A Model of Policy-Making Derived from the History of American State and Local Economic Development: Paper Presented At 75th Annual MPSA Conference April 6-9, 2017 Chicag

Economic and Community Development Tells Its Own Story: A Model of Policy-Making Derived from the History of American State and Local Economic Development

 

Dr. Ronald W. Coan

Senior Fellow and Editor

Council for Community and Economic Research

Arlington VA

 

 

 

Paper Presented At

75^th Annual MPSA Conference

April 6-9, 2017

Chicago Illinois

 

Sub-Unit 4: Economic Development

Panel: Economic Development Strategies

 

The history of American state and local economic development revealed key drivers that shaped state/local ED policy-making for over 200 years. The policy-making model that emerges, presented in this article, is broken-down into four parts. Part One introduces principal features of the model and discusses key issues. Part II tackles factors/dynamics associated with system change. Part III outlines internal elements of jurisdictional policy system. Since change agents are filtered through the jurisdictional political culture, Part IV asserts American local economic development has divided into two competing approaches: business-centered economic development and community development.

 

 

 

Long described as mere “boosterism” and crass and ineffective business subsidies to business, 19^th Century American ED displayed a robust set of state and local ED strategies, tools, EDOs, and programs that are still around today. My “History of American State and Local Economic Development: As Two Ships Pass in the Night” spends 300 hundred pages before reaching the 20^th Century. Looking back, American ED can easily be traced from the 1607 founding of Jamestown—by a British EDO, the joint-venture Virginia Company.  Economic development looked a bit different back then, of course, but no mistake the Virginia Company was only the first of a long tradition of city-building: Del Webb pioneered Arizona’s Sun City retirement community, the Irvine Corporation established Irvine California, and James Rouse founded Columbia Maryland. City-building is only one of many ED/CD strategies that have endured and evolved over the centuries. American state and local economic development is a lot older than most think. There is surprisingly little new under today’s not so warm sun.

As Two Ships Pass in the Night (As Two Ships), an initial compilation of 200+ years of American economic development (into the 1990’s), treats economic development as a state and/or local (jurisdictional) level policy system output, a “policy area”. To study a policy area like ED over centuries requires a framework to provide order, offer explanation, and perhaps some predictability as well. “As Two Ships evolved its own model. The research, conducted since 2008, revealed the key drivers that shaped state and local ED policy-making—and provided plenty of evidence of their persistence to the present day. Over this extraordinary time span American ED has morphed into 50 similar, yet quite-varied, ED sub-state systems—each quietly screaming “how and why did we get this way?” The model my history revealed is presented in this article, broken-down into four parts.

Part One introduces the principal features of the model and discusses key issues that make the model distinctive, heuristic, and a wee bit off the conventional conceptual trail. History applied to the study of policy systems translates into a “vertical” (through time) perspective which draws attention to policy system change rather than the internal dynamics of the policy system. Policy system change lures us into Part II which tackles those factors and dynamics associated with system change. Succinctly, policy systems change because they confront different environmental contexts or have experienced noticeable transformation in their internal dynamics. Economic development logically shifts with each change. Three “macro” drivers of change (the industry/sector profit life cycle, population mobility, and a three-level competitive hierarchy) jostle local policy systems until they realign themselves to cope with a new world produced by these change-agents. Economic development goals, strategies and programs react to these drivers.

Why jurisdictional policy system shifts occur beings us to Part III, a discussion (finally) of the jurisdictional policy system itself. Jurisdictional policy systems are linked to their jurisdictional economic base and the Part II change agents are filtered through the prism of the jurisdictional political culture—the subject of Part IV. In what may be a bit of a shock, American local economic development has since day one divided itself into “Two Ships”, two competing and almost diametrically opposed approaches. Our Part III description of the American local policy system and its Part IV emphasis on political culture are certainly the commanding break through findings arising from the two hundred year history.

I

Understanding Economic Development Policy Vertically (over time) vs. Horizontally (within a time period)

 

As Two Ships studied municipal policy areas over time. Time becomes the dominant critical force. The story that emerges is that economic development, a policy output of a policy system, evolved over 200+ years exhibiting a succession of different municipal policy systems comprised of distinctive actors, policy goals, and outputs. The succession of policy systems was not random, and patterns within a state, and across states and regions emerged. Geographical (regional) variation was pronounced.

Looking at a policy area over time, uncovering that different policy systems make ED policy differently—for different purposes, leaves one with a distinctly different “feel” about urban policy-making than one gets from a “horizontal”, analysis within a specific time period. When one compares municipal policy systems with each other over time, an entirely new world opens up.

ED terminology may be the same across policy systems and even time, yet its actual implementation in different cities is quite varied. Business attraction (for example) varies in its intensity, may chase different targets, offer different incentives, and serve different goals. Attraction programs, therefore, can be quite dissimilar, yielding very different results across states and communities. “A rose is not necessarily a rose” in ED. Another example is tax increment financing (TIF). Almost all states use tax increment financing (TIF); but TIF programs differ radically among states and vary noticeably in use within cities of each state. When we talk about local/state ED strategies and programs we’ve got to careful and recognize they vary, and change noticeably over time and geography. Speaking of geography—it matters! Geographic differences in policy systems and policy-making outputs have always existed and persist over long, very long periods of time—regional variation is very real.

The critical dynamic is what induces change from one policy system type to another and how does geography (and political culture) affect that change. Paradoxically, why do cities and states, impacted by change, exhibit a remarkable continuity over the long-term, literally over centuries. How does a pattern found in a 19^th century city (or even 18^th), albeit dressed in different clothes and expressed in different conceptual language, continue to the present day? Houston, for example, was never Boston, and is not likely to be anytime soon. Yet today, Houston’s present ED policy system/policy-making looks more like Houston’s ED policy-making a hundred years ago (likewise Boston’s exhibits such continuity as well)? Figure this out: ED is different across geography, is constantly adjusting to change, yet, displays a remarkable continuity within cities, states and regions.

How does the “As Two Ships” model deal with these contradictions?  First, we shift from a “public” policy to a “jurisdictional” policy system. Secondly, we integrate regional variation into jurisdictional policy systems. Thirdly, the history provides ample evidence that until the 1970’s, American ED was dominated by a regional “Big City (North and Midwest) hegemony” that reduced the West and South to semi-colonial dependency—profoundly affecting western and southern jurisdictional ED policy-making. Finally, the federal government after 1933 became an important “player” in state and sub-state ED. The “Contemporary” American Economic Development Age, in existence since the turn of the 21^st Century, owes a great deal of its content to the long-term consequences of post-1933 federal policy. Each of these factors will be discussed below:

1. A Public Policy System Only? Onionization?

As the model fell into place, it did not follow conventional policy-making models. Although at heart a simple Eastonian policy-making system, complete with environment, underlying culture, and mysterious policy-making black box, the model focused on change from one policy system type to another—not a detailed assessment of any one policy system policy process cemented in one time period. The shift in focus toward policy system change demonstrated convincingly that an essential conventional (horizontal) policy concepts didn’t apply comfortably. Past policy systems were overwhelmingly private sector dominated and even contemporary policy systems included significant private EDO involvement.

The current public policy-making paradigm (“authoritative allocation of values” reserved only to government), required excluding literally two hundred years from our history. Through the 1960’s the majority of ED policy-making was designed and implemented by private, non-governmental EDOs, often with power and legitimacy delegated to them by governments, and this policy system was heavily influenced by private policy elites—i.e. business/professional. Indeed, through most of this two century period, local and state governments lacked the “capacity” to serve as a ED lead agency; instead they delegated leadership of the ED aspects of their policy system to chambers and business leadership. This delegation and influence of private elites continues today (albeit to a lesser degree)—creating mischaracterized ED reality.

By excluding the private, business-dominated elements of the ED policy system, the description of economic development was seriously distorted, restricted only to government EDOs and downplaying, if not decrying the activity of private EDOS.  This shift occurred late in the Transition Era, during the 1990’s[i]. As Two Ships, and the model under discussion, includes the activity of prate EDOs and business elites. That is why we refer to a “policy system”, not a “public Policy system”. Both private and public EDOs are included within our jurisdictional policy system. As such our model and history continue down a path outlined by Fosler and developed in a number of works previous and after. He was the first to recognize the movement away from private EDOs and he made the first known defense of our “policy system”[ii].

Moreover “As Two Ships demonstrates, ED policy (strategies, tools, and programs) change principally when different types of policy systems come into power—a sort of policy realignment. Different policy systems task ED with different purposes, clients, and, frequently, display distinctive characteristic policy actors/priorities, incorporate/adapt different/existing structures, and establish appropriately-empowered EDOs. The substance (especially goals) of American ED policy changes with each policy system type. ED outputs reflect the particular characteristics/processes of each individual policy system. Despite these changes and goal realignments, however, much of the older systems often persist—because the “need” or the constituency did not go away.

This phenomenon is labeled as “onionization” and means that any given policy system maintains key elements and actors dominant in past policy systems. In essence, much of the past private EDO-dominated systems continue to the present day. Their inclusion reveals a strikingly hybrid contemporary jurisdictional policy system in which government EDOs pursue a separate, oftentimes Progressive neighborhood-based community development set of strategies (and CDO network) while the Privatist EDOs operate alongside, usually led by chambers and privately funded regional advocacy, downtown CBD, tourism, cluster development and one-stop marketing strategies. In the book one discovers the development of such hybrid ED/CD policy systems in the Transition Era—and which continue in communities as disparate as Boston, Chicago and Seattle.

 

2. Geography: Regions, States, Time Lines, Variation and Superficial Similarity

Variation among policy systems and their definition, design, approval and implementation of American ED outputs is characterized by two critically important realities: a time lag between regions and the existence/composition of jurisdictional political cultures found within and among each region. Boston, founded 230 years before Denver in 1850’s, is not in the “same place” as even more recent cities, like Miami, which grew during the Twentieth Century—and western cities that did not receive sizeable population infusions until the Second World War.

Virginia Beach (for example), considered by many a suburb of Norfolk, was incorporated as an independent city in 1952—today is 41^st largest in the United States and Virginia’s largest city (twice the size of its nearest competitor, Norfolk—itself nearly twice the size of the better known state capital, Richmond). Ironically, within Virginia Beach’s boundaries lie the original 1607 Jamestown community. For this reason (time variation) alone, one should not expect all American cities to be in same ED policy “spot”. Jurisdictions/States across the nation may call their strategies, tools and programs by the same name, but they are defined, designed and implemented to serve the different goals/constituencies, and policy actors appropriate to different times and places.

D

ifferent policy systems can be found among regions within the same time period. The “flow” of policy systems among regions can lag or precede the evolution of policy systems found in other regions. Western policy systems can pursue “City Beautiful” strategies in the 1970’s, which eastern Big Cities embraced as early as the 1890’s. Time, geography and political culture affect ED policy systems, policy agendas, goals, structures and strategies. The balance of power among regions, or the lack of it, as evidenced in the in the Great Big City Industrial Hegemony discussion below, arguably elevates regional variation as a dominant element in the history of American economic development.

