A Look at the Goals and Costs and Benefits
of the War with Iraq

It is important for all of us to be clear on the goals of the Iraqi War and how we plan to measure its costs and benefits in the final analysis. It is never too early to think about these key issues.

Let me add at the beginning. This is not a debate about whether I am personally for or against the war with Iraq. The important issue at this point in time is that the war has started, now how should we think about the challenging issues it poses for all of us? My objective is to share some ideas on how to possibly think about this war, including its costs and benefits for those impacted.

This article offers a definition of war and a discussion of the major goals that have been suggested as possible justifications for why we have gone to war. Finally, I offer some thoughts on how to judge our success in this war effort. My review of various media accounts of the war and sustained conversations with family members, friends and colleagues indicate that these same issues are on the minds of many people at this time.

What does war mean? Merriam-Webster says that war is "a state of usually open and declared armed hostile conflict between states or nations." The key word here is “declared.” A state of war actually exists only after war has been formally declared. Some would argue that an informal and undeclared state of war has existed in many parts of the world for sometime, especially in the Middle East.

Isn't it interesting that we should turn to something as simple as a dictionary for guidance at an overwhelmingly complex and frightening time such as this? When you think about it, the dictionary is actually a very powerful book. Over the years, people have turned to the dictionary as an authoritative source to find definition and meaning for a wide variety of words and phrases.

Merriam-Webster can provide us with a quite adequate definition of war; that is it can provide us with a widely understood way of referring to war. As I reflect on this issue, I seriously question how much the dictionary, or for that matter any formal information and knowledge source, can tell us what war really means to us in a personal sense. Meaning is always personal. An issue is meaningful to us when it either aligns with or challenges our personal values. In this light, this war with Iraq has and will come to mean many different things to many different people.

On March 19th, President Bush informed all of us that we are formally at war with Iraq; that is we are engaged in “a declared armed and hostile conflict” with Iraq. The war has officially begun. Most people dislike prolonged ambiguity because it makes them feel overwhelmed by the large number of possibilities that could occur in the future. Ambiguity often creates questions that we cannot answer, and therefore causes us to fear our own questions at times. Let me encourage you not to fear your own personal questions about this war with Iraq. Rather, consider exploring these questions in the context of your values. Some rich learning lessons may await you.

Things change in our mind once we are armed with an official declaration of war. We are no longer waiting for war. For some, it brings relief to shrug off the initial phase of ambiguity and uncertainty about whether or when we will actually begin fighting the war with Iraq. For others, the real fear and anguish begins. Imagine the fear that our armed service men and women must feel right now. Imagine the fear that ordinary Iraqi citizens must feel at this moment. The reality of war sets in as we listen to reports of casualties and other developments. War is no longer a theoretical discussion for any of us, least of all the men and women who are actually there fighting.

We follow the events of the Iraqi War in the news on a play-by-play basis, much like we watch Sunday afternoon football. We absorb news reports for what they tell us about the statistics and the strategy of war. We look for whatever evidence we can find that helps us answer the questions about what is the score and who is winning this war. For most of us, the process is a torturous roller-coaster ride that we can hardly wait to end.

What does this war mean to me? I am neither a hawk nor a dove when it comes to war. In the most basic sense, I see war as a last choice alternative when all other strategies fail. Did the United States explore all other options before declaring war? Our official view from Washington is that we did. Much of the rest of the world does not agree. The important issue at this point is what choices or decisions we make about the war effort from this point onward. If we view warfare through the lens of football strategy, then the objective is to play the best offense and defense possible, given the talent playing, the coaches and overall field conditions. By almost all yardsticks, the United States has a superior team, even though we do not have home field advantage. In this case, we clearly prefer to play this game on our opponent’s home field.

As I look back across history, war has been in many cases a necessary evil. My pragmatic side tells me that now we are officially in this war, the central concern is how to we get out with minimal harm and expense to both American and world citizens. Also, I think it is important that when this war is over, we feel on a personal level that we accomplished our goals and that we did the right thing for America and others impacted by the war. This raises the moral question, which in the case of war is often judged in the context of the lesser of evils. There have never been any easy answers in judging the morality of war itself.

It’s important to examine the goals we seek to achieve in this war with Iraq. What are we really trying to accomplish? In my analysis, this is not a simple issue to assess. It is complex because the goals associated with this war are very complicated and are influenced by a myriad of factors, many of which are not under our control. I don’t think it is necessarily bad that we have different goals in undertaking this war, but for most of us it is important that we understand which goals are most important. In this sense, we seek to understand the hierarchy of goals that exists. Let’s look at some of possible goals for this war.

