Brush Park, Detroit. Photo Credit: Stephen Harlan, CC BY-SA 2.0
Noah Smith at Bloomberg wrote a recent column on how to revive the Midwest that channels the ideas of Michigan based Brookings scholar John Austin. This strategy has two main planks: lure more immigrants and invest more in higher education (presumably research universities).
This is a fine and dandy idea. There’s only one problem: In an economy driven by immigrants and university research, which places are likely to win? The places that are already winning this very battle: the elite coastal cities like Boston, New York, and the Bay Area.
We’ve had decades now to observe where immigrants are settling in the US. They are mostly bypassing the Midwest. Even Chicago has seen its immigrant flows start to dry up.
And as I previously documented, in a superstar economy, the Midwest has few of the absolutely most elite programs in critical STEM fields. CMU’s computer science program is the exception that proves the rule.
The Smith/Austin strategy is like telling the Washington Generals that if they want to start winning games, they should just go beat the Globetrotters. It’s not going to happen. The Midwest’s role in this current system is as the designated loser. The only way to start winning is to find out how to play a different game.
This is something that the Midwest leadership class mostly can’t even comprehend. That’s somewhat understandable. It’s much easier to look at how other people succeeded and say, “Let’s do some of that” than it is to try to change the game completely, which is a difficult an inherently uncertain enterprise.
But this pragmatic mindset is what has undermined the Midwest. It’s a big part of what killed Michigan in the first place. There’s certainly a role for pragmatism, just as there is a valid place in the Midwest for focusing on immigration and universities. But that’s only going to work for a limited number of places.
Here’s a place to start thinking differently. We are in a disruptive era in Washington right now. What fundamental changes to the status quo in federal policy that aren’t already being advocated by coastal progressives would Midwest leaders like to see? Consider the example floated by Matt Yglesias (a coastal progressive, but in this case putting forth a different kind of idea) of breaking up the federal bureaucracy and moving big chunks of it to the interior.
Aren’t there successful Midwest metros that have relied upon an “ed, meds, and feds” model? Isn’t Yglesias’ suggestion just more of the same? Also, you don’t need world class engineering schools to have significant computer science and engineering employment in a region, just look at Columbus, NC’s research triangle, or Denver and Austin and San Antonio. I would think that trying to copy Germany’s industrial policy, union laws, and corporate governance model/laws would be something that would be good for the Midwest but isn’t being advocated by coastal progressives. Maybe also mandatory universal military service for young men (something like 6 months of basic training and then an opportunity to enlist).
I agree on universal service, with a non-military option, and on copying Germany’s industrial-oriented, non-university-track public education system (from which would flow a “mittelstand” style industrial policy, union laws, and governance once the workforce was in place).
In Aaron’s series of posts on his interview with his father a couple of years ago, this “unqualified worker” issue was raised. If everyone thinks s/he is college material because teachers and counselors tell him/her so, then no one communicates the value of honest skilled trades work nor helps a kid prepare for it.
Unfortunately the Northern European “communitarian” or “social democratic” urge is on the wane in the US ever since Eisenhower and Kennedy passed from the scene, with only a brief comeback under Bush I.
Ach. But then how could the vampire squids, vulture capitalists and financial engineers as easily extract their pounds of flesh?
Seriously…as a bookwork/college grad/office drone, I envy and admire the “skilled trades” people I know, I have no delusions that my arcane white collar profession is the bee’s knees.
The problem is we are rapidly devaluing “honest labor” even more with new technologies that allow a few financial wizards working for vast inherited wealth to capture even more of the economy. They don’t even need “us” any more. I look at automated trucks. Even beyond the drivers and owner operators, any observer of the trucking industry would observe that there are an awful lot of small trucking companies out there. Can these companies afford to acquire the Tesla Supertrucks? I wonder-which means the big fleet operators will gain even more market share.
The only reason “invest in higher education and attract more immigrants” seems like a loser strategy for the Midwest is because the active electorate, by and large, has long been hostile to both. I feel like now would actually be a good time to employ this strategy, because in conjunction with the area’s lower cost-of-living, you would be investing in the chance to start new ideas, industries and opportunities, while still being able to pay the rent.
The other strategy the Midwest might employ is to devote resources to attacking the opioid crisis, and seriously investing in two-year schools and trades education — and treating unions as partners, rather than adversaries, so their resources could be put to use.
I’m curious what you mean when you say the Midwest “can’t win” with an economy built on immigrants. Even if many or most are to move on from where they immigrate to, it’s pretty difficult to see future growth in the Midwest metros where natural decline and/or domestic migration are big drains without some international immigration. It seems more like a critical though incomplete part of a broader strategy, not a coastal elite rigged game.
