Merci, Jacques et Marie

Posted by & filed under CGR Staff.

Kent GardnerThe French have voted with their hearts and picked Francois Hollande as President. And who can blame them for wanting to be more like Italy and less like Germany? More Roman Holiday and less The Spy Who Came In from the Cold?

We should be grateful to the French. We need exemplars—countries whose policies we embrace and countries whose polices we avoid. France seems determined to set a bad example, if they expect Hollande to follow through on his promises. This is a nation that hasn’t run a budget surplus in 35 years, where labor costs have been rising in the face of blistering global competition, and where the public sector controls more than half of the economy. Hollande promises to hire more public sectors workers, raise the marginal tax rate to 75%, and reverse Nicholas Sarkozy’s feeble encroachment on the entitlement mindset of the French worker. Read more »

Tax Reforms Starts with Simplification

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerThere is nothing like the IRS Form 1040 and NYS Form 201 to get you in the mood for tax reform.

We need a simpler system. Complexity is expensive by itself—we spend money simply keeping records and paying professionals to figure out what we can and can’t claim. The Taxpayer Advocate’s Service (TAS) of the National Taxpayer Advocate (appointed and funded by Congress) estimated in 2010 that taxpayers spend 6.1 billion hours filling out taxes each year (down from an estimated 7.6 billion hours in 2008, probably courtesy of tax software). 60% of Americans pay someone else to complete their tax forms. In 2008, TAS put the total cost of compliance at $163 billion, about 11% of total tax receipts. Read more »

Notes from a Distant Land—and What We Have in Common

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerOn assignment out here in Arizona, I’m led to compare it to my adopted state of New York. First, there’s the weather: no snow, warm temps, bicycle-friendly year-round. Out here, of course, that’s a normal winter.

The big city dominates state politics. Here the city is Phoenix. With two-thirds of the state’s population, the Phoenix metro area carries a big stick. Arizonans living elsewhere complain that they have but a small, quiet voice in state political circles and that the interests of Maricopa County (Phoenix, Tempe, Scottsdale, etc.) rule. We’ve got our big city, of course: New York City alone accounts for just over 40 percent of the state’s population. Add in Long Island and Westchester and Rockland counties, and metro New York’s share rises to 61 percent. Read more »

Defined Contribution Retirement Plan: Good for Workers

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner“And which retirement plan do you want?” Retirement?!! As a newly appointed Assistant Professor of Economics at Potsdam College of SUNY, I was 28 and starting my first real professional job. I was being asked to make a decision that would have little impact on my life for 37 years.

I was offered two options: The first was the NYS Employee Retirement System (ERS). If I stayed in state service and retired at age 65, I would be eligible for annual benefits equal to 70.5% of my final average salary (defined as the highest salary earned in three consecutive years). My contribution would have been 3% of salary for the first ten years. The remainder of the cost would be paid by the state. This is what is called a “defined benefit” retirement plan. Regardless of what happens to the invested money, NYS promises to pay out a specified benefit for as long as I live. Read more »

UR-RIT Corridor: Rochester’s New Economic Center of Gravity

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerIn Triumph of the City, Harvard economist Ed Glaeser attempts to explain why some cities—think New York or London or Bangalore—have prospered, even as the cost of communication has plummeted. The “death of distance” suggests the death of cities. Why do some defy the prognosis?

Glaeser reminds us that cities are “density, proximity, closeness. . . . [T]heir success depends on the demand for physical closeness.” He asserts that electronic communication is not a substitute for face-to-face contact (a proposition anyone who has endured a few conference calls will accept). Even sophisticated “virtual meeting” suites fall short. (Maybe it looks like Nathan is in the same room, but you can’t go out for a beer after the meeting.) Read more »

Rochester Economy: Optimism for 2012

Posted by & filed under CGR Staff.

Kent GardnerDespite issues weighing down the US economy –fiscal stress in Europe, continued high unemployment, and gridlock over federal fiscal policy – the Rochester, NY economy is a bit of a success story. As summarized in a recent Wall Street Journal article, Rochester, “ticks many of the standard Rust Belt boxes” yet has held relatively steady through the recession.

As a participant in the Rochester Downtown Rotary’s annual economic forecast luncheon, I was pleasantly surprised by the generally upbeat expectations of my fellow panelists. Moderated by Sandy Parker, head of the Rochester Business Alliance, it included Steve Babbitt, chairman of the board of the Greater Rochester Association of Realtors; Brad McAreavy, president of the Rochester Auto Dealers’ Association; and Clayton Millard, first vice president of wealth management at Merrill Lynch.

Read more »

Capitalism: Worst of Possible Systems (except for the alternatives)

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner“What (or whom) should we occupy?” has become shorthand for a bit of communal soul searching. We know that our economy fails to measure up. For some the pain is very personal, “Why can’t I find a job?” or “Must I work so hard for so little?” or “Why can’t employers see what I see in my daughter or my son?” Or one step removed, “What do we do about single moms stuck in a continuing cycle of poverty?”

We want answers. We blame globalization or automation or the school system. Or we blame government or regulation or some shadowy conspiracy. And we blame each other. The Occupy Wall Street movement blames the greed of the rich and powerful and their agents in government. The Tea Party movement blames the power of Big Labor—and their agents in government.

What we want changed depends on who we think is guilty. The Tea Party wants less government. The Occupy movement wants more. Read more »

Rankings: What they can — and can’t — tell you

Posted by & filed under CGR Staff.

Kent GardnerLast week, we issued a report through Govistics – a project of CGR – ranking U.S. states by average 2010 state worker salaries. New Jersey and New York topped the list, followed by California, Alaska, Maryland and Connecticut. All had average state worker earnings of over $50,000. Indiana, Missouri, West Virginia and the Dakotas rounded out the bottom of the list, with average salaries of less than $35,000. Of the six top-paying states, all but Connecticut saw an increase in state worker pay from 2009 to 2010, with New York state workers seeing a 3.4% increase in their paychecks. Of the bottom five, all but Indiana saw increases in state worker pay.

Read more »

Too Good to be True? Too Good to Last?

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerPessimism about the economy comes easily to most of us. We’ve been told that it takes fewer muscles to smile than to frown. Nonsense. Pessimism is our natural state.

And when the Rochester economy outperforms the state consistently over a three-year period, we suspect either mischief or incompetence: Someone at the Department of Labor made a mistake that will soon be discovered. Yet while the rest of the state has been shedding jobs since September 2008, we’ve pretty much held our own here in Rochester. Read more »