As grim as everything seems right now, historically the economy and the country has always bounced back. Perhaps not always to the standard once previously enjoyed, but it has always rebounded.

 

So when the dust finally clears, where do you think the opportunities for growth will be Ohio or otherwise?

 

This is the challenge and question every single working American should be critically, rationally, and deeply thinking about.

 

I can't think of any off the top of my head but I think this thread should be devoted as an UrbanOhio economic think tank aimed at trying to yield positive results. There is a silver lining somewhere, we just have to find it.

I think consumer awareness, frugality, and highly regulated lending practices will be the cornerstone of our rebound.  The reason we rebound is because we learn from our lessons and emerge stronger. A U.S. financial crisis is a global crisis so it's in the world's best interest to come together and form a solution (which they are). In the mean time, maybe we should do what we did during the Great Depression and get everyone drunk.

 

Four major mistakes made during the Great Depression that aren't an issue right now (except maybe the last one, depending on who gets elected):

 

Government wouldn't lend temp. loans as a last resort to big companies including banks. 2/5 banks failed.

 

No Depositor insurance.

 

Countries worldwide imposed high terrifs and restricted trade.

 

We raised taxes and cut spending/borrowing around '32.

 

I actually think we will have to find a way to actually make stuff again.

 

The variables I'd like to know:

 

Energy prices: what is the new equilibrium?

Cost of labor: how much poorer did we get? can we become an affordable place to make stuff?

Geography: what has happened to the economies of various urbanized regions? did this kill last few surviving cities or did it crush the 'burbs like some think/hope?

 

 

Yes, we must make stuff.  Specifically trains and alternative energy equipment, but everything else too.  Basic things we use everyday that are all Chinese now.  I'm not pooping on biotech here, I just doubt it has the employment or export potential of heavy manufacturing.  It's like all we can build now is hospitals.  Are we that sick? 

 

I know this sounds reactionary but I think we need to get back to basics.  The presence of solid bread & butter industry will spawn more opportunities for the high-end stuff.  Yes we've had a brain drain overall, but a disproportionate segment of the talent left around here knows how to build things.  That knowledge base hasn't vanished yet.  If we screw around another 20 years it will.

 

All of the forces that took manufacturing out of here need to be met head on.  It may require some protectionism.  China couldn't build up their industrial sector without it and neither will we.  It will require direct investment by the government.  Tons of it.  The treasure of the nation is held fallow now by the few and that can't be a barrier any longer.  They've had their say. 

 

It's time to recognize that some mass theft has taken place.  Not just money but time.  We need to undo Reaganomics and proceed as if it never happened.  We were on the right track beforehand.  We'd be on Mars by now.  Instead we spent all our energy spreading ourselves thin in a postindustrial suburban nightmare.  Let's pick up where we left off before.  All the tools are still there, plus we have computers & cell phones.  It makes no sense that we all just have to sit here and wait for improvement to be announced from Wall Street.  How can a few hundred bankers just shut the whole world down?             

I am hearing a lot of support on the news for public infrastructure projects to spur the economy, similar to what was done back in the 1930s. Our country's infrastructure obviously has been put on the back burner, so now may be the time.  Around Cincinnati, the obviously say the I-75 Brent Spence bridge and light rail would be two biggies, but there are thousands of smaller projects that need to be addressed as well.

 

These investments do work,  When I lived in Denver, the building of DIA was an economic development investment meant to help dig the area out of the doldrums of the energy crisis that had devastated the state.  Well it really worked, it got that place rolling again and they learned from their mistakes to not put all of their eggs in one basket and diversify their economy.

Yes, we must make stuff.  Specifically trains and alternative energy equipment, but everything else too.  Basic things we use everyday that are all Chinese now.  I'm not pooping on biotech here, I just doubt it has the employment or export potential of heavy manufacturing.  It's like all we can build now is hospitals.  Are we that sick? 

 

I know this sounds reactionary but I think we need to get back to basics.  The presence of solid bread & butter industry will spawn more opportunities for the high-end stuff.  Yes we've had a brain drain overall, but a disproportionate segment of the talent left around here knows how to build things.  That knowledge base hasn't vanished yet.  If we screw around another 20 years it will.

