US is a nation of regions, not states

Readers of The Resilient Investor will remember that our picture of more vibrant local economies is rooted in a shift from national and international trade networks toward increasingly vibrant regional economic systems.  A recent article in the NYTimes speaks to the emerging regional character of the US economy and society, suggesting that national policy should be redirected from state-specific funding, and instead nourish the already-emerging regional networks, which can then breathe new life into their surrounding rural areas and depressed smaller cities:

America is increasingly divided not between red states and blue states, but between connected hubs and disconnected backwaters. Bruce Katz of the Brookings Institution has pointed out that of America’s 350 major metro areas, the cities with more than three million people have rebounded far better from the financial crisis. Meanwhile, smaller cities like Dayton, Ohio, already floundering, have been falling further behind, as have countless disconnected small towns across the country.

Here’s the map of the US that the authors suggest we begin to plan around (click for larger version):

US regions map

The full analysis is well worth your time (and also worth being one of your precious 10 NYT articles this month); but, knowing that not everyone will feel they have a click to spare, we’ll excerpt the article a bit more freely than usual below. (UPDATE, 5/5/16: The WaPo followed up with six more maps and an interview with the author behind them)

The idea is not to literally reshape the map of the US, but rather to change the lens through which we pursue economic and infrastructure development.

We don’t have to create these regions; they already exist, on two levels. … Federal policy should refocus on helping these nascent archipelagos prosper, and helping others emerge, in places like Minneapolis and Memphis, collectively forming a lattice of productive metro-regions efficiently connected through better highways, railways and fiber-optic cables: a United City-States of America.

A key point is that regional planning is not, of course, a radical or new idea:

Congress was once a world leader in regional planning. The Louisiana Purchase, the Pacific Railroad Act (which financed railway expansion from Iowa to San Francisco with government bonds) and the Interstate System of highways are all examples of the federal government’s thinking about economic development at continental scale. The Tennessee Valley Authority was an agent of post-Depression infrastructure renewal, job creation and industrial modernization cutting across six states.

Indeed, the National Governors Association is spearheading regional collaboration, and several regional initiatives are underway, including high-speed rail planning in the intermountain west (Phoenix-Salt Lake City-Denver).  However, old habits die hard, and by and large, Congress is still driven by state-directed funding systems.

What would this approach look like in America? It would start by focusing not on state lines but on existing lines of infrastructure, supply chains and telecommunications, routes that stay remarkably true to the borders of the emergent super-regions, and are most robust within the new urban archipelagos.

Connectivity isn’t just about infrastructure; it’s about strategy. It’s not just about more roads, rail lines and telecommunications — as well as manufacturing plants and data centers — but where those are placed. Getting that right is critical to getting the most out of public investment. But too often, decisions about infrastructure investment are made at the state (or even county) level, and end at the state border.

….

Consider how parts of the Rust Belt could benefit from this approach. A Midwestern high-speed rail network that ran from Southern Illinois to Southern Michigan would not just link wealthy investment hubs like Louisville, Ky., and Columbus, Ohio; by tying in high-unemployment cities like Dayton, it would make it easier for workers to commute to where the jobs are.

While much of the analysis focuses on the central role played by regional metropolitan areas (e.g., that “United City-States of America” tagline) and improving prospects of neglected smaller cities, this approach would also benefit the rural areas between the hubs.

Such networks would just as easily help poor and rural areas, like Appalachia. Upgraded transportation corridors between New York, Washington and Atlanta could finally lift Appalachia’s isolated and stagnant towns stretching from New York to Alabama by facilitating investment in farms and vineyards, food processing and eco-tourism.

In our view, this element of the idea needs to be more fully fleshed out.  It’s not only the mid-sized cities like Dayton or Fresno that need to be rewoven into the fabric of these regional networks—it’s the many small cities (25,000-50,000 in population; hubs of their counties) and their surrounding towns of under 25,000 residents—where many of the regional farms are, as well as increasingly web-connected small companies—that would most benefit from becoming tightly bound into vibrant regional economies.

All in all, we like this new “big picture” of regional economic planning.  While  the vision of rejuvenating local economies is at the heart of resilient investing (because local resilience in the face of an uncertain future is so important), we know that full local self-sufficiency is not realistic, practical, or necessarily even desirable—becoming insular is not resilient.  Most importantly, it’s far easier for small local companies to tap into regional supply and sales networks than it is for them to become competitive in the global, or even national, economy—while these regional nodes can build strong links to the international economy.  This is why we see regional economies as the key to unleashing the potential of the localization movement.

National policies that build on the character and needs of these emerging regional economies, while also diligently weaving together the smaller local economies of the surrounding territories, would be a big step in the direction we envisioned in the concluding chapter of our book, “The Invisible Heart of Resilience” (quick intro here).  There, we sketched out a picture of our resilient future, where building your individual resilience requires you to also foster local and regional resilience, which in turn leads to economic and political priorities and decisions that support national and global resilience.  It all starts with recognizing how your personal actions can support healthy, equitable economic and social choices at each of the nested scales within which your life choices ripple outward.

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