Evidence from the Oregon Experience
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Portland State University PDXScholar Dissertations and Theses Dissertations and Theses 1992 State Industrial Policy and the Autonomy of State Leaders: Evidence from the Oregon Experience Matthew I. lS avin Portland State University Let us know how access to this document benefits ouy . Follow this and additional works at: http://pdxscholar.library.pdx.edu/open_access_etds Part of the Urban, Community and Regional Planning Commons Recommended Citation Slavin, Matthew I., "State Industrial Policy and the Autonomy of State Leaders: Evidence from the Oregon Experience" (1992). Dissertations and Theses. Paper 1228. 10.15760/etd.1227 This Dissertation is brought to you for free and open access. It has been accepted for inclusion in Dissertations and Theses by an authorized administrator of PDXScholar. For more information, please contact [email protected]. STATE INDUSTRIAL POLICY AND THE AUTONOMY OF STATE LEADERS: EVIDENCE FROM THE OREGON EXPERIENCE by MATTHEW I. SLAVIN A dissertation submitted in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY in URBAN STUDIES Portland State University 1993 TO THE OFFICE OF GRADUATE STUDIES: The members of the Committee approve the dissertation of Matthew r. Slavin presented June 26,1991. Sheldon Edner RltJertUebman APPROVED: Roy W. Koc • Vice Provost for Graduate Studies and Research AN ABSTRACT OF THE DISSERTATION OF Matthew I. Slavin for the DOl.:tor of Philosophy in Urban Studies presented June 26, 1991. Title: State Industrial Policy and the Autonomy of State Leaders: Evidence from the Oregon Experience. APPROVED BY THE MEMBERS OF THE DISSERTATION COMMIITEE: This research identifies variables that detennined the amount of autonomy Oregon's gubernatorial leadership possessed in formulating and implementing the Regional Strategies program, centerpiece of industrial policy in Oregon during the latter half of the 1980s. The literature on state industrial policy points to instances in 2 which the leaders of America's state governments are acting autonomously. Gubernatorial actors appear to be formulating industrial policy goals independent of powerful non-state groups and other state actors and developing the capacity to transform their policy preferences into authoritative actions. The literature is largely devoid, however, of any systematic accounting of the variables that determine the extent to which gubernatorial actors possess autonomy. Drawing upon interviews with key actors involved in formulating and implementing the Regional Strategies' initiative and document research, this case study points to five principal sources of . variation in gubernatorial success. These are as follows: (I) Economic crisis. The inability of longstanding industrial recruitment practices to reconcile divisions caused by Oregon's deepest recession since the Great Depression eroded support for existing state economic development arrangements, enabling Oregon's newly elected Governor Neil Goldschmidt to reform state economic development policy along industrial policy lines and accumulate discretionary authority for state economic development spending denied his predecessors. (2) The division of power between the executive and legislative branches of Oregon state government. Reacting to tensions founded in localism, regionalism, and concern with having its authority usurped, Oregon's legislature placed limitations upon Governor Goldschmidt's industrial policy mandate. Legislatively-enforced measures precluded the competitive evaluation of local economic restructuring plans, frustrating a key Administration goal, and instead made equity and political expediency the driving force behind key industrial policy decisions. Legislators also 3 denied the Administration authority it was seeking over semi-autonomous state agencies, impeding its plan to consolidate control over state economic development policymaking. (3) State fiscal capacity. Industrial recruitment's failure led voters to establish a statewide lottery with proceeds dedicated to economic development. The lottery expanded Oregon's fiscal capacity for economic development, providing the Goldschmidt administration an instrument with which to fund industrial policy. (4) The degree to which local interests were fiscally dependent upon state revenues. Administration success in securing key industrial policy goals was a direct consequence of its ability to use the discretionary authority it possessed over lottery spending to enforce local compliance with its policy preferences. The Administration proved more successful in circumstances in which local authorities were fiscally dependent upon gubernatorial controlled state lottery revenues for funding local economic development projects than