Election fallout: Republicans offer different solutions, but metro challenges haven’t changed

In the 1967 classic “Cool Hand Luke,” the Paul Newman character spends most of the movie trying to “get his mind right.” Elections like last Tuesday’s are a little like that.

Those of us who write (and read) about urban-design issues know that the election result, no matter how momentous, didn’t change the basic challenges of the day. Our addiction to oil and other carbon fuels still holds the nation’s energy and foreign policies hostage. Our atmosphere continues to overheat with potentially dreadful consequences for future generations, no matter what the deniers say. Our inefficient growth patterns and transportation habits cannot be environmentally or fiscally sustained. Our economy cannot deliver the high-value jobs that Americans need so badly. The income gap between rich and poor continues to grow in ways that damage both the society and the economy.

What has changed over the last several days is that a new conservative tide offers a different set of solutions. “Getting your mind right” around those solutions is the hard part.

Perhaps it’s in the nature of designers to favor technical fixes. President Obama took office in 2009 with a clear mandate, a congressional majority and a menu of technically appealing, Washington-based answers: Burning too much carbon? Tax its consumption and provide incentives for alternate forms of energy and transportation. Got a problem with housing and jobs? Keep the banks solvent, provide mortgage relief, extend unemployment benefits and ramp up job training.

It was a menu that, without a relentless marketing effort, was open to attack, especially as the recovery faltered, the deficit soared, and the administration seemed off on an errand to fix something (health care) that didn’t seem directly related to the nation’s overwhelming need: jobs. And so, last Tuesday’s “shellacking,” as Obama put it, was largely self-inflicted. But that’s beside the point now. The point now is to try to grasp just how the new conservative agenda proposes to meet the challenges mentioned above.

The Republican manifesto
The centerpiece seems to be deficit reduction, which would be accomplished by slashing government’s discretionary spending and reforming entitlements as a way to offset tax cuts for the wealthy and a further relaxation of regulations on business. (Liberals point out that that the Bush administration’s formula of low taxes and lax Wall Street regulation got us into the current mess, but that argument has been lost.) The hope, then, is that the wealthy, newly freed from their tax burdens, will begin to invest not just in yachts but in job creation, preferably in the United States. That, in turn, will trigger a series of other events: Main Street will revive; the economy will snap out of its doldrums; the deficit will begin to fall; a chastened government sector will revert to its minimalist purpose (mainly defense), and the private sector will step in to address the great challenges of the day, including those listed above.

It becomes an article of faith, then, that private enterprise will solve the carbon problem with nuclear power and natural gas; that big oil will step aside to celebrate new fleets of electric cars running on privately funded toll roads, and that private enterprise will, on its own, engage in the kind of research and development and education reform required to create high-value jobs; and that the availability of those jobs will inspire the poor to try harder and join a once-again expanding middle class. It’s an appealing narrative.

Most of this is set out in the Republican manifesto, “A Pledge to America,” which offers inspiring rhetoric about “ending the attack on free enterprise,” “reining in the red tape factory in Washington, D.C.,” and “repealing the government takeover of health care.” It sketches the outlines of a far slimmer federal government, one that, if you add specific suggestions from Rep. Paul Ryan for trimming Social Security and Medicare benefits for future recipients, begins to “restore sanity” to the nation’s capital. Cutting military spending is not contemplated because “we will never apologize for advancing the cause of freedom and democracy around the world.”

More ideology in a pragmatic world?
What strikes me most about this manifesto, or perhaps any manifesto from the right or left, is that it is highly ideological in what is quickly becoming a post-ideological world; that it is profoundly idealistic in a world moving rapidly toward pragmatism. The right, especially, seems nostalgic for an America that no longer exists — although it may be correct in its critique of centralized power. There may no longer be, for example, a national economy in the way we once thought about it, but rather a series of metro economies that compete with similar metro economies across the nation and world.

Those highly diverse metro economies rise and fall depending upon how well they compete. The analogy is that of an ecosystem or, perhaps, the Internet. Everything is connected to everything else. In that sense, the local environment is important not just because it’s nice to have clean water and big trees but because it offers an attractive platform for investment, wealth creation and broader prosperity. If there’s a problem standing in the way — say, a rigid federal system or a hopelessly nostalgic mindset — you find ways to move around it.

There are no universally correct formulas. A metro region’s strength may be drawn from both left and right — a greater sense of entrepreneurship, for example, coupled with targeted pubic investments to maximize strengths and shore up weaknesses.

