A new narrative for rural America

Earlier this month, the Kauffman Foundation published a piece on “After generations of disinvestment, rural America might be the most innovative place in the U.S.” arguing that the current narrative of rural decline is wrong. Rather, the author, Chris Harris, notes that rural America has the underlying foundation for prosperity:

“We must recognize that innovation, diversity of ideas and people, and new concepts don’t need to be imported to rural communities – they’re already there. Rural entrepreneurs and community leaders have always, by necessity, been innovative.”

The problem is not the lack of potential; the problem is the lack of investment to unleash that potential.

He goes on to argue that because of the misdiagnose of the problem, policy makers follow the wrong solutions. Using tax breaks to recruit businesses to rural locations have the perverse result of lowering communities’ tax base and thereby hampering their ability to make the long-term community and infrastructure investments needed to sustain the local economy. In other words, tax incentives to attract companies in the short term end up making the communities less attractive in the long run. Furthermore, he argues that the often-utilized strategy of targeting corporate retailers ends up damaging local entrepreneurs.

Instead, communities should follow a “build, not buy” strategy of growing local businesses. He cites the examples of Emporia, KS and Ord, NE as success in investing in technical support and capital to local entrepreneurs.

Of course, the idea of investing locally is not new. In the past, this was often referred to as “economic gardening.” But Harris’ argument of underlying strengths in rural America is worth repeating. A decade and a half ago, I make a similar argument in the piece called “Building on Local Information Assets.”

In that piece, I pointed out that “All communities have the opportunity to benefit from capturing and using their local knowledge. In this new age of information and knowledge, rural areas can continue to thrive by being the special places they are.” I argued that communities must first map their intangible assets to better focus their strategies. Especially important are the hidden assets such as the tacit skills of the local workforce. It needed to be noted that tacit knowledge is only partially based in the individual; it also resides in the special circumstances and situation of the community.

At the end of my article, I closed with the thought that “it can be economically ‘cool’ to be rural.” For that to happen, however, we need to embrace Harris’ new narrative about rural America and build upon the positive strengths. Let’s hope that policymakers are listening.

The convoluted path of innovation: the COVID-19 vaccine

The general perception of drug development is as close to the linear model of innovation as any process can be. Starting with basic the research on a new compound, then turning that compound into a drug to combat a specific disease, then testing and certification by the FDA, and finally scaling up mass production.

A look at the example of using synthetic messenger RNA (mRNA) to fight COVID-19 reveals how convoluted drug development really can be.

The following is from Damian Garde and Jonathan Saltzman, “The story of mRNA: How a once-dismissed idea became a leading technology in the Covid vaccine race.”

The story starts with an idea by Dr. Katalin Karikơ, working with her collaborator Dr. Drew Weissman, on how that mRNA could be used to trigger cells to manufacture certain proteins — including antibodies to fight infection. That work, itself, built upon years of work by other researchers on DNA, going back of course to Watson and Crick (and Franklin) and the discovery of the DNA Double Helix, which built on work even further in the past.

For Karikơ and Weissman, it was years of grant rejections and frustration until they came up with a way to prevent the injected mRNA from triggering a massive immune response and making matters worse.

The idea was then picked up by Dr. Derrick Rossi as a focus of his work on a replacement for embryonic stem cells. That work came to the attention of Dr. Robert Langer – who recognized its potential for creating vaccines, among other uses. Langer contacted the venture capital firm Flagship Ventures which lead to the creation of Moderna.

As Moderna was pursuing its research, two scientists in Germany, Dr. Ugur Sahin and Dr. Özlem Türeci, were also working with mRNA technology. The established a company in the US, BioNTech, and even hired Dr. Karikơ. Meanwhile, Moderna ran into technical problems with the general use of mRNA for multiple conditions and focused instead on vaccines. As Garde and Saltzman tell it, the two companies took different directions.

Then the pandemic hit – and the rest is history. Moderna tailored a mRNA vaccine to the coronavirus. BioNTech partnered with Pfizer on its own vaccine.

Which brings the technology almost back to the starting point. With all the subsequent high-level attention, mRNA technology is now being touted as newest breakthrough for multiple uses – as envisioned by Karikơ, Weissman, Rossi and others.

So, when the newest mRNA-based therapy for some disease is announced in the future, remember that the road from at-the-time-ignored research in the 1990s to medical breakthroughs today has been a long and convoluted path.

[And note, the Garde and Saltzman article says little about the role of the government in the process – especially in the latter stages. For a description of that, see this article in today’s Washington Post on Operation Warp Speed – “How the ‘deep state’ scientists vilified by Trump helped him deliver an unprecedented achievement”]

A bad November for the labor market

It could have been worse. At least employment grew by 245,000 in November – according to this morning’s employment data from the BLS. Economists had expected employment to increase by 440,000. Employment rose by 610,000 in October. Hiring slowed the most in tangible producing goods and services industries. The biggest change was in Accommodation & Food Services where employment in November actually decline by 12,000, compared to a rise in October of 227,000.

Employment in the intangible-producing sectors grew slightly in November by 68,000 compared to an increase of 57,000 in October. But this maybe an anomaly as the decline in employment in Government slowed (due in part to the cut back in Census workers in September and October). And this is in sharp contrast to the increase in intangible employment by 929,000 in August.

The slow-down was most pronounced in Professional & Business Services, which grew by only 44,000 in November compared to 208,000 in October. This slow-down almost completely offset the improvement in Government employment. Employment in Arts, Entertainment and Recreation increased by the essentially the same amount in November as in October.

Clearly the economy continues to struggle with the impact of COVID-19. While the biggest problems are in sectors with direct contact with the public, the impact is being felt by all.