Tag Archives: quality of life

How NOT To Do Economic Development

According to a recent report in the Capital Chronicle, the Indiana Economic Development Corporation wants a massive increase in funding. It justifies that request by insisting that larger expenditures are necessary to keep Indiana competitive in the national job market,  “especially as Indiana pivots from manufacturing to the “economy of the future.” Those industries — electric vehicles, semiconductors, agricultural technology — will need incentives to come to the Hoosier State.”

The article describes the nature of the “incentives” that will be offered: purchases of land, tax credits, a “Deal Closing Fund,” and others.

If you are interested in the details, you can find them at the link. My reason for highlighting the article is that it underlines Indiana’s persistent–and exclusive– focus on an economic development approach that is essentially bribery.

There’s a lot wrong with that focus.

First of all, even when successful, it uses tax dollars generated by Hoosiers to reward/bribe enterprises new to the state, rather than trying to grow businesses and employers who are already here. Second, it is an approach that buys in to the “zero sum” game being played by American states that are encouraged to bid against each other to lure Enterprise X,  which, if successful, simply moves the site of employment to state A from state B, rather than adding positions to the nation’s job market.

But my biggest beef with the bribery approach is that it misconceives and misunderstands what makes a state attractive both to business and to skilled workers.

In a recent interview, the new CEO of Techpoint spoke of that organization’s commitment to working with partners “to bring more people of color and women into the sector.” Indiana is currently 37th in tech employment, and–as I have previously noted– there are reasons for that.

Economic development– the addition of skilled workers and new companies–depends  on a state’s quality of life. That quality may be enhanced by good weather and natural beauty (assets Indiana mostly lacks), but it is a far more capacious concept.

As one economic development firm explains,  improving quality of life raises a destination’s desirability, attracts (and retains) population, adds revenue, and boosts recognition and reputation.

As the Brookings Institution has found,

There is compelling new data that these traditional economic development tools may be ineffective compared to investments in quality of life and place. Our research on smaller communities has found that community amenities such as recreation opportunities, cultural activities, and excellent services (e.g., good schools, transportation options) are likely bigger contributors to healthy local economies than traditional “business-friendly” measures. Smaller places with a higher quality of life experience both higher employment and population growth than similarly situated communities, including those that rank high by traditional economic competitiveness measures.

Research has shown that people are willing to pay higher housing prices and even accept lower wages to live in places offering a higher quality of life, and that businesses are willing to pay higher real estate prices and offer higher wages to locate in places with more productive workers.

After estimating quality of life (what makes a place attractive to households) and quality of business environment (what makes a place especially productive and attractive to businesses) in communities across the Midwest, we found quality of life matters more for population growth, employment growth, and lower poverty rates than quality of business environment. 

As the article notes, policymakers can’t build a Great Lake, mountain, or other natural feature. But they can focus on enhancing other quality of life aspects and providing solid public services for their current residents.

The Brookings analysis found that one of the strongest factors associated with higher quality of life was spending on public schools, “with public school quality and the availability of early childhood education being two of the most important factors for working parents.”

Bottom line?

The findings reinforce that local leaders and economic developers should prioritize quality of life strategies over tax incentives and lax regulation. The long-standing Midwestern community economic development strategy of low taxes, business incentives, and loose environmental regulations usually doesn’t work, and has often proven disappointing to communities that have given away tax dollars and reduced business standards without seeing substantial returns. Low business taxes often hide a hidden opportunity cost by reducing available funding for local schools and other public amenities. 

If our legislative overlords really wanted to attract skilled workers–including female workers and workers of color– they would fund child care and pre-K programs. They would work to create great public schools and excellent transit systems. (They would also leave medical decisions to the professionals who understand the complexities of those decisions, rather than imposing the beliefs of fundamentalist Christians on all Hoosiers.)

Pledging billions for bribery while ignoring quality of life isn’t a viable economic development strategy.


Minority Rule, Courtesy of Gerrymandering

In addition to its website, Talking Points Memo sends out a morning newsletter to subscribers. A few days ago, that newsletter (paywall) included two paragraphs that sum up the single biggest challenge facing American democracy.

The success of the abortion rights coalition in ballot initiatives from Kentucky to Michigan showed that abortion can be just as powerful an incentive to vote for those who support abortion access as for those who oppose it.

For many House Republicans, that shift would, in another world, alter their behavior. With majorities in even deeply red states supporting abortion access, you’d expect these lawmakers to moderate their position. But thanks to the dearth of competitive House districts due to cumulative years of gerrymandering, many of them have more to fear from a primary challenge from the right than a general election against a Democrat.