This column has spent time recently with Thomas Fisher, dean of the University of Minnesota’s College of Design, and Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institution, as well as with new books from Joel Kotkin and Richard Florida about the future of cities.

Recovering to what?
A common theme has been how, after a brutal recession, to retool metro economies to meet the challenges surrounding energy, environment, prosperity and equity listed in this piece’s second paragraph. A common answer is that we cannot go back to an economy based primarily on financial speculation. “The economy that got us into this recession is not the economy to which we need to recover,” Katz said.

Bruce Katz
Bruce Katz

The answer probably lies in “making things again,” he said, particularly ideas, some of which get turned into high-value manufactured goods for export. Metro areas, Katz said, should become laboratories of pragmatism, fueled not by ideology but by “what works.” State governments, even though they face an unprecedented $125 billion shortfall, must be careful not to cut spending not just for the sake of cuts, but also to carefully target public investments for greatest probable return.

“We cannot just cut our way to growth,” he said. A state with a large research university, for example, would be foolish to starve its best ticket to discovery, innovation and new business activity. The Twin Cities’ greatest weakness, he told me, is its failure to commercialize ideas in the way that, say, San Diego and Austin have created local wealth around their university campuses.

MSP metro needs a strategy to compete
It’s important for metro economies to know “who they are in the global market,” and “not to get lost in the ideological noise” of Washington politics, Katz said. Some states and metro regions will succeed at this, and some will not. The Midwestern “auto zone” and parts of the Sun Belt hit hardest by the real estate crisis will have a difficult time crawling out of their holes, he said. What about the Twin Cities? Katz left the question hanging.

The people upon whom I rely to generate this column think we have a good shot at recovering and competing, largely because we know our strengths: A strong work ethic, a productive work force, a solid research university, a lively cultural scene, easy access to nature and a relatively high quality of life. And we know our weaknesses, too: a harsh climate, relatively high taxes, an inadequate transportation system, an inefficient development pattern, a huge racial gap on income and achievement, an inability to commercialize ideas, and a propensity to talk rather than act.

Last Tuesday’s election shifted the balance of political power in both Washington and St. Paul at a critical time. New approaches are on the way, but the challenges are unchanged. This column’s mission, as before, is to discuss how best to improve the urban design of this cold, remote place, not to advance any ideology but to help Minneapolis-St. Paul to remain a metro area worthy of recovery, reinvestment, competitiveness and prosperity.

More reading:
Bruce Katz on the “Pragmatic Caucus”

Alan Berube on education and jobs in metro America

Katz et al. on export growth

Katz et al. on innovation clusters
Thomas Fisher on design thinking

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Comments (15)

  1. Submitted by Ray Schoch on 11/08/2010 - 10:22 am.

    I can’t help wondering how Mr. Katz would respond to the weekend story in the ‘Strib about Polaris, which is shutting down a production facility in Osceola, WI, thus putting 500 non-union employees out of work, and sending that production to Mexico, where the labor costs are 1/3 that of even their non-union workforce. This to make snowmobiles and, increasingly, ATVs – both of them for markets not just out of state (e.g., Texas, California, Arizona), but also out of the country.

    Technically, I suppose, they’ll qualify as “American exports,” and if there are tax benefits to that – as a Republican administration would probably work to put in place at the behest of Polaris and similar businesses – the businesses involved will be happy to take them. Thus, we’ll have tax breaks for businesses that are technically American, producing products in Mexico with Mexican workers for sale here and overseas, at the cost of the devastation of a small town (and likely the surrounding county) about an hour northeast of the Twin Cities.

    This will be very good for Polaris shareholders – labor is typically the single largest cost element in producing just about anything – and the CEO of Polaris has prior experience at running factories in Mexico, so the startup of operations should go relatively smoothly. In a similar situation, I’d probably do the same thing as the CEO. The whole point of industrial capitalism is to make money, and if it can be made more quickly and with more abundance by moving the manufacturing process to a low-cost neighbor, as Polaris has done, we shouldn’t be surprised if there’s a very nice bonus, perhaps in 7 figures, for the executive responsible.

    That this is yet another nail in the coffin of Midwestern, or even American, manufacturing, won’t matter to investors, since their primary motivation is to make money.

