Sunday, March 18th, 2012

The Chicago Tribune Doesn’t Get It On Regional Economic Development

For years I thought what was good for the country was good for General Motors – and vice versa. – Charlie Wilson, President of General Motors (often misquoted)

The Organization for Economic Cooperation and Development recently released a 332-page economic report on greater Chicago. This one, like Rahm Emanuel’s own economic plan, is very candid about the economic and demographic problems facing Chicago. I will be saying much, much more on this subject in the near future.

In the meantime, I want to focus in on the Chicago Tribune’s reaction to the OECD study. They published an editorial about it concentrating on one finding, one that’s absolutely no surprise to anyone who has ever given Chicago even a cursory review, namely that there are way too many units of government in Chicagoland – over 1,700 to be precise.

The Tribune correctly notes that jurisdictional boundaries are often irrelevant to economic geography. But this particular piece caught my eye:

State borders should not matter, the OECD concludes, because the entire Midwest depends on the economic engine of its largest city. What’s good for Chicago is good for Indianapolis. Did you hear that, Mitch Daniels? Or is the Indiana governor too busy recruiting Illinois companies to move across the state line?

While I can’t read the Tribune editorial board’s minds, it isn’t difficult to see why they pick on Mitch Daniels. He has launched a campaign to try to lure businesses from Illinois (and other surrounding states) to Indiana. Indiana also pointedly declined to be part of the OECD study when they were invited, even though Northwest Indiana is clearly part of Chicagoland. In explaining the state’s rationale, economic development director Mitch Roob said, “We don’t do studies, we do deals.”

Far be it from me to defend Indiana’s decision not to participate in the study. It clearly shows a lack of understanding of modern economic geography. The approach of focusing on poaching businesses from surrounding states reveals Indiana’s strategy of trying to be “the best house on a bad block” and is a tacit admission it really can’t compete at the national much less the global level. What’s more, it’s another example of how Indiana hasn’t gotten it on the centrality of metro regions to the modern economic. (See “A New Approach to Regional Economic Development in Indiana for further thoughts on this). Incidentally, Indiana’s strategy isn’t working very well. Since 2004, the year Daniels was elected governor, Indiana actually lost a greater percentage of its jobs than Illinois, and the flow of people moving from Illinois to Indiana has dropped as well.* Underperforming dysfunctional Illinois is quite a feat.

But while there’s plenty of room for Indiana to change its thinking, the Tribune’s editorial isn’t likely to inspire anyone in Indiana or elsewhere to do it. Quite the opposite in fact.

Consider their statement “What’s good for Chicago is good for Indianapolis.” This sounds nearly identical with the oft-mangled misquoting of Charlie Wilson as telling Congress “What’s good for General Motors is good for America.” I wonder if Tribune ever considered the converse of their statement, namely that what’s good for Indianapolis is good for Chicago. Do you think they believe that? Do you think they or any other member of the Chicagoland’s leadership ever spent any time time thinking about what was good for Indianapolis or Milwaukee or Madison or Des Moines or Grand Rapids? I haven’t heard anything to suggest that they have.

If you are the big dog, which in this case Chicago clearly is, and you want other people to work with you, then you need to make the first move to prove your good intentions.

This is perhaps best illustrated by former Indianapolis Mayor Stephen Goldsmith. In Indiana, east-west roads that form a county boundary are the maintenance responsibility of the county to the north. 96th St. is the boundary between Marion County (Indianapolis) and Hamilton County, home to the most rapidly growing and affluent suburbs in the region. (Chicago residents can think “Lake-Cook Rd.” though the analogy is imperfect). There was a critical need to upgrade the corridor and build a new bridge across the White River at 96th St. Under Indiana law, this was Hamilton County’s responsibility, but because the cost of the project was so steep, it went nowhere for a long time. What’s more, plenty of folks in Indy weren’t too keen for it to happen, because they saw it as benefiting primarily the suburbs and enabling them to suck more life out of Indianapolis.

Goldsmith saw it differently. He saw how it would open up land in his own city to development as well. And he didn’t see the suburbs as the enemy. So although he was under no obligation to do so, he stepped up and told Hamilton County he’d pay for 50% of the road project even though legally it was 0% his responsibility. The project got done.