Massive and innovative infrastructure development seems one strategy that could work for the Midwest. The politics of coastal metros makes new construction, public or private, complicated there. Could Midwest metros show the power of new and innovative infrastructure in energy, water/sewer, non-car transportation, internet connectivity, and housing? High speed rail capitalizing on the region’s central location could make a real difference. Still, just like the post Civil-War South, the Midwest will have to accept that it faces a few generations of economic marginalization, I think. It will have another day, but that day will come after we are all gone.
There’s very little point in investing in infrastructure if there isn’t the business demand for it. Silicon Valley, arguably, has terrible infrastructure, and logistically Hong Kong is a challenge as well, but there is enough business in these places that people create work-arounds, or simply put up with the delays as a cost of doing business there. As I commented below, we need to make the workforce more skilled. These place need a quality strategy, of being smarter, not a quantity strategy, of simply moving more goods. That day of commodity mass production is long gone.
The post-war U.S. suburban industrial complex literally created demand by it’s scale and mutually-reinforcing nature. China has done the same in the last 15 years. There was no preexisting demand for either from global capital. Investing in people who will leave seems risky to me. Investing in an infrastructure that can’t leave seems a better bet. My comments don’t presume mass production of commodified products. Creating an innovative infrastructure is as important doing so on a large and systematic scale.
I’m not sure I understand your point, but you seem to imply that first the U.S. and then China built up their economies by selling to themselves, and that “priming the pump” with infrastructure spending will rebuild the Midwest economy. That approach is somewhat similar to the “Big Bang” or “Leading Sector” theory of economic development for the English Industrial Revolution, in which the development of coal, steam and railway transit became an “engine of growth” that pulled along the rest of the economy. That kind of thinking led to a number of World Bank development projects after WW II, including construction of the Aswan Dam in Egypt. The original “Leading Sector” theory for the English Industrial Revolution has been pretty much debunked, however, with historians like Phylis Deane showing how that country’s economic development came about as a result of a number of improvements in the legal, financial, infrastructure and even agricultural systems, i.e. one sector cannot pull everything else along unless the pieces work together. The U.S. enjoyed unparalleled growth after WW II because Europe and Japan’s factories were in ruins, U.S. companies transferred management and technical techniques from the war effort, and consumers had 15 years of pent up demand that dated from before the Great Depression. Today there are a world of competitors, the Midwest has lost much of its manufacturing wealth, and, even if they were able to move goods and people more easily, firms there would still have to compete with highly advanced firms in Asia to win back market share.
You’re missing the forest for the theoretical trees. The U.S. enjoyed unparalleled growth after WWII because the U.S. government made it possible to sustain U.S. production through continued public investment in infrastructure and education and the creation of demand in Europe and Japan for U.S. goods through the Marshall Plan and the Bretton Woods Agreement. The demand wasn’t “pent-up,” it didn’t exist. Demand is not inevitable. The creation of postwar markets was not inevitable. It was the result of conscious decisions. It could have all gone very differently if the U.S. economic and political elite hadn’t created the military and suburban industrial complexes to make it happen as it did.
After WW II, infrastructure enabled the US to respond to the demand enabled by Marshall Plan financing. Today demand does exist, but it’s already being met by US competitors. New infrastructure won’t significantly increase the ability of private firms to compete.
Demand is as malleable as any other aspect of capitalist markets. The Chinese have reminded us of the that in the last 20 years. New infrastructure will create new demand in the U.S…in the Midwest if that is where it is concentrated. Demand doesn’t just spontaneously emerge. It is created by human institutions. Of course, infrastructure isn’t mutually exclusive with a new education and training agenda. The U.S. invested in that after the war too.
Matt, new infrastructure won’t create demand. Infrastructure is a cost of production, and there’s little evidence that high-priced infrastructure is what is making the Midwest’s product uncompetitive globally.
Historically, the Midwest was strong in steel, autos, and durable consumer goods like appliances, all industries that have now gone offshore, particularly to China, Korea and Brazil. Those places are producing superior products for the money, with Hyundai and LG now outpeforming Japanese companies like Sony and Nissan. If anything, the newly-arrived Asian producers would benefit far more from infrastructure improvements than our Midwest companies would. And, if anything, some of the really boondoggle federal projects I’ve heard about have concerned un-needed freeway capacity. The basic point is that lowering the cost of one factor of production, infrastructure, is probably far less important than improving another input far more important to product competitiveness: labor skill, especially in design, testing and automation. That’s where Germany and Scandinavia have put much of their focus, and their export levels are far higher than ours. I don’t believe the argument that there is untapped demand at home for which the supply could be shielded from foreign competition. No-one I know is going to easily give up their right to buy inexpensive foreign goods sold at Costco.
