New economy means constantly changing focus
Monday , September 17, 2012 - 2:21 PM
OGDEN — Everyone agrees that Utah and the world have entered an era some are calling the “new economy.”
That’s where the agreement ends.
Dave Hardman, president of the Ogden/Weber Chamber of Commerce, sees the new economy as the booming tech-driven climate growing jobs in Weber County. He says growth is driven by a reputation for outdoor sports that has replaced agriculture and railroads.
Pam Perlich, of the University of Utah’s Bureau of Economics and Business Research, says the new economy is the post-industrial, computer-driven world of information technology that “cannibalizes jobs, creates a superclass of people who are the builders of the builders of these machines” and displaces millions of workers in the process.
Her new economy means that progress is, in some cases, increasing unemployment faster than it can grow jobs.
Articles in such magazines as “The Nation” and “Yes!” say the new economy means more locally owned businesses, driven by ecological awareness.
All of them, says WSU economics professor Doris Geide-Stevenson.
The term “new economy” is a moving target.
The economy is always changing, Stevenson says, and those changes take people by surprise on a regular basis.
For example, Stevenson was pretty sure she knew what the “new economy” was back in the late 1990s.
That was the hot new name then for a world in which technology and policy produced an era when everyone really knew how the economy worked.
It was, she says, a Goldilocks economy, controlled so it was not too hot and not too cold, but always just right.
People thought, “we have the means to deal with it from a policy perspective, but we also have technologies to deal with it,” Stevenson says. It was “the idea that we have figured out how things work.”
Bottom line: No more recessions, just a smoothly running, steadily growing, well-managed economy. The bursting of the dot-com stock bubble didn’t even seem to change that thinking.
Then the housing bubble exploded in 2007.
Suddenly, the Federal Reserve was digging into its history books for answers. Ben Bernanke, who was named head of the federal reserve the year before, found his expertise on the Great Depression of the 1930s useful.
But economies always change.
“There’s always this churning going on. There are always jobs that go away because of technical advances,” Stevenson says. “So we don’t have people who shoe horses any more; there are other professions.”
People who speak of a new economy centered around environmental concerns are also correct, Perlich says.
For her, she says, the new economy is a worldwide condition that the planet has never witnessed before because it has never had 7 billion people pouring their energies into so much high technology.
“Our capacity to impact the world around us as a species has never been as big as it is today,” Perlich says.
“We have the potential to change our planet, and the metaphor is the new economy, but it really is a metaphor or code word for all these new realities we see emerging around us. The trick is to pick out what is truly important.”
Financial crises are only a small part of it, she says. Recessions and booms will always happen.
“So this term ‘new economy’ gets used by a lot of people because they don’t know what’s really going on, and even in hindsight, we aren’t really clear about what’s happened.”
Take the western United States, Perlich says. In 1950, it had several states with half a million people each, mostly rural and isolated.
The interstate highway system came along, as well as the Cold War, air conditioning and the aerospace and defense industries. Suddenly, Arizona had 6 million people, and Utah had 3 million.
“So we have industrial policy that purposefully directs resources and population to certain areas,” Perlich says.
“It’s the connections of Utah to the outside world and all places throughout the world, to financial and labor product markets, that are driving a lot of the changes.”
That has made Utah something that its founders never dreamed of: a technology-boom area.
“The classic industries in Utah, like mining and agriculture and the defense sector, don’t grow as rapidly as other sectors of the economy,” Perlich says.
“We began to see the development of a wide range of industries in Utah, a wide in-migration of people. We have become one of the most widely diversified economies of all the states.”
Hardman, of the Ogden/Weber Chamber, says Weber County has been trying desperately to ride that change.
Top of Utah has seen its traditional rail and agricultural economy fade, he says. By the end of the 1990s, the area was desperate for a new direction.
Ogden and Weber County tried to attract more high-tech jobs, Hardman says, but even after the 2002 Olympic Games in Utah, they couldn’t get traction.
“So we specifically hired a company to bring in writers” to produce articles about life in Top of Utah, he says.
The effort cost $100,000 a year for a couple of years but generated articles in national magazines.
“And as those articles started getting traction in publications, all of a sudden, people started paying attention to us,” Hardman says.
Some of the first companies to come were the head-office operations of outdoor recreation-equipment manufacturers.
Hardman told a meeting of entrepreneurs recently that those headquarter operations didn’t bring a lot of jobs to the area because the companies do their manufacturing overseas, but those companies did bring their national reputations.
Those higher-profile companies started the ball rolling.
Magazines started writing about Ogden on their own. Suddenly, Forbes and National Geographic were covering “the cost of living and the friendliness” in the Top of Utah, Hardman says.
That led to a gradual re-branding of the Top of Utah as welcoming “not only in outdoor recreation, but as business-friendly. Now, when we talk to companies, whether it is Home Depot or an application company for mobile devices, they know who we are and are anxious to take advantage of the culture and the workforce.”
Those are jobs that pay more than outdoor-recreation work, he says.
Even existing companies have ramped up to meet the new world market. For example, Hardman says, Barnes Aerospace in Ogden has always made parts for airplanes out of exotic metals such as titanium.
But “they moved from a basic machine-shop atmosphere to a beautiful 170,000-square-foot facility in Business Depot Ogden. They brought with them all their people, but they brought new technology, higher-tech stuff that they can build and do things they have never done before,” Hardman says.
“So the efficiencies and the technology have given us the edge in the race for business, so that is the big difference we are seeing.
“Now, instead of just mechanical production companies, we’re looking at high-tech companies.”