Tuesday, March 17, 2009

All policy is metropolitan

Ryan Avent links a very good study from the Brooking's institution that points out to the geographic sources of economic growth in the United States. One of their examples is California:

California, it is often noted, accounts for more than a tenth of the national economy. That’s true—but somewhat misleading. The “California economy” is not evenly spread across the state, but rather it is driven by a few metropolitan areas. The Los Angeles and San Francisco metropolitan areas are responsible for more than half the state’s economic clout. Along with San Diego and San Jose, they together contribute 72 percent of the state’s GDP. True, if California were its own country it would have the eighth largest GDP in the world, but if these four metros alone were a separate nation, they would outpace India, Mexico, South Korea, and Australia.

Two other economically powerful states, Illinois and New York, are even more dependent on their metro powerhouses, with Chicago and New York each constituting more than three-quarters of their state’s GDP. (The New York metro actually powers two states: the portions of the metropolitan area in New York account for 75.7 percent of that state’s GDP, and the chunk of the metropolitan area across the river in New Jersey accounts for 77 percent of Jersey’s GDP). Texas and Florida likewise each get 80 percent of their economic heft from the handful of major metros within their borders.
Connecticut is blessed/cursed of being part of a metro area (NYC) that is in another state. This is a problem as the rich core can and will put projects that link both areas at a lower priority more often than not. It does avoid, however, the problem that NYC often faces when crucial infrastructure and transportation investments get divested at Albany to the upstate area. We can focus our efforts to what makes sense to the state, avoiding the problem of being left out by the byzantine politics of New York state.

The problem, however, is what we can do in Connecticut to get bogged down in politics that prioritize investments in slow growth, mostly empty areas and leave aside the extremely dense corridors that make sense economically. As usual, it ends up boiling down to incentives, and how we make building up the urban, metropolitan cores that drive growth all over the country extremely expensive, via underinvestment and a regressive, inefficient property tax system.

This does not mean that we could turn New Haven into Austin or San Francisco; it might be not a good short term plan. What it does mean, however, is that Connecticut could use its proximity and links with the most powerful economic engine in the planet to become a creative, lower cost, high-quality of life extension of the NYC metro area that focuses on growing smart. Small city and town charm, connected to the global economy.

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