Thus, the picture that emerges from our vertical perspective differs radically from the policy system exposed by horizontal analysis. Comparing jurisdictional policy systems across time periods permits us to see the variation caused by regions and their distinctive population flows, and development of their political cultures expressed in structures and policy systems that produce ED strategies, tools and programs tasked to achieve goals appropriate for the time period, the region and the particular jurisdictional location and economic base. It can easily be seen that different policy systems exist at the same time, using tools/EDOs/strategies of a similar name to accomplish different goals and purposes–while continuing to practice programs and policies of past policy systems as well. This is why we shift our analysis to something called the “jurisdictional” policy system which includes all policy-making whirlpools whether they be private or public, contemporary or past, so long as they continue to produce policy.

 

3. The Big City Hegemony

One of the more dramatic findings that emerged from “As Two Ships” is the existence and power of a northern, northeast/mid-Atlantic/Mid-West “Big City” industrial hegemony that arose from the Civil War. The political, partisan, and ideological victory that followed the Civil War, combined with the industrialization it intensified, and the arrival of a fifty-year flood of immigrants (industrial workforce), produced a hegemonic national economy and polity that, intentionally or not, virtually “ruled” the other regions, especially the conquered South, reducing them to what they perceived as a colonial status. “Big City Hegemony” deeply affected the evolution of other regional economic bases (for reasons associated with a past “uneven economic development” paradigm)—affecting the configuration and behavior of non-hegemonic regional jurisdictional economic bases, and, the definition of economic goals and strategies by jurisdiction in the other regions.

Each region (and sub-regions) followed its own economic development path—often sharing, always competing, but each responding to the particular policy nexus that each confronted over each period of time. The diffusion of economic (and community) development strategies, tools and programs followed different time lines with each region using such strategies, tools and programs to confront its own demons and aspirations. Bottom-line be wary of thinking economic development is a “one size fits all” set of strategies common to all jurisdictions, states, regions and time periods. It is not—and never has been.

Two consequences follow. First, when the Big City Hegemony was powerful, it heavily influenced the development of ED in those States settled principally by emigrants from the Big Cities. Hence Pacific Coast cities and, to some extent, Denver, followed the outlines of Big City-style ED, but their jurisdictional economic bases (or political cultures) were never identical. Southern California witnessed different population flows than Northern California—and since the 1990’s have evidenced yet another migration. Far away, isolated, beyond the interest/reach of the hegemony, subject to its own distinct population flows, the jurisdictional economies of Texas (and the Southwest) autonomously developed in their own special blend of cultural and economic juices. The confederate South, however, its economy rural, cotton/tobacco/mining driven, with slave/sharecropper workforce paved its own unique, controversial economic development path, a goodly part of which reflecting a culture, way-of-life and economy that was “Gone with the Wind”. But all this would later change! A so-called “New South” would emerge.

The second consequence, a long simmering economic development “shadow war” between North and South in the early 1950’s, erupted into the so-called Second War Between the States—which itself soon proved to be a proxy that revealed massive regional and economic change that imploded the hegemony, and raised both South and West to economic development primacy. After that, the American economic development history becomes especially interesting—and very complicated.

Nevertheless, the cities and states of the Big City hegemony played a disproportionately critical role in the evolution of American economic development—particularly community development (to be discussed in Part IV). The roots of our professional development lie in the values and history of the Big City hegemony. Much of the literature concerning urban politics and policy-making draw from the experiences of the Big City hegemony. They continue to do so today, even though the Big City hegemony has collapsed and western and southern cities in general are more vibrant. Ideology, blame-placing, and outright politicization have intruded into our history and the jurisdictional ED policy-making and policy literature.

 

4. The Federal Government

Through most of “As Two Ships”, the federal government was an outsider to sub-state economic development policy. The States were, if anything, a hindrance, but, in some political cultures the dominant force. Until the Great Depression, municipalities were the dominant level of government responsible for leadership in American ED policy. That changed dramatically with the Depression, World War II, and the Permanent Cold War that followed. The federal government as it fought the Depression and Second World War and Permanent War), as it had with the Civil War, unleashed changes that, combined with changes in Big City jurisdictional economies and the infusion of a new political culture into Big Cities, overwhelmed the Big City hegemony. Having accomplished such feats, the federal government retrenched in ED and its role in state and local ED is less pervasive today—but still substantial.

The feds have pulled back; in their place the States have assumed arguably the dominant role in sub-federal economic development. Still in key ED strategies, workforce and small business for example, the feds remain the dominant level of government. Chasing federal dollars and investment remains an important local (and State) ED strategy. Sanctuary cities (and States) complicate today’s picture, but the federal government is no longer an outsider, it is a major, if nuanced, player in state and local ED.

But it must be admitted that between 1933 and 1972 the role of the federal government was disruptive and transformational. Much blame has been levied against federal policies and programs, most of it from my perspective unfair—some of it entirely wrong. During that time period, however, our so-called “Age of Urban Renewal” occurred. That Age was a complicated but critical period in our history. Without urban renewal (which, by the way is broadly-defined in As Two Ships) American economic development would look considerably different. Indeed, the Age of Urban Renewal is introduced as the “Scarlet Letters” of our profession and policy area. It is, however, the “hinge” between two critically important periods in the history: the golden classic age of American ED and the Transition Era that followed Nixon through Clinton.  In any case, like it or not, the federal government cannot be ignored in state and local ED.

 

II

The Environment: Drivers of Economic Development Policy and Policy System Change

The drivers behind policy system change are principally, but not exclusively, triggered by impacts generated from (1) population mobility, (2) changes in the jurisdictional economic base by the industry/sector profit life cycle, and (3) urban/national competition from other (a) relevant cities (nationally and regionally), (b) cities and towns in the metropolitan hinterland, and (c) global comparative (floating currencies-free trade) advantages. ED policy systems (and ED policy outputs) react to inputs from these fundamental environmental forces. As Two Ships collapses economics, socio-demographics, and external competitiveness into three macro environment drivers. Other factors and forces, of course, can and do intrude, but these three are the most significant.

The most outstanding, and charming, exceptions to this reactive nature of ED policy-making, are: (1) the initial “city-building” ED strategy that creates a jurisdiction essentially from scratch by imposing itself into the decision-making of established urban/state jurisdictions, and Cluster-building (2), on the other hand, attempts the equivalent proactive approach by reconfiguring the jurisdictional economic base. Otherwise, our history suggests state and local ED is exceedingly reactive to external changes, challenges, and opportunities in its environment as filtered and guided by political culture and/or to changes in the demographics and size of the jurisdiction itself.

Throughout our economic development history these three drivers interact, ebb and flow; “blend” and overlap. There are periods of “digestion,” “building critical mass” and “dominance” when one is predominant over the other two. In real life, they play off against each other. I discourage the reader from thinking in terms of which is more important; they shift over time and the future is unknown. Isolating the impact of a specific driver, while statistically possible, to me is a fruitless and deceiving endeavor. Determining whether the chicken laid the egg or vice versa in a real world that cannot distinguish between chickens or eggs leads to arrogant findings that convey a supposed reality that is, for me, unknowable.

Our drivers, are hugely powerful. It is very unlikely a city (or even a state) can stop or reverse them. Residents, however, expect that one try one’s best. Fix what can be fixed, take advantage of what is offered by fate, clean up or prepare for future opportunity, and help whom you can help. Jurisdictions, residents and policy elites, seldom have proven content to react passively to the winds and waves of the environment storm. Decline is more disruptive than growth[iii]; there is a massive ocean separating the tone and content of economic/community development in a declining community from a growth community.

One consequence these drivers have produced is an enhanced need for government. That is a primary lesson learned from 19^th century local policy system change. Policy-making in the twenty-first century is more public policy-making than it was in the first half of the twentieth century. Having said this, the American local jurisdictional economic base remains a private, capitalist, bastion—despite the arrival of Keynesian and neo-Keynesian economics.

As a “bottom-up” approach, the model focuses on the path chartered by each local jurisdiction as the jurisdiction perceives, reacts, and defines those environmental inputs. The model uncovers tremendous municipal and state variation and seeks to explain it. In the sub-sections below, each of the three drivers will be introduced, discussed, and key findings from the history will be injected. The history (chapters in As Two Ships) fleshes out the drivers and frequently grounds them in specific case studies. A wrap up/segueway conclude Part II.

 

Industry Sector Profit Cycle

No matter how small the jurisdiction, the jurisdictional-bound economic developer’s life is focused on his/her jurisdictional garden of firms, sectors, and industries growing in his/her jurisdictional economic base. The Practitioner ED World is fixed within political jurisdictions which contrasts with the Policy (academic/Think Tank) World perspective that defines economic base from a regional cluster, metropolitan area—or mega city (whatever that is). Policy World ED is more an analytic or statistical construct; not so the Practitioner World which sees the condition of its jurisdictional base by simply driving to and from work, seeing classmates of one’s kids, and shopping. No one fires Policy Worlders for getting it wrong. The perspective found in As Two Ships is admittedly more sensitive to the Practitioner World if only because they are the principal players in the local and state ED policy process.

Still, As Two Ships borrows heavily on a theoretical construct, the industry/sector profit life cycle to explain the temporal evolution of the jurisdictional economic base. Jurisdictional economic bases, the sectors and agglomerations of which they are comprised, mature and change over time. The jurisdictional economic base is the “economic” composite of all the sectors within the jurisdictional boundaries and also necessarily includes those firms/sectors employing jurisdictional workforce no matter where they are located. Like a magnet or a fishnet, the jurisdictional economic bases attracts and captures the various changes and transformations that occur in each sector and industry found in its economic garden.

That complex an economic base will not let itself be tinkered with easily. Jurisdictional ED operates mostly at the margins of the jurisdictional economic base; it cannot “control” individual firm or industry/sector behaviors—including any job creation (or losses) the latter achieves. In the short-term certainly, jurisdictional ED policy outputs, except in its initial city-building phase, seldom transform the economic base, meaningfully alter business cycles, counter environmental competitive pressures, or reverse economic growth or decline.

Rather, As Two Ships suggests jurisdictional ED “manages” the creative destruction exhibited within its economic base; it does what it can. That ED can be found throughout American history is proof positive that, however defined and constrained, ED has been a highly prioritized policy area in most local jurisdictions—and all states. Our implied metaphor of “ships on a stormy sea” conveys the intangible reality that elites in particular do what they can to ensure their ship arrives as safely as possible at its destination. Likewise the citizenry, which as often as not, is quite deferential—at least so long as no one rattles its cage. That may be why ED in a declining jurisdiction is quite distinguishable from ED in a growing community.

