Wednesday, January 27, 2010

State Of The Disunion Address

Richard Longworth beat me to the punch with his speech about Rust Belt discord. President Obama's national pep talk is just a few hours away and I'm thinking about a literal "state of the union". Dominating my Google "rust belt" query is Ohio's State of the State. How does Ohio separate itself from its underperforming neighbors?

The question itself is indicative of the parochial demon Longworth exorcises. Political legacy costs are killing the Midwest and all Gov. Ted Strickland does is reinforce his state as a cul-de-sac of globalization. Ohio is surrounded with economic redevelopment:

Recently, this typical American ingenuity and entrepreneurial energy has been demonstrated in the growth of knowledge-based industries, such as Genentech and Google. Today unheralded individual communities are taking charge of their own futures through a variety of exciting initiatives that are emblematic of the spirited capacity of Americans to reinvent themselves.

Take Pittsburgh for example, where the combination of Carnegie Mellon University’s pioneering robotics program and remnants from the city’s once strong industrial base is fueling the development of the next generation of robotics, giving the city bragging rights to becoming the Silicon Valley of “droid design.”

Meanwhile, in Warsaw, Ind., local companies account for approximately one-third of the world’s orthopedic device market. In Michigan, $1 billion in federal grants are being used to accelerate the development of next-generation batteries and electric vehicles. In an effort to further fuel the green movement, Midland, Mich.-based Dow Chemical Co. is investing $500 million through its own venture fund in public health, clean technology, and water products.

San Diego witnessed this organic phenomenon with the growth of both wireless information technology and the life sciences clusters that sprang up adjacent to UC San Diego. Our region continues to grow innovative clusters in new and converging technologies such as clean technology, health care IT and biofuels. Oil giant Exxon Mobil Corp., as part of its $600 million investment in renewable energy, has teamed with the San Diego biotech firm Synthetic Genomics Inc., to research and develop next-generation biofuels produced from sunlight, water and waste carbon dioxide by photosynthetic pond scum.

But even in collaborative regions like these there is no platform that regularly brings together the four key players: the research community, which is developing the technologies that will shape the businesses and jobs of the future; the entrepreneurs and investors, who can turn a promising technology into a business; the economic developers, who focus on and use resource allocation and business policies that can assure economic prosperity, and the educators and workforce training organizations, which focus on the general and specialized skills needed in globally competitive industries and services.

Balkanization is the rule, even in the most successful regions. However, the Rust Belt is king of zero sum thinking. Mexico can only boom if Michigan busts. Brain drain Detroit informs brain gain Houston. This is the dominant economic paradigm:

Realistically, income tax response gets more elastic as the tax region gets smaller. Oregon borders two states with attractive migration possibilities. California's taxes are no bargain--but Oregon's relatively lower tax rates may have attracted wealthy individuals and businesses that will now find it not so attractive.

Zero sum scenarios follow a distance decay model, a simple way to understand the benefits of regional consolidation. Work with your neighbor and eliminate the most vexing economic tug-of-war. Cleveland is waging a death struggle with Pittsburgh, not Shenzhen.

The US Constitution isn't a drag on the TechBelt. Don't blame neoliberalism, either. The popular scapegoat is globalization.

No comments: