Things That Make Me Go Hmm… Startup-NY advertising in Ohio?

Migration Map 2010Recently Start-Up NY has been advertising heavily in Cincinnati touting New York as a great place to start a business. Cincinnati has a small but interesting start-up business. Most of the buzz has been about Cintrifuse. Although there have been some successes, no one has confused Cincinnati with the start-up meccas like Silicon Valley. Start-ups in Cincinnati and Northern Kentucky largely remain a work in progress. When we look from New York’s perspective the grass sure looks greener over Ohio’s septic tank. The recently released United Van Lines 2013 migration study press release says that New York has the third highest ratio of traffic moving out of state. The reason for the high outbound ratio is complicated but it is hard to ignore the business climate’s consistently low ratings. The 2013 version of the ALEC-Laffer State Economic Competitiveness Index has New York ranked 49th. The year before they were ranked 50th. So why would a budding start-up move from a state like Ohio who is ranked 26th to a state ranked 49th? Cincinnati may not have the cachet of Silicon Valley but it has a better business environment and a lower cost of living than New York.

New York has a difficult marketing problem and from their perspective at the back of the pack, the Cincinnati start-up market is a more appealing target to attract businesses from than Texas or California. Their plan is to create tax free zones in which “businesses can operate 100% tax-free for 10 years. No business, corporate, state or local taxes, sales and property taxes, or franchise fees.” This is an interesting offer but it is restricted to areas located primarily on SUNY campuses around New York City. Their idea was to pair up high tech businesses, low taxes, and college campuses. This might eventually work with Columbia university but I am skeptical of its usefulness at the SUNY campuses. Even if this plan happens to be successful at a major university, what is going to stop Kentucky and Ohio from setting up similar plans at the University of Cincinnati, Xavier, Miami, or Northern Kentucky? In the grand scheme of job migration their plan is a nice employment solution for high tech, college students but it really does not address the much larger unemployment problem with the low education, low skill job market. They may save a few jobs for college graduates but the rest of the people are going to have to look for jobs elsewhere. To fix that problem we have to learn how to grow low and medium tech companies again. We tried to fix the problem by encouraging the growth of the service industries at the expense of manufacturing companies. Now we have learned that the service industry is not the magic bean that will grow the low education, low skill job market. “To grow middle class wealth you must be making things bigger, better, faster, or cheaper.” That will take a different mindset. A mindset that made New York city great a long, long time ago.

When I think of New York City I think of this poem. From huddled masses to high tech college students, it is amazing how the vision of who we are has changed. It is hard to embrace a return to the optimistic vision of the poem when a poor business climate is undermining that vision at every turn. In a very provincial sense I feel like Samuel Gerard in “The Fugitive” who kept telling Dr. Kimble, “I don’t care”. I have a job to do, New York has a job to do, and it is very likely that never shall the twain meet. I hope local start-ups will look at the numbers and stick with Cincinnati. That is the smart decision. Regardless of their decision my life is unaffected. However there is a deeper issue in play. Like Samuel Gerard who finally admits that he does care, I want New York to be successful again.  When I root for New York’s success I am not rooting for a more optimistic future for all of us and the success of New York is part of it. I am rooting for the unbridled optimism of the poem.

Give me your tired,
your poor,
Your huddled masses
yearning to breath free,
The wretched refuse
of your teeming shore.
Send these, the homeless,
the tempest-tost, to me,
I lift my lamp beside
the golden door!