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EDITORIAL
Op-Ed; Hub can lift a glass to what it does well
THOMAS M. KEANE JR.

12/13/2002
Boston Herald
All Editions
039
(Copyright 2002)

Bostonians are a critical and pessimistic lot. Around here, an optimist is someone who thinks the glass is half full - but is sure it's about to be dropped.

Yet a recent report from Suffolk University's Beacon Hill Institute suggests that not only aren't things all that bad, they really are quite good.

Economists Jonathan Haughton and Corina Murg put together an extensive analysis of the country's largest metropolitan areas, seeking to find out how they ranked in terms of "competitiveness." Boston's rank? Third.

Competitiveness, by the way, is not a measure of how inventively we disparage the Yankees. Rather, it's a gauge of an area's business climate. Turns out, good old Taxachusetts is not so bad after all.

I have visions of power-suited members of the Greater Boston Chamber of Commerce marching through the streets chanting, "We're Number 3! We're Number 3!"

We're not Hertz, or even Avis, but we're right up there, along with Seattle and San Francisco (Numbers 1 and 2) and just ahead of Denver.

The authors of the study looked at the 50 largest metropolitan areas, from New York City (21.2 million people) to Richmond, Va. (with only 1 million). Metropolitan areas, by the way, are much larger than the cities with which they are most closely identified. The Boston metro area, for example, is the seventh largest in the country. It extends from southern New Hampshire and out to Worcester. It has 5.8 million people; Boston itself has only about 10 percent of that.

And how come Boston ranked so high? For one, it's safe (Boston ranked second on security). In addition, with its highly educated population, strong health-care industry and its numerous colleges and universities, the area ranked first both in human resources and in technology. Also, Boston has a strong entrepreneurial culture; we do better than most in creating new businesses.

All of this matters. Competitiveness is directly related to prosperity: Competitive cities have stronger economic growth, and that translates into higher incomes per capita.

There are three important points to draw from Beacon Hill Institute's analysis.

First, that we are ultimately responsible for our own economic prosperity.

There is a tendency to believe that because local governments have little influence over the national economy, there is little that we can do to make ourselves better. In fact, the opposite is true. As Harvard's Michael Porter says, "wealth is actually created on the microeconomic level." Almost all of the things that the institute looked at - from transportation to safety to education - are controlled by local governments. Some cities do a good job of it. Others, like New Orleans, don't - which is why that city, ranked 50th, is also bad off economically.

The second point is that Boston has an opportunity to do even better.

Many of the factors that contribute to competitiveness take a long time to put in place. Boston's educational advantages, for example, have been more than 460 years in the making, from the establishment of the nation's first public school, Boston Latin, in 1635.

But interestingly, the three areas where Boston is weakest shouldn't take centuries to fix. We do relatively poorly on transportation (Boston is 41st in the average travel time to work), cost of living (we rank dead last, in large part because of housing costs) and fiscal policy (our bond ratings are low because the state is coping with low revenue and high state expenses).

Each of these problems can be solved. The completion of the Big Dig will ease many of Boston's downtown transportation problems, but a sensible government policy will also start to look at other approaches, such as the urban ring or the rail link between North Station and South Station.

Housing, of course, is the issue that everyone likes to talk about but few seem willing to confront. If we want to reduce housing costs, we need more housing. The biggest impediments to new housing, however, are those that we impose on ourselves, such as restrictive zoning and high regulatory burdens.

And finally, there's fiscal policy - which segues into the third important point from the Institute's report.

Gov.-elect Mitt Romney faces a reported budget gap of more than $2 billion. That deficit mushroomed swiftly after years of comfortable surpluses, suggesting that there are structural flaws that the new governor needs to address.

Yet the implication of the institute's report is that the budget gap itself is short-term. There are signs now that the national recession has, in fact, ended. Boston's fundamentals are good, which means that soon - in at most a couple of years - it will rebound strongly. That will leave state coffers fuller and make us all better off.

Not only is the glass half full, but it turns out we have a pretty tight grip on it as well.

Talk back to Tom Keane at tomkeane@tomkeane.com.