Tuesday, May 31st, 2011
I want to invite all of my readers in greater Indianapolis to join me next Monday night, June 6th, for a farewell happy hour at Scotty’s Brewhouse downtown. I am planning to be there from 5:30p-8:30p so come on down! Shoot me a note if you are planning to come.
With a move forthcoming, I wanted to make sure to have a chance to reconnect (or connect for the first time) with my Indy readers. Already now that I’ve gone carless, I’m rarely in Indy. Other than for a brief professional trip at the end of the month, this could be my last visit for a long while. I feel bad that I didn’t do something when I actually left Indy, so this is also my make up event for that.
It’s no secret that the Urbanophile started out as a heavily Indianapolis-centric blog. In fact, the blog has its roots in the Indianapolis development discussion forum at Skyscrapercity. I am often accused of being an Indianapolis cheerleader and booster. I’d like to think I’ve thrown plenty of pies in Indy’s face where warranted (see here and here for example), but nevertheless, I guess you can say guilty as charged. I do love the city.
This puzzles many because to the outside urban enthusiast, Indianapolis is a singularly unimpressive city. Even its urban core is among the least dense in America, with mostly single family homes and few urban commercial districts. It has only the 99th largest bus system in America. Its architecture is generally undistinguished. It is dominated by chain restaurants. Much of its urban design quality is very low. The list goes on.
But over the years I’ve come to appreciate that Indianapolis may be the worst city in the Midwest – except for all the rest. All of those things might be true. This is a city that has no stately form or majesty – no appearance that we should be attracted to it. In other places, those are what define the urban greatness of the place. But they are not wherein Indy’s greatness resides.
Instead of a lively cafe culture with all those serendipitous meetings we always here about in Portland or where ever, in Indy that social life occurs in people’s back yards or homes. That doesn’t make it any less real. I know because I’ve experienced it for myself.
While Indy’s culture might lack sophistication by the definition of some, it’s got a quality about it few other cities can match. Other cities might have more talk and plans for stuff, but Indianapolis actually accomplishes things. And it’s far more forward thinking than you might think. That’s why from the city-county consolidation and amateur sports strategy 40 years ago to the Indy Cultural Trail, roundabouts in suburban Carmel, and much more today, Indianapolis has in fact often been not just a good executor of best practices, but in many ways an innovator and urban leader. I don’t think it’s any accident that my blog started in Indianapolis and grew to what it is.
There are probably few cities, and certainly no Midwest cities, that have done more with less raw assets than Indianapolis has. So regardless of what many might think, I believe there’s a real story to be told – and it’s backed up by the numbers. The fastest population growth in the region among peers, the fastest job growth, the #3 fastest percentage growth in Hispanic population among all large US metros, the #5 fastest percentage Asian growth, the #6 best state for business according to Chief Executive magazine, etc. While this is a city and region with huge challenges, I think the results speak well for themselves.
I think for those who come without a preconceived notion of what a great and thriving city ought to look like, there’s a lot of goodness to be discovered in Indianapolis. It’s not for everybody. But for a lot of people, it really is a great city I’m proud to have lived in and blogged about. Get to know the city at more than the surface level and you’ll come to say about your time there what I do – “O welche Lust!”
So for those of my readers in Indianapolis, please come on down next Monday night. Since it’s a Monday, you know you don’t have plans. It would be great to be able to see everybody. Hope you can make it.
Sunday, May 29th, 2011
Since it is a topic I’ve had some recent conversations about recently, I wanted to take a bit of time to talk about the way I approach thinking about cities, and a little about how I blog.
One of the things that has always struck me about cities is how incredibly siloed their functional areas are and how the work done in them is so often dominated by specialized (I’d argue over-specialized) technicians. For example, civil engineers design roads, planners do zoning, architects design buildings, teachers teach, etc. There has traditionally been little concern about how one area interacts with or affects another (though with things like transportation and land use, that has of course started to change), nor any sort of overarching framework or vision.
