Thursday, April 19, 2012

Massive Industrial Investment in Saratoga Springs Illustrates the Lies of Conservative Economic Policy

Investment Takes Place Where the Total Economic Environment is Right, Not Just the Tax Environment

The mantra of the right wing is that high taxes are job killers.  In their fantasy world business makes the decision to invest solely on the level of taxes in our area.  If taxes are lower in say, Texas, a company will build its factory in Texas regardless of any other factor.  That real world experience contradicts this fantasy only serves to reinforce the fantasy for Conservatives who routinely filter out real world contradictions to their beliefs.

Case in point is Saratoga Springs in New YorkNew York is a tax disaster, it has a high state income taxes, high property taxes and the sales tax that includes both state and local components can approach 10%.  So why would any company want to invest $2.4 billion in a chip plant in that state. 

Thanks to a cold call placed by the Saratoga Economic Development Corporation in 2005, pitching the area as an ideal site for a factory, GlobalFoundries, a semiconductor manufacturer, is building a $4.6 billion, 2m-square-foot campus in a Saratoga forest (above). The main site, a former secret missile-testing range, is as big as six American-football fields. The Semi-Conductor Association estimates that the five-year cost of building and operating a factory making the wafers needed for semiconductors is $1 billion dearer in the United States than elsewhere. 

See there are other reasons a company will select a particular geographic area.  There is the presence of a skilled work force, there is location to major urban centers, there is proximity to good education and training facilities. 

It is working with local colleges and universities to create a labour pool for the future. More than half the jobs require at least an associate’s degree (ie, one granted by a technical or community college) in electronics or semiconductor manufacturing. Along with other high-tech companies, GlobalFoundries is working closely with Hudson Valley Community College, which has a dedicated semiconductor-training campus, called TEC-SMART, nestled in the same forest. It shares the space with local high-schoolers. “In a way we’re preparing for jobs that don’t exist yet,” says Joseph Dragone, a district superintendent.

The nearby University of Albany’s College of Nanoscale Science and Engineering (CNSE), the first college in the world dedicated to nanotechnology, is doing much the same. A decade ago Alain Kaloyeros, who runs it, set up a partnership with industry and the state government. Some 300 companies have provided $13 billion to the college for labs and cleanrooms, and the state has contributed a further $1 billion. CNSE has provided some 80,000 square feet of professional-grade cleanroom space which it shares with the nano-industry. Students work both alongside and for private companies. Competitor firms, such as Tokyo Electron and Applied Materials, work almost next to each other.

And one company has even moved from a famous economic paradise.

Sematech, a chip consortium, has moved to Albany from the high-tech magnet of Austin, Texas.

And yes Conservatives, taxes are important

And, just to ice the cake, the area has the lowest per-capita county taxes in New York state.

But the real story here is that this type of success requires the interaction and cooperation of government at all levels with the private sector and it requires investment by government, investment that must be funded by ‘horror’ taxes.  All of this is something Conservatives hate and will fight to death to stop.

Saratoga Springs in this case was lucky, Conservatives have not yet implemented policies in that area to would have prevented this great economic boon, but don’t worry folks, they won’t stop trying until they succeed in making the U. S. into Spain, Italy and Greece.

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