    I also doubt that those 500 workers in Osceola can maintain anything even faintly resembling a middle-class existence if – this is pure fiction – they were willing to work for 1/3 their current pay rate if Polaris would keep the jobs in Osceola. Minimum wage, which is my guess at what 1/3 of the average wage of those employees might amount to, after adjustment to meet federal law (the actual figure might be quite a bit less than current minimum wage), might avert starvation, but that’s about all, and alternative employment in a largely rural area for 500 adults doesn’t seem very likely.

    I absolutely agree that we can’t return to – or at least we should avoid like the proverbial plague – a financial speculation-based economy. High-value manufactured goods certainly sound wonderful as a desirable alternative to the current economic doldrums, but if companies continue to export jobs along with products, there will eventually be no one left to to either make or purchase those high-value manufactured goods, at least inside the United States. Long before we get to that point, we’ll have reached the “Third World America” that Arianna Huffington keeps harping about.

    In the meantime, by all means, we should be searching diligently for “what works,” no matter what its political origins. That said, I note that Mr. Katz wasn’t inclined to speculate about possible future(s) for the Twin Cities region. Speaking purely as an amateur, with no claims to expertise on these matters at all, I think recovery will be more difficult than the conventional thinking seems to believe, especially given not only the chasms in income and educational achievement, but the current ideological warfare, and the fact that big corporations/employers demonstrably have no particular loyalty to the United States or its welfare. Capital is fungible and mobile.

    What Polaris demonstrates, more than anything else, is that business, at least reasonably big business, is amoral. Making money is the name of the game, and the game can be moved to wherever the returns are greatest and quickest. Unlike that old shibboleth from GM’s chairman in the “good old days,” of American manufacturing supremacy, what’s good for the company and its shareholders may well be catastrophic for the city, region, or by extension, the country. That’s the way industrial capitalism works, and it also provides plenty of reason why, unless you own the company, you should take the glowing praise heaped upon business executives with a grain or two of salt.

    Offhand, I don’t know of a business strategy that will compete with labor costs that are 1/3 of non-union labor in the area, unless it’s based on a dramatic lowering of living standards throughout the region and across the board. It’s hard to be enthused about a movement toward area-wide poverty.

    But I’m an admitted amateur. I await enlightenment from other commentators.

  2. Submitted by Thomas Swift on 11/08/2010 - 10:46 am.

    “Our atmosphere continues to overheat with potentially dreadful consequences for future generations, no matter what the deniers say.”

    If the atmosphere is heating, and there is anecdotal evidence that suggests it is, your simplistic declaration overlooks a couple of crucial points. 1. We don’t know why and 2. We have absolutely no idea if the net consequences will be dreadful, or wondrous, or a combination of both. The window of opportunity for warmers to simply make unsubstantiated declarative statements has passed.

    The rest of that paragraph is nothing but overheated, leftist papsew which can be safely ignored.

    “Liberals point out that that the Bush administration’s formula of low taxes and lax Wall Street regulation got us into the current mess, but that argument has been lost.”

    That’s because it lacked articulable basis in fact. I join other concerned citizens in demanding an accounting that focuses on the root cause; the effects of government intervention into the mortgage industry.

    It is true that we cannot cut our way to prosperity, and it’s true that government has an important role to play in our economic well being. But the leftist’s dream of the centrally controlled urban utopia not only runs counter to everything most American’s believe, it is itself a recipe for self-destruction, as the anthill cities of the former Soviet Union clearly show.

    Further, until they “get their minds right” and come to realize that creating government for its own sake is a complete waste of time and money, leftists will never be seen as competent analysts of the capitalist system upon which our country was built, and upon which our future success rides.

  3. Submitted by Jeff Klein on 11/08/2010 - 11:23 am.

    Mr. Swift, you don’t know what “anecdotal” means and claims (1) and (2) are both false. In regards to (1), you are as a layman dismissing the opinion of (literally) 97% of the world’s climate scientists and the position of (literally) EVERY scientific organization of national standing including the petroleum geologists. As far as (2), I can tell you that I speak regularly to friends right here at the U in the ecology department whose life work it is to study this very question.

    And even if (2) wasn’t false, why would you roll the dice on this? I don’t know that you understand what “conservative” means, either.

  4. Submitted by Charlie Quimby on 11/08/2010 - 11:57 am.

    Government is the source of our problems. Global warming is lie. Capitalism will pull us out of this mess.

    Sounds like plan to me.

