Skip to main content


Genesee County's unemployment rate falls to 2.1 percent

By Howard B. Owens

Genesee County's unemployment rate hit what could be an all-time low in October at 2.1 percent.

Available records go back to 1990, and the 2.1 rate is the lowest of any month since 1990.

The Department of Labor reports 600 people in Genesee County are part of the labor force but without jobs.  The total labor force is 29,800 people in the county. That's up from 29,200 in October 2021, though in September, Genesee County's labor force was 30,300, when there were 800 people looking for work, and the unemployment rate was 2.5 percent.

New York's unemployment rate is 3.6 percent, down from 5.3 percent a year ago. The nation's rate is 3.4 percent, down from 4.3 percent a year ago.

The Buffalo area rate is 2.7 percent, and the greater Rochester area is 2.5 percent.

Help wanted: a sign of the times

By Joanne Beck

There’s a common presence at many businesses nowadays: help wanted postings.

A shortage of workers has enveloped most every business sector since the pandemic rubble landed, and many employers have been encountering stumbling blocks with filling vacancies ever since.

And it’s not just at restaurants and grocery stores, as the shortfall is also for county positions, law enforcement and school districts.

Few, but qualified
City of Batavia Police Department has been short-staffed due to vacancies, creating more overtime hours for full-time officers, Chief Shawn Heubusch said.

“This has caused the officers to work a lot of short-shift over time, therefore we have not been able to work as much of the OT associated with special details as we would like,” he said. “We have hired several qualified candidates that are working their way through academies or field training and will be able to fill vacancies on road patrol in the near future. This will allow us to get back to working more of the specialized details that we look forward to doing.”

He did note, however, that the department had “a significant drop in applicants” for the last exam.

“Roughly, the applicants were cut in half. It has been difficult recruiting in public safety, across the spectrum for a variety of reasons,” Heubusch said. “I will say that although the number of candidates has decreased, we have not seen a decrease in qualified candidates. In fact, I would say just the opposite. Given everything that has been going on in the nation, the current candidates are extremely dedicated to becoming law enforcement officers as demonstrated through the background and interview process. We have learned that these recruits have a very high drive to be police officers for the City of Batavia.”

That’s some good news. So how about Batavia City Schools, whose board just approved a long slate of teachers and teacher aide positions?

Creative recruiting
During her presentation at this week’s meeting, Trisha Finnigan, executive director of staff development & operations, outlined the ways in which the district is recruiting for and retaining qualified candidates. It’s not just about posting a position anymore. 

“So starting with recruitment, we've had to take a more creative approach in terms of recruiting exceptional staff to join the Blue Devils family. Instead of leaning on traditional methods, such as newspapers and our websites and our recruitment sites, for example, we've been using Indeed,” she said. “We’ve also noticed that when I was looking back at the past year, there seems to be a disconnect from when someone expresses interest in a position. Now we tell them, they, for example, have to complete a civil service application, as it seemed like that wouldn't happen. So when I looked back at that information, we decided that we would take a different approach.”

That approach involves not taking for granted that job applicants understand the steps required to apply, she said. Candidates are scheduled for an interview and given the Civil Service application for them to complete. The process has been refined, she said, to be more proactive about informing candidates about what’s next for them to do, such as getting fingerprinted or completing necessary paperwork.

“It's been awesome. We just now posted for substitute teacher aides and teachers and those are coming in. So I'm feeling positive about us having some people that could fill the need that last year we were lacking,” Finnigan said. “So we're moving in the right direction. It's my responsibility to make sure that I'm tapping into avenues where we're attracting exceptional candidates to come and work with us. And then how do we get that? Let me just see if I've missed anything here. One of the other things we did too, is that, in negotiating contracts with some of our units last year, we needed to do a better job of posting what the benefits of the positions were.

"So instead of, say, putting out teacher aide, just with a salary range, we made sure we included things like there is health insurance benefits, you can get paid for holidays, you can accrue vacation time," she said. "So those are some things when we're competing with other employers in the in the area, maybe offering a more an increase hourly wage, we can compete with some other things.”

Parents have been asking about jobs aligning with their schedules “to mirror the school calendar." That has meant more hiring of local residents, which has been nice, she said.

