It's about time for the state to take advantage of its relationship with China, by investing now in schools, transportation, and trade.
Let’s face it, the last few years have been pretty depressing all the way around. People are struggling to hold on to their homes and health care, and to provide for their children’s education. Meanwhile, we’re stuck in two wars and rebuilding two countries that most analysts believe would be the same whether we left now or in 2014.
And our state government is forced to make deep cuts that hit those who can afford it least: the working poor. It’s hard to be optimistic about the future.
But in the spirit of the New Year and hope, I offer the following as evidence that our best days are indeed in front of us. That is, if we dare to be bold and take advantage of our uniquely competitive position as a region.
Washington state is positioned to become one of the most important players in the most important relationship in the world — the one between America and China.
And the key to developing a strategy to take advantage of future opportunities lies with us: our schools, transportation and trade infrastructure, and the creativity and energy of our Puget Sound region. The White House and the Brookings Institution have finally recognized the importance of urban regions in fueling the national economy and are shifting policies and funding strategies to acknowledge and foster regional strengths.
The White House is keen to develop an export strategy in order to jump start the economy. Governor Gregoire talks up exports, as well, emphasizing just how trade-dependent our state really is. And we have the infrastructure in the Puget Sound to be an export power. It’s hard to find another area that has as much potential to increase manufacturing and produce agricultural products, and that has ports as strategically located for access to the growing Asian markets.
A recent KUOW program detailed how the growing wealth in China was leading to an infatuation with French wines — much to the delight of the French. We make quite a bit of wine in Washington state too, along with many other products that could help tip the trade balance in our favor in the very near future. But in order to export high-value products, we need innovators and a place for them to develop, land for manufacturing, and access to ports and rail infrastructure.
The executive director of the Puget Sound Regional Council, Bob Drewel, is working to help leaders understand the importance of thinking as an economic region. The Prosperity Partnership, formed after the region successfully ensured that the Boeing 787 would be made here — or at least put together here — is refocusing its efforts. Now the partnership is working to develop the next generation of planning and advocacy: the Regional Business Plan, aimed at understanding our strengths and weaknesses in order to guide government investments in education, infrastructure, and technology.
The advocacy role of the partnership is more important than ever. But taking advantage of our strengths and opportunities won’t be easy and will require optimism and forward thinking.
The devastating cuts in the state’s budget threaten to weaken many of the advantages our region enjoys. Cuts to the University of Washington, and higher education generally, come at a time when we most need an educated workforce and strong research institutions. If we put higher education out of reach for our citizens we threaten our economy and the upward social mobility that has always been America’s promise. And if we starve higher education of public support, we will weaken our ability to develop the cutting-edge products of the future that no one has even thought about yet.
Similarly, we need to continue to invest in our infrastructure in a timely manner to both attract and retain the large employers and the startups. There is no better time to do that than right now, with the positive bidding environment and high unemployment in the construction sector. The countries that are on the rise are doing this. India, Brazil, and China are growing fast and investing in their ports, rail, roads, bridges, and transit. Our economic growth rate is anemic at 3 percent compared to the rates of growth in China, India, and Brazil, all over 8 percent.
Optimism is on the rise in those countries as well, while an ever larger number of Americans believe our best days are behind us. According to a Pew Research Center poll, 87 percent of Chinese believe their country is moving in the right direction compared to 30 percent of Americans.
I believe this pessimism is partly responsible for our inability to do big things. This is why locally we see our elected leaders shrinking back from big challenges and instead “playing small ball” by taking on highly localized issues like bike lanes, phone-book bans, and urban chickens. These are good issues to tackle, but they are not going to give us what we really need: a competitive region that produces jobs for our people.
Local leaders need to better understand the interrelationships between the public and private institutions that drive our economy.
