Huffpost Business
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Peter S. Goodman Headshot

Job Creation Depends Upon Business And Government Cooperation

Posted: Updated:

From the crude characterizations echoing from the campaign trail, it often seems as if American business and government are confined to separate and hostile spheres, each intent on stifling the other.

Mitt Romney sounds like he doesn't even want to be president, given the depths of his disgust for the supposed money-wasting, progress-impeding nature of the federal bureaucracy. "It's time for us to cut back on government and help the American people," he recently said in Iowa, continuing what has become his campaign for the job of CEO of America Inc., a fully privatized concern capable of managing all of life's problems.

President Barack Obama's attacks on Romney's private equity career sometimes risk channeling the nation's legitimate fury over Wall Street's predations into a broader and unhelpful exercise in blaming business for deep-seated problems.

But in real life, business and government are crucial partners whose joint efforts have proven potent in delivering the only thing worth obsessing about during the campaign -- more and better paychecks for American workers. I was reminded of this recently when I sat down with visitors from Saratoga County, N.Y., a place that offers a valuable lesson in how such partnerships can be forged.

More than a decade ago, this patch of upstate New York confronted the same sort of slow-grinding crisis that assails the nation. The economic model that had long sustained the region -- one centered on manufacturing - -seemed in permanent decline, yielding joblessness and distress.

Had the people running the county operated anything like those in charge of the nation, here's what probably would have happened: A few forward-thinkers would have proposed a new growth strategy -- an emerging industry to invest in -- only to be lampooned as free-spending socialists by those in control of the kitty. Tax cuts would have been embraced as the only politically viable tonic, resulting in widening budget deficits, greater economic inequality, and few new jobs for anyone outside of financial services, accounting and racehorse grooming.

Fortunately for people in Saratoga County, local leaders had other ideas. They embarked on a thoughtful and productive process to identify their core economic strengths and harness them toward attracting new jobs.

This is how GlobalFoundries, a major producer of computer chips, came to invest $4.6 billion to establish a sprawling new factory on an abandoned rocket-testing site within the county. This is how the new fabrication plant came to employ the roughly 1,400 people who work there today, a number expected to grow to as many as 1,800 by the end of the year. Those jobs pay an average of $60,000 a year, according to the company.

"We wanted to figure out what would be next," says Shelby Schneider, an economic development specialist at the Saratoga Economic Development Corp. who played a leading role in bringing GlobalFoundries to the area. "We had lost a lot of our major industry."

The successful courtship of Global Foundries was in part conducted through a crude means that, in the aggregate, does no favors to the country: The state handed the company a package of tax credits worth about $1.4 billion over a decade. In essence, New York agreed to write a check to capture jobs that might have landed in some other state. You can't criticize New York for that. It's how the economic development game is played. But when everyone operates this way, the result is a nationwide tax credit arms race that transfers public money into the private coffers of multinational corporations.

But the full measure of Saratoga County's success lies in its strategic thinking about its place in the global economy, and its intelligent fusion of government and private resources toward applying its core strengths to attract jobs. In that regard, the county's achievement is a worthwhile reminder that job creation is best pursued as a team sport in which the public and private sectors operate together.

As its name implies, GlobalFoundries conducts its business irrespective of national confines. It is owned by an Abu Dhabi sovereign wealth fund and it operates 17 different regional offices scattered from southern China to central California. It has six fabrication plants in Singapore, and a seventh in Dresden, Germany. When it opted to construct an eighth plant in anticipation of growing demand, it might have expanded in one of those places, or somewhere else in the United States where the semiconductor industry already has a big presence, such as Austin, Texas or Portland, Ore.

"We could have put this fab anywhere in the world," says Travis Bullard, a spokesman for the GlobalFoundries.

Saratoga County was not on the company's map, but the economic development corporation changed that through a cold call. It highlighted core regional attributes: the traditional manufacturing base, which meant plenty of skilled hands accustomed to working in a regimented setting, and an abundance of people with high-level degrees, owing to the proximity to 23 colleges including engineering powerhouses such as Cornell, Rochester Institute of Technology and Rensselaer Polytechnic Institute.

The economic development corporation emphasized the presence of an IBM research and development center nearby, with which GlobalFoundries already had a relationship. It even turned the county's relative isolation from the rest of the global supply chain into an advantage. Most of the chips that GlobalFoundries produces wind up in factories in coastal China, where they get slotted into electronic gadgets. By setting up in New York state, the company would effectively hedge itself against a shock from an earthquake or other natural disaster that might halt production in the center of the action in Asia.

"Usually, in our field, we're reactive," says Schneider. "But in this case, we did everything we could to immerse ourselves to understand what their thinking was."

The economic development corporation worked with local community colleges to set up training programs tailored to GlobalFoundries' employment needs. As many as two-thirds of the jobs are open to people who have two-year associate level degrees, making them reasonable targets for mid-career people who are transitioning -- either by choice or under duress -- from flagging industries.

None of this is revolutionary or even original. North Carolina successfully crafted a thriving hub of biotechnology by tapping the expertise of local research institutions and devoting public dollars toward incubating new ventures. Former tobacco and textile workers now don lab coats in pursuit of treatments for heart disease and cancer. Iowa has made itself a leader in manufacturing the needed gear for wind power in part through targeted training programs for laid-off manufacturing workers.

This lack of exotic ingenuity at play is precisely why these examples are so important. Saratoga County did what every locality must in an age in which businesses in Boston are pitted against competitors in Bangalore. It asked a simple question: What do we do well, and how can we exploit that to enable our people to earn a living? Then it marshaled the resources to make it happen.

This is what the country must do, and it will not happen through Romney's mindless demonizing of government, a refrain that reflects the campaign cash he is harvesting from the one industry most keen to kneecap regulatory authority -- finance.

It will not happen by dismissing American business as the enemy, which is something Obama knows well. His poorly marketed and inadequately understood $800 billion stimulus spending package includes significant support for research in fields that could produce jobs in emerging industries, such as renewable energy and the life sciences.

The campaign is pure theater. After the show is over, the real work of getting people back to work will depend upon effective cooperation between two spheres whose efforts are both needed -- business and government.