Better Boat Building;

 

She was the luxury liner everybody wanted, one of the flagships of America's new industrial fleet. When General Motors Corp. launched a national lottery for its Saturn plant location site in 1985, more than 30 states became ticketholders in the $5-billion, 6,000-job sweepstakes. For eventual winner Tennessee, the loot is yet to be counted; like the Titanic, however, the great Saturn treasure hunt was really a relic of a by-gone era. As much as states still covet grant vessels like Saturn, they have also learned that larger fleets and better shipyards add up to sounder insurance policies against stormy economic weather.

"A state can't simply identify one or two things and say, 'This will fix the economy," says Scott Fosler, vice-president and director of government studies of the Committee for Economic Development, a research organization in Washington, D.C. "It needs a wide range of [initiatives] that interact with each other. That's why you see the shift now away from attracting outside industries to promoting entrepreneurial climates within states."

James Gollub, senior policy analyst at SRI International, expands on the concept. States are beginning to look at their economic environments, he says, "like asset portfolios they can watch over and invest in appropriately. Government can do things an individual market can't. Good economic infrastructure helps industries adapt more effectively."

What's new about the current climate is that states are beginning to recognize, and act on, all the elements of good economic infrastructure -- tax policies, regulatory climates, transportation facilities, educational systems, and so on. As part of their overall economic development strategies, for instance, such states as Alabama, Florida, Texas, Arkansas, North Carolina, and South Carolina are pouring unprecedented sums into public education in general and vocational-technical education in particular. Tennessee has made the same commitment, a factor GM cited in sending Saturn there. Still others hope to emulate such successful technology-transfer programs as Pennsylvania's Ben Franklin Partnership and Ohio's Thomas Edison Program, which match academic resources and researchers with support systems for launching commercial technology ventures.

Gollub points out, however, that states can take other measures that don't necessarily require spending big bucks. For example: identifying market opportunities and/or capital resources, then brokering this information to the business community; initiating regulatory changes in banking, insurance, and telecommunications; and establishing loan guarantees, loan-loss reserves, and revolving investment pools. Robert Friedman, of the Washington-based Corporation for Enterprise Development, adds that it's not so much individual initiatives that count as "putting them together in a context." What used to be thought of as "social" policies -- education, welfare programs, and the like -- are being combined with purely economic policies, and the whole is greater than the sum of the parts.

Herman Leonard, associate professor of public policy at Harvard University's Kennedy School of Government, agrees. Once, he remembers, he saw a "Doonesbury" cartoon in which Vice-President George Bush repeated the old saw that a rising tide raises all boats, and was challenged with the question, "What if you don't have a boat?"

"Good economic policy," says Leonard, "is making sure everyone has a boat."