The following is an excerpt from a speech to The New York Regional Plan Association on April 29, 2005 presented by Bruce Katz, director of the Brookings Metropolitan Policy Program. The entire speech, Beyond Red and Blue, is instructive for the entire country in framing strategies for our competitive future.

“This convincing dissection and dismissal of the red/blue divide leads to my second point—the Washington political class is highly polarized at a critical time in our nation’s history—when the country is undergoing a period of profound demographic and market change that is comparable in scale and complexity to the latter part of the nineteenth century.

Everyone in this room can attest to the breathless pace of demographic change in this city and our nation.

• Our country is growing by leaps and bounds—33 million people in the past decade, 24 million in the decade before.
• Our growth is being fueled in part by a wave of immigration not experienced since the turn of the last century. 34 million of our residents are foreign born, 12 percent of the population, the highest share since 1930.
• Immigration is essential to offsetting another major demographic trend – the aging of our population. Like much of the industrialized West, the US population is growing older and living longer.
• And our family structure is changing. Women and men are delaying marriage, having fewer children, heading smaller households.

The pace of demographic change is matched only by the intensity of economic transformation.

• Globalization and technological innovation are reshaping and restructuring our economy and altering what Americans do and where they do it.
• These forces have accelerated the shift of our nation’s economy from the manufacture of goods to the conception, design, marketing, and delivery of goods, services, and ideas.
• These forces are changing the ways businesses manage their disparate operations and make location decisions—enabling large firms to locate headquarters in one city, research and design somewhere else, production facilities still somewhere else, and back-office functions—within or outside the firm—in still other places.
• For a region built on global finance, they are also changing the way we finance housing and business, through standardization and securitization in the capital markets.

These demographic and market forces have reset and rescrambled the rules of economic success in our country. Here are just 3 new rules to consider:

Rule Number One: What you know determines what you earn as a family and whether you prosper as a community. In our changing economy, higher and higher levels of education are the keys to prosperity for families and competitiveness for regions. A metro’s income grows 1 percentage point for every 2-percentage point growth in adults with a bachelor’s degree.

Rule Number Two: How you grow physically affects how you grow economically. Density and compact development matter in the knowledge economy, because they enhance innovation and contribute to labor productivity. Cities and urban places, in short, have a renewed economic function and purpose after years of decline.

Rule Number Three: How a region governs needs to reflect the new geography of work and opportunity—the metropolis. In a rapidly changing economy, regional cohesion and collaboration is no longer an oddity, something that only the Twin Cities or Portland, Oregon partake in. Rather, regional thinking and action is now a necessity for addressing a host of economic, environmental, and social challenges that cross antiquated political borders.

These rules sound simple and unconventional, but they require radical and revolutionary changes in how policymakers at all levels of government think about competitiveness and prosperity.”