“Hiring is a very collaborative process. We work closely with the administrators, we’re looking at positions. Since July 1, we've hired over 35 personnel with New York State Certification, 16 new support team members, and that includes food service helpers, custodial support, as well as teacher aides,” she said. “And it should be noted that with that money we received for the preschool programs, that allowed us to add 10 positions, certificated positions … So that was something because we really did have to hustle.”

She had a quick turnaround of posting, hiring and getting those people trained for school opening in the second week of September. It worked out well, she said, and the district continues to reach out to colleges for candidates. In an effort not to “settle” for a lesser qualified candidate, the district has opted to plug in gaps with retired teachers until the best candidates are found.

She also spoke about retention: “it's one thing that we are getting people, it’s another to keep them."  And that depends on the tangible — contract terms — and the more subtle perks of a welcome package and surveys, she said.

“It’s a way of gauging their satisfaction and their perception of whether they feel valued as a Batavia Blue Devils family member,” she said. “And I also get interesting feedback on the interview process and other things that helped me plan better when we're looking for candidates.”

Resolving to address the issue
Earlier this year Genesee County Legislature agreed to waive all Civil Service fees to remove a potential barrier for applicants, and this week approved a resolution to extend the residency territory for corrections officer positions in hopes of gaining more interested candidates for openings.

Mental Health Department Director Lynda Battaglia previously spoke of the difficulty in filling four vacancies for wide-ranging clinical and finance positions to a psychiatrist role. The county has had trouble finding a full-time psychiatrist and revised the position to provide a hybrid of in-person and remote counseling services to better accommodate someone not able to be local on a full-time basis.

Many, but inexperienced
Although some employers are being more creative to attract job candidates, it may not be about the job at all. At least that’s what Chris Van Dusen of Empire Hemp Company has discovered. He and wife Shelly were at a recent job fair and did quite nicely, they said.

“We had over 300 applications,” Shelly said.

What they soon learned was that applicants weren’t so interested in the job as they were the product. And when that misunderstanding was cleared up (no, there’s no smoking marijuana on the job), the 300 potentials dropped to about three or four viable candidates, the couple said.

State Department of Labor Commissioner Roberta Reardon visited Batavia Tuesday and acknowledged the lack of qualified candidates for some fields while she encouraged students to pursue education, training and labor skills to fill the many jobs available in manufacturing, food chain and other trades fields.

Maybe when all is said and done, it might just be that there aren’t the bodies out there to fill vacancies. According to the most recent state data, there were 30,500 Genesee County residents reported to be in the labor force, up from 29,400 a year ago. The state’s unemployment rate of 4.8 percent is a few points lower than 7.1 percent a year ago, and 900 people were listed as unemployed, compared to 1,300 a year ago.

Photo by Howard Owens.

NY Farm Bureau lauds passage of new North American trade deal

By Howard B. Owens

Press release from the NYS Farm Bureau:

“The Senate’s passage of the United States-Mexico-Canada (USMCA) trade agreement clears the final hurdle that stood in the way of progress for New York’s farmers.

"Nearly half of our state’s agricultural exports go to our North American neighbors, providing vital market opportunities that will remain open thanks to USMCA.

"The certainty that this agreement provides to farmers, plus the potential for expected growth for our dairy farms, are reasons to commend lawmakers for getting the job done in a strong bipartisan fashion.

"Combine this news with yesterday’s announcement of the phase one trade deal with China, and there is renewed hope that United States’ trade policy is headed in the right direction.”

Genesee County wages lag rest of the region

By Howard B. Owens

At $821, the average weekly earnings of a Genesee County resident is on the lower end of wages paid in New York and well below the national average of $1,095 and the New York State average of $1,347.

It's also lower than the other GLOW counties: Livingston, $859; Orleans, $891; Wyoming, $885.

Downstate counties and Albany are where the state's highest wage earners are, of course, with New York City workers earning $2,109 per week on average.

Erie County's average is $986. Monroe County is $1,009.

According to the Bureau of Labor Statistics (a federal agency), "Forty-two of New York’s 44 counties with employment below 75,000 had average weekly wages below the national average of $1,095. Steuben ($1,127) and Schenectady ($1,115) were the exceptions. Yates and Hamilton counties reported the lowest average weekly wages at $690 and $691, respectively."