 

Sector/Industry Profit Life Cycle and Jurisdictional Economic Base

 

Young industries/sectors mature and jurisdictional economic developers discover that they must deal with middle-age industry/sector concerns—followed later by old-age issues and fears. Firms can die and marry (merge). Products and services change, markets expand and contract. In the jurisdictional economic garden, flowers do not bloom forever; trees do not grow to the sky. The history borrowed and incorporated into its narrative a life/profit cycle model developed by Ann Markusen (1985)[iv]. Her model is robust and sufficiently complex, but includes as few moving parts (concepts-jargon) as are needed to explain industry/sector change within jurisdictions. An introductory description is presented below

Markusen’s approach (which fits more closely industrial sectors than today’s Peter Thiel’s information/internet sectors[v]) stresses each sector/industry typically agglomerates in a relatively few jurisdictional economic bases—even though stray firms can be found in all jurisdictions. Agglomeration often produces a local prosperity boom and economic growth in a jurisdiction’s early years when city-builders create the initial jurisdictional economic base. Gazelle-like young firm growth follows in its time to sector/industry consolidation for most. Industry consolidation creates a slippery slope to oligarchy where fewer, but larger firms compete. Jurisdictions that capture the oligarchies economic strength prosper; others languish.

Industries/sectors are not randomly distributed across states, regions or communities. Each jurisdiction develops its mix of industries/sectors. Location advantages, home-brewed entrepreneurship, modes of logistics/transportation, mergers/acquisitions, and simple serendipity distribute firms/industries/sectors across geographies. Our bottom-up approach exposes huge economic base variation across regions and within States. Jurisdictional economic bases compare to a fingerprint—no two are supposedly identical. New York City, financer of American manufacturing, had much less of it than Cleveland or Detroit—and then there’s Miami. Each metropolitan area contains a variety of urban jurisdictions, each living off their own individual industry/sector garden of delight. As well as borrowing from the metro garden. Suburbs, for example, possess their own jurisdictional economic base, as does their neighboring central city. A metropolitan economy is a “smush” of jurisdictional economic bases.

Mature firms in stable consolidating industries face increased sensitivity to price, greater cost intolerance, and require employment adjustments resulting from new production efficiencies (productivity). Maturation dictates that firms maintain profits without price increases, because customers enjoy competing equivalent alternatives to satisfy demand. Cost-minimization and productivity (equipment substituting for labor) becomes a way of life for maturing firms—as does downsizing. Home-brewed firms are acquired and transformed into branch plants whose investment/employment decisions are made elsewhere. Consolidation, relocation, new plants (built to accommodate the latest technologies, innovations and equipment) and plant closures are also likely.

A jurisdictional economic developer must provide new forms of assistance to mature firms, helping them minimize costs and introducing greater productivity into operations. This is the heart and soul, meat and potatoes of a contemporary business-retention program. In the classic 19^th century ED, however, the strategies were more attraction-based so to take advantage of consolidation and the formation of oligopolies. Newly developing jurisdictions and regions compete for mature industries and their facilities.

It is not as easy as it might seem and history suggests new industries and sectors find it easier to develop in new jurisdictions as older jurisdictions safeguard the profitability of their existing jurisdictional economic base. This dynamic underscores our “Big City hegemony” and foreshadows the eventual shift to a service sector and technology-driven economy associated with future regional change.

Firms in a maturing industry/sector sometimes cannot adjust to change. Firms do have some say (corporate strategy) in their profit life cycle. The state business climate or the unwillingness of a jurisdiction to respond to the cost-minimization imperative can compel a firm to relocate or provide it much-needed economies to sustain operation. In this atmosphere, the political culture may play an important role in a jurisdiction’s ability to respond to industry maturation. The power of policy actors in the jurisdictional policy system may also inhibit the jurisdiction’s ability to understand and deal with an aging economic base. As shall be discovered, each of our two “cultural” ships treat the jurisdictional economic base differently.

As an industry/sector reaches the last stages of its life cycle, survival is in question. With the right conditions and cost structure, a mature/elderly firm can persist for a surprisingly long period of time—stagnant, but employing a constant, probably lower-wage workforce. But usually plant closedowns and runaway plants are the inevitable result. Industries and sectors were born in a certain time period, and aging, while idiosyncratic to each firm and sector, affects each jurisdiction to the degree the sector or industry is present or has agglomerated in its base. When energy sources, production composites or logistics change, the disruption can be intensified. Jurisdictions, therefore, do not feel change pressures equally or at the same time. This can affect the sequence and scale of jurisdictional ED reaction.

As profits and markets decline and bankruptcy becomes a real possibility someone will give industry decline a name and it will spawn a set of reactions from affected economic developers. It took seventy-five years for deindustrialization to be named. In the meantime economic development proceeded on its merry way (World War II was a pleasant distraction)—oblivious to the realities of the maturity of its aging jurisdictional industrial bases. Fortunately for us today, technology, life science, and the internet will not follow the path of industrial manufacturing? They, of course, will grow forever, constantly innovate, and never mature or die.

 

Shift from Manufacturing to the Service Sector and the Rise of Technology

Over the last half of the twentieth century the American economy shifted from manufacturing (basic) to service (non-basic) industries. The service sector was pretty unfamiliar territory for most economic developers—and urban policy-makers as well (at first it was labeled “producer-services”). The service industry—responsive as it is to local-metropolitan demand, residential discretionary income, and less cyclical—presented challenges quite different from those associated with an industrial economic base.

Important elements, such as nonprofit hospitals, research institutes, and education emerged. Eds and meds have entered into the ED lexicon during the Age of UR, but in the Transition Era—when combined with the shift to technology—eds and meds became prime actors, beneficiaries, and strategy targets. In this shift of strategies, actors, tools, the older mainstream business assistance tools were downplayed. Tax abatement in particular was especially controversial as it was applied to retail/service firms that were rooted in the local economic base.

The shift to “technology”, however, moved economic developers from a focus on “brawn” and manufacturing processes into a brave new world of “brain” and knowledge—it required a “change of character” in our profession, our strategies, and tools. New actors entered into the ED policy process and it spurred a host of new EDOs and a shift in existing EDOs (industry parks to technology campuses). That shift played out over the last two decades of the Transition Era.

We experimented for more than thirty years. In that manufacturing did not die out (indeed many forms of technology deeply involved manufacturing) meant the old world of economic development persisted in the new world. But economic development became a lot more complex. The 30-year period from 1970 to 2000 witnessed a transition from its golden industrial past to its contemporary state. The character of economic development that emerged after the 1990’s looked and acted remarkably different from its pre-1965 predecessor. It will become our “Contemporary Economic Development.” When the smoke cleared, our jurisdictions’ diverse economic gardens had changed dramatically—as had their physical landscape, competitive hierarchy and population demographics.

Patchwork Nation (2004, 2011)[vi] provided a reasonable picture of jurisdictional economic base types that developed during the Transition Era. The industry/sector profit life cycle varies by sector and industry[vii], its logic offers insight into the Contemporary Era future, as well as a guide to the past. Despite the disruption, however, both the life cycle and the rise of new sectors/industries have pulled our profession and jurisdictional policy systems into new directions, to address new concerns, while also demonstrating the value and durability of many older strategies and programs.

 

Population Mobility

As Two Ships practically screams out how population movements create new cities, and transform small ones into bigger ones—vice versa, big cities into smaller ones. Population gains and loss overshadow job gains/loss. Community viability and competitiveness are strongly affected by the ebb and flow of residential population. It isn’t the Bureau of Labor Statistics that gets the attention of citizens, politicians and media; it’s the Census Bureau that wreaks havoc on the jurisdictional economic development policy agenda. Ethnic/racial groups moving into and across the USA are as American as apple pie, but over our history such movements have stirred up our proverbial melting pot, creating as much disruption as innovation and growth.. It is should be no surprise that population mobility has wedged itself into most every jurisdictional policy system nook and cranny–and into our history.

Americans are, and always have been, a mobile people. A report by Jed Kolko (2103)[viii] asserts that 20 percent of Americans moved each year between 1945 and 1980. New residents bring new attitudes, experiences, beliefs, and value priorities to their community—former residents presumably leave behind empty buildings. Hopes for a new job, for a better life, and the obvious converse—a previous location couldn’t satisfy either—express the bitter-sweet reality underlying the movement of peoples. Hope and fear underscore that population mobility is a movement of the young—and the desperate.

That this mobility may be declining in our Contemporary Era is likely correct. (and, if Tyler Cowen[ix] is correct, attributed to decline in generational risk-taking), its historical power through the Transition Era, however, is amply demonstrated in As Two Ships.Throughout this history the geographic movement of generational cohorts is evident. Fleeing the old family unit is timeless. Since, this history draws upon political culture as a vital ingredient in economic development policy population movement can create new demographics and social groupings which could be quite unsettling (pardon the pun) to existing jurisdictional political cultures. And in many ways, of course, it has been. Melting pot or stew pot, the interaction of values, beliefs and attitudes have reshaped the context, content, and processes of ED policy-making. Political culture travels on the feet of migrants and immigrants. Given the historic population mobility during the Transition Era, the shift in jurisdictional political cultures has been intense.

Consider immigration. The plight of immigrants in the American First Ghetto (1880) launched a series of reform movements, several of which—housing, garden cities, public health, parks, playgrounds and recreation—channeled into a mighty stream of contemporary economic development (community development). Immigrants compelled port cities to create port authorities—the first governmental economic development agency.

Immigrants created the workforce for the new industrial city—and also threatened revolution, social instability, labor unions, and social/geographic mobility. They also massively impacted, and changed, jurisdictional policy systems. The post 1970 immigration, rivaling, if not exceeding the historic Great Immigration, has injected new political cultures into our cultural fabric and policy processes. As Two Ships owes a lot to immigrant population movements.

The Southern Diaspora, Great Migration, and 20^th century generational cohort movements have hugely altered the character of jurisdictional policy systems—and are arguably the leading factor Big City policy system change. That they change the substance, goals, and the nature of ED policy outputs is also obvious. Internal population mobility injects another vital, dimension into our model.

In this history, I develop a type of internal migration that has proven important to economic development: “generational cohort mobility.” Generational mobility refers to the continual “coming of age” of young adult cohorts seeking to better express the values and world view forged by events and dynamic forces prominent in their formative years—either that, or they want to put as much distance as they can from their parental units. Generational mobility could personify Richard Florida’s “creative class”[x], and Horace Greeley’s “Washington is not a place to live in. The rents are high and the food is bad, the dust is disgusting and the morals are deplorable. Go West young man, go West and grow up with the country”.[xi]

Population mobility underlies the great flux that characterized the post-1970-2000 economic development Transition Era. Migrations exert uneven effects on jurisdictions; not all are on the front lines, for example—others are.. In the Transition Era population movements exhibited a “clustering” dimension that has come to be called “the Big Sort”[xii]. Coterminous with the rise of new policy areas such as environmentalism, the Big Sort not only reconfigured existing jurisdictional political cultures (Orange County California now Progressive), but altered the definition of what has been historically the bottom-line goal of economic development: growth. Furthermore, homogenous communities created by a Big Sort yield distinctive policy outputs, and raise the potential for polarization among jurisdictions and States. This phenomenon may well have led to a class-segregated “bubble” during our Contemporary Era.  In any case, as we left the Transition Era, our Contemporary Era has evidenced a “red and blue” State divide more divisive and brutal than any time since the Civil War.

