It ain’t sexy, but it works: getting the basics right fosters economic growth

by Ryan Streeter on April 24, 2012. Follow Ryan on Twitter.

In our article today at The American, Joel Kotkin, Mark Schill and I write that growth in the Midwest holds some important lessons for America as a whole. Growth depends a great deal on…

…capitalizing on Americans’ desire to reside where the cost of living and doing business is favorable. As the last Census showed, Americans move in droves to regions where the cost of living is low, businesses face fewer obstacles, and workers have choices. As Wendell Cox and Joel Kotkin have shown, this goes for 25- to 35-year-olds as well as 55- to 65-year-olds. People want options and a good quality of life at a price they can afford.

We write the places like Indianapolis and Columbus are stealing people and jobs from higher cost places like Chicago and New York because the kind of opportunity that exists in these more reasonably-priced regions appeals to a good many Americans. Indianapolis and Columbus may not seem sexy to urbanistas, but they are winning the population game because they get the basics right: cost of living, jobs in growing industries, school quality, and a growing set of amenities that talented people enjoy.

Detroit, as we all know, has really blown it in recent years, which is why it looks like this:

Indianapolis, on the other hand, has gotten the basics right. That’s why it looks like this:

Blue shades show where you’re losing people to on net, and tan/brown shades show where you’re gaining people on net. Detroit has only gained people from other struggling industrial areas. Indianapolis is stealing people from all over the midwest as well as high-cost coastal zones that are supposedly more desirable to live in (according to elite coastal types).

Midwestern success is rooted not in running away from its manufacturing past, as some have said it should, but by embracing it anew, updated for the century we live in. We write:

In the corridor from Madison to Milwaukee, or the outlying areas around Chicago, or the Indianapolis metro area, or even in the Quad Cities on the Iowa-Illinois border, we see higher educational attainment and manufacturing growth occurring together. Cedar Rapids, Iowa, had the highest GDP growth from 2000 to 2010 of any metro area in the Midwest. A new corridor has grown up between Cedar Rapids and Iowa City, home to the University of Iowa; it takes advantage of the region’s historical manufacturing capacity and blends it with new technology. Peoria, Illinois, is second to Cedar Rapids in GDP growth. Peoria is home to 200 manufacturing firms, and it is also a Midwestern leader in college degree attainment.

Brains and brawn will be a big part of the midwest’s future. The same will go for other parts of the country, too, that resist the temptation to go all trendy in their economic development goals and focus rather on making sure they get the basics right and properly understand how traditional industry and talent attraction fit together.

We conclude this way:

[M]iddle America is a clear picture of how much the basics matter: Cost of living, job quality, schools, and opportunities to develop the right skills for the best jobs. The areas within the Midwest that have gotten the basics right are poaching people and companies from the areas that haven’t. Any economic development strategy that ignores the basics in favor of a more stylized theory of growth will usually run off the rails before too long. Americans, at the end of the day, want the places they live to get the basics right so they themselves can build their lives, start their businesses, and raise their children as they wish.