Railroad Pipedream: Economic Development Goals Upstate
The primary purpose of the Upstate railroad investments imagined in this pipedream is to speed freight traffic between points west of the Mississippi River, and east of the Mississippi and north of the Ohio River, to New York State, New Jersey and New England. The Upstate investments would take the place of additional highway lanes, such as those being built in on the Turnpike in New Jersey, and make transportation through New York more competitive with transportation through other states. The Upstate investments would also make the New York/New Jersey seaport, located in New Jersey, more competitive with other East Coast ports, and could feed a rail freight tunnel from New Jersey to the Bronx. Finally, the pipedream would remove freight traffic from the Empire Corridor, making high-speed passenger rail more possible.
These are the transportation goals. But the entire pipedream, with the freight tunnel and the investments Upstate, would also have economic development goals for Upstate New York.
First and foremost, the rail freight tunnel and high speed freight lines might convince someone to build a major railport and/or some megawarehouses in Upstate New York, not just in New Jersey and Pennsylvania. There, containers and trailers coming in from the west, on trains and/or trucks, could be unloaded, the goods sorted, and then put back in containers and trailers for a 60 mile per hour rail trip to Downstate New York via the new tunnel. When picked up at intermodal yards in the Bronx, Queens and perhaps Brooklyn, they would travel direct to their final destination. Similarly, goods arriving by sea at the Port of New York and New Jersey could be hauled to Upstate New York by train. There they would be sorted, and put on different trucks and trains for delivery to points west and southwest.
In either case, the highway congestion in and through the New York Metropolitan Area would be avoided by going by rail to and from Upstate New York, rather than by truck in to exit 8 or the New Jersey Turnpike or the I-78 and I-81 corridors in Pennsylvania. Even if freight bound for Downstate New York arrived by truck to Upstate New York, it might still make sense to put trailers and containers on trains to get them east of the Hudson, if the freight trains left frequently enough and moved fast enough. Intermodal railports could be located in or near Buffalo, near Binghamton, and/or near Albany and Schenectady.
It should be noted that in the supposedly bankrupt state of California, just such investments are being made to improve the competitiveness and reduce the impact of the most important seaport in the United States – the Port of Los Angeles and Long Beach. Formerly an area of rapid population growth, coastal California has become almost fully built out west of the mountains that separate it from the rest of the United States, and land and space there have become expensive. As a result most logistics firms and major retailers have built their mega-warehouses on the other side of the mountains, in the desert of Los Angeles’ “Inland Empire” or even as far east as Phoenix. But the ports are connected to inland areas by a limited number of interstate highways through the mountains, and these became jammed with commuters seeking affordable housing while still working in Los Angeles and Orange Counties. As a result “drayage” costs – trucking goods from the ports on the coasts to the mega-warehouses in the Inland Empire – soared. And as imports from China and trucks leaving the ports soared, the pollution caused by old rigs driven by independent truckers became a big issue.
The solution was an express rail line to rapidly more goods from the ports on the coast to rail connections to the Inland Empire, the Alameda Corridor. This project completed construction a decade ago, with the Burlington Northern and Santa Fe railroad (BNSF), owned by Warren Buffett’s Berkshire Hathaway as a participant. Railroad investments such as additional intermodal terminals are growing as a result.
Economic development officials in California are now concerned that the widening and deepening of the Panama Canal to allow larger ships will encourage container ship traffic from East and Southeast Asia to pass thought the canal. Freight could then more by ship directly to East Coast ports like New York, rather than unloading on the West Coast and crossing the U.S. by truck or train. They are worried about competition from the Port of New York and New Jersey, but as the information presented previously shows, they ought to be more worried about the Port of Virginia in Hampton Roads. Improved rail connections to “inland” railports is thus considered a strategic investment for California, just as it is for Virginia.
The recent economy of the United States has featured imported goods purchased with borrowed money. This is why so much of the industrial development and activity of the past two decades has been in distribution, not in production, and why import volumes and seaport container traffic have soared. That consumer debt-based economy has now collapsed. Americans had been collectively spending up to 6 percent more than they earned for decades. They will now be at least that much worse off and probably more, as interest is paid on past borrowing that isn’t defaulted on.
