Annapolis Institute Overview


Three Responses to New Economy

by Phil Burgess, Unabridged from the Rocky Mountain News, May 23, 1993

Bozeman, Mont.— Sit, fight or run. These are your options if you live in a state racked by the changes in America’s New Economy.

For example, demographic change is causing Montana to lose one of its two seats in Congress.

And federal policy has taken its toll. Transportation deregulation has left many Montana communities stranded, as railroad abandonment and cutbacks in scheduled air service have undermined many local economies. Even larger communities, such as Billings and Bozeman have been hit with service curtailments and higher fares.

The collapse of commodity prices drove a stake through the heart of Montana communities that depended on mining or harvesting natural resources: transforming water, grass and space into food; turning rocks into concentrates and smelted metals; oil and gas into energy; or trees into lumber.

Also, dramatic increases in productivity- using technology to produce more with fewer people- have reduced employment to levels that threaten many communities.

Some people respond with a “sit” strategy. They see the problems as just another downturn in a familiar cycle of boom and bust.

Others run. They move our of smaller towns or they leave Montana.

Others see recent changes as more than just another cyclical downturn. These people see broad-based structural changes driven by new technology and the globalization of markets.

Most structural change people are fighters. Some fighters see opportunities to extend the traditional natural resource industries by locating more value-added activity in Montana. They point to meatpacking or dimension lumber as extensions of ranching and forestry, for example. These people often view environmental activists as “outsiders” bent on taking the economy away from the miners, tree cutters and cow grazers.

Other fighter see economic diversification as key to transforming Montana’s economy. They see a future that builds heavily on “distance-independent” industries that do well in remotely located areas, provided there are good telecommunication links.

These industries include mail order firms such as Lands End in Wisconsin, specialty food companies such as Mrs. Fields Cookies in Utah, back-office operations, such as Citi-Corp’s credit card service center in South Dakota.

Because those seeking diversification also see tourism and other “experience industries” as an expanding sector, they tend to be more sympathetic to the sensitivities of the environmentalists.

Fighters correctly view Montana’s many assets- its “big sky” quality of life, good schools, low costs of doing business, high work ethic and regional cooperation- as tailor-made for success in the New Economy. Fighters also want to reform and broaden the Montana tax base by including a sales tax to capture revenue from Montana’s rapidly expanding service economy.

The struggle for Montana’s future is being shaped by its fighters.

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