Monday, December 15, 2008

Mega Skeptics in the New North

Blogs, not universities, make up the Marketplace of Ideas. To wit, journalist Steve Prestegard challenges Richard Longworth's idea that the Midwest should engage in mega-regional cooperation in order to tackle the destructive effects of globalization:

Longworth believes the Midwest must work together as a region to market itself and deal with globalization’s negative effects. Working together is laudable, but the problem with that approach is that the rewards of growing businesses don’t go to a region as a whole, only to whatever state is the home of a growing business. Unlike a regional in-state approach such as the New North, where growing, profitable businesses and their employees pay various state taxes that benefit the state as a whole and thus everyone in that region, if A Corp. decides on Wisconsin instead of Minnesota, Minnesota doesn’t get very many benefits unless A Corp. is located on near the Minnesota state line and some of its employees live in Minnesota. (That is the case for some Chicago-area, Twin Cities-area and Dubuque, Iowa, businesses.) The fact that only two governors in (Longworth’s definition of) the Midwest are Republican makes no difference — until Wisconsin voters vote for Illinois’ governor, Illinois’ governor will see every business that moves into Wisconsin (particularly those who choose Wisconsin over Illinois) as a loss for Illinois.

Longworth responds:

You say a regional Midwestern marketing and development strategy won’t work, because the only benefits go to the state or locality that actually gets the investment, not to the Midwest as a whole. Narrowly conceived, that’s true. But it assumes that individual states and localities can thrive in a rusting, dying region. Granted, economic lightning might strike a region like New North, while the rest of Wisconsin or the rest of the Midwest crumbles. But don’t bet on it. Regions do rise and fall together. Look at New England: boomtime in shoes, textiles and other industries, busttime when those industries went south, renewed boom (except for the far reaches, like Maine) when New England recovered on the basis of high tech. Or look at the South: a bad century, somewhat like the Cubs, from the Civil War to the 1960s, when air conditioning was invented and the Old South became the Sun Belt. Some places, like Atlanta, have done better than others, like the Delta. But overall, the South has drawn in industry, investment, people and money as a region. Or look at the Midwest: we’ve been living for the past century on the explosion of innovation and entrepreneurialism that burst from the region as a whole, with one good idea (the invention of the car, for instance) spawning tons of other ideas (ignitions, tires, ball bearings, etc.) and creating industries, like steel, across the Midwest to feed these entrepreneurial businesses. Steel mills in Chicago, in turn, created demand for iron and coal throughout the Midwest and, in time, spawned the farm equipment businesses in Wisconsin and elsewhere. In other words, the Midwest rose as a region, thrived as a region and, alas, is now declining as a region. My point: economic development seldom happens in isolation. So what if Minnesota gets that factory? Wisconsin will get the next one. Better for the two states to work together.

I read Prestegard as understanding economic development as a zero-sum game. If The New North does well, it will be at the expense of someplace else. To him, whether a factory moves from Wisconsin to Minnesota or India makes no difference. The end result is bad for Wisconsin. However, Prestegard does allow for some proximity spillover if the growth occurs near a state border.

Longworth plays geographer, pointing out the historical links between certain states. Good times and bad are regional. The rising tide in Minnesota should lift the boats in Wisconsin. I think Longworth has suggested how that commencial benefit could be enhanced and is striving to do exactly that.

I take a piece of each perspective in constructing my own take. Both journalists overplay the political geography. If a big business moves from Atlanta to Pittsburgh, then Philadelphia doesn't really benefit. There is considerable economic variance within states. State level data are not all that useful. Longworth himself describes how uneven Chicago's rebirth has been, benefitting mostly the central business district. And Chicago's alpha global city status doesn't do much for Carbondale. On a mega-regional level, Atlanta's boom did not scrape the rust off of relatively near by Chattanooga.

Longworth's Midwest is untenable. I don't think we could build enough connectivity infrastructure to make it viable. The same goes for state-centric thinking. Pittsburgh looking to Youngstown and Cleveland instead of Philadelphia is much more practical.

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