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The Choices We Make

Below is the Nowak Metro Finance Lab Newsletter shared biweekly by Bruce Katz.

 

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In the mid-1930s, Charles de Gaulle, then a French Army colonel, went to visit Leon Blum, the French Prime Minister. The future leader of France reproached Blum about the state of the country’s defenses.

Blum was taken aback, declaring “But we are spending more for defense than the previous Government!” “It is what you are spending it on,’ de Gaulle said, “that I want to discuss.”

What they were spending it on was bigness. The French had the largest — and by most accounts, finest — army in the world. They underwrote huge military budgets. They constructed the most massive defense installation since the Great Wall of China — the Maginot Line.

And when World War II came, all of it collapsed, when German forces circumvented the fortifications, moved rapidly into France and conquered a proud nation in six weeks.

As de Gaulle surmised, France was investing more in fighting the last war than preparing for the next one.

A dramatic story for sure which, on the surface, has precious little to do with the US at the start of 2022.

But I am reminded of this story for several reasons.

First, President Biden’s Build Back Better agenda has reintroduced “bigness” into the US policy lexicon. The enactment of the $1.9 trillion American Rescue Plan and the $1.2 trillion Infrastructure & Innovation Jobs Act have triggered an unprecedented level of federal funding around established and new programs, with grand aspirations for national transformation.

There is no doubt the scale of these investments, in toto, is substantial. But the question is what we are spending these dollars on and whether those expenditures are sufficiently targeted to alter the economic, environmental and social path of our country.

In many respects, the combination of federal investments that have been enacted so far amounts to a very specific form of nation re-building. Substantial resources are being targeted to multiple kinds of infrastructure: transportation infrastructure (e.g., roads, bridges, rail, transit) and water infrastructure to make up for deferred investments over decades: energy infrastructure, to make the sources of energy more renewable and reliable; and digital infrastructure, to remedy geographic disparities made all too clear by the pandemic.

The outsized focus on infrastructure (and mobility infrastructure in particular) has historic precedent. In earlier periods of economic formation, US progress was shaped by such iconic investments as the Erie Canal, the Tennessee Valley Authority, the Hoover Dam, the interstate highway system, and so forth.

But there are limits to this overarching narrative. Infrastructure exists in the specific, not the general. Which roads or bridges get repaired? What transit lines get built? Which parts of a metropolitan area or region get served? Are these project choices in the service of a broader vision of metropolitan prosperity or (just) the insulated and isolated perspective of a separate department of transportation or public authority?

And then some harder questions. Given the allocation of federal funding, what’s the relative division between different kinds of infrastructure investments, say the repair of a federal highway built in the 1950s versus the remediation of industrial brownfields along waterfronts versus the removal of a transportation investment which dissected a community 50 years ago along stark racial lines? The federal government has clearly placed the focus on making up for deferred investments in conventional transportation infrastructure rather than addressing deferred responses to industrial transition, economic restructuring and structural racism.

The devil is in the details, in short. It’s not clear that most places will choose the right mix of investments. And unless we saturate the county with professional capacity and planning resources (the Sustainable Communities Program a decade ago is a good model to replicate), most metropolitan areas (i.e., the bulk of the country) will engage in a classic exercise of horse trading, merely giving the central city and every suburban and rural county what they need to sign onto the deal rather than make transformative bets. The result: the whole will be decidedly less than the sum of the parts; 2+2=3.

Second, federal investments to date are over-indexed on traditional forms of infrastructure and under-indexed on newer forms as well as innovation, place-making and human capital. The US is a collection of urban, metropolitan and rural economies (states are artificial political units rather than cohesive markets) and these places will not get built or re-built by infrastructure alone. Rather, their performance is fundamentally shaped by their investments in distinctive industries, universities, technological invention and deployment, critical employment nodes (e.g., downtowns, innovation districts) and the talent of their workforce.

Washington’s signal to the country in 2021: investments in broader elements of regional competitiveness are not the preferred focus of Congressional action. Without that, infrastructure investment may enhance the ability of people and goods to move around metropolitan areas more freely and efficiently, which is important. But the ability of a metropolis to to grow quality jobs and upgrade the skills of workers so they can participate in that economy may be affected only marginally.

