The following is an excerpt from my article in the upcoming book The Economics of Place, available on Amazon in September.
BRAINS ARE BEAUTIFUL
We know that educational attainment is the biggest predictor of success for cities and metro areas today. The research is unassailable.
Increasing educational attainment, measured by raising the four-year college attainment rate by one percentage point in each of the America’s 51 largest metropolitan areas, would be associated with an increase in per capita income of $124 billion per year for the nation. And each additional percentage point improvement in aggregate adult four-year college attainment in a city is associated with a $763 increase in annual per capita income.
The knowledge based economy that we find ourselves immersed in is here to stay. The lower skill, higher wage factory jobs that defined states like Michigan and cities like Detroit have largely disappeared. Simply stated, in today’s economy the places with the most brains win. And while I am pleased to report that the tired mindset that says that we can rebuild these old style economies according to a 20th Century blueprint appears to be on life support, the more difficult nut to crack is breaking from the old political and governmental mindsets that dictate how important public policy decisions are made.
So if the quality of a local or regional workforce is indeed the indicator of a strong economy (as it is in places like Seattle, Boston, and Minneapolis), then we must make sure that Michigan is appropriately aligned with this new paradigm. But, where should we begin?
With apologies to my friends who represent traditional business organizations, you guys need a new playbook. Finding a correlation between low tax states like Mississippi and high income states like Massachusetts is near impossible, although I will submit that they both start with the letter ‘M’. I loathe paying taxes as much as the next guy and advocate for squeezing more out of every dollar raised, but simply cutting taxes and expecting the growth to follow in an environment that increasingly depends on quality of place is a scheme hatched in some anti-tax Disneyland where no actual data exists. Worse yet, the tax debate continues to sap energy and it keeps us from acting on what really matters economically.
Loosen Regulations on Business?
Have you ever tried to open a business in Chicago? Or New York? Or Seattle? Not the friendliest of business environments. Yet new innovations are popping up within their borders and in numerous places just like them across the country. Responsible local and state governments must regularly update their regulatory processes in an effort to create the best environment possible. But try asking a promising young entrepreneur if she prefers her city to have a relaxed environmental policy or a commitment to support sustainability. I bet she chooses the latter. To her it is not just a fad to “be green”, it is a value. And the regulatory environment plays a distant second fiddle to the quality of the place where she dwells and pursues her piece of the dream.
Bust the Unions?
Here is another 20th Century remedy to a 21st Century problem. While I have a laundry list of points where I think organized labor is missing the boat, turning $20 an hour jobs with benefits into $10 an hour jobs without them isn’t a healthy and sustainable growth strategy unless you’re Malaysia. Check the statistics.
Attract and Retain Talented People?
And how do we do that, you ask? It’s simple. OK, maybe it’s not so simple. We achieve this through building and sustaining high quality places in our state.