Tuesday, January 09, 2007

Casualties of Migration

Here is yet another story about small towns fighting decades of outmigration. If they haven't already, communities in the Mon Valley should study these rural initiatives. Continuing a theme explored in this blog, local investment could come from prodigal sons and daughters who have found success in a new location:

State aid for small entrepreneurs also helps. Montana, which has a notably populist governor, has been pushing especially hard. In its last legislative session, the state legislature made even the tiniest of businesses eligible for aid. But Chuck Hassebrook, executive director of the Centre for Rural Affairs in Nebraska, says it is expensive to provide small business development services in rural America, even if there is a good return on investment. Rather appealingly, he proposes that the federal government shave 5% off its enormous farm-subsidy programme—which goes mostly to mega-farms—and give it to small businesses. “You could quadruple what the federal government spends on entrepreneurial rural development,” he says.

Another channel is philanthropy. “Rural communities are not going to be rescued by large corporations setting up large factories,” notes Mr Hassebrook, but they could be helped by people with money (local boys who have made good in Chicago or Omaha, perhaps). In particular, he says, the rich should be encouraged to give not just to churches and libraries, but also to economic development. One remarkable case is Martindale, Texas, another worn-down southern cotton town. In 2004 Carlton Carl, vice-president of the Association of Trial Lawyers of America, bought most of the central district (he won't say for how much). He is refurbishing the buildings, hoping to attract artists and “a nice restaurant”.

The trick is connecting the right person in the regional diaspora with the right opportunity back home. Economically depressed towns and cities should track down their high school graduates, updating them on the situation. I think now is the time to invest in Pittsburgh.

A successful model Pittsburgh could emulate is that of Globalscot, a Scottish government initiative to build a network that "harnesses the expertise of over 900 senior, influential business leaders who are committed to generating opportunities for Scotland." The network is entirely comprised of Scottish expatriates who are interested in helping Scotland's economic development.


Mark Rauterkus said...

You think it is time to invest in Pittsburgh.

Say what?

Do you mean it is time to do more tax-payer financed give-a-ways?

The stories you point to are all about welfare plans for businesses.

Plus, they don't work. And, they are expensive.

You can't overcome the marketplace.

Furthermore, with these little towns getting smashed with outward migration, Pittsburgh should be going gangbusters.

But, we've already done tons and tons of "investments" in Pittsburgh. Why then is Pittsburgh still on a sharp decline? We ain't like a little town in Montana.

Think again.

Jim Russell said...

I mean outside private capital from Pittsburgh expatriates. Furthermore, I'm suggesting a network of intellectual capital that has left the region.

Granted, Globalscot is a government funded initiative, but similar affiliation groups like you see among the Chinese and Indians in Silicon Valley are not.

I'm all about leveraging market forces, particularly for labor. If you care to notice, I advocate liberalizing labor mobility instead of legislating migration policy.

I also note that a great deal of economic development is occuring in places generally lacking political opposition and legal entanglements.

I gather the bit about redistributing farm subsidies to small businesses set you off. But the second paragraph of the quote from The Economist article is more germane to my point. I think local folks who make good somewhere else are predisposed to invest their PRIVATE capital in their hometown.

The stories I point to are not all about welfare plans for businesses.

Read again.