McMurray says trade war with Canada hurts WNY

By Howard B. Owens

Press release:

In the wake of the trade tariffs instituted by the Trump administration, Nate McMurray is touring businesses across Western New York, talking to business owners to understand how the changing economic climate is affecting them.

McMurray met with the owners of Catalpa Farms today in Canandaigua who grow soy, which they primarily export to China.

The price of soy has tumbled from a high of $10.70 at the start of this year's growing season to $9.60 today as a result of the 25 percent tariff instituted on soybean imports, in reaction to Trump's tariffs.

The farmers said that the price drop is "killing them" and that there is a likelihood that China will begin to import soy from Argentina due to the uncompetitive price of our export. This is unacceptable.

There are no other words for the tariffs except economic warfare. McMurray believes that this is posturing at the expense of the American people.

The administration's careless trade war endangers the welfare of the American people and of the people of New York's 27th district, whose livelihoods are among the industries affected.

Trump's increasingly combative rhetoric with Canada, one of our closest allies, as well as his erratic behavior at the G7 summit casts into doubt the administration's commitment to the economic well-being of our citizens.

"Our region is interdependent on Canada," McMurray said of New York's 27th Congressional District, "turning our backs on our Canadian neighbors is unthinkable.

"Even just the petty words coming out of the White House are enough to seriously threaten jobs and incomes here at home. Actions have consequences. It's not fair to our working men and women and it has to stop."

'Weak economy' cited in bond rating for Genesee County

By Howard B. Owens

County Treasurer Scott German told members of the Legislature on Wednesday that he's somewhat surprised that Standard & Poor's has continued Genesee County's slightly downgraded credit rating because of a "weak economy."

He said he disagreed with the assessment.

"For some reason, they say we have a very weak economy here," German said. "I don’t get that."

The county's rating is AA-, which has been the case for awhile now. The minus after AA indicates the county is a slightly worse credit risk than other agencies with an AA rating. The highest rating is AAA.

A credit risk assessment, or bond rating, effects the cost of borrowing money, such as it needs for water projects or is likely to need for a new jail.

The county fares well as a credit risk because of good management, budgetary performance, strong budgetary flexibility, very strong liquidity, and low debt load.

The county's credit risk outlook for new municipal bonds is "stable," according to the report.

It's the "very weak economy" that is dragging the credit rating down, according to the report.

S&P's report says that the buying power of county residents is 83.2 percent of the national level with a per-capita market value $49,542.

"Overall, the county's market value grew by 2.1 percent over the past year to $2.9 billion in 2018," the report states.

The report does note that while income is below state and national averages, the county's unemployment rate is also traditionally lower and that remains true.

The county's tax base has increased modestly and consistently over the past five years.

There is unrealized hope for growth through the county's economic development efforts, the report states, particularly with STAMP -- Science, Technology and Advanced Manufacturing Park -- the 1,250-acre nano-tech business park under development in Alabama.

"However, given its early stages of development, it remains to be seen if these industries will relocate to the county," the report states. "One company recently changed its decision to move to the park."

The report also takes note of the $10 million allocated by the state for the Downtown Revitalization Initiative and the expansion of the HP Hood facility in the Genesee Agri-Business Park as positive signs for the future.

"Given the modest amount of development still ongoing, we do not expect the tax base to experience any negative pressure in the near term," the report states.

Part 7: Trump, trade and the local economy

By Howard B. Owens

Trade Wars

This is part seven of an eight-part series on trade and how changes in policy might affect the local economy.

If the Trump Administration upsets the trade relationship with Mexico, our southern neighbors are already threatening retaliation with tariffs of their own on corn, and turning to South America for one of the country's food staples in what is already dubbed a "tortilla war."

Craig Yunker, CEO of CY Farms, said such a move, especially at a time of a strong U.S. dollar, would certainly hurt local farmers. 

"The GLOW region's economy is highly dependent on agriculture," Yunker said. "Agriculture is highly dependent on exports. A trade war coming out of anti-trade comments and tweets will put our regional economy at risk."

Rep. Chris Collins said he isn't worried about a trade war. If there is one, he said, it would be short-lived because other countries need us more than we need them.