 

First Settlers and City-Building

 

Non-Native American population movements started in the early seventeenth century—and they continue to this day. Initial (im)migrants, the first settlers, poured the foundations of Big City neighborhoods, southern plantations, Mid-West towns, negotiated and approved initial state constitutions/municipal charters, settled the West—and first suburbs. Amazingly, mostly unappreciated,  the profound impact on contemporary ED policy-making are consequences exerted on present-day bureaucratic structures/forms of government, and relationship between public and private actors that was injected into state and local policy systems by the first settlers—literally hundreds of years ago. These constitutions, charters, structures and values, augmented, modified, and updated by judicial precedents and subsequent interpretations, still remain substantially intact. In this way, cultural values of not only our Early Republic first settlers, but their forebears in colonial America, divide us into a policy “quilt of many colors”—especially red and blue.

Chapters of our history describe how people movements constantly created new cities. The initial strategy for any jurisdictional economic developer (city-builder), sitting alone on an empty plot of land, is to con some fool or business into moving next to him/her. City-building is a dominant theme in the history. For current economic developers, city-building is history—“no more than a dream remembered … now gone with wind” and city-building is not usually thought of as an ED strategy—but that is incorrect! America constantly creates new jurisdictions: suburbia-exurbia; Dell Webb-style retirement communities; new urbanist communities (Seaside Florida); and planned communities (both private and public) such as Columbia Maryland, the Woodlands Texas, and Irvine, California. Los Alamos and “the girls of Oak Ridge Tennessee” come to mind. Gold rushes have been replaced by oil/gas fracking, and Silicon Valley provides a place for geeks to dream “such stuff as dreams are made on” (Prospero in The Tempest—not Hilary Duff).

City-building inspired subsequent boosterism and community image attraction programs. But city-building is not just attraction; it also requires infrastructure. Infrastructure must be installed to accommodate new populations and firms. Infrastructure is “the gift that keeps on giving.” Its initial installation is just the beginning. Putting aside upgrade and modernization, infrastructure is sensitive to population mobility. Reverse population movements created a present-day crisis in our rural communities, and bombed out neighborhoods in Detroit Michigan. The huge burst of immigration exerted major effects upon America’s labor market, and offered the potential that by 2050 the ethnic makeup of America would be vastly changed. City-building and a jurisdiction’s initial policy structures set the course for future ED strategies, and– to remind the reader—create the initial jurisdictional economic base that starts the clock ticking for the industry/sector profit life cycle.

 

Forgotten Internal Migration

There are all sorts of internal migrations. The famous half-century long Great Migration, for example, arguably greatly impacted economic development and our cities. Consider as “alternate history” what our Big Cities would have been without the Southern Diaspora. The Great Migration’s human tale described by Isabel Wilkerson’s, The Warmth of Other Suns (2010)[xiii] demonstrates the complexity of motivations associated with population mobility, and supports our belief that generations coming of age create growth as well as decline as the Great Migration played a mighty role in the transformation of the polity and economy of the South.

Less well-known is the population mobility engendered by the federal government’s dispersion of manufacturing and military facilities during World War II. That migration made the subsequent rise of the Sunbelt all but inevitable. Even less noticed has been a “return” migration which has repopulated the “New South” and continues to fuel growth into the nation’s most populous region. Florida’s foundations rest on internal population migration and Miami’s early boom as a retirement haven has been replaced by “Financial Latin and South America’s Capital” created by immigration; Florida is our third largest state. California is our largest. Both figure prominently in population mobility. Is regional change a synonym for population mobility?

And then there is suburbanization. Seldom associated with “population migration,” that is precisely what it was (is). By 1950 more Americans lived in suburbs than Big Cities. By 1970 nearly twice as many Americans lived in suburbs than central cities. Suburbanization, as far as economic development goes, not only means suburban economic developers receive paychecks, but also that all economic developers must contend with people and firms having alternatives within a metropolitan area. Consider also as an exercise in “alternate history” if annexation had worked and there were no suburbs. That would have been wonderful—wouldn’t it? Wait a minute! Does that mean all those mediocre, conformist, boring, rich, racist neo-liberals would now live in the central city?

Population decline elevates ED’s priority in the jurisdictional policy process. Chronic job loss and population decline are the visible expression of a deeper loss in economic meaning. This fear troubles those of us who love what are now labeled as “legacy cities.” “Place” in these instances no longer seems to matter. These cities no longer enjoy access to the economic engine of the national economy. While job creation in this environment may well be a chimera, the economic developer is tasked with it by a community desperate to regain its former position in the urban hierarchy. Population mobility creates winners and losers. Population mobility is the lifeblood of a jurisdictional policy system and economic base. The specter of population loss is the most visible evidence of economic and policy system decline—decline and the threat of it is the “winter is coming” of economic development.

 

Three Competitive Hierarchies

(Urban, Metropolitan and Global)

 

The third driver is labeled “Competitive Urban Hierarchies.” Competitive hierarchies come in three levels:

 

1. Urban: competition between national or regional cities. (New York versus Chicago;, Portland versus Seattle as regional);
2. Metropolitan: competition between central city and its hinterland for dominance or autonomy; and
3. Global: competition with cities/other nations fueled by comparative advantage,

floating currencies, and free trade.

 

The three hierarchies can overlap, compete or reinforce each other. Economic development strategies can be hugely linked to one or several competitive hierarchies. Urban renewal, for instance, was utilized to preserve the primacy of Big central Cities over their growing metropolitan suburbs. Business climate—a well-known, principally state-level economic development strategy—is primarily driven by urban and regional competitive hierarchies. Innovation and knowledge-based economics, on the other hand, develops sectors, occupations, and industries competitive with the global comparative advantage hierarchy. Interestingly, it matters little that every other sizeable city is doing the same.

Each of our two ships has reacted differently to competitive hierarchies. The two cultures characterize and respond differently to each hierarchy. Progressive community developers call attention to the “mobility of capital”, spatial fixes, corporate strategies and financial profit-making (greed), and runaway shops. Progressives cite a perceived control of municipal politics and economic development policy at first by local, growth coalition business elites, but in the present-day Contemporary Era criticize see a global corporate neo-liberal, Two Cities/Luxury City (Brasch, 2011) as examples of capitalism’s manipulation of economic power to dominate economies, wage/income-levels and juridictional economic bases (think Bernie Sanders). They try to protect their disadvantaged, the most abused by competitive hierarchical intrusion.

Mainstream Privatist economic developers, on the other hand, see hierarchies as more natural, the inevitable realities of competitive capitalism. Privatist economic developers see the threat in the failure to compete effectively, but are also prone to see opportunity in such competition. For them, innovation leads to growth that creates more jobs than are destroyed. Success is fostering cutting edge new sectoral gazelles and training residents for growth occupations and high-paying jobs in them. Privatists, in the ascendancy through most of our American ED history, have gloried in their rivalries (domeism)—that is until the specter of decline became very, very real. It is in these varied responses that we more clearly see our Mistoffelees of political culture in economic development policy-making.

The first competitive hierarchy (the urban/regional hierarchy) was most prominent in As Two Ships—because the young industrial United States was in growth mode, enjoying global advantage (some protectionism/reserve currency) through most the book. Urban competition assumed several almost amusing forms, such as New York-Chicago’s skyscraper race, the Boston-New York subway race, or the often hilarious attraction-promotion competition among western city boosters during the late 19^th century. Our major cities have long competed against each other for firms and corporate headquarters. But even these “benign” rivalries have exerted an effect on economic development. Cities to aspire to, or seek to avoid losing in the competitive game. That is why there are hundreds of city rankings on Yahoo every day: worst driver, best pizza, most millennial, etc. End of decade observations by the Census Bureau for many are little more than team standings in the league in which city residents think they compete—which is my segueway to sports and stadia.

Most any morning, tons of citizens and taxpayers first look at the standings of their professional sports team. If the team lost, foul mood ensues, followed by backseat coaching critiques, and for some a breakfast beer. Obviously, if your team wins the Super Bowl without deflating footballs, then breakfast is a celebration. Aside from alerting readers that sports teams are a city’s third rail of politics—don’t mess with them— stadiums, a much-criticized aspect of economic development, has deeper meaning to an economic developer.

Sports occupies the role of gladiator and chariot racing played in ancient Rome; sports is a major preoccupation of the working and middle classes—and offers box seats to its mucky mucks. There is much symbolism that surrounds having, or losing, a major-league sports team. Of course, there is less of economic gravy (job creation) to a sports stadium, than a humbug of psychology, self-respect, and civic pride. The same could be said for the pervasive, expensive state-level incentive deal-making for mobile corporations like Google and Tesla. Such extravagant competition simply won’t go away despite any number of cost-benefit studies. They might go away when cities and states can no longer afford them?

More positive examples from our history support the other side of the urban competitive coin. Urban competition involving the tourist-innovation World’ Fair/Exposition/Olympic games seems fairly benign and even helpful. But American urban competition could assume more serious manifestations as well. The first national-scale urban/economic development strategies started with “be the first to install” Parks Movement that evolved into a nearly-thirty-year, two-phased City Beautiful Movement led by America’s first unquestioned economic developer, Daniel Burnham. The golden age of the central business district resulted.

Perhaps the most destructive urban/regional conflict was that between the Big City hegemony and southern states. That competition was no mere rivalry, but drew upon deep divisions—between two different regional economic bases, between victors and vanquished, between civil and political rights, between a zero-sum, semi-colonial economic dominance. The regional division was not exclusively based on economic development-related factors, but ED differences were central, long-standing and deeply felt. The history outlined in As Two Ships clearly demonstrates the evolution of our American ED profession and policy area would have been different in the absence of the South-Big City hegemonic struggle.

The now-forgotten “rise of the Sunbelt” carried with it not only the toppling of the old Civil War regional hegemony, but also an opportunistic “we have arrived—deal with us” grab of status, image and power by younger, often Privatist, cities and metro areas. To them successful economic development made a statement to the world. Using CBD-urban renewal (domeism) such cities competed with both hinterland boomburbs and eastern Big Cities then in decline. Jurisdictions responding to competitive hierarchies historically have focused on the CBDs, in the Transition Era they competed with neighborhood quality of life and revitalization. Today, cities compete for gazelles and clusters. Of course, the illogic of every city competing for the identical cluster as the city down the highway—and every other city in the nation for that matter—is not important so long as we have our “life sciences” bioinformatics center, Tesla car or solar panel, and tons of real cool Uber or Pokémon GO startups.

 

Strategy, Tool and Program Implications

Economic development cannot avoid this stuff, if only because we usually work for (or get funding from) political officials that live or die on how voters feel when they wake up in the morning. Economic development has always been “political.” It is an output from a policy system, for pity’s sake. From this follows the herd-like diffusion of economic development programs, strategies, and tools across state boundaries and city limits. Innovation in American economic development exists, it seems, only to be copied by others. Academics ponder weak and weary why this occurs, but it is found in all periods of our history. Virtually every major strategy, tool, or program has become a national movement: from home rule and civic leagues of the 1880s, to the Industrial Development Bond (IDB), urban renewal, TIF, EDZ, business improvement districts (BIDs)—to minimum wage and the quest for technology, clusters, and innovation today.

