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Revive Regional Economic Planning

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One of the takeaways from the election disaster for me is (of course) that the economic problems of deindustrialized communities are a very real thing that neither Democrats nor Republicans have taken seriously during the half-century of globalization, automation, and capital mobility that has decimated the American working class. The fact that we saw significant shifts in critical Rust Belt states to a white supremacist candidate talking a bunch of huge lies about keeping jobs in America is in part a sign about failed economic planning for these regions. In comments earlier today, SolidCitizen noted that it makes sense for workers to believe in Trump’s lies since their own union leaders have been feeding them false optimism for a couple of decades now. And he’s right about that. Workers don’t trust their union leaders at this point either, not to hold on to their jobs. That’s not really the fault of the unions–fighting against huge economic shifts is pretty well impossible at the union level.

One of the failures of policymakers is to engage in regional economic planning over the past four or five decades. One of the brilliant moves of the New Deal era was to specifically target regions of the country for economic development. This happened in two ways. First was the massive dam building projects to bring electricity and thus industry to impoverished regions of the country. This was done most notably through the Tennessee Valley Authority but while the TVA could not be replicated in other parts of the country due to the outrage of private power, huge government investment in the Missouri, Columbia, Colorado, Red, and Arkansas River basins brought major job growth to previously rural America. This led to the second major set of economic plans–shifting America’s industrial base, especially around the defense industry, outside of the traditional industrial zone we know today as the Rust Belt (itself a telltale sign of government regional economic planning failures). Some of this was explicitly about efficient planning for World War II and building up industrial capacity in port cities like Mobile or Los Angeles and some of it was using the excess energy capacity of the dams to shift the aluminum industry to the Northwest or place major nuclear facilities in rural east Tennessee. All of this had major long-term implications for American development and still does today.

But after the 1960s or so, visionary economic regional planning largely stopped. The defense industry still very much shapes where things are built, such as the huge naval presence in Rhode Island that led to our lovely governor forcing an institute making the university working for the defense industry down the throats of the state’s voters last month. But for the most part, government has let private industry make these decisions themselves. So globalization has had enormous benefits for the economies of the West Coast states and to a lesser extent in the South. But it’s been utterly disastrous for the old industrial states who never really benefited from mid-century regional planning. This is a real problem and we need government to once again take the lead in fixing entrenched poverty in declining states.

I thought of this again when Yglesias published this very interesting piece that I largely agree with. Basically, he says that many government agencies should leave overcrowded and overpriced Washington for the cities of the Midwest. This makes sense on a number of levels. Midwestern cities already have sizable infrastructure investments that could be easily converted, as well as surplus housing stock. This would even out the economy, make Washington an easier place to live, and bring economic benefits to states that really need them like Ohio, Wisconsin, Indiana, and Michigan.

America’s post-industrial Midwest is far from being the country’s poorest region. To find the direst economic conditions in the United States, one generally has to look toward Appalachia, the Mississippi Delta region, the Rio Grande Valley, and a smattering of heavily Native American counties in the Southwest and Great Plains. What the Midwest’s recent economic struggles bring, however, is not just large-scale political salience but a particular kind of fixability.

The poorest places in the United States have been poor for a very long time and lack the basic infrastructure of prosperity. But that’s not true in the Midwest, where cities were thriving two generations ago and where an enormous amount of infrastructure is in place. Midwestern states have acclaimed public university systems, airports that are large enough to serve as major hubs, and cities whose cultural legacies include major league pro sports teams, acclaimed museums, symphonies, theaters, and other amenities of big-city living.
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But industrial decline has left these cities overbuilt, with shrunken populations that struggle to support the legacy infrastructure, and the infrastructure’s decline tends to only beget further regional decline.

At the same time, America’s major coastal cities are overcrowded. They suffer from endemic housing scarcity, massive traffic congestion, and a profound small-c political conservatism that prevents them from making the kind of regulatory changes that would allow them to build the new housing and infrastructure they need. Excess population that can’t be absorbed by the coasts tends to bounce to the growth-friendly cities of the Sunbelt that need to build anew what Milwaukee, Detroit, and Cleveland already have in terms of infrastructure and amenities.

A sensible approach would be for the federal government to take the lead in rebalancing America’s allocation of population and resources by taking a good hard look at whether so much federal activity needs to be concentrated in Washington, DC, and its suburbs. Moving agencies out of the DC area to the Midwest would obviously cause some short-term disruptions. But in the long run, relocated agencies’ employees would enjoy cheaper houses, shorter commutes, and a higher standard of living, while Midwestern communities would see their population and tax base stabilized and gain new opportunities for complementary industries to grow.

This is a really great idea, although those who would have to move may well not be happy about it. Government can’t really force private industry to move where it wants them to move, but it can create the conditions for regional economic planning by investing its own resources. It did that in the 1930s and in the 1950s and it can do it again in the 2010s. And whether this fixes the Democratic decline in those states is basically irrelevant. Hopefully it would, but this is solid policy regardless and electoral calculations should at best be a secondary consideration in policy.

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