BBA Economic Digest: Fighting Chance

March 8, 2020

To Have a Fighting Chance

 

As an economic development consultant, I work in places that frankly need me. It's typically not in booming metros like Dallas, where I live. Rather, it's places that are struggling just to remain relevant in this digital age.

 

The digitization of American life is now the norm. Every industry relies on computing, and employers are demanding more advanced digital skills from workers. Broadband (anything faster than dial up) equips people with digital skills. It makes it easier for them to search and apply for jobs. It helps businesses access a larger pool of job candidates.

 

A digitally fluent workforce brings productivity gains to firms. In short, higher levels of broadband adoption leads to economic growth, higher incomes, and lower unemployment everywhere. Let me repeat, everywhere.

 

Now you would think that if broadband is an essential infrastructure, then every community would have it. You would think. But according to the 2018 American Community Survey, 18.1 million or 15 percent of households don't. Compare that to the 99.6 percent of households with complete plumbing, or 100 percent of households with access to electricity.

 

But, but, but, the estimates on the number of Americans lacking broadband access are all over the map. The Federal Communications Commission places the number at 21 million, while Microsoft reckons 162 million people across the U.S. can't access broadband speeds. (That would be faster than dial up.)

 

Not surprisingly, the states with the lowest broadband adoption rates also have the lowest median incomes, highest shares of rural communities, and the highest shares of communities of color.

 

“More and more policymakers are seeing exactly why broadband matters. This isn’t something that’s viewed as a nice-to-have anymore, this isn’t about Netflix and cat videos ... it’s about what you can do by having that internet access,” said Kathryn de Wit, manager of the broadband research initiative for Pew Charitable Trusts.

 

Many states are addressing barriers to facilitate broadband deployment in unserved and underserved areas. They have plans that define goals and objectives that provide a baseline against which to measure progress. 

 

Some are providing funding to support broadband deployment through grant programs that fund a portion of the cost of deployment in unserved and underserved communities. They are also ensuring accountability by requiring that grantees demonstrate they are providing the service they were funded to deliver.

 

My point is that progress is being made, albeit slower in some places than we would like. 

 

Here's the bottom line: Making broadband accessible and affordable results in increased digital literacy, and leads to more skills. I see this as essential for rural communities to compete.

 

It goes back to two basics principles of economic development -- investing in people and investing in infrastructure. Do that and you have a fighting chance.

 

A Union Man

 

Several years ago, I was in a Midwestern city, a once vibrant manufacturing center that has seen better days, and I met the newly elected mayor. Curiously, he introduced himself as "a union man."

 

From what I learned about this man beforehand, he was a former banker, cared deeply about his city and was respected. (He had gone door to door in poor neighborhoods to listen to the concerns of residents, a first for them.)

 

But I cautioned him about his self-identification.

 

"Mr. Mayor, if you were to introduce yourself as a 'union man' to certain corporate representatives considering your city for capital investment, well, that just might give them great pause," I said.

 

I could not tell if my remarks registered with him. Looking back, I do not think they did.

 

By the way, I don't think of myself as "anti-union," nor do I consider myself a "union man." If anything, I am a "customer man" -- a client's interests always comes first and foremost.

 

Enter the Thinking Machines

 

Today many worry that strides in artificial intelligence -- new machines that can parse legal documents, diagnose diseases, drive trucks, and do other jobs once thought too complex to automate -- will result in widespread unemployment.

 

But we know that this "“future of work” discussion goes back at least to the late 16th century when Queen Elizabeth I denied a patent to the inventor of a new automated knitting machine. She feared it would take the jobs of “young maidens who obtain their daily bread by knitting.”

 

Throughout history pessimists have fretted about the impact of new inventions on the value of human labor, while optimists have pointed to how technology has improved the human condition.

 

But, but, but: “Those weren’t thinking machines,” Vasant Dhar, a data scientist and professor at NYU told Quartz Magazine. “This is not the same as last time, not the same as previous kinds of technology that changed the nature of work.”

 

Google researchers are teaching robots to navigate without human intervention. Relying purely on tweaks to current state-of-the-art algorithms, they successfully got a four-legged robot to learn to walk forward and backward, and turn left and right, completely on its own.

 

The queen would be impressed ... or totally freaked out. 

 

Watch this short video of Axios' Jim VandeHei and Mike Allen discuss how robotics and AI will change the nature of work. 

 

How (Some) Regional Economic Development Organizations Fall Short

 

In the past month, I've met with representatives of two regional economic development organizations, both based in NFL cities. Noteworthy was that neither had programs for business retention and expansion or entrepreneurial development.

