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City and State Smokestack Chasing Blows Mostly Smoke

William Fulton / Nov 12 2010

For Release Sunday, November 14, 2010
Citiwire.net

William FultonTwenty-five years ago, when I first started writing about economic development, the governors of seven states went on The Phil Donahue Show — the premiere daytime talk show of its time — begging General Motors to build the assembly plant for its brand-new Saturn brand in their state.

It was, to put it bluntly, a pretty pathetic excuse for an economic development campaign. Even though auto assembly plants don’t literally have smokestacks, this was a pretty stark example of politicians trying to find a short-cut to economic success through the standard technique of “romancing the smokestack” — wooing some out-of-town business in hopes that they will come to town. I always counted the Donahue show as the lowest point in the history of American economic development — especially since none of the seven states got the plant.

At least the Donahue show seemed like the low point until earlier this year, when Ohio Gov. Ted Strickland made a YouTube music video begging basketball star LeBron James to re-sign with the Cleveland Cavaliers. The YouTube music video managed to trivialize both the economic development goal and the means by which that goal is pursued. Somehow a talk show seems almost statesmanlike compared to a music video. And have we sunk so low that the holy grail of economic development is not an auto assembly plant but an individual basketball player? Not that it much mattered. In the end, making a music video didn’t work any better than going on a talk show. The Saturn plan went to Tennessee — at least until GM killed the brand last year — and LeBron went to Florida.

If the humorous failures listed above teach us anything, it is this: There is no magic bullet for prosperity. You can’t just romance the smokestack and hope to succeed, especially in the long run. But there are ways to maximize the chances of enduring success.

The fact that some communities are prosperous and some are not is hardly an accident. In large part, success is the result of deliberate effort on the part of business organizations, nonprofit entities such as research institutions and universities, and — yes — government agencies to nurture the growth and sustainability of particular businesses and particular types of economic activity in particular locations.

There’s nothing new about this. For thousands of years, cities and regions have prospered when they have grabbed emerging economic opportunities and found ways to make sure the economic benefit flows toward them. Sometimes these efforts have been mostly private — as when the Columbian Rope Company, in the midst of the Depression, set up a research lab in my home town and hired my grandfather, a chemistry professor, to run it. Sometimes these have been mostly public — as when the Erie Canal was built by New York State and the interstate highway system was financed by the federal government. And sometimes these efforts have been a combination — as when Congress subsidized the private construction of the transcontinental railroad.

But in the last couple of decades, the activist role of local and regional players has become more evident. Silicon Valley is part of a worldwide economic elite largely because of the presence of Stanford University and the way entrepreneurs have leveraged Stanford’s presence. Dallas and Denver are major cities largely because civic and political leaders built enormous airports — what one former Dallas mayor called “the port to the ocean of the air” — at a time when nobody else was doing so. Pittsburgh continues to prosper — despite the departure of its steel mills and a steady decline in population — because it has reinvented its economy over and over again.

These places are prosperous specifically because they have not tried to romance the smokestack into town. They know that prosperity isn’t dependent on one company or one plant or one person. Prosperity — especially the kind that endures for decades — emerges from a carefully constructed ecosystem that nurtures and sustains skilled labor, innovative entrepreneurs, research breakthroughs, and well-capitalized start-ups. In other words, great cities, large and small, are powered by great prosperity, and the smartest cities — just like the smartest businesses — understand that they have to continually plow the fruits of their prosperity into sustaining and reinventing themselves.

It’s a mysterious process, but it’s pretty miraculous when it works. And it’s a lot more sustainable than pinning your hopes on a basketball player.


William Fulton is the Mayor of Ventura, California, and a principal in the planning consulting firm of Design, Community & Environment (www.dceplanning.com). This article is excerpted from his new book, Romancing The Smokestack: How Cities And States Pursue Prosperity [http://www.cp-dr.com/]

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4 Comments

  1. Posted November 13, 2010 at 10:26 pm | Permalink

    Read it, cheered.

    Will definitely hunt your book down and give it a few plugs, not least because I’m holed up in a cabin writing with much the same thesis (and a slightly different solution).

    BFK

  2. Joe Molinaro
    Posted November 15, 2010 at 8:54 am | Permalink

    Good column. An “ecosystem” for business is a good term for what communities need to create. But alas, it will take a long time for states and cities to unlearn their old habits of wasting lots of money trying to lure individual firms.

  3. Posted November 15, 2010 at 10:09 am | Permalink

    How we approach economic development must now be considered in a international context. Our sister city in Korea can get their income tax waived for 5 years and in Thailand it is up to 8 years. The role of government in the rest of the world in far more assertive with strategy and incentives for investment attraction. Most countries have agencies, America has two people. It is a different game. I will read this book. Also read Prestowitz’s new book, ” Betrayal of American Prosperity” for a global view of competitiveness.

  4. Darrell Glasco
    Posted November 16, 2010 at 4:08 pm | Permalink

    Having worked in economic development in Austin and Atlanta, and then in banking at Silicon Valley Bank I have witnessed first hand the issue with chasing large companies as well as the power othat entrepreneurs have on a community. What you have said in this article about chasing smoke stacks cannot be repeated often enough.