Commentary: A Midwestern Marshall Plan? Well, sort of
This article first appeared in the St. Louis Beacon, July 8, 2009 - To a nation in economic crisis, the Midwest can only say, "Welcome." The last Great Depression started in the Midwestern Dust Bowl a decade before it hit the rest of the country. The blight now has been a fact of life in the Midwestern Rust Bowl for at least a decade. If this means the Midwest again leads the nation, perhaps it's an honor we could have skipped.
Recovery -- even a new era of Midwestern innovation -- is possible. But the Midwest may need outside help. The federal stimulus package promises funding for infrastructure, highways, bioscience, university research -- all areas where the Midwest could use the money. But more of the same is not the answer.
Once the Silicon Valley of its era, the Midwest grew and thrived on the ideas of men like Ford, Timken and Kettering -- ideas so good that we lived on them for decades and never had to have new ones. Somewhere in all those good years, we lost the knack of innovation. The Midwest also never learned to work together. Cities, states, universities, companies preferred to scrap among themselves for every investment and job and tax break.
While the good times lasted, this mindless competition was an affordable luxury. But when the Midwest began its decline, it declined together and fell apart. States battled other states for factories in an orgy of smokestack chasing. Companies learned to play states off against each other, and the states wasted millions of dollars. The frantic competition for Japanese car plants is the prime example. Small towns built industrial parks and gave major tax breaks to any company willing to invest, only to see the companies decamp to Mexico when the tax holiday ended. Universities and colleges competed for students, faculty and grants as fiercely as their football teams competed on
Saturday, never thinking that Midwestern brainpower, put together, could create an intellectual powerhouse that would draw the best and brightest -- and richest -- from around the world.
The result is a balkanized Midwest, split into a grabbag of states that have everything in common, including a long slow slide into depression, but want as little as possible to do with each other. In my own research, I was astonished to go to state after state and talk with true experts -- academics, government officials, business people -- who knew everything about their own state but had literally no idea what was going on across the state line. Endemic duplication cripples progress.
Industries of the Future
The global economy couldn't care less about state lines drawn more than 220 years ago, but the Midwest has not begun to exert this leverage or combine its strengths. The industries of the future are regional in essence, and if the Midwest doesn't exploit them as a region, it won't benefit from any of them.
A few examples:
Clean Water Technology
In the new National Intelligence Council (NIC) paper, "Global Trends 2025: A Transformed World," clean water technology is identified as one of the "technology breakthroughs" that will change the world and drive the new economy. Freshwater technology will be key to this, and the Midwest sits on the greatest repository of freshwater in the world. The Great Lakes hold about 20 percent of the world's freshwater, on top of other abundant lakes and aquifers in the region.
As the NIC said, new industrial uses for water abound in farming, biofuel, biopharma, nanotech, chemicals and semiconductor industries. The region that finds, funds and exploits these uses will have a grip on the economy of the future.
The University of Wisconsin at Milwaukee is exploring a freshwater research institute to begin this research. This good idea would be better if the university teamed with other lakeside schools such as the University of Illinois at Chicago, Wayne State in Detroit and Case Western in Cleveland.
Bioscience and Biotechnology
Bio has enormous untapped potential in agriculture, health care and other uses. It has applications in regenerative medicine, drugs, genomics, predictive medicine and other uses.
The Midwest has a toehold in this bio revolution, with some of the world's major research universities and institutions. These include state universities such as Michigan, Wisconsin and Illinois, plus the University of Chicago and Washington University in St. Louis and big research hospitals like the Mayo and Cleveland clinics. The Midwest embraces a stupendous lineup of bio firms like ADM, Cargill, Dow AgroSciences, Monsanto, Pioneer Hybrid, Abbott, Baxter, Eli Lilly, GE Healthcare, Medtronic and Zimmer.
If the Midwest is doing so much research, why are most of the bio jobs still on the two coasts? Several reasons: One is balkanization. Another is the lack of money and business services. So many good bio ideas that spring from Midwestern labs have to go to the coasts to find the venture capital and support they need to be turned into commercial products.
Nanotechnology is the manipulation of subatomic particles to produce new or better materials. Again, there's activity here: Dayton, Ohio, which lost the five Delphi plants that helped support the town for a century, is trying to link local institutions into a nano powerhouse. But no one yet is trying to link this work with research elsewhere in the Midwest to leverage what should be one of the region's strengths.
This means the harnessing of sun, wind and water -- all of which the Midwest has in abundance -- to create alternatives to fossil fuels. Wind farms are sprouting across the region. Newton, Iowa, which lost Maytag, has 700 workers making parts for wind turbines. Greenville, Mich., which lost Electrolux, is creating 1,200 jobs in solar panels.
As in bio and nano, this is an infant revolution. That NIC forecast sees a future in green technology, especially for the region that develops efficient energy storage technology.
The old auto industry is a paradigm for the Midwestern failure to cope with global challenges. It's an old industry with incompetent management, high costs, tired facilities, a lack of innovation, resistance to change and reliance on a workforce educated for the industrial age but lacking the skills to compete globally.
It's time to get serious about rapid transit, both light transit within urban regions and, especially, a highspeed rail network that would truly tie the region together. This industry would, in itself, create hundreds of thousands of jobs. And the big auto companies could get a piece of this, if they're nimble enough.
All this is where Washington and the Marshall Plan idea come in.
A Marshall Plan
The original Marshall Plan, which rebuilt the war-shattered economies of Western Europe, was announced by Secretary of State George Marshall in 1947. Between 1948 and 1952 the United States spent $13 billion in aid to Europe. As a percentage of U.S. gross domestic product, that's equivalent to about $200 billion today.
Tony Judt, in his magisterial history “Postwar,” describes how this money acted as a "strategic program of recovery and growth, rather than a disaster fund." It forced business, labor and government to collaborate. Most of all, "it laid upon (the Europeans) a requirement to negotiate and confer not just with the United States, but with each other ... It made coordinated economic policymaking seem normal rather than unusual."
Remember, these countries had been killing each other three years earlier. It's not too much to say that this coordinated program imposed by Washington sowed the seed for what became the European Union. It may be stretching things to see the EU as a template for the Midwestern future, although some scholars have suggested that. But the Obama administration has it in its power to point the Midwest in this direction, if not in the stimulus itself then in its future spending.
All the projects listed above make sense only if pursued on a regional basis. Other government initiatives -- on education, infrastructure, research -- can be done much more efficiently and much more powerfully if the recipients work together to share costs and brainpower. Some, like new transport links, can only be done regionally.
President Obama's mega-billion dollar stimulus plan is intended to reignite economies across the nation. Now, most of this money goes to individual cities or states, guaranteeing duplication, competition and waste. Wouldn't it be grand if the administration took a page from the Marshall Plan playbook and told Midwesterners that they must plan regionally, to come up with projects that would revive this entire region, before we got the money?
This collaboration goes against the grain of Midwestern independence, which is the point. Left to ourselves, we may never agree to agree. But billions of dollars make a powerful lure.
Richard C. Longworth is a senior fellow at The Chicago Council on Global Affairs and author of “Caught in the Middle: America's Heartland in the Age of Globalism.” (Bloomsbury, 2008) The preceding is condensed from a Global Midwest Policy Brief.