Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
How to Deal with “Left Behind” America
Recent attention — thanks in good part to the 2016 elections — on inequality and mobility issues has focused on America’s “left behind” Appalachian and Rust Belt regions, such as depicted in Hillbilly Elegy. A couple of recent Economic Innovation Group reports add context.
One illustrated the lopsided nature of the post-recession recovery, finding that (a) 20 counties alone generated half of the country’s new business establishments, and (b) only 15 large counties enjoyed their strongest recovery in the 2010s. A more recent analysis — based in part on data from Harvard’s Equality of Opportunity Project — finds 51% U.S. counties home to 60% of kids exert “a negative impact on children’s future earnings.” As that report concludes, “Most children in the United States are growing up today in counties with a poor record of fostering upward mobility. As the geography of U.S. economic growth narrows, it may become even harder to prevent further retreat of economic mobility”.
One possible response to all of this is the most obvious one: assist people in moving from distressed areas to where the jobs are. The issue of declining US geographic mobility is a key theme of economist Tyler Cowen’s new book, “The Complacent Class“. My AEI colleague Michael Strain has suggested offering relocation vouchers to the long-term unemployed in high-unemployment areas. “The Obama administration, among others, has urged to cities and counties to rethink their zoning and other land use laws, which affect the housing market in high-growth cities,”impede mobility and thus contribute to rising inequality and declining productivity growth.”
But not everyone will move, of course. So how to make left-behind regions more prosperous? In a new Financial Times commentary, economist Diane Coyle advocates what she calls “universal basic service” that would focus on the communities themselves: quality of public services, schools, infrastructure. Coyle: “If teachers or nurses do not want to move to Detroit and West Virginia . . . then there should be a pay premium large enough to overcome their reluctance. And the quality of service in local transport networks should be as good in declining as in wealthy areas.”
A different version of this idea might be to relocate some federal departments — such as the Labor Department and FBI — out of Washington and to distressed areas. The Economist is skeptical of that idea, noting the “the spillover effects of that sort of employment to outside, private industry are quite small.” Yet it could be a piece of a broader regional development strategy.
For its part, EIG favors more private investment. One possible mechanism is a bill, the Investing in Opportunity Act, which would encourage new investment in distressed communities through tax breaks. On the regulation side, recall this idea from venture capitalist Marc Andreessen which encourages state and local governments to figure out:
Published in Economicswhat domain is (or could be) specific to their region—and then removing the regulatory hurdles for that particular domain. Imagine a Bitcoin Valley, for instance, where some country fully legalizes cryptocurrencies for all financial functions. Or a Drone Valley, where a particular region removes all legal barriers to flying unmanned aerial vehicles locally. A Driverless Car Valley in a city that allows experimentation with different autonomous car designs, redesigned roadways and safety laws. A Stem Cell Valley. And so on.
Typically, the places that are growing are cities. For people to move from a dilapidated township to a booming city, they would be bringing their kids to the worst parts of the city… because of affordability.
Why is it that these areas are booming?
Why aren’t any of these businesses taking advantage of the cheap real estate in these areas? Would building a college there help bring businesses? Access to newly educated workforce?
This has been obvious for years. It is frustrating to see people just now thinking about this.
And we need to beef up our employment offices too.
I just can’t understand why businesses need to be focused in only a few places.
I really want to see the dilapidated towns grow again.
What prevents it? I get readily accessible employee base… but if we demand these people move, why not those people?
There are benefits to small/moderate size town and city living that big city living doesn’t provide…
#1 on my list is fleeing the liberal-ites that infest America’s urban landscape and all attendant issues that follow from them. #2 is concrete and ambitious architects’ pursuit of the most beautiful skyline on earth… as if they could compete with the natural beauty of rural landscapes.
The idea that we would know who to move and where is the kind of top down we can fix it attitude that created them in the first place and ignores the disincentives to work investment and growth we’ve created over the years. I have a simpler idea. Eliminate the minimum wages, allow welfare and unemployment insurance to follow the worker even into his first very low wage job, and insist that able bodied and not so able bodied recipients learn a skill. If we must pay for anything more, give training vouchers but give them to anyone who needs them. Those already employed are probably more able to learn a new skill than people who’ve never had a job or were the first let go, and when the employed move up or out they’ll leave vacancies. Oh yes and drug test. Or just send all of these programs to the States with declining budgets and let the competition and innovation begin. Anything but assuming Washington bureaucrats can manage it from above. How many times must we learn. They cannot and they will not learn because it is not in their interest to learn.
Missing from the list of ideas to address the problem;
Why do we continue to ignore the obvious answers?
If Attorney General Sessions held some highly publicized raids on the meat packing industry, poultry processors, etc. and jailed a few executives for knowingly hiring hundreds of illegals, then had a massive publicity blitz offering assistance to citizens that want to relocate and replace the illegals in those jobs, we could have a start of a renaissance in blue collar employment.