Brookings: Experts - John C. Austin

Boosting the Great Lakes International Economy

John C. Austin — Tue, 19 Jul 2011 11:39:00 -0400

The regions on both sides of the Great Lakes international border need to team up to strengthen their highly integrated economies.

That was the conclusion of over 250 public and private leaders from both the United States and Canada recently brought together by Brookings and the University of Toronto Mowat Centre in Detroit-Windsor.

The tone was set by Bruce Katz’s keynote--where he pressed for international metro action to expand exports and encouraged the industrial Great Lakes to seize and lead the low-carbon, clean-tech economy.

Overall, two topics dominated discussion by delegates as ripe for international teamwork.

One was building the 21^st century transportation infrastructure the region needs as a platform for enhanced exports--and in particular building a state-of-the-art span connecting Detroit and Windsor, the world’s highest dollar international trade crossing point. Michigan Senate Majority Leader Randy Richardville, and Canada’s Consul General Roy Norton were pitching hard for the Michigan Legislature to follow Governor Rick Snyder’s call, and vote final approval for the new bridge.

The New International Trade Crossing has been 10 years in the planning, and is strongly backed by business leaders and governments on both sides of the border. It seemed a done-deal when Gov. Snyder announced that Ontario would pay cash-strapped Michigan’s share of the project, and in turn the U.S. Department of Transportation would let the Canadian dollars stand-in as Michigan’s match for federally-funded highway projects across Michigan.

The project keeps being sabotaged by the aging billionaire Mattie Maroun (born 1927), owner of the equally aging Ambassador Bridge (built 1929), fighting hard to keep a monopoly on toll traffic.

Maroun has contributed hundreds of thousands of dollars to Michigan State legislators, and bankrolled groups that are behind dirty tricks that would make Donald Segretti blush, including fake eviction notices at the doors of homeowners near the proposed bridge and patently false TV spots claiming Michigan taxpayers will foot the bill.

Meanwhile the whole $250 billion economic relationship with Canada is at risk, as the tightly wound manufacturing, agricultural, and commerce supply chains are bottlenecked--just at a moment they are poised to grow.

Another area for Great Lakes international teamwork is converting the region’s prodigious innovation, technology-base, and manufacturing talent to support new jobs and leadership in the clean-technology market. Recent Brookings research shows Michigan already 12^th in the nation in share of clean-tech jobs and confirmed the jobs potential of clean-tech growth.

Grand Rapids Mayor George Heartwell made the point, “I can think of nothing more important than a more robust, and better harmonized Great Lakes renewable energy portfolio standard to drive job creation in the clean energy sector.”

Heartwell was articulating the market opportunities seen by business leaders in West Michigan, who feel well positioned to grow product lines and new jobs developing and manufacturing clean-energy and clean water solutions. When Gov. Snyder showed up in West Michigan to give his first “Reinvent Michigan Award” to Energetx, a wind turbine and electric vehicle parts supplier, the former venture capitalist was also petitioned by a 40-member delegation of clean energy business buddies, asking him to better support these emerging markets with more aggressive public policy.

As the Brookings study shows, clean-tech is one emerging arena in which to repurpose the engineering and manufacturing competencies of the Great Lakes to replace jobs lost in auto and other sectors--if state and metro leaders provide the supportive policy platform.

Authors

John C. Austin

Publication: The Avenue, The New Republic

For a Richer State, Add Investments Into Budget

John C. Austin — Sat, 26 Feb 2011 00:00:00 -0500

Gov. Rick Snyder's budget seeks to find the bottom of Michigan's fiscal freefall by creating a simpler, fairer tax system, forcing action on long-standing legacy cost structures, and signaling that Michigan has a good business climate. He also proposes to tax retirement income like other income, rightly noting that a robust Michigan economy is more about making sure our children and grandchildren have a state in which they want to live, work and make their entrepreneurial careers than whether Michigan is a Cayman Island for retirees.

Yes, there is much to admire in Gov. Snyder's budget. But a good business climate and low taxes do not necessarily a richer state make.

Evidence is overwhelming that the richest states, with growing per capita income, are the ones that are the best educated. Eight of the 10 highest per capita income states have the highest education attainment rates.

Michigan is not one of these states, ranking 37th in per capita income and 34th in education attainment. On balance, "winning states" also invest more in education, infrastructure, research and development, cities and their natural assets.

Austin, Texas, is today the nation's best-performing metro economy. Why? Texas has poured billions of its oil money into making the University of Texas a world-class institution -- with all the "spillovers" for new firms, and creating a dynamic, creative community vibe that attracts yet more talented people.

Look, too, at North Carolina and its Research Triangle. Public-private partnerships and shared investment in education and higher education brought North Carolina into the front ranks of new economy states.

Ditto Pittsburgh, where, like Detroit, a dominant industry, steel, was a middle class job generator. It tanked in the '70s and '80s. Incomes in Pittsburgh plummeted. Thousands, young and old, fled the region.

Today, Pittsburgh's incomes are soaring, and young people are returning. Why? They built out Carnegie-Mellon and the University of Pittsburgh with new medical, life sciences, clean energy and IT firms, and spruced up their special "river city" location.

Michigan has similar assets: World-leading universities. Historic cities and towns. A beautiful outdoors, water and the Great Lakes. And great, hard-working people.

These assets ultimately matter more to job creation than business climate.

What have we been doing to these assets in Michigan? In recent years, Michigan is last among the states in its support for higher education, pricing these great schools out of reach of working-class Michiganders. We've cut support for roads, bridges and infrastructure. Revenue sharing to cities and towns has been slashed. Capital expenditure on Michigan parks has plummeted.

