SwampFox

The Assault on Education, and Taking Responsibility for Problems as Well as Credit for Successes in our Economy

Submitted by: John Warner on Jun 24, 2010 at 7:58 am Tagged with: Economic Development Source: Swamp Fox

We need a comprehensive economic development strategy in South Carolina that will lead to long term prosperity in the state. A strategy based primary on industrial recruitment alone, which is where we invest almost all of our economic development dollars in South Carolina today, is obsolete. Industrial recruitment is necessary, but not sufficient, if we are to have a vibrant, prosperous economy.

This was never more starkly clear than at a meeting I was in last week in Columbia. Doug Woodward, an economist from the Moore School at the University of South Carolina, updated his regular economic analysis and forecast. The reason South Carolina has one of the highest unemployment rates in the country is straight forward. The highest rates of unemployment are among people with lower education working in branch manufacturing. The lowest levels of unemployment are among those with higher education in professional services.

That the most important driver of economic prosperity is the number of affluent, educated people in the state has been clear for some time, If we want an economy with higher wages and lower unemployment, the state should take some of the investments we are making in recruiting branch manufacturing and invest that instead in education.

A young friend recently had a party, where there were lots of the talented, creative, educated young people we need in South Carolina. Following up on a discussion we had, my friend noted:

A lot of the folks that were here on Monday night don't necessarily feel the same bonds to this community or this state that we do. They've lived all over the world and in a number of different states (and those "out of culture" experiences are one of the reasons that they think differently in the first place). It's well known that capital goes to where it is most appreciated; so does creative talent. If these folks feel like what they do or the way they think is threatened or unappreciated, they'll simply pack up and move on. Obviously, we don't want this to happen.

That is pretty obvious, isn't it? Then the state needs to be making investments like it is.

After Doug Woodward's presentation, a representative of the SC Department of Commerce distributed copies of their 2009 Activity Report celebrating the fact that 52,663 jobs had been recruited to the state in 2007-2009. They should be proud of this impressive accomplishment, but it is only one side of the story. Juxtaposed with Doug's unemployment statistics, the problem this poses for South Carolina is obvious. Given that Commerce has a branch manufacturing recruitment focus, I asked why net branch manufacturing jobs lost in the past two years weren't netted against the branch manufacturing jobs recruited? That is a better metric to judge the branch manufacturing recruitment strategy we have in the state, and the net impact over the past couple of years is a large number of net jobs lost. Looked at that way, there is much less to celebrate, which is the way most people in South Carolina feel about the economy over the past two years.

We have one of the highest levels of unemployment in the country, because for decades we have made low investments in education and we have based our economic development strategy on recruiting branch manufacturers. Now, if those who own this strategy are to take credit for the jobs recruited in recent years, they also have to take responsibility for the layoffs produced as well.

Actually it gets worse. Not only are we overstating the case for industrial recruitment, there is an open assault on the very programs that will produce educated, affluent people in the state. We are in one of the worst economic crises in our lifetimes, and imprudent decisions that replaced stable property taxes with sales taxes on the eve of the great recession have decimated revenues in state government.

To recruit the 52,663 jobs to the state, the Legislature has found over a billion dollars of incentives in the budget. Last week, the Governor vetoed, and the house sustained, $1.2 million of funding for the NanoCenter, the Future Fuels program, and the Technology Incubator at the University of South Carolina. Let's be clear about how this impacts the future of our economy. Brain Benicewicz is one of the preeminent scholars recruited to the NanoCenter. Brian is not only on the leading edge of research in his field globally, he is also successfully working with companies across the country to commercialize his research. When Brian was recruited to South Carolina through the endowed chairs program, we got not only his technical relationships but his extensive business relationships. Brian is precisely the kind of affluent, educated, connected person we need to drive the economy of South Carolina. How do we get more economic activity in South Carolina spinning out of his research? An important way is to support the start-up of companies in the USC Columbia Technology Incubator. What did the veto of $1.2 million do? It killed the NanoCenter's ability to reach out to industry in the state, and it killed USC's ability to commercialize some of it in start-up companies.

While we are doubling down on the industrial recruiting of branch manufacturing jobs to the state, we are tearing down the infrastructure that produces more highly educated jobs in the state. This is not a strategy that will create the vibrant, prosperous economy we want in South Carolina.

We are at an inflection point in the state. The budget crisis next year will be worse than this year, because $1 billion in Federal stimulus funding will run out and there is no good source to replace it. Major institutions of state government will be reinvented, including economic devleopment and education. Now is the time we need to be laying the foundation for what our economy will be in the future. If we want a vibrant economy where affluent, educated people thrive, then we have to be setting the priorities today that make that possible.