On Sunday, we looked at a recent study by the Brookings Institute that documented — once again — how economic growth is clustering in a relative handful of high-growth metro areas and leaving the rest of the country behind. The report also pointed out that those companies are so dependent on high-skilled workers that, when they do want to expand, they’re more likely to expand to high-tech cities overseas than smaller communities in the United States where the labor pool isn’t as deep.
So what does Brookings propose as a solution? “The Case for Growth Centers: How to spread tech innovation across America” proposes that the federal government designate 8-10 cities across the country as “growth centers” and spend up $100 billion over 10 years on them, much of that in the form of research and development funding.
The report found that 90% of the growth in certain high-tech fields has been concentrated in just five places — Boston, San Francisco, San Jose, Seattle and San Diego. Further, the report found that the raw number of jobs in those high-growth fields has actually declined in 191 metro areas around the country. The goal with these “growth centers” would be to create other high-tech capitals and make sure they’re spread across the country, not just the two coasts.
Our question today: Is this a good idea?
On one level, sure. The current situation does not seem good for America’s civic health. But can the federal government really fix the problem? And should it? The first question we’ll tackle tomorrow. The latter question is more of a philosophical one. Here’s the conundrum for both political parties: This level of government activism runs directly counter to Republican philosophy, yet many of the states that would benefit from this are Republicans ones. Likewise, Democrats aren’t averse to spending money, but are they interested in spending that much money in places that may never vote blue? In any case, for those concerned about the bottom line, Brookings offers this context: “That is substantially less than the 10-year cost of U.S. fossil fuel subsidies.” Are we better off propping up a dying industry or better off investing in the future? Brookings is adamant on one point: The free market alone won’t fix this geographical clustering, only exacerbate it.
Let’s move on to other questions. How much faith do we have that the federal government could really pick 10 cities targeted for such riches? Brookings calls for a “competitive, fair and rigorous process” with an “independent selection process.” Color us skeptical. Look at how much criticism Amazon took for its selection process for HQ2 — and that was a private company looking out for its bottom line. Now imagine 535 members of Congress weighing in.
We’re skeptical we’ll see this enacted as policy, but as a thought experiment, it’s definitely a valuable exercise. Would creating 10 new tech capitals really make much difference? After all, the country’s a whole lot bigger than that. Brookings acknowledges that its growth center plan does not address “the full crisis of America’s smaller cities, towns and rural areas.” However, it says, “the proposed innovation surge would absolutely begin to transform the nation’s spatial malaise. Most notably, it would bring new vitality closer to more struggling communities, allowing for smaller towns and counties to benefit through supply chain relationships, commuting and other interdependencies.”
Philosophically, the Brookings proposal fits into something else we often hear whenever the subject of the rural economy comes up. Namely, maybe the government shouldn’t try to “fix” rural America but instead place its bets on smaller cities that are more likely to see economic growth. By that theory, perhaps Buchanan County is a lost cause, but we should focus on Blacksburg instead. In that spirit, Brookings says its proposal “is focused on accelerating the growth of the most promising yet lagging metropolitan areas in the nation’s interior, rather than on saving the most distressed cities and towns across the vast totality of America’s economy.” Brookings says “that too needs doing” but “it is simply not possible to ‘target’ everywhere at once.”
So what are these “most promising yet lagging” metro areas? It lists 35 candidate cities, ranging from Chicago, Cleveland, Detroit, Minneapolis, Nashville, Pittsburgh and St. Louis on the most populous end to Akron, Ohio; Boise City, Idaho; Fayetteville, Arkansas; Lexington, Kentucky and Provo, Utah on the least populous end. Blacksburg and Roanoke came nowhere close to making the cut. Brookings said a metro must have at least 500,000 people to qualify. It also wanted to see a strong research university and an “above average share of population with at least a BA and a sizable pool of STEM PhDs.” We have the strong research university in Virginia Tech but not the population and not the workforce. Nationally, 33.7% of adults in the workforce have a bachelor’s degree. Montgomery County tops that figure at 46.3%; so do Roanoke County at 34.7 % and Radford at 34.4% — but the former isn’t enough and the latter two aren’t that much “above average” to make a difference. In most of Southwest and Southside Virginia, the figure is under 20%; occasionally under 10%. We wouldn’t qualify even if we did have the population, unless a big percentage of those “extra” people had degrees. The closest contender to us is Charlotte, North Carolina.
Ultimately, then, this proposal isn’t about us. The problems it calls attention to are very much our problems, but it’s hard to get excited about a solution that calls for spending billions to make, say, Chicago, Minneapolis, Nashville, Pittsburgh and Portland, Oregon into high-tech capitals when they’re already far ahead of where we could even dream of being. Brookings might well be absolutely right that this is the best way to combat what economists call “the great divergence” but what’s in it for us? That might be a crass way of looking at things, but it’s how the politics of this plan would work. On the other hand, the report performs a great service by proposing a way — however radical, and however impractical politically — to address what Brookings rightly calls “a grave national concern.” Even if this isn’t the solution, we wish more politicians were talking about what the solution ought to be. Four have tentatively done so. Tomorrow, we’ll look at who they are and what they say.