From my standpoint, reducing or eliminating terrorism and the use of weapons of mass destruction is the top goal we should have in mind in proceeding with this war. 9/11 is impossible for most Americans to shake from their memory. We do not want anything like 9/11 to occur again in the United States or anywhere in the world. This is a fairly widely shared goal, at least by the American public. The mission of the U.N. inspection team was to determine whether and to what degree Iraq possessed these weapons. From the United States’ perspective, the U.N. team results did not prove that such weapons did not exist in Iraq. Much of the rest of the world said that the inspection results were inconclusive and that we should give the U.N. team more time to investigate. As all of us know, the debate ended at this point and we decided to move forward with the war effort.

Now, in the actual face of war, we may really know whether Iraq possesses these weapons. Hopefully they do not. But that raises the question of what happens if Iraq does not use any weapons of mass destruction during this war. First, does that verify that Iraq does not possess these weapons? On the surface, it does not. It may mean that for whatever reason they chose not to use them. Moreover, how will the rest of the world perceive the United States at the end of this war without any concrete evidence that Iraq possesses these weapons? Will they and will we see this war as justified in this case? This is indeed an important question for all to consider.

While the terrorism and weapons of mass destruction issue is vitally important, other criteria will also be used to judge us. Probably the most important yardstick that will be used by others will be the final death toll and the financial and economic costs produced by the war. The casualty count is easier to measure, but how to reasonably ascertain the economic impact of the Iraqi War is far harder. If this is a swift and painless exercise for all concerned, the U.S. will be judged less harshly. Some may actually praise us. If the war effort drags on with little or no positive benefits, we are likely to lose some current international friends and sustain considerable criticism from many fronts.

Can this war provide a 100 percent eradication of terrorism and the use of weapons of mass destruction? No, but perhaps it can reduce the future prospect of terrorism and the use of these weapons by some significant percentage. In other words, at best we can achieve a substantial reduction in the risk that these events will occur in the future. That raises another important question: how much of a reduction in this threat will be considered sufficient to justify a full-scale war with Iraq? That too is difficult to assess because no one knows the exact size of this threat now, only that we suspect that it is quite large. This is another leading cost-benefit question that we should be asking ourselves as this war proceeds.

Knowing something about North Korea’s nuclear capabilities, we also should be asking the question of whether a successful war with Iraq will substantially deter the North Koreans’ use of nuclear weapons in the future. A failure in Iraq could likely propel the North Koreans and others to move ahead with their weapon plans. Strangely, a big success in Iraq could actually backfire in its impact on the North Koreans by motivating them to speed up their nuclear development efforts because they suspect that they will be the next focus of our attention after Iraq.

And yes, most of us have considered the possibility that terrorist threats may actually grow in retaliation against the Iraqi war effort. What is the probability of this development? At this point, none of us really knows. We are doing what we can to minimize this likelihood. Heightened security worldwide will hopefully help to manage this threat, but the question is how much?

Most of us continue to watch for signs of new terrorist attacks. When you heard about the recent high-jacked Cuban plane, what was your first thought? I would guess many people initially feared this was an attempt at terrorism. When you first learned of the new deadly Asian virus, wasn't the first thought that crossed your mind that biological warfare has begun? When you read in the paper recently that the poison Ricin was found in a Paris subway, what came to mind? It is very easy at a time like this to misjudge situations and prematurely jump to conclusions, especially when we are looking for the enemy to come get us. The lesson for all of us is to judge situations and events very carefully, and seek perspective, which only knowledge, and in some cases time, can provide.

Putting an end to Saddam Hussein and freeing the Iraqi people is another very often-stated goal of this war. Is this an important goal? I think it is. Is it as important as the terrorism goal? It is if the Hussein regime is viewed as a primary source of world terrorism. Some would say the two goals are one and the same. While I see some connections between the two goals, I also think they are different. Besides the terrorism argument, overcoming a repressive and cruel political regime is a frequent reason given for decapitating the current Iraqi regime. It also must be remembered that eliminating Saddam Hussein will remove only one source of this threat, and yes it is suspected to be a big one at that.

Can we actually eliminate Saddam Hussein? Some say this is at best a 50-50 probability. Did we get the job done with Bin Laden? Many suspect that we did not. And yet, control of Afghanistan was returned back to its people. Could the same happen in Iraq? I think that is a distinct possibility if the war effort goes as planned. My guess is that taking out Hussein will be a very difficult task for a variety of reasons. One of which is actually locating him. Also, how good is our intelligence and how effective is our precision weaponry? As best we can tell, we missed on our initial shot. Also, we must ask again how many lives will be lost in the process of trying to eliminate the Hussein regime? Will the targeted war strategy actually work? Most recent news reports tell us that it will not work alone. What does this mean? It may be telling us that we must move quickly to a broader scale assault to get the job done. Most people interpret this to mean much greater bloodshed and destruction in Iraq.

