Expert: North Dakota should shift from subsidies

Karl Stauber offers a vision of North Dakota as a new economic frontier.

He envisions a North Dakota that has gone further to wean itself from farm subsidies and has done a better job of capitalizing on its social and environmental amenities.

By Patrick Springer
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The Forum

“What if North Dakota were to say that we’re going to engage in a 20-year investment strategy that would say we’re going to be one of the most entrepreneurial places in the country?” he said. “We’re going to set our course on that star.”

Without a bold vision – pursued rigorously over time – North Dakota will fall behind in a changing world, said Stauber, president of the Northwest Area Foundation, a think tank based in St. Paul that fights poverty in the upper Great Plains.

“It would seem to me that the key question is how does North Dakota invest its private and public resources in ways that create competitive advantage,” he said.

By competitive advantage, Stauber means North Dakota must do a better job of identifying the goods and services it can produce better and more profitably than anyone else – and then aggressively pursue them.

That won’t be easy, because the state has grown so dependent on farm subsidies, which send the message to farmers to keep growing commodity crops like wheat.

To have a more promising future, North Dakota must agree on a collective vision and be willing to break from the comfortable past, Stauber said.

That demands strong leadership, he added.

“The leadership in the state has to stand up, set a course, and take the political heat for it,” he said. “You’ve got to distinguish yourself from the rest of the country.”

North Dakota has done that in the past, Stauber said. About 25 years ago, the state was recognized as a national leader in its accomplishments in education.

“So North Dakota can do this,” he said. “But it requires courageous leadership, and it requires a vision of creating competitive advantage and not protecting the status quo.”

The status quo, hardly a road to prosperity, is jeopardized because it is increasingly difficult to sell the need for farm subsidies to an America dominated by a suburban middle class far removed from agriculture.

The old “social contract,” where rural America fed the nation, no longer exists in a world of global trade – and therefore it must fill a broader role.

Joel Kotkin, author of “The New Geography,” said policymakers must shift from subsidies toward the kind of investment strategy proposed by Sen. Byron Dorgan, D-N.D., in the New Homestead Economic Opportunity Act, which would offer tax credits and venture capital for high out-migration counties.

Incentives should be targeted toward jobs that reward educated, technologically accomplished workers – low-wage, low-skilled jobs will continue moving to developing countries with much cheaper labor costs, Kotkin said.

“The problem is your state government seems to be focused on the old ‘chip chasing’ that will bring $7.50 jobs that will be moving to India anyway,” he said.

Kotkin, who has visited North Dakota several times on speaking engagements, agrees with Stauber that farm subsidies and government transfer payments, such as Social Security, stifle innovation and breed a social climate that shuns risks.

“I think the problem is you have a sort of gerontocracy and a landed gentry who are in control,” older residents and landowners who benefit from government subsidies, Kotkin said.

“The great problem for this part of the country is the people who could save it are saying ‘I can’t fight the entrenched interests,’ ” and so they leave, he said.

North Dakota has done well in investing in its higher education system, Stauber said. He essentially echoed the discussion that has been made by the state’s Higher Education Roundtable, and called for the state to use its campuses as engines for growth.

“You have excellent public research centers in North Dakota,” he said. “Now the challenge becomes how do you get them to create economic opportunities in Stanley, N.D.?”

Curtis Stofferahn, a rural sociologist at the University of North Dakota, said the state should alter course and pursue a strategy focusing more on making greater investments, public and private.

“So far, we’re not willing to invest in this state,” Stofferahn said. “It’s all federal dollars. We’re a federal economy. If we’re going to do something for North Dakota, we’ve got to step up to the plate and do something ourselves.”

Again, Stauber said, the state needs strong leaders to pull people together to strengthen the economy and to create better opportunities.

“Where’s the leadership?” Stauber asked. “Where’s the group of people who are willing to take the risks, willing to chart the course based on the best discussion?”

Readers can reach Forum reporter Patrick Springer at (701) 241-5522

http://www.in-forum.com/articles/?id=24990