ads Created By BBDO, Voiced Over By Robert DeNiro, and Feature Music By Jay-Z and Alicia Keys.”  It goes on to justify the $50 million dollar expense for all this pleasant fluff with the ever-necessary, political-stroking kumbaya  disclaimer that the Governor was “joined by Speaker Sheldon Silver, Senate Majority Leader Dean Skelos, and advertising agency BBDO Chief Executive Officer John Osborn” when making the announcement.  One can almost see old Bert Cooper in his socks standing there with the preeminent New York politicians of our day taking credit and taxpayer money for a commercial designed to make New York look good, but to whom?

Anyone with two eyes, two ears and the slightest business acumen knows New York State is, next to California, the last place to do business.  And if everyone else knows this, so does Cuomo and company.  Like the bridge, this is the ad campaign to nowhere, a not-so-subtle poster for Cuomo in his bid for the presidency come 2016.  Start now with the lies and by the time 2016 rolls around they will have become truth from being told so often.

Any $50 million dollar ad campaign which assumes businesspeople are as stupid as its creators believe they are needs a few stooges for illustration and credibility.  Among others mentioned on the website, the campaign cites a yogurt company in the Upstate community of New Berlin as an example of what can be done in a business haven like New York when the state and private enterprise join hands.

Chobani yogurt is a recognized leader in the business.  Part of the Greek concern, FAGE,  the American operation was started in 2005 by Hamdi Ulukaya who, presumably on behalf of the parent corporation, bought a defunct manufacturing plant from Kraft Foods and started making Greek-style yogurt.  Phenomenally successful, Chobani is now one of the most popular yogurts in the country, so popular it has expanded at least twice since its start.  Governor Cuomo wants you to believe it’s a result of New York’s friendly business climate.

According to Governor Cuomo’s press release on the new ad campaign, the cost of the latest Chobani expansion “is estimated at over $100 million, with the state contributing an incentive package valued at over $1.5 million to support the creation of 130 new jobs over three years and the retention of 160 existing jobs.”  A ridiculous statement in the same vein as Obama’s similar claims since the 160 jobs weren’t going anywhere to begin with given the growth in Chobani’s business which necessitated the addition of 130 new hires.

We are told there is a great deal of synergy in the state-Chobani relationship.  “To support this rapid growth,” says the governor’s website, “New York State and FAGE partnered to allow [italics ours] the company to expand where it needed to the most: close to New York’s dairy farmers,” the same dairy farmers who have been throttled by New York’s taxes and environmental regulations and number almost a third fewer than fifteen years ago.

In 2010, the New York Office of the State Comptroller called it a “crisis” citing the “years from 1998 to 2007 [during which] the number of dairy farms in the State plummeted 27 percent.  The number of dairy farmers has dropped as dramatically, with the State losing half of its dairy farmers in the last 20 years.”

Comptroller Thomas DiNapoli (D) blamed “low milk prices” for the decline, but the real reasons, according to those in the business of selling off New York farms, include state taxes, oppressive regulations and an almost palpable Downstate ambivalence towards Upstate in general.

A specialist in farm real estate, Lindy Ferguson of Farm & Country Realty in West Burlington, New York acknowledged it’s not only prohibitive taxes, rules and regulations, the demise of family farms in New York is directly attributable to a state policy of “indifference.”  Mrs. Ferguson points to family farms being gobbled up by large companies in spite of the fact there are “young people who want to start farms, but can’t.  The banks run in the other direction as soon as you say the word ‘farm.’  The state won’t lend money to prospective farmers either, and [the U.S. government’s Farm Services Agency (FSA)] is a joke.  If you want a loan from them they give you form after form after form and then it takes months to get through the process until finally they say, ‘no.’  By that time young people find something else or move to other states.”

From a business standpoint larger, more efficient companies buying up smaller ones makes sense, but in New York there is additional value added for bloated government which is symbolic of what happens in other sectors.  When large concerns take over family farms there is a subtle, yet very real effect of making it more difficult for smaller enterprises to start.  Large companies will absorb the cost of doing business in a tax, spend and over-regulating state like New York.  They will withstand being taken advantage of until it no longer makes economic sense, then they pack up and go somewhere else.  But they leave behind a culture of over-taxation to support massive spending and a regulatory environment built and bred to extract as much from business as possible.  In other words, the rules evolve based on a game between New York State government and large, well-financed corporate entities.  Small businesses, including and especially farmers, can’t play by those rules.  Clearly, in New York they no longer try.