What about freeing the Iraqi people? This sounds like a worthwhile and plausible goal, but again the cost-benefit issue must be answered. How many American and allied soldiers and innocent Iraqi citizens must die to achieve this freedom goal? Moreover, what does freedom mean to the Iraqi people? Do they really see the United States as doing them a favor, or do they see this as a malicious attack upon their culture and religion? My guess is that both views exist among Iraqi citizens. So far, the people of Afghanistan are struggling to find a better life. There has been progress, but most believe this will take some time and probably a lot of help from the United States and other nations for the Afghans to really find their way. Putting Iraq onto the road of recovery and reform after the war is likely to take some time, even with substantial help from the U.S. government. Many uncertainties exist in terms of which political and economic path the Iraqi people will take once liberated.

Is U.S. economic recovery a goal of this war? Bloodshed and mass destruction are bad enough, but economic gain may be viewed by many as the most sinister of our possible goals for this war. We outright deny this as a motive, but many at home and abroad tend to think otherwise. Read the signs of the protestors here and abroad. They invoke the image of the ugly American, consumed by our personal financial gain. More than a few have called this an "oil war." If oil prices drop to less than twenty-four bucks a barrel, OPEC leaders have decided they must hold an emergency meeting to take corrective action. That could mean many things, including price-fixing. In recent days, Wall Street and other world markets have seen some modest gains, which may not last after the initial war euphoria fades. The struggling airlines are growing even more worried as people cancel both personal and business flights until we know more about the war and ensuing events. And finally, how about all are defense contractors? How unhappy are they with their new lucrative contracts with the government?

Our economic security is vitally important, and we should be painfully aware of the short and long term economic impacts of this war effort on the U.S. and global economies. For the economy, the worst of all cases is a prolonged “holding pattern” where consumers and businesses both refuse to spend. In that respect, a declaration of war could actually help loosen spending, which is badly needed to get us back on our feet economically. In the final analysis however, restoring our economy by initiating a war should not be a deliberate goal of this war effort. Let’s hope that it is not.

If this war is like any other war in history, we can count on the fact that our goals will evolve as the war process develops. It is important to see a war in “process” terms. Parts of the process that a war follows are planned and well understood and others are not. We live in a world of unintended consequences. Major unpredictable chain reactions are set off across the world by even simple everyday events. This was will give rise to many unintended consequences. Our next job must be to identify these possibilities. Surprise and unpredictability are regular parts of our lives. It is vitally important that we ask ourselves the right questions about this war effort so we can decide what this war means to each of us in a personal sense. I am reminded of the words of a kindred spirit here in Cleveland, Jack Ricchuito, who says that “our questions give shape to our life.” So, go ahead and ask your most burning questions about this war and see where they lead you. That is precisely what I am doing here.

In the final analysis, how do we really know if we have won this war? How do we define success in this case, and for whom? Most certainly success will not be defined in terms of 100 percent solutions to any problem. That is simply not possible. We are already experiencing losses, which says to me this game will not be a shutout victory by any stretch. Like most of us, I hope we can clinch this one early in the game so everyone can go home and get back to their “normal” lives.

I think our nation’s goals will ultimately tell the story of whether we were successful in this war. Then again, maybe our goals will not at all tell the story of our success. Instead, it will simply come down to how we decide to tell our story, regardless of what the scoreboard says at the end of the game. Sadly, the spin-masters will have their say when it comes to writing the final chapter on the story of the Iraqi War.

The eyes of the world are fixed on America and this war effort. How will they judge the outcomes of this war? Most other nations have spoken by their inaction that this is not their war. How will the rest of the world feel about us if we win or lose this war? How will we as Americans feel about the rest of the world after this war is behind us? These are the questions we should be asking ourselves even now early in this game.

Contact Information:
Don Iannone, Editor, ED Futures
Phone: 440.449.0753
Email: dtia@ix.netcom.com

The Russian Economy and the Iraqi War

Russian officials say their economy will not be impacted substantially by the Iraq War. "We built our forecasts and our policies in such a way that the economy is currently immune from the various splashes in the world economy," said Finance Minister Alexei Kudrin, who is also a deputy prime minister.

What do Russian economic officials worry most about relative to the Iraq War? Oil prices. Alexander Zhukov, head of the State Duma's influential budget committee, said that while Russia's economy was well protected from the effects of war, the world economy could be pushed into a crisis that could eventually ensnare Russia. "If the war lasts longer then planned, then oil prices will soar and one should expect a global crisis," he said. "For the Russian economy the most important factor is the behavior of world oil prices," said Zhukov. Go here to read more.

Economic Development Prospects Long Term
Hinge on Education, Say Tennessee Officials

Tennessee wants more high-quality jobs. How does the state make that happen? State officials say that education is the key. Go here to read more about Tennessee's latest thinking about the economic development-education connection.

