Cook: Why VW may not matter

Cook: Why VW may not matter

July 16th, 2014 by David Cook in Opinion Columns

David Cook

Photo by Ashlee Culverhouse/Times Free Press.

The good news is that VW will build its SUV here, adding an estimated 5,600 more jobs -- direct and indirect -- to the region.

The terrible news is that it may not matter.

In the last several years, Southeast Tennessee has received more European investment than some places will see all century. VW, and its $1 billion footprint at Enterprise South. Wacker. Alstom. All in all, German companies alone have invested billions in the Chattanooga area.

It makes for a dreamy verse in the renaissance song we sing to ourselves: from dirtiest city to best place to live, the Chattanooga story keeps getting better and better.

Call it the VW mystique. We believe that with more and more European investment, we can somehow overcome the economic fragmentation plaguing the rest of America.

There's only one problem.

We can't.

"The rising tide of global investment has not raised all ships. In fact, many neighborhoods in Chattanooga are poorer in 2013 than they were in 2000," writes Dr. Ken Chilton, professor at Tennessee State University and former director of the Ochs Center for Metropolitan Studies.

In June, Chilton and two others -- Owen Furuseth at the University of North Carolina-Charlotte and Kimberly Triplett, also at TSU -- presented a paper at the City Futures Conference in Paris, France, that rethinks the VW-as-savior narrative.

The title of the paper speaks volumes: "Who Benefits from European Investment in a mid-sized US City? The Bad News from Chattanooga, Tennessee."

"Economic development success is not translating into widespread economic improvement," they write.

It was 2008 when VW announced its initial investment here. State leaders had promised $577 million in tax incentives. Since then, more than 12,000 jobs have been created and $53 million a year added to the state and local tax base, according to a University of Tennessee study.

So leaders chased the SUV expansion like a Holy Grail, ultimately offering another $300 million -- or perhaps even more -- in tax money.

(Consider the irony of Tuesday's shiny-happy news conference, held at an art museum, yet Hamilton County chooses not to fund art teachers in its elementary schools.)

All together, that's nearly $900 million in tax breaks.

So you'd think things would have improved remarkably, right?

"General prosperity and growth in Chattanooga do not seem to be alleviating glaring inequalities," Chilton writes. "In fact, the data suggest that the rising tide is lifting fewer and fewer ships out of poverty. This has major implications for U.S. economic competitiveness."

Major implications? It has damning implications. Even with all our foreign investment climbing into the billions, our city remains fractured, with some neighborhoods not unlike Third World countries.

Chilton's research shows:

• Economic segregation increased between 2000 and 2012.

• Social class is becoming more rigid.

• A large population of unskilled workers attends highly segregated schools.

• Roughly one-third of African Americans live in poverty.

"Concentrated poverty," he writes. "Health disparities, community violence, low-quality schools and a general lack of economic, human and political capital."

This should be the news out of Flint, not Chattanooga. Yet our Euro-VW investment has not trickled down enough to alter and uplift the opportunities available for those who need them most; a very clear line remains between investment and disinvestment.

"The low-hanging fruit of economic development has been picked, and the new norm is slow growth characterized by increased inequality," he writes. "The old jobs that provided pensions, secure incomes and upward mobility are gone and they're not coming back."

Chilton sees it as an issue of public education.

Graduating students aren't ready for entry-level VW jobs, a point that should both embarrass and motivate us. No one knows this more than VW, which partnered with local community colleges to create workforce development.

But with nearly $900 million in tax breaks, it shouldn't stop there.

"It's great to have the Chattanooga State-Volkswagen Academy, but why not tie in directly to Howard and Tyner and Brainerd, where these kids can see from grade nine a path that pays off with a job from VW paying $18 an hour at age 18?" Chilton said over the phone this week.

With the new SUV, we have been given a second chance to craft such policies -- with intention -- that creatively and purposefully steer the blessings of foreign investments into the places starving for them.

Otherwise, we face a very real dead end.

"A permanent underclass is emerging," he concludes, "that is ill-equipped to compete in a global economy."

Contact David Cook at dcook@timesfreepress.com or 423-757-6329. Follow him on Facebook and Twitter at DavidCookTFP.