| Published in the Cedar Rapids Gazette, Sunday February 9, 2003
New method to think about wealth
creation
By: Robert D. Koob
Iowa's business
leaders are on the right track when they talk about the future growth
of Iowa in terms of "wealth creation." This variation on the
sometimes vague concept of "economic development" has the
potential to appeal to the financial common sense of individual Iowans,
as well as transcend the current tension between the desire to hold
the line on taxes and Iowa's obvious need for better human services.
If each taxpayer had increased income and buying power, the state would
have more to spend on education and the needs of its very young, very
old and infirm -- without raising the tax rate. Iowa's gross wealth
is the sum of the wealth of its citizens. Quite simply, increase the
wealth of Iowans and the wealth of the state of Iowa increases.
One statistically certain way to do this is to raise the educational
level of all Iowans. The best-known predictor of a state's wealth is
the educational level of its population. This has been true for decades
and the 2000 census confirmed it. If all Iowans without high school
diplomas could earn them; if all high school graduates obtained some
college education; if all those with some college obtained bachelor's
degrees and so on, Iowa would be a wealthier state.
Despite decades of predictions of an over-supply of college graduates,
the 2001 unemployment rate of those with bachelor's degrees or higher
was less than half the national average. College graduates found better
ways to do old jobs as well as create new jobs. This phenomenon became
well known as "the knowledge economy."
Ironically, despite our state's high quality of education, Iowa has
not retained its own graduates or succeeded in attracting college graduates
from other states. Of the 50 states, Iowa continues to rank in the mid-thirties
in terms of percent of its population with a college degree. It was
ranked 35th in the September 2002 Milken Institute report on the state's
capacity to participate in the current knowledge economy. So, not surprisingly,
Iowa continues to rank in the mid-thirties in per capita state income.
Recent state legislative actions have shifted a significant proportion
of the cost of public higher education from the tax base to tuition.
Legislative action seems entirely inconsistent with the need to raise
the educational level of Iowans and thereby increase Iowa's wealth.
We must stop thinking that we are in competition for a fixed set of
resources. This thinking is natural to a state founded on an economy
based on a fixed resource: the soil. Real growth, however, is based
on ideas, and ideas are an infinite resource. Increased productivity
comes from innovative thinking.
The world is much more complex today than a century ago, creating a
constant demand for innovation. In the same way that Iowa's early 20th-century
boom relied on its rich soil and industrious immigrants, encouraging
the growth of knowledge will stimulate a 21st -century boom. Now, however,
the "soil" must be a more abstract mix of attitudes and policies
that invite innovation. The need for an industrious, creative and well-educated
population has not changed.
If new wealth creation is to become a reality in Iowa, Iowa must retain
its commitment to education at all levels, and then do one thing more.
It must create opportunities for educated people to find attractive
jobs here. Iowa's leadership faces the challenge of determining how
best to accomplish that.
We, as Iowa citizens, can support their efforts by working to overcome
our natural tendencies. Change and uncertainty are uncomfortable, but
wealth creation, growth and development are all characterized by change.
We all need to work hard to embrace constructive change and fight our
natural tendency to resist it. |