"No one wants to use the word war in any sentence," Collins said. "What I would remind people is that if there is a war, we'll win the war."

The calculation Collins looks at, he said, is "four and 25," meaning the United State has 4 percent of the world's population and accounts for 25 percent of the world's economy (Collins and I had some discussion about this number. I told him it was 15.8 percent, but that turns out to be a number adjusted for something called purchasing power parity, which adjusts for exchange rates; the current nominal rate is just over 25 percent.

While on the campaign trail, Trump spoke frequently about the $346 billion trade deficit with China; there are some factors that raw number leaves out. 

First, much of the $115 billion the U.S. exports to China goes over as raw goods and comes back as more expensive, manufactured goods.  

Second, the U.S. GDP per person is $51,638. That is higher than any other major nation and much higher than China, at $6,497, (and much higher than our other major global rival, Russia, at $11,615. That means U.S. consumers have more money to spend on products, meaning more demand for products. Of course, it also means the cost of labor in China is much lower than in the United States.

While the GDP per person is low in China, it has grown substantially over the past two decades. The number of people living below the poverty line in China has fallen from 750 million in 1990 to less than two million today. Free trade has been good for China, which is probably why the communist president Xi Jinping has become a champion of open markets.

“Pursuing protectionism is like locking oneself in a dark room,” Jinping said. “Wind and rain may be kept outside, but so is light and air.”

These are among the reasons, Collins argues, that China needs the United States, which makes a trade war unlikely.

"What happens if China loses access to U.S. consumers?" Collins said. "It's going to be anarchy over there. On the agricultural front, I would hate to see that happen, but that also begs the question of supply and demand. We're a big supplier. What's going to happen to the price of corn if all that corn comes out of the market? They're going to start raising prices."

What's known of Trump's trade plans is that he plans to focus heavily on deficits with each trading partner even though trade deals usually lower barriers with trade partners more than they lower our own already low duties. There's also some concern that Trump might want to pull the nation out of the WTO, a move many economists believe will only weaken the United States as the rest of the world moves on with free trade without us.

While Jim Campbell, CEO of Chapin, supports new trade deals that help U.S. manufacturing, he doesn't think the United States should turn to a more protectionist stance.

"The one thing we can all agree on is protectionism doesn't work," Campbell said. 

It didn't work for America, or the world, during the Great Depression, when Congress passed the Smoot-Hawley Smoot–Hawley Tariff Act, a contributing factor to making a bad recession worse.

"We still need some free trade," Campbell said. "We need fair trade."

Fair trade: Most business leaders we spoke to for this series, even most of the strong free-trade advocates, have some complaint about how seemingly unfair trade practices of other countries hurt their businesses. Dean Norton, former president of the NY State Farm Bureau, acknowledged the provincial dairy protections of Canada. Local farmer Maureen Torrey noted there are some crops her farm ships to Canada only rarely. 

John DeLuca, sales manager for Liberty Pumps, said he just returned from Indonesia, which charges a duty on U.S.-manufactured pumps entering their country, but there is no duty on pumps entering the United States.

Jeff Glajch, VP of finance at Graham Manufacturing, thinks addressing these kinds of issues will bolster U.S. manufacturing, and even bring more manufacturing back to Batavia, so anything the Trump Administration can do to "level the playing field" would be good for America.

"If there’s a trade policy that favors U.S. manufacturing that is a positive to us," Glajch said.

What we don't know yet from the Trump Administration is what fair trade looks like and how we move from where we are now to where President Donald Trump thinks we should be.

GRAPHIC: Reproduction of the front page of The New York Times from 1930 carrying the warning of economists that the Smoot-Hawley Tariffs would start trade wars.


Part 4: Trump, trade and the local economy

By Howard B. Owens

The Farm Economy

This is part four of an eight-part series on trade and how changes in policy might affect the local economy.

It's hard to say just how much of what is produced in Genesee County is exported overseas. There are several companies that manufacture products here and ship what they build to China, Europe, the Middle East, Mexico and, of course, Canada, including Liberty Pumps, Chapin and Graham.

There is no database, though, that tracks exports at a rural, county level.

What we can say with some certainty, however -- our county's biggest export is what is grown here on our farms.