I come from a very different background. I spent most of my career in management consulting in corporate America. (Lest I get overly dinged for this, let me hasten to add that I also spent 5+ years in staff roles with actual operational responsibility). Management consulting is an inherently integrative discipline. Even if you are just doing a technology implementation, you certainly need to take into account all aspects of the company in question. So inherently I like to try to look across functional areas and look for those interactions and overall system effects.
Also, looking at how CEOs approach their business, the things they obsess over are often not really of much concern to urbanists or state/local political leaders. For example, identifying customer segments and value propositions, creating sustainable competitive advantage/differentiation in the marketplace, brand, talent acquisition, company culture, organizational effectiveness (harnessing the power of the existing employee network for innovation, etc), and more. When a politician talks about “running government like a business” you can be sure he means cutting costs or some other operational item. Those are important to be sure, but that’s not where most businesses hang their hat. Contrast that with Jeff Bezos’ relentless focus on the customer that has made Amazon what it is, for example.
While companies are typically looking to stake a unique claim in the marketplace, urbanism is by contrast very driven by dogma and “school solutions.” Partially this is because so many of the players are institutionally aligned with political movements trying to advance a particular policy agenda. But it also comes from the generally risk averse and play it safe nature of too many politicians. That’s why 49 out of the 50 states claim they want to be the next biotech center of the US, or why everyone is chasing high tech, green economy, etc. businesses; or building bike lanes, light rail, etc. The idea is not to differentiate yourself but rather to simply copy what is popular in the marketplace right now. (Rod Stevens takes a great look at this in his post “The 31 Flavors of Urban Redevelopment“). It should come as no surprise that most of these initiatives don’t really move the needle. Even if they have a positive effect, they aren’t differentiating versus peer cities that are probably doing the same thing.
Again with my background I tend to side with the Michael Porter’s of this world who say that “the essence of strategy is about being different.” That is why so much of my analysis is about what cities can do that is unique to them and their situation, history, culture, values, etc. This gives is a bit of a contrarian feel just for that reason, even though much of this is 101 level stuff in the corporate world. And of course that’s doubly true since so much of looking for opportunity is looking for marketplace gaps, i.e., the things no one else is looking at or doing. (Lest you think there isn’t a real school of thought on this, I recommend reading Paul Arden’s book “Whatever You Think, Think the Opposite“).
I also have a contrarian feel because of the way I ate my own dog food. When starting out, I realized I didn’t have a platform or other credentials that would cause people to take me seriously. I wasn’t a foundation fellow or a professor or mayor or newspaper columnist. So saying the same things as everybody else likely wouldn’t have attracted that many readers. To build and maintain an audience I feel I have to put out unique, compelling content that isn’t available elsewhere. That probably gives a bit of a false impression about how much of an unconventional thinker I am. Where I’m in line with some piece of conventional wisdom, which I often am, I usually don’t write about it since there’s typically already an ample supply of material out there on it elsewhere.
So in a nutshell my approach is rooted in looking at overall strategic items, marketplace differentiation, sustainable competitive advantage, and an integrative approach to urban systems. There are very important differences between cities and companies. For example, companies in theory have a unitary goal – making money – and defined lines of authority. Cities are made up of diverse, independent people and institutions with lots of different goals, and are to a great extent self-organizing systems. And of course there’s often no real line of authority. But I think a lot of my analytical techniques are nevertheless applicable. And I certainly am a strong believer that we need less dogma-driven thinking and siloed approaches.
To flesh out a little bit more about my approach to blogging, I’ll tell you a few other key choices I made. These aren’t right for everybody of course, but I think they’ve been useful for me.
First, I focus on state and local policy, not federal policy. That’s not to say I don’t write about federal issues where I can, but I’m primarily focused on what local leaders can do to help themselves without help from the far off land of DC. I think think this has been an under-served area. Also, for someone such as myself, I did not see any real avenue to influence thinking at the federal policy level.