The governor's 2012 budget proposal, while hinting at better things to come, continues these trends.

Low taxes alone do not make states prosper. Even before the governor's proposed changes take effect, the Tax Foundation 2011 Business Climate index rated Michigan 17th in the country in business climate. Minnesota -- the most prosperous Great Lakes state, with more job creation and higher incomes than Michigan -- is 43rd in the same ranking.

Reliable studies suggest that investments in early childhood education yield $2 in long-term economic impact for every dollar invested. Ditto for expenditurers on transportation infrastructure and Great Lakes cleanup. Every dollar dedicated to getting a higher education degree versus a high school diploma nearly doubles lifetime earnings -- and taxpaying.

How do we pay for these investments? Notably lacking from the governor's "fairer, more efficient tax system" is taxing the law firms, the doctor's partnerships, the insurance agencies and the consultants that constitute the bulk of today's knowledge services economy. Shouldn't they contribute, too?

We need a good business climate, for sure. We also need, even more, investment in the things that make Michigan's economy grow.

Authors

John C. Austin

Publication: Detroit Free Press

The Next Economy: Economic Recovery and Transformation in the Great Lakes Region

John C. Austin, Jennifer Bradley and Jennifer S. Vey — Mon, 27 Sep 2010 00:00:00 -0400

As the American economy works its way slowly out of the Great Recession, a consensus is developing among public and private-sector stakeholders that simply re-constructing our old economy, one based on highly-leveraged domestic consumption, would be a serious mistake. The nation must instead focus on building the next economy, one that is oriented towards greater exporting, powered by a low-carbon energy strategy, driven by innovation, and that creates opportunities for all.

The Great Lakes region, too long tagged with the misleading nickname, The Rust Belt, could show the rest of the country the way forward to the next economy. Although battered by decades of declining economic health, and particularly by the recession, the nation’s heartland still has many of the fundamental resources—top-ranked universities, companies with deep experience in global trade, and emerging centers of clean energy research to name just a few—necessary to create a better, more sustainable, economic model.

This is not to disregard the region’s challenges. Its major metros have neither the economic development strategies nor the transportation infrastructure in place to fully take advantage of their export generating capacity. Many have inefficient physical development patterns, hollowed out urban neighborhoods, and concentrations of energy-intensive industries, and thus remain the epicenters of the nation’s fossil fuel-reliant economy. They lack the early-stage capital and other supports needed to strengthen existing firms and encourage start-up enterprises. And many suffer from deep, entrenched poverty, and have low educational attainment levels compared with their peers nationwide.

With both the strengths and challenges clearly in mind, this report provides a roadmap to economic recovery and transformation in the Great Lakes region, powered by its metropolitan areas. It describes how federal, state, and local stakeholders can leverage the region’s substantial assets to create a more productive, sustainable, and inclusive economic future.

The report finds:

First—The Great Lakes region, particularly its metropolitan areas, has significant resources essential to creating the next economy:

Global Trade Networks —These networks, developed in large part by the auto industry, are critical to an export economy. Seven Great Lakes metros—Dayton, Detroit, Grand Rapids, Indianapolis, Milwaukee, Toledo, and Youngstown—are already among the country’s top 20 metro areas in terms of the share of their metro output that is exported. In particular, Great Lakes metros can capitalize on the growth potential of knowledge exports, as they have a concentration of top universities and associated medical complexes.
Clean Energy/Low Carbon Capacity — Industries and universities in Great Lakes metros have created the research capacity and manufacturing prowess needed to build a clean energy, low-carbon economy. They have an outsized ability to lead on wind and solar renewable component manufacturing, and to capitalize on the “green-blue” potential of the Great Lakes and their waterways. The region’s research and innovation infrastructure is already spurring the development of new products and processes: Michigan, Ohio, and Illinois are among the top states in terms of green tech patenting, focused on new technologies in battery power, hybrid systems, and fuel cells.
Innovation Infrastructure — Great Lakes metros have the industrial and institutional infrastructure necessary to power an innovation economy. The 21 largest Great Lakes metros alone are home to 32 major public and private research universities, which attract substantial federal research investment. The region produces approximately 36 percent of America’s science and engineering degrees each year. Between 2001 and 2007, an average of nearly one-third of the country’s patents each year were awarded to the Great Lakes states.
Opportunities — Like innovation, opportunities grow in the presence of a robust educational network, such as the one that exists in the Great Lakes region. In addition to its public and land grant universities—the latter created in the 19^th century to promote agriculture, science, and engineering—the region is also dotted with community colleges, which help the region’s workers develop skills and credentials necessary to secure jobs in the region’s industries, and in so doing maintain a pool of skilled employees to attract and support them.

Second — To realize the promise of the next economy, federal, state, and metropolitan leaders should join with the private and philanthropic sector to:

Invest in the assets that matter: innovation, infrastructure, and human capital
Devise new public-private institutions that are market-oriented and performance-driven.
Reimagine metros’ form and governance structures to set the right conditions for economic growth

Voices from the Region
As part of this project, a number of scholars, practitioners, and policy experts from Great Lakes metros, and beyond, contributed their recommendations for how the federal government could support the region’s transition to the next economy. These recommendations, discussed in a series of briefs, focus on a range of issues including workforce policy, manufacturing, higher education, transportation, and water policy.

