Michigan's Next Step: A Conversation with Bruce Katz

Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institute, has a message for Michigan: alternative energy, sustainability, and an export-driven culture are what will distinguish us in the new economy.

He also says it's time the state embraced its cities -- not its suburbs, exurbs, and small towns -- as the true way forward. Like it or not, it is where the nation is heading in terms of talent, innovation, and growth. Urban centers are the great incubators, Katz claims, reshaping our nation's culture, policy, neighborhoods, and economic policy. Michigan ignores this trend at its own peril.

To compete in the global economy, says the vice president of the Brookings Institution, the state must revise and evolve its ideas about how to achieve economic prosperity.

Katz was in Lansing recently and talked to Capital Gains news editor Natalie Burg.

What message do you have to share with Michigan today?

I'll be talking about the need to move to a different economic growth model in the aftermath of the recession. So, I think the economy that preceded the recession was characterized primarily by consumption and debt and, frankly, innovating in the wrong things. And so for the country as a whole... we need to shift to an economy that is driven by exports and powered by low carbon and fueled by innovation.

And cities... are really the vehicles for getting us to that next economy because they really concentrate all the assets that matter.

Can you talk about your emphasis on the importance of these metro areas as opposed to "small town America"? Does that mean, for Michigan, just Detroit or also mid-sized cities like Lansing and Ann Arbor?

I think all of the above. I think Michigan has 15 metropolitan areas. They're about 80 percent of the population and about 85 to 86 percent of your economy. You've got two big ones, Detroit and Grand Rapids. And then you've got Ann Arbor, Lansing, the Mid-Michigan metros, Flint, obviously. Every one of these places has sort of a distinct set of assets and attributes.

Frankly, they relate to each other more than people think. Because of the auto supply chain, because of life sciences or because of food to market. This is a very integrated state in some respects, compared to other states where the western part of the state has nothing to do with the eastern side of the state. This state is actually more of a holistic economy.

So, I think the challenge for Michigan is really the challenge for the country: to understand that as you move to this different kind of economy, what you want to do and what you want to build on are the distinct assets of different places.

The U.S. has been through 30 years of what I would call cookie cutter growth. It never differentiated between Detroit and Denver, or Charlotte and Cleveland. Because the growth was consumption-led, it just focused on retail and housing. Well, there isn't that much difference between a Wal-Mart in suburban Detroit and a Wal-Mart in suburban Denver. There's a huge difference in between what Detroit exports and Denver exports. Or what Grand Rapids innovates on and what another metro in the country innovates on.

So differences actually matter and they should be exploited and leveraged. I think that's a very powerful message for the country.

So, what you're saying is that Michigan, because of our manufacturing base and integrated economy, is in a good position on that road to retooling?

I think manufacturing, innovation, a global orientation, frankly, a receptivity to immigration… From the governor on down, the talk about immigration in this state is quite different than the talk in, say, Arizona. Being receptive to immigrants at this point in time in the economic cycle is very powerful, because there are lots of talented workers who could be coming here from China, India. They're coming here as students already. We should really try to keep them here. You already have a strong level of foreign investment from Japan and Germany. You're very open to this, unlike other parts of the country.

You, potentially, are well aligned with this different kind of growth model. I mean, in other parts of the country all they've had for 15 or 20 years is housing growth. I don't think that's how you -- housing is a derivative sector, it's not a driving sector -- you don't build a national economy based on housing. You build it based on manufacturing and innovation and exports.

One thing you've mentioned as a priority for the new economy where Michigan may have room to grow is your emphasis on low carbon and mass transportation. We don't have a lot of high-speed rail here. Should that play into our retooling?

We all need to recognize that the transition to the low carbon economy is very real. This is not an environmental imperative only; it's a market proposition. And other parts of the world, particularly China and Germany, are trying to out-compete us on alternative energy and clean energy. It covers a broad swath of issues.

I think what Michigan needs to reckon with is which part of the low-carbon economy can you be best at in the world--not just domestically, but in the world. I do think that because of your manufacturing heritage you might be the production center for the low carbon economy. We need to manufacture solar, wind turbines, sustainable infrastructure, sustainable products.

You've said that metros will drive the new economy, not "small town America." What about the rural areas of Michigan that are set apart from metros? How do they participate in the new economy?

Most small towns are part of metro areas. A lot of places that are on these national lists -- "best small town in America" -- are basically suburbs of metropolitan areas. They exist because the metropolitan areas are the growth engines. Most of the people who wake up in a small town commute somewhere else, unless we're just talking about retirement communities for people with means.

I think we need to understand frankly how the country functions in this century, as opposed to how it functioned in the 19th century. It's a completely different economy today here and abroad. 

The power of China, the power of India, and the power of Brazil are [rising] because they are urbanizing and they are building powerful metropolitan economies. We are the most powerful metropolitan nation in the world. If we don't understand that, we will lose our ability to compete.

Do you expect this to happen naturally? Are people going to start moving into cities more frequently, or do we need to encourage them to, as a state?

They already are. The natural market has allowed our metropolitan areas to grow, not just in population, but in economic power. Because the global economy rewards concentration and agglomeration of assets. The U.S., culturally, likes to think of itself as a network of small towns. It's always been anti-urban, and now anti-metropolitan in its psyche. It's time to get over it.

This interview has been edited and consolidated. The original version of this Q&A appeared in Metromode's sister publication, Lansing-based Capital Gains.

Natalie Burg is a freelance writer and the news editor at Capital Gains.

Bruce Katz photograph copyright Jim Harrison.
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