Foundations of contemporary practice and policy emerge
Originally entitled “Great Forces at Work,” this chapter’s topics almost complete our discussion of the critical elements that led to the formation our twenty-first-century contemporary ED/CD system. So far Part III’s chapters have identified several elements that partially constitute the foundations of our practice of economic and community development. They include the limited but critical role of the federal government in state/sub-state ED/CD. We will make one additional point in this chapter on that topic.
Secondly, the implosion of hegemonic Big Cities and their subsequent stabilization markedly altered the character of our second metropolitan hierarchy. A polycentric post-suburban metro area characterized by considerable variation across regions dominates and dramatically influences the context and outputs of jurisdictions in each metro area.
Thirdly, regional change, often subsumed under the rubric “rise of the Sunbelt,” not only broke the previous Northern hegemony, but fundamentally altered the first-level competitive hierarchy, the regional and national competition of major cities. Regional variation in economic and community development strategies and the diffusion of political cultures means American ED is quite diverse despite the seeming perceived commonality of strategies and programs. Each region occupies its “own space and history” which profoundly affects the policy systems of its member jurisdictions. Seattle is not Boston or Philadelphia, Los Angeles is not New York City, Miami is not Chicago, San Antonio is not Houston, Phoenix is not Salt Lake City or Birmingham (AL) and each city/jurisdiction offers its own particular policy fabric to policy-making.
Fourthly, the demise of old gazelles/agglomerations, the rise of new ones, has seriously reordered the geography and configuration of our jurisdictional economic bases. The shift from manufacturing to a services-driven economy not only changed jurisdictional economic bases but altered the mix and the substance of jurisdictional economic development. Chronically declining mostly Great Lakes legacy cities share the landscape with places like the Silicon Valley, American “world cities” like NYC, Los Angeles, Chicago, and a Contemporary Era Miami, a little understood or studied polycentric “boomburb” suburbia, collapsing rural and Third/Fourth level small cities/ towns, and the rapidly growing and dynamic economic bases of energy-driven jurisdictions such as Houston and Bismarck (and many others). While most large cities (and all states) may seek to attract the “usual gazelle suspects” the economic bases they seek to diversify seldom share the same mix of sectors and industries, and certainly seek to overcome different historical legacies and state business climates.
These Contemporary Era drivers have exerted great pressure on the strategies, tools, and EDOs prevalent in our present-day ED/CD. Equally critical is the fluctuating balance between Mainstream Economic Development and the various wings of American community development. In many large cities, hybrid policy systems have formed, adding considerably to the complexity of outputs and policy-making. The profession(s) reflect both the fluidity and the fragmentation, siloization and onionization describe throughout this history.
But there is much more to be added to these Contemporary Era foundations. Reserving discussion of environmentalism to our Conclusion (Chapter 20), this chapter returns to our Chapter 1 model to help identify other Great Forces that fundamentally shaped our present-day Contemporary Era and complete our discussion of Part III’s Transition Era. That the Great Forces discussed in this chapter overlap, even compete with previously discussed Contemporary Era foundations is obvious and inevitable. That other factors, events, strategies/programs exist but are not included in this chapter is also sadly a fact of life. This is, after all a 700-page book already. The detailed consideration of other factors/forces/strategies as well as our present-day Contemporary Era, as stated previously awaits another volume already in progress. Oh joy!
This chapter starts with Deindustrialization and the Great Reindustrialization Debate which raged through the seventies and climaxed in the eighties with the discovery of Deindustrialization. Finally, the beast was named, but the culprit, we contend, is the third or global competitive urban hierarchy that accelerated greatly as global finance abandoned the old Bretton Wood system, and the immediate postwar American economic hegemony wore off and global competition intensified. Emerging from the Great Industrialization debate are several critical Contemporary Era ED strategies, including clusters, corporate strategies, knowledge-based economic development, innovation, and more conventional export-facilitation, start-up entrepreneurship, and foreign direct investment. Community development created its own approach to deindustrialization, and Two Cities/Luxury City, spatial fix, and the pervasive anti-NeoLiberal strategies. In 2016, yet another potential strategy emerged, Trump’s anti-free trade “Forgotten Peoples.”
The second theme, a truly revolutionary evolution of American state and local economic development, described the entry and, through a case study of Massachusetts, the innovation unleashed by state governments into sub-federal economic and community development. Massachusetts was by no means the first, but it was among the most important path-breakers, as states not only entered into local ED/CD, but in many instances almost replaced local governments as the principal player in sub-state ED/CD. A primary hallmark of our Contemporary Era is the near-dominance of the state in American economic development. While strategy and tool innovation may have been a benefit, one can also argue the entry of the States meant an incredible competition among states not over the now-traditional business climate competition, but deals and incentives to firms reached levels that amazed even the participants.
The third Great Force was people mobility. The obvious 800lb gorilla was Immigration as America witnessed a flood of immigrants, the like of which had not been seen for a hundred years. The impact on politics and political culture was huge. The domestic population was incredibly mobile as well. Generational cohorts moved in waves changing policy systems, redefining growth, creating new ED/CD strategies and priorities—and new population centers as well. The young were the usual suspects in generational cohort mobility, and in the 1990s creative classes and millennials played their part, but even the elderly moved and settled in retirement communities, to Miami and Phoenix—and African-Americans began a reverse Great Migration back to the “New South.” “Go West Young Man” had seemingly been replaced by “Go Someplace, y’all.”
All this moving around was unsettling (pardon the pun) enough, but a new phenomenon, the Big Sort, meant that people settled in communities they liked, whose lifestyle and values they identified with. As we sorted ourselves out we created new monolithic jurisdictional policy systems that followed ideological and partisan approaches and re-forged political cultures (think Orange County and Los Angeles). State and local policy-making was yanked into a Brave New World and ED/CD reflected the polarization