Sunday, March 18th, 2012
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%.
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