Biotech Maryland

Competition for bioscience is intense and getting stronger. Even Maryland, which has a strong presence in the sector, is looking for much greater rivalry for future biotech opportunities. Local experts say that the state needs to give greater attention to increasing venture capital flows into Maryland biotech cluster. Go here to read more.

How is the New Toyota Deal
Looking in San Antonio?

Things are shaping up with Texas' new Toyota deal, but project financing strategies for Toyota and its expected suppliers must be resolved quickly and systematically, according to local and state economic development officials.

San Antonio's lead economic development agency, San Antonio Economic Development Foundation, is calling for a standardized incentive package to use in the upcoming battle for Toyota suppliers. Why? The aim is to speed up the process and strip it of uncertainties to better compete against smaller, nimbler cities in the area

Go here for more information.

Edmonton, Alberta Looks To City
for More ED Funding Help

Solving current ED budget shortfalls is not easy. Economic Development Edmonton is looking for more help from City Hall to keep its organization viable. What's the tab? Five million dollars is being requested to close the existing funding gap. Go here to read more.

Fort Wayne Announces New ED Investment Fund

Fort Wayne, Indiana is ready to get very serious about economic development. A new $20 million ED fund has been announced and the City of Fort Wayne has committed the first million to get things rolling. Go here to read more. This is very good news indeed.

Market Rally Best in 20 Years

Stocks soared on Friday, sending the Dow Jones industrial average to its best weekly performance in more than 20 years. This is good news indeed. The Dow gained 8.4 percent this week, while the Standard & Poor's 500 index rose 7.5 percent, its best week since the rebound after the terrorist attacks in September 2001. The rally pushed both indexes into positive territory for the year, along with the Nasdaq composite index.

Not only did the start of the Iraqi War give a boost to the stock market, but the swing in the price of crude oil from $38 a barrel at its peak ahead of war to below $27 helped. The next worry is how will OPEC react. OPEC ministers said they would hold an emergency meeting if oil prices drop below $24 a barrel.

While some analysts expressed strong optimism about the market's performance in the weeks ahead, many remain cautiously optimistic, encouraging investors to carefully find their way back in the market.

Stay tuned. It's great to get some long-awaited good news about the market. Let's keep our fingers crossed.

War

It is difficult to write about economic development issues when our nation has just launched a war with Iraq. Let's talk a bit about war.

Have you ever really thought about the word war? Fortunately, we have not had to think much about the issue in recent years. What does war mean? Merriam-Webster says war is "a state of usually open and declared armed hostile conflict between states or nations." Isn't it amazing that we turn to something so simple as a dictionary at an overwhelmingly complex and frightening time as this?

The dictionary is a powerful book when you think about it. People see the dictionary as an authoritative source for definition and meaning. Merriam-Webster can provide us with a quite adequate definition of war, but it cannot tell us what war means to us. I think that is an important distinction. Meaning is always personal. In that light, this war with Iraq means many different things to many different people. Lately, I have felt the need to develop a more personal meaning of war in general and this specific war with Iraq.

Last night, President Bush notified all of us that we are "engaged in declared armed and hostile conflict with Iraq." The war has officially begun. Most people hate ambiguity because it makes us feel overwhelmed by the possibilities. It creates questions that we cannot possibly answer, which makes us fear our own questions.

Things seem to change in our mind once we are armed with an official declaration of war. For some, it brings relief to shrug off the ambiguity and uncertainty about whether or when we will actually begin fighting the war with Iraq. For others, the real fear and anguish begin. Imagine the fear that our armed service men and women must feel right now. Imagine the fear that ordinary Iraqi citizens must feel at this moment.

What does this war mean to me? I am neither a hawk nor a dove when it comes to war. In the most basic sense, I see war as a last choice alternative when all other strategies fail. As I look back across history, war has been in many cases a necessary evil. My pragmatic side tells me that now we are officially in this war, the central concern is how to we get out with minimal harm and expense to American and world citizens.

I must admit that I am struggling with the goals we seek to achieve in launching this war with Iraq. What are we really trying to accomplish? In my analysis, this is not a simple issue. It is complex because I see many goals being represented by this war. What are they?

9/11 is hard for most Americans to shake from their memory. We do not want anything like 9/11 to occur again in the United States or anywhere in the world. For some, this war is about significantly reducing the threat of terrorism. Can this ever be a 100% solution? No, but perhaps it can reduce the future prospect of terrorism by 50 to 60%. Is that enough of a solution to justify a full-scale war with Iraq? That is the cost-benefit question that must be asked at some point.

And yes, terrorist threats may actually grow in retaliation to the Iraqi war effort. What are the probabilities of this development? When you heard about the highjacked Cuban plane this morning, what was your first thought? I would guess most people feared this was an attempt at terrorism. When you first learned of the new deadly Asian virus, wasn't the first thought that crossed your mind that biological warfare has begun?