The Federal Role in Helping Incumbent and Dislocated Workers Adjust to the New Economy » (PDF)
Randall Eberts and George Erickcek

Strengthening American Manufacturing: A New Federal Approach » (PDF)
Susan Helper and Howard Wial

The Federal Role in Leveraging America’s Community Colleges » (PDF)
James Jacobs

The Federal Role in Supporting Auto Sector Innovation » (PDF)
Thomas Klier and Christopher Sands

The Federal Role in Supporting Public Universities’ Global Missions » (PDF)
Lou Anna K. Simon, Richard M. Foster, and John C. Austin

Developing a National Strategy for Goods Movement » (PDF)
Robert Puentes

Leveraging the Great Lakes Region’s Water Assets for Economic Growth » (PDF))
G. Allen Burton, Don Scavia, Samuel N. Luoma, Nancy G. Love and John C. Austin

Additional Resources
Hubs of Transformation: Leveraging the Great Lakes Research Complex for Energy Innovation »
James J. Duderstadt, Mark Muro, and Sarah Rahman

Turning Up the Heat: How Venture Capital Can Help Fuel the Economic Transformation of the Great Lakes Region »
Frank Samuel

Facing the Urban Challenge: Reimagining Land Use in America's Distressed Older Cities—The Federal Policy Role »
Alan Mallach

Downloads

Authors

Publication: Brookings Institution

The Great Lakes: Mid-America’s Might

John C. Austin and Jennifer S. Vey — Mon, 27 Sep 2010 13:42:00 -0400

As seen here on the Avenue, our colleagues have been hammering on the fact that, just as the nation’s metropolitan areas went into the Great Recession carrying their own unique economic baggage, so too, are they are emerging from it differentially equipped to participate in the economy to come.

The metros of Great Lakes, region, for example, did not enter the crisis on the housing and finance-fueled bubble that “popped” the economies of many metros in the south and west. Rather, many of these communities were hit by a one-two punch: a financial crisis that froze already struggling credit-dependent auto and manufacturing sectors and a broader housing market and economic collapse that crushed already stressed workers and families. All told, since the second quarter of 2007, the 21 largest metros in the region have lost a combined 1.3 million jobs.

The severity of these issues nudged the administration to provide special aid to the region, through the stimulus, the bailout of Chrysler and GM, and the establishment of the White House Council on Auto Communities and Workers—efforts that together helped staunch some of the bleeding. But Washington’s ability to help has largely run its course. With budget concerns significantly curbing the nation’s appetite for big federal moves, innovation will necessarily come from new (and perhaps existing) governors and their public and private sector counterparts in the region’s metros.

These leaders have a daunting job in the face of state and local budget freefalls, and will need to demonstrate both pragmatism and creativity under conditions of continuing scarcity and uncertainty. But the region, driven by its metropolitan areas, has a bevy of strengths they can exploit to gain real traction in the next economy—an economy that will, by necessity, be export-led, low carbon, and innovation-fueled, and which will provide better opportunities for larger numbers of people. Our new work takes stock of these assets, including:

global trade networks and relationships that will enable it to expand the volume of goods and services sold overseas, creating new jobs at home and helping the nation meets its goal of doubling exports
firms and universities that have the research horsepower and manufacturing know-how to be leaders in the invention and production of clean technologies and processes
the industrial and institutional infrastructure that can help spur economy-building innovations, and ultimately convert them into new businesses, new products, and new jobs
And a robust network of community colleges and public universities that can help provide the education and training residents need to move up the opportunity ladder

Seizing the opportunities afforded by the next economy is not for the faint of heart, however. Tempting though it may be to try to hunker down against the winds of dramatic economic change, leaders in the Great Lakes region must instead push it to be at the vanguard of even more disruption and change. Hard hit by globalization, the region needs to be the most globally-oriented in the country, building on its export base to create even more innovative products and services for global consumers. Creator of the high-carbon American lifestyle of the last century, the region must pivot to become the source for low-carbon technologies, and new, greener urban infrastructures and communities. And lulled into complacency by an economic structure that didn’t require, and therefore didn’t value, education, the region must become an example of how to create an economy that offers opportunity for all to gain the knowledge and skills they need to compete.

Crisis, in short, must be used to spur innovation and renewal.

To be sure, the federal government still has to take on some macroeconomic fundamentals: trade, currency, carbon pricing strategies, and investment in the nation’s infrastructure and education systems. But our report argues that state and metro leaders need to put forth their own set of smart reforms and investments, from developing cluster-based strategies to boost metropolitan exports, to developing tough, merit-based approaches to funding transportation projects, to creating land banks that would allow them to better manage land for long-term planning and economic development.

The region’s leaders may very well be up to the task. Governors and mayors of both parties, backed by shrewd business, civic, philanthropic, and labor allies, can often be more courageous and innovative than those trapped within the Beltway. As such, they can help the region create a new and improved narrative about itself, one based not on how it failed to adapt to the economy we just left behind, but on the important role it will play in the one that lies ahead.

Authors

Publication: The Avenue, The New Republic

Image Source: © Rebecca Cook / Reuters

Drilling for Oil in the Great Lakes

John C. Austin — Thu, 10 Jun 2010 15:36:00 -0400

One of the annual Great Lakes political rites of late spring is the leadership policy conference on scenic Mackinac Island, the car-less Great Lakes getaway, at which Mackinac’s Grand Hotel, with the longest front porch in the world, is weighed down by 1500 of Detroit and Michigan’s leading business, media, and political figures, along with the odd early presidential aspirant.

This being an election year, the manure being spread by seven Republican and Democratic Michigan gubernatorial hopefuls, along with visiting keynoter and maybe presidential candidate Newt Gingrich, rivaled the piles left by Mackinac’s famous horse-drawn taxis.

