Atlanta’s Al Bundy Economy

Today’s Courier Herald Column:

Married With Children was among the Fox Broadcasting network’s first group of successful sit-coms.  The show managed an 11 season run, and featured the life of shoe salesman Al Bundy and his family.  Al was a man of modest means getting through life with what seemed to be a deck that was always stacked against him. Whenever he was down and out, however, he could always remember that one time, back in high school, when he scored 4 touchdowns in a single game.  With his self image stuck a couple of decades in the past, and despite evidence to the contrary, Al Bundy looked in the mirror every day and saw a successful big man on campus with a bright future ahead of him.

The Atlanta region has a certain self image of itself as well.  For decades, Atlanta was on the move.  The city too busy to hate was fast growing and brimming with economic activity.  During the recessions of the 70’s and 80’s when the national economy suffered under flu like symptoms, Atlanta barely had a chest cold.

We offered cheap land, an available labor supply, a low cost of living, and a high quality of life.  Companies came here because of an attractive business climate and low operating costs.  Employees emptied the rust belt and came here for opportunities of employment.  Metro counties frequently appeared on the nations’ fastest growing list.  If Atlanta’s economy had been a 17 year old, it would have been fully capable of scoring four touchdowns in a single game.

The last decade has not been as kind to the Atlanta economy.  Once a financial center, Georgia’s banking laws which protected local community banks from, being absorbed by larger institutions saw North Carolina’s big banks move Atlanta’s banking center to Charlotte.  The high salaries pumped into the region by Delta Air lines were significantly pared after 9/11 as Delta shed jobs and cut wages to put itself back on a competitive footing.  When the 2008 financial crisis hit, Georgia’s decades of building came to a screeching halt, almost eliminating the entire construction industry, one quarter of the state’s community banks, and the many industries related to real estate.

Georgia’s economic performance numbers are now quite different from our earlier glory days.  The Brookings Institute has released its economic growth rankings of the top 200 metropolitan areas, and Atlanta ranks at number 189th on that list for 2010-2011.  Our income growth was up just .4%, while we continue to shed jobs at a rate of -.9%.  By comparison, the Atlanta region ranked 97th from 1993-2007.

The report notes that most Western European and North American economies ranked low the last few years because on ongoing recession, while metro areas in emerging economies show strong growth due to their relatively low base levels, Atlanta still ranks near the bottom of American metropolitan areas on the list.  Only Kansas City (190), Richmond (191), and Sacremento (196) rank lower.

There is still a mindset among some civic and political leaders that the region is in a cyclical blip, and that once the fallout of the financial crisis is fully digested, growth and prosperity will return to normal.  Atlanta and the rest of Georgia is at great risk if we assume that by doing nothing, we will return our peak performing glory days.

Land for growth is no longer plentiful and cheap.  The labor available from construction trades is not well matched to the skills needed for more industrial construction projects.  Georgia’s education ranking remains near the bottom of all states and is not a lure for today’s high wage technology industries.

All is not hopeless or negative.  Georgia is a natural logistical hub.  The world’s centers of commerce can be reached from Atlanta with a non-stop flight.  We operate the largest exporting port on the east coast.  Georgian’s have a natural entrepreneurial spirit and a willingness to adapt to take advantage of change and opportunity.

What Atlanta and Georgia need is a coherent strategy.  As an aging economy, we cannot expect to go back to former strengths we enjoyed as an emerging state that was cheap and undeveloped.  We must present a vision, plan, and actions that will place the state in position to leverage core strengths in order to win future opportunity.

Georgia’s economy is at a crossroads.  Sitting on a coach and reminiscing about better days will not make them return.  Developing and implementing a long term plan to meet the challenges we face today is the best way to get Georgia on track to the economic successes of tomorrow.

37 comments

  1. Max Power says:

    Charlie, I agree with almost everything you’ve written here. Sadly, I don’t think there’s an easy fix. What I would like to see is Georgia develop a second and third city so that in the future so much of the state’s economy wouldn’t be dependent on Atlanta’s fortunes. First step move the state government out of Atlanta.

