The recent elections have unleashed a blog storm, involving just about everyone with a keyboard, so we see no reason to be any different, the fact that we know little about politics notwithstanding. What we do know something about is economic development and the influence of federal government actions on local economies. Certain assertions in that regard will preface further discussion:
- Although residents somewhat familiar with their local economies might believe the federal government has little direct influence on them (assuming it is does not have an unusually strong local representation due to the presence of a military installation, major government contractor, or the like), this is not a generally applicable assumption. It may be true when things are going well or following some normal pattern, but not when turmoil is evident.
- Since the federal government, historically and generally, lacks an overall strategic direction, and is therefore subject to the whims of either the chief executive of the moment or some other passing high-profile actor, government involvements and commitments can change at any time. Since the federal government operational managers (not necessarily politicians) seem also to have little concern for local economies affected by policy shifts, changes can occur without warning.
- While the economy runs on transactions, the underlying basis for transactions is confidence, at all levels of society from corporations and institutions to, especially, the individual consumer.
- Markets, as a rule, respond negatively to uncertainty, which erodes confidence. The larger the scope of uncertainty, the more the overall economy is likely to either stagnate or veer off in directions based on inference rather than fact. When uncertainty is focused largely on a single or few policy issues, specific sets of industries can feel the effects much more than the general economy.
- Some government effect that might be “good” for a local industry might be less desirable for the economy as a whole, either immediately, or over time.
- The government, the federal government especially, is one institution, and perhaps the only one, that can temper the short-term-profit motivation that pervades the “free” market – a role that is sadly neglected.
So, what should localities do to minimize their risks in an uncertain federal environment? After reviewing your situation for direct vulnerability, given the local and regional industry composition, assess the likelihood for disruption and craft proactive strategies appropriate for such conditions, ensuring to the extent possible that re-training capacity is available, existing workplaces are adaptable or else alternative sites are ready, and the like. In general, federal uncertainty provides another excuse to promote diversification of the economy, which is almost always a local economic development goal anyway. Regional and state collaboration can offer another path to further isolate the area from federal influence.
In short, economic development is often at its best when creative responses are needed to address new issues. Stakeholders need to be made aware that current politics are a stimulus to building more self-reliant local economies.