Don't Just Do Infrastructure. America Needs Comprehensive Economic Development
Dr. Rob Cohen | 7/13/2018, 6 a.m.
President Trump recently proposed a $1.5 trillion infrastructure program. It's generally a good idea but infrastructure alone will not produce long-term inclusive growth. To achieve that, America instead needs a comprehensive economic development strategy. That means struggling communities must invest in many different types of capital: infrastructure, health, education, and small business development.
Whether in urban Baltimore, rural Appalachia, or the open west, stagnation and poverty aren't caused by a singular lack of infrastructure, health, education, or jobs. Struggling Americans face deficits in all. High-poverty counties in the United States have a lower life expectancy than many developing countries. Education is poor, unemployment is high, and infrastructure is inadequate.
Contrast this with regions that are booming. For example, New York City has a dynamic school system, a thriving job market, and the nation's best public transportation. While jobs are the most important intervention, they're not a magic bullet. Different development sectors reinforce each other. You cannot take advantage of job opportunities if you're not healthy or if you don't have the right education.
This theory is well tested. In the field of international development, where I work, we operate from the principle that multi-sectoral programs synergize for sustainable growth. This strategy enabled the 20th century development miracles of Singapore, South Korea and Taiwan, among others. These countries grew from poverty to wealth by investing in their people alongside infrastructure and businesses.
This was also America's original development strategy; we once led the world in education. It likewise guided the Marshall Plan that helped rebuild Europe after World War II. We must rediscover this strategy. And local communities should lead the effort. Local ownership fosters employment and a sense of purpose while optimizing the investments for local needs. One community might need infrastructure; another needs a drug treatment clinic; a third needs a high school; and a fourth could need all three.
How can we fund this proposal? Large government-funded projects are too inefficient. The stimulus legislation of 2009 found too few "shovel-ready projects" and overhauling national health care has proved contentious. The federal government's only comparative advantage is size, so it should merely provide ample funds.
Enter the states. Governors and mayors have strong local credentials and incentives to deliver. States could submit proposals for federal funding for specific projects, augmented by state money. President Obama's successful education initiative— Race to the Top— followed this model. So does the successful Global Fund to Fight AIDS, Tuberculosis and Malaria.
To fund these projects, public-private partnerships can leverage new and old private capital and talent, spur private sector job growth, and reduce taxpayer burden. Such a strategy must target the whole country. Programs that serve everyone— rather than a particular race or class— promote unity and sustainable support.
Additionally, these projects must generate real return. Fortunately, initiatives that produce returns abound. For example, the economic return from treating a community's opiate addiction is twelve dollars for each dollar invested. Quality education and infrastructure are similarly profitable. Family planning is also a crucial investment. The poorest areas of America have the highest birth rates. This stresses the already overburdened health and school systems, and increases competition for lower-skilled jobs. Our challenges today seem staggering, but America has recovered from worse. Economic development theory works, and the United States boasts the best record in world history. Now, we just have to execute.
Rob Cohen is a physician, Army veteran and international development practitioner. His book, "Boom without Bust: How Humans Can Solve Slow-Motion Emergencies" will be published in 2019. Follow @RobCohenMD.