    • The Last Democrat in Georgia says:

      I agree that geographically, from a physical standpoint, the State Capital might have been better situated in a city that is more centrally-located in relation to the rest of the state, like Macon down in Middle Georgia. But with the explosive population growth over the last three decades or so, the balance of the state’s population now resides in North Georgia above the Gnat Line.

      Also, no state legislator or bureaucrat would ever agree to move the State Capital and state government out of Atlanta because Atlanta is where all of the fun and the action is in relation to the rest of the state (and when I say fun and action, I mean that Atlanta has all of the amenities that rural and small-town legislators find amusing during the three-month legislative session, like pro-sporting events, five-star restaurants, five-star hotels, escort services, big-city shopping and, of course, big-city lobbyists eager to do almost anything to get their favored piece of legislation passed).

      Legislators and bureaucrats don’t want to go to small-city Macon, they want to go to big-city Atlanta (if not always for the best reasons).

      There may not be an easy and immediate fix to Metro Atlanta’s and Georgia’s problems, but we can start fixing them and eventually make short work of them by investing heavily in the basics of pre-K thru 12 and postsecondary education and water and transportation infrastructure.

      Like Charlie mentioned in the post, land for growth (auto-dominated sprawl) is no longer plentiful and cheap (even in an auto-dominated town with no natural barriers to physical growth (sprawl)), which means that if the metro area wants to continue to grow, it is going to have to grow in a more sustainable fashion, which means growing in a more upwardly fashion along higher-density transit-anchored corridors than has been the case in the post-World War II era in which the metro area has traditionally (and now infamously) grown outwards in a sprawling fashion often along an inadequate network of undersized two-lane roads that is based on ancient Indian trails.

      Again, if Metro Atlanta and the State of Georgia wants to remain viable in the future, there is going to have to be very heavy investment made in education, transportation infrastructure and water infrastructure, you know, sort of like our competitors in Texas and North Carolina are proudly and actively continuing to do on an ongoing basis.

      Education, transportation and water. Education, transportation and water. Education, transportation and water. Keep repeating, Georgia, until it is like seared into our brains.

      The extreme economic difficulties that this state is experiencing are but just a small preview of what will happen around these parts on a permanent basis if we don’t get our act together and get our priorities straight.

      Our current economic problems don’t necessarily have as much to do with regulation and taxes as much as they have to do with the horrendous reputation that we have earned over the past decade as being a state that has stubbornly refused to invest in its transportation, water and education infrastructures in the face of explosive population growth.

      Sorry, but being 49th out of 50 states in transportation spending with the nation’s eighth-largest population just isn’t going to cut it.

  2. AMB says:

    You think the best and brightest will move to Americus or Augusta or Macon?
    Georgia is paying the price for ignoring education for a number of years. We can pave roads and build fishing holes but education gets cut and cut again.

    • rense says:

      Merely “investing in education” by paying teachers more money and building new buildings doesn’t create economic growth, any more than merely cutting taxes does. And we don’t need “the best and brightest” to move to Macon; just 10 people with good ideas and 50,000 willing to work for those 10.

      The truth is that Georgia was among the highest spenders in the deep south on education: more than Florida, South Carolina, Alabama, Mississippi and Tennessee per capita. The problem is that spending was mistaken for innovation. In any event, the biggest issue with Georgia education is the lack of private schools, both at the K-12 and university level. The second biggest is the lack of emphasis on vocational education, but that is more of a national problem.

      Still, the real issue is that our best talent still leaves the state for California, New York and increasingly Florida, Texas and North Carolina. If we limit it to “improving education” then we’ll just keep educating stockbrokers for New York, bankers for North Carolina and engineers for Texas and California. Georgia needs to develop a sector to replace the declining agricultural/manufacturing ones … Florida has tourism and technology, Texas has energy and technology for example. The laissez faire approach of the GOP won’t help develop that sector, and neither will the social welfare approach of the Democrats.

        • rense says:

          @22bons:

          The same way that California, Texas and Florida did with theirs. They pumped huge state dollars into tourism, technology and energy and lobbied for and got federal dollars to go with it (though granted a lot of the federal spending was military, DOE and NASA). Georgia considered trying to match what Florida and North Carolina was doing in technology in the 1990s, but never got around to it. As a result, Georgia lost most of the little – but promising and growing – tech industry that they had.

