Thursday, December 9, 2010

A Tour of the Rust Belt by a Californian

I come from Buffalo and I got the same feeling when I visited there last summer. The population is less than half of what it was when I went to high school there. The auto plants and steel plants are gone along with the population. The consequence is that the tax base can no longer support the once great schools, beautiful parks and other public facilities that led the city to call itself "the queen city of the lakes". The high school that I attended, which was once considered among the best in the country, has been converted into a school for cosmetology to train entrepreneurs who want to open up nail salons. This is not unique to Buffalo. The story is the same for Cleveland, Toledo, Detroit and parts of Chicago.

Some economists would call this creative destruction. Get rid of the old and move on to new and better things. I am only able to see the loss of wealth and culture. I have a hard time seeing the new and better things that will replace what has been lost. Our economic system no longer has a nationality. Money and economic activity moves easily to the emerging markets and the best sources of low cost labor. Labor is not as mobile as money, and abandoned plants remain as a reminder of immobile capital that is no longer productive.

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