in instances in which local interests were independent of the state for revenues. (5) The character of private capital investment. Economic development is contingent upon the investment of private assets, over which Oregon's political .leadership exercised little direct control. The failure of anticipated private investment to materialize frustrated Administration plans to use lottery money to leverage private investment in favored projects. Investment induced by Oregon's industrial policy initiative was likely to promote job growth in low wage sectors, frustrating the Administration's goal of using industrial policy to generate high wage jobs. ACKNOWLEDGEMENTS A number of people made this dissertation a far more academically productive and personally enriching experience than it might otherwise have been. Above all is Sy Adler, my adviser at the School of Urban and Public Affairs and chair of my dissertation committee. Sy provided the impulse to many of the good ideas that shaped my dissertation and proved patient and thoughtful when I struggled with less worthy ideas. Sy never failed to express confidence in the value of my work even at times at which I was myself in doubt I want to thank the other members of my dissertation committee as well. Like Sy, Carl Abbott provided initial stimulus to many of the ideas which found their way into this dissertation. As Dean of the School of Urban and Public Affairs, Nohad Toulan provided leadership to an institution within which my academic and intellectual skills could develop. Bob Liebman's advice for organizing my thoughts and defming key issues was especially important, nowhere so much as in the closing stages of this dissertation. Sheldon Edner played a similar role in my ability to clearly define and elaborate key issues, especially in the dissertation's early stage. I am in debt to the Maury Clark Fellowship, funding from which enabled me to conduct the field research upon which this research is based. To my friends Caroline Skinner, Chris Brown, and Karla Neupert, special thanks. Their willingness to put up with me throughout my work on this dissertation and their confidence in my ability to bring this dissertation to a successful conclusion went well beyond the call of duty. iv Last, lowe a special debt of gratitude to Dr. Woodrow Jones, who convinced me to return to graduate school at.Portland State University. Without Woody's encouragement, I may never have started, much less completed, this dissertation. TABLE OF CONTENTS PAGE ACKNOWLEDGEMENTS .iii LIST OF TABLES xi LIST OF FIGURES xii CHAPTER I INTRODUCTION 1 The Problem I The Approach The Contribution Caveat Organization of the Dissertation ; 6 n THE RESEARCH AGENDA 7 The Concept of State Autonomy 7 Autonomy as a Prerequisite for Effective State Action Limits on State Autonomy State Capacity to Intervene Autonomy of the Federalist American State Industrial Recruitment: The Subordinate State 13 Industrial Policy: The Autonomous State 16 . The Initial Impulse to Industrial Policy Will be Provided by Forces Arising Within State Government and not Private Groups State Industrial Policy will Embody Goals Peculiar to State Leaders and Apart from those of Private Non-state Groups State Leaders will Demonstrate an Ability to Override Opposition to their Industrial Policy Interventions State Industrial Policy Focuses Public Resources Upon Emerging Sectors of the Economy vi The Programmatic Choices that Shape Industrial Policy will be Based Upon Objective Analysis State Industrial Policy is Characterized by Concerted Action Amongst the Economic Development Agencies of State Government The Shortfall of Theory The Research Agenda 27 Research Boundaries Methodology Notes ; 34 ill THE IMPULSE TO INDUSTRIAL POLICY IN OREGON 35 Causes and Consequences of Oregon's Economic Crisis 35 The Failure of Industrial Recruitment 40 Oregon as an Administratively Weak State The Two Oregons Labor's Disaffection Business Sector Criticism E~ly Industrial Policy Proposals Erosion in Public Confidence Summary 59 Notes 61 IV BUILDING SUPPORT FOR INDUSTRIAL POLICy 63 Industrial Recruitment Repudiated 63 Building an Industrial Policy Coalition 65 Seeking the Rural Vote Securing Union Support Building Bonds With Business Submerging Differences Mandate for Industrial Policy Reform Summary 74 Notes 75 vii V THE POLITICS OF INDUSTRIAL POLICY ADOPTION 76 Regional Strategies as Industrial Policy 76 Political Opportunities in Regional Strategies 81 LegislativeConstraints·Upon Autonomy : 83 Gambling With Economic Development Division of Powers Regionalism Localism Summary 100 Notes 101 VI THE POLITICS OF IMPLEMENTATION: CENTRAL OREGON 102 The Politics of Prototype Choice 102 The Need for Regional Balancing The Tourism Precedent Strong Local Planning Capacity Tourism as an Emerging