There are several motivations for economic development herding, but in the history I repeatedly label a primary one “the arrow-in-my-quiver” effect. If some city develops a program innovation, every state or city must offer it—just in case somebody might use it. Frequently, few jurisdictions actually use the innovation, but better we have the arrow in our quiver unused than somebody noticing we don’t have the arrow (some, the more cynical, may also observe that herd-copying makes for a popular plank in somebody’s election platform). This history suggests that prolific innovation diffusion can be an expression of competitive geographic hierarchy.

 

The metropolitan and global comparative advantage hierarchies

Embedded within As Two Ship’s Part II is something called “the Age of Urban Renewal”. It could have been called the Age of Modernization, the Age of Neighborhood Public Housing, or even Obsession with Suburbia but between 1930 and 1970, it was the various program manifestations of a CD/ED strategy smushed into today’s rubric “urban renewal” that dominated our history. There was a lot more going on at the time, but that’s where much of economic development was focused. UR, in its various forms served many goals, from slum clearance, public housing, and CBD revitalization/refunctioning. But the graveyard economic developers were whistling by was decentralization or suburbanization. The ghost of metropolitan competitive hierarchy haunted that period of our history.

Big City hegemonic cities were faced with the prospect of losing their dominance to autonomous suburbs. The problems urban renewal attacked were all perceived as “causes” of central city decline or opportunities to ameliorate further decline. Decentralization was what it was called then, suburbanization is a more recent term, is less descriptive of what was going on. The history thinks of it as the “drift to a polycentric metropolitan area” or as Teaford calls it “post-suburbia”[xiv]. Within that time period modern community development  jelled, port authorities became viewed, not as EDOs but as “transportation authorities”, and mainstream ED drifted toward government (both state and local) EDOs. The jurisdictional economic base was contextualized either as a metropolitan hierarchy threat or a resurgent, rogue southern pilfering campaign.

Urban renewal, whatever else it was, functioned as the programmatic hinge that harbored new modern “mainstream” ED and it fueled neighborhood/Policy World resistance that coalesced into new forms of community development. Much of both “Big City” economic development, was shaped implicitly in reaction to decentralization of our metropolitan areas and the UR strategy. In western cities, however, (a noticeable time lag existed between hegemonic Big City and western city UR).UR assumed the last phase of a central city’s’ lost battle with its “simultaneous suburbs” in which a City Beautiful-like CBD domeism announced their arrival on the national urban hierarchy—but in many case, the global competitive hierarchy as well (Seattle and San Antonio—of course, Miami).

The relentless grinding of sectors and industries exerted by an unyielding comparative advantage/free trade global market hierarchy is only the latest manifestation of hierarchical competition that tosses our two ships about in seas such as made the Edmund Fitzgerald famous. The tale of our third global competitive hierarchy has, of course, always been in evidence, but frankly we chose to ignore most of it in the history. Tariffs, gold/silver currency exchange rates, and global price of cotton played a major role in passage of the Old South to the New South—and sparked the Textile War as well. But as the developed world regained its pre-World War II footing (and the colonial world independence) in the 1970’s the privileged position America had enjoyed in the post-War aftermath was threatened. American local jurisdictional economic bases had received artificial sustenance from that prosperity. The latter decades of the Transition Era had entered into their own brave new world of global competition the like of which had not been felt in American for quite some time.

By the time our American ED Transition Era ended, around 2000, a Great Reindustrialization Debate had fostered a host of programmatic strategies to combat decline induced by the relentless grinding of sectors and industries. Keynesian economics received several serious doctrinal modifications, from both left and right. With those strategies/tools forged from Great Reindustrialization plowshares, Contemporary Era American ED has fruitfully and fruitlessly sought to create an illusive economic growth for our jurisdictions and States. Today, strategies like sunrise/sunset industries, cluster development, knowledge-based ED, innovation and creativity, entrepreneurism—and others—counter foreign low-wage jobs, corporate profit strategies, trade deficits/balance of payments, floating currencies, and even free trade pacts—with decidedly mixed results. Enter Brexit and Donald Trump.

Transition Era global hierarchy created what amounts to an existential crisis for state and local ED (community development too). Perhaps some of the late twentieth-century mobility of capital ideological exuberance is a legitimate fear whether sub-state economic development policy-making can be meaningful in this brave new world. Can residents truly affect the direction, and create a future vision for their city—or are cities driven by cruel, constantly disruptive external dynamics into prescribed decisions determined by invisible, remote and greedy corporate managers? Do cities, even states, ultimately have no choice if the city is to survive and prosper, other than to facilitate and subsidize corporate profits? Has sub-state policy-making become a mere medieval puppet show? If not, how can it be remade into a vibrant Shakespearean drama?

The Great Reindustrialization Debate fabricated a strategies and program responses, but the events of the recent year (2016) question their effectiveness and point out where they have clearly failed—the Forgotten People and the emergence of a two class society perhaps someday leading to H.G. Wells’ Eloi and Morlocks. If, and how, state and local economic development can respond to these new events is, of course, unknown.

 

Growth or Decline: that is the question

Until relatively late in our history, ED strategies and programs ultimate objective was to produce economic/population growth and upward individual mobility. Growth was our underlying, fundamental purpose, the end product of nearly every ED/CD strategy. Growth, however, ran into some tough times as the Transition Era matured. By then growth, conceptually, had become increasingly befuddled, and the reality of decline was evident—particularly in imploded hegemonic Big Cities.

The New England-Carolina’s Textile War, detailed extensively in As Two Ships, was not only the canary in the mine for the Second War Between the States, but also the first nationally-watched example of sector decline. Textile were not necessarily the first, or only sector in decline. Lehigh Valley economic developers coped with coal-mining decline and the need for diversification during the Twenties. And there was ample evidence of firms and sectors weakening—although mostly attributed to suburbanization and southern piracy—during the 1950’s.

Blame for disruption was levied against what proved to be symptoms of a more serious disease—a disease which defied identification, however—the disease lacked a name. So economic developers fought the wrong war until the global competitive hierarchy turned against them in the 1970’s. World War II, the early Cold War and the primacy of the American economy globally into the 1960’s had masked early decline. Manufacturing decline in western and southern states had been propped up by federal industrial decentralization and Cold War military spending that fueled spectacular growth in the military-related, gazelle-like manufacturing sectors. Commentators talked about “uneven development” rather than question the overall future of manufacturing.

In any case, Big City attention was focused elsewhere; they were fighting more pressing battles. The effects of suburbanization had been forefront in hegemonic Big City ED/CD agenda since the 1920’s, and the disruption of the Great Migration (the Second Ghetto) more evident and felt in the 1950’s. But the coup de grace was the sixties urban riots—from that point on change and decline were first order ED concerns.

By that time a host of problems had descended on the (hegemonic) jurisdictional economic base. The railroads had begun consolidation, with near-catastrophic effect on places like Buffalo. The steel industry was in trouble, and auto industry was increasingly challenged by Japanese cars. By the 1970’s Japan Inc. was as much an enemy as the Soviet Union. New literatures on corporate strategy and workforce and management strategies were flourishing, the first volleys of “The Great Reindustrialization Debate” intensified during the 1970’s and 1980’s.

The Debate avalanched between 1981 and 1985. Within the avalanche was Bluestone & Harrison’s “Deindustrialization” which finally belled the evil cat and gave it a name[xv]. No sooner named than it was linked, haphazardly, to the rise of the South and regional change, a linkage which only muddied the waters of ED strategies and practices. The implosion of hegemonic Big Cities prompted the rise of the States as preeminent sub-state ED players. Late in the Transition Era it was evident some (hegemonic) jurisdictions simply could no longer grow, economically or demographically. Such jurisdictions were in obvious decline. As late as the 1990’s the ED deck of cards was still being reshuffled. Consensus and a new set of ED/CD paradigms formally crystalized around the turn of the 21^st century. The Transition Era was American ED’s first serious experience with decline. It didn’t go well.

Decline was compounded by a simultaneous redefinition of growth itself. During the Transition Era the priority afforded to growth was seriously questioned; growth’s environment/ quality of life effects had become important factors in ED policy-making and implementation. New strategies such as growth management had emerged—and no growth was seriously discussed; pollution control and brownfield remediation entered into the ED lexicon. Environment-sensitive and quality of life ED meant neighborhoods became a vital and robust focus of a revamped ED/CD. Support for environment was strongest among (generational cohort) the baby boomers, and boomer mobility and the initial Big Sort hugely affected the policy systems of western jurisdictions especially. Growth’s desirability could no longer be assumed in some jurisdictional policy systems. With growth’s value diminished, the consensus behind ED’s traditional high-priority on jurisdictional policy agendas was challenged–a game changer for the profession and policy area

So by the start of the 21^st century Contemporary Era, American ED had witnessed the implosion of the hundred-year Big City hegemony and the rise of new regions with different economic bases, discovered deindustrialization, redefined growth, rediscovered a hostile completive global hierarchy and fabricated robust new paradigms and strategies to counter it, watched the federal government settle into an important but limited sub-state niche—and confronted an intractable decline in many, formerly prestigious jurisdictions. ED and CD was ready to abandon its fin de siècle pessimism and launch new visions and strategies to reverse decline and create their version of a brave new world. That also appears not to have gone well.

By the time of this writing, a literature has cropped up, typified and well-summarized by the title of Nicholas Eberstadt’s work “Our Miserable 21^st Century”[xvi]. The election of Donald Trump, perhaps a lagged consequence of the massive Great Recession (and Dot-Com recession previously), the discovery of “forgotten people”, the mystery of a disappearing productivity, and the rise of populism in the developed world—intensified by global population migration—provides considerable support that our drivers of economic development policy have far from abated and growth still eludes us, however, it is defined.

 

 

III

 

A Bottoms-Up Approach to American State and Local Economic Development: The Jurisdiction: policy system and economic base

 

In this section we look inside the policy system—its structures, processes, actors, and dynamics. Each policy system-type can by identified by its distinctive actors, chief policy-making structures (such as/form of government, electoral system), predominant driver(s) of change, relationship with the private sector and higher levels of government, and its definition/priority of ED/CD applied to strategies, tools, and program outputs that confront problems, constituencies, and situations relevant to that time period.

The policy system is stolen from political science and policy analysis. To work effectively with my policy system, the reader needs to be familiar with a few concepts and relationships. Each unit of local government (counties, villages, cities, towns– an unincorporated area usually has a county for its jurisdictional policy system) by definition contains a “policy system”. In theory, every very square inch of the nation falls into someone’s policy system—although that “someone” need not be a local political unit. States and especially the federal government or Native American tribes, own huge amounts of land—that is the underlying issue, for example, in Western states “Sagebrush Rebellion” and the current Dakota pipeline and Oregon wildlife center controversies. A local jurisdictional policy system is defined and limited by the political boundaries of the civil jurisdiction.

My history includes a government-centered policy decision-making process, but it sits, alongside a largely autonomous private, public authority and nonprofit policy decision-making centers, and also includes regional EDOs, and higher levels of government (federal, state and even the G-20, G-8, UN and WTO). In a jurisdiction there is a lot more going on concerning economic development than what happens (or not) in the city council or mayor’s/city manager’s office. Complicated formal and informal policy whirlpools exist within our jurisdictions.

