The New Economics of the New Economy Pt 1

I've been reading with great interest about the state of the economy. I, like most Americans, are worried about what's going to happen. Will these jobs that were lost going come back? If they don't what will take their place? There is a lot of uncertainty out there and it makes me nervous. I was reading this article on MSNBC.com titled the Great Recession transforms the workplace. The article talks about how many of the jobs that were lost aren't coming back. Most of them have been outsourced to other countries where the labor is a lot cheaper and many environmental and workplace regulations don't exists. It then goes on to say how American workers will need to be retrained for the specialized jobs that will be created. However, it really doesn't say what jobs will replace the ones that are lost. From my experience (and from what I have read) these new jobs wont pay as much as the ones they are replacing and the benefits will be much worse.

If you do a little research several things become very apparent. Things like real wages have been on the decline or either stagnant for the past couple of decades while inflation has steadily gone up. The income gap between the bottom 99% and the top 1% is wider than it has ever been in the US, and it's getting wider. New housing sales plummeted, and prices tumbled with them. Then the foreclosure and banking crisis have driven many people to economic ruin. So much so that the poverty rate in America has skyrocketed. I could go on and on but I think you get the picture.

Amid all of the horrible economic news our cities, Louisville included, are struggling to stay afloat. The future also doesn't look bright either. Once this recession is over I think you will see some major differences between this recession and past ones. The biggest differences will be that real wages will continue their downward trend and more people will be out of work. A lot of the jobs that were cut during this recession will be lost forever. When people do find work they are going to be making less money. In a lot of cases a lot less money. We are getting poorer as a nation. We are getting to a point where even with 2 incomes it wont be enough for most people. Cities (and states, but my focus is on cities) are going to have to restructure their entire tax systems or find ways to expand their economies in such a way that it will encompass a majority of their populations.

As you may have figured out by my previous post I don't like to dwell on the negative to long. i want to find some solutions. One place I don't think we will find any solutions is the federal government or our state government. There is just to much lobbyist money in Washington and Frankfort for their to be real change. We are going to have to figure this out on the local level. Which is hard because as we get poorer we are going to put more of strain on our social services. Which happen to be funded to a large extent by the state and federal governments. So, what should we do?

The first thing we need to do is recognize the problem and develop a comprehensive plan to deal with it. We then need to follow through on that plan. This is something we haven't to well as a city. Case in point. When Dave Armstrong first came up with 4th Street Live, and put it in motion he also had a large part of money for the re-development of the rest of 4th street going south. That money was for the development of local business to compliment the national chains. The plan was never really followed. We need to follow it.

Here is what I would do.

1) Keep Louisville weird, but expand that thinking to west and southwest jefferson county. If one part of the county is behind it slow down everything else. I would do this by setting money aside for micro loans. Loans in the amount of $500-$2500. I think there is also room for innovation here as well.

If you drive through western Louisville there are a lot of abandoned lots especially streets that should be business corridors like Market St and 18th/Dixie Hwy, Using some of the Hope IV grant money I would build multi-use building like the ones in Park Duvalle. Retail on the bottom with mixed-income units above. Parking in the rear. You can do this because if you tear down a "housing project" you have a place for the old residents to live. Some of these retail spaces would be offered "rent free" to entrepreneurs who go through a business class and qualify for the micro loan. The city will furnish the space and credit card machine/cash register. For the cities effort the city will take a percentage of everything made. If the business fails no biggy. The city just finds a new tenant and reuse the same equipment. The city doesn't have to use new computers or credit card machines. Louisville could use some of the surplus equipment that is just sitting in a warehouse someplace.

2) Like I said in my past blogs I would also push for Louisville to expand it's economic sectors. I believe the film industry is a natural fit. I would also make a big push for minor league or lessor known sports. I don't mean just getting big sporting conventions or NCAA tourneys, but try and become a "mecca" in an alternative sport. A good example would be wrestling. Louisville is home to one of the best wrestling schools in the nation. We should work on getting some of the smaller wrestling promotions to call Louisville home. Why not. Another big one is MMA. We could be the mecca the MMA in the midwest/east coast. That would mean thousands of young men and women training and living Louisville. Thousands of young professional MMA fighters making a decent income living here. using our airport to travel to fights all over and visa versa.

I think this is enough to chew on for part 1. In part 2 I'll touch on density, transportation, other sectors Louisville can look into.