I have frequently posted about the effects of gerrymandering. Probably the most damaging consequence is voter suppression; as I have often noted, people who live in a district considered “safe” for the party they don’t support lack an incentive to vote. When the disfavored party doesn’t turn out, that also depresses the votes for that party’s  candidates for statewide office.

Here in Indiana–a state that has been identified as one of the five most gerrymandered states in the country–our legislature is beginning a session in which the Republican super-majority continues to disregard the demonstrated priorities of its Hoosier constituents.

Several Republican lawmakers appear to oppose the Governor’s call to invest in the Hoosier state’s inadequate, struggling public health system. For that matter, there appears to be no appetite for confronting Indiana’s dismal ratings in a wide variety of quality of life indicators. As Hoosier Democrats recently pointed out: 

Hoosiers have a F rated quality-of-life and the state has a D- rated workforce, a C- rated education system, the third worst maternal mortality rate in the nation, and the country’s most polluted waterways. It appears Republicans will once again ignore the warning signs from Indiana’s top business leaders and their taxpayer-funded reports and instead choose to focus on their extreme agenda.

CNBC lists Indiana as one of the ten worst states in which to live.

Over the past couple of days, I’ve posted on just one part of that extreme agenda, the GOP’s war on public education. Other efforts include our lawmakers’ continuing war on LGBTQ Hoosiers– especially on  trans kids and anyone in the medical community who dares to serves them.

Indiana isn’t alone, unfortunately.

In 2015, two political scientists– Martin Gilens of Princeton and Benjamin Page of Northwestern–published a study concluding that the preferences of US voters barely matter. Or as they put it, “economic elites and organized interest groups play a substantial part in affecting public policy, but the general public has little or no independent influence.”…

Gilens and “a small army of research assistants” compiled nearly 2,000 polls and surveys that asked for opinions about a proposed policy change. Since he wanted to separate out the preferences of economic elites and average citizens, he only used surveys that asked about respondents’ income. He found 1,779 poll results that fit that description, spanning from 1981 to 2002. Then he took the answers of median-income voters to represent what average voters think, and the answers of respondents at the 90th income percentile to represent what economic elites think.

Next, the authors had to measure what interest groups thought about all of those issues. They decided to use Fortune magazine’s yearly “Power 25” lists of the most influential lobbying groups, but since it “seemed to neglect certain major business interests,” they added the ten industries that had reported the most spending on lobbying. Their final list includes 29 business groups, several major unions, and other well-known interest groups like the AARP, the Christian Coalition, the NRA, the American Legion, and AIPAC. Each interest group’s position on those 1,779 policy change proposals were coded, along with how strongly each group felt about each proposal. The results were combined to assess how interest groups in general, felt.

The study found that average citizens only get what they want if economic elites or organized interest groups also want it…

In contrast, the preferences of economic elites and interest groups — especially economic elites — are each quite influential.

In dramatically gerrymandered Indiana, the clear preferences/warnings of the state’s largest businesses and growing tech sector are routinely disregarded in favor of  the “influential elites” who evidently believe that low taxes are a more attractive economic development tool than a reasonable quality of life–a belief with which CNBC begs to differ.

Indiana’s super-majority does listen to the well-organized religious fundamentalists whose policy preferences repel the high-skilled workers our economy needs. 

As long as they can gerrymander, our unrepresentative representatives are safe from democracy– and their constituents.



I Guess This Doesn’t Include Indiana

Macleans has identified cities it dubs a “new brain belt.”

These are the places where they think the greatest innovation is happening today. Sometimes they are classic rust-belt cities but mostly they are university or hospital towns in the vicinity: Waterloo, Ont., instead of Windsor.

They identify characteristics of such places: high-tech facilities, quality educational institutions, taxpayer support for research, appealing living conditions and, most important for them, cultures of free thinking, in contrast to the “hierarchical, regimented thinking so prevalent in Asian and MIST [Mexico, Indonesia, South Korea and Turkey] countries.”

Or states like Indiana.

We have had several robust discussions on this blog about my theory of “paradigm shift.” Call it that, or focus on the narrower question (posed by MacLeans) whether your own city or state is “innovative” or “future oriented”–the question is one with which every Chamber of Commerce and Economic Development organization is wrestling: how does my city/ metropolitan area/state continue to compete and thrive in a world that is constantly changing? How do we get from here (wherever that is) to there (wherever that is)?

I was struck by the list of characteristics identified by MacLeans: of the five, four focused on human capital–more precisely, the development of an intellectual culture.