Our federal constitution allocates sovereignty over sub-state entities to state government. So sub-state jurisdictional policy systems are “creatures” of the state policy system—and the reader should recognize contemporary sub-state economic development, despite notable federal involvement, still firmly remains lodged within fifty state jurisdictional systems. Local policy systems are not free actors. Interdependence of local and State sustains local policy-making structures and relationships embedded with long-forgotten cultural values.

A jurisdictional policy system includes a landscape of structures, actors, and processes within a specified geography that make decisions concerning policy areas such as education, criminal justice, welfare, housing, land use/planning/environment, tax/fiscal, civil rights—and economic development.

 

Jurisdictional Policy System: The Local Engine that Could?

 

Within each local policy system, a variety of economic development organizations (EDOs) do business. They are the basic unit of analysis of a policy system–the workhorse of state and sub-state economic development. EDOs can be public/government, quasi-public hybrids or private. Chambers can attract industry of its choosing; port authorities can export and import; neighborhood improvement associations can organize residents, build housing, or rehabilitate it. EDOs external to the jurisdiction can conduct business in a local policy system. A state can operate the local economic development zone (EDZ) and set up a regional ED council. SBA can advise and fund small businesses or a federal agency can set a minimum manufacturing wage; the EX-IM Bank can loan to a local firm.

Through the variety of EDOs actively engaged in a jurisdiction, a long list of ED/CD strategies, tools, and programs are ongoing within any jurisdiction at any point in time. Strategies, tools, and ED programs are approved in accordance with EDO type/mission and are “governed” by its legal structure. Establishing and empowering EDOs are elementary first steps and the subsequent struggle for resources to implement EDO strategies, tools, and programs necessarily involve politics, conflict, and consensus-raising that constitute the day-to-day stuff with which local ED/CD practitioners must deal. Resource-raising and implementation are the key phases of ED policy-making—not formal approval. The interaction among a policy system’s multiple (external and internal) EDOs, reflecting as it might different constituencies, strategies, tools and programs, can be visible in the media or hidden behind closed doors. Most EDOs are so specialized that no one other than those affected ever look at what they are up to.

.Local policy systems differ greatly in how they are configured. Community development organizations (CDOs) are usually sub-municipal, private, and the composition of their boards of directors vary hugely—as do decision-making. Some EDO/CDOs rely a great deal on private, self-governing EDOs, others depend mostly government EDOs? Often hybrid or mixed private/public EDOs are active. Counties and local jurisdictions can interweave programs; some jurisdictions preference one over the other for ED.

Form of government matters—less in terms of the mix of strategies or programs than for how the policy process operates, who implements programs, and who is involved in both. Policy system change often has been achieved by changing a jurisdiction’s form of government, its election process (at-large or district elections, for example), or by referendum/initiative. Policy system change can alter the character (business-dominated or neighborhood-oriented) and composition of key policy actors are fluid (unions, universities, school system, hybrid EDOs)—some are added, others removed, still others assume greater/lesser influence. Despite a change in a jurisdictional policy system, past EDOs (including their strategies, tools, programs and goals) can survive and endure (discussed below). It is unlikely the “same” actors engage in ED policy-making/implementation identically in different policy systems, however.

Size of the jurisdiction can tilt the openness or closed nature of the policy process. Citizen involvement in ED (not so CD) is episodic, usually minimal. CD thrives on citizen/resident involvement, but it too is not without its problems and biases. EDO/CDO decision-making and program implementation are bureaucratic in nature. Yet, at the local level, there is a surprising amount of “informality” in decision-making. That seems true for the early 19^th century and remains true today.

Economic development is itself bifurcated. The gulf between the practitioner (implementer) and the (academic-like) policy designer/advocate is huge. Each live in radically different worlds. In recent years, university-driven ED complicates what had been a simple dichotomy, but it doesn’t destroy an ED reality that the gap between those that advocate policy and those who implement it can be very wide indeed. My model acknowledges this by assuming two “Policy” and “Practitioner” worlds exist—and this too has exercised serious impact on the history of American ED. In that EDOs are “governed” by non-economic developers, politics, be it business of political (and personality), constitutes yet a third segment of the ED-relevant policy process. ED is a policy system output; economic developers, expert or not, do not make their own policy.

While “As Two Ships” seldom involved itself in the detailed internal dynamics of the urban policy system—that is reserved for another book—it does stress who involved themselves in sub-state ED policy systems and how they changed over time periods. These “players” are called “policy actors”. “Stuff” does not happen without policy actors getting involved. Policy entrepreneurs are common and policy windows while opaque, are real. Timing is everything.

Our history is saturated with policy actors. Some policy actors appear more often than others: elected officials, the so-called jurisdictional one percenters, segments of the business community, mayors and city councils—and EDOs–are fixtures of nearly all policy systems. Labor, growth coalitions, residents, taxpayers, State and federal government, courts—and frankly anyone who wants to be involved can be found. School systems are an example of the latter. One “Darth Vader”-like quality that has deeply pervaded my ED history and sub-state ED policy-making/implementation is that sub-state ED is dominated by “elites”; it is also a relatively “closed” policy-making/implementation system.

A jurisdictional economic development policy system, almost by definition, has no one in charge. That is an obvious difference from public policy-making. In a jurisdictional policy system policy “whirlpools” flourish. Composed of networks of EDOs of varying types sharing a function, funding, and/or constituency, a whirlpool is a bunch of EDOs traveling together. There may be some power and status structure associated with the whirlpools within the jurisdiction. In the 19^th century for example, chambers, real estate exchanges and transportation/utility franchises could hang out together. Sometimes it was railroads and chambers. Whirlpools generally have vertical, not horizontal, communication networks. External EDOs operate in their own whirlpools.

Coherence, such as it is, follows from funding source (sometimes politics), but each EDO charts its own course, confronting the turbulent seas of politics, capitalism and global change as its governance and staff see fit. Reformers hate the inefficiency of this cattle-stampede of a policy system, and consolidation/ empire-building is a normal feature—with empire-builders quickly realizing herding EDO “cats” is easier said than done (don’t cha like mixed metaphors). New EDOs/CDOs constantly appear, usually causing considerable stir in the affected policy whirlpool. EDOs do die; whirlpools disappear in periods of resource drought, or when elderly staff depart, but it is surprising how many EDOs and CDOs survive over time. The take away is that sub-state policy-making is decentralized, fragmented into distinct policy-functional whirlpools, often personalistic as well as bureaucratic, surprisingly flexible and able to adjust to new demands/constituencies. Why this is so is related to what EDOs and CDOs produce, i.e. what are their policy outputs?

 

Economic Development Outputs: Strategies, Programs and Tools

EDOs usually have more limited ambitions than their rhetoric, egos, collateral material and success stories imply. Few truly believe that a business loan will revitalize a city, or a rehabbed house a neighborhood. At the local level players learn to appreciate their whirlpool has its limits—and they wisely know the seas on which they sail are turbulent indeed. Each EDO defines its own destination port and chooses its means to get there in these stormy seas. A reality behind this metaphor is obvious. If the turbulent seas get it into their mind to sink the ship—it’s sunk. Don’t screw with Mother Nature. Sub-state jurisdictions are not the master of their fate; but they can, indeed must, make their way through the seas as best they can.

That is the bottom-line metaphor for sub-state (and state) economic developers. They consummately “satisfice”—not maximize. They cannot let themselves simply bob and plunge, driven by waves, winds and currents as mere flotsam. Municipalities, counties and states must figure out where they want to go, and plot how best to get there. Their ships have rudders and engines; that is what economic development strategies, tools, and programs provide to the community. As Two Ships observes, in a capitalist economy, ED/CD is the manager of creative destruction.

Outputs relevant to economic development are strategies, tools, and programs. These outputs deal with, and seize opportunities from, the drivers or forces of change that arise from the policy system’s environment. Outputs, in theory, are intended to accomplish certain “goals.” But goals, as conventionally known, are obstacles to understanding sub-state economic development. State and sub-state jurisdictions are diverse and complex; they face multiple problems simultaneously, thus inhibiting a composite Holy Grail-style single goal. Economic developers seek many grails simultaneously.

Any community simultaneously pursuing multiple goals entrusts its EDOs with several motivations/ goals/strategies for each of its programmatic initiatives. An attempt to posit one or two system-wide goals (such as job creation or raising taxes) does not match reality “on the ground.” That is why we speak of economic development strategies—not goals. A strategy, by definition, can combine several goals, and thus serve the purposes of many policy system actors. If one is looking for an “ultimate underlying goal”, it is apparent to me that “growth” is the best candidate until we cross into our Contemporary Era.

So a variety of goals flood the economic development policy area and policy systems. These include population growth, increased tax revenues, competing with relevant cities, aspiring to a level of status in the regional/national hierarchy of cities, developing clusters or diversifying one’s economic base, job creation, neighborhood revitalization, people-empowerment, wage growth, infrastructure upgrading, physical modernization, innovation, creating the “right” kinds of jobs, and fostering a proper “business climate.” There are also other potential goals that can enter into a strategy or program.

It is possible that a single speech/press release describing an economic development strategy might mention many of these goals before the speaker leaves the podium to cut the ribbon. Any quest to find the goal is certain to be as elusive as searching for Monty Python’s Holy Grail.

 

Strategies

Economic developers function around strategies. International Economic Development Council (IEDC) certification is chiefly demonstrated by mastery of key economic development strategies. As Two Ships demonstrate the standard enduring strategies include: city-building, attraction, business climate, tourism, business retention, infrastructure, development and redevelopment, workforce and labor base skills training, specific firm assistance (loans and other assistance), entrepreneurial, small business and startup development, innovation and knowledge-based economies, planning, and sub-municipal (neighborhood/CBD) development/revitalization and community development. There are others that arise, economic gardening, for example.

The strategy is the “why,” the rationale, the theory justifying what we do. Strategies are often rhetorical in nature and typically are found in economic development plans, political campaigns, party platforms, on web sites, and all sorts of collateral material and media press releases. Strategies are the front door of American economic development. A strategy of the same name can differ widely in its specifics and purposes as implemented across cities, states and regions and can easily change with the appearance of a hot, sexy book such as this one.

Strategies, over time and place, come and go—like Michelangelo.

 

Programs

A program is derived from strategies, formed around staff, resources, and one or more tools with custom-defined terms, eligibility, service area, and other administrative factors. Programs are the core unit of policy implementation. There are way too many programs to list. Examples are a TIF district, an EDZ, export financing, MEP, accelerator-incubators, a visitation program, branding, a media placement, web-database demographic sites directory, MBE lending, a downtown event, a basic skills training class, venture capital placement, an innovation workshop, a waterfront redevelopment project, etc. Programs are the meat and potatoes of economic development.

Programs reflect the political culture of the jurisdiction, the state policy system, and most often are shaped by the tools/resources available to the EDO. Throughout this history the reader will encounter the expression “a rose is not a rose.” This is a takeoff on Gertrude Stein’s quote, and it is meant to convey that programs, tools, and strategies with the same name/title vary enormously among states and even jurisdictions within the same state. A realistic understanding of economic development policy-making lies in appreciating its variation, why variation exists, and what effects that variation cause—rather than mindlessly citing the meaningless fact that 47 states have passed something they call TIF and they share x or y statistical commonalities and have wasted “z” taxes in projects.