          • 22bons says:

            Let’s leave California out of it and focus on more comparable states that do seem to have outperformed Georgia in the past decade — Texas, Florida, North Carolina, and Tennessee. Three of these states have no income tax, and this is a significant institutional factor differentiating them from Georgia. If we want to “match” what they are doing, this seems to be the most obvious place to start.

  3. 22bons says:

    Good article in the last City Journal addressing this (and Atlanta does get a mention):

    http://www.city-journal.org/2011/21_4_urban-development.html#.TxeL1nIEoHQ.twitter

    “The conclusion to draw from all this isn’t that cities can do nothing to promote economic development. It’s that they should avoid academic fads and quick fixes, which are no substitute for obvious policy goals like competently providing mandated services at reasonable cost, keeping streets safe, and not taxing and regulating away businesses—good governance, in sum, and even that comes with no guarantee to work.”

    Kasim Reed is doing an admirable job of turning around decades of poor governance in the city proper. The larger problem affecting quality of life and economic development in Metro Atlanta is congestion. It’s my hope that T-SPLOST fails so that we can get to plan B in which Governor Deal and Kasim Reed expend political capital to address congestion in an effective and coherent manner. Education as economic development is essentially a myth that politicians unwittingly perpetuate — as a development strategy it’s much easeier to pull talent from elsewhere with jobs, quality of life and cost of living (and these all dependent on good governance that delivers valued services with relatively low taxes).

    • Rambler1414 says:

      “It’s my hope that T-SPLOST fails so that we can get to plan B in which Governor Deal and Kasim Reed expend political capital to address congestion in an effective and coherent manner.”

      Why can’t we do both?

      Pass T-SPLOST (which solves some congestion issues)
      AND
      Create a more efficient GDOT that addresses our most congested areas in the state instead of widening uncongested 2-lane roads in Rural Georgia?

      • 22bons says:

        Why not both? Opportunity cost and voter fatigue. Scarce dollars need to be used wisely and targeted at the problem — congestion — rather than being spent on projects which are not necessary or which serve other purposes (i.e. maintenance, development roads to nowhere, etc…).

  4. rense says:

    Atlanta’s biggest problem is the desire for everyone outside of Atlanta to see the city fall on its face. Some would say that it is their second biggest problem, with the biggest being its bad leadership, but the truth is that Maynard Jackson, Andrew Young and Shirley Franklin weren’t bad mayors, and neither is Kasim Reed. (Now the city council and some department heads … that’s another story.) OTP folks simply won’t accept the leadership changes in that city that happened NEARLY 40 YEARS AGO. And no, it isn’t a Democrat/Republican issue, because OTP Georgia didn’t start reliably electing GOPers until recently … for example Sonny was ya’lls first guvnah, and even he was saddled with Mark Taylor as lieutenant governor initially.

    The bizarre thing is that Atlanta’s collapsing benefits no one. It won’t lead to a change in political regime (ironically, cooperating with the city to help it GROW would accomplish that, but pushing it into becoming “another Detroit” will result in Detroit-like political leadership) and as no viable alternative exists as an economic engine (both the Cobb and Gwinnett pipe dreams became precisely that) Atlanta’s loss will be merely the gain of Florida and North Carolina (and possibly South Carolina and Alabama and Tennessee with all these big manufacturing plants that they are getting AND GEORGIA ISN’T … sorry, can’t blame the Atlanta mayor for that).

    • Charlie says:

      First, to all above, appreciate the comments. It’s going where I had hoped, with ideas/thoughts focused on solutions. Also a recognition generally that this isn’t a Republican/Democrat problem, it’s a Georgia problem.

      As for this last comment, to be clear, the Brookings study was a metropolitan area study, not a city of Atlanta study. Thus, it’s a 5.5 million people problem (out of Georgia’s 9M), not a 500K person problem.

      With that said, I first heard of this study while listening to Neil Boortz yesterday morning while in the car. He then concluded that the reason for Atlanta’s ranking was because of Hartsfield airport, its mismanagement by the City, and the horrible corruption by the insiders there.