An unprecedented (and unlikely to be repeated) bi-partisan gubernatorial debate hosted by the Detroit Regional Chamber of Commerce saw seven Michigan candidates to replace term-limited (and sand-blasted by Michigan’s auto and economic collapse) Governor Jennifer Granholm deal with a host of hot-button topics.

None was more interesting, given the BP moment, than the question posed by moderator Tim Skupick: “If the Canadians were to start drilling for oil in the Great Lakes, would you try to stop it, and if so, how?”

The question was not a wild hypothetical. Canadian provinces have been considering exploiting more of the significant gas and oil deposits under the Great Lakes. Drilling has been done on land for years. Drilling in the Lakes has been episodically proposed by various states, and most recently, Canadian provinces. Michigan’s legislature was moved in 2002 to ban Great Lakes drilling, and pushed a federal law in 2005, as proposals for “slant drilling”—getting at oil and gas under Michigan proper—from “out at sea” in the Great Lakes were seriously being pursued.

Michigan straddles almost 4,000 of the 10,000 miles of Great Lakes frontage; but eight other states and two Canadian provinces—including leading metros like Chicago, Milwaukee, Buffalo, Cleveland, and Toronto to smaller Duluth, Green Bay, and Traverse City—share the same waterfront real estate.

Given the Gulf-induced drilling backlash—all the candidates—Republicans and Democrats—groped to outdo each other in demonstrating their zeal to prevent such a thing with varying degrees of credibility given Canada is a sovereign nation and a lack of clarity concerning what, if anything, a governor could do.

Some of the answers: “I’d fly to Ottawa; I’d phone the premier of Quebec; I’d lobby the Obama administration to stop it; a governor can’t do anything, but I’d try.”

At a moment when the nation is just beginning to pour serious dollars into cleaning the Great Lakes, repairing damage done by the prior carbon-fueled industrial era’s water abuse; and prompted in no small part by our work demonstrating the huge economic importance of clean Great Lakes to the long-term economic revitalization of these industrial metros, there have been some ironic recent twists in the political winds.

Prior to the Gulf BP disaster, not only was Great Lakes drilling once again sneaking up as a real and potentially “needed” economic opportunity (albeit with Canadians as the stalking horse), but Michigan just gained an unprecedented windfall to maintain its once crown jewel state parks system from the latest round of oil and gas leases that are routinely auctioned. Michigan’s park system, like a lot of Michigan, has been decimated by 10 years of economic and state budget collapse, leading to deferred maintenance and park budget cuts. The recent round of land-based oil and gas exploration leases earned a surprise $178 million for the parks trust fund—almost as much as the $190 million total netted since the program began in 1929.

Making a choice in the Great Lakes devil’s bargain between long-term economic gain by capitalizing on its spectacular freshwater coast as a place-defining, people attracting magnet or exploiting the rich resources that lie below the Great Lakes, and maybe wrecking the place again, will be held at bay due to the BP moment. But the underlying tensions and Faustian political choice remains.

Authors

John C. Austin

Publication: The Avenue, The New Republic

Image Source: © Reuters Photographer / Reuters

Great Lakes are Dead, Long Live the Great Lakes

John C. Austin — Tue, 01 Jun 2010 17:28:00 -0400

The portion of the blogosphere inclined to noodle over Brookings State of Metro America report, included some who now ask, “whither the Rust Belt?” and “whither the Brookings Great Lakes Economic Initiative?”.

I’m pleased to say all are alive and in forward-looking form. The Great Lakes Economic Initiative developed several years ago, not out of a DC-based “mega-region” overlay, but as I traded notes from my years as an elected official and public policy-shaper in Michigan and teamed up with similarly situated political, business and civic leaders from Cleveland, Pittsburgh, Milwaukee, and elsewhere around the region. We basically said, “Don’t we have a similar economic and cultural story? Aren’t we trying to treat the same problems; and leverage the same assets? Isn’t there more we can do working together to accelerate our economic transition?”

At the same time Dick Longworth, a Pulitzer prize-winning former journalist, documented the shared Midwestern and cultural reality in his book Caught in the Middle: America's Heartland in the Age of Globalism.

The basic story line of the Great Lakes states was of a region uniquely rich in raw materials and fertile land that became the breadbasket of the growing country, then the world’s manufacturing innovation and creation center.

As the grains of the plains came to Minneapolis-St. Paul, it became the flour-milling and export capital of the world, home to Pillsbury and General Mills. As pigs were slaughtered in Cincinnati, making soap as a byproduct, the consumer products giant Proctor and Gamble grew. As buggy makers in Flint and Detroit were converted by Henry Ford and Billy Durant into Ford and GM, so too metal-benders for farm equipment in Grand Rapids starting making chairs for Steelcase and Herman Miller, electronics innovators in Dayton led to EDS and AC-Delco, iron ore from Duluth-fed US Steel in Gary, Cleveland and Buffalo.

Given its natural bounty (and enabling policies like land giveaways, canal and railroad construction) the region grew rapidly in the 1800s and became densely- populated. Then, most of us made our living on farms, or work linked to farms in small towns. This same region then converted its bounty to finished agricultural and manufactured goods, and it arguably created and ruled the factory-era when 60% of us worked in blue-collar industry.

This region led America in the first two waves of economic organization: the farm, and subsequently the factory economy. It is today making a spotty but accelerating transition to leadership in the 3^rd wave, Peter Drucker’s knowledge economy. This new economy was enabled by the internet (largely created by the Big 10 universities) with its concomitant urbanization and metropolitan agglomeration of people, ideas, innovation and jobs. People once moved off the farms to factories; now they are moving to metro-centered offices, labs, studios, universities, hospitals, and related work locations.