 

Tools

Tools are the workhorses of economic development; the microprocessor of all economic development programs. Tools make a strategy operational and credible. An economic development organization (EDO) is usually a creature of the tools in its arsenal—arrows in its quiver. Tools are the instruments that economic developers employ to implement economic development strategies and programs. The same tool can be used one day for one strategy, the next day for another. Customizing a tool merely requires adjusting eligibility, terms and conditions, marketing, and underlying strategy rationales. Probably tax abatements are the most common tool. Tax increment financing combines several tools.

One of the more important lessons derived from our history is that while economic developers think and talk in terms of strategies, our history has usually revolved around tools. Enduring professional associations are formed to advocate, educate and provide technical assistance in the use of tools. Indeed, most EDOs were originally established to house the tools necessary to accomplish its initial purposes/strategies.

Commonly found tools are: eminent domain, tax abatement, grants, venture/seed capital, business counseling, revolving loan funds, bond issuance (IRB), zoning/land use regulations, networking, policy research, advocacy, property ownership/management/leasing, a tourist site, convention center, or event, a training course or curriculum, infrastructure installation/upgrading, incubators and accelerators, industrial/office/technology parks, construction management, and property write-downs—an ED plan–are examples. Tools often require state authorizing legislation, invite legal regulation, and require specialized expertise. Tools are housed in an EDO that is legally empowered to use the tool. Staff develop expertise in use of tools. Tools are why EDOs survive for long periods of time. Tools are configured differently in each of the fifty state ED systems.

What tools an EDO commands arguably defines its constituency, expertise, and its visibility to the outside world. In many ways, my history is a history of economic development tools, clothed in programs, and wrapped in strategies as adjusted by changing policy systems. That is why NYC’s Department of Docks, America’s oldest government EDO (1870”s) still exists, buried deep in the bowels, almost without identity, in NYC’s principal EDO.

 

The Past Lives On: Onionization

The idea behind onionization is simply that each onion layer constitutes a period of time during which dynamic forces (drivers of change) were prominent. The periods of time varied in length, intensity and which driver prompted change, which prompted complexity and variation in jurisdictional policy outputs. Jurisdictional policy systems responded, establishing certain types of EDOs that embedded strategies, tools and programs. Each strategy typically is lodged in a specific EDO-type. As policy systems change. EDOs of each onion layer continue, and new layers are superimposed on older ones. Old programs/strategies persist into new periods.

As layers are added over the years, older layers become more autonomous, more inward-looking; they can almost become invisible to the naked eye. Sometimes they lose their identity as an economic development agency—many older EDOs are unstaffed, “nested” through merger/contract with newer EDOs. Sometimes EDOs adopting new missions cease to think of themselves as economic development agencies, although that it what they did—and still do. The community also redefines them and places them in a different category—redefining them from an EDO into an airport, for example.

When the forces/drivers that created EDOs, tools and strategies subside, why don’t we just close them down? Likely as not, the need for the program continues; but the crisis having faded from the public eye, the EDO/strategy gets built into the unnoticed fabric of community. Take it away and the problem is likely to reappear. The EDO, tool or strategy remains useful, possesses a clientele (however small); and, since the EDO’s personnel have acquired a strange dependence on a paycheck, and governance of the EDO on the client’s beneficence, termination, if warranted, becomes an exercise in courage or stupidity.

The need for a transportation infrastructure continues: we still must worry about workforce and skills training, and tourists need constant reminding. Strategies ebb and flow in the mind’s eye and in their perceived importance, but problems and opportunities don’t disappear. Old battles need to be fought in the new age. More often than not the EDO, the strategy, program or tool continues into the future—often acquiring new purposes, implementing new strategies, broadening its utility and clientele. Our history strongly suggests economic development is additive—hence onionization.

 

 

IV

 

Two Ships Passing in the Night: Mainstream ED (Privatist) and Community Development (Progressivist)

 

My history asserts there is no single way to do American sub-state economic development; there are at least two—and they have been evident throughout our history. Economic development, as a policy area and a profession, overlap (think Venn diagram) the capitalist economy and society/demographic groupings and politics/world view/value conflicts and priorities.  Inherently economic development sits squarely on fault lines separating powerful, policy-shaping forces—it cannot escape them. Through the course of American state and local history such overlaps have translated into choice between two vastly different approaches to ED and policy systems reflecting different constituencies can chose both to construct a ED-hybrid, bi-modal policy system.

Perhaps more than most policy areas we respond to the natural divisions within our nation, divisions which arise from choices to critical questions that do not, indeed cannot, ever be solved or easily bridged/compromised. Choices like who should ED help and what masters it ultimately serves? ED also reflects the tensions of those who are uncomfortable with the existing economic system (capitalism) and others. From these ultimate choice flow a second level set of choices on how “best” to accomplish objectives. Social justice/identity politics or economic/ social assimilation? Economic opportunity or condition?

The values that underlie and support the choices, initially were lodged in 18^th century (even earlier) religion and political philosophy. The values were carried by population/refugee movements, and then ethnic/social class/generational internal migration. Over time these values and choices became embedded in each jurisdiction’s underlying morass of values and beliefs, called political culture. So culture is very durable. These vales and choices have proven themselves resilient and enduring, able to switch from religion, party affiliation into secular political ideologies and new geographies. The salience of choices ebb and flow, but challenges of daily life have always forced us to periodically reassess eon-old questions and choices. So does American economic development. The challenge of being a participant in the management of our economic system constantly requires choices and values.

There are two inevitably multiple answers to basic questions and the many conflicting values defy a consensual prioritization of such choices. Sitting on the fault line, overlapping distinct “worlds” of society, economy and politics our history demonstrates that two “macro” ED-related systems of thought have evolved—each with its own sub-categories. These two approaches, reflecting different values and choices are our proverbial “as two ships passing in the night.” Each ship has a name: Progressivism and Privatism. They do not like each other!

 

Jurisdictional Political Cultures and Policy Systems

Jurisdictional political cultures were the shipyards that “laid the keels” of my “Two Ships”. Each ship embraced an approach to economic development that has persisted, with ebbs and flows, through our entire history: (1) “mainstream, capitalist-accepting, limited government, direct business-assistance ED”, and (2) “people-centered, autonomous/uncomfortable with capitalism, expansive government, community development”. Privatism dominated the nineteenth century—and continues; contemporary Progressivist community development approaches developed after the mid-twentieth century. Today both, operating from hybrid policy systems, fuss and feud.

State and local levels, closest to the people and the political culture, feel culture’s impact intensely. Time and experience, like water over rocks, incorporated these choices, values and beliefs, almost unthinkingly, into policy-making (both private and public). As we shall discover, these choices, values and beliefs became embedded, not only in attitudes/opinions conveyed through socialization,  but in political structures as state constitutions, municipal charters, precedent-setting state and local legislation, and judicial decisions/precedents—supplying an easy answer as to why economic development varies among states and jurisdictions.

Subsequent adaptations and modifications to initial political structures, such as form of government and electoral procedures, usually reflected then-current cultural values and choices while often maintaining much of the older ones. American structural change has tended to be more additive than zero-sum. When we change we try to minimize the disruption of old values and choices (it’s called compromise, stupid)—and so surprisingly much of what the first settlers, who first put their choices/values to pen and paper making them the law of their land, remain, dressed in new clothes and speaking in modern day language. In this manner our Two Ships have survived many “perfect storms”.

Each approach to American economic development chases its own goals, develops its own strategies and programs, and operates within its distinctive autonomous network of EDOs or CDOs in our jurisdictional policy systems. Each approach serves different constituencies. Some of our critically important strategies, workforce for example, rests squarely upon a federally-built bridge over jurisdictional policy system chasms. Each ships defines inputs and responds differently to our three drivers of change.

To be sure, there are Privatist forms of community development, and community developers can use Privatist tools and strategies—but each serves different goals and constituencies. The Two Ships differ on how responsive/responsible they are for the jurisdictional economic base and the CBD; and community development is most focused on neighborhoods and housing than city-wide job/tax-creating strategies. Business climate is a battleground between our Two Ships—as is tax abatement and eminent domain. Most jurisdictional policy systems in our contemporary era have devised hybrid privatist mainstream and progressivist community development policy systems.

The names given to the two styles were easy to come by. The first, Privatism, was coined by Sam Bass Warner—a well-respected urban historian (Warner, 1968)[xvii]. The second, Progressivism, requires more explanation. The post-1880 Progressive Movement is well known; its impact on politics and policy-making profound and well documented. While there is overlap with the Progressive Movement, our Progressive political culture precedes the movement and is defined and described in terms and behaviors relevant to economic development. Both cultures can be traced to the earliest periods of American colonial history. Each represents a different approach to politics, government, economics, liberty, freedom, and individual versus community orientation.

 

ED-Relevant Values and Choices

Don’t expect any “Welcome to our Privatist (Progressive) community” sign when you cross a state, municipal, or county boundary. So, how are we to know whether a community-jurisdiction follows a Progressive or Privatist path? Privatist and Progressive cultures are very different. An economic developer would be hard put not to feel it from the get-go. But it’s worth specifying distinctive elements which separate them. The two cultures result from choices to the below questions:

 

• Should economic development be led by and conducted through (1) private-sector leadership and public–private EDOs; or (2) government and government-directed EDOs? This question underscores the willingness, comfortability, with government to solve problems—a negative answer values limited government perceiving government as less helpful, if not a negative force.
• Should ED directly assist/benefit private firms and hard-working, risk-taking individuals so they can build wealth from which the community prospers and grows; or should ED directly benefit people in the community (especially the most distressed, not firms and entrepreneurs. This question taps acceptance or discomfit with capitalism. Importantly, it pinpoints how, and who, ED should work with and through to achieve its purposes:. It pinpoints the targets of ED: firms or people. If the latter is chosen, a more open definition of what constitutes ED (i.e. housing, criminal justice, education) is possible. If the former is chosen, ED is tasked to make capitalism more effective (access, favorable terms, and business climate) for firms resident in its economic base.
• Should the community compete against other communities for wealth, status and economic growth—without which community stagnation/decline is inevitable; or should ED look inward and empower economically/politically disadvantaged residents unable to compete in society, economy and politics. Literally the questions addresses whether the responder is accepting of a “capitalist competition” between cities, hinterland and global threats. Does one protect one’s own “community”, or do what it takes to survive through aggressive competition. CD does not focus on competitive hierarchies and to the extent they intrude on its goals, CD reacts negatively—usually attacking the cause of such intrusions: capitalist greed, growth coalitions that control local policy-making, and corporate profits/strategy. Ultimately, much of the three driver’s impact derives from the operation of a global/national capitalist economy—even population migration.
• Should economic development incorporate business and its owners into the design and implementation of ED strategies, programs and tools in order to utilize the expertise resources and cooperation of business in the attainment of the public purposes intended from ED outputs and goals (i.e. community growth, jobs, prosperity); or should ED separate its policy system processes/outputs from a private sector and its bottom-line profit-making goal fundamentally at odds with the community and its disadvantaged. Rather CD stresses rational planning, experts and analysis that identifies gaps and weaknesses that flow from capitalism/firm decisions and task any solutions to public entities? This question also delves into the relationship between ED and capitalism on its effects on design/implementation of ED strategies, programs and tools.

 

A Privatist jurisdiction is wary of government being the primary agent of social and economic change. Limited government is preferred, and business elites are invited to participate in the making and implementation of ED policy. Private leadership is preferable to government in economic development; limited government preferable to an activist, redistributive government. To a Privatist, prosperity/economic growth are best achieved by a dynamic private sector (capitalism) that creates wealth and opportunities for citizens and residents. The community will prosper through individual hard work, innovation, risk-taking, and entrepreneurship. The community benefits from providing a supportive infrastructure and low-cost environment to private enterprise.

For a Privatist, inequality provides motivation for individuals to participate more fully in the economic sphere. The community should level the playing field for firms so they can compete with firms in other communities, by creating a supportive risk-taking environment (often characterized as low taxes, a willing and cheap labor force, and less regulation). In this perspective, government can partner with business or business can direct economic development to the benefit of the private sector and the community. As business competes with other private firms, the community competes with other communities for limited resources, population, wealth-creation, and economic growth—failure to compete leads to stagnation, decline, and, in the worst case, community “death.”

Instead of working with capitalism and business, Progressive communities target distressed “people” in their community as CD’s beneficiaries. Their focus is not on the jurisdictional economic base, but on neighborhoods disadvantaged by business decisions. Progressives task themselves with protecting “vulnerable communities” from capitalist-imposed inequalities and corporate abuses. They conceptualized place of residence as an economic polis (as well as political) in which citizens working together benefit individually/collectively, achieve individual fulfillment, and economic prosperity—together. “It takes a village” taps this conception that individuals achieve personal empowerment by inclusion in a caring community-polis. This fits well with the definition of community development common in black-majority neighborhoods. Community mobilization in Hispanic neighborhoods, however, has followed a slightly different path (Miami Cubans are an exception) more accepting of social-economic assimilation and pure neighborhood revitalization. Assimilation in modern CD is not necessarily desirable as it can suppress, if not colonialize, low-mod geographies and their residents.

Progressivist economic development confronts inequality resulting from residents unable to effectively participate in community prosperity. A requirement imposed on Progressive economic development is that it must empower the least advantaged. That requirement is also expected of its private sector and firms. Raising the capacity/prosperity of the least advantaged may be an ultimate purpose behind Progressive economic development. Progressives see the private sector less as an engine of growth and innovation than as society’s vehicle for distributing the benefits of growth and prosperity to community members. There is mistrust of the profit motive; propelled as it is by greed, it is perceived at cross purposes with community economic development goals. Conflict of interest is broadly defined, and business-friendly concepts such as noblesse oblige and stewardship questioned. Strands of American economic Progressivism have ventured into both socialism and state capitalism—the tension of Progressive community development with capitalism is visibly evident.

 

Business Elites, Public “Capacity” and Policy Venn Diagrams

One consistent thread in my history is the constant and pervasive role of business elites in both mainstream ED and community development policy systems. The complexity, not without its irony, is that business elites are important to both of our Two Ships; CD through its history has always been facilitated, in some instances led, by philanthropic foundations and think tanks (Russell Sage, Ford, and Rockefeller).  How can that be?

Throughout the history, the composition and character of business elites that participate in local ED exerted a considerable impact on policy-making—regardless of which political culture is dominant. Further, that composition of business elites (associated with firm size/market) can differentiate large cities policy systems from smaller cities/suburbs; in different time periods, it has also differentiated regions. Assessing the policy direction of those business elites who involve themselves in local ED is a serious issue in this history.

Business and industry, capitalists if one will, are not a monolith. The local business community is very fragmented; it is not, and has never been, exclusively driven by personal or corporate profit in its ED involvement. ED strategies, tools and programs often generate competing elements of the business community, or advocacy by some, and not others. Local Business competes with itself as much as it desires to restrict government involvement in business affairs. Most importantly, business elites can be Privatist, as expected—but equally likely, elements of them (professionals and jurisdictional one percenters) can be Progressive.

Community development includes a strong and core business elite involvement—an involvement that is found as early as 1825. Given the diversity of policy systems, the varying influence of our two competing cultures, and the multiple business elite configurations the policy predisposition of the typical jurisdiction’s business community/economic base varies over time and place—and within time and place. There is no justification for believing that “the business community” in one city or state is necessarily identical to that of another city or state

Contrary to stereotype, modern urban government owes its strength, its capacity to govern, to business elites. Until surprisingly late in the nineteenth century, American municipal government possessed insufficient “capacity” to “lead” a modern policy system. This pre-Progressive era municipal government incapacity to formulate and implement independent economic development policy meant that ED policy-making was usually handed off, delegated to, private EDOs lodged in various hybrid, public–private bodies, authorities, independent commissions, and the like. Through the nineteenth century—and well into the twentieth—the search for structures that allowed for a public–private partnership was an important feature of our economic development history.

Economic development as a policy area overlaps with the “shaded areas” between three Venn Diagrams (economics, society, and politics/government). Not without its controversy, therefore, business assistance and private involvement in ED decision-making has been a major fault line within economic development. Sub-state ED directly and indirectly intrudes and involves itself with the operation and conduct of America’s capitalist economy. ED profoundly deals with firms, sectors/industries and business cycles, business formation and entrepreneurship and a host of strategies (business climate, attraction, and retention). Consequently, fault lines between private and public sectors are huge, and long-standing. The awkward shotgun marriage of economic development with the capitalist system has produced a fundamental tension that dominates the history..

 

Concluding Observations

Viewed as a policy output by a state/local jurisdictional policy system assessed over time, a study of economic/community development offers insight and explanation into dynamics that influence urban policy systems. The two-century history itself, with its time line traversing the four diverse regions of the nation, offers a perspective seldom appreciated in analysis of policy-making. Over our long history, America evolved from its Early Republic Era (1790-1870), into a Classic Mainstream ED Era (1870-1930), through the Age of Urban Renewal (1930-1975), into (overlapping) a thirty-year (1970-2000) Transition Era into our Contemporary Era.

Not surprisingly, that perspective reveals forces that propel policy system change, a process that consistently realigns the varying economic development policy outputs of very different state and local (jurisdictional) policy systems. A portrait drawn from the bottom up demonstrates conclusively policy systems, even in the same time period, can be significantly different, designing and implementing ED/CD programs and strategies, often with the same name or title, intended to accomplish vastly different goals and purposes and assist entirely different constituencies.

The historical perspective sensitizes the reader to the importance of time, but also of geography. The regions of America have not, and still do not, share the same heritage, time line, economies, cultures, and demographics; a shared national history has impacted each region in its own way, and the timing and substance of state/local economic development policy driven by changes in jurisdictional economic base, population movements, and the three competitive hierarchies have been seriously affected by varying impacts of each on the different regions. ED/CD strategies, tools, and programs, sharing the same name, differ hugely across regions in terms of time lines/lags, intensity of use, and program/strategy definition. That variation, seeking an answer to why it exists to such a degree, opens our eyes to the importance of political culture, the transmission of policy culture across geographies, and the incredible durability of that culture within a jurisdictional policy system despite massive change and expanses of time.

Our inclusion and emphasis of political culture into state and local jurisdictional policy-making has been amply rewarded. From its first days, American state and local jurisdictions have chosen between two very different ED paths. Our “Two Ships”, Privatism and Progressivism, have produced two almost diametrically opposite approaches to ED: community development and mainstream business development. With ebb and flows, updating and modification over time,  and diffused across the nation first by population movements, and then in the last few decades by a lifestyle, religious/secular, class-based “Big Sort”, infused from a new-found concern for quality of live and the environment, a polarization of jurisdictional cultures have led to hybrid jurisdictional policy cultures, and an increasing number of relatively homogenous jurisdictions, across regions and within metropolitan areas, at war with each other—and economic/community development is a centerpiece battlefront in that struggle.

This Big Sort polarization has come at an especially bad time. American economic development has over the last half-century discovered “decline”. Over the great bulk of our ED history, ED was driven and tasked to produce “growth”. But in our Contemporary Era growth has been redefined to include a strong government, environmentalism and a “quality of life” and in the Contemporary Era social justice/group identities dimensions. No longer is it clear what growth “is”.

Worse, from growth’s point of view, the global competitive hierarchy in particular no longer can be counted on to elevate jurisdictional economic bases of American cities and states. Moreover the Transition Era’s intense immigrant population movement has generated a reaction, a need to digest the volumes of newcomers into our policy systems. At a time when community and mainstream economic development at war, the need for some armistice, some cooperation to deal with challenges of capitalism’s creative destruction has never been greater. That is the challenge with which my history—and this article–concludes.

 

[i] The shift was most evident in the treatment of state-level EDOs (where the private EDO was weakest) and was vividly displayed in the treatment of mid-1980 state EDOs by two well-known ED classics: R. Scott Fosler’s, New Economic Role of American States (NY, Oxford University Press, 1988) and Peter Eisinger, the Entrepreneurial State (Madison WS, University of Wisconsin Press, 1988).

[ii] R. Scott Fosler, New Economic Role of American States, op. cit., pp. 3-6; see also Forward by William S Edgerly, Chair of CED’s Subcommittee on Economic Progress

[iii] See for example an early (1987) description of the politics underlying the implementation (and design) of economic development in a declining jurisdiction; John E. Jackson, “Michigan” in R. Scott Fosler, New Economic Role in American States, op. cit., Chapter 7, pp. 100-111.

[iv] Markusen, Ann. Pofit Cycle, Oligarchy & Regional Development. Cambridge: MIT Press, 1985.

[v] Peter Thiel, Zero to One (New York, Crown Business, 2014)

[vi] Gimpel, James and Schuknecht. Patchwork Nation. Ann Arbor MI: University of Michigan Press, 2004.

[vii] Gordon, Robert, the Rise and Fall of American Growth (Princeton University Press, 2016)

[viii] Kolko, Jed. “Americans Aren’t Yet Back on the Move.” Trulia 27 September 2013.

[ix] Tyler Cowen, the Complacent Class (St. Martin’s Press, 2017)

[x] Florida, Richard, the Rise of the Creative Class. New York: Basic Books, 2002.

[xi].Horace Greeley, New York Tribune, July 13, 1865.

[xii] Bishop, Bill. the Big Sort. Boston: Mariner Books, 2008.

[xiii] Wilkerson, Isabel. the Warmth of Other Suns. New York: Random House, 2012

[xiv] Jon Teaford, Post-Suburbia (Baltimore, Johns Hopkins Press, 1997)

[xv] Bluestone, Barry & Harrison, Bennett. Deindustrialization of America. New York: Basic Books, 1982.

[xvi] Nicholas Eberstadt, Our Miserable 21^st Century, Commentary, March 2017

[xvii] Warner, Sam Bass. the Private City (2nd Ed). Philadelphia: Philadelphia University Press, 1968.