Kentucky Makes Economic Gains

Time Magazine’s latest issue discusses why California is still the most important state in the U.S. from an economic perspective. I’m not going to disagree with that (more venture capital was generated there last year than the other 49 states combined). It is nice though to remind folks that other states do matter and states that were once thought of as hopelessly backwards are now becoming leaders in business.

Longtime readers know that one of my intellectual heroes is Joel Kotkin, a urban development scholar who works out of Los Angeles. Recently I was thrilled to read a piece Mr.Kotkin wrote for New Geography where he discusses some economic advancements made here in Kentucky.

Recently, I met with a couple of dozen mayors and city officials in Kentucky to discuss economic growth. The mayors spoke of their initiatives and ideas, yet hardly anyone mentioned the stimulus.

“We didn’t see much of anything,” noted Elaine Walker, mayor of Bowling Green, a relatively prosperous town of 55,000 in the western part of the state. “The money went to the state and was siphoned off by them. We got about zero from it.”

Ironically, Walker does not seem overly upset about the lack of federal assistance for Bowling Green. Instead, Walker–a self-described supporter of the president in a part of the country largely resistant to Obamamania–seems more disposed to taking matters into her own hands. Rather than waiting for Obama, Bowling Green is looking to stimulate itself–and other communities would do well to emulate this grassroots approach.

A common theme in much of Kotkin’s writing over the last 6 months has been the way that stimulus funds have failed to reach the people best positioned to use them wisely. This is a narrative that I think will come back to haunt the Obama administration at a later date. Stimulus monies have largely been wasted. What it is good to see however is the way that communities like Bowling Green are willing to fight for themselves rather than wait for federal money that isn’t coming.

Bowling Green’s “self-stimulation” is part of a concentrated effort at diversification for the city, which has long depended on its General Motors plant, which produces the Corvette. Other single-industry-dominated regions, notably Detroit, have made much noise about moving into other fields, but their emphasis has frequently revolved around high-profile, highly subsidized projects such as “green” industries, entertainment or tourism.

Instead, says Walker, the first step in diversification lies with boosting small local businesses.

With its strategic location on Interstate 65 connecting the old industrial heartland to the emerging one along the Gulf, Bowling Green enjoys many advantages. It’s slightly over an hour to Nashville and two hours to Louisville, the area’s two major consumer and cultural marketplaces.

Other small communities in the state have also realized that any green shoots would have to come from local grassroots. Russellville, a rural community of some 7,200 in the southwest part of the state, is looking at a “back to basics” economic development plan that stresses the export of local food products and crafts.

“You can ride down the highways and smell the hams smoking,” notes one local economic developer. “We are looking on how to export those hams to the rest of country.”

I have long-advocated something I call ‘wagon wheel economics’ for states like Kentucky which is still largely rural but blessed with good-sized cities at critical locations. Following the old Roman model of ‘all roads lead to Rome’ I believe we should be working harder to create a series of economic bridges between our cities and our rural communities. Quite frankly, we need each other. Our rural communities have goods they can export but they need help with marketing, retail, processing and access to consumers. I would like to see a ‘sister cities’ approach to intrastate economics where communities help each other in a cooperative effort at improving our economy. I think using the natural interstate corridors to do so is a logical step.

Another positive point for the state has been our auto plants. Two Ford plants here in Louisville along with a Toyota plant in Georgetown provide high-paying work for thousands of Kentuckians. The jobs in these plants are not just low and mid-skilled assembly work.

Mayor Gary Williamson of Mt. Sterling, a town of 6,000 located in Montgomery County, in the generally more impoverished east, has been pushing a different strategy. His region is dotted with industrial plants of varying sizes. The city is also 45 minutes from Georgetown, site of a large Toyota factory.

These employers require a steady stream of skilled industrial workers, particularly in such fields as machine maintenance. Williamson and other officials in the area see training such workers–starting at the high school level–as a way to not only keep people employed but to attract other firms to the area. “We want to keep people here, and they will do so if they have jobs after school,” he explains.

Kotkin goes on to discuss the ways in which our regional culture, once considered a liability (especially in elite academic circles) is now seen as positive asset on the road to greater economic prosperity.

It’s significant that such grassroots-based development–geared to unique local conditions–is taking place in Kentucky. For generations, the state and the rest of the surrounding Appalachian region has been the brunt of both jokes and patronizing attention from the nation’s academics, policy circles and media.

Yet, this unique culture also could provide some of the basis for a regional recovery. There’s a growing sense, notes longtime Kentucky League of Cities President Sylvia Lovely, that the region’s fundamental assets–its natural beauty, resources and traditions of craftsmanship–could constitute a distinct advantage in the coming decades.

More important still could be less tangible values, Lovely notes. “Modernity” in its current unadulterated form–with a lack of community, homogeneity and disconnect from the natural world–could be losing its allure for millions of Americans. In terms of what matters, she suggests, Appalachian towns may possess “if not more information, perhaps more wisdom than those who hold themselves out as experts. “

If statistics are to be trusted it seems that the outflow of population from our region has finally stopped and a positive trend of inward migration has commenced. Unfortunately this is at the expense of those northern states that received migrating Southern workers for several decades of the 20th century, but this is the ebb and flow of internal migration.

Since 2000 Kentucky, as well as Tennessee and West Virginia, have enjoyed positive rates of net migration. Although some parts of the region continue to suffer horrendous poverty and continued out-migration, many other communities–such as Bowling Green, Lexington and Louisville, as well some more rural areas–have attracted more newcomers than they have lost. Overall Appalachian states’ migration statistics look a lot healthier than Ohio and Illinois, not to mention New York or California.

I’ve written a lot lately about culture and the positive ways in which places like Kentucky, sitting firmly on the divide between North and South, East and Midwest, can impact our souls and our lives. Obviously this piece by Joel Kotkin ends on a similar note. Community, manners, culture, tradition…these things all matter a great deal and a higher premium seems to be placed on them by some people. But it appears that the impact is not just on our personal lives. There is potential for those things to affect our own prosperity. Over and over I hear about a public that is hungry for the types of values often reflected at the intersection of urban and rural life. It’s good to see efforts aimed at capitalizing on this.