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Focus on growth in Greater Minnesota

David Strom//December 5, 2014

Focus on growth in Greater Minnesota

David Strom//December 5, 2014

I am a city guy.

The longest time I have lived away from an urban area was my time in Northfield, where I went to college. Other than that, I have lived in cities all my life.

The same tends to be true for the policy elite, who often view anywhere outside an urban region as undifferentiated farmland, with occasional parks and cabins to visit. Rural life is so quaint that the state even funds “historic farms,” as if farm life is something that belongs in a museum, not a vital part of our economy.

The reality is quite different, though. In today’s economy, Greater Minnesota has a terrific story to tell, and in many ways deserves more attention from policymakers than the Twin Cities urban region.

Manufacturing is enjoying a renaissance in Minnesota, and manufacturing is growing faster in Greater Minnesota than in the Twin Cities region.

There’s an obvious reason for that: Costs are lower overall, and manufacturers are a more valued part of the economic picture than in the service-oriented urban region. In the Twin Cities region, banking, retail, insurance, health care and financial services dominate the economy. Manufacturers would certainly be welcome, but their concerns could easily be swamped by other, larger industries.

Manufacturing isn’t as sexy, but it provides the foundation for long-term, well-paid jobs for blue-collar workers who haven’t been beneficiaries of American economic growth for a generation. And Greater Minnesota, with the streamlining of agriculture, has needed to diversify its economic base or face demographic decline.

The Twin Cities urban region has a big stake in the economic health of Greater Minnesota. Currently the state spends over $500 million a year on local government aid (about $130 million of that is for Minneapolis and St Paul, the bulk of the rest goes to Greater Minnesota), essentially to backfill the budgets of cities that are having trouble providing the basic services every government must provide its citizens.

We spend even more on subsidies to people who want well-paid jobs but can’t find them. How much better would it be to have a vibrant, faster-growing economic base in every corner of the state?

The story of manufacturing and other economic growth in Greater Minnesota is good today, but there are policies we can follow that will yield even greater results in the years to come.

First, we should worry quite a bit about policies that are going to dramatically increase the cost of power. Minnesota in particular, and the Midwest in general, rely quite a bit on coal to generate electricity. It’s not hard to understand why this worries some policymakers who are concerned about the environment, but environmentalist legislators too quickly dismiss the concerns of rural legislators who worry that increased power costs will choke their economies.

High energy costs can indeed choke their economies. Manufacturers in particular are sensitive to electricity costs because it is one of their larger expenses.

The same goes for environmental regulations, which can impose dramatic burdens on smaller communities.

It’s not so much the “polluters” who are fighting against increased regulation, but organizations such as the Coalition of Greater Minnesota Cities. They worry that well-meaning but detached policymakers from the urban region — people who live surrounded by asphalt and concrete, high-rises and suburbs dotted with houses — have an idealized version of what life in rural communities should look like.

And the costs of those unrealistic ideals can run into the billions of dollars. At times it seems to them that urban environmentalists won’t be happy until rural Minnesota again looks like “Little House on the Prairie,” with cabins on the lake for urbanites. But that vision is incompatible with the realities of a modern economy in which farmers use drones and Internet enabled tractors.

Urbanites argue about light rail, commuter rail, “complete streets,” and other luxuries while Greater Minnesota is still arguing for fully funding their “corridors of commerce” plan to upgrade roads to improve the movement of goods and services.

And one of the most contentious and potentially important battles over the next few years will be about how best to expand broadband access to underserved communities in Greater Minnesota.

Here in the Twin Cities, we tend to think of broadband speeds in terms of the streaming quality of Netflix. We take for granted that broadband is widely available, and the biggest concern for urbanites is not economic, but entertainment quality.

In Greater Minnesota though, inconsistent access to broadband is a vital economic issue. The expansion of manufacturing and the diversification of their economies will be premised on the ability to provide vital infrastructure — and that includes broadband. If you do custom manufacturing, you need fast and reliable access to data.

Municipalities are so concerned about the economic consequences of insufficient broadband that they are considering turning it into a public utility — despite the fact that even they know they are ill-equipped to run a complicated, high-tech and rapidly changing business. Yet their local businesses are demanding a solution, and they are losing businesses to other regions.

Policymakers are going to have to find a solution to this dilemma — a solution that enables the economic growth potential in rural communities, without destroying a private industry that can keep up with the technologies that are constantly emerging.

Greater Minnesota — a region that many people feared was dying a couple of decades ago — is experiencing an economic rebirth. It’s time that those of us in the urban areas recognize that and make sure we don’t get in the way.

David Strom is a Senior Policy Fellow at the Center of the American Experiment, and a public policy consultant at Think Write Do. 

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