Putting an end to Saddam Hussein and freeing the Iraqi people is another often stated goal of this war. Can we do this? Did we get the job done with Bin Laden? Somebody must have the answer to this question: What is the probability that we can actually eliminate Saddam Hussein? My guess is that this will be difficult for a variety of reasons. What about freeing the Iraqi people? This sounds like a pausible goal, but again the cost-benefit issue must be answered: How many American and allied soldiers and innocent Iraqi citizens must die to achieve this goal?

Is economic recovery a goal of this war? More than a few have called this an "oil war." If oil prices drop to less than twenty-four bucks a barrel, OPEC leaders have decided they must hold an emergency meeting. As of this morning, expectations on Wall Street are that a modest gain will occur in the market in light of the recent war developments. The struggling airlines are growing even more worried as people cancel both personal and business flights until we know more about the war and ensuing events. And finally, how about all those happy defense contractors? How do they feel about the economic significance of this war?

If this war is like any other war in history, we can count on the fact that the goals will evolve as the war process develops. We live in a world of unintended consequences. Surprise and unpredictability are regular parts of our lives. By the way, you might find Jack Ricchiuto's thoughts on this issue to be of interest. Go here. I want to thank Jack for raising some thought-provoking questions on his blog about the importance of the questions we ask in life. Thanks Jack.

How do we know if we have actually won this war? In large part, our goals tell this story. Did we accomplish all or most of what we set out to accomplish by this war? Moreover, at what human and economic price did we achieve these goals? The eyes of the world are fixed on America and this war effort. How will they judge the outcomes of this war? By which yardsticks will they assess America's wisdom in launching this war? Most have spoken by their inaction that this is not their war. How will the rest of the world feel about us if we win or lose this war? How will we as Americans feel about the rest of the world after this war is behind us.

These seem like important questions in my quest to find a personal meaning for this war with Iraq.

U.S. Capital Stock Declining

According to a recent article by Reis, a leading real estate and property research firm, the capital stock of America is depreciating at its fastest pace in 72 years, even faster than at the depth of the Great Depression.

Thanks to Mark Waterhouse from Garnet Consulting Services in Connecticut for calling this interesting article to our attention.

Go here to read the Reis article.

This is a serious problem with implications for states and communities across America. It has short and long term implications for economic competitiveness. In short, it hampers our ability to grow. It also reminds us that we should grow in a "smarter" way in the future to better manage our infrastructure costs. It may suggest in some cases that cities and counties need to seriously consider moving toward governmental consolidation, following the recent move by Louisville and Jefferson County, Kentucky.

Business investment levels were healthy across the 1993-2000 period. These levels have fallen off sharply in the past three years due to the recession and national security issues delaying planned investments. They will not return until we reduce the high level of risk and uncertainty that exists across the world.

Government has been running behind in its investments in public infrastructure and facilities for many years. This problem worsened in the 1980's and 1990's, sparked by a major pull back in Federal investments in revenue-sharing and major infrastructure projects. Plus most states and communities are now experiencing the back side of their infrastructure system life cycles. Putting the issue lightly, these systems are suffering from old-age. Is it little wonder that states like Ohio are looking for alternatives to state management of their turnpike system, or why Indianapolis decided several years go to turn over the operation of its waste treatment plants to the private sector?

Economists worry about the long-term effects of under-investment in public infrastructure on overall productivity growth, which is a much understated source of productivity growth in the economy. For one, talk to Randy Eberts at the Upjohn Institute.

How do we cope with this problem? As the Reis article says, our public capital stock is unlikely to get much help during this current period of increased defense spending. Will the prospects improve beyond our current environment? Most state and local governments have adopted a "make do" attitude about infrastructure, favoring basic maintenance over more costly system improvements.

All public finance is "creative" finance in today's world of capital scarcity. To meet the investment challenge described in the Reis article, state and local governments must do one of two things: 1) take on more public debt; or 2) look to the private sector to respond to these needs through new "market-based" initiatives. And yes, some combination of the two is also possible.

Now you know why you cannot raise funding for all those deserving infrastructure projects in your community.

International ED Partnership: An Example
From Fairfax County, VA

Here is a perfect example of what I have been talking about over the past year. EDO's should be partnering with their national and international counterparts to achieve key economic development goals in a highly collaborative and innovative environment.

The Fairfax County Economic Development Authority (Virginia) has joined with Invest.UK, the British Government's economic development agency, in a competition that encourages technology, telecommunications and biotechnology companies in the U.S. and the U.K. to expand across the Atlantic.The U.S. winner, which can be a technology, telecom or biotech company, will be awarded a choice of a U.K. incubator or science park that is best suited for the company's international expansion plans.

The final package will likely include one year's free rent, management services; lab space and equipment; access to support staff, facilities and conference rooms, and access to valuable advice, skill sets and a ready-made business network. The U.K. has a large network of business incubators and science parks that is an important link in that country's technology and research and development sectors.The British winner, which must be a biotech company, will get a free year in the Fairfax County BioAccelerator, a bioscience business incubator that opened in late 2002 and has space for up to 12 companies.

