Six Questions: A vision for a new economy

By J. Patrick Coolican

Monday, April 5, 2010 | 2 a.m.

Bruce Katz, vice president of the Brookings Institution, will speak at an invitation-only event today at UNLV. He’ll also lead a panel that will include MGM Mirage CEO Jim Murren.

Katz and Brookings, whose Mountain West Initiative is at UNLV, are on the forefront of thinking about how the United States and areas such as the Sun Belt need to transform their economies. With the recession winding down, Southern Nevada will need to rethink its economy to prevent another debt-fueled collapse.

Tell us what you’ll discuss Monday.

We need to think about a different economy post-recession. We’ve got to start building an economy that is more export-oriented, less consumption-driven. It should be low-carbon and fueled by innovation and works for a broader set of our population.

Then I’ll ask what happens in a place like Las Vegas: Can you play in this new economy? You can, though it’s going to require some hard choices. It’s going to require moving beyond the economy you’ve had, that relied on real estate development, speculation and debt. Luckily, you do have some strengths. You have the potential for export of services, including your convention business. And potential for renewable energy production. All that is augmented by your proximity to Southern California.

What do we need to do?

Vegas, like most metros, cannot go it alone. You can’t build a different economy by yourself if national and state government doesn’t do what’s required. In the scheme of the national budget, these things aren’t that big in dollar terms. We’re proposing $20 billion a year in energy innovation and research. Right now, we’re at $5.5 billion. We’ve decreased our research in advanced energy development significantly since the ’80s, while other countries such as China are ramping up.

What you can do at the local scale is understand what your natural assets and advantages are and invest in them.

In the long term, we can’t do this kind of stuff, like investing in research and development at our universities, without raising taxes.

Right.

Has the shift begun at the national level?

You don’t shift overnight to an export economy after 30 years of debt-fueled consumption. This has begun to happen in the past 15 months, on infrastructure and energy, health care technology and broadband. The question is, which country is going to crack the code on solar, nuclear, wind at the idea and design level, and which country is going to produce and deploy that energy. The issue is whether the U.S. is lagging. We’re up against a level of competition that is nothing like before — from the Chinese, for instance.

And this can’t just happen at the research and development level. We need to maintain a manufacturing base because on the factory floor is where a lot of innovation happens, and because manufacturing is an important part of building and maintaining a middle class.

This sounds like an industrial policy, more like what you see in Japan, South Korea and Europe.

We have had an industrial policy. It has been, “Let’s support real estate development, residential construction and speculation, through tax policy and in other ways.” But we’ve never had a policy for productive and sustainable growth.

We’re slashing spending at our universities. This can’t be a good idea, can it?

Higher education institutions need to be efficient and effective, and every state is facing its own fiscal tsunami. But other states are taking a different path, recognizing that universities are important not just for instruction, but also for innovation. You get what you pay for.