Second, I take a non-partisan approach. I have my own political opinions on things, but I try to stick on this blog to a “policy, not politics” approach that isn’t rooted in personalities or political parties. As part of this I try to provide an explanation of why I feel the way I do on a particular topic to people can see where I’m starting from. I also try to feature a diversity of thinking from others, where seriously argued, even if I don’t agree with all of it personally. Far too many blogs are only promoting one side of the story.
Third, I started out as a regional blog. There are tons of blogs on national issues and politics. City urbanist blogs are ubiquitous. But not many folks were looking across cities while staying rooted in local policy. I also picked the underserved market of the Midwest. Actually, this was sort of an accident. Originally my blog was very Indianapolis focused. I really wanted to make it an Indianapolis blog. But I was frustrated that people in Indy seemed to be clueless about what was going on right down the road in Louisville or Cincinnati. So I decided to focus on large Midwest cities instead of just Indianapolis, hoping to fulfill a sort of competitive intelligence function. The rest is history. Incidentally, today I consider the Urbanophile a national blog, though I do still write about Midwestern cities.
I hope that gives some additional perspective on my PoV and blogging approach. I often get questions about it, and this is sort of how I applied my own principles to myself and my blog. I think these are some of the same things that anyone writing about cities or starting a blog on any topic might want to consider. You might come up with different answers, but it’s good to explicitly think about your own goals, approach, and scope.
Thursday, May 26th, 2011
My latest post is up over at New Geography. It is called Out of the Loop and deals with what I consider a fundamental challenge for Chicago and Illinois, namely that while the greater Loop economy is booming and is everything most of its boosters claim it to be, it still isn’t big enough to carry the city, region, and state on its back.
Since I do a Chicago vs. New York comparison, some of you might be thinking I just want to kick Chicago to validate my decision to move, but actually this one has been sitting in my queue for a long time and I just never wrote it. I was prompted to finally finish it off by some recent conversations I had with various folks around where the city is at the changing of the guard at City Hall.
Anyhow, my view is that we have to focus on creating a more broad based positive business climate in Illinois so that non-Loop businesses, and particularly home grown small and medium sized businesses, can really thrive and add the payroll (and pay the taxes) we need to be fiscally sustainable. Your views are of course always welcome.
In other Chicago news, GE Capital announced that it is bringing 1,000 new jobs downtown. Apparently they are all new and without subsidies. That’s a great coup for Rahm as he comes into office. And more evidence that the Loop economy really is working.
Also, some of you may have seen this Tribune article on the managed competition plank in Rahm’s reinventing government initiative. In it I raise the question of clout influencing the contracting. Let’s be real, in this town that’s always a risk. But to be very clear, I’m a big supporter of this idea and think Rahm should go full steam ahead on it. There’s no reason government has to do everything in house – especially not when there are multiple qualified bidders in the marketplace ready to step up and compete for the work. Which is not to say that the existing workers, freed from many of the rules they operate under, might not be able to put forth a compelling bid of their own. The article did note that I support the idea, but I want to stress it again because I know some think I’m an opponent of these sorts of deals when I am most certainly not.
And part two:
Tuesday, May 24th, 2011
America has never been a very curious nation. Sure, we’ve produced great inventors and entrepreneurs, but you could probably count the great “American philosophers” on one hand (at least one of whom, de Tocqueville, wasn’t even American). Americans are not prone to world travel, evidenced by the fact that only 37% of us own a passport. A lack of curiosity is not the sole blame, obviously it costs us far more to travel abroad than it does for Europeans, with flights so cheap they make Southwest look like a legacy carrier. But in the wake of the 9/11 security changes, lack of a passport means 2/3 of Americans aren’t even flying to Canada, Mexico or the Caribbean, destinations which are often cheaper than, say, Florida.
