Sunday, July 5, 2009

Waiting for the "Human Capital" to Pay Off

Since the opinions expressed in this blog are those of The Wandering Eye and not of the Source, The Eye feels free to express the

Posted By on Sun, Jul 5, 2009 at 11:02 AM

Since the opinions expressed in this blog are those of The Wandering Eye and not of the Source, The Eye feels free to express the following opinion of the guest commentary by Bryce Ward, Ed Whitelaw and Andrew Kenny that appears in this week's issue:

It's crap.

Not, I hasten to add, the part about the wisdom of protecting the Metolius Basin; I couldn't agree more with that.

The crap comes in when these three economists try to explain how Central Oregon's natural beauty and outdoor lifestyle are bringing growth and prosperity to the region.

"To explain economic growth among states and counties, economists traditionally have pointed to such factors as deep-water ports, bustling, navigable rivers, massive transshipments across planes, trains, trucks and automobiles, and vigorous research universities spinning off undergrad and grad degrees as well as commercial ideas and ventures," they write. "This view emphasizes employers, industries and the costs of production and distribution."

But according to the New Economics as expounded by Messrs. Ward, Whitelaw and Kenny, all those factors don't matter now. What matters is the acquisition of "human capital." They write that "states and localities that have attracted skilled, educated, creative, and talented people - what economists call human capital - have prospered, while the other areas have struggled."

And they cite statistics showing that Deschutes County has done better than the rest of the state in attracting high-quality human capital, including people with bachelor's and post-grad degrees.

Why have we been able to attract this wonderful human capital? Because (bet you can guess where this is going) of Deschutes County's, and the Pacific Northwest's, "high quality of life which stems in no small way from the forested mountains and snow-capped peaks, clean streams and lakes, spectacular scenery and boundless recreation on millions of acres of public land."

But then why, with all these attractions and all the terrific human capital they attract, does Central Oregon consistently lag behind the rest of the state and nation in wage levels?

The trio has an explanation for that too: People in Deschutes County "get lower wages and salaries, compared to their counterparts elsewhere. But the County's residents - employed, underemployed, unemployed and even those disconnected from the labor market - receive a different paycheck, one not denominated in dollars, but in the benefits of those forested mountains, clean streams and other forms of - here's more economics jargon - natural capital."

Or, to put it more succinctly, it's that good old "poverty with a view."

I would, perhaps, be more inclined to accept Ward, Whitelaw and Kenny's ideas if I hadn't been hearing the same old bullsnot for the past quarter of a century.

Yes, we have some bright and talented people here (although I'm convinced that most of the really bright, talented and ambitious people still choose to locate in the big metro areas where they can make the big bucks). Yes, we have outdoor recreation. Yes, we have mountains and trees and rivers.

But where's the payoff? When is the magician going to wave his wand and pull the rabbit out of the hat? When is all this human capital going to show some return in the form of higher pay and broader prosperity?

For about 25 years I've been listening to promises that "in the long run" the irresistible appeal of our glorious outdoor lifestyle is going to draw entrepreneurs who will create all sorts of wonderful enterprises that will provide thousands of good-paying jobs. So when the hell does "the long run" finally arrive?

I respect Ward, Whitelaw and Kenny's right to their opinion and, as I said, I wholeheartedly agree with and applaud their defense of the Metolius. But when it comes to accepting their theory about how Central Oregon will achieve prosperity, my response is - to borrow a catchphrase from a popular movie of a few years ago - "show me the money."

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