So what do metros of this region have in common, if their stories now diverge? Minneapolis-St. Paul is not the flour-milling capital of the world anymore; Chicago is not the meat-packing capital; nor is Pittsburgh the Steel City. All are more diverse (in all good ways)—than they once were. Rochester, New York was once almost as much a company town beholden to Eastman Kodak, (and experiencing similar magnitude of job losses) as Flint, Michigan with GM. They are in different places now.

Beyond the still-significant regional integration of their economies and supply chains and importance of lessons learned from true peers with similar “bones”, the unique economic histories and cultural experiences during the 19^th and most of the 20^th centuries leave many common socio-economic residues for good and for ill across most of the region.

The good: leading private/public centers of innovation, technological skill, global networks, education institutions, and natural infrastructure. The ill: low education attainment levels, lagging entrepreneurship, aging infrastructure, industrial pollution residues, a dated benefits system , fractured and multiple government units, and a culture of protecting the past, versus embracing the future.

So metros of the region have a huge stake in figuring out how to capitalize on their water assets as a source of “clean-tech” innovation and jobs, and lakefronts as economic draws—versus water as an input to making paper and steel, or to ship bulk commodities.

The world’s leading axis of research universities can be fulcrums for solving the nation’s and world’s problems in energy, sustainability, health care and medicine, new materials and can accelerate the transition to knowledge economy leadership

The nation-leading network of community colleges can be leveraged to retool the skills of today’s manufacturing workforce, for tomorrow’s green- and health-related jobs

The engineers, IT specialists, and designers laid off by Delphi in Kokomo and Dayton can be the spark for the next round of “gazelle” firms in the country, with appropriate support, training, and early stage capital.

This is the work to do across the region – to accelerate the transition of our unique competencies to leadership in a new era, and the next economy. As my colleague Alan Berube noted — the question for us all, and Brookings in particular, is “what can public policy do to help?”

Authors

John C. Austin

Publication: The New Republic, The Avenue

Image Source: © Allen Fredrickson / Reuters

Financial Excess Still Claiming Car Country Casualties

John C. Austin — Fri, 21 May 2010 13:42:00 -0400

In Michael Lewis’ disturbing but illuminating book unearthing the machinations behind the global financial crisis, The Big Short, one of the Wall Street investors enmeshed in creating the web of sub-prime mortgage-backed securities and related derivatives reports on how he knew the bubble was going to burst. It was when he (somehow!!) learned from a Las Vegas prostitute that she owned five homes, financed with sub-prime ARMs, ready to implode.

As Washington (hopefully) gets financial reform done to restrain the “animal spirits” (to borrow one of Alan Greenspan’s favorite phrases) of investors and borrowers alike, I was reminded of the economic havoc wreaked by this orgy of incestuous investing at a summit sponsored by Brookings and the Obama administration on the future of auto-impacted communities.

Local mayors, business, labor leaders, civic, and philanthropic leaders—along with governors and members of Congress from auto communities—took stock of the damage, their own and the administration’s efforts to repair it, and what needs to be done next to aid the metros of auto country to accelerate their recovery.

To say the hard-hit auto communities of Michigan, Ohio, Indiana and the rest of the industrial Midwest did less financial sleeping around than the real estate bubble communities of Vegas, Florida, and the coasts is an understatement. The workers in these communities were too busy furiously trying to retool their own skills and industries in the face of job loss and restructuring in autos and manufacturing than to try and finance five homes with bad loans. Then the global financial crisis hit them with a second punch to the gut—effectively destroying credit-dependent markets for the things they made (autos and the expensive parts that go into them).

The biggest tragedy is that these Wall Streets “markets” for synthetic mortgage-backed securities and credit-default swaps had absolutely nothing to do with what we want financial markets to do well—put money efficiently into economic growth generating investment: plants, equipment, new technologies, new goods and services. When credit markets “froze” thanks to the collapse of these financial “products”—it put a deep-freeze on the work of those in auto communities—trying to make and invent new real products.

At the summit I talked Sue Osborne, the mayor of my former hometown of Fenton, Michigan, a solidly blue collar bedroom community 15 miles south of Flint—a community which should be cheered by the announcement of a new federal plan to help clean up 90 former GM industrial sites, and position them for new development; including the massive and iconic Buick City complex in Flint.

Meanwhile though, auto suppliers and auto-related firms are still reeling from the effective freeze on lending by banks to anything auto-related—even to finance their move to clean energy components, medical devices, or other new product lines. Mayor Osborne told me Creative Foam, a Fenton auto supply firm, and a leading corporate citizen of 40 years, can’t get the loans to finance their retooling to make non-auto products—and was at risk of going out of business.

Larry Summers, head of the National Economic Council, noted in his remarks that loosening credit is one of the basic building blocks for a manufacturing revival and reiterated a call for Congress to pass a proposal modeled on a Michigan program to provide loan guarantees for manufacturers looking to diversify their product lines.

On the ground in Fenton, Flint, Kokomo, and Mansfield and the other communities represented at the summit the economic survival clock is ticking, like a real-life version of “24.” Let’s hope we can see more action, and a happy ending.

Authors

John C. Austin

Publication: The Avenue, The New Republic

Image Source: © Rebecca Cook / Reuters

Making Washington a Partner in Detroit's Next Economy

Thu, 11 Feb 2010 16:00:00 -0500

Event Information

February 11, 2010
4:00 PM - 5:00 PM EST

College of Creative Studies
201 E. Kirby Street
Detroit, MI

On February 11, The Brookings Institution's Metropolitan Policy Program and Time Inc. hosted Reimagining Detroit: Making Washington a Partner in Detroit's Next Economy at the College of Creative Studies in downtown Detroit.