This is a "cool" idea! My congratulations to the sponsors and participants.

Go here to read more. Go here to read about my proposal on national and international ED partnerships.

Retirement Isn't What It Used To Be:
The Need to Explore Some New Options

People are living longer, but times are harder. That is the message in a recent New York Times article that describes the struggle a large number of retirees are facing in retirement communities across America. This is far from new news. People have been screaming about this problem over the past several years.

The stock market's tirade over the past 3 years has nearly decimated retirement fund accounts, turning well-to-do and self-sufficient retirees into "coupon clippers." No, this is not what they expected, nor is this what the current near-retirement age group is looking forward to. It could get even worse for us 50-something-ers.

It's a pretty simple equation when you look at it. Wealth slips and quality of life follows. Ask any family living in or below the poverty level. In so many words, that is what they will tell you.

Our standard of living is slipping in America, despite the number of millionaires and billionaires we lay claim to. We need some new thinking on how to tackle this erosive challenge that is undermining all the hard work that we do in our 35 to 40-year work lives. No, it isn't fair that it all comes unraveled in the final chapter of our life. For many older people, the last years of their life are almost as hard as when they started out in life.

I would offer up this challenge to economic developers across America. What new ideas do we have to head-off this retirement disaster? Maybe it's not enough to target retirees as a growth industry. When you catch your breath from chasing young high-tech talent into your community, maybe you can scratch these words on your yellow note pad and think about them: "Economic development is about wealth creation. My community needs an inter-generational strategy for building wealth and deploying this wealth throughout citizens' lifetimes. What vehicles do we need to put a better system into place to make this happen?"

One idea to get us thinking: a community retirement fund. Maybe employers and employees should have the ability to make contributions to a new type of retirement fund that offers the diversification that a community can offer. It might be a nice alternative to the employer-controlled retirement vehicles that we have in place now.

This is an issue that deserves some fresh thinking. To start us thinking, I've posed the question.

Preparing for War: A Personal Perspective
for Economic Developers

This article attempts to offer some personal thoughts on the impending war with Iraq and its meaning to economic developers. Little has been written or said about how economic developers prepare for or cope with war. Fortunately, few of us have had to directly cope with these issues in the recent past. I believe that we need to think about the war from the perspective of our role in society. This war poses significant threats to our national and local economic security.

While we are paid to think about the economic issues facing our communities, the top concern for everyone at this moment is clearly personal, family and community safety. No one really knows at this point how the war with Iraq and ensuing events sparked by the war will impact their personal lives.

What are some of the issues economic developers might want to think about at this time?

First, the threat of a war with Iraq is imminent. People are making personal, career, business and other decisions in light of the expectation that a war will take place. Most are proceeding with much greater caution. Look at the stock market for one indication of this trend. And yes, we saw some improvement yesterday, which will hopefully continue. Consumer spending also reminds us that things are not good. Many business decisions have been placed on hold. Until we know more about the war we will be fighting, most major business and economic decisions will continue to be on hold.

Second, we do not know at this point how severe this war will be in terms of its impacts on American and international interests in the short and longer terms. Each of us can formulate our own scenarios in terms of how we think the war might go. All of us hope this is a war that ends as soon as it begins. The shorter the better. We must consider the possibility that even a short war could spark other dangers and threats, including additional terrorist acts, deteriorating foreign relations even with our friends, and economic sanctions imposed on U.S. business and economic interests abroad.

Third, business and economic activities will be impacted in various ways by the war effort. They already have been impacted as we have struggled since 9/11 in a state of heightened risk and uncertainty. These conditions have taken their toll on business investments and profits, as well as individuals' ability to create wealth. In short, economic development activity has slowed to a trickle everywhere. These are likely continuing realities until we know more about the shape of the war effort to come.

Fourth, our nation is at risk elsewhere in the world. North Korea is a known threat, but there are probably others that will become visible once the war begins. Most of us already worry about possible retaliation from other parts of the Muslim world.

Fifth, our national economic interests are on the line. Not only is the threat of an oil shortage a possible threat, but some of our longstanding trading partners may impose trade and economic sanctions on the United States if the war effort goes wrong. There is also the threat that namely the Chinese will take advantage of our current vulnerabilities to gain economic ground on us.

Our minds must be nimble enough to think in different directions at this time and consider many possibilities. These are serious issues with implications for every local economy in the U.S. and many worldwide.

Sixth, many of us remain in a state of denial about the whole state of world affairs, hoping and praying this is just one long bad dream. It's not. This is a real situation that will impact our lives and we must heighten our awareness of how these events can and will impact us. This article hopes to contribute to everyone's awareness.

