Sunday, June 15, 2008

Chattanooga Renaissance

The libertarian model for domestic migration concerns state taxes. If lower taxes spark job creation, then people will go where the jobs are. Hence, there is a positive correlation between low tax states and strong population growth. Remember that such studies disregard international migration (which would unfavorably skew the results). That's a discussion for another time and blog, but I mention all of the above in regards to Waco, TX looking at Rust Belt city Chattanooga, TN as a model of economic development:

Clifton Robinson, a Waco insurance magnate who has given millions to Baylor and other causes, said he believes the trip will be remembered as a turning point in Waco history.

“There are hundreds of ideas we can get from this trip,” he said. “This is one of the most beneficial things for Waco I’ve ever seen. . . . The mind-set in Waco hasn’t been to be as good as we can be. I think we’re about to change that. I think the dynamic has completely changed.”

Chattanooga, population 168,000, is a southern Rust Belt town that has reinvented its downtown as a tourist destination and white-collar business center, an image change that began with the Tennessee Aquarium in 1992. Asked how much of Chattanooga’s success could be replicated in Waco, Sheldon replied, “I think all of it and more.”

Concerning the host states of Texas and Tennessee, I didn't see any discussion of lower taxes to improve the economic health of either Waco or Chattanooga. If Texas is such a great place to do business (as the growth of Houston, Austin, and Dallas indicate), then what's wrong with Waco?

As for Chattanooga, that city struggled with the same population issues that hobbled Pittsburgh:

Through the late 19th century and most of the 20th, Chattanooga reveled in its reputation as the “dynamo of Dixie” and the “Pittsburgh of the South,” a city of railroads, foundries and bountiful union jobs.

Even after the federal government tarred Chattanooga with the distinction of air pollution capital of America in 1969, the city continued to brag of its industrial jobs per capita, sharing company with Rust Belt cities like Flint, Mich., and Gary, Ind.

When thousands of those jobs went down the drain in the 1970s and ’80s, so did the city’s pride, said Mayor Ron Littlefield, who was a city planner during that time. Rusting factories sat empty, while downtown became a ghost town with a dreary post-industrial waterfront. The population dipped and crime soared.

Not that I'm against lower taxes, but the approach makes for rather shallow policy. Rust Belt cities, particularly those located (ironically) in the Sun Belt, have floundered in a variety of geographic contexts. And the turnaround in Pittsburgh, such as it is, is no less impressive than the one in Chattanooga. However, if you know about how lower taxes fueled the renaissance of a post-industrial city, do tell. As far as I can tell, the shrinking city problem is a tough nut to crack.

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