New infrastructure creates new demand all the time. It’s called ‘induced demand.’ It did after World War II. It did in China in the last 20 years, and it can in the Midwest in the future. https://en.wikipedia.org/wiki/Induced_demand
What are the critical missing pieces of infrastructure that would make the Midwest materially more competitive worldwide, that would induce so many more consumers and producers to buy its products? Roadways, rail, freeways, gas pipelines, subways, electric tie-ins, airports, pollution control facilities? China and other rapidly developing places had none of this, and they had no middle class. I know there are rail delays in the Midwest and in moving passengers across New York, but it is hard to imagine that any of the above are so backwards as to render our industry uncompetitive, especially when compared with the constrained infrastructure in developing countries.
Your comments imply that the Midwest cannot participate in the post-industrial economy. That assumption is part of the Midwest’s problem. Infrastructure that radically improves the physical connectivity of people, not things, within and between midwest metros will support the development of new and expanded businesses. Connecting investors, academics, professionals, and others in the MIdwest to each other through dramatically improved buses, streetcars, subways, intercity trains, airports, and the connections between all of these will stimulate demand of all kinds for goods and services in and from the region. Connecting academics in Columbus with investors in Cincinnati or experienced start-upers in Chicago with scientific researchers in St. Louis, for example, will create a mutually beneficial relationship that will foster new investments that cannot be created in isolation.
The eds and meds strategy is so old-fashioned. It worked, somewhat, for New Haven, but they had Yale.
The idea of coupling higher ed and immigration is ludicrous, unless you limit immigration to those with masters degrees. These places are failing because the people in them don’t have the basic work skills they need to compete in the world. The competition is Singapore, not Seattle, because that is where the pharmaceuticals are produced that are designed at the great research universities in this country. The latch key child on the South Side of Chicago will not benefit from more scientific advances at the University of Chicago, Northwestern or Argonne National Laboratories if he or she can’t write well, have a solid command of math, and solve physical and logical problems in a heartbeat. Without those things, there’s really no difference between our workforce and a highly motivated peasantry moving from the Chinese farm fields into the city.
Building on the region’s strengths, I think the key to successful Midwest economic development lies in the agricultural realm. But it has to be more than corn and soybeans, warehoused pigs and chickens. How about hemp, hops and/or other specialty crops? Small towns could be reanimated and young folks given a reason to stay or new families could be encouraged to immigrate. The burgeoning farm-to-table movement could benefit from steady supplies. One local restauranteur bemoaned the troubles she has sourcing free-range eggs for her mini-empire of a dozen locations. I agree with other commenters who champion increasing the number of skilled tradesmen, too. Anecdotally, I know plenty of heating & cooling, plumbing and general contractors who are worried that without a crop of young apprentices, the trades will just be a bunch of old men.
There’s likely very little the Midwest can do at this point. The best solution is a national effort to facilitate moving to opportunity: Conservative and low-skill people should be assisted in moving to the South and Sunbelt, while elite coastal cities need to be guided (or coerced) into greatly expanding their housing stock through infill.
Along with some financial assistance with moving provided by the feds, this will enable high-skill and liberal people in the Midwest to move to the opportunities they need.
It should really be about managed decline now.
Before we bury the Midwest in its own slag heaps, let’s remember that things can change — over time. In the early 1970s real estate agents bought a billboard by the major airport that said: “Will the last person leaving Seattle please turn out the lights?” This was in response to the aerospace industry collapsing in the area, and the agents’ comments that out of town clients “were amazed that Seattle wasn’t a ghost town with weeds growing in the streets.” Not this means Youngstown in 40 years is Seattle today, but it does mean death is not inevitable.
http://www.historylink.org/File/1287
I believe that Aaron is generally correct that the elite coastal metros benefit the most from a “traditional” education and immigrant strategy.
