The old upstate/downstate feud continues in New York, but whereas it used to be a dispute between equals—when I was a kid, upstate New York was thriving, with IBM employing thousands in the Triple Cities, Kodak growing rapidly in Rochester, healthy insurance companies located in Utica, and enormous GE plants in Schenectady—today upstate New York has become the very poor relation. Binghamton has shrunk in population from 90,000 to roughly half that number. Rochester? Every time you think Kodak has hit bottom, the management announces a new round of layoffs. Schenectady? Near the river the city looks like a wasteland, something out of Clockwork Orange.

Yet the upstate workforce remains well-educated, the upstate housing stock affordable. (To a visitor from California, housing prices seemed astonishingly low. The weekend I was in town, the most expensive house for sale in Vestal—a big, roomy place, to judge from the website– came in at under $400,000, an amount that would scarcely purchase an efficiency apartment in Palo Alto.) So why haven’t new enterprises sprung up in upstate New York to take up the slack created by the shrinking, mainline corporations? One reason is obvious: Taxes. The politicians in Albany have set taxes at levels intended to extract the largest sums from the thriving metropolis centered on the island of Manhattan, not at levels intended to encourage the formation of new enterprises in the remaining nine-tenths of the state—and the nearly eleven years in office of Republican Governor George Pataki haven’t helped.