  • High tech facilities are built in places having workforces that can operate and manage them, places where both technical skills and comfort with technical innovation are plentiful.
  • The phrase “quality educational institutions” suggests the sort of yeasty and challenging environment that deals in questions, not answers–the sort of educational environment that produces new ideas and new ways of thinking about the traditional ones. (Quality is not defined by job placement statistics–sorry, Indiana Commission on Higher Education.)
  • “Taxpayer support for research” certainly doesn’t call to mind the penny-pinching, “I’ve got mine, Jack, and I’m holding onto it” attitude that has long characterized my own state of Indiana. It certainly doesn’t describe a state that would constitutionalize a cap on property taxes, lest those taxes somehow get raised and then–horrors!–spent on a common civic good like education. Or a better quality of life.
  • When you think about it, a culture of “free thinking”–the fourth intellectual attribute of forward-looking places–really leads to the only characteristic listed that doesn’t immediately connect to the life of the mind: a good quality of life. I don’t think you can have a good quality of life without such a “free thinking” culture.

People who enjoy engaging with ideas, with the arts, with people unlike themselves–people interested not only in acquiring new skills but in using those skills to improve their communities–are people who understand the organic nature and human importance of those communities, and the importance of their own connections to them.

There are people in my city–and I’d wager in yours–who are working hard to create a community that looks like that.

But at this point, my city– and most definitely my state— have a long way to go.

More Lessons from Canada

Yesterday I shared Canada’s approach to management of government contracts–an approach American government officials would do well to emulate. Today, I want to share two examples of good urban policy from our neighbors to the north.

First, from Vancouver:

In Vancouver, Canada, walking, cycling and public transit are now viable alternatives to driving. Todd Litman blogs on Planetizen that recent data indicate that Vancouver’s “automobile mode share” represents about half of all trips.

By contrast, in most North American cities, personal vehicles are used about 80 percent of the time. Litman is executive director of the Victoria Transport Policy Institute.

Vancouver’s urban planners have worked to make the city easier to navigate without a vehicle. As a result, in addition to the obvious environmental benefits,  Vancouver’s residents spend less money on transportation than urbanites elsewhere, have more opportunities for active lifestyles, and are less likely to be killed in an automobile accident– Vancouver has experienced a sizable drop in traffic fatalities.



Can’t find Place Jacques-Cartier? Curious about the history of Mount Royal? Ian Hardy reports for MobileSyrup that Montreal’s CA$23 million  (US$18.4 million) “smart city” plan would provide easy answers via free public Wi-Fi. The 70 projects to be completed by late 2017 would include real-time updates about buses and subways and digital access for citizens to municipal data.

The city promises to deploy free wireless connectivity at 750 locations. It also would require all major urban development projects to include superfast, wired fiber optic Internet connections, the article says. In addition, Montreal hopes to attract companies and startups that specialize in innovation that improves how cities govern and interact with citizens.

I served in city government “back when”–in an administration committed to making Indianapolis a place where people would want to live, a forward-looking city with a great quality of life. That was back when we still had planners…back before the entire focus of state and local government became keeping taxes low by providing only the most essential services at the lowest possible cost, before we took to selling off public assets to make budgets work.

Before the word “government” became a sneer.

From Accidental to Delusional

When Greg Ballard was first elected, many people dubbed him the “accidental Mayor,” in recognition of the fact that virtually no one had voted for him; they had voted against Bart Peterson, who had the bad luck to be in office when the General Assembly raised property taxes. (When voters don’t know that there’s this thing called federalism, they also don’t know who raised their taxes.)

Subsequently, Ballard actually won an election, and we are stuck with him for at least the next couple of years–perhaps more, if the Democrats can’t find a viable candidate pretty soon.

On the one hand, it’s hard not to feel sorry for this or any Hoosier mayor. There is no money to do much of anything. The brutal winter has exhausted snow-removal budgets. The Department of Metropolitan Development is down to three planners. The police force is seriously understaffed. The list goes on.

The problem is, this Mayor came into office not knowing anything about urban policy or administration, and he has not proved to be a quick learner. So we have watched his numerous “economic development” junkets, his enthusiasm for cricket, his lack of enthusiasm for the legislative battles over measures that adversely affect a city in a state with no home rule…again, the list is lengthy.

Now we are told how the Mayor wants to solve the systemic problems that are strangling our city and depriving us of needed revenues: we’ll do it by encouraging higher-income folks to move to Indianapolis and grow our tax base.

Can you spell delusional?

Read my lips: people with the means to decide where they want to live make those choices based upon quality of life. They don’t move to cities with horrendous and growing homicide rates, poorly-maintained parks and streets, badly managed snow removal, struggling schools, abysmal public transportation and dwindling city services. They don’t wake up one morning and say, “Wow, I hear Indianapolis has a cricket field. Let’s move there.”

We’ll be lucky if local people who can decide where they want to live don’t continue to leave Indianapolis. (Marion County had Indiana’s largest absolute net outflow of population over the past decade.)

Our city faces truly monumental challenges. It would be nice if we had an administration capable of understanding those challenges.