Finally, this is a time for not only greater courage, but also increased intelligence, compassion, and greater sensitivity to how the big picture is shaping the small picture of our individual lives. Do what you can on a personal level to help at this time. Don't be afraid to accept a helping hand offered by another. All of us must work harder at managing our emotions during this troubling time.

Like other traumatic events in life, this war will be a true test of what we are made of. Hopefully all of us will discover that we are made of more than fear, anger and hatred. These qualities have dogged humanity from the beginning of time. History tells us that war is an inevitable aspect of human existence. History also tells us that wars have changed the course of lives of people, nations and businesses. Hopefully someday very soon all of us will look back upon these dark days, understand their purpose and continue to feel good about ourselves. Let that be our deepest hope. May God bless you, your families and the communities you work for.

Latest Poll Suggests U.S. Businesses
May Not Be Ready for War

A new Gallup poll suggests that American businesses have done little to improve business, employee or data security since 9/11.

The poll indicates that fifty-seven percent of employees say their companies have not upgraded security for employees since Sept. 11, 2001. Another 27% say their companies have made only minor changes to improve employee security. Just 16% say their companies have upgraded their employee security a great deal over the past year. In spite of the increased threat of terrorist attacks as the United States goes to war, our business community does not appear to be taking added security measures. I think we should be doing more in this regard.

Thirty-eight percent of employees say that their companies have not upgraded security for their business records and other data since Sept. 11, 2001. Another 20% say their companies have made only minor efforts to improve data security, while 27% don't know if any changes have been made. Just 15% of employees say their companies have upgraded their business record/data security a great deal over the past 12 months. Again, these percentages are just about the same as those obtained last August.

Go here for more details about the Gallup poll.

Maybe one of our jobs as economic developers is to remind and help our businesses improve security during these uncertain times. Who else is shoulder this responsibility on the local front? As I suggested in earlier articles, economic risk management may be one of our new jobs. Economic security is a part of our jobs now. I would encourage you to think about this role and what your organization can do to help.

Risk is not new to economic development, but dealing with an elevated level of risk and uncertainty is new for most of us. I believe risk management will be more important to our future economic success. Those areas best equipped to anticipate, assess and minimize economic risk will be most likely to succeed going into the future. Is your area and are your businesses ready for the impending war with Iraq and possible events triggered by the war. Sadly, most of us must answer that we are not as ready as we need to be.

To learn more about how you can assess, plan for, and manage economic risk in your community, please call us at 440.449.0753, or send us an email at: dtia@ix.netcom.com. We would be happy to share our ideas with you. Recently, we introduced some new services that might help.

Distance Education Working
in Rural China

Recent reports indicate that distance education efforts are having a positive impact on the training of rural farmers and citizens in modern farming methods and a variety of other efforts. Online medical advice is also being offered to patients in remote parts of the country. Over 2,000 distance education have been setup so far and more are expected. While more needs to be done in this area, these indications point to early success in getting rural Chinese to take to the Net for learning and other information.

Go here to read more.

Minnesota Launches New Flexible Loan Program

Collaborative advantage. That's what it's all about. Minnesota has consistently shown the ability to get people to work together to accomplish their economic development goals. Minnesota's latest accomplishment is in the economic development finance area. Nearly 60 communities and development groups from across Minnesota have banded together to form an innovative new economic development financing organization—the Minnesota Community Capital Fund (MCCF).

The Northland Institute, a Minneapolis-based nonprofit organization, developed the MCCF over the past two years, and is managing the fund during its start-up period. Scott Martin, Northland's president and MCCF CEO, explained, "the MCCF is a rural economic development initiative of the Institute that is designed to provide more loan capital to rural communities through the pooling of local dollars and by accessing national capital markets".

MCCF will originate loans on behalf of its members and sell all loans to the secondary market. This approach enables MCCF to fully recapitalize its loan fund on a continuous basis, thus ensuring that MCCF will always have money to lend in the communities we serve. MCCF loans will be made only in conjunction with banks or other financial institutions. MCCF loans are intended to fill a project financing gap and provide capital only when needed by a commercial lender to complete the overall loan package.

To learn more about this new initiative, go here.

Additional Leads on Interesting and
Noteworthy Practices in Economic Development

Here are some additional places you might look for ideas on interesting and noteworthy ED practices:

* National Association of Regional Councils
* National Governors Association
* International Economic Development Council
* U.S. Economic Development Administration
* Georgia Tech Economic Development Institute

You will find a mix of ideas on these websites. Examples include: regional collaboration, cluster-based development, rural economic development, sustainable development, business recruitment and marketing, and workforce development.

