Can Confucius save America’s middle class?
Update: Sorry, in the first version of this column I confused two different companies. The corrected version is below.
BOWLING GREEN, KENTUCKY–For decades, this bucolic corner of southwestern Kentucky depended on Corvette sales from the local GM plant for its economic life. Now, itâ€™s trying something different.
Last year, the state university opened a â€śConfucius Instituteâ€ť that offers nighttime Chinese language classes to local business people. An American auto parts company chose to create 280 new manufacturing jobs here instead of Mexico. And government officials brag about the 19 companies from India, Japan, Finland, Germany, Israel and other foreign countries that have invested locally.
â€śWe just came back from China,â€ť Ron Bunch, the head of the Bowling Green Chamber of Commerce, told me as he escorted Chinese investors around town. â€śWeâ€™re starting an Indo-Kentucky Chamber of Commerce.â€ť
Even the townâ€™s old economy hallmark â€“ the GM plant that is the worldâ€™s only producer of Corvettes – is expanding. Fruit of the Loom, which is headquartered here, is slowly growing as well.
While the middle class agonizingly shrinks in other parts of the United States, Bowling Green, Kentucky boasts a growing number of jobs and a lower unemployment rate â€“ 7.9% — than the national average of 9.1%.
â€śItâ€™s about not fearing globalization,â€ť said Brian Strow, a former city commissioner. â€śBut being an active participant.â€ť
Bowling Green is reinventing itself. Pragmatic, diverse and not politically polarized, this city of 100,000 residents increasingly sees itself in a global context. It is slowly finding its way and providing a sign of hope for Americaâ€™s beleaguered middle class.
After working as a foreign correspondent and investigative reporter for The New York Times for the last fifteen years, I recently became a columnist for Reuters. The primary focus of my column, â€śThe Global Middle,â€ť will be the state of the middle class inside the United States and around the world.
While the American middle class has struggled in recent years, a new global middle class is emerging in countries like South Africa, Brazil and Turkey. Worldwide, an estimated 70 million people join an â€śemerging market middle classâ€ť each year, earning incomes of $6,000 to $30,000 annually. Economists predict they will surpass the Western middle class in global spending power within twenty years.
This column will examine which economic policies help create middle classes. What lessons from abroad, if any, can be applied to the United States. And whether growing middle classes overseas inevitably mean a shrinking middle class in the United States.
For me, and many others, the creation and preservation of middle classes is vital. Two decades of covering political, religious and ethnic conflict around the world has convinced me that the single largest instrument of stability in any society is a middle class. Whatever their nationality, members of the middle class tend to reject extremist leaders. They try to make governments more effective. And they often cherish the same values, particularly merit, justice and stability.
I plan to visit Bowling Green and other communities inside and outside the United States to see firsthand what is occurring on the ground. My goal is to move beyond political posturing, news media hyperbole and academic theory. Here in southwestern Kentucky, community leaders are trying to innovate, export and educate their way out of Washingtonâ€™s economic and political paralysis.
There are hurdles, of course. Over the last two years, only 2,200 jobs have been created in a community of 100,000 people. A taxpayer-financed, $25 million industrial park on the north side of town is attracting fewer tenants than hoped. And the desperate courting of foreign investors is a marker of the end of American economic omnipotence.
The Confucius Institute here is one of 74 that have opened on campuses across the U.S (and 322 worldwide) that are affiliated with a non-profit based in Beijing. Critics have said the Chinese government controls the organization and some have even accused it of corporate espionage.
And yet Bowling Green has few other options and a long history of welcoming foreigners. A refugee resettlement center since the 1970s, the city has large Vietnamese, Bosnian and Burmese communities. Thirty languages are spoken in local public schools.
The city defies traditional labels and limits. Neither Rust Belt nor rural, it has diversified from an economy dependent on Corvette sales to mix of services, technology and light manufacturing
While it is the hometown of Sen. Rand Paul, it is neither blue nor red. All local government offices are non-partisan. When party is identified, local Democrats are fiscally conservative. Local Republicans say government plays an integral role in economic growth. The local economic development philosophy is to add small numbers of jobs to existing companies, rather than courting potential white elephants.
â€śOur greatest strength has been staying the course,â€ť says Kevin DeFebbo, the city manager. â€śThere is a great practicality here.â€ť
Lastly, the town has a college, Western Kentucky University, that is no ivory tower. Increasingly, the university is the regionâ€™s economic engine. In 2001, the university and state purchased a 300,000 square foot local mall on the south side of town and turned it into a research center that holds laboratories, private companies and a high tech start-up incubator.
One of its fastest growing tenants is Pure Power Technologies, a spinoff of a local carburetor manufacturing company.
the research and development arm of a local heating and garden tool manufacturing firm that went bankrupt in 2008 after losing jobs overseas and being bought and sold by a series of private equity firms. Today, it creates develops and designs diesel engine control systems. Its director travels widely overseas to drum up new business. president is a university graduate, as are all eighteen of its employees.
â€śHeâ€™s in Brazil today,â€ť said Doug Rohrer, a former business executive who runs the center. â€śHeâ€™ll be in China on Monday.â€ť
What works in Bowling Green may not work elsewhere. Other communities lack the resources that exist here. But there is real change in this area. I will write more about Bowling Green and its efforts to fight back, and track over time its success or failure. For now, business people, local officials and teachers are engaging the outside world and succeeding. An odd mix of Corvettes, American pragmatism and foreign investment is helping Bowling Greenâ€™s middle class claw its way back.
PHOTO: Corvette fans look over the new 2006 Z06 Corvette during its roll out for Corvette fans and the general public. REUTERS/John Sommers