"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Friday, March 8, 2013

What To Do With Mississippi?

Mississippi ranks last in per capita income and last in per capita GDP.  It was one of the three worst states in economic growth in the period 1997-201, declining by almost 1 percent.  It’s ACT school test scores are the worst in the nation.  Over twenty percent of the adult population is functionally illiterate.  Twenty-three percent of the state’s population lives in poverty, the worst in the nation.  Thirty-eight percent of the population is black, but over 50 percent of its K-12 student enrollment is black, and in many counties it is over 90 percent.  It is one of the nine states of the country with the poorest economic mobility. Only 50 percent of its population living in urban areas compared to a nationwide average of nearly 80 percent, and it is one of the four most rural states in the union. Nearly 22 percent of Mississippians receive food stamps and many more are on welfare, ADC, and Medicaid.
Socially, it is one of the most conservative states in the country. Sixty-six percent of Mississippians do not believe in Evolution.  Eighty-three percent are evangelicals most of whom believe in a literal interpretation of the Bible. It is the fourth most politically conservative state in the Union. (All data from US Census, US Department of Commerce, Mississippi State, Pew Charitable Trust, private business journals, etc.)

Given these discouraging characteristics, how can Mississippi progress?  The answer is not evident.  Few industries want to invest in a state with such poor educational performance and social dysfunction.  Because of the state’s low GDP and low personal and family income, tax revenues are insufficient to develop the infrastructure necessary to attract development.  Many if not most municipalities are losing retail, and have shown little vision in attracting new investment. Some, like Tupelo, are the exception.  This Northern Mississippi city of 35,000 has been forward in its thinking, has shown political vision and will and has created a strong and diverse economic base. The Tupelo Community Development Foundation has provided strategic planning and aggressive marketing.

Tupelo is home to a large, nationally-recognized medical complex, has a number of important industries, and has taken steps to revitalize its downtown. It has been successful at attracting thousands of national and international tourists to the birthplace of Elvis Presley.   Benefitting from the tax revenues generated by the economy, it has built new public facilities and renovated others.  In short, even in a casual visit to Tupelo, the visitor can see clear signs of private and public investment.

Columbus, on the other hand, a town of 25,000, shows few signs of economic vitality.  The downtown is losing retail at a rapid rate, and the prime economic driver - the Air Force Base - may have a short future given current financial austerity.  The Mississippi University for Women is a small educational institution, overshadowed by its neighbor, Mississippi State and Ole Miss in Oxford.  A new president has demonstrated political savvy and marketing expertise and is trying to find and carve out a niche for ‘The W’ to attract the few state funds available; but it too, is a weak bet compared to more economically powerful industrial enterprises.  Columbus’ LINK is more a chamber of commerce – an association of like-minded business people interested in the economic well-being of the town – than a real strategic planning agency like the CDF in Tupelo.  It has not yet been able to agree on a marketing strategy to build on the international reputation of Tennessee Williams.

Other towns share Columbus’s dilemma, and many are far worse off, especially those in the Delta.  The ones that are succeeding, or are at least stable, are those that have some major institution – a college or university, a hospital or medical complex, or at least one major industry.  Greenwood, for example, has a hospital, and most importantly is the headquarters for Viking Range Corporation.  The selection of Greenwood as the corporate headquarters for Viking was serendipitous, however, for it is the birthplace of its founder.  There is nothing especially attractive about Greenwood as a corporate destination and the corporation, recently purchased by Middlby, may not stay in Mississippi.

There is currently a lively debate in the Mississippi legislature about offshore drilling.  While next door neighbor Louisiana has made billions from their gas and oil industry, Mississippi has forbidden any exploitation of its coastal waters.  This opposition may change in the face of the state’s persistently poor economy.  Currently unknown inland sources of gas and oil may turn Mississippi into the new North and South Dakota, generating the same revenue and propelling state GDP, but up until now that is but a hope and a dream.

Seven percent of state GDP is derived from Entertainment and Tourism and most of this comes from the ‘offshore’ and Indian casinos.  These have been profitable and growing modestly, but are not seen as economic saviors.  Casinos come and go, many are in trouble while others flourish, and employment is mid-low level without the higher level professionals that Tupelo, for example, attracts through its medical complex.

So, will Mississippi continue to remain at the bottom of most economic and social indicators and be the nation’s equivalent of an inner-city?  I have observed the economic and social development of Washington, DC where I have lived for over 35 years; and while I have seen the city grow and prosper during that time, I have also observed that its poorest neighborhoods have remained stagnant.  They have many of the same indicators as Mississippi – a poor, black, inadequately educated population characterized by social dysfunction, poor health and family welfare, and high unemployment.  No matter how many federal and municipal funds have been poured into these communities, little progress has been made.  Employers are wary of hiring from this community because of the quality of the labor force, schools have been resistant to change and improvement and are more holding pens than educational institutions. In other words, is the only hope for Mississippi is that at least some of its residents – like poor DC residents – will find opportunity elsewhere?  That is beginning to happen in DC, but the consequences are dire, for with the loss of these more motivated and ambitious residents, the inner city becomes even more desperate and isolated.

Mississippi has the distinct advantage of being a state, and once offshore drilling begins and/or gas fracking fields are discovered, its wealth, GDP, and personal incomes may well rise.  With that one positive development, many peripheral advantages will accrue.  More money will be spent in the local economy.  Executives and professionals will demand better schools and public facilities, better roads and infrastructure.

Mississippi is a fiercely anti-federal state. Perhaps because of the memory of unwanted federal intervention during the Civil Rights era and the more distant but still powerful memory of Reconstruction and the Civil War itself, Mississippi rejects – at least from the hustings and in the polling booth – federal assistance.  Of course residents of the state benefit from the hundreds of government programs that go unnoticed in our highly politicized and divisive era, but overall there is a continuing mistrust of Washington. This will have to change, for only with a reasonable partnership between private investment and government support and facilitation can economic and social development accelerate.

Mississippi has a very low immigrant population – not surprising because of the poor job opportunities in the state – but new waves may arrive if gas and oil become important and they will inject the energy and ambition which has characterized them in America.  The IT sector is almost non-existent for the same reasons that other industries have stayed away.  High tech firms, more than others, need highly-skilled or at least quickly educable employees which Mississippi lacks.  However, given the continual economic changes in the international market (e.g. Chinese labor and Indian call center employees are not so cheap any more), Mississippi may benefit from a transfer to US shores.

In short, the prospects do not appear too bright for Mississippi.  I have only touched the surface here in this short piece; and there are many other factors, trends, influences, and possibilities that I have not discussed; but in general the trajectory that I have described is an accurate one, and without a windfall, the state is likely to muddle along for the next decade at least.

 

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