Best Practices

Everybody wants to know which economic development organizations are doing "best practice" work in particular economic development functions or activities. Organizations hire consultants like me to do identify what the "best" are doing. Save your money if you are looking for absolute, irrefutable examples of best practice in economic development. There are none. Now, can you learn from other organization's experience? Absolutely, but please don't look for the perfect program that will solve all of your problems. It doesn't exist. I say instead: work on perfecting your own programs through better monitoring, research and planned improvements. Invest in technology, especially the Internet, to support appropriate aspects of your work.

Economic development is a "work in progress." I think we are getting better at what we do, but we are a long way from knowing how to set forth standards that any organization can adopt and follow and receive predictable results. In fact, we have done virtually no best practice benchmarking research that shows if you do x, then y will occur. At best, our best practice work is case study-based, and in some instances looks at a larger population or organizations, operating environments, and performance outcomes. That is what we need. Somebody needs to conduct this research. It will help all of us.

Everyone would be better served in the field if we talked about appropriate or applicable practices. Let's work on creating appropriate expectations about what we do. I find too much hype about best practices, and when I look beneath the surface I usually find a weak unsubstantiated self-claim to fame. That is not best practice. We need help in many areas of economic development practice. Four key areas come to mind where we should spend more attention: industry clusters; technological innovation; marketing; and incentives.

If you are new to the best practice game, you may want to nose around this website for some useful ideas. Go here. This is a database created by the UN on sustainable development best practices worldwide. It contains several best practice solutions for economic development.

We have more to say on this topic. Stay tuned.

Geographic Information System (GIS) Applications
In Economic Development

EDO's are making increased use of GIS technology as both a planning/analysis and communication tool. We did a little looking around to see who is doing what.

Here are some user websites you might want to look at:

Virginia ED Partnership
City/County of Honolulu
City of Tucson
Manatee County, Florida
City of San Francisco
Boise, Idaho
Greater OK City ED Information System
Missouri Economic Research and Information Center

Most of the above user organizations are employing GIS for real estate and site information and planning, but many also provide applications like retail market area analysis and business cluster mapping services.

A visit to these sites should serve to: 1) give you some starting ideas on what is possible using GIS; or 2) provide some comparisons for your existing GIS program and ways to advance it.

I suggest a stop at some of the university department's teaching GIS. You might start with the University of Toledo's GIS Center, run by Dr. Chris Shove, who has a strong background in both economic development and GIS. Go here.

Another useful stop would be the Urban and Regional Information Systems Association. Go here. Lots of useful information on the site, plus many informative links to other organizations using and developing GIS applications.

If an economic development GIS users group does not exist in your state, you may want to consider forming one. These groups allow users to share information and ideas about what works and what doesn't.

Indiana Debates Where the Tax Axe Should Fall

Economic developers have argued historically that low business taxes contribute to more economic growth. Studies in Indiana suggest that may not be entirely the case, since the state has enjoyed a relative tax advantage over many of its state competitors and still has not seen robust growth. Some in Indiana argue that the tax burden has shifted to individuals and many are not happy to be paying more taxes each year.

Sound like a familiar debate? It is. Guess what? You are going to hear a lot more about these issues as businesses and individuals both seek to dodge the tax bullet as the economy continues to sputter along and state and local government revenue shortfalls grow. Somebody has to pay more in the future. Who's it going to be?

Tax policy changes are quite complex since changes made in one area have implications for other tax policy areas. More than a few states have conducted massive tax studies to determine if their tax mix and distribution policies are in line with where society and the economy are headed. Most of these studies point to serious misalignments that need to be fixed. The problem is right now nobody has the will or financial where-with-all to do anything. One thing is for sure. Local and state governments are hungry for revenue right now and they will be gunning for more revenues from everyone, even at the expense of economic development. Essential government services, such as public education and infrastructure, are not only important to citizens--they also benefit businesses.

The merry-go-round continues. Where it stops nobody knows. Our advice is to exercise care in addressing these issues. Examine various economic and fiscal growth scenarios. Do not lock and load on just one picture of the future--chances are good it will be wrong.

What future ideas should we consider? For economic development, taxes on production are ill-advised in most states, including those states relying heavily upon consumption-based taxes (retail sales taxes).

Strategies that diversify tax revenue sources are a good bet, even in those states with a good mix now. Should and will the Internet be taxed? I believe it will if traditional tax sources continue to struggle.

Governmental consolidation makes a great deal of sense, even if local politicos don't want it. We cannot afford to support the current public administration landscape as it is configured.

Privatization is a good bet if service quality and costs can be maintained. Look first to private contract management of public services, not unlike the model already used in Indianapolis.

Where should we put the emphasis on future incentives? Clearly, they should be placed on "productive" growth, innovation by businesses, and entrepreneurship by individuals. These are logical economic drivers to back, which will have a positive long-term impact on the economy.

Finally, we need to get an improved handle on the cost of growth to everyone, including citizens, communities and businesses. Wherever possible, we need to drive down the costs of growth.

Go here to read how Indiana is looking at these issues.