Yesterday while most of Chicago was chasing the Chinese president around town, I went to a lunch sponsored by the Economic Club of Chicago. The theme was Go to 2040 and what Chicago had to do to stay competitive in the 21st Century. This is the third ECC event I have been to and they are always enlightening.
They touched on the recent tax hike by the Democrats in Illinois, but that wasn’t the main focus.
The panel was moderated by Adele Simmons. Randy Blankthorn of the Chicago Metropolitan Agency for Planning, Paul O Connor of Skidmore Owings & Merrill and Kevin Willer of Google each gave a short presentation. Then there was some Q+A.
While I didn’t agree with everything said, it was provocative, and I think the thrust of each of their points was similar. They each covered their own subject in which they had a lot of expertise. They things that they said are applicable to any metro area in the country, not just Chicago.
Mr. Blankthorn focused on government. The Chicago metro area has more governmental bodies than any other area of the world. That’s saying something. There are so many different little taxing districts, and they are intertwined and intermingled. The result is, not one government official is responsible and it’s easy to pass the buck. Additionally, the government officials get confused over whose responsibilities to whom, and the efficient delivery of needed services becomes impossible. It is an understatement of the 21st Century to say Mr. Blankthorn has a Herculean task in front of him.
They also made the critical point that we need to start ignoring state and municipal borders. Economic metro areas don’t begin and end at metropolitan lines on a map. In Chicago’s case, that means working closely with government bodies in Wisconsin, Indiana, even as far flung as Michigan, Minnesota, Iowa, Missouri, and Kentucky to create economic efficiencies in an entirely economically connected area.
Blankthorn is trying to speak with all these layers of government to try and get them to work together, eliminate unnecessary branches of government, eliminate employees and to try and get a higher level of service. My sense of him is that he has the patience of Job!
One of the things that they didn’t touch on in this segment was the pension programs of government workers. There can be no progress made on government spending without changing the the pensions from defined benefit to defined contribution. Government costs will overwhelm the taxpayer. In Illinois case, businesses and people will move. After the recent tax hike was announced Jimmy John’s sandwiches, a national sandwich chain, said they were moving. It’s owner is relocating his family to Florida. It’s critical that government costs are reduced for meaningful economic development to occur. Government cannot power an economy forward, but it certainly can get in the way.
Mr. O’ Connor touched on a couple of points. His first was his area of expertise, investing in the infrastructure of metro areas. In Chicago, this is key because of it’s history and location. Chicago wasn’t created by happenstance. The Indians found it to be a great transportation hub far before anyone else. Transportation is the base of the entire Chicago economy today.
Unfortunately, traffic in Chicago is the worst in the entire nation. You can’t get there from here. There are huge economic opportunity costs when people can’t move around. Perhaps they decline to do that trip to the store because getting there and back will take too much of their time. This hurts their own personal economic “happiness” factor, and it hurts commerce lowering local GDP. It’s sort of ironic that the other capital of big government, Washington DC has traffic that is just as bad. Maybe government workers just drive around in their cars all day?!
O’Connor stressed infrastructure developments in public transportation. This applies not only to roads and bridges, which need improving, but also moving freight around. Rail in the US needs to be modernized. It’s an efficient low cost way to move bulk goods, but the system has bottlenecks all over the country.
As far as getting into and out of the city, I would agree that public transportation needs to be improved and enlightened. However, no amount of public shaming will get Americans totally out of their cars. Plus, in suburban settings, implementing public transportation would be highly expensive and inefficient. It’s cheaper to modernize roads. One radical idea I would propose is privatizing the city bus service. I bet the buses get better, and the service gets better at a cheaper price. Linking air, and rail so that they run more efficiently together also could be a focus. High speed non stop rail from both our airports to the Loop is a good idea.
Other metro areas of the country need to closely examine their infrastructure starting with airports and working to the minutia of roads. Getting people around efficiently increases economic output. Planning small metro areas where people can walk to get services can cause cities and towns to coalesce differently than the typical suburbs of yesteryear.
Kevin Willer talked about entrepreneurship. He made some amazing points. Investment in smarter more efficient ways to educate our children will help tremendously. Creating networks that support entrepreneurs is also a big factor. One of the most important thing that Kevin said was this. “If you want to truly support entrepreneurs in your town, help them by becoming a customer, setting up a meeting for them utilizing your personal network, mentoring them, and, setting up formal networks to invest dollars in start up companies.” Many elder businessman feel they are out of touch with the upcoming technology, so they don’t think they can help. But, they are in the best position to help. They can make a phone call and set up a meeting. They can mentor, because while the technology may have changed, the entrepreneur still needs to produce where marginal revenue equals marginal cost. Elder businessman still know how to run a business. There is a lot they can add to the stew.
They also talked a lot about generation Y and what they see. First generation in America that is mostly color and gender blind. First generation that is has more women going to college, it’s more highly educated over a broader base. I would add, it’s a very libertarian generation. They want access to unfettered information and they process it in very unique ways. Generation Y will be one of the most entrepreneurial generations in American history.
A bit of a tangent. For those of you that are depressed because you feel China is going to take the US over by pure economic force, have a look at the map from The Economist below.
The American economy is still the most robust and energetic economy in the world. If we support and create entrepreneurs, we will stay there. China eventually may have a bigger economy simply by virtue of more population. The critical thing is that America needs to be the place where innovation happens. Generation Y can do that with the correct support.
In summary, we have to create smaller more efficient government. Government has to do more with less. We need to invest in smart infrastructure and rethink how we retool our existing metropolitan areas. We need to invest in better, less government controlled, educational systems for our kids, and support entrepreneurship to grow.
If we don’t, in no time we will look like the quasi-socialist societies of Western Europe. Stagnant, with only memories of what it once was, and visions of what it could be. There is a reason they left, and continue to leave to come to America. We think different.
tip of the hat to Doug Ross. Welcome to his readers.