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Cascade: No. 68, Spring/Summer 2008

A Blueprint for American Prosperity

Bruce Katz is a man with a vision – and a plan – and if he’s right, the United States will change the way it competes in the new global economy. Katz, who leads the Metropolitan Policy Program at the Brookings Institution, opened the Federal Reserve Bank of Philadelphia’s third conference on reinventing older communities with a challenge: stop thinking of our neighbors as the competition; join forces at the metropolitan level to compete against China, India, Brazil, and Russia; and enlist our federal government as an active participant in the process. Katz thinks we shouldn’t limit our viability in a global economy by thinking small. One town competing with another is not the point. Our neighbors’ strengths and problems are ours as well, and we need to work together to make ourselves more competitive.

Katz reported that while we may think of ourselves as a nation of 50 states and countless individual counties and towns, he views the United States as 363 metropolitan areas. The top 100 metro areas are the economic engine of this country, home to almost two-thirds of its total population, and producer of three-quarters of its gross domestic product, although comprising only 12 percent of the land area. These same metro areas are the drivers of the world economy, but he believes our competitive advantage is shrinking. Countries like China and India are becoming increasingly dominant players and, Katz believes, if the individual parts of U.S. metropolitan areas do not start competing together (rather than against each other) we will have much to lose. He also believes the federal government has to be a partner in making this change.

Katz cited the Chicago metropolitan area as an example of the complexity of thinking the old way, i.e., along municipal boundaries. The Chicago area comprises one large city, six satellite cities, and 544 municipalities in 14 counties in three states. As long as governments ignore the reality that economic development and growth are regional, not municipality specifi c, we will be forever limited. Katz argued that this is the year to convince the federal government that a new model for economic development and growth is needed. He noted that not since 1952 has there been an election without an incumbent president or vice president as a candidate. This provides a great opportunity to influence change, particularly how the federal government responds to the needs of states and cities but most of all metropolitan areas. He proposed that a new partnership with the federal government can leverage the assets needed for competition. Those assets fall into four categories: innovation, human capital, infrastructure, and quality of place.

Philadelphia Mayor Michael A. Nutter and Bruce Katz, Vice President and Director, Metropolitan Policy Program, The Brookings InstitutionPhiladelphia Mayor Michael A. Nutter and Bruce Katz, Vice President and Director, Metropolitan Policy Program, The Brookings Institution

Innovation and human capital, the first two assets, are intricately intertwined. Innovation is important for new job growth, and researchers studying comparative levels of innovation find that a highly educated workforce and good research and development facilities are essential. Regions with a higher proportion of college graduates are more likely to have higher levels of innovation.

Noting that “you earn what you learn,” he suggested that all of us must be involved in improving the public education system throughout our metropolitan area, not just for reasons of equity but also for competitiveness. The fact that only 13 percent of Hispanics and 18 percent of black Americans are college graduates, compared to 34 percent of whites and 59 percent of Asian Americans, is a competitive disadvantage for all of us. While minorities are only 25 percent of our workforce now, soon they will represent 40 percent. If the U.S. workforce is not as well educated as China’s or India’s, our economic advantage will suffer.

The third asset Katz believes we must leverage is our existing infrastructure. It is not good enough to build new systems and let the existing ones – whether highways, rail lines, or seaports – deteriorate. The collapse in 2007 of the I-35W bridge in Minneapolis was a stark reminder that we cannot ignore the stresses and strains of everyday use.

Quality of place, Katz’s fourth asset, is something we all want – neighborhoods that are safe, attractive, and affordable while also accessible to parks, jobs, good schools, and a range of cultural activities.

Bruce Katz, The Brookings InstitutionBruce Katz, The Brookings Institution

Katz believes that these four assets can be leveraged best by changing how we plan for economic growth. The federal government is an important partner in planning for large intra-metropolitan needs such as railways, highways, airports, and seaports. But Katz believes the federal government should only provide incentives for metropolitan areas to determine all other needs, then step out of the way. He describes this as “flipping the pyramid” on its head, meaning the federal government would respond to local needs rather than direct them.

To promote this change in thinking, Brookings has created a leadership council and is planning a series of meetings between the party conventions and the elections to create a “Blueprint for American Prosperity.” Starting with a summit scheduled for June 12, 2008, Brookings will look to experienced leaders for their ideas. In the next year, Katz will ask these leaders how we can:

  • spur innovation in our firms and workers and create vast new markets for high-value American products and services;
  • build an educated and highly skilled workforce that is racially and ethnically diverse; and
  • accommodate the next 120 million Americans in quality communities.

He thinks that with this information we can create a new federalist compact to ensure that the federal government: (1) leads where it must by providing national direction on climate change, infrastructure, and wage stagnation; (2) empowers metropolitan areas where it should by, for example, giving metro areas the flexibility to tailor economic development policies to their own clusters of economic activity; and (3) maximizes performance by committing itself to evidence-based performance. Katz believes the federal government can be this force, if it re-thinks its role in the current global economy.

For more information, please visit www.philadelphiafed.org/community-development/events/ to hear a recording of Bruce Katz’s speech and see his slide presentation.

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