Monday, November 12th, 2012
This article is part of the State of Chicago.
Chicago is in effect a tri-state area consisting of parts of Illinois, Indiana, and Wisconsin. The lion’s share of the population is in Illinois. Also, the city is by far the largest municipality in the area – it’s bigger than a lot of states. This leads to a very Illinois-centric and Chicago-centric civic leadership and view of the world. Perhaps rightly so.
However, Chicago, looking for advantages where ever it can, should seek to find them in collaboration with the other states. Today I’ll examine the case of Northwest Indiana. The four county area that is technically part of Chicagoland – the Gary, IN Metropolitan Division – has over 700,000 people in it, which is pretty sizeable in its own right. It is also very culturally and aligned with Chicago, with significant Eastern European, Black, and Latino populations.
One advantage the area has is that Indiana’s entire approach to governance and economic development is very different from Illinois. Indiana has been implemented a “bare bones” model focusing on fiscal conservatism and seeking to be tax and regulation advantaged relative to the Midwest. Illinois has been grossly financially irresponsible, but has also been willing to invest in building a base in high-end and knowledge economy businesses, global connections, etc.
The types of high end firms that are in the Chicago Loop simply aren’t going to move to Indiana, likely not even to an Indianapolis. I never took seriously the CME’s threat to leave, for example. Northwest Indiana is also not likely to develop the type of entrepreneurial high tech cluster that Chicago has.
On the other hand, there are lots of businesses that wouldn’t touch Illinois with a ten foot pole. Some of these might be willing to locate in Indiana, however. My idea here is that Northwest Indiana should seek to find businesses for which proximity to Chicago and a Midwest is an advantage, but for which Illinois is particularly hostile in a legal/regulatory way, or in which Indiana has particular advantages.
Not only does Northwest Indiana need the investment and jobs itself, so do the South Suburbs of Chicago. And they are in easy proximity to NWI. Also, these suburbs, being outside of Chicago’s favored quarter type areas, are not well positioned to thrive from the Illinois strategy. Indiana jobs might benefit their residents quite a bit.
Additionally, Northwest Indiana has one of the largest heavy industrial zones in America. Despite the decay of Gary, plenty of steel is still made in the region. I believe Indiana is still America’s #1 steel producing state. I can’t imagine America will ever build many if any more areas like this. But we still have heavy industrial needs. So Northwest Indiana is one of the few places to put them.
A perfect example is BP’s $3 billion upgrade of its Whiting refinery. A lot of environmentalists opposed this. Unfortunately, America still runs on gasoline for now and we have to refine oil until we can replace it with something else effectively. Given the disappointing sales of electric cars to date, we’re not there yet. Transit is also not a realistic replacement at this time. If you are Northwest Indiana, why not work to build up this base? It won’t happen in Illinois. There’s a good reason there aren’t steel plants there any more. And the city and state would fight the development of any heavy industrial developments that did want in.
Gary would also be a logical place to put a third Chicago regional airport, though I’m not naive enough to believe that this will ever happen. Which highlights the benefits of the ideas above: Northwest Indiana doesn’t need cooperation from Illinois to make them happen. Yet, unless it involves cross-state poaching, Illinois would actually benefit. I do think some poaching is inevitable, but even here it might not be all bad. Some of the businesses that leave Illinois for Indiana might be ones that would be departing the metro entirely if they didn’t have the NWI alternative.
The key is to specialize and differentiate, taking advantage of your complementarity to be able to have a larger addressable market than if all parts of the region tried to be the same. This is easier to pull off when, as in this case, you’ve got multiple states who can have different fiscal and regulatory approaches.
Of course, for Indiana to take advantage of this it needs to have its act together. It’s the most politically fragmented part of the state of Indiana, and the various municipalities and counties have rarely worked to together. Congressman Pete Visclosky, who represents the area, has tried to use his regional mandate as a platform for bringing parts of the region together. This is especially admirable given that local governance is not part of his remit.
Other problem in the area is its heritage of corruption, as with Chicago. Sadly, rather than try to differentiate away from Chicago, NWI too often imitated it.
Northwest Indiana is also a Democratic political monoculture. Whenever you don’t have competitive elections, that is bad given the lack of real accountability to the voters. I’d say the same of various monolithically Republican suburbs.
Still, I believe that, despite serious challenges, especially with the decayed northern part of Lake County, there are plenty of economic opportunities to be had.
Oh, and Northwest Indiana is also home to America’s best brewery.
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