 

All of the forces that took manufacturing out of here need to be met head on.  It may require some protectionism.  China couldn't build up their industrial sector without it and neither will we.  It will require direct investment by the government.  Tons of it.  The treasure of the nation is held fallow now by the few and that can't be a barrier any longer.  They've had their say. 

 

It's time to recognize that some mass theft has taken place.  Not just money but time.  We need to undo Reaganomics and proceed as if it never happened.  We were on the right track beforehand.  We'd be on Mars by now.  Instead we spent all our energy spreading ourselves thin in a postindustrial suburban nightmare.  Let's pick up where we left off before.  All the tools are still there, plus we have computers & cell phones.  It makes no sense that we all just have to sit here and wait for improvement to be announced from Wall Street.  How can a few hundred bankers just shut the whole world down?             

 

What do you mean by ''making stuff'', reverting back to an industrial economy from a service economy? I don't think that's going to happen much but eventually it will happen to an extent, regardless. Countries like China are still much lower in the pecking order and will be the ones primarily doing that. We really don't need their pollution problems over here anyway. However we would see growth in manufacturing if we can get China to agree on strengthening their currency through World Trade Organization agreements, which would help our exports. They're not playing fair, they're devaluing their currency like no other so we'll buy more of their crap. It's causing us to lose 500 Billion dollars per year.

 

As for spending, that's what a lot of people believe is what got us out of the Great Depression. While most of those public parks are fun to walk through and the government paid wages for people to dig and fill ditches and do CCC projects, I don't think anything like that would raise GDP in 2008 like say..investing in start-up technology incubators. That's not to say we shouldn't invest in infrastructure, I'm just wondering what kind of infrastructure we're talking about. Fibre Optic would be a good start! I also agree with rail transit and such. I think we're going to focus more on energy than anything else though. What we lack in massive spending, I hope we make up for in reinvigorating certain sectors of our economy (I'm assuming Barack is going to win). Hopefully we're more serious about energy now than we were in the 70s. Should help the midwest region.

We don't need to revert from the service economy, it's doing that all on its own.  How can China truly be lower in the pecking order when we owe them zillions?  They've been loaning us all of our goods, with interest.  We are not wearing the pants in that relationship.  If we want to remain "above" manufacturing for another 10 years, we'll owe them another zillion. 

 

We can make stuff, or we can not make stuff, but we can't all sell each other insurance anymore and call that a national economy.  Service presupposes industry as its basis.  Finance what?  Insure what?  Write code to accomplish what?  None of these are ends in themselves.  Certain sectors will always be indispensible-- health care, government, agriculture, etc.  But I'm aghast when people say the hospital is the new factory.  That's a hollow economy, it's the snake eating itself. 

There are very good reasons why the post-war economy had to die. The 70s really were that bad. Essentially it was the same distance from the beginning of the post-war economy that we are from the beginning of the fall of communism economy.

 

Protectionism doesn't work and would like cause a spiral of decline that would return us to a depression-era level of unemployment. Key things to remember of the Great Depression. 1. It was only World War II that got us out of it. FDR did squat besides save us from some sort of dictatorship (debatable since he was elected 4 times). 2. It was only a 'Great' Depression in the US (and the rest of the Western Hemisphere to a certain extent). For much of the rest of the world, it lasted about 5 years and they saw decent growth from the mid-30s onward.

 

We do need rebalance our tax and spending priorities away from finance capital and back toward industrial capital, but industrial capitalism has a much higher level of natural unemployment than a service/finance based economy.

We don't need to revert from the service economy, it's doing that all on its own.  How can China truly be lower in the pecking order when we owe them zillions?  They've been loaning us all of our goods, with interest.  We are not wearing the pants in that relationship.  If we want to remain "above" manufacturing for another 10 years, we'll owe them another zillion. 

