Wednesday, October 27, 2010

Rationale For Plugging The Brain Drain

Slowing brain drain isn't a policy goal. It's a fringe benefit of economic development. Perversely, reducing outmigration is framed as the end game:

“Long before there was any formal economic development effort in the state or in the county, this group made a major difference in diversifying both the local and regional economies,” said Ron Arnold, executive director of the Daviess County Economic Development Corporation. “John’s leadership and commitment helped bring several companies to the area and helped others expand, and all of it done on a volunteer basis.”

Snyder said that the economic development group was formed in part because high school seniors were graduating from local schools and then leaving the area due to a lack of jobs. “The ‘brain drain’ has been a challenge to Indiana communities for many decades in one form or another,” Snyder explained. “The first economic development group was able to attract some new business and change a few things.”

Naively, I assumed attracting new business and job creation was the reason any community would hire economic development professionals. If a bump in employment opportunities fails reduce the rate of graduates leaving the region, are the efforts a failure? Ironically, plugging the brain drain is economic undevelopment. Make sure everyone drops out of high school and reap the political rewards of stifling geographic mobility.

Initiatives designed to retain talent are anti-growth. Encouraging home ownership exacerbates poverty. Even student loan debt works against the benefits of increasing educational attainment.

Migration is a form of economic development. Attracting more immigrants will catalyze regional growth. Yet we won't consider a novel idea such as a mobility bank:

Flint is just one example of the many American communities that have unemployment much higher than the national average. Many obstacles prevent an unemployed worker from moving from one city to another in search of a job. The decision of whether to move for work is not unlike the decision of whether to go to college. An unemployed or underemployed person who is thinking about moving for economic reasons faces a series of front-loaded costs such as moving expenses and leaving familiar surroundings, costs incurred in exchange for what are hoped to be longer-term benefits—ideally, a steady job or a higher-paying job. But, as with paying for college, there is a private-market failure that limits access to credit to fund human capital investments—namely, that people cannot use their future earnings as collateral to borrow money to finance their moves. Many people also may be uncertain about what job opportunities are actually available to them in distant locations, and may have limited information about amenities and quality-of-life issues in areas with stronger job growth.

Encouraging outmigration is the same as encouraging going to college. Discouraging outmigration is the same as discouraging going to college. The latter aim is obviously ridiculous. Policies designed to stop brain drain are just as absurd. Workforce development without a geographic mobility strategy is half-baked and dead set against the prosperity of the people the board purports to serve. It privileges industry over worker. Economic development professionals need to get with the times.


Anonymous said...

I follow what you're saying, but is this the best example? The way I read it the brain drain was the symptom of a lack of economic development. Yes, they're a little misguided by using population outflow as the indicator to measure success, but they were trying to bring in new businesses. And it doesn't sound like anyone was trying to keep students from graduating. You could give them a little -- just a little -- more credit.

I LOVE the mobility bank, but the Brookings paper frames it as a federal program. I wonder how such a thing would work on a more local level.

Jim Russell said...

No one was or is trying to keep people from graduating. The goal is to retain more graduates, which is effectively the same as keeping people from graduating.

Keeping people from leaving shouldn't be a policy goal. I'm still amazed how the article frames economic development. Then it hit me ... That's how most regions have approached the issue. The cart before the horse is the rule instead of the exception.

Would any locality open a mobility bank? Local would be better. I'm sitting on a good example that I unearthed yesterday about a proposal in Ireland. More later.

Anonymous said...

Even if they were creating jobs in Flint, who's gonna move there? Sky high crime, abject poverty, and extreme blight will make it so that you would have to offer extremely high wages to get any talented people to come to such an area.

Jim Russell said...

Even Ann Arbor has a problem attracting talent. The image of the Rust Belt and Midwest is typically negative, which blocks migration to communities in this megaregion. Rural towns face a similar dilemma.

That said, the migration picture isn't as bleak as you make it out to be. What's going on is gentrification at a grand scale, like blighted neighborhoods left for dead attracting artists looking for cheap digs. There are other paths of potential inmigration.

I have no doubt that Flint could attract people who grew up in a different Rust Belt city. There are also expatriates who would move back if they could find gainful employment.