Time magazine's Assignment Detroit correspondent Steven Gray joined Detroit Mayor Dave Bing, John Austin, Brookings non-resident senior fellow; The Skillman Foundation President, Carol Goss; New Economy Initiative Chair Steve Hamp; for a discussion on invigorating the Washington/Detroit relationship, with an emphasis on connecting Detroit's emerging economic development plan with help coming from Washington.

The event, drawing a crowd of over 250 people, provided a timely and open discussion on Detroit's transition to the "next economy," with a focus on federal policies that can better leverage economic transformational goals and strategies already under way in Detroit.

For media coverage of this event, please visit the following:

Reinvent Detroit - Editorial Staff - The Detroit News

Will Metro Detroit Get Rebuilding Act Together? - Amber Arellano - The Detroit News


Panelists speak at Reimagining Detroit: Making Washington a Partner in Detroit's Next Economy	Detroit mayor Dave Bing and Steven Gray of Time Inc.

Steve Hamp of New Economy Initiative and Carol Goss of The Skillman Foundation	Detroit Deputy Mayor Saul Green and John Austin, Brookings non-resident senior fellow

Participants

Panelists

David Bing

Mayor of Detroit

Carol Goss

President and CEO, The Skillman Foundation

Steven Gray

Time Inc. Assignment Detroit Correspondent

Steve Hamp

Chairman, New Economy Initiative

Feds Pony Up Toward Great Lakes Water ‘Magic’

John C. Austin — Wed, 04 Nov 2009 12:16:00 -0500

If your image of Milwaukee is largely derived from Laverne and Shirley re-runs, think again. My recent visit with leaders of Milwaukee’s Water Council showed me how communities in the Great Lakes are beginning to tap the “magic” of water for economic revitalization (the words of Milwaukee Mayor, and maybe-gubernatorial candidate, Tom Barrett).

The Milwaukee River running through town used to be a mess, and the only thing that looked out on it was the backs of factories. Metropolitan Milwaukee Association of Commerce CEO Tim Sheehy explained, “We opened it up for development; now it is lined with shops, restaurants, condos and offices. When we bring CEOs to town, we don’t put them in a car. We put them in a boat and show off our city.”

These efforts in Milwaukee and other Great Lakes metros are getting a major shot in the arm with President Obama signing a bill that provides $475 million in Great Lakes cleanup dollars. This “down-payment” on a long term multi-billion dollar federal-state-local plan to clean water and reboot municipal waste systems (so beaches are open and not closed for weeks during the year); to cleanup toxic hot spots still lingering in Great Lakes harbors and rivers, and protect and reclaim wetlands and scenic areas was promised by then-candidate Obama last year.

The promise he made during the campaign to follow up on a Bush-era Great Lakes clean up plan that had been languishing in Congress, was muscled forward, aided by the Healthy Waters, Strong Economy economic analysis of its prospects.

The 2007 report provided compelling empirical data that this cleanup was much more than a nice thing to do for the environment, it could also be a jobs and economic development engine for Wisconsin, Michigan, Illinois, Minnesota, Ohio, Indiana, Pennsylvania, and New York--helping these industrial states reboot as attractive choice places to live and work, as well as fuel their clean-technology industries.

So these efforts are now paying off--and there is more to come. Not only is Milwaukee a very attractive place, it is becoming a global leader in a cutting edge arena. Milwaukee was recently designated a UN global compact city for water and has been invited to join six other global cities--Prague, Shanghai, Berlin, Paris, and Rabat (Morocco)--working together to learn, model and share sustainable water uses for the planet.

A vital ingredient in beer (clean water) is now a vital ingredient in global sustainable development. Milwaukee and other Great Lakes cities are beginning to bottle the “magic."

Authors

John C. Austin

Image Source: © Allen Fredrickson / Reuters

An Analysis of Air Travel Trends in the Great Lakes Region

John C. Austin, Robert Puentes and Adie Tomer — Thu, 08 Oct 2009 00:00:00 -0400

An analysis of commercial air travel patterns for the major metropolitan areas of the Great Lakes between 1999 and 2009 reveals the following:

Similar to the national trends, air passenger travel in the Great Lakes region increased steadily since 1990, moving in step with economic growth, and, accordingly, it has also fallen during the recession. Many metropolitan areas vastly exceeded the national growth rate between 1999 and 2009: Akron, Buffalo, Dayton, and Milwaukee. Conversely, some witnessed passenger declines; St. Louis, Pittsburgh, Toledo, and Cincinnati experienced the steepest declines.
Measured by the number of connections, the Great Lakes have three of the country’s 10 most connected metropolitan areas and another three that rank in the top 25. Metropolitan Chicago has 133 connections to other metropolitan and micropolitan areas, which ranks second in the country. Detroit and Minneapolis are not far behind with 122 and 114 connections, respectively.
One of the top 10 most travelled air corridors in the nation and 21 of the top 100 lie in the Great Lakes. The corridor linking Chicago to New York attracted over 4.7 million passengers during the last twelve months to rank fourth in the country by volume. Overall, Chicago boasts twenty corridors in the nation’s top 100.
The Great Lakes metropolitan areas experience a range of on-time performance, although three of the region's four major hubs exceed national on-time averages. During the last year, 79.1 percent of arriving flights in the major Intermountain West metros were on time, similar to the national average of 78.9 percent. However, performance was mixed between the twenty metropolitan areas.