Everything the Trump Administration is talking about related to trade has the potential to have a big impact on local farmers. 

According to Dean Norton, an Elba dairy farmer and former president of the New York Farm Bureau, Trump's tack toward protectionism has already had an impact. When Trump canceled U.S. participation in the Trans-Pacific Partnership, New York farmers lost about $100 million in potential new revenue, Norton said.

"People don't understand that about 25 percent of what is produced locally is exported farm product," Norton said. "Exports and imports generally have a positive effect on the bottom line when it comes to trade."

Collins said he understands that agriculture is important to his district and he promises to represent those interests in Washington.

"There are a lot of ag issues and for many people when we talk about trade they think about cars and widgets and not about ag," Collins said. "I can promise you, I will be a voice at the table. I can't promise outcomes, but I can make sure the issues are on the table."

While Walmart and Target shoppers might find some electronics, clothing, and housewares more expensive during a trade war, supermarkets may not be able to stock some of our favorite foods. Besides the crops that can't be grown domestically, such as bananas and cocoa beans (at least in quantities sufficient to meet demand), many other crops are available out of season because they are grown in other countries, such as blueberries, lemons, watermelons and strawberries. 

"Consumers demand strawberries 12 months out of the year," noted Maureen Torrey, co-owner of Torrey Farms, but the only way we get strawberries in winter, she noted, is to import them from South America, primarily Chile.  

We import tomatoes and avocados from Mexico and Canada. California grows avocados but not enough to meet the current demand for guacamole.  

"The demand has gone through the roof," Torrey said.

Our tomatoes used to come from Florida, Torrey said, but after NAFTA (North American Free Trade Agreement), much of that production shifted to our southern and northern neighbors.  

Asked if the United States could again produce tomatoes, Torrey said, "That goes hand-in-hand with the fact we don't have the labor anymore to grow these hand crops. There's a lot of factors that interact with these whole trade agreements."

Mexico is second only to Canada as foreign suppliers of food to U.S. consumers, much of it products that can be easily grown in America.

When the president talks about NAFTA (a deal he promised to renegotiate as soon as he took office, but has yet to act on) he's usually drawing his ire on Mexico, Trump and administration officials have indicated Canada need not worry about drastic changes to the trade deal, but local farmers have long-standing complaints about trade with Canada.

While you might think NAFTA would make it easier for WNY farmers to ship grain, dairy, and meat to our northern neighbors, the opposite is true, they say, yet the U.S. market is completely open to Canadian farmers. The Canadian government, they charge, even subsidizes shipments of agriculture products to Florida.

Norton said dairy farmers have been battling Canadian restrictions since 1996.  

Various Canadian agriculture programs provide price supports, import quotas and production caps on domestic dairies. Since most of these programs are provincial, rather than controlled by the Canadian federal government, the restrictions are beyond the reach of the World Trade Organization. U.S. dairy farmers are unable to file a complaint with the WTO.

"The dairy industry there doesn't want to compete with imports even though their dairy industry is dying," Norton said.

Trade is important to farmers because from $120 billion to $140 billion worth of the nation's agricultural output is shipped overseas, which is why farmers get very nervous about the idea of new trade barriers

Last year, all of CY Farms soybeans were sold overseas, said its CEO Craig Yunker, noting that trade is fundamentally important to agriculture because of the whole concept of comparative advantage. What one country grows well, another may not, so they're both better off trading with each other than trying to produce something that neither can do as well as a trading partner.

"A banana republic down there can't grow corn and we don't grow bananas," Yunker said.

Yunker agrees with Norton -- that it hurt U.S. farmers to pull out of the Trans-Pacific Partnership.

Trade deals do more than open markets, he said, they set rules, allowing companies to compete on a level playing field. The rules deal with government subsidies, health and labor regulations and environmental concerns.

"All of these things were setting rules for a trading block and we helped set the rules," Yunker said. "We were able to do that because those other countries wanted access to our markets. Now China will put a trading block together and now China will set the rules."

China was not part of TPP, but keeping the Chinese market open to U.S. ag products is very important to farmers. As the Chinese economy grows, so does Chinese food consumption. Higher standards of living means people eat more meat, so the Chinese not only need more grain to feed themselves, they need it to feed their farm animals.