This fall in the standard of living could take a number of forms. One is a growing inability for most Americans, particularly younger Americans, to afford goods produced abroad, as the dollar loses value and wages and prices rise in countries such as China. Americans would be forced to rely on more expensive domestically-produced alternatives, and would be able to afford to buy less of them. One sees indications of this in two trends. Rising energy prices, leading to conservation and more domestic supply. And the early stages of “in-sourcing,” as rising wages in places like China and falling wages in the United States mean that for some products the difference between the two is no longer great enough to offset the cost and hassle of making things across the ocean from where they will be used.
If large, global companies are going to return some large-scale goods production to the United States, they are unlikely to return it to New York State. Virtually all the industrial growth in the U.S. in the past 60 years have occurred in “right to work” states, where laws make it more difficult for unions to organize workers and wages and benefits are lower. Manufacturing has left New York for the South long before it left the South for Mexico and China, and for the same reasons – something New Yorkers might consider when they are urged to “Buy America” to keep the jobs New York used to have in other states.
It is possible, however, that some goods production for the large and affluent Downstate New York market might locate in Upstate New York, particularly the production of customized goods by new, small, entrepreneurial companies. It was, after all, the strength New York City’s link to Upstate that had encouraged the Upstate region to develop to begin with -- driven by the Erie Canal, the Erie Railroad, and the New York Central railroad. These investments had the effect of linking Upstate directly to the New York metro area.
Manhattan is just about New York’s sole remaining economic asset, and accounts for more than half of the private sector work earnings in the entire state if the substantially government-funded Health Care and Social Assistance sector is excluded. Activity indirectly generated by Manhattan (as when someone who works there spends money at a store elsewhere) or linked to Manhattan (in businesses with Manhattan customers) could mean this island generates three quarters or more of the state’s economy. Manhattan would likely remain the main economic engine of the state even if Wall Street pay were eventually cut back to a more reasonable level. A stronger rail link to the New York City area might induce some manufacturing entrepreneurs, perhaps a custom furniture maker that started in New York City and was expanding, to locate Upstate rather than in the South. After all, the Brooklyn Flint Glass company did become Corning Glass after moving upstate.
The freight link could also benefit agriculture. I do much of my summer fruit and vegetable shopping at New York City’s Greenmarkets, which feature farmers trucking in just-picked produce and selling it direct to consumers. Most of these are from the Hudson Valley, southern New Jersey and eastern Pennsylvania, but most of New York State’s prime farmland is further west – around the Finger Lakes and near the shores of Lake Ontario. One fruit farm has employees drive a truck from Geneva, New York all the way down to the Greenmarket in Union Square. That is a 280-mile drive that takes more than five hours without traffic. And on I-80, which is used for part of the trip, there is always traffic.
As part of the high-speed freight pipedream, I had mentioned the need for a series of high speed “exits,” and a requirement for the freight railroads to serve as “common carriers” allowing others to use the rails in exchange for tax abatements. Now imagine that one of those users was the New York State Department of Agriculture and Markets, which would own and operate a set of boxcars and a series of freight sidings with platforms off the exits. A “Greenmarket Train” or trains could start east from the vicinity of Buffalo in the late afternoon, and make a series of stops at those platforms. Produce farmers could bring boxes of fruits and vegetables picked each day to parking lots adjacent to the platforms to meet the train, and auction it off to both local buyers and Downstate buyers associated with the individual rail cars. The train would arrive at the Hunts Point market, the Brooklyn Terminal market, or both before 5 am, for delivery to food stores throughout downstate. Those stores could then offer local produce picked the day before, just as the Greenmarkets do.
Again, I don’t want to overstate the possible effect of this on New York’s declining agricultural sector. Most fruits and vegetables are produced on mega-farms for shipment throughout the country; a growing share of the produce consumed in the U.S. is produced in Mexico or even China where low-wage workers are available to take back breaking, temporary jobs in the fields. In New York State, there is a perennial battle over the minimum wage exemption for agriculture. Local farmers say they could not stay in business if they had to pay their field workers, mostly immigrants, that much. And according to a recent New York Times article, most Americans are no longer physically fit enough for farm work and dont' want it.
More recently, however, food quality and safety concerns and consumer preferences have been pushing in the opposite direction, toward food that is locally produced in smaller-scale farms. To give just one example, many of the grand old houses in the part of Central New York area where I went to college were built for those who made fortunes in hops, an ingredient in beer, more than 130 years ago. And now, according to the New York Times, there is a hops revival in the area “harnessing the current passion for all things local and artisanal.” That passion, or at least the agricultural growth associated it with, seems to be growing more outside New York. This sort of activity does not require rail freight to occur in a practical sense. But given that people are choosing to pay more for alternatives to the industrial food chain for largely symbolic reasons, the symbolism of rail transportation might help.