The recession and significant contraction in the Great Lakes region’s auto and related manufacturing industry has recently exacerbated economic woes and an out-migraton dynamic. Hence, it should come as no surprise that air travel patterns have followed suit. A return to economic growth will challenge those growing regions and the most connected metropolitan areas.

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The Vital Connection: Reclaiming Great Lakes Economic Leadership in the Bi-National U.S.-Canadian Region

John C. Austin, Britany Affolter-Caine and Elaine Dezenski — Mon, 24 Mar 2008 12:00:00 -0400

The Great Lakes economic region, comprised of the U.S. states bordering the Great Lakes, the upper Mississippi and Ohio watersheds, and the Canadian provinces of Ontario and Quebec, has a storied economic history.

The waterways of the five Great Lakes—along with the Ohio, Mississippi, and St. Lawrence river systems—first connected the rich natural bounty of North America’s interior with the ocean and the rest of the world. Later, the conversion of abundant resources to processed agricultural and finished manufactured goods made the Great Lakes region an industrial colossus, and placed it at the center of U.S. and Canadian economic development. The area has served as the launching pad for new industries and innovations, birthing the oil, steel, auto, and aviation industries; leading the global “green” agricultural revolution; and boosting such recent technological “game-changers” as the Internet.

Unique to this relationship has been a largely invisible boundary, historically the longest unguarded border between two nations. Understanding their economic interdependence, the region was a first mover to open markets—from early reciprocity agreements to the U.S.-Canadian Auto Pact (1965), the U.S. Canadian Free Trade Agreement (1989), and the North American Free Trade Agreement (1994). The resulting interaction and free flows of people, capital, ideas, and goods across the border enabled the growth of great industries, gave rise to a strong blue-collar middle class, and created the largest bi-national economy on earth.

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John C. Austin
Britany Affolter-Caine
Elaine Dezenski

Place-Specific Benefits of Great Lakes Restoration

Soren Anderson, John C. Austin, Paul N. Courant and Robert E. Litan — Mon, 24 Mar 2008 12:00:00 -0400

Introduction

Previously, “Healthy Waters, Strong Economy: The Benefits of Restoring the Great Lakes Ecosystem", provided a benefit-cost analysis of a major infrastructure program to improve water quality in and around the Great Lakes: the federal-state Great Lakes Regional Collaboration (GLRC) Restoration Strategy. Benefits were estimated in two ways, giving roughly equivalent answers.

Under the first approach, we summed the best available estimates of the various individual benefits the GLRC Restoration Strategy could be expected to generate—additional tourism, fishing and recreation, benefits to property owners from cleaning up “areas of concern,” reduced water operations costs for municipalities, benefits from new technology developed because of the cleanup program, and other unquantifiable benefits—and concluded that the benefits could reach as high as $50 billion.

Our second approach was to value the benefits on an aggregated basis by estimating the increase in values of residential property that would be affected by the cleanup. As we noted in our earlier report, “[I]n principle, the aggregate estimate of the increase in expected property values should equal or at least approximate the sum of the estimated values of each of the specific environmental and health benefits associated with living near bodies of water” that have benefited from eco-system restoration.

In this supplement, we use this second “aggregate” methodology to provide ranges of the approximate economic benefits of the GLRC Restoration Strategy for each of the eight major metropolitan areas bordering on the Great Lakes.

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Soren Anderson
John C. Austin
Paul N. Courant
Robert E. Litan

Ask Candidates How They'll Help Fix Michigan

John C. Austin and Bruce Katz — Tue, 11 Mar 2008 00:00:00 -0400

The road to economic transformation in southeast Michigan is not an easy one. While still reeling from the loss of lots of good-paying auto-related jobs, the attempts to move forward economically hit a further detour with the sub-prime credit fiasco.

We see a growing understanding in Michigan and the Detroit area that the path to prosperity is about people getting fundamentally better educated than the previous factory economy demanded of them. It also means diversifying the economy to exploit new areas of opportunity in energy, design and engineering, freshwater technology, arts and entertainment, and as a logistics and trading center in North America.

What we don't see is a federal government, or the presidential campaigns, having any understanding of how it could assist metropolitan communities such as Detroit that are the hardest hit by the nation's move from an industrial to a knowledge economy.

Around the country, we are solidifying our status as a metropolitan nation. Our metropolitan communities are the economic activity centers of the global economy. This is as true in Michigan as it is in the rest of the country; 53% of Michigan's gross state product is generated in the greater Detroit area.

All of the things Detroit and southeast Michigan are trying to do -- largely unaided -- to transform the regional economy could be significantly helped by a federal government that was a partner, not a delinquent.

For instance:

Federal investments in next generation energy solutions to fuel the research and development engines at Michigan universities and energy technology firms. The brains and hands that shone in now lost auto jobs would find new success in energy technology jobs, from the design of new batteries to the manufacture of precision wind turbines.
Federal transportation policy that replaces earmarks and bridges to nowhere, with flexible resources to support the aerotropolis and bridges to Canada that can fuel regional commerce.
Meaningful federal housing policy to dramatically increase the ability of communities to develop vitally needed market-driven, mixed-use and mixed-income neighborhood development.
A sane border crossing and security policy to accelerate trade and transactions with our trusted neighbors.
Finally, follow through on a planned $25-billion program to clean up the Great Lakes, in part by improving aging sewer and infrastructure systems. A recent study completed by Brookings demonstrated that a federal follow-up would have at least an $80 billion-$100 billion economic benefit for Michigan and the other Great Lakes states.