New York State Assemblywoman, Jane L. Corwin (R) whose district is in the heart of New York’s dairyland has been fighting a losing battle.  “My colleagues and I,” she states on her official website, “have been working to facilitate job creation in this state through legislation that reduces the cost of conducting business, including reducing the property tax burden and finding alternative energy resources to keep New York’s farms, many of which are family-owned, up and running.  While the passage of legislation such as the property tax cap will help farmers, what all businesses need is Albany to stop raising taxes and fees, implement a long-term energy plan and get out of the way of job growth.”

Her list of anti-business policies in New York is woefully short, but the long-term energy plan she alludes to involves another farmer’s issue particularly, one of potentially colossal importance.

Farms from the Southern Tier to the state’s midsection are on top of not only the Marcellus shale formation, but what Geology.com calls “The Natural Gas Giant Below The Marcellus,” the Utica Shale formation.  Stretching into seven states, the formation is so large, “the Ohio Department of Natural Resources estimates a recoverable Utica Shale potential between 1.3 and 5.5 billion barrels of oil and between 3.8 and 15.7 trillion cubic feet of natural gas,” much of that well within New York’s boundaries representing billions of dollars in revenues to both the people and the government of New York, not to mention the enormous advantage in offering businesses the opportunities associated with cheap energy.  Cuomo however, is MIA on the issue.  As is typical of liberal Democrats, he is more comfortable spending $50 million dollars on a pointless advertising campaign than dealing with developing the state’s potential to make it truly more inviting for business and industry.

To be fair, the anti-business culture in New York is not the fault of Andrew Cuomo’s alone.  He is simply a proponent, a tool of the culture he’s inherited.  As such, he does not deserve the accolades people like G. Thomas Tranter of Corning Enterprises pour on him as a politician who has “fundamentally” changed the way New York does business.  Nothing could be so patently and absurdly untrue.

In a May 2, 2012 article for ChiefExecutive.net, JP Donlon put all fifty states on a list of the best for business to the worst.  Texas is first, California is last, and New York is second to last.  The tale is in the tape as they say.  From 2001 to 2009 the net migration of people from New York and California to other places was “over 1.6 million and 1.5 million” respectively.  Concluding the painfully obvious, Donlon adds, “People migrate in search of employment.”

The Governor is not unaware of the above, but he is a product of unbridled liberalism and Clintonian politics with a Big Apple flair for fantasy.  When the facts don’t fit the fantasy, put on a Broadway production.

Consider his approach to New York’s unemployment statistics.  In reality, New York’s unemployment rate is 8.6%.  It’s potential labor force has dropped from something shy of its high in 2008 of 9.7 million people to approximately 9.55 million as of the latest U.S. Labor Department statistics.  Employment in New York has also dropped to its lowest level in almost ten years, 8.73 million.  On the books, almost one million New Yorkers who can work don’t have work.  Off the books we know the figure is higher, mitigated perhaps by the exodus of young producers to states where they can put their talents to work, but leaving behind a growing population of takers including older people who would leave if they could, but can’t, many dying in loneliness without their children nearby, a common complaint.

On his website, Governor Cuomo claims “New York’s private sector job count now stands at 7,321,400 – an all-time high,” when the U.S. Department of Labor disputes the figure in a chart a third-grader could read.  To increase employment, Cuomo goes on to explain that his $50,000,000 campaign will bring the uniquely positive aspects of New York’s advantageous business climate to…New Yorkers and then the other states.

It may be the Governor is oblivious to the fact that the rest of the country, all of Europe and now even China are in the midst of the most dramatic economic downturn since the Great Depression.  Of what earthly value could his $50 million dollar campaign be in such circumstances?  To whom is he directing the message?  Advertising to New Yorkers about starting businesses in New York is either a black joke or cynicism as art.  As directed to other states it is a wildly Kafkaesque endeavor with as certain results.  Taken on its face, cynical hardly defines Cuomo’s view of the intelligence of New Yorkers, made more insulting by the wasteful madness in advertising New York to other states of the Union who can see what everyone sees, that New York is second on a list of places businesses should avoid like they would Sodom on the day of God’s judgment.

This at a time when the situation in areas of Upstate New York is nothing short of critical with most of New York’s population loss in those areas.  Truckers refer to the Thruway between Albany and Syracuse as “Death Valley.”  Buffalo, a city of almost 600,000 in 1950 has lost over 60% of its population and virtually all of its manufacturing base.  In the last decade alone the population has shrunk an additional 10.7% to 261,000.  Utica, once a thriving place of over 100,000 is a shell of itself having lost over 40% of its population since the fifties.  Syracuse and Rochester have suffered the same plight.