So most of the economic development goals for Upstate associated with this pipedream, therefore, are related to the production and movement of goods. Distribution and logistics to a large extent. And manufacturing and agriculture to a smaller extent, if certain economic and social trends accelerate. Other economic and social trends, however, might, just might, permit the proposed high-speed passenger rail enabled by the pipedream to encourage some urban revitalization based on an improved link to Manhattan.
The years since 1980 had seen a revolution in air travel, with far lower prices and far more people flying. As a result, businesses that felt they had to be in New York City in 1950, and had moved to the suburbs to be near New York City in the 1960s and 1970s, felt free to locate across the country. It had become common to fly executives and sales people into a city for just one meeting, and back home that evening. Many meetings took place in rooms at hotels at the airports themselves.
This trend, however, may be about to reverse. The three major costs of air service are capital (the airplanes), labor, and fuel. From 1980 until recently, the capital has been subsidized by investors willing to continue investing in airlines despite serial bankruptcies. Labor costs used to be high, but after a series of bankruptcies they are getting so low that one has to question the motivation and qualifications of the employees at some of the airlines. And fuel costs were low in the 1980s, but are now rising. All three costs can only go higher, and air travel is becoming more costly, less convenient and less comfortable as investors demand profits and capacity keeps falling.
So for businesses linked in some way to New York City, or linked to the global economy by the need for its employees to fly though major gateway airports such as JFK, locating in some small metro area one or two airplane rides away from New York City may no longer make sense. Those small metro areas tend to have the highest airfares, and the least service. It is for that reason that AT&T recently moved its headquarters from San Antonio, home of the prior chief executive, to Dallas. But there is only so much room for additional people and businesses in the densely developed, expensive NY Metro area. Some businesses may look for a nearby alternative.
As one extension of the pipedream, perhaps Empire Corridor service could be extended to Jamaica, Queens using locomotives capable of coping with the various power sources along the way. That would allow someone living or working in Downtown Syracuse, Utica, Amsterdam or Schenectady to take the train direct to Jamaica, and then switch to the Airtrain to JFK. If nothing else, competition such a link might prevent airfares to and from Upstate cities for soaring to the moon.
In 1950 economically and socially viable urban neighborhoods, places where one could walk or take transit to work and a variety of other places, were common. And places built for the automobile were uncommon and valuable. That’s what middle class people wanted at the time, so that’s where the middle class moved. And most older central cities collapsed, economically, socially, and fiscally, becoming places of limited employment opportunities, high crime, high social service burdens, high taxes and bad public services.
Today, however, suburbs and Sunbelt cities are ubiquitous, and even if that is what most people still want, they are dropping in price due to excess supply. The housing in the earliest suburbs, moreover, is reaching 50 years of age, the same age at which urban neighborhoods were passed down to the poor. The suburbs, therefore, are getting cheaper and poorer.
Younger generations, meanwhile, are more likely to want to live in walkable urban neighborhoods with mass transit, compared with those who preceded them. And it is the preferences of the young that dictate the future. Among other things, each generation since the 1970s has become progressively poorer, and those forming households today may no longer be able to afford large suburban homes and two or more motor vehicles. But with most older central cities having rotted away, the remaining viable urban neighborhoods in places such as New York City, Boston, and San Francisco, have become prohibitively expensive.
Developers have responded by trying to re-boot a number of older urban downtowns as mixed residential/commercial areas, and reboot some transit-served suburbs with mix-used transit-oriented developments, with mixed success. Substantial numbers of older office and industrial buildings, for example, were converted to residences in cities as diverse as downtown Los Angeles, downtown San Diego, downtown Miami, downtown Denver, and Downtown St. Louis during the housing bubble. Washington DC, the nation’s former murder capital, has been booming with revitalization for a decade. Despite severe crime and fiscal problems, the City of Chicago has become more attractive and prosperous relative to its suburbs. Capital is clearly on the move. And where developers overshot and overbuilt in aiming for the affluent, the middle class is now taking advantage and populating new housing in these neighborhoods.
The combination of overpriced “super-cities” and the internet has induced some people to move beyond their commuter zone into a “telecommuter zone” that is too far to travel to work every day, but close enough to do so every now and then, as for meetings. The city of Hudson in the Hudson Valley has famously been revitalized by people moving up from New York City. Manhattan spillover has also been observed in some parts of the Catskills.