However, I think Aaron misses that the STEM fields are actually a huge strength for Midwest educational institutions. Contrary to Aaron’s statement, Carnegie Mellon is definitely NOT the only top computer science program in the region. Illinois, Michigan, Wisconsin and Purdue are all considered to be top tier elite computer science programs. The public Big Ten schools are legitimately better in computer science as a whole than the Ivy League (and the Big Ten produces a heck of a lot more graduates in those fields, to boot). Just look at the companies founded by just University of Illinois alums: Oracle, YouTube, PayPal, Yelp, etc. My guess is Aaron has had some of the Ivy-obsession of NYC rub off a bit in the analysis here (where there’s just an assumption that Ivy League schools must be great in STEM). If you go to Silicon Valley, the Midwest Big Ten schools are among the biggest feeders to tech firms after Stanford and Cal. Note that the biggest advantage of going to an Ivy League school is when you *don’t* want to be a STEM major and instead be able to get a plum Wall Street job with a random liberal arts degree based on qualitative alumni connections and reputation as opposed to quantitative skills.
So, the Midwest actually does have a legit home court advantage in terms of the STEM education that the whole nation is craving. The issue is that the Midwest has generally failed to capitalize on it. Think of how much different Chicago, Detroit, Milwaukee and Indianapolis would look economically if it had just kept its computer science grads from Illinois, Michigan, Wisconsin and Purdue at home. Figuring out why the Midwest was unable to capitalize on that home-grown brainpower is really where the region needs to start.
It’s no mystery why the talent hasn’t stayed, because it’s a been a problem forever — a largely inward-looking culture that doesn’t value diversity of person and thought, an employer base that doesn’t want to pay for talent, and a general distrust of change. The reason this really stands out now is because — for whatever reasons you want to bring up — the high-wage, low-skill manufacturing base has collapsed, and the economy has gone down with it. There are cities within the Midwest trying to make a serious go on retaining their own, but backward state governments are doing all they can through policy, whether they want to admit it or not, to drive out anyone who doesn’t want it to be 1964 anymore. News came out yesterday that House Republicans in Indiana are trying to develop a plan to attract the highly educated to the state, and I’m sure it will fail badly because it won’t address the clear reasons why the highly educated leave the state in the first place.
I think you’ve hit the nail on the head. Contrast American manufacturing 50 years ago with German manufacturing today, and its not hard to see why the Midwest is not getting ahead.
50 years ago, many Midwest manufacturing jobs were high-wage, low-skill jobs in a few vertically integrated industries, notably auto, steel and appliances. People did the jobs that could not be automated. Computer-controlled machinery displaced the workers.
German manufacturing today, by constrast, is very specialized, high-skill work, involving the programming and control of machinery making products sold to multiple industries. The employers are small and medium-sized, famiy-held companies whose skills complement those of similar companies in the local area. The local expertise may be “metal” or glass, but that expertise is sold into a number of industries. That specialization, in techniques, rather than industries, and that focus on worker training, has led Germany to some of the highest export levels in the world.
The Midwest, and for that matter, most of America, never went back and reformed education so that workers would have the programming, math, writing and problem-solving skills needed to manage and run automated machinery. We don’t teach applied geometry. Our high school chemistry classes don’t discuss how metal or glass behaves under different situations. Our high school drafting classes have kids focused on architecture rather than 3D parts design. Take a latch key kid from the South Side of Chicago and stack him up against an apprentice from Germany, and its no wonder that the latter takes home $60,000 a year, on top of cheap education and health care, while the kid from Chicago is dealing drugs. We have an opioed crisis because not only are there no job prospects, but because so many of these people have no skills.
I live in Seattle area, and Amazon fills many of its positions here with people moving from elsewhere. (Our public schools don’t turn out enough qualified kids for those jobs to go local.) The big issue is not whether there are good universities, but whether the top students want to stay. Way back in 1976, kids in my Stanford dorm who came from Midwest states like Iowa told me they would never consider going back, that there was nothing to do there. A lot of this “talent clustering” has to do with lifestyle. A lot of it also has to do with job opportunity. If you’ve put your life into college and your career (as well as big student debt), you need to go where there’s a strong professional network to ensure your next job.
What does this article have to do with the Midwest? Sounds like you just like to use “the Midwest” as a whipping boy for some reason to describe what is happening to not-big-city America. I’m not aware that any region of the country is faring better when you get away from the big cities.
And Chicago’s recent “drying up” of immigration is almost entirely due to a dramatic drop in Mexican immigration, but otherwise I’m not sure how any of this fits into your narrative since there really isn’t proof that it’s population stagnation is actually hurting it. Chicago has its highest employment of all time, its downtown employment is at record levels, it has a downtown construction boom that has no parallel outside of New York, and the city has the highest percentage of its population with a college degree–in the country.
So stop giving the coasts undeserved credit just for the successes of their largest cities. I think we are all mostly in the same boat, unless you can demonstrate otherwise.
Good points all, UP.
Well stated Urb Pol!