      Thus, while I’d love to tell you your comment was off the mark, with Boortz blasting out that airport concessions are the reasons we’re not growing as a region (seriosuly, think about the tortured logic that you have to use to make that leap), I guess using the city as a scapegoat by some is an effective blame game.

      • Dave Bearse says:

        Charlie, I trust you you’re sincere in seeking solutions, but I gotta vent…

        Yeah, it’s a Georgia problem, but GOP leadership that has owned state government for eight years owns the problems. They don’t want any help, beyond porters carrying T-SPLOST baggage and such.

        It’s pretty clear that’s the case when a guy like Dem Rep Scott Holcomb, when privately shown the new House districts map for the first time prior to them being released publicly, is told that those doing the redistricting didn’t know where he lived—they were either incompetent, liars, or to the point of this comment, really don’t care..

        Georgia’s problems are for the GOP leadership to transparently work out with their yes-men supermajority.

      • saltycracker says:

        Atlanta blame game ? Ok so the core is rotten but the apple has some good ? Dekalb ? Clayton ? Gwinnett ? Believe they are also telling business the tune they will march to. Just a permit to do something is a gaunlet of public bureaucracy & bad attitude. Should we send business associates downtown at night for dinner & to feel the vitality ?

        Not sure a metro area anywhere is a target market for a big manufacturing plant but they have a lot of vacancies to fill. Don’t think we want to go the Detroit route & start bulldozing the empty high rises, strip malls & homes.

        Another place to look might be our financial institutions that may not be doing what they should to market non-performing assets. Harping at the local gov’t to spend taxpayer money to do something to bring them a tenant/buyer seems like a good tactic.

    • analogkid says:

      It happens that there was a piece on (lib’rul) NPR this morning about the Republican mayor of Oklahoma City and how the city mostly avoided the pains that other cities have had during the downturn. He talks about how they convinced the suburbs to support not just infrastructure and services, but also “amenities” like arenas and a canal downtown. All of which was done debt-free with a local option sales tax. It’s worth a listen:
      http://www.npr.org/2012/01/19/145437581/oklahoma-city-avoids-economic-pitfalls

  5. CobbGOPer says:

    If our fearless leaders would get with the program and eliminate the state income tax, that would be a big step forward in getting this economy back up to speed.

    Instead we have to suffer a thousand little tax cuts for a thousand specific interest groups, none of which is the Georgia taxpayer.

          • CobbGOPer says:

            True, but you also know that their lack of a state income tax has nothing to do with the specific reasons why Florida is still struggling economically.

            • griftdrift says:

              Actually I disagree. Florida two primary sources of revenue are property taxes ( housing ) and sales tax ( tourism ). Guess which two things cratered in the recession?

              • 22bons says:

                The absence of an income tax certainly contributes to budgeting problems for governments in Florida, but I don’t believe it has a negative impact on Florida’s economy or growth prospects. I would certainly be interested in reading any study that claims Florida (or any other state) should increase its income tax to spur economic development.

              • CobbGOPer says:

                You’re talking about the state government having less money, which has nothing to do with the state economy. Unless of course you mean lower government spending is tanking Florida’s economy. However, if in fact it’s the case that Florida’s economy is that heavily dependent on state government spending, then they have bigger problems than not having an income tax.

              • griftdrift says:

                I neither advocated increasing Florida’s income tax nor defended Georgia’s income tax. I’m just pointing out that shifting revenue streams has consequences.

                And yes, I encourage you to study Florida’s economy before declaring an income tax free state as a model of growth.

                • saltycracker says:

                  Florida’s explosive growth left a lot of the costs of needed infrastructure up to future taxpayers. While the public payrolls, including lucrative benefits, rode the wave and are now resisting adequate cutbacks.

                  When someone suggests that growth must fund itself the developers, bankers, chamber of commerces, real estate interests and their minions freak and say we can’t afford to do that, it will stifle the growth, borrow & let future taxes pay for it as it has always done. Even Florida’s real estate taxes plays favorites and forces turnover, a boon to the real estate interests.

                  Consumption taxes and impact and other fees are best in Florida as an income tax would catch but a minority. The sheltered, transient and underground/off the books economy is too big.