I have long posited that we are victims of our own geography. The vastness and relative emptiness of the North American continent gave the young nation room to grow and flourish, while leaving it free from foreign influence. Immigrants were generally eager to assimilate, as the threat of repeated bodily harm at the hands of nativists would entice you to try and blend in. Europe consisted mainly of poor, oppressive backwaters in those days, so most didn’t see much point in holding onto the old ways in a land that gave them an opportunity to reinvent their identities.
Last month, I attended the Global Metro Summit here in Chicago. One of the panelists, Barcelona Deputy Mayor Jordi William Carnes, made the observation that “America is important to the rest of world, but spends too much time looking inward”. I would agree, but even within the United States, infighting and provincialism rule the day. As Richard Longworth has written extensively, the states compete against one another for finite resources, whether in the form of federal transportation dollars, or in wooing corporations to set up shop. This is a losing battle, since state borders are completely arbitrary lines which have no real effect on the life of metro areas, other than to unnecessarily complicate things. Eight of the twenty-five largest metros in the US span state lines that were established two centuries ago. In effect, we govern ourselves under a system that was designed for the 1820s.
This provincial attitude reared its tiny head again this past week, when Wisconsin Governor Scott K. Walker (that “K” is crucial to avoid denigrating the proper Scott Walker) slammed Illinois for it’s tax hike and invited businesses to relocate to his state. As James Warren wrote, this shows a lack of a broader vision on Walker’s part. He’s playing for votes within his own little fiefdom, seemingly oblivious to the fact that if Chicago’s economy were to fail, Wisconsin’s would go down right beside it. As much as I love our neighbors to the north, Milwaukee does not have the transportation infrastructure necessary to link it to a global marketplace. This is the same guy, mind you, who basically ran for office on his opposition to high-speed rail, which would be one of the best possible assets in building a regional economy.
So allow me to state for the record my philosophy of how the future is aligned: neighborhood – city – region – planet. Note that “county”, “state” and “nation” do not exist. These are eighteenth-century constructs that serve little useful purpose in a connected, digital global economy. The hard question is asking what it will take to achieve this in these “United” States. No politician has ever voted themselves out of a job, and yet a thorough realignment of local and federal governance is necessary. Industrialized Europe had to be more or less leveled in World War II for the stakeholders to recognize the value of cross-border cooperation and a free exchange of people and ideas. I certainly hope we don’t need such a serious jolt.
Wisconsin and Illinois, despite their football-based loathing, have too many issues which demand cooperation. And you can add Michigan, Ohio, Minnesota, Pennsylvania, New York and Ontario to that mix, as well. In coming decades, stewardship of the Great Lakes will become crucial to the region and to the world. Transportation linkages already radiate from Chicago like an octopus, in a common region with common concerns, these absolutely must be brought up to speed with the rest of the developed world. There is really no other option.
This post originally appeared in The Planner’s Dream Gone Wrong on January 17, 2011. Reprinted with permission of the author.
Sunday, May 22nd, 2011
[ I want to preface this post with an off-topic request for help. I’m trying to get an RSS feed set up to do podcast integration with the Apple iTunes Music Store and am having trouble getting cover art to work. If there’s anyone out there who is a guru at this, I’d appreciate assistance so please email me. Thanks. ]
Indianapolis has long chafed under the memory of being mocked by out of towners and bigger markets as “India-no-place” or “Naptown”.
As with many nicknames, the actual origin of the term “Naptown” is in dispute. It has variously been attributed as an insult implying a sleepy, boring town; coming from call letters of WNAP radio; or originating in 1920’s jazz from the so-called “Naptown sound”. Given that the “nap” syllable occurs in the long Indianapolis, a short form or diminutive is implied.