So what has this to do with high-speed rail? The question is, could such a link, in substance and symbolism, advance Upstate cities as a possible outlet for the growing shortage of economically, socially and fiscally viable urban life in the U.S., for people and some businesses?
If the investments described allowed passenger trains in the Empire Corridor to cruise at 150 miles per hour, the same speed as the Acela, it is possible that 100 miles per hour could be averaged, including stops and slower speeds south of Poughkeepsie. Today, Manhattan to Hudson takes two hours, but Manhattan to Syracuse takes 5 ¾ hours. High speed rail could cut that to 3 ¾ hours. Rochester and Buffalo are too far away from Manhattan for a real economic link, but could be linked more closely to Toronto – despite the failure of a Rochester to Toronto ferry not long ago. A Rochester to Toronto high speed train could cut the link to 2 hours, and Toronto is a dynamic major metro area of 5.7 million people.
Moreover, the dynamism of the New York Metro area, with 20 million people if broadly defined, might be sufficient to attract investment from Canada. The trip from Manhattan to downtown Toronto by rail now takes 9 ½ hours, but could take just 5 ½ hours with expedited border crossing. New York to Montreal takes 11 hours today, but could take 4 ½ hours with a high-speed track down the Northway median. There are nearly 4 million people in metro Montreal, which has slipped in stature since its mid-1970s heyday.
Might high-speed clusters of people, and some firms, linked to Manhattan or Toronto turn around the fortunes of the older central cities in New York’s Erie Canal/New York Central Mainline/I-90 corridor? I don’t want to oversell this idea, because these cities have big problems. Any residents and businesses with any money will pay high taxes to fund the debts, pensions and retiree health benefits left behind by of those who moved away, all while accepting diminished public services. In some cases, government jobs are under the control of those living outside the city, and run for their benefit. Schools are poor, and crime is high.
The City of Buffalo has been mismanaged and run for the benefit of those moving out for years, as the book Power Failure shows in nauseating detail. But in Rochester, it was rumored some decades ago, the suburbs (via the county government) tried to help the central city and many key institutions remain downtown. It hasn’t helped. Syracuse had a reputedly forward thinking Mayor from the mid-1960s to the mid-1980s, but he ended up in jail for corruption. In Schenectady, state subsidies brought some activity downtown, but the police chief was caught working with drug dealers and gunshots often ring out nearby, and the appealing Stockade area along the Mohawk River often floods. In Utica, funding for the public library was cut in half earlier this year.
Moreover, every time New York City has become expensive there has been talk of young people, businesses and entrepreneurs moving to the City of Philadelphia, just a two hour train ride away. Despite some successes, those hopes have never been fully realized, and to the extent that Center City continues to expand as a zone of revitalization, it does so primarily due to endogenous local demand, not people moving in from elsewhere. In contrast, young people from all over the world would love to live in New York City. And examples of locals looking to move into and revitalize Upstate cities are limited.
On the other hand, the problems of rising taxes and collapsing local services due to debt and pension burdens from the past will expand far beyond the borders of older cities in the next few years, touching all but the most exclusive suburban enclaves. Younger people may be attracted to areas where housing is small is cheap, allowing them to provide for themselves what they will be paying to have provided to others in the past. Places where you can get around by bicycle if you can’t afford a car.
As infrastructure and trained labor have spread across the country (and across the world), many of the factors that drove economic geography in classical urban theory have become less important. Instead what matters most – aside from business operations moving to low-wage countries abroad – is access to sales opportunities, such as those found in abundance in Manhattan, and the personal preferences of those who own or (in the case of large companies) control businesses.
In many cases, those preferences come down to being around “people like us.” For the typical corporate executive, that might mean living in and moving the company to an exclusive suburb far from people who are different, aside from those commuting in for work. But for entrepreneurial-types in a variety of fields, “people like us” are scarce, and they are attracted to wherever people like them are clustered no matter who else is around. They cluster for mutual support, the exchange of ideas, and the occasional income source or subcontract when needed.
It would not take too many such people moving in to turn around a small area like the central core of Upstate cities, particularly if there are enough locals dedicated to such areas. A few hundred could make a huge difference, because there is always the possibility that one of them will hit on something that could lead to the creation of a major employer. One need only observe the spread of New York City’s various entrepreneurial and freelance tribes along the subway lines, moving out as they are priced out, to see the role high speed rail could play symbolically.
Post new comment