Valley must accentuate the positive

Posted on December 13, 2004 | Type: In the News | Author: Satya Thallam
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There's no doubt much to love about living in the Valley and in a state like Arizona.  But an ongoing assault on that attitude has been taking place for some time on our airwaves and editorial pages, prompting me to suppose otherwise.  

Is Arizona in fact an inherently backwards-looking place, where the policies of the last decade have withered what little chance we have at a thriving economy?  Considering the intelligentsia's penchant for spurning everything we have to offer, maybe those of us who enjoy it here have it all wrong, merely living in a fool's paradise.

But we certainly aren't alone. People have myriad options on where they choose to live, and their decision makes a statement about the desirability of different places. During the 1990s, and again from 2000 to 2003, Arizona had the nation's second-highest gain in migration from other states. Who are we to argue?

Phoenix's Hardship Index (a Rockefeller Institute measure that accounts for things like unemployment, income, poverty and education) dropped from 49th to 64th out of the 86 cities studied over the '90s.  A declining rank means things are getting better, and at a faster rate than elsewhere.

Last year, Arizona had the nation's second highest rate of job growth.  A third quarter '04 assessment by the Federal Deposit Insurance Corporation ranked Arizona 11th nationally in growth of new businesses, and the Valley 18th out of 281 metro areas for overall job growth.  The state added over 25,000 jobs in October alone, the best October in seven years. 

Researchers David Friedman and Joel Kotkin identify Phoenix as being among the 15 best metro areas for doing business in an Inc. Magazine ranking released in March.  Not surprising, considering Arizona is in the bottom third for cost of living.

Add to that the Milken Institute's just released 2004 Best Performing Cities index, which ranks the 200 largest metro areas according to parameters such as job and wage growth, high-tech output, and entrepreneurial activity.  Phoenix ranks third in the nation.   

So what's to complain about? 

To start, some see Arizona as an "old economy," lacking a visible high-tech concentration like those in Massachusetts and California.  Using the state's relatively low level of venture capital as proof, some have called for public subsidies for the high-tech industry as a means to move toward a "new economy."  Nobel laureate Gary Becker once wrote in his BusinessWeek column, "Subsidies generate safe" startups that appeal to bureaucrats, not market demand. Silicon Valley could never be reproduced through bureaucratic hothouse support."  In the meantime, technology hubs Boston and Silicon Valley have hemorrhaged almost 300,000 jobs since 2000, while Phoenix has gained 100,000. 

Others complain of a dearth of cultural amenities.  In particular, Phoenix, as Arizona's economic hub and the fifth-largest city in the country, lacks the vibrant downtown core thought to be crucial to a healthy and sustainable economy.  The failure "to achieve an appealing, livable downtown" (as one columnist put it) has in turn fueled massive downtown redevelopment efforts on the public dime.  Notwithstanding anecdotal evidence to the contrary, this kind of focused and exclusionary development strategy has failed to produce significant effects elsewhere.  Indeed, some research indicates that the strength of a downtown's economy may be more dependant on the growth of suburbs.   

The two contrasting views of Arizona stem from a fundamental dissonance on the role of the public sector. 

Pessimists see Arizona's successes as having occurred in spite of an apathetic government.  To get to where we want to be, "we" (meaning the public sector) need to do more.

Optimists see a thriving economy, a suitable place to work and live, and prospects for the future because of relatively low government involvement.  Indeed, as the 11th freest state in the country according to Forbes and the Pacific Research Institute, opportunities abound in a place that an increasing number of people see as their best option among many. 

In either case, misidentifying what is good and bad about this place threatens to turn what is now an economic success into a paradise lost.

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