Saturday, January 03, 2009

Government 'and' or 'versus' economic development

In 2002, when I ran for County Commissioner, most people were talking about jobs. As I stated repeatedly throughout that campaign, government doesn't create jobs - that's what the private sector does. But government can provide an environment that is conducive and helpful for job growth in the private sector.

Obviously, that message resonated because, by the elections of 2004 and 2005, everyone was using the phrase 'government doesn't create jobs.' The problem was that repeating the phrase didn't ensure that the speakers understood it or even believed it. That didn't matter, however, if it got the person elected.

Entering 2009, we will have a mayoral election in Toledo. Not surprisingly, every politician is still talking about jobs - except in the last 20 years or so (perhaps longer, but that's the time I've been involved) the issue of jobs has been the number one mantra and Toledo is still in decline.

Mayoral candidate Keith Wilkowski, a shrewd politician, yesterday announced his economic advisory team, calling it an 'economic recovery council' (see? very shrewd, indeed). Lisa Renee at Glass City Jungle has the press release. He takes an appropriate swipe at current mayor Carty Finkbeiner who promised jobs but has yet to deliver and sets the stage for an interesting discussion over the next year for who is the best person to elect to 'turn this area around.'

But I believe the discussions are already off target.

We have the Toledo-Lucas County Port Authority, the privately run and funded Regional Growth Partnership, the Lucas County Improvement Corporation, and NORED - Northwest Ohio Regional Economic Development Association. The city, or the tax dollars of its citizens, support all but one (RGP) of these economic development groups.

So why does the city of Toledo need an economic development department or strategy? If government cannot create jobs but only provide an environment for job growth, the focus of any city's efforts in economic development should be reaction to the private sector needs.

Numerous studies, reports and research, coupled with plain old common sense, will tell you that in order for a business to be successful, it needs to make a profit. Businesses make profits when their costs are lower than their earnings. They need a stable regulatory environment that treats them and their competitors fairly. They need taxes and fees that reflect only the mandated functions of government in order to keep them minimal - and preferably lower than what their out of city competitors are paying. They need a pool of workers who will meet their needs in terms of skills and knowledge.

While many politicians talk about 'quality of life' as economic development, most businesses will tell you that such issues are so far down the list that they only consider those things when every other need is identical, which is rarely the case.

Our existing economic development groups can - and, in fact, already do - provide information to the various municipalities about what businesses need. They are well-equipped to inform elected officials and administrators about what things the government can and should do to help provide a pro-growth environment. Sadly, most of the time they are not heeded with decision-makers focusing on their own ideas instead of responding to the true needs of businesses.

Even Wilkowski has fallen into this trap, talking about 'jumpstarting the economy' through more government spending in order to 'put Toledoans back to work.' In his recent proposal for a solar field on top of our landfill, he proposes that city government must promote our local industries, especially solar panels.

However, in promoting any one particular industry, the city will, by default, not be promoting another one. This puts the city in the position of picking and choosing winners - and using public policy and funds to do so. That's not a stable regulatory environment that treats all our businesses fairly. And any money spent on 'new' ideas means that those limited funds are not spent on existing needs like roads, police and fire - the core functions of a government.

Think about it: will Toledo attract new and varied businesses because we spend millions of tax dollars to build a solar field on top of our landfill? Or will business owners be more likely to come or expand here because our tax structure (sales, income and property) is lower?

Most of the time, elected officials end up interfering or hampering real economic development because they're so busy promoting government, and especially government spending, as the solution, rather than truly responding to the non-headline grabbing needs that already exist. They end up working against what could happen if they'd just get out of the way.

So as we enter the 2009 campaign, we should not allow mayoral candidates to frame the discussion of economic development in terms of what government spending they will propose. We should insist that they detail how the tax and regulatory environment in the city will be improved to truly create an environment that will allow all businesses to grow, creating the jobs we so desperately need.


skeeter1107 said...

Very well said.

The question that lingers in my mind is "why doesn't the local politician heed this repetitive advice?" How many more government sponsored economic development projects need to fail before they finally "get it?"

You could make the argument that perhaps the answer lies in the fact that most of the local politicians have little if any business experience. Maybe so. But even if they don't, at some point they must recognize what works for government and what doesn't.

So to the politicians; Please do what government does best and stop doing what clearly doesn't work.

Tim Higgins said...


It is almost amazing that candidates for the office of mayor in Toledo would suggest that more studies and bureaucracy would be of benefit in bringing employers and jobs to the city. How many times do you and others have to point it out to them? When is someone going to understand that what we need is less government intrusion, less taxation, and less regulatory impediment to businesses looking at the city?

If this is what our best and brightest have to offer in the coming election, we are indeed in trouble. Perhaps Take Back Toledo will help to field a more suitable candidate.

Hooda Thunkit said...


""Or will business owners be more likely to come or expand here because our tax structure (sales, income and property) is lower?"

Ironic isn't it that apparently only you (a former politician) get it; yet we keep reelecting the same old, same old "clueless ones..."

Methinks Toledo needs a "political enema...," for lack of a better term.

Lisa Renee said...

It would be silly to disagree with you on the concept that the easiest way to attract more businesses is to make the government as business friendly as possible.

Assist where assistance is needed, and not interfere when it's not, support rather than to take over.

That said, creating a municipal solar field, would be a pr boon to Toledo's goal of becoming "the" city for alternative energy. It would garner attention that would be difficult to otherwise accomplish and could if it does prove viable attract private investment. If I were to dream, I'd envision a partnership with the City and our solar firms, showcasing what a City can do.

I also think Wilkowski creating this economic panel even with the other organizations you've mentioned would give him more direction than if he were to wait to be able to seek LCIC or RGP's direction/advice. If a Mayoral candidate were to try to work with either agency, not being yet elected, that could create issues of it's own.

It's possible some of those on his team could come up with ideas and if nothing else demonstrates he is willing to seek expertise within the community.

I'd love to see a realistic approach from both the media and the candidates as to what the Mayor can really do, just as I'd like to see that for the President and other offices as well. Unfortunately, that does not yet exist so candidates who are truthful about what they really can accomplish? Take a bigger risk than many are willing to take.

Maggie Thurber said...

Lisa - I'd love to have a mayoral candidate say: "I'm not going to create my own economic advisory group - I'm going to rely upon the groups we already have. These groups already have their own strategies and are working to implement them. I'm going to do everything I can, as the mayor, to support their efforts, heed their advice and follow through on their recommendations to make this city the most business-friendly city in the nation."

As for the solar fields - there are serious issues with building such a facility on a landfill and it just goes to show how out-of-touch the politicians suggesting such an idea are.

Landfills are constantly shifting in terms of degradation of the insides. The last thing you'd want to do is put a structure that relies upon a solid foundation on top of less-than-stable ground.

The city doesn't need to spend millions to give us a name - there are other ways (less costly more efficient) to garner a reputation.

But think about it from this perspective. We've got a growing industry and all the politicians are jumping all over themselves to 'brand' our city with this new industry. What about all the other industries where we could welcome new companies? Why are a bunch of politicians trying to determine our future? If we've got an industry excelling - great! But when politicians focus on one, they end up ignoring all others because they are developing policy and spending based upon the one.

We'd all be better off if the city/politicians got out of the way and supported - rather than dictated - which of our local businesses get the 'prize' of government support.

Google Analytics Alternative