Whole neighborhoods have been wiped out in cities like Utica, their rotted empty carcasses boarded up and scheduled for wholesale euthanasia.  All across Upstate families are broken apart, adult children leave out of necessity, many to rarely see their relatives again for the distance and new responsibilities of a productive life in another state.  The pool of needy grows to an unsustainable level while the pool of providers shrinks to a point where it can no longer survive itself.

The state’s answer?  A $50,000,000 ad campaign which shows the majesty of Niagara Falls, but not the desolation of the surrounding area, a campaign which delights in New York’s Adirondacks, but fails to capture the depths of economic deprivation and despair in the towns and villages around and among them, a majestic skyline and a bustling New York City, but not the slow inexorable decay in parts of the Hudson Valley and Long Island where property taxes are so high people can no longer afford to pay them.

Where there is no business, there is no life.  After so many years of killing the golden goose, she is finally on life support and $50 million dollars of snake oil will not cure her.

The question is begged, if we are as great for business as Mr. DeNiro, Jay-Z, Alicia Keys and Governor Cuomo say we are, how come the unemployment rate is higher than the dismal national average?  Why are one million people available for work, but can’t find jobs?  And why are we second to the lowest on the national scale of states conducive to doing business?  It doesn’t make sense, and does little in the way of justifying a $50,000,000 expenditure on an ad campaign that tries desperately to make a silk purse out of a sow’s ear.  In a way, it smacks of state-funded fraud, the kind of fraud spelled out by Orwell in theory and perfected by the Soviet Union in practice, the same kind of fraud New York State has institutionalized using bribery as a means of holding a tenuous, fragile economic scene together.

On the same day as Donlon’s piece was published, Brian Kolb, writing in the New York Post lambasted Cuomo and the Democrats led by Sheldon Silver for attempting to raise the minimum wage in New York from $7.25 to $8.50 per hour, a bribe to the rank and file for votes, but paling in comparison to those the state hands out to corporations who prostitute themselves willingly, if temporarily.  Kolb, a businessman wrote, “Few if any of the folks pushing the minimum-wage hike have ever run a private-sector business.  They have zero understanding of how hard it already [italics his] is for job-creators in New York to run their businesses.”

A perusal of New York politicians’ resumes vindicates Mr. Kolb’s assessment.  Andrew Cuomo has never run a business in his life.  He’s been at the public nipple in one way or another since graduating from Albany Law School.  How would he know what it’s like to operate a business in New York or any other place for that matter?  What he does know is how to spend taxpayers’ money, which should come as no surprise since it is in his DNA as it is Sheldon Silver’s who, as far as anyone can tell has only limited association with business in any way with the exception of campaign donations.

The State of New York is very much a microcosm of the federal government.  Its political class, including Republicans and the only Conservative party in the United States of America without one conservative in it, has, over the years, ensconced itself in a place where they govern by a set of their own rules created in a vacuum of liberal fantasy totally removed from the people of the state who can always be depended on to vote the wrong way.  There exists a destructive compulsion among New York politicians to raise taxes, spend money, regulate everything, and do it all with such reckless abandon one wonders if they are human.

Fifty million dollars to attract business to New York?  It is a cynical expenditure in keeping with other equally sinister, irresponsible and ill-conceived wastes of taxpayer money throughout the state’s history.  But it should come as no surprise.  New York is primarily governed by a Downstate cadre of ultra-liberal fanatics, and like all fanatics, the consequences of their actions have no bearing, no meaning and therefore no reality.  The result is in the doing.

As to the Cuomo administration’s successes in bringing new business to the state, it took $10,000,000 from the federal government to create an “electric vehicle buyer incentive program.”  This to presumably help along a “green” company, the Smith Electric Vehicles company, New York’s version of the Fisker.  New York taxpayers are also kicking in a “package of state and city incentives valued at over $6 million…to augment the company’s private investment” of $8 million in a Bronx plant to build “zero-emission vehicles.”  Working the numbers, it’s not a bad deal for the fledging electric car company, taxpayers are forking over $16,000,000, twice what the company is putting up on its own to produce a product the state has to bribe people to buy.

This is the way New York entices businesses to locate in the state.  Not by dramatically cutting spending, lowering taxes, reducing regulations, cutting fees and otherwise making New York a haven for any right-minded CEO or entrepreneur, but by bribing them with some up-front cash, a few tantalizing incentives, tax breaks, abatements and other goodies, all of which are temporary.