At a recent Seattle City Council meeting, Councilman Mike O’Brien questioned Seattle Port Commissioner Gael Tarleton about the need to compete against other ports for import business. The discussion began during a port briefing on international competitiveness, the widening of the Panama Canal in 2014, and the rise of new and expanding ports. O’Brien questioned why we wanted to increase imports as it was a symptom of our culture of consumerism and ultimately damaging to our environment.
I absolutely agree that we cannot continue to be a consumer- and service-based economy, and that is why I disagree with O’Brien’s comments. Let me explain. The Puget Sound ports of Tacoma and Seattle began as export-driven ports. While it’s true that they are largely import-driven now, with 70 percent of imports moving to Chicago and points east, the empty containers returning westward by rail are export opportunities for this state's homegrown products.
In a recent Seattle Times opinion piece, Joseph Borich, president of the Washington State China Relations Council, wrote about Washington state’s unique relationship with China and the opportunities that it affords. We benefit greatly by our exports to China; our trade deficit is only 13 percent while the national trade deficit is a whopping 326 percent. Our state exports to China in 2010 will likely reach $9 billion. And with the trends in China what they are — increased wealth and a large and growing middle class — there is no limit to how much that figure can grow.
But we have to understand what our exporters need and how that relates to our import facilities. In fact, during the shipping downturn of the last two years, there was a container shortage for exporters. So every import is an export opportunity.
Additionally, having strong ports and the accompanying infrastructure — roads, bridges, and rail — means that we would be well-positioned to develop and ship the new products of the future to the growing middle and upper classes in China and the rest of Asia. Boeing also needs the port and the manufacturing area that surrounds it for suppliers as it turns out a 737 every day of the month from its Renton plant.
Growing companies on the east side of the state depend on this infrastructure as well. Companies that export electronics, aerospace, and pharmaceutical products, like ITRON, Triumph Composite Systems, and Hollister Stier, are driving the economy in Spokane while providing longshore and transportation jobs at our sea and airports. There are many others around the state as well that depend on Puget Sound’s location and infrastructure for the growth and productivity of their businesses.
Port Commissioner Tarleton understands these issues well and explained them to O’Brien. She will be president of the commission next year. I hope and expect she will continue the work of current Commission President Bill Bryant to continually reach out across the state to help people understand the strategic importance of our ports. (Jan. 4 update: It now appears likely that Bryant will serve another year as president.)
As exciting as these opportunities are, the basic infrastructure needed for exporting goods and simply getting around the region is under threat. The 520 Bridge, the Alaskan Way Viaduct, and Seattle’s seawall all need to be replaced.
These are strategic regional resources that are the platforms for our economic competitiveness. Past leaders in government and business in our region have invested money and energy in building and protecting our manufacturing and industrial base. Other regions have decided to move in a different direction and are now suffering severe economic impacts and an erosion of the middle class.
Portland is an economic cautionary tale. They have been hit harder by the Great Recession than almost anywhere else. And although Portland is held in high regard by urban planners for its ability to plan regionally, it simply hasn't had the economic diversity to insulate itself from the downturn. According to a study of wage and job growth by Brookings and the London School of Economics, Portland dropped from a pre-recession rank of 45th to 139th among 150 metro areas, one of the steepest declines in the survey.
The study does include a bright side, saying there are opportunities for export to growing Asian markets for those metropolitan regions with the infrastructure to support it.
And a new study by a consortium of Oregon business groups details similar findings. In fact, Portland’s economic woes are hurting Washington’s Clark County, whose 13 percent unemployment rate is worse than the Washington state average of 9.1 percent. This is largely due to Clark County’s reliance on the Portland area for jobs, a connection that some in Clark County are beginning to rethink.
Here in Puget Sound, we need local elected leaders to think beyond political boundaries and think instead of how goods and services are produced and move through our economic region. Markets and economies do not follow political boundaries. The New Year will bring new opportunities to explore regional cooperation on a number of big transportation projects. There will be pressure to sink back from big challenges and play it safe, to focus on local issues. This would be a mistake. The time is now to invest in the future, which looks incredibly bright for our region.
Happy New Year!