It is imperative that Michigan and its sister states in the industrial Midwest not wait to catch a break -- but make their own breaks by demanding to know from the aspirants for president and our federal elected officials what they are specifically and tangibly doing to deliver for economic transformation.

Brookings is attempting to help by working with metropolitan communities across the country as part of its Blueprint for American Prosperity initiative -- developing practical federal policies that support the vitality of metropolitan communities such as Detroit. A major step forward was recently taken when Brookings joined the Detroit Regional Chamber of Commerce and 30 other chambers from the Midwest to come together and develop a set of federal action priorities.

There are eight months before we choose our next president. So it is time to keep it up, and keep it focused, and insist the next president and federal government are partners in Michigan's economic transformation, not merely passengers just breezing through to say hello.

BRUCE KATZ, is vice president of the Brookings Institution, and directs Brookings' Metropolitan Policy Program. JOHN AUSTIN is vice president of the Michigan State Board of Education, a nonresident senior fellow with the Brookings Institution of Washington, D.C., and director of the Brookings Great Lakes Economic Initiative.

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Publication: The Detroit Free Press

"The Vital Center": A Federal-State Compact to Renew the Great Lakes Region

John C. Austin — Mon, 01 Oct 2007 12:00:00 -0400

Brookings John Austin provided Great Lakes regional economic context for a forum of Ohio and Pennsylvania business and civic leaders convened by Congressmen Jason Altmire (PA), and Tim Ryan (OH) to develop strategies for growing the bi-state regional economy.

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John C. Austin

Great Lakes: Healthy Waters, Strong Economy

John C. Austin — Wed, 05 Sep 2007 12:00:00 -0400

In this audio news conference presentation, Vital Center author John Austin discusses the importance of the benefits of restoring the Great Lakes ecosystem.

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The Broad Benefits of Restoring the Great Lakes

John C. Austin, Paul N. Courant, Robert E. Litan and Soren Anderson — Tue, 04 Sep 2007 12:00:00 -0400

The Great Lakes are one of America’s most important—and often-overlooked—natural features. Together, they account for 90 percent of the United States’ and 20 percent of the world’s surface fresh water. The Great Lakes also directly impact the lives of the roughly 35 million people who live in the cities, states, and Canadian provinces surrounding them, providing drinking water and recreation, commercial transportation, and both tangible and intangible quality of life benefits.

However, the Great Lakes and surrounding areas face numerous threats to their health and utility. This report summarizes the major findings of a more in-depth study—"America’s North Coast: A Benefit-Cost Analysis of a Program to Protect and Restore the Great Lakes" (pdf)—of the benefits and costs of the federal-state Great Lakes Regional Collaboration (GLRC) Strategy by the same authors. It begins by outlining the major elements of the restoration strategy, and the costs of cleaning and preserving the Great Lakes ecosystem. It then describes the results of a rigorous analysis of the GLRC Strategy, highlighting the economic benefits of its implementation. The report concludes by discussing the policy implications of this analysis, arguing that, because the restoration plan outlined in the GLRC Strategy is likely to produce economic benefits well in excess of its costs, federal and state policy makers should act on its recommendations.

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John C. Austin
Paul N. Courant
Robert E. Litan
Soren Anderson

The Future of the Great Lakes Economy: A Federal-State Compact and Opportunity

Thu, 28 Jun 2007 08:30:00 -0400

Event Information

June 28, 2007
8:30 AM - 12:00 PM EDT

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

The Great Lakes region of the United States made America a global agricultural and industrial powerhouse. Today, this highly integrated twelve-state economic region-too often called the Rust Belt- faces the daunting task of reinventing itself for leadership in a global knowledge economy, and its success in doing so is an issue of vital national importance.

On June 28, the Brookings Metropolitan Policy Program hosted the first in a series of forums to highlight ways the federal government can help bolster the economic assets of the Great Lakes Region. Rep. Vernon Ehlers (R-Mich.), a longtime proponent of revitalizing the region, provided opening remarks.

This two-panel discussion also included experts from the communities, universities, foundations and associations in the Great Lakes region. Panelists discussed the innovative efforts currently underway to boost the economic competitiveness of the region, such as technology, innovation, and environmental stewardship; and offered federal policy recommendations designed to foster the Great Lake Region's continued growth as a vital economic engine for the nation in the years ahead.

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20070628greatlakes

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Vernon Ehlers

U.S. Representative (R-Mich.), Co-Chair, Great Lakes Congressional Caucus

The Great Lakes: A World-Leading Bi-national Economic Region

Britany Affolter-Caine, James Milway and John C. Austin — Wed, 28 Mar 2007 00:00:00 -0400

In this presentation to a meeting of Canadian federal and provincial officials, Toronto area civic and academic leaders, and city officials, John Austin and Britany Affolter-Caine previewed the upcoming report on the bi-national Great Lakes regional economy and shared strategies for fueling economic growth across boundaries in the region.

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Britany Affolter-Caine
James Milway
John C. Austin

Publication: Ontario Investment and Trade Services

The Vital Center: A Federal-State Compact to Renew the Great Lakes Region

Britany Affolter-Caine, Bruce Katz and John C. Austin — Mon, 05 Mar 2007 00:00:00 -0500

Bruce Katz, Vice-President of the Brookings Institution, and John Austin, Non-Resident Senior Fellow, briefed House and Senate staff members invited by the Great Lakes Congressional Caucus Leadership, on the federal policy implications emerging from the Great Lakes Economic Initiative, and the Vital Center Report.

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Britany Affolter-Caine
Bruce Katz
John C. Austin

Publication: Capitol Hill Briefing