Whatever the case, the word Naptown has long had negative connotations in certain circles locally (though I find it unlikely that Naptown as an insult ever had wide currency outside of Indy itself given that few would have cared even to insult the place back in those days). Civic leaders and citizens take pride in the city’s transformation and clearly believe, with great justification, that Indianapolis has significantly transcended its sleepy past. So the “Naptown” label is part of the old baggage they want to jettison.
While it may seem difficult to believe, the nickname Naptown is actually one of the strongest potential brand assets of Indianapolis. It is a short, easy to remember and pronounce name that is readily associated specifically with the city. Unlike India-no-place is it not categorically pejorative. Indeed, one would have to think about it quite a bit to derive an insulting meaning from Naptown. The word nap does mean a brief sleep, but it also refers to yarn. The related adjective “nappy” means “twisted”, which can have a positive, edgy, cool connotation.
Even if Naptown were in insult, many nicknames start out as diminutives or insults but ultimately become terms of affection. In Chicago, the term “Second City” is hardly positive, nor is “Windy City”, which ostensibly referred to windbag city boosters. Many other nicknames would appear not to be positive and even only tenuously connected to the place they refer to. Consider “the Big Apple” or “Beantown”.
Rather than shunned, Naptown should be embraced and promoted as a nickname for the city. Like the others discussed, Naptown is easy to connect to Indianapolis and can easily be imbued with positive connotations, implying a cool, urban, edgy vibe. Think Naptown Roller Girls and you’ve got the right idea.
One challenge is that there is still significant negativity around this name. However, much of it may be generational. Older generations who remember the city’s nadir think of it one way. Younger generations who’ve only known a rising Indianapolis think of it another. Indeed, younger generations are already embracing it. Google reports over 500,000 web pages referring to Naptown. There are over 350 Facebook groups with the name “Naptown” in them, many of them African American themed.
To a great extent the positive or negative associations around a name having nothing to do with the name itself, but rather with feelings about the thing the name represents. In a sense, Naptown in a negative sense is simply a symbol of the old Indianapolis. Naptown in a positive sense can be a symbol of the new. One might even argue that it will be possible to know when Indianapolis has truly come of age and changed its brand when both it and others refer to Naptown in a reflexively neutral to positive way.
One of the gaps in the Indianapolis brand is any sense of what to call residents. What do you call someone from Indianapolis? Hoosier is the only name that comes to mind. While it is good to be associated with Indiana and have a strong cultural linkage to the state as a whole, having some Indianapolis-specific name for the city’s residents would be a plus.
Naptown does not obviously solve this problem as terms you might derive from it are not obviously strong. But it does create a potentially powerful word in Spanish: napteños. This is a common Spanish phraseology. For example, residents of Buenos Aires are called “porteños” (port city dwellers) and those from Madrid “madrileños”. If the word napteños were embraced by the city’s Latino community, it would be a fitting tribute indeed to the transformed and global Indianapolis we know today.
This column originally appeared in the Indianapolis Business Journal.
Thursday, May 19th, 2011
You hear tons of complaints out there about the dysfunctional political dynamic between the two parties in Washington. Toxic politics are indeed a problem, but it seems to me that there’s a more serious issue around the lack of a moderate ground substantively and a lack of commitment to the actual business of government.
If you’ll indulge me in an overly broad generalization, we seem to have a Democratic party that thinks more spending is the answer to all our problems, regardless of how well it is spent or how big the deficit is. I’ve got news for them, financial doomsday approaches. And there seems to be much more interest in recycling tax dollars into the hands of favored interest groups rather than actual results.
On the other hand Republicans today seem all about just “cut, cut, cut.” The political beauty for them in saying that government is the problem and is inherently poor at whatever it does is that it relieves them of any actual responsibility for having to operate the ship. Why bother even trying when it’s hopeless? So too many of them don’t. In fact, some Republicans are actually invested in the failure of government, because if it succeeded at something that would undermine their whole argument.
Though again I exaggerate for effect, I think Americans have a right to be fed up.