  5. Submitted by Glenn Mesaros on 11/08/2010 - 12:07 pm.

    In an op-ed entitled, “It Was the Banks,” James Galbraith effectively places the blame for the pro-Wall Street policies of the Obama administration squarely on the character of Barack Obama himself. Excerpts from the op-ed follow:

    “The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.”

    Galbraith, the son of the famous New Dealer, leaves out the “elephant in the room”, which is not the GOP, but the fact that Obama is a pathological narcissist failed personality, who will now turn on the electorate who sanely rejected his policies. He will ally with fellow crazies like Rand Paul, who blindly follows dead Austrian economists with Hitler like budget cuts that will kill millions of real people.

    The Democrats deserve every loss they accrued for tolerating Obama in the White House, and did not invoke the 25th amendment to relieve America of this albatross constricting economic development.

    Minnesotans are so ignorant of their own history that they should read Charles Lindbergh, Sr. on the Federal Reserve, and Senator Robert Lafollette, Sr. to reclaim their birthright that created the New Deal twenty years before FDR actually implemented it, and Ronald Reagan voted for it four (4) times.

  6. Submitted by Ginny Martin on 11/08/2010 - 12:23 pm.

    I have the feeling that this country cannot sustain the capitalist system that has been in place–with modifications occasionally that the conservatives want to get rid of, like regulation–is doomed. It is based on consumption. How can we continue to consume valuable resources–many of which are already gone?–or buy it from others (which also have a limited life). Do you ever look at all the malls going up and wonder who buys that stuff? Especially as other malls close down? Who has the money? Or are they just for rich people.
    We have become, and I’m appropriating this phrase–a banana republic with an enormous income gap; in the United States of America, 2% of the people own 40% of the wealth. How can that possibly be sustained? Upheaval and violence are probable outcomes and perhaps a “do-over” if we have time because global warming is truly closing in on us and it is not just the poor who are getting flooded and experiencing avalanches. Ours are accelerating.

  7. Submitted by Thomas Swift on 11/08/2010 - 01:23 pm.

    Jeff, at least you’ve gone to the trouble of adding unsubstantiated statistics to the use of CAPITALS in support your unsubstantiated declarations.

    You’ve earned an “if you say so”, which is good, I guess.

  8. Submitted by Jon Kingstad on 11/08/2010 - 03:21 pm.

    Back to the subject at hand. Steve Berg says:

    “Liberals point out that that the Bush administration’s formula of low taxes and lax Wall Street regulation got us into the current mess, but that argument has been lost.”

    Has it? I don’t think last week’s election was a referendum on the validity of that idea which is still the most cogent explanation for the financial meltdown. Because the alternative is the major premise in Mr. Swift’s statement at #2:

    “That’s because it lacked articulable basis in fact. I join other concerned citizens in demanding an accounting that focuses on the root cause; the effects of government intervention into the mortgage industry.”

    Am I to take that Mr. Swift denies that financial deregulation which has occurred over the past 30 years, including the creation of new financial instruments like credit default swaps and collateralized mortgage obligations played no role in the collapse of Lehman Brothers or the near collapse of AIG and Bear Stearns? Or that the government intervention in the mortgage industry (which has been since 1937) had anything remotely to do with these events?

    If the public hasn’t quite figured all this out, it’s only because they haven’t grasped what Mr. Galbraith points out in Mr. Messaros’s comment #5.

  9. Submitted by Ginny Martin on 11/08/2010 - 03:23 pm.

    Charles Lindbergh Sr. embraced the Nazis and Hitler and did his best to keep us out of war with Hitler.
    A “pathological narcissist”? I think there’s a lot of pathology going on around here, but it doesn’t have anything to do with President Obama.

  10. Submitted by Ray Schoch on 11/08/2010 - 04:13 pm.

    Alas, no enlightenment so far.

    As the not-always-judicious, but undeniably smart Mr. Clinton was reminded during his first presidential campaign, “It’s the economy, stupid.” Mr. Obama, Democrats AND Republicans ought to be reminded of that, methinks. Current Republican triumphalism may prove to be short-lived, indeed, if they’re not able to create jobs as promised, and offhand, I don’t know of any successful job-creation programs or trends based on fiscal austerity.

    American workers are among the most productive on the planet, and as a culture, we work longer hours and take less time off (and pay less in taxes) than just about any other industrial nation. That didn’t help the Polaris workers in Osceola.

