Michael Blouin is crisscrossing the state to effect a paradigm shift in how Iowans view economic development efforts

By mid-summer, Iowa economic development chieftain Michael Blouin expects to have visited most of the state’s 99 counties. Only weeks into his new job, he’s already logged thousands of highway miles traveling the state and trying to get Iowans to think differently about economic development – bigger and further out the old boxes that held tax-base giveaways and other unimaginative tools. He’s been to the four corners of the state, discerning during his travels that Iowa has many faces. As Blouin familiarizes himself with the challenges before him as director of the Iowa Department of Economic Development, he’s unabashed about how satisfying it is to lead Iowa into a new era. He tosses out metaphors: He’s feeding “a hunger to know what’s happening.” He’s satisfying “a tremendous appetite to understand this and get involved.”

Blouin’s enthusiasm is fueled by the Iowa Values Fund, the carrot he says persuaded him to accept Gov. Tom Vilsack’s invitation to head the IDED and assume a lead role in transforming the state’s economy. “If the governor hadn’t rolled out the Iowa Values Fund, I probably would have said ‘no’ [to leading the IDED],” said Blouin, who led the Greater Des Moines Partnership through an organizational transition and served as its CEO for four years. “Without that, this was a hopeless case. Add to that the response from the Legislature, and it’s phenomenal.”

The Iowa Values Fund, which could range from $500 million as proposed by the governor to as much as $2 billion as backed by some Republicans in the Statehouse, is far bolder than the economic development engines proposed by other states seeking to participate in the “new economy” growth industries – biotechnology and other life sciences, information and financial services, renewable energy and others – that carry the promise of high-paying jobs.

“This is incredibly bold,” Blouin said. “It will get international attention. We will have made a statement about the role we wish to play in the new economy that will stand out from that made by other states or, for that matter, probably any other country.

“We’re one of the few states in the country that’s even financially capable of doing this. Most are bonding to get out of debt, or using tobacco money,” he said. “We’re not in that situation; we’ve got a gap, and it’s nothing we can’t handle.”

The financial problem here is smaller – by billions of dollars, Blouin says – than in other states, putting Iowa in a much better position to take advantage of historically low interest rates, its superior bond rating and keen interest among investors in government-backed bonds.

“Our problems are real,” Blouin said, “but comparatively speaking, they’re much easier to deal with, and that’s something both the governor and the state Legislature can take credit for. We’ve actually had a decrease in the size of our budget, and [the revenue shortfall] is manageable.”

Among Blouin’s steepest challenges is to craft an approach to economic development that not only creates and attracts higher-paying jobs, but also makes as much sense in Iowa’s urban centers as it does the smallest of its 950 communities.

“What I had forgotten is, as small as Iowa might appear to be, it’s very large when you start to travel it,” he said. “There are several Iowas out there, with different needs and opinions and interests. It takes a while to gain perspective, which is critical for the [IDED] to have any credibility.”

As he travels around the state talking about “enlightened self-interest,” the idea that what’s good for a single community is better for the region as a whole, he’s encountered some resistance among slow-to-change Iowans. As part of that philosophy, local economic development groups are encouraged to form regional alliances that will identify common goals and multiply both the groups’ cash positions and their recruitment abilities. Some wary Iowans saw that as bureaucrat-speak for county consolidation, part of another top-down effort to make Iowa and its governments more efficient, but Blouin said their fears have for the most part been allayed.

“You start by creating a system that empowers people to get at the table,” he said. “We’ve got 950 towns with 99 counties, and within that system, there are 225 local economic development groups, most of them public-private partnerships.”

The new approach recognizes that the old method to attract business, which pitted towns in close geographic proximity against each other for development prospects, is a “zero-sum game” that has hurt small communities, Blouin said.

“Towns five miles apart are competing ferociously, winner-take-all, give-away-the-tax-base to get it,” he said.

Based on the successful Vision Iowa program, the Iowa Values Fund offers a slew of incentives for cities and counties to join in regional partnerships. Among them are tax credits for locally controlled revolving loan funds; regional funding earmarks for initiatives stemming from the multi-country groups; cash matches if significant local dollars are raised to fund a project; and the sharing of taxes created by new development among all cities and counties in the economic development region.

Blouin said the new approach empowers local groups to devise solutions for the problems unique to their regions. Putting the funding package together remains a major hurdle – easier to clear under the governor’s $500 million proposal than the GOP-backed $2 billion package, where only about $1.1 billion of the financing has been identified.

That such an investment will occur at all during a period of stagnating state revenues is strongly symbolic to Blouin, a seasoned politician who spent five years in the Iowa Legislature from 1969 to 1974 and four years in Congress from 1975 to 1979 before he became an economic development professional. The bipartisan cooperation in evidence this session is a recognition that the stakes are high and that, despite a slow economy, Iowa can’t afford to take baby steps in transforming its economy, Blouin said.

With an aging population and static growth, Iowa’s demographic challenges are huge. Among the most dire predictions is that as Baby Boomers retire, the state’s workforce will be left hundreds of thousands of people short. “We need a workforce to fill this huge attrition,” he said. “Even if we kept everybody in Iowa at gunpoint, put in a new law that said nobody leaves, and they had to take a job through and stay at it through retirement and had no growth, and we still would be 150,000 to 200,000 people short.

“Even in the midst of all the frustration, there’s genuine excitement,” Blouin said. “People are willing to risk it, to take a bold step, even in the midst of the different perspective they bring.

“They want ‘this’ to work – nobody quite has ‘this’ defined, but they want it to work,” he said. “It won’t happen if it breaks down along partisan, rural and urban, and legislative and executive [branch] lines.”

Enlightened self-interest

French aristocrat Alexis de Tocqueville (1805-1859) first popularized the notion of enlightened self-interest and the idea that too much individualism, or concern for one’s own agenda or interests, can lead to selfishness and isolation.

To safeguard against the self-defeating tendency of individualism, Tocqueville suggested the principle of “self-interest rightly understood.”

Loosely, that principle is based around the ideas that each individual is best served by attending to the interests of the community at large, and that the needs of the community serve the needs of the individual.

Tocqueville was considered one of the greatest political thinkers since the advent of government. In 1831, he spent eight months in the United States, learning much about American society. He advanced the philosophy of enlightened self-interest in his masterpiece “De La Démocratie” (“Democracy in America”), which was based on his observations, readings and discussions with eminent Americans.