Later, on the other side of the county, it came time to widen South County Line Road. This time it was Indianapolis responsible for the cost. But because he had first paid for 96th St. when he didn’t have to, Goldsmith had the moral authority to go the county south of him and ask them to pay half of the County Line expansion, which they did.

This is how regional cooperation works. The big dog has to step up first. Getting it right on regional questions like this – it also has a regional non-compete where various cities and towns won’t offer subsidies to induce a business to relocate within the region – is one of the reasons Indianapolis has led the way in the Midwest on population and job growth in the last decade.

I absolutely agree that it is in the interest of the Midwest for Chicago to be strong and prosperous. And vice versa. So cooperation is in everyone’s interest. But to make it happen, it is Chicago that is going to have to step up and first and prove to the rest of the region that it is as invested in their success as it expects them to be invested in Chicago’s. Without that, maybe places like Milwaukee and Grand Rapids will continue to pursue closeness to Chicago on their own because they have few other good options, but any broader cooperation of the type the Tribune apparently wants to see happen is likely doomed.

As I’ve argued before, Chicago and Indianapolis are very complementary. (The same is true of various other Midwest cities with Chicago). They are very different and are not good substitutes for each other. Hence they can benefit from specialization and cooperation. What we see instead is opportunistic swipes at each other, such as Indy trying to lure the CME away and Chicago saying it wants to poach sports events that are hosted in Indy. While I actually don’t think these sorts of things are necessarily unhealthy in and of themselves – I don’t want to stamp out inter-geographic competition – they are unfortunately all there is. There should also be more cooperation to create the sort of “coopetition” situation we’ve seen touted as one of the keys to Silicon Valley’s success.

As I said, Chicago will have to make the first move. The first one to make is to get the rhetoric right, which the Tribune clearly didn’t do. Chicago’s media and civic leadership need to show first through their statements that the success of the broader Midwest is important to them personally, and that they see it as critical to the future of success of Chicago. Then they need to figure out how to show they mean it through their actions.

* Total Non-Farm Employment, annual average, 2004-2011. Illinois lost 2.6% of its jobs. Indiana lost 3.4%.

21 Comments
Topics: Economic Development
Cities: Chicago, Indianapolis

21 Responses to “The Chicago Tribune Doesn’t Get It On Regional Economic Development”

  1. pete-rock says:

    Aaron,

    Great post, and way to point out how the Tribune’s editorial missed the mark (although there is a lot of truth to the government fragmentation bit). I’ve only glanced at the executive summary of the report, but it’s clear the OECD viewed poor education, workforce development and residential segregation as challenges to the region’s economic growth, and the number of local governments is more a symptom of those issues and not the cause.

  2. Ziggy says:

    It is fascinating to watch as establishment syncopates like Daniels and Rahm Emanuel – considered to be the godfather of NAFTA – attempt to manage our country’s race to the bottom at the state and local levels, cheered on by corporate house organs like the Tribune.

    We’ve seen where Mayor Emanuel’s concerns are focussed by his legislative initiatives in advance of the now cancelled G8 conference – enact new ordinances that attempt to criminalize the Constitutionally guaranteed rights to public protest.

    We are likely to see more efforts made to enhance “domestic security” strategies on a regional basis than to strengthen cooperative economic development endeavors. That’s where it seems the free Federal bucks are being provided these days.

    Meantime, there are few Midwest cities above the population of 1,000 that couldn’t benefit from $10 million, $20 million or $100 million and more in infrastructure and other public improvements that would make them more economically competitive in the global marketplace. And, even after the improvements were made, it would be very difficult to discern to the naked eye where all the money was all spent, so great is the need.

  3. damenhandle says:

    Aaron,

    There has been alot of news coming out of Chicago in recent months regarding a jobs/economic plan, the budget, transportation/cta, G8/NATO, education, redisgn of Navy Pier and contruction of Bloomingdale Tradil, etc that I would love to hear your thoughts on.

  4. Anonymous says:

    No suprise – I’ve yet to meet someone from chicago who doesn’t have a superiority complex when it comes to chicago’s neighbors. I was at the final four in indy a few years ago and had the displeasure of hearing a chicagoan, probably from Gurnee, express how much better the experience would be in chicago. Couldn’t even put the attitude away for a day in the host city. Chicagoans – you’re still flyover country. Put the big boy britches on and head to nyc.

  5. damenhandle says:

    Also your thoughts on the proposed infrastructure bank as well. I believe you have supported this idea in the past.

