Regional Partnerships
by Edwin Dorn
Greater Austin Chamber of Commerce
1998 Board Retreat
Tapatio Springs, Boerne, Texas
October 7, 1997
Change
The Austin I left 30 years ago was a pleasant, mid-sized town sitting in the middle of Texas, distant from the big, exciting cities of Houston and Dallas. The Austin I have returned to is part of a bustling metropolitan area. This is now one of the fastest-growing metropolitan areas in the country. It is home to more than 800 high-technology companies employing more than 80,000 people.
That change didn't just happen. It happened because forward-thinking leaders, such as Pike Powers and Glenn West and Bob Inman set out to make it happen.
At the same time, this area has retained the features that have long made it such an attractive place to live. Quality of life remains high; crime remains relatively low.
Sustaining Economic Growth
The Austin area's success raises two questions. First, how do you keep it going? Second, how do you deal with the costs of growth such as traffic congestion, pollution, crime, economic disparities between the "old" central city and the "new" suburbs, and so on? How can you have economic growth and maintain the quality of life that has makes this area so appealing?
As it turns out, these questions have the same general answer. The key to sustainable growth lies in developing a region-wide perspective. One clear finding to emerge from our experience and research on competitiveness is that for global economic decisionmakers, the unit of analysis tends to be the metropolitan area, the MSA. Business executives look at what the MSA offers in terms of physical infrastructure, human resources, tax structure, quality of life and other features. Political boundaries are relatively unimportant--unless they are congruent with significant social disparities or infrastructure disconnects within the metropolitan area. If reliable power and water supplies end at the county line, you've got a problem. If there are huge disparities in education across jurisdictions within an MSA, you've got a problem.
In order for economic development to occur within an MSA over the long term, it needs to occur evenly between the city and the suburb. The evidence on this is compelling. Those metropolitan areas that have been able to sustain growth tend to be those where there is little economic disparity between city and suburb. By contrast, regions which have hollowed out their cores in favor of rapid suburban growth quickly lose their overall vitality.
Why is this? One of the major factors has to do with human capital, and particularly with the ratio of unproductive to productive human capital.
We in this country have committed three serious errors during the past 60 years. First, we have been seduced into believing that it is cheaper to sustain people on welfare than it is to make them productive. Well, it may be cheaper in the short term--a year's worth of welfare probably costs less than a year's worth of college or vocational school. Over time, however, the effect is counterproductive; it can lead to multiple generations of families who are dependent and resentful and very hard to help.
A second error has been thinking that we could simply move away from the problem. Not enough skilled workers in the innter city? Simple: move to the suburbs. Social problems in the big city causing an increase in taxes and a rise in crime? Simple: move to the suburbs. Since I've been back, I've been struck by the apparent popularity of a solution that goes even beyond suburbs--gated communities. Eventually, of course, those problems begin to follow us into the suburbs.
Third, we have tended to believe that if a problem was created as a consequence of the way market economies operate, then the solution must come from government. Often, the problem has been too urgent, or we have been too impatient, to see whether some kind of partnership between the private and public sectors made sense.
We've learned that we cannot solve human capital problems on the cheap, and that we cannot run away from them. We have to address them in a regional context, not just as a problems for particular jurisdictions. And many of them can best be addressed through a partnership between business and government.
Three Rules
Generally, those who talk about sustainable growth talk about three essential "e's": economics, environment and equity. Let me offer my own three rules for sustaining growth.
First, invest in human capital. The United Negro College Fund has a great slogan: a mind is a terrible thing to waste. I frankly think that our ideas about educational spending are backwards. We're reluctant to spend six or eight thousand dollars per child per year for elementary/secondary education, but it doesn't bother us at all to spend twice that for college. Our elementary/secondary teachers are poorly paid compared with their counterparts in other states, compared with other professionals and compared with college teachers. Teaching college students is a lot easier than teaching in the lower grades. I don't think many college professors could keep a group of eight year-olds engaged all day.
Second, work very hard to reduce economic and racial segregation. A poor central city surrounded by wealthy suburbs is an unhealthy climate for long-term development. A poor black and brown city surrounded by wealthy white suburbs is downright poisonous. It is exceedingly difficult for political jurisdictions to work together when they are markedly different in terms of economic resources or in terms of color and race.
Segregation has long been a problem in this area. My sense is that unless some deliberate action is taken, it could grow worse. As you know, state-wide demographic projections call for a dramatic increase in the Hispanic population over the next couple of decades, a moderate increase in the black population, and a relatively small growth in the Anglo population. Where will these people live? If they settle disproportionately in central cities, the color line between city and suburb will become much sharper, and regional partnerships will become much harder to form.
Third, forget for now some grand design for a metropolitan area system of government. Focus instead on issue-specific or project-specific partnerships. And think of four-way relationships--city-suburb, and public-private. Think about governance, not government. You'll discuss potential items for regional collaboration later today--transportation, water, education, public safety and so on. For example, this region is about to embark on a major road-building project that will relieve some of the congestion along I-35 through Austin. That project, along State Highway 130, will spawn new economic activity in the eastern part of Travis County. But if uncoordinated, it will simply spawn a series of strip malls and suburbs, with the environmental and quality-of-life costs spilling over into Williamson, Bastrop and Caldwell counties.
The Same Boat
When I moved here a couple of months ago, I left my family in Northern Virginia. They'll join me at the end of this school year, after my oldest daughter completes her senior year in high school. Meanwhile, I'm living in a little efficiency apartment near the campus.
What's happening is that I am reverting to bachelor habits. For example when I fix dinner at home, I have a very simple rule: use as few dishes as possible. Preferably, none. I go through a lot of paper towels.
Living alone for the first time in 27 years, I'm also watching a lot of television, especially sports. On Monday night, for example, I kept flipping back and forth between football and baseball. On some nights, there's wrestling on two channels simultaneously. There are some interesting sporting events on TV, especially late at light.
One thing I've discovered, watching ESPN, is that there are two sports you can win by moving backwards. One is tug-of-war. We all played this when we were kids. It was especially fun when the teams faced off with a mud pit between them.
As adults, most of us have become pretty good at white collar tug-of-war. In fact, I'll bet that most of the people in this room are masters at it. That's how we become leaders in our companies--by pulling business away from our competitors. If you're in the Round Rock Chamber of Commerce, I bet you spend a lot of time telling potential investors why they should locate in Round Rock rather than in, say, Pflugerville. Yeah, we're all very good at white collar tug-of-war.
There's one other sport that you win by moving backwards--Olympic rowing. That's when everybody recognizes that they're in the same boat, and that unless they all pull together, they'll capsize. Well, the Austin metropolitan area is one economic boat. This region constitutes a single labor market, a single communications market and transportation hub, a single housing market, even a single environmental area.
Georgetown cannot continue to grow economically, if the larger region cannot meet the human resource requirements of potential investors. Bastrop cannot thrive economically, if its partners upstream cannot control effluents flowing into the Colorado River. The overall cost/benefit calculus for business will be unfavorable unless we can convert unproductive human capital to productive human capital.
Conclusion
This region is at a fortunate point in its history. It is strong economically and vibrant socially. The disparities between central city and suburb have not reached an irremediable point. On the other hand, this area's residents have seen what can happen when growth just occurs willy-nilly, without good regional cooperation. Driving through Austin on I-35, for example, one sees strip mall after strip mall. That's not the ideal.
By some estimates, Austin has about a decade to establish a decent pattern of regional partnership. After that, the economic and racial disparities across jurisdictions may be so severe that suspicion and resentment will stand in the way cooperation.
We in this region are all in the same boat. We've got to find ways to row together.