"They buy such a large amount of grain, just the thought of them shutting down would send a panic through world markets," Norton said. "Their billion and a half people are increasing lifestyle consumption so it's important that we're going to want to be at the table to provide some of those products for them. If we're not, some other countries are going to be and they will have no qualms about replacing the United States. Trade is a very dog-eat-dog world."

Russia and China have been improving trade relations over the past couple of years and recent Russia has become the world's largest wheat exporter.

That's significant, with or without new trade barriers, because grains are commodities and commodity pricing is impervious to protectionism. The only thing protectionism can do on commodity markets is make things more expensive.

For many products people buy and sell, a number of factors can determine the price. Quality, service, unique features, brand loyalty and other factors affect what people are willing to pay. But some products, known as commodities, don't have those differentiating features going for them. It all comes down to supply and demand. The greater the supply, the lower the demand, and then the lower the price. When supply drops and demand goes up, prices go up.  Commodity traders actually make their living placing financial bets on the trends in prices for commodities, which includes corn, wheat and soybeans.

Farmers don't set the price on commodity products they sell. The market does. That means trade barriers, or a rise in the value of the dollar, can make it much harder for domestic farmers to sell their crops overseas.  

As an example of the impact global markets can have on grain prices, Norton pointed to the recent history of corn. A couple of summers ago, the Midwest suffered a huge drought, hurting corn farms in those states. In WNY, we had plenty of rain and bumper corn crops. Local farmers took advantage of the weather patterns and planted more corn, but we still don't produce enough here to shift the world market. Corn prices hit record highs and local farmers reap bigger profits.

Last year, worldwide corn supplies rebounded and New York was hit with drought conditions, meaning less corn was grown here. As a whole, the New York ag industry suffered a $1 billion loss in 2016, according to the New York Farm Bureau.

"We are affected by what happens in Argentina, Brazil, China, all those things affect us one way or the other," Norton said.

CHART: Corn prices, 2007-2016


Part 2: Trump, trade and the local economy

By Howard B. Owens


This is part two of an eight-part series on trade and how changes in policy might affect the local economy.

One of the more interesting characters President Donald J. Trump has brought into the White House is Stephen K. Bannon, a top advisor to Trump with the job title of Chief Strategist. 

Bannon is a former Navy officer, Wall Street financier, former chairman of Breitbart News, and a former Hollywood producer who derives some of his income from royalties on the TV series "Seinfeld." To his enemies, he is a white nationalist, a fascist, a Nazi, even though these are characterizations he rejects and the evidence to support the labels is suspect. He calls himself an "economic nationalist."

His epiphany came, he has said, during the 2008 financial crisis. His father lost $100,000 when he sold his AT&T stock (without consulting a financial advisor or anyone in his family). When Bannon observed the ability of Wall Street CEOs to walk away from the crisis unscathed while hardworking Americans such as his father were hurt, he was incensed. Bannon believed (and he's far from alone in this perception) that Wall Street tycoons perpetrated a fraud while profiting from the meltdown. 

The crisis set Bannon on the path of an economic ideology he believes will protect the working people of America from the elites of a globalized economy. When Bannon and Trump met, in many ways, they were soulmates. Without using the term, Trump was probably an economic nationalist before he decided to run for president.  

Trump doesn't call himself an economic nationalist. He just says, "We're going to put America first." That's an emotionally more powerful term that has resonated with voters.

If we're going to talk about trade over the next few days and understand how the Trump Administration's policies may change the economics of Genesee County, if not the entire world, it would be helpful to understand what Trump and Bannon believe and where that fits into the history of economics.

When Trump talks about putting America first, the message resonates with a subset of his supporters who are against globalization.

The word globalization means different things to different people. To nationalists, it seems to mean a process by which countries begin to surrender their sovereignty to international organizations such as the United Nations, World Trade Organization and the World Court. To most economists, it means the world developing more tightly coupled economic ties and becoming more interdependent through trade with no need to trample national sovereignty.

The anti-globalist believe countries can best protect their sovereignty by restricting trade. That approach is called protectionism.

