02/14/2011 03:47 pm ET Updated May 25, 2011

The Bottom Line On Bottom Up

We all know we need to create more jobs and do it in an era of severe budget austerity.

The debate that launches today about how we do that -- especially over what the federal government should do -- can be a great opportunity for Democrats and Republicans to get past their rather rigid 20th century ideologies and come together around a new 21st century paradigm of bottom-up growth.

But it won't happen if we focus the debate exclusively on what might pass muster in Washington DC. We must focus instead on the last mile where people live, breathe and want actual outcomes -- and don't care about political parties as much as seeing projects and job creation happen in their backyards.

Today's announcement from President Obama on the creation of transformational Growth Zones and innovative public-private partnerships offers us all a second chance to do just that.

Across America, in the last mile, locally-driven, bi-partisan and business-led economic blueprints are identifying clean economy and new sustainable technologies (biomass, bio-plastics, energy-efficient manufacturing) as the biggest growth opportunities to make jobs and keep them here.

So why are we so stuck? And will the coming budget battles make it worse?

It doesn't have to be that way -- we can unleash America's diverse and regional economic potential by speeding our transition to the new forms of economic collaboration and public-private partnerships identified in our action blueprint, The Acceleration Agenda. The argument in brief: we can do more for less by rewiring our broken economic development system to better link entrepreneurs to financing and build nontraditional networks that connect innovators, suppliers, and customers across traditional geographies.

We are off to a decent start. There are well-documented small business financing gaps that have made it hard for new companies to grow but these gaps are getting addressed and are inexpensive to fix. Bi-partisan and influential groups like the Council on Competitiveness are busy making the case for funding a new generation of on-scene "barrier busters" and to move the locus of interagency work down to frontline communities, not in Washington, D.C. This is all cheap to do, and we can measure the benefits in new jobs and new markets created.

But the biggest problem beyond missing money and broken mechanics? We are stuck in an ideological cold war -- not just between Democrats and Republicans but between those who are still holding fast to 20th century command & control regulatory systems rather than unleashing the power of bottom-up innovation and public-private collaboration.

We are seeing one version of this conflict play out in the current dogfight in Congress over EPA regulation of greenhouse gases, a debate which is derailing many productive discussions about how we actually can create clean energy jobs. The Obama Administration remains stuck to a pre-Copenhagen strategy of waving around a regulatory stick to compel action on climate, rather than offering up creative carrots to drive low-carbon, new energy job creation.

Within the Beltway, this is good theater, as everyone knows their parts. Environmental groups are at their best when they can stop bad things from happening. Conservatives can rail about Obama's job-killing government policies and pump up their base. Lobbyists can bank billable hours. It feels like 1995 all over again.

The problem is that we can do better with a new 21st century script designed to produce economic progress, not political stalemate. The fact is there is plenty of trans-partisanship outside of the Beltway where people are hurting and are eager to work together to make jobs.

What's the new movie called? It's called Economy 2.0 where we let governors, mayors, and local business and community leaders determine their own fate, rather than be collateral damage in a nasty Washington war over regulation that drives too many business and GOP leaders away from the table. This storyline won't deliver the happy ending we want - clean energy megawatts installed.

We must write a new script, and the Administration's creation of a new initiative on jobs and competitiveness (chaired by GE's Jeffrey Immelt) are a source of hope. But the federal role in this movie must keep shrinking from central actor to supporting cast.

President Obama, for example, could go further in light of the deficit and urge DOE Secretary Stephen Chu to re-program more of his agency's funding away from its 20th century Manhattan Project research mindset to instead support smart deployment schemes that fit the competitiveness realities of this century. Innovation happens as much outside the labs as inside.

In Congress, leaders on both sides of the aisle need to look at ways to end an era of complicated and constricting top-down federal mandates and encourage more flexible implementation mechanisms that reward actual outcomes and performance. New governors on both sides of the aisle, such as Michigan's Rick Snyder and Oregon's John Kitzhaber, to name two, would likely jump at the change to pursue federal waiver strategies for economic development and infrastructure, similar to past efforts around health and welfare implementation.

So if Democrats can accept local control and bottom up regulatory innovation, can the GOP embrace a role for the federal government in accelerating the creation of low-cost and high-impact public-private partnerships? Or will ideology and tired derisive debates over "industrial policy" get in the way of what Americans of all political trips want: more jobs.

Significantly, the President's budget released today embraces the need to build new, transformational "bottom up" strategies for job creation and sustained economic growth. A new Growth Zones initiative will invest $40 million to lever private/public partnerships that drive high-growth industries and markets. Building on its innovative 2010 call for creative jobs and innovation partnerships, EDA will lead a collaborative initiative with HUD, USDA and Treasury to accelerate 20 pilot sites split between urban and rural America. The Growth Zones will include $2 million per site, plus targeted tax incentives replacing the old enterprise zone program.

So can Growth Zones and other forms of bottom up collaboration lead the way to a new economy and a new politics? Or will these proposals be dismissed as just wasteful big government -- disguised as kumbaya? Hopefully not, because the benefits are actually measurable. The most recent analysis released by Grant Thornton and ASR Analytics in September 2008 found that EDA's programs generate "between 2.2 and 5 jobs per $10,000 in incremental EDA funding, at a cost per job of between $2,001 and $4,611." These are highly impressive rates of return for any public economic development. New regulatory innovations in collaborative permitting technology for bridge-building are also generating impressive returns: $3.19 for every dollar expended in the Northwest by cutting the cost of design and schedule delays; doing it the traditional way yielded only 75 cents per every $1 expended.

So here's one vote to end the era of command & control government and 1,500 page-long Congressional bills that fuel mainly conflict and confusion. America can address the jobs crisis and unleash a 21st century economy. Local flexibility, creativity and collaboration are the key to accelerating our transition to Economy 2.0. That's the bottom line on bottom up.

Also posted at NDN.