Ability to attract people like bears to honey has sticking point: economy

At both the state and national levels, pitches are being made for huge expenditures on public works projects as an economic stimulus.

In Arizona, the pitch comes with a local twist: The state has a rapidly growing population. The additional infrastructure will ultimately be needed anyway. So, why not build it now, when the economy could use a boost?

The efficacy of public works spending as an economic stimulus is debatable. And there are major questions about how much idle heavy and commercial construction capacity really exists and how quickly additional capacity can be developed.

But put those issues aside for now. Let’s examine the underlying Arizona twist on the pitch: The population growth is coming anyway, so let’s build to accommodate it now.

Arizona has certainly been one of the fastest-growing states for some time. Although official statistics don’t reflect it yet, the widespread belief is that population growth in Arizona has slowed.

It’s also widely believed that this is a temporary phenomenon, that when the national economy recovers, Arizona will get back to attracting people like bears to honey.

Based upon history, that would certainly seem to be a safe bet. But, as George Will says, history repeats itself until it doesn’t. And there are reasons to be cautious about assumptions regarding what Arizona’s future holds when the current economic malaise clears.

The future-will-be-the-same argument assumes that population migration to Arizona is being suppressed by the inability of people to sell homes in other places and uncertain job prospects here. Once the housing market stabilizes and the job market perks up, the moving vans will resume their rumble.

However, economic policy choices (including a return to lax monetary policy and mammoth borrowing to fund bailouts and stimuli) may lead to a prolonged period of economic stagnation.

That, in and of itself, wouldn’t necessarily mean that migration to Arizona wouldn’t resume. Arizona grew at a very quick clip during the 1970s, the last period of prolonged national economic stagnation.

However, this downturn may be different. From the double-whammy of steep housing and stock declines, many Americans have seen their net worth shrink by a quarter or a third.

That’s a sobering development whose long-term implications cannot begin to be grasped at this point.

For a while, Americans may become a much more economically cautious people. Families may start living below their means again. Nest eggs may become more important. Savings from current income may become a larger part of building them, rather than relying on appreciation of already owned assets.

There’s a certain amount of risk-taking in moving. Some people move to take a specific job. But confidence in the longevity of any job has been shaken. People may become reluctant to give up networks they have developed where they currently live that can be accessed to find a new job should the need arise.

From the 1950s on, Americans increasingly moved to places they wanted to live without having a job in hand, confident in landing something once there. That sort of risk-taking may abate.

Then there is the issue of illegal immigration, which clouds any crystal ball.

Foreign immigration has driven a significant part of Arizona’s population growth. Since 1990, Arizona has added 650,000 foreign-born residents. In fact, foreign immigration has accounted for about a quarter of Arizona’s overall population growth.

And much of that foreign immigration has been illegal – according to most estimates, about 60 percent of it.

Illegal immigration is also believed to be down, but there are disputes as to the reasons why – a poor economy or increased enforcement activity. Which is the case won’t be known until the economy and the housing market recovers.

And if it proves to be enforcement, the effect of losing the construction labor previously supplied by illegal immigrants is another economic unknown.

Arizona doesn’t have a birthright to be one of the fastest-growing states in the union. That’s a function of the willingness of others to take moving risks and economic conditions nationally and locally – all huge imponderables right now.

This is, in short, a time for Arizona governments to be hunkering down, trying to manage their way through tight revenues.

It’s not a time to be making big expenditure commitments based upon the assumption that the future will be like the past.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: robert.robb@arizonarepublic.com

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Arizona’s population by decade

1900: 122,931

1910: 204,354

1920: 334,162

1930: 435,573

1940: 499,261

1950: 749,587

1960: 1,302,161

1970: 1,770,900

1980: 2,718,215

1990: 3,665,228

2000: 5,130,632

2007: 6,338,755

This entry was posted on Friday, December 26th, 2008 at 12:00 am and is filed under Edge, Opinion. Tags for this post: Columnist, Columnist/Guest, Economy, Edge-Economy, Edge-Economy-Columnist, Opinion-Trans/Growth, Opinion-Trans/Growth-Columnist/Guest, page-b01, Robert Robb, Trans/Growth. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.