There are options available. Last summer, the US Senate passed the US Innovation and Competition Act. That bill would improve US competitiveness and reduce spatial disparities within the country by investing at scale in tech hubs and other platforms for generating the invention and deployment of next generation technologies in ways that align with the raison d’etre of different parts of the country (e.g., advanced mobility in Detroit, precision medicine in Philadelphia, the Blue Economy in Rhode Island).

We’ve seen an early version of what this could catalyze in the $1 billion Build Back Better Regional Challenge competition that EDA is running as part of the American Rescue Plan. That invitation for places to show how they would scale distinctive industry clusters received 529 applications, a true measure of the hunger out there from a broad array of public, corporate, university and philanthropic stakeholders for 21st century economic development investments. If Washington was engaged in true economy shaping, EDA would be funded at $3+ billion/year for multiple years for just this kind of effort to strengthen distinctive industries and clusters across the country. The result on investment would be off the charts, ultimately leveraging hundreds of billions in other public, private and civic resources in the next decade alone.

And EDA’s investments would be joined by reforms to how other governmental agencies (starting with the Department of Defense, the National Institutes of Health and the Department of Energy), deploy their own innovation funds and locate their personnel. This location point is no small matter. Imagine if the federal government began to move thousands of workers from “behind the fence” of military bases and national energy labs to downtowns and innovation districts around universities and industry clusters. Such a move would recenter growth in the cores of metropolitan areas in the aftermath of the pandemic (when remote work is a real structural threat to employment density) but also could accelerate the speed to market of world-beating technologies across multiple sectors. The long-term impact on cities as disparate as Dayton and St. Louis would be profound.

Finally, the unprecedented level of federal spending is happening alongside the largest threat to our democratic institutions and mechanisms since the founding of the republic. One can easily imagine a scenario where cities, metros and states — and their public, private and civic leadership — spend all their energy and time implementing a plethora of federal programs and are literally too busy to focus on the threats to the republic that are rising and persistent.

Nation building and national suicide may occur side by side in other words. That shouldn’t be surprising at one level. We all play certain roles in our system and, for those at the receiving end of federal money, there is no virtual federal program to “preserve democracy.” (If there was, it would almost certainly be oversubscribed).

But there is a relationship between how the disparate sectors and places within metropolitan areas come together to do grand things and advance the health of democracy in our nation. As many of you know, Jennifer Bradley and I co-authored The Metropolitan Revolution: How Cities and Metros are Fixing our Broken Politics and Fragile Economy. Several extracts from the book struck me as relevant to our travails:

“In a world in which people live, operate, communicate, and engage through networks, metros have emerged as the uber-network: interlinked firms, institutions and individuals working together across sectors, disciplines, jurisdictions, artificial political borders, and, yes, even political parties. In the process, a new kind of metropolitan leadership is being spawned. It is, at its core, a pragmatic caucus, which puts place over party, collaborative over conflict, and evidence over dogma. (emphasis added)

Because [the federal and state governments] are dominated by legislatures that are divided by party and ideology, they reward those who rely on partisan calculus and engage in partisan combat. There, good politics is good policy — for individuals seeking to move the up the legislative ladder. Cities and metropolitan areas think in terms of networks that act together to achieve common goals and encourage collaboration and teamwork. They have a different disposition toward progress and continuous improvement. There good policy is good politics — for individuals seeking to gain community trust and commitment.”

What this means is that while our election system is stress tested like never before, our leaders in cities and metropolitan areas — through formal mechanisms like metropolitan planning organizations and informal, multi-sectoral and multi-party networks — can model a kind of behavior to show that collaboration across jurisdictional and partisan lines can be accomplished even in these times of hyper rancor and division. Collaboration in the service of community progress, particularly if it results in tangible investments that make an economic difference, will surely have some ability to counter the madness that former President Trump has unleashed and continues to stoke.

I don’t want to be pollyannish. Demagogues or cowards who peddle the “Big Lie” about who won the 2020 election are not people who generally engage on the finer points of economic development. And true believers will be true believers. But local progress, visibly delivered and broadly communicated, surely must affect public mood and discourse.

These are complex, uneasy times. But Charles de Gaulle’s warning in 1936 resonates today. Nations make choices. Places make choices. The future of our republic and our communities is not yet written; we are writing it in real time.