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The two-tier economy seems more of a reality in the America of today than it has in almost a century.

One of my mentors, the late Cornell planning professor K.C. Parsons,
used to have a succinct two-word description for the business of
economic development. He called it "buying jobs."

In depressed Upstate New York, where he taught and where I grew up,
he wasn’t wrong. As long ago as the 1950s, when a factory threatened
to leave, the towns began to pony up subsidies: free land, free
buildings, tax rebates. If the subsidy got deep enough, the company
stayed. If we were outbid by the aggressive, no-union Carolinas, the
company left.

In time, the game stopped working. Not only were New York and
Massachusetts outbid by Carolina, but Carolina was outbid by Texas,
and then Texas was outbid by Mexico and Latin America. No amount of
subsidy in the world could compete with low wages. This was good in a
certain way. It forced the Northern cities to face the reality of
economic transformation, and it began building a middle class in low-
wage locations such as Mexico.

But now America’s Northern and Southern cities are in the same boat
when it comes to manufacturing jobs…

(Many thanks to Dick Hoeben for passing this along. Russ)

By William Fulton

Full Story: http://www.governing.com/archive/2004/jun/econ.txt

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