Many economists think the whole idea of protectionism was smashed by Adam Smith, the Scotsman who published "The Wealth of Nations" in 1776. "The Wealth of Nations" in a real sense marked the birth of economics as a course of study. Until Smith's monumental work, how trade worked was viewed through a lens of thinkers known as mercantilists. For the mercantilists, trade was a zero-sum game -- for every winner, there was a loser, for one side of a trade to gain, the other said had to fall behind. For that reason, mercantilists believed that governments needed to plan the trade of their countries and if necessary raise barriers to trade to protect homegrown production.

Smith said that simply isn't true. Smith argued that to force people to make at home what could be made more cheaply in another country was a waste of resources because the people doing less productive work could better spend their time doing things that made a greater contribution to the local economy. 

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers.

The best economy, according to Smith, is one where each person is free to maximize his own productivity. By laboring in one's own interest, Smith observed, people contribute to the greater public good though that is not their true intention. His famous phrase from this passage is "the invisible hand," or that which guides the whole economy toward greater good through a series of self-interested actions by individuals. 

That is the essence of the free market.

Economist David Ricardo would expand on this observation with his theory of comparative advantage. Ricardo argued that two nations benefit when each engaged in their greatest economic capacity and then trade the results of that output. Ricardo's example involves a bit of math, but basically if one country has an advantage over another in making both wine and cloth, but the greater advantage lies in wine, then the wine country should make wine and trade for cloth and the country weaker in both wine and cloth should make cloth and trade for wine. In this way, both countries are more productive together than each doing their own thing.

Comparative advantage comes right down to the county level and even the individual farm level, said Craig Yunker, CEO of CY Farms. If one farmer has better ground for raising cattle and another farmer has better land for grains, they would both be foolish to try to be in the cattle and grain business. They are better off putting most of their effort into cattle for one and grain for the other (even if they both do a little cattle or a little corn).

The same applies to international trade, Yunker said.

"There are factories that have been closed for 100 years," Yunker said. "They don't make buggy whips anymore. There are cars being made in Mexico, but the technology comes from the United States. There are probably more cars being sold worldwide because of the expansion of production and we all benefit."

The way Pete Zeliff sees it though is the United States has a lot of advantages that it can use to grow manufacturing regardless of what the rest of the world does. Zeliff, owner of p.w. minor and a member of the Genesee County Economic Development Center Board of Directors, points to our lower cost of chemicals and our lower cost of energy, especially since the birth of the shale gas industry. That will make the United States more competitive in manufacturing, he said.

"The price of natural gas will be below $4 for the next 30 years," Zeliff said. "That will make us the most competitive country in the world. We're energy independent with the lowest cost of energy in the world. We can source 85 percent (of inputs for manufacturing) right here. The rest of the world cannot."

Even with Smith pointing the way to the value of free trade, many world leaders couldn't shake the appeal of protectionist policies because the benefits of free trade are incrementally diffused over time and across populations while the occasional costs of free trade are more visible (see: The Fruits of Free Trade (pdf)).

The world got itself into a lot of trouble through protectionist policies in the early 20th century, with protectionism contributing to a worldwide depression and eventually a global war. That created a greater realization that developed nations needed to find ways to cooperate.

That led to The Bretton Woods Conference, held in 1944 in New Hampshire and attended by delegates from 44 Allied nations, and the General Agreement on Tariffs and Trade (GATT), signed in 1947.

Bretton Woods led to the creation of the International Monetary Fund and of the organization that eventually became the World Bank (the late Barber Conable, Batavia's representative in Congress in the 1970s, became president of the World Bank in 1986). 

GATT governed trade among signatories until the creation of the World Trade Organization (WTO) in 1993.

The roots of these agreements were planted by events of the previous 40 years. The chaos that followed World War I was predicted by economist John Maynard Keynes in his book the "Economic Consequences of Peace." Keynes foretold the harsh consequences of the Paris Peace Conference on Germany -- predicting it would lead to future chaos.

After the Great War, America, along with other nations became much more protectionistic, making it much harder for Germany's economy to recover from the devastating consequences of the peace treaty. While protectionism here and abroard didn't cause the Great Depression, most economists agree that the Smoot–Hawley Tariff Act of 1930 only made matters worse, deepening what was then only a recession and prolonging the depression. 

