By Julia Pamilih
As a part of our event on the role of place-based policies to address economic distress, Professor Gordon Hanson hosted a conversation with Heather Boushey, Senior Research Fellow at the Reimagining the Economy Project, and former Chief Economist for the Invest in America Cabinet .
During her four years in the Biden administration, Boushey played a major role in building and selling a bouquet of industrial policies, including the Inflation Reduction Act (IRA), CHIPS & Science Act, and Build Back Better. Boushey and Hanson’s conversation focused on how we can come up with a nationwide economic development agenda that can bring the country together. Here are five key takeaways making a place-based economic strategy that works.
- Tying together place and production
Boushey emphasized the need to focus on not just what we make in the U.S. but also the importance of where that production happens. For example, the design of policy to promote investment in clean energy included tax credits that were more generous in economically distressed areas. These tax credits were more widely oversubscribed than projected, but the process of preparing communities for clean energy investment highlighted the importance of capacity. Tax credits were designed to avoid picking winners and losers but the government’s role evolved to helping a wide range of communities build the capacity needed to develop competitive investment plans for these grants.
- Workforce policy needs to be front-loaded
While U.S. employment fell below 4% in 2022, a tight labor market exposed a key vulnerability in industrial policy. While the U.S. may be able to fund factories, you cannot simply conjure up skilled workers. For example, there is no existing U.S. battery making labor pool, and many communities ended up scrambling to retrofit training programs in real time. Furthermore, initial grant phases often prioritized design plans over implementation, wasting precious months when money was readily available.
Place-based industrial policy programs should front load workforce development, developing earlier partnerships with community colleges, apprenticeships and local training providers. This will enable projects to move faster once funding flows. The Biden administration sought to achieve this with Workforce Hubs as a showcase of good workforce policy.
- The importance of communication
Good policy takes many years to deliver visible results, but public support often hinges on quick, tangible wins. Proactive communication is important because the process is otherwise invisible. The public is unlikely to notice the intricacies of technical grant workshops or six-year permitting timelines, but they do notice jobs when factories open.
Success stories, such as the $4 billion Nucor green steel park in West Virginia, may underplay the importance of the federal dollars and regional coordination that underpinned their success. Government storytelling is vitally important to highlighting the local champions and sustaining public and political support for place-based policy.
- The state as connective tissue
Economic development leaders can be the key to success when they tie together manufacturers, business leaders, and community colleges and universities. Boushey cited cases of success in areas where a particularly proactive state or local economic development lead had worked with the community for many years to build a plan, such as to make that part of the country a battery hub. The state was playing the essential function of connective tissue for economic development, yet – in what was a repeated theme of the discussion - Boushey warned that we are not yet telling those stories well.
State and local governments also play an essential role in building trust. Rural and economically distressed communities may view the federal government as distant or unreliable, hindering collaboration on projects like solar panel siting or regional workforce hubs. Given the current discussion around ‘abundance’, Boushey noted that we need to bring people along and ensure that local conversations and problem-solving are still happening around permitting.
- The risks of fragile institutional memory
The conversation turned to continuity. Today’s default is that the federal administration alternates between parties every four years, making it increasingly important to codify lessons from one administration to the next. A shrinking career civil service, combined with the rising number of more transient political appointments, risks losing technical know-how and institutional memory. This makes it all the more important to codify the stories of how success happens, which partnerships work and what is possible in place-based policy.