 

In short, these regional groups, one in the Midwest and the other in the Southeast, focused exclusively on business recruitment, which I told them straight up was a mistake.

 

Mind you, both of these major metro areas are currently doing relatively well, and my counsel probably fell on deaf ears. But they asked to meet me in Dallas, and when we met, I asked questions. What do you expect?

 

Recently, I met with representatives of Greater Des Moines Partnership, representing a 12-county region in Iowa. I learned that this group does not ignore BR&E and entrepreneurial development but devotes resources to each, tracking and assisting local economic development organizations with both.

 

I'm a big proponent of regionalism, but economic development is far more than recruitment. Rather than throw up their hands and say "that's a local issue," regional ED groups should be involved at some agreed upon level. I promise you that will them in their recruitment efforts.

 

Losing Ground

 

The tech sector is one many economic developers yearn to foster, and it's true that some tech companies have expanded outside of Silicon Valley.

 

Cities such as Charlotte, N.C.; Madison, Wis.; and Boise, Idaho have added digital services jobs. Yes, but: "They’re gaining jobs, but still losing ground," said Mark Muro, senior fellow and policy director at Brookings Metropolitan Policy Program.

 

"The industry is still centralizing" in just a handful of tech hubs. "We keep waiting for this to reverse, but we're not sure it will anytime soon because of the winner-take-most dynamics of the way the sector works," Muro said.

 

The increased concentration may reflect the importance of large-scale clustering of talent and companies in periods of rapid tech disruption and the "groupthink" of tech industry executives and investors about location decisions, "which may tend to prevent the entry of geographical as well as corporate rivals," Muro writes in the blog post.

 

The top five metros with the highest shares of digital services — San Francisco, Seattle, San Jose, Los Angeles and Austin — accounted for nearly a third of all such jobs nationwide in 2018. Only 21 cities increased their sector share between 2010 and 2018, with gains that were less than one-tenth of a percent.

 

Of the country's top 100 larger metros, 63 saw their share decline with slow or negative growth. Providence, R.I.; Little Rock, Ark.; Virginia Beach, Va.; and Stockton, Calif. lost 5 percent or more of digital services jobs.

 

In December, Brookings and the Information Technology and Information Foundation proposed that the federal government should provide R&D funding and regulatory benefits to 8 to 10 promising metros — or "growth centers" — to help them become more competitive to the existing tech hubs.

 

That December report found that 90 percent of the nation's tech-sector jobs had concentrated in the top five innovation cities —Boston, San Francisco, San Jose, Seattle and San Diego.

 

Digital services includes software publishers, data processing and hosting, computer systems design and other information services.

 

Immortal Words

 

The following is an excerpt of a book review that appeared in The Economist of "Every Drop of Blood," By Edward Achorn. Atlantic Monthly Press; 336 pages; $28.

 

 

By 1865 Lincoln had substituted rationalism and fatalism for the predestination theology of his Kentucky forebears at Little Pigeon Creek Baptist Church. But he still venerated the King James Bible and often quoted it at length. Skeptical about the God it depicted, he nonetheless believed that some power beyond human understanding controlled the destiny of nations.

 

As Edward Achorn writes in “Every Drop of Blood”, though Lincoln was hardly an orthodox Christian, his second inaugural was “the most overtly religious” of any presidential speech to that date. He said America’s “original sin” of slavery required a righteous God to purge both those who wielded the whip and the politicians who permitted it.

 

He noted that northerners and southerners read from the same Bible and prayed to the same God, and both invoked God’s judgment on their adversaries.

 

The awful presence he described came from Ezekiel and Jeremiah, not from stories of baby Jesus, meek and mild. But afterwards came divine healing:

 

"With malice toward none, with charity to all; with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds…to do all which may achieve…a just and lasting peace…"

 

As they listened, the African-Americans close enough to hear began murmuring, “Bless the Lord,” the chant growing louder until it erupted into shouts and weeping.

 

 

What We're Reading

 

What Happened When Tulsa Paid People to Work Remotely  CityLab

 

How Automobiles Helped Power the Civil Rights Movement 

Smithsonian Magazine

 

Why isn't Washington, D.C. a state? It started with a drunken mob.  NatGeo

 

Eastern Kentucky Has Been Underwater, but You Probably Didn’t Notice 

The Atlantic

 

What Happens to Your Emails After You Die  Bloomberg

 

The Great Wall Street Housing Grab  The New York Times Magazine 

 

 

 

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