I think there’s room for a broad range of policy choices that span the political spectrum. While national policy requires some level of national uniformity, no one approach is going to be right for everywhere. And so there’s plenty of room for different strategies at the state and local level. The more diversity of places we have, the better in my opinion.
But whatever your choice, what we desperately need to have is leadership in both taking political stands on tough choices, and also focusing on the blocking and tackling of actually delivering the public services. This goes beyond just spending money to actual execution. Government has to be more than just a fiscal machine where the only argument is over what setting it is on.
There are some great examples out there of people doing this. Gov. Mitch “The Blade” Daniels of Indiana has laid out a conservative vision for his state that involves fairly minimalistic government. And he’s focused on getting there, as he’s cut the number of state employees to the lowest levels since the 70’s. But he also believes government needs to do some things, and the things it does it needs to do well.
Building infrastructure is one of them. Daniels privatized the Indiana Toll Road and took the nearly $4 billion and pumped it right back into roads. What’s more, INDOT has really accelerated a lot of its normal schedules to try to get these projects done more quickly, and do a lot to reduce the cost of projects without compromising too much on quality. He also installed a new computer system at the BMV that reduced wait times dramatically and resulted in major customer satisfaction improvements. He’s also been relentless at looking for fat to cut, including even such mundane items as scrutinizing the vehicle fleet. Though it seems odd to others, one of his most daring moves was standing firm that Indiana should observe daylight saving time, something lots of governors took a run at but failed. He implemented an extremely ambitious property tax reform scheme that saw that state take over 100% of operational funding for education. So this was not only a good tax move for localities, it put Indiana on the forefront of progressivism on this issue. Daniels also undertook a bold privatization of the state’s welfare system that didn’t work out. But after giving it a try, he decided to pull the plug on it. While that didn’t work out, my philosophy is that if don’t fail at something, your agenda was probably nowhere near ambitious enough. These are only a sample of the things he’s done or is trying hard to do before he leaves office.
Meanwhile, over in New York, Mike Bloomberg has been taking his job similarly seriously. He was elected as a nominal Republican but is clearly a moderate Democrat at heart. He took heat in some quarters for saying New York was a “luxury city.” But this is simply a clear-eyed businessman taking a look at the strategic situation and figuring out what his city’s niche is in the marketplace. And he responded accordingly.
He hired Janette Sadik-Khan as transportation commissioner and gave her the political air cover she needed to implement America’s boldest urban transportation agenda. (See here, here, here, and here). He put in place the PlaNYC comprehensive plan aiming to make New York “the greatest, greenest city in the world.” He brought in former Indianapolis mayor and Harvard government school prof Steve Goldsmith as deputy mayor. Goldsmith is a moderate Republican that is a serious wonk on policy, but also similarly relentless in execution as he proved in his own stint as mayor. He’s already bringing tons of efficiency ideas to the table, such as his recent plan to jettison tons of excess city real estate. Bloomberg seized control of the public schools, significantly boosted funding, and has been strongly pushing reform. Again showing leadership, he went to bat for new schools chief to replace Joel Klein, but when that person didn’t work out, he wasn’t afraid to take the heat and change horses. He’s pushed to put needed policies in place like congestion tolling, despite an obstinate Albany. He implemented a local tax increase pro-actively before a fiscal maelstrom hit the city, which was unpopular at the time but has enabled New York to manage its budget in these tight times without draconian cuts. Again, the list goes on.
I’ll be very clear that for me I think all this has created a more inspiring urban environment, and one where the urbanist future is happening today. That’s a big part of why I personally am going to move there.
Daniels and Bloomberg are extremely different in their points of view. So this isn’t intended to endorse any particular policy. But it illustrates how when you make a serious policy choice not rooted in some reflexive partisan dogma, then focus on executing it through courageous leadership and hard work coupled with pragmatism, you can really move the needle and differentiate your state or city.
Both Indiana and New York City have done far, far better than their peers during this recession. And this type of quality leadership is a big reason why. I could cite many other examples from around the country. I don’t want to suggest these are the only people doing it, but unfortunately this model has proven the exception rather than the rule. If we really want to renew our cities and restore real prosperity to America, we need a lot more like it and soon.
Tuesday, May 17th, 2011
It would seem impossible for Midwestern states to get any sillier and more irrelevant, but they're trying. In a time of continuing recession and joblessness, with crunching budget problems, failing schools, crumbling infrastructure and no real future in sight, these states have decided to solve their problems by stealing jobs from each other.
The most recent example is the so-called "border war" between Kansas and Missouri, as the two states compete to see how much money they can throw at businesses to move from one state to the other. The focus of this war is Kansas City — both the Kansas one and the Missouri one, basically a single urban area divided not only by an invisible line down the middle of a street but by a mindless hostility that keeps its two parts from working together.
This competition is not new, but it seems to have heated up since 2009, when Kansas passed a law that lets companies relocating to the state keep 95 percent of their employee withholding tax for up to 10 years. This has lured several companies to move from Kansas City, Missouri, to Kansas City, Kansas (known locally as KCK) and its suburbs, bringing several hundred jobs with them. Stung by the moves, the Missouri KC has offered multi-million-dollar packages to keep firms, like the National Association of Insurance Commissioners and AMC Entertainment, from decamping to the Kansas side.
Top Corporate Leaders Urge Governors to Stop Poaching Neighbors’ Businesses, Kansas City Star, April 11, 2011
Businesses Stand to Gain Most in Rivalry of States, New York Times, April 7, 2011
Kansas and Missouri aren't the only Midwestern states raiding each other's watermelon patches. The governors of Wisconsin, Illinois and Indiana, which would seem to share a common economy, have been squabbling over which state has the lowest taxes, to the point that Indiana and Wisconsin have posted billboards on their state lines urging Illinois companies to flee north or east, as the case may be (presumably passing en route all those Democratic legislators from Indiana and Wisconsin who hid out in Illinois to avoid having to vote for objectionable legislation back home.)
In Kansas and Missouri, all this has reached the point that even businesses in the two KCs, which presumably could benefit from these bribes, have told their two states to grow up. Seventeen leading businessmen from both sides of the border sent an open letter to Kansas Gov. Sam Brownback and Missouri Gov. Jay Nixon, urging them to voluntarily "agree to a bilateral halt" in this "economic border war."
Nixon responded positively. Brownback basically told the businessmen to go jump in the Missouri River. This probably has something to do with the fact that, so far, Kansas has been winning most of these battles. Whatever the reason, Brownback's press secretary said Kansas would keep on poaching, because the state "needs to compete and win against 49 other states plus Europe, India, China and the rest of the world."
Well, no argument there. Except competition with "Europe, India, China and the rest of the world" has nothing to do with this juvenile job-raiding. In fact, this "border war" keeps Missouri and Kansas from competing globally — indeed, robs them of the tools they need to compete globally.
Some rational thought shows why. It's precisely these states' inability to compete globally that causes them to declare war on the folks next door.
In a global economy, Kansas and Missouri aren't competing with each other, any more than Illinois, Indiana and Wisconsin are competing with each other. The real competition is 10,000 miles away and all Midwesterners know that we're losing it. The region — not just the individual cities and states but the entire region — is losing companies, manufacturing, jobs, people, congressional seats and college grads, which means they're losing the resources needed to compete in a global economy.
Clearly, what the Midwestern states are doing isn't working. You'd think they'd do what the Europeans, Indians, Chinese and other competitors are doing, which is to form regional alliances to leverage all their strengths, to maximize their economies of scale, to merge their assets in to a single world-beating economy. On a global scale, Midwestern states are tiny: there are more than 30 Chinese cities with more people than there are in all of Kansas. But as a region, the Midwest has more than 60 million people which, even on a global scale, counts for something.
But this involves political initiative. It also involves spending on education. It requires the sort of imagination necessary to recognize that the old ways don't work and a new approach — to economic development and job creation — is needed.
But governors seemingly don't get paid for imagination and, these days, they're avoiding all the spending they can. Especially, they don't get paid for anything that benefits the states next door. By mandate, they are geography-bound, forced to limit all thinking and action within their state lines. Any business they can steal from next door looks good to their voters, whether it makes sense or not. Their economic development people, who know from hard experience that this is insane, go along, because the governor signs their paychecks and, as one official told me, "governors just love to cut ribbons."
One reason this doesn't work is that poaching businesses involves giving tax breaks to the poachee. Right now, states aren't spending on the future because they're broke, and one reason they're broke is that they're giving away badly-needed tax money. The letter from the Kansas City businessmen made this point clearly:
"At a time of severe fiscal constraint, the effect to the states is that one state loses tax revenue while the other forgives it. The states are being pitted against each other and the only real winner is the business who is 'incentive shopping' to reduce costs. The losers are the taxpayers who must provide services to those who are not paying for them."
Neither does this poaching usually create new jobs. Most of these cross-border raids, in Kansas-Missouri and in other states, involve companies just moving a few miles away across the state line — usually so close that their workforce changes not at all. People just commute in different directions. The overall impact on job totals, incomes and economic gain in the region itself is absolutely nil.
Only one person gains if a business crosses the state line, and that's the "winning" governor, who gets to claim short-term job growth on his turf during his tenure. This, of course, is why this practice continues. The payoff to the governor is immediate and gives him a boost in his next campaign. Really creating jobs in the region and restoring genuine economic growth is a long-term project that spans many gubernatorial terms and, hence, holds no charm for the incumbent of the day.
The state governments and governors, like Brownback, claim that these tax lures are necessary to draw in companies not from next door but from far-away states. If so, they aren't working. A University of Illinois study showed that there are some 300 significant corporate relocations in the United States every year, and about 15,000 different economic development organizations — state, county and local — competing for them. In other words, the odds against success are fifty-to-one. No wonder states go for a quick and dirty kidnapping across the state line.
Even when truly new investment takes place, such as the building of a Japanese car factory in the United States, the states let themselves be played for suckers. State economic development officials tell me that the company, such as Honda or BMW, simply announces that it intends to set up a new assembly plant somewhere in the Midwest. Then the company just sits back and watches the states throw money at them, trying to outbid each other with tax holidays, free land, training subsidies and other lavish gifts.
All the states know this goes on. All know they could stop it in an instant by banding together and refusing to play the game. But all are so jealous of each other, and all governors are so anxious to cut that ribbon, that they just can't help themselves.
Mark Drabenstott, in his Heartland Paper for the Global Midwest Initiative, Past Silos and Smokestacks, wrote that these recruiting incentives and other bribes account for no less than 80 percent of economic development budgets in the twelve Midwestern states. That leaves virtually no money left over for approaches that might really work.
Every economic development professional knows that this adds nothing to the Midwest's long-term growth or its ability to compete globally with China and other rising nations. The only true solution is to create truly new companies and industries by building them from the ground up — by investing in local education, encouraging local entrepreneurs, setting up incubators, growing business services, increasing venture capital.
This is called economic gardening, and it works. It means working regionally. It means spending money, not giving it away in tax breaks. It means planting seeds now, knowing they won't sprout until some other governor is in office.
Right now, Midwestern governors are competing not with China but with each other to see how much they can slash spending in the next few months while stealing jobs from the next state. It's easier. It makes a better headline. And it's useless.
Richard C. Longworth is a Senior Fellow at The Chicago Council on Global Affairs. He is the author of Caught in the Middle: America’s Heartland in the Age of Globalism.
This post originally appeared in The Midwesterner on April 15, 2011.