  6. Danny Handelman says:

    If a jurisdiction cannot afford to pay for a bridge or road widening, that strongly suggests the jurisdiction cannot effectively pay for operation and maintenance for the infrastructure, and that it is not necessary for “economic development”. These types of projects also cause induced demand (increasing capacity will result in people travelling further distance and shifting from public transit to private motor vehicle), resulting in no net gain in travel times in the medium- and long-term, while increasing congestion in the non-expanded infrastructure.

  7. John Morris says:

    Without getting deeply into specifics, I have to agree with Danny. Usually when one needs lots of regional help to get a project done it’s because the benefits don’t pay for the costs.

    Logically, Chicago as a central commuter and rail hub with an urban form that benefits from transit should be playing a bigger role in promoting transit oriented development in all the cities around it.

  8. John Morris says:

    I’m not saying Chicago can or should be paying for this, just cheering it on and helping develop regional plans that work towards synergy.

  9. Malcolm Cunningham says:

    Good article. Two issues left relatively unrebutted by the Trib (for obvious reasons, given their editorial position in the past) were:

    The indifference of Indiana’s (and downright hostility) of Wisconsin’s GOP majorities toward the long planned Midwest High Speed Rail network. Rail/transit ridership is booming in the U S. Current medium speed and in the future oil free, electrified bullet trains would save much energy expenditure, need for oil wars, and would free up scarce airport/highway capacity. Highways are a money pit and most airlines are in and out bankruptcy. Oil exporters like Saudi, Russia, UAE, Kuwait, Brazil are all building HSR.

    The Tribune’s comments on the issue have all been pro oil rants straight out of the leaflets of the Cato Institute/Reason Foundation. And the Trib gets most revenue from car/suburban sprawl based real estate advertising.

    Also, the disingenuous touting of Bus Rapid Transit (BRT) as an antidote to Chicago’s congestion problems. Crush loaded articulated BRT in Curicaba Brazil is often referred to as a paradise for taxpayer and rider alike. Problem is, Brazil’s long term plans are to replace BRT with Light Rail Transit, which is oil free, fast, comfortable with much lower labor/maintenance costs etc. Rahm Emmanuel is proposing a dysfunctional BRT program that will be shoe horned into overcrowded, narrow arterials, PARALLELING existing rail transit. Most of the BRT money will be spent on paving, street furniture etc. The BRT funding will be wasted, while overcrowded “L” trains will be starved of station/rolling stock upgrades. Like it or not HSR is inevitable in the U S and could be a huge jobs source as it is overseas. Unfortunately much of U S media, lie the GOP is in th epockets of the oil industry.

  10. Bow317 says:

    Just a couple of notes:if the north burbs want “sexy”rail,let them have it at their expense. Besides, they refuse to come contact with “undiserables”.

    Indy has no busy what so ever debating rail unless a function bus system is place and used.

  11. Allen says:

    “…the entire Midwest depends on the economic engine of its largest city”

    Mr. Renn, you are too kind and patient. The above claim is outrageous. Chicago has a slew of serious issues. The economic success in recent times in Columbus, Indianpolis, Des Moines, Omaha, et al. has had little if nothing to do with Chicago.

  12. John Morris says:

    I think that’s true. But, considering the role Chicago originally played as the central hub of the midwest, I can’t help feeling the decoupling has hurt the region badly.

  13. the urban politician says:

    Allen,

    The economic success in recent times of those other cities indeed has nothing to do with Chicago.

    And as long as they stay indifferent to Chicago, they will remain relatively unknown cities. Philadelphia, DC, Boston, NYC all have a synergy which makes the American Northeast a potent region–the most powerful region on the plant, arguably.

    Think if they were more interdependent on eachother, feeding off eachother, connected to eachother, how much more they could become. There is merit to the concept of a midwestern region with a Chicago hub. It’s already there to some degree, but it could be much more.

  14. the urban politician says:

    ^ Above I meant to say “planet”, not “plant”

  15. the urban politician says:

    John,

    The other problem is that there are too many backwards rednecks in the midwest.

    They resent anything that represents a collaborative effort between governments, because they after all hate government, hate minorities, hate non-Christians, and view everybody as Socialists.

    The midwest has unfortunately attracted too many of these nitwits for its own good, and they are perfectly content with a lower middle class life in which they attend church, curse out the President (who is not a real American), and with decreasing subtlety support any and all ideas/legislation that are even remotely motivated by bigotry.