 

We can make stuff, or we can not make stuff, but we can't all sell each other insurance anymore and call that a national economy.  Service presupposes industry as its basis.  Finance what?  Insure what?  Write code to accomplish what?  None of these are ends in themselves.  Certain sectors will always be indispensible-- health care, government, agriculture, etc.  But I'm aghast when people say the hospital is the new factory.  That's a hollow economy, it's the snake eating itself. 

 

The manufacturing sector can't compete globally without legal, accounting, investment banking services. You also have to realize our engineers (service economy) are responsible for innovating new manufacturing technology that increases productivity - which is a large portion of why there are less manufacturing jobs in the U.S. More work can simply be done by less people. TX, NV, and CA have all seen staggering manufacturing growth lately. Vegas alone has had 30% growth in manufacturing since 2000.

 

Shanghai, Mumbai, Johannesburg and (obviously) Dubai are all transitioning themselves for sevice economy.

1. It was only World War II that got us out of it.

 

I was told by my economics prof. that it was due to the printing of money (stimulating spending) that led to job creation as well as war spending but then again, he's a hardcore conservative and everything I've learned in school pretty much depended on how liberal or conservative the instructor is.

It's slightly more complicated. Essentially, lots of people started working and making lots of money. The feds printed lots of dollars, but then they encouraged folks to buy lots of liberty bonds and then due to rationing people couldn't spend anyway so they had to save it. So once the war was over we had recovered a large amount of the capital lost during the Great Depression and it pretty much lasted until '58 and the last bits of it disappeared in the early 70s.

The problem is not that we don't make things anymore.  It just doesn't take armies of high paid factory workers to make them.  The real issue with the industrial and agricultural economies of the Midwest is in their inability to sustain a middle class standard of living for large numbers of unskilled workers and their families.

 

Indiana produces more steel than ever.  It's agricultural output remains high.  I believe 2007 was actually the top output year ever for the state in manufacturing value added.  But the jobs and the pay are going away.

 

The future of Ohio involves:

 

- Completing the restructuring of the manufacturing sector, particularly the auto industry.  This is going to be extremely painful since it will mean many more job losses.

 

- Shrinking the size of most of its cities other than the three C's.  Realistically, a lot of people are going to need to leave Ohio in search of greener pastures.  This will also be a painful process.

 

- Adopting metro economic area based economic development strategies.  This can't involve a cookie cutter, one size fits all approach from the state.  I wrote something on this here: http://theurbanophile.blogspot.com/2008/10/new-approach-to-regional-economic.html

Ohio has to come to terms with the fact that cities are the economic unit of the global economy, and that there's a minimum scale needed to compete.  I think Ohio has very optimistic geography here, with at least three cities that are clearly big enough to compete, and several others knocking on the door.

 

- Each region should identify a mix of participating in broad based mega-trends like bioscience, but also have regional industries it targets in whitespace areas.  What Indy has done with auto racing is a great example.  Here are three Indy posts that describe what makes a good economic development strategy.  You can't just pin your hopes on a generic "bio Ohio" strategy when everybody and their brother is going after the same industry.

 

http://theurbanophile.blogspot.com/2008/05/economic-development-strategies-done.html

http://theurbanophile.blogspot.com/2008/07/more-smart-economic-development.html

http://theurbanophile.blogspot.com/2008/07/smart-economic-development-strategies.html

 

- In line with urban-centricity, there should be major infrastructure investment in the top cities.  This particularly involves highway upgrades to keep congestion low.  When markets recover, the state should look into leasing the Turnpike as a financing mechanism and should aggressively leverage tolling and public-private partnership to finance new builds.

 

- Pass a right to work law.  Repeal anti-business statutes like the pay day loan legislation, strip club regulation, etc.

 

- Strengthen the home rule powers of municipalities

 

These are some thoughts.  Clearly, each city needs to come up with its own strategy.  There can't be an "Ohio" approach since economically there's no common Ohio to cover.

 

I think the real problem is that there won't be 'greener pastures' somewhere else. So many of those greener pastures were built almost entirely on the credit bubble and real estate in particular. I don't think depopulation of the countryside solves any problems. I'd rather see a return to truely local economies, a Wendell Berry-esque vision for the future.