July 19, 2002
The Economic Challenge for Smaller Cities
OK, here's your assignment. Jump into your car, drive into the heartland, and pull over when you get to a town of 30,000. Then tell the people who you meet what they need to do to compete in the economy of the future..
You won't have a problem finding a receptive ear. Small town America has been taking it on the chin in Indiana, much as it has throughout the country. And while we may instinctively reject or even resent the depiction of economic decay in rural Sullivan County recently published in the New York Times, there is no denying that the winds of change in population and wealth have proven unfriendly to countless smaller communities.
Agriculture, the economic bedrock of rural America, has long ceased to be a vehicle that can provide meaningful economic growth. The specialized, mechanized, and highly capitalized business of growing food has produced ever-larger farms that employ fewer workers.
More importantly, the era of political clout long enjoyed by farmers must someday come to an end. That clout has brought an elaborate system of price supports and subsidies that have grown to the point where support payments in any given year can account for nearly half of farm income. Indeed, when it comes to dollars, it is not wrong to say that cities are feeding the farms.
That impending change makes it all the more imperative that smaller cities and towns find their niche in the non-farm economy, if they are to remain viable. There is, of course, no single growth strategy that fits all. But any that are pursued should do so in the light of what we know about the geographic and demographic patterns of economic growth.
One factor that looms large is the rapid growth at the fringe of larger urban areas. Smaller communities who find metropolitan areas sprawling to their doorstep can grow by supporting and emphasizing those connections. In an age where we enjoy interstate highways, mobile phones and air conditioned automobiles, workers everywhere have shown an increasing tolerance for longer commutes.
That's not a formula for growth that most small to medium cities can adopt, however. These communities must squarely face the problem of jump starting growth on their own. But in doing so, it is important to understand what has caused growth to favor larger urban areas in the first place.
In the beginning it was rivers and harbors. In the industrial age, it was factories. But in the knowledge-driven, information economy it has been the close access to a wide variety of specialized labor and capital resources that has enabled some cities to thrive while others wither. Despite the congestion and high cost of doing business, technology companies still cluster around Silicon Valley, because it puts them in proximity with the specialized technical, managerial, and financial talent that they need. Workers, in turn, are attracted for much the same reasons -- their chances of finding a company that can fully exploit and reward their specialized skills is higher than a smaller market could provide.
That pattern represents a tall obstacle for, say, a community the size of Bedford or New Castle to overcome. But in a smaller niche, perhaps in coordination with other nearby communities, and even with a helping of private and public capital, such reinventions are the best hope we have of getting growth in otherwise stagnant corners of the state back on track.
About the Author
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