It was with that background that Keynes and other economists who joined the conference at Bretton Woods sought to promote a more open global market for trade and the flow of currency. 

Bretton Woods and subsequent agreements helped bring greater political and economic stability to world, but these consensus organizations have also long been the targets of anti-globalists, such as the John Birch Society, founded in 1958.

Those views remained in the minority in the 1950s and 1960s, when the U.S. economy expanded at an average rate of 6 percent a year, and even in the 1970s and 1980s, anti-globalism was largely a fringe movement.  

It became more of a leftist and anarchist cause early in the 21st century.

Most people on the right were fine with global trade until a few years ago. Then there was the 2008 financial crisis hitting right at a time when China, which joined the WTO in 2001, was becoming a bigger economic power.

CHART: Gross Domestic Product (a measure of an economy's wealth) on a per-person basis for each country in the world, showing relative wealth and percentage of world population.


Interesting Reading - Henry Paulson's Longest Day

By Bea McManis

No editorial comment, just a recommendation to read the article.

"If Paulson was taken aback by the ways of Washington, he was just as surprised at how the crisis in the subprime-mortgage market became, by the fall of 2008, a global economic meltdown. He told me repeatedly that he had always known that, because the country had gone eight years without a major financial shock, “the next shock we had was going to really stress the modern financial system.” He was certainly aware, and frequently mentioned, that the subprime-mortgage problem had the potential to spread. He recalled telling President Bush that “there’s a dry forest, and we don’t know what’s going to ignite the fire or set the spark,” but suspected that housing might be it. During a conversation late in his tenure, Paulson said he believed that he and Ben Bernanke, the chairman of the Federal Reserve Board, “were ahead of a lot of people in understanding how serious” the gathering economic crisis was. But, he added, “it was always bigger and more systemic even than I had for a good while anticipated it to be, or expected it to be.” At another point, he said simply, “We’ve been late on everything.”

Bailout Fails House on the first go

By Philip Anselmo

The $700 billion "bailout" has failed to pass the House of Representatives. This from the New York Times:

The vote against the measure was 228 to 205. Supporters vowed to try to bring the rescue package up for consideration against as soon as possible.

Stock markets plunged sharply at midday as it appeared that the measure was go down.

House leaders pushing for the package kept the voting period open for some 40 minutes past the allotted time, trying to convert “no” votes by pointing to damage being done to the markets, but to no avail.

Should the measure somehow clear the House on a second try, the Senate is expected to vote later in the week. The Jewish holidays and potential procedural obstacles made a vote before Wednesday virtually impossible, but Senate vote-counters predicted that there was enough support in the chamber for the measure to pass. President Bush has urged passage and spent much of the morning telephoning wavering Republicans to plead for their support.


The Dow, which had been trading down about 300 points for most of the afternoon, fell to a 600-point deficit before recovering slightly. The index was down more than 550 points as lawmakers scrambled, but failed, to round up votes to pass the package.

The Standard & Poor’s 500-stock index was down 6.5 percent after dropping as far as 7 percent.

(UPDATE) This from Reuters:

The White House, expressing disappointment on Monday with the House of Representatives' rejection of a financial bailout plan, said President George W. Bush would meet his economic team to determine further steps and contact congressional leaders.

"There's no question the economy is facing a difficult crisis that needs to be addressed," White House spokesman Tony Fratto told reporters.

Veterans still eligible to file for economic stimulus check if they have not already

By Philip Anselmo

We received this press release from the VA Medical Center:

Veterans will have the opportunity to receive assistance filing a claim for the economic stimulus payment at VA Western New York Healthcare System, 3495 Bailey Avenue, Tuesday, September 30 from 10:00 a.m. to 12:30 p.m. and Wednesday, October 8 from 10:00 a.m. to 12:30 p.m. in the skills center, room 309A. Veterans who last year received disability compensation, pensions or survivor’s benefits from the Department of Veterans Affairs (VA) may be entitled to an economic stimulus payment of at least $300. To qualify, veterans must file a tax return for 2007, even if they aren’t normally required to file. Bring photo identification and pension, social security and/or service connected disability information.

For eligible veterans who do not normally file a tax return, information about claiming the economic stimulus payment is available in “Package 1040A-3,” available from IRS offices or on the Internet.

Authentically Local