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.

Segregation, Why Should I Care?

I was talking to one of my friends about my latest blog post and he said something interesting to me. "Why should I care about Western Louisville?" He liked what I wrote, and he understood where I was coming from. He just didn't see why he should care. So, I thought I would explain why he should care, or at least take an interest.

I can some up why you should care in one word. Demographics. If you care at all about this city then you should care about where the demographics and what they mean. In the not to distant future there will be more Black and Brown folks than White folks. The vast majority of kids under 13 are either Black or Brown. That's even true in Jefferson County. Did you know the US is the 5th largest spanish speaking nation in the world?

The city can't keep ignoring the neighborhoods in which the vast majority of these populations live. Why? Because they are the future of the city. The future of the country. If things don't change then more and more young Black and Brown will do like most of friends have already done. Move.

Almost every black kid I knew growing up has either moved to Atlanta, Charlotte, Dallas, Houston, and Chicago. Most of them to Atlanta. They moved because they wanted to be around other young black professionals. Something that you really don't see a lot of in Louisville.

I know a lot of young white kids move as well. We need to keep all of our young, bright, and talented professionals. The only problem is that the pool of young white talented kids are shrinking while the pool of young black and brown kids are growing. We can ignore the black and brown kids like we have been, but that would put us at a serious disadvantage going forward. Why do that yourself?

The other problem is that we don't treat all people the same. The years of racial and economic segregation have taken their toll on the Black community. This means it's going to take great resources to improve those communities. These are resources that we are going to have to spend if we want to remain competitive. Not just Louisville, but the nation as a whole. If Louisville can start now then we will have a HUGE leg up on every other community.

It's not hard to attract to young black professionals. You just have to make us feel wanted and that we have the same opportunity as everybody else to compete. The city may have to start to black chamber of commerce, or an arts center in Western Louisville. We have to do our part as well. It can be done.

When I was in high school and college all of my friends were telling me that Atlanta was the place to go. When I went to Atlanta for college i could see why. I had never seen so many young black professionals in one place. A few years later the hot cities were Charlotte, Houston, and Dallas.

Louisville can do the same thing. The West-End is a beautiful part of town. It doesn't have anywhere near the blight that black communities in other cities have. The foundation is here or are we afraid that Louisville may become to poor, old and black?

What Louisville should do

Economic development is tricky. How exactly do you set your city apart when almost every other city is trying to do exactly the same thing that you are doing? Every city has something unique about it. Indy has the Indy 500. Louisville has the Derby. Nashville has country music. Those are very unique things that each cities leverages to its advantage. However, it's not enough. You still need more. You have to be diversified. Especially in our increasingly global economy. Cities are no longer just competing against each other for business HQ. They are also competing for talent. Talent that isn't afraid to move at the drop of the dime from city to city or even country to country. 

According to Greater Louisville Inc, the metro chamber of commerce, Their focus is on building Louisville niche growth markets. Logistics and distribution, and health related enterprises, and  entrepreneurism. Health related enterprises would be things like going after the biomedical industry. Entrepreneurism is pretty much like it sounds. making it easy for people to start small to medium sized businesses. Which is a pretty good strategy. Louisville is known for being a place where its pretty easy to start your own biz and be pretty successful. Tumbleweed, Papa John's, Ralleys, Chi Chi's, KFC, and many more had their starts in Louisville. 

Going after the Biomedical industry is going to be an uphill struggle. The hardest part is that we just don't have a prestigious top tier research university that would attract the type of talent needed to keep something like that going. The university of Louisville has come a long way. The medical school has grown by leaps and bounds. The number and size of the National Institute of Health of grants have grown every year. However, we still lag far behind our competitor cities and regions. Louisville's biggest problem is that the state of Kentucky will never adequately fund its universities.  The other problem with going after biomed is how many jobs would it actually create. I'm sure there would be a lot of jobs for scientist, but what about the average folk. Will people with regular degrees be able to take advantage of the growing Biomed sector? I know the high paying jobs will do a lot for the cities coffers, but what about the vast majority of the populace? The other downside is that most biotech firms seem to almost always get taken over by Big Pharma. Usually once that happens Big Pharma buys all of the intellectual property dissolves the company and moves on. What would Louisville have left? The guys who started it would make a killing, but what about the city in the long run? I'm not saying this isn't a worthwhile goal. It is a very worthwhile goal. It's just going to require a lot of work, and take decades before we can really start to reap the benefits.  

Louisville should keep pursuing those economic development strategies. I just think that Louisville should just take advantage of its other strengths. Strengths, I think once properly cultivated, could lead to greater prosperity for the city. It would also help to Louisville to stand out amongst its peers. What are those strengths. Simple. The Arts. 

Louisville is a quirky artsy town. Why not take advantage of that. The city with the help of Greater Louisville Inc.,  should start a film commission. Like most film commissions they should try and recruit hollywood films to be shot in and around Louisville. However, I think their biggest function should be to cultivate the local talent that's already here.The film commission should educate the venture club (local meeting of venture capitalist in Louisville) about investing in low budget movies. Then educate local filmmakers on how to present their ideas to the venture club. The Film commission would keep track of all of the movies made in Louisville so we know just how much the local film industry is contributing to the local economy. I would also like the commission to sell locally made movies on it's website. This would be a way for the commission and local filmmakers to make a little bit of money. The commission would also fund education programs for youth. You always need to groom the next generation of talent. 

As you can tell I'm pretty high on the local filmmaker angle.  I think this would be a natural fit for Louisville and something that can honestly be done in short order. The reason I would concentrate most of the commissions energy on local films is because I think they offer the greatest return on investment.  If you're lucky you might attract one medium budget hollywood film to your city. A film that has the budget of say $40 Million. However, most of that money will not be spent in Louisville. They might higher drives, rent some homes, get hotels, catering, and the like. But as soon as filming is wrapped up they are gone. That's not a bad thing, and if Louisville could do it great. However, if Louisville could produce 10 $1 million dollar low budget movies a year the money would have a greater impact in the community. First, most of the people who worked on the film will most likely be from Louisville. Their wages would stay here. Second, you will be building up a film workforce that will make attracting bigger budget movies easier since you would have built up a talent base. It's a win win. Thirdly, the education barrier isn't as high and the pay is usually above average.

I also think the city needs to get more serious about cultivating local businesses. 4th street live is great. The Center City project looks cool. However, Louisville has spent hundreds of millions of dollars to prop up an out of town company. Why not put several million dollars in a fund to try and lure local businesses to finish building out the rest of 4th street. You could make the money forgivable loans up to $250,000. If you could add a lot of local flavor to say several national chains I think it would do a lot for the city. you can go to any city and go to a HardRock Cafe. You can't get Wick's pizza everywhere.

Louisville should also try and become the green capital of the Midwest. We should have the most LEED certified buildings in our region. We should have more bike lanes, houses with solar panels, and first rate mass transit. While this may not be "economic development" per se it does create a progressive environment. That progressive environment is what will attract the younger (and young at heart) talent. People want to believe that they can make a difference in their hometowns. Even if they they really don't have voice they need to believe that they do. Being a progressive town that is a quirky artsy place gives people the feeling that they can make a change or try something different. If a town can tolerate and even cultivate it's funky, quirky artsy folks, then it will also do the same for the straight and narrow guys. It makes everybody feel like they can fit and that they do have a place. More importantly, it makes people like you have their back. Which means, that I'm not as afraid to try something new because I have support. 

This might be the biggest economic development tool Louisville has. Making people feel like they belong.