New York politicians are like heroin pushers, they lure businesses in with promises of cooperative Nirvana, then when they’re here, they slowly but surely suck the lifeblood out until the company a.) dies, or b.) leaves.  In New York, there’s only one business inevitability, you will rue the minute you set foot on New York earth.  In the meantime however, like a pusher with a new addict, New York State is your best friend, especially since bribery in New York is institutionalized.  Like abortion, institutionalized, or state sanctioned bribery may be grossly immoral, but not the least bit illegal.

It is appropriate that people with dual citizenship in New York and Lalaland like DeNiro, Jay-Z and Keys were tapped to tell the state’s fantastic story.  “It’s great to be here,” they say, “you’re going to love it…here, just have a taste, it won’t hurt you, and don’t worry, there’s plenty more where that came from.”

Take, for example, the greatest government bribe in New York history, the GlobalFoundries “inducement.”  As part of an investigative series, Albany Times-Union reporters, Larry Rulison and Sarah Ryan detailed what it took and is taking to lure and keep a computer chip manufacturer to New York.  The picture isn’t pretty.  Their article, “All expenses paid: GlobalFoundries sent bills, state gave cash,” dated October 10, 2011 cites “Corporate apartments with luxury amenities. Flat-screen TVs. Supermarket gift cards. T-shirts and catered meals to celebrate special occasions. Lunch meetings for business groups. Bottled water and coffee.

Those are some of the expenses that New York taxpayers bankrolled for GlobalFoundries as part of a $1.4 billion subsidy promised the company five years ago to build a computer chip factory in Saratoga County — including $665 million in cash.”

Begun under the Pataki administration in 2006, the GlobalFoundries initiative became a source of interest for many, not the least being the left-leaning Times-Union newspaper owned by the Hearst Corporation.  No love being lost between the TU and Republican Pataki, when the deal was announced it immediately came under scrutiny.

GlobalFoundries, once controlled by Intel competitor American Micro Devices (AMD), is now wholly owned by Abu Dhabi’s Advanced Technology Investment Company.  Dwarfed by Intel, AMD tried unsuccessfully for years to compete in the CPU (central processing unit) business.  The GlobalFoundries deal was supposed to give AMD a brand-new multibillion dollar state-of-the-art manufacturing facility partially financed by a friendly government with tax and other incentives for years hence (sort of like Cuba and the mob in 1959), so as to better compete against behemoth Intel.  But a series of blunders on the part of AMD both technologically and in management cursed the enterprise before one brick was laid on the foundation of the new plant.

The warning signs of failure were there from the beginning however, thus becoming fodder for criticism from the local Albany media if not from the loyal opposition led by State Assembly Speaker Sheldon Silver (D) who had a political stake in New York’s high-tech reformation.  Details of the deal began to emerge showing the state, in a desperate effort to move beyond its image as the buckle of the rust-belt, promised hundreds of millions of incentive dollars, hundreds of millions more in advanced site development funds, tax incentives and the like without any concrete promises in return from the company upon whom this taxpayer largesse was being dumped.  In short, anytime AMD wanted to pull out of the deal, it could.

In 2007, less than a year after the grand announcement by the government of the State of New York, Kris Tuttle of SeekingAlpha.com wrote that AMD had startled the investment community with a statement long on candor, but frighteningly short on confidence.  “[We admit to a] lack of profits in all businesses, appallingly negative cash flow, poor distribution management and large market share declines.”

Then Chairman of AMD, Hector Ruiz, subsequently displayed a bizarre ignorance of his own company’s workings vis the investment world when in light of the above he stated, “[I can’t] understand why the valuation of the company could be worth 40% less than it was just a short time ago.”

This set the stage for what should have been a review of New York’s involvement with AMD and GlobalFoundries, perhaps a cut-your-losses discussion.  Instead, faced with a looming manifestation of all that could go wrong with the largest such deal in New York State history, it was full steam ahead.  After all, AMD still appeared to be poised for a victory over its giant rival Intel.  AMD had the fastest chips which were selling well…life was good and looking better.

That was then.  Four years later, after problems with its newest premier chip, and the mounting losses related, AMD lost what little advantage it had on Intel.  On March 5, 2012, AMD and GlobalFoundries decided to part ways.  In an apparent attempt to calm rising fears over the rather abrupt decision, AMD announced at the same time it would still be using GlobalFoundries’ advanced 28nm (nanometer) manufacturing process.  This directly conflicted however with a report by Joel Hruska of ExtremeTech.com who on November 22, 2011 wrote that AMD was canceling its 28nm manufacturing relationship with GlobalFoundries in favor of a new relationship with Taiwan Semiconductor Manufacturing Company (TSMC).  In one fell swoop the entire raison d’être for GlobalFoundaries’ presence in New York was put into serious question and along with it billions of taxpayer dollars.