    Universities generally are under the gun at least as much as other “government” entities in the new right-leaning fiscal mood. Colorado has cut state funding to the state’s university system by 60 percent over the past few years. In part, that’s because there’s precious little else that the legislature is empowered to cut there when a budget shortfall arises. As a newbie, I don’t know the legislative and constitutional issues surrounding the U’s funding in Minnesota, but it’s hard to do research, and even harder to turn research into application, with less than half of your former funding.

    The cultural scene is livelier here than I expected it to be, but it requires discretionary income to exist, much less to enjoy. It won’t make much difference how many theater seats the Twin Cities have if I can’t afford a ticket, public transit can’t take me there in anything approaching convenience, or parking, if I have to drive, costs as much as admission to the show.

    If the economy isn’t repaired and strengthened, quality of life will deteriorate markedly, and access to nature as a recreational amenity might become irrelevant. Most of those regional weaknesses Steve listed will be exacerbated, as well.

    I’m still waiting for enlightenment.

  11. Submitted by Victoria Wilson on 11/08/2010 - 10:13 pm.

    A pragmatic approach to an urban issue is exemplified in a recent article by Cynthia Boyd:
    Project Spirit offers homework help and a lot more for African-American children in St. Paul school (posted 10/30/10)
    A community effort to improve their school scores, when successful, will open up the neighborhood to a broader base of home buyers. This in turn will fulfill the goal of a more densely populated metro area. This in turn will lighten the stress on our transportation infrastructure, particularly true in this location situated between the two downtowns.
    Conservatives will like this approach as it is self-organized, privately financed, and operates under the influences of a social contract accepted by the community.

  12. Submitted by Brian Simon on 11/09/2010 - 02:33 pm.

    Ray Schoch writes
    “I don’t know of a business strategy that will compete with labor costs that are 1/3 of non-union labor in the area, unless it’s based on a dramatic lowering of living standards throughout the region and across the board. It’s hard to be enthused about a movement toward area-wide poverty.”

    I don’t either. Perhaps the workers of Osceola need to figure out how they add value in a way that workers in Mexico do not. But that is really a short-term solution; in a world where global trade is cheap, countries like ours have to figure out what our strengths are & leverage those, rather than trying to compete based solely on cost. Coming back to our region & Berg’s point, he left one of our strengths off the list: an educated workforce. That says two things to me: 1) make sure we continue to have one of the best education systems in the country & thus the world and 2) promote that when trying to attract economic investments in the region. Pawlentyism is to compete solely on tax rates & send ourselves on a race to the bottom. Instead we need to leverage our strengths and prove that a dollar invested here has better payback than a dollar invested in Mexico or South Dakota.

  13. Submitted by David Willard on 11/12/2010 - 08:42 pm.

    Community Reinvestment Act (CRA) Backed by barney and Dodd. This made a hash out of real lending. Never forget. And barney got re-elected. Same old Dems, same old problems.

  14. Submitted by Richard Schulze on 11/13/2010 - 07:25 pm.

    A large part of America’s political spectrum believes, as an article of faith, that
    do-gooding politicians caused the crisis – that the Community Reinvestment Act forced banks to lend to minority groups, and that Fannie/Freddie were responsible for the bubble.
    I won’t spend much time on this, since it’s easy to refute. The CRA was around for almost 30 years before the problems in subprime began to develop; anyway, most subprime lenders weren’t even covered by the act. And the worst of the housing bubble developed at a time when Fannie and Freddie, under pressure over accounting scandals, were actually withdrawing from the market.

    Nonetheless, it’s important to know that a lot of people believe that Barney Frank did it – and nothing will convince them otherwise.

  15. Submitted by Richard Schulze on 11/13/2010 - 07:39 pm.

    For the American economy to grow and the balance of payments to return to something sustainable, America must develop new products and services to export. Given the lack of growth in the rich world populations and economies, those exports must be directed at upwardly mobile (but still relatively poor) consumers in India, China, Brazil, etc.

    America can sell raw materials and agricultural products to those countries, yes. It can sell luxury products including high end electronics to the nouveau riche. But can Americans develop products and services that are ‘frugal’ enough to compete with home-grown alternatives? Can American companies learn to market and sell in developing countries? Can Americans overcome their parochialism and their reluctance to recognize the new order? The answer to those questions will determine whether the American economy thrives or continues to stagnate over the next generation.

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