It’s time to bridge regional economic divisions
On June 8, Democrats and Republicans in the Senate gathered to pass the $ 200 billion Law on innovation and competition, a vast legislative package aimed at advancing the country’s competitiveness in R&D with China. The 68-32 vote was a rare bipartisan convergence on two frequent dividing points: money and state involvement in the economy.
But that is not all that was striking about the vote. Also noteworthy is the bill’s proposed creation of 18 “regional technology centers” to spur economic growth in new locations, which represents the country’s most significant foray into regional policy in decades, may -being since the Great Depression.
For decades, Congress neglected the deepening of the country’s regional divisions. New economic trends have created a growing gap between vibrant metropolitan areas and “superstars” and everywhere else. Meanwhile, policymakers quibbled, argued, and stood still as gulfs opened between income levels in tech-driven coastal metropolitan areas and ‘left behind’ areas.
A 2019 Brookings report documented that just five major innovation metropolitan areas – Boston, San Francisco, Seattle, San Diego, and San Jose, California – accounted for more than 90% of the country’s innovation sector growth. 2005 to 2017.
But what to do to counter this dramatic divergence has not always been clear. Since the 1960s, local congressional responses have primarily resulted in limited, one-time investments in grants, programs, and tax benefits that have been too small and too inconsistent to resolve the huge economic forces that separate the nation. What resulted was inaction.
But now senators on both sides of the aisle have come together to recognize the economic, social and political crisis of interregional inequality and endorse the use of local government action to address it.
Lawmakers took inspiration from the arguments and ideas of professors at Brookings and MIT Jonathan Gruber and Simon Johnson respond to regional differences by creating a set of technology hubs located in Inner America aimed at catalyzing local economic growth. Originally, the bill proposed to create eight to ten hubs scattered across the heart of the country at a cost of $ 10 billion over five years. By the time of the final vote, the number of hubs had doubled to at least 18, supported by the same budget, reflecting a push by senators from small states to get more cities and rural areas to get a share of federal R&D spending. .
Despite the change, something approaching a bipartisan consensus on the nation’s regional divergence issue appears to have merged. A preponderance of senators from large and small states, as well as blue and red states, generally seem to agree that:
- The status quo, as evidenced by the country’s uneven innovation map, is unacceptable
- The nation can and must act to counter this inequality
- The nation doesn’t just need at national scale answers but location based those too
This is an important step, and far from the philosophical and political divisions that have generally involved these three proposals.
Still, the idea of creating major technology hubs has sparked fierce debate among senators over the geography of the program, while the regional issue could encounter stronger headwinds in the House. What is more, nothing currently under study reaches the scale necessary for global action to counter the country’s gargantuan regional imbalances. To truly meet the challenge, it will be necessary to combine much larger place-based interventions, such as innovation hubs, with “place-conscious” adjustments to major “universal” programs addressing topics such as poverty, infrastructure, workforce development, assistance to localities and market concentration, as sociologist Robert Manduca notes.
Despite these caveats, this week’s Senate vote could truly turn a turning point. Within the bill’s emphasis on industrial policy is an emerging consensus that the nation’s ruinous regional divisions don’t work for anyone and must be addressed. Now, finally, we can start doing it.