The Times-Union exposè of October 10, 2011 cited a lawsuit in which it engaged to wrest information on the deal from The New York State Economic Development Corporation.  They won and the information revealed a relationship between the state and GlobalFoundaries quite similar to a rich daddy and a spoiled daughter.  By then GlobalFoundaries had sought $590 million dollars in outright reimbursements for sporting goods, groceries and flat panel televisions “among other expenditures paid with public dollars.”

But the most startling revelations are the statements made then about the GlobalFoundries deal by members of the Cuomo administration in light of the glowing remarks made today about the same deal in the context of touting the “New New York” ad campaign.

The Times-Union presented evidence of the outlandish spending by GlobalFoundries on the taxpayer’s dime to a top Cuomo administration official who said, “’Such a mega deal likely won’t be offered again,’ — not even to land a second fab (chip fabrication facility) at Luther Forest Technology Campus in Malta, where GlobalFoundries owns 223 acres.”

The Cuomo advisor failed to discuss what the State of New York might do otherwise to encourage the new fabrication plant to locate at the campus.  So entrenched is the mindset that the only way to get businesses to locate in New York is to bribe them, it reveals a fundamental inability to deal with the real issues of why they don’t come on their own in the first place.

“’We don’t see massive subsidies as good economic development policy or a good investment of taxpayer money,’ said Ken Adams, who became president of ESDC in April under Cuomo. ‘We’re no longer fronting money. There’s a lot of lessons we learned from past experience.’”

Apparently not.  On the same website announcing his “New New York” campaign the Governor happily and proudly glorified the GlobalFoundries arrangement as “one of the biggest economic development deals in New York State history” and then went on to boast about a new deal worth $4.4 billion in private investment, but attached to it a $400 million dollar state investment in the SUNY College for Nanoscale and Science Engineering (CNSE) in Albany.”

On its face, such an enormous investment in high-tech education using taxpayer dollars looks like a very good thing, but under the surface it is a direct investment in IBM which is building a facility connected to the college which it presumably wouldn’t have unless the state put in the $400 million to the college.

According to the Times-Union, IBM “built a $2.5 billion chip fab in East Fishkill with state money [and] was a major beneficiary of these policies, along with the University at Albany’s College of Nanoscale Science and Engineering, which leveraged hundreds of millions of dollars in state funding to lure computer chip consortium Sematech from Austin to Albany.”

The Cuomo administration may not be “fronting money” out in the open like Pataki, but it is fronting taxpayer money nonetheless in its own way.  Such bribery is part of the state’s political culture, a way of skirting having to deal with the underlying reasons for New York’s economic rot.

Billions of taxpayer dollars spent luring companies to the state may be sound practice for New York politicians, but consider the one that got away, the one that the state could have had without one dime of bribery.

On the same webpage proselytizing the advantages of a $50 million dollar ad campaign is a quote from G. Thomas Tranter, Jr. of Corning Enterprises.  “The New York Open for Business marketing effort,” he stated, “is critical to spreading the word to businesses far and near of why they should be taking a look at New York.  Governor Cuomo has fundamentally changed New York’s approach to business growth.  These accomplishments have demonstrated a new level of competence that has paved the way for a restored confidence by CEOs who now see the benefits of doing business in the new New York.”

All fine and good except that Mr. Tranter apparently doesn’t himself see what he says others should.  On July 21, 2010, Corning announced plans to build an $800,000,000 manufacturing plant…in Beijing, China.  So much for Mr. Tranter, Jr.’s assessment of New York’s wonderful business climate, but certain clarification of how obsequious a human being can be when desperate to be in with the liberal elite New York in-crowd.

It is conjecture of the most useless to say DeNiro, Jay-Z and Keys made out with payment for their services.  In the grand scheme of things, $50,000,000 is paltry, more a campaign donation from the taxpayers of New York to Andrew Cuomo for his 2016 presidential run.  But it is galling to an incredible degree when it is done without so much as an infinitesimal connection to the realities.  New York is 49^th in states conducive to business because the atmosphere is polluted with liberals and hack politicians, both hard core Democrats and fat, passive Republicans.  But they are not solely to blame, New Yorkers themselves are far more at fault for electing them time after time after time.

It is true, you get the government you deserve, but no one deserves this kind, not even the people of New York.