Jim Russell, the author of the very relevant blog Burgh Diaspora, brought up some great points in a recent comment about Pennsylvania’s tax structure.

Russell argues that taxes, while important, are not keeping businesses from growing in Pennsylvania. The key, he says, is finding a competitive advantage and building on that advantage.

For articulating this against-the-grain point, Russell is our commenter of the week.

Here’s what he had to say:

I agree that lower taxes are preferable to higher taxes. But there isn’t any substantive proof that a lower state tax burden will benefit Pennsylvania’s struggling cities. If that was the case, then El Paso wouldn’t be struggling to bring its natives home or keep graduates from leaving.

Lowering PA taxes as to compete with Texas and Florida is impractical, but I consider the prospect. That puts all PA cities into play. As in Texas and Florida, there will be winners and losers based upon the same unique assets that advantage places such as Boston or Minneapolis.

At the scale of city taxes, businesses can locate or relocate just outside city limits to avoid municipal tax burdens. That threat has often resulted in bribes in the form of a tax reduction. Rust Belt cities and states have been employing this strategy for a long time, such as designating enterprise zones with competitive tax structures. It failed.

Almost every industrial city was built upon some geographic comparative advantage. When that evaporated, not even the carrot of lower taxes could stop the exodus.

I am suggesting that Erie and other cities struggling to make the transition to a post-industrial economy once again cultivate a unique comparative advantage. Once we do that, we’ll talk about tax reduction strategies to further fuel growth.

I have one idea that I consider to be a unique comparative advantage: Diaspora Networks. The Great Lakes are another that I’ve seen in the press lately. Concerning diaspora networks, one big reason for the rise of the Celtic Tiger is demographics. Pre-boom, Ireland was one of the youngest countries in the EU. The dependency ratio was relatively small, putting much less stress on government social services. But another factor was (and is) the strong ties of the Irish Diaspora to the homeland. On that count, I think Erie could copy the economic turnaround of Ireland.

As for Rust Belt cities like Erie currently experiencing better economic times, read Richard Longworth’s book, “Caught in the Middle.” A city I’m tracking is Milwaukee, which has a way to go but is making great strides.