    Call me bitter, but all you need to do is meet about 90% of the people I went to high school with.

  16. Chris Barnett says:

    TUP, seriously? The northeast has history, power, and inertia (of the moving sort) that no other US region can or will surpass. Three of the four cities you named have been US capitals. The fourth was the birthplace of revolution. Three are home to the oldest universities on the continent, all of which are among the best anywhere. Two are centers of worldwide financial, military, and political power.

    Chicago and every other big city from Pittsburgh to KC COMBINED can’t equal the I-95 corridor/megalopolis.

    We’ve got to have a different model here…and I think ours is rooted in the steely German-American self-reliance that is the Midwest’s dominant cultural/national-origin template. Independence and determination do not equal intolerance and bigotry. But they probably don’t lead to the kind of regional focus on Chicago that you and Richard Longworth would apparently like to see.

    (Perhaps the collective action of the Indiana legislature and electorate proves me a mistaken outlier; that could be valid criticism after we see what kind of electoral backlash ensues from the last two years’ legislative sessions, and how many votes Rupert gets for governor in protest of the other two hyper-partisan choices.)

  17. the urban politician says:

    Chris,

    I wasn’t really trying to compare the midwest to the northeast in that sense. I couldn’t agree more that the northeast megapolis has all of the history and assets in place to remain in power (which is why I called it arguably the more important region in the world).

    I’m just saying that the midwest could learn something from the benefits of increasing the connectivity of its cities. We may not have another Boston or Washington, DC, but I certainly think that more a more compact/walkable Milwaukee, St Louis, Detroit, or Indianapolis could make them much more desirable cities capable of drawing in more talent than they currently do. And with good rail access to Chicago, even more so.

    And let us never forget that the tides of history can always change. New York was a tiny colony on the edge of civilization 4 centuries ago, and now it is the center of the universe. If the midwestern region plays its cards right, it stands the chance of rivaling any other region in the world in a future time of rising sea levels, diminished fresh water and natural resources, etc.

  18. the urban politician says:

    ^ Oops, above I meant to say “most” important region in the world, not “more” important.

    Damn why can’t there be an edit feature?

  19. Bow317 says:

    Aaron,

    Unless I am compeletly confused,(often the case) it was the CME that came knocking at Indy’s door asking for a date. What was Indy to do? Say no.

    In the end it turned out to be exactly what it looked like: a veiled threat to strong arm Illinous state government for a better tax deal.

    Interested though that they would consider Indy as a very real threat. Indy has come along way.

  20. Chris Barnett says:

    TUP, we probably agree more than disagree. Especially about fresh water and the Great Lakes cities’ future.

    But part of the German-American farmers’ social legacy in the Midwest is the importance of the automobile/light truck. Self-reliance and independence are interwoven with cars in the Midwestern cultural fabric.

    When “connectivity” is expressed solely in terms of intercity trains and intra-region public transit, the independent/libertarian streak in Midwesterners reacts poorly. (I am indebted to Atlantic Cities for the recent post regarding “How to talk about cities”.) Keep in mind that most urbanized Midwesterners live in suburbs, exurbs, or small cities…not central cities.

  21. uffy says:

    This site is bit ridiculous in it’s constant criticism of Chicago. Let’s talk about which cities are doing better. The uninsured population of Texas and its cities is the highest in the country, California has 8 of the top 10 cities with the worst unemployment rates, as you mention Indian has lost significantly more jobs in the last 8 years than Illinois. I could go on.

    The truth of the matter is that the New York Metro and the SF Bay Area are the only metros in America that are not stagnating along with the rest of the country. Sure there are areas with increasing population in the Southwest and Southeast, but with the possible exception of Raleigh-Durham they are all in the same sad boat.

    America is bifurcating. There was no net increase in private sector employment over a decade for the entire country while the income of the top percent basically doubled. Of course Chicago can and should do more, but to claim that it is a “bog dog” when competing against not cities but entire other states and, more importantly, countries is just silly.

    As for the report I agree that Chicago-area business and Universities need to increase cooperation, that training of low-mid skill workers is sorely lacking, and that transportation infrastructure is in dire need of repair and update. Let’s just see which cities will do better than Chicago on these fronts – I doubt there will be many. America as a whole, with few exceptions, has to face these challenges together.

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