                  • griftdrift says:

                    Impact fees are interesting case.

                    Example. When my brother built his house, he spent $12,000 before a shovel hit dirt. You think our property tax battles are nasty now? Wait until they are a primary source of revenue.

                    Just saying. Not advocacy. Consequences.

                    • saltycracker says:

                      Upfront impact fees beat an annually increasing subjective property tax based on what the neighbors are doing and not what one willingly paid for their property.

                      Not saying either one is administered wisely.

    • Max Power says:

      I know it’s difficult for you to believe but Georgia’s tax policy has zero to do with our economic woes.

  6. billdawers says:

    Great column.

    I wrote a little about this yesterday (http://www.billdawers.com/2012/01/18/for-economic-performance-in-2011-atlanta-ranks-near-the-bottom-of-list-of-200-world-cities/), and I do think that the state’s lack of support (and even basic understanding) of the Atlanta economy has been critical here. If anything, the situation might be even worse than the slow growth in incomes and the decline in jobs would indicate: the cliff-diving home price data from fall 2011 alone represents tens of millions of lost wealth for Atlanta metro area residents.

    I’ve struggled to come up with a state with such an unbalanced population and economy, but maybe Minnesota might be the closest — a geographically large state with a single metro area accounting for a significant portion of the population and economic activity. At the state level, Minnesota invests about 100 times more per capita than Georgia does in transit, for example. And I really do mean that as an example — there are many ways to nurture commerce, economic activity, and quality of life. If Georgians as a whole don’t feel more invested in the success of Atlanta, we might find it impossible to capitalize on some of the competitive edges you mention here.

    • CobbGOPer says:

      “At the state level, Minnesota invests about 100 times more per capita than Georgia does in transit, for example.”

      And yet we haven’t had an enormous bridge collapse without warning in Georgia. Amazing.

  7. saltycracker says:

    Metro Atlanta grew because corporations chose it as their regional center with an airport/transportation hub and to maintain proximity to their industry, customers and potential employees. Where their execs & employees lived was proximity to the housing, schools & public services they preferred.

    The City of Atlanta long drove the residential preference away and is aggressively driving business choices to OTP. Atlanta needs to approach business from a position of reasonable taxes, sound services and pro-business activities. Not from the position of how business must be compliant or influential with city leaders in order to do business in Atlanta. A core group of businesses will always be around because they have to or because they are too invested not to as well as some residential folks liking the city living for their personal reasons.

    Even if Reed purges some of the corruption there are no signs of improved services, lower taxes and less demands on conditions to do business. Atlanta business needs MARTA rail into the suburbs, not the other way around.

  8. Three Jack says:

    As a native Atlantan, I believe the biggest problem is so few residents are actually from this area. We lost the local generated passion and excitement that was so prevasive during our growth decades as more and more folks (damn yankees 😉 ) moved here in search of good jobs with a lower cost of living. We are a victim of our own success.

    With so much geographical diversity, Atlanta no longer has any sort of unique identity. This is going to make it that much more difficult to be the ‘phoenix rising from the ashes’ — http://www.waymarking.com/waymarks/WM7DZC_Phoenix_Rising_from_the_Ashes_Atlanta_GA — that Atlanta became after the Civil War.

    • saltycracker says:

      Hmmmm, you sayin’ IBM, Delta, Coke, ATT, UPS, Emory, Children’s Hospital, GaTech, et al should’ve stuck to hirin’ locals run thru the APS ? Or are you blaming the City of Atlanta management on geographical diversity ? : )

  9. NoTeabagging says:

    The ‘New Construction’ industry should turn into the ‘Renovation’ industry. Too many vacant residential and commercial properties out there that need to be back in use. Stop building new on vacant land and recycle the overbuilt mess we have now. Municipalities should encourage reuse of existing properties, even teardown/rebuild projects, before approving new construction on raw land.

    I am also a bit surprised at the comment, “The labor available from construction trades is not well matched to the skills needed for more industrial construction projects.” I believe we do have skilled labor that could adapt to using different materials and methods. A bit of on the job training may be required, but it would be admirable of companies to do this and put locals back to work.

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