In dueling speeches on Thursday, President Obama and Mitt Romney each offered ideas on how to fix the American economy. Their plans, while profoundly different, are alike in a critical way: They both assume the national economy needs national solutions.
That’s partly true for things for which the federal government is primarily responsible, such as trade, money supply, and taxes. But if Washington’s policies really mattered so much, then why are so many American cities and states booming regardless of who is president?
North Dakota’s unemployment rate, for example, is near 3 percent. High-tech hubs like Austin, Texas; Boston; and San Jose, Calif., are humming. Many cities within 100 miles of each other have vastly different growth rates.
Each place has unique reasons for doing well, such as natural resources or creative universities. New York City thrives on finance, arts, tourism. Washington, D.C., prospers on tax and visitor dollars. Many places have largely defied the sluggishness in the national economy.
These growth centers could become America’s pathway back to prosperity. They not only hold lessons for what other places can do, but they can serve as magnets for the unemployed.
“More than ever, local communities are the secret of economic success” in a global economy, finds Enrico Moretti, an economics professor at the University of California, Berkeley, and author of a new book, “The New Geography of Jobs.”
Like many scholars now studying microeconomies, Dr. Moretti sees the mobility of workers to low-employment cities as an easy solution to improve the national economy. “Your salary depends more on where you live than your résumé,” he writes.
Today’s strong local economies tend to have a high concentration of college graduates whose creation of wealth helps support those with less education. If the less-educated jobless simply move to those sorts of places, the income gap between college graduates and high school graduates would shrink, says Moretti.
The best way to reduce income inequality may be to simply change one’s neighbors.
If the presidential candidates want to weigh in on this “national” solution, here’s how: They can recognize that federal unemployment insurance now provides an incentive for the jobless to stay put. That can change, however, if the unemployed are provided information on jobs in thriving states and cities and then given vouchers to help them move.
Such “mobility vouchers” would not only help the jobless find jobs but also give those who stay behind a better chance of finding work, Moretti states. Currently, only one federal program, called Trade Adjustment Assistance, provides some financial help for laid-off workers to move.
Communities in decline that experience an exodus of workers may stay in decline. They should be the focus of the 2012 election campaigns. (Note that both Mr. Obama and Mr. Romney gave their speeches in hard-pressed Ohio.)
As healthy communities show, it is largely local and state policies that help create the conditions for a place to find its peculiar economic strength. In today’s knowledge economy, especially, the communities that draw people together to engage each other in a sharing of ideas tend to generate the new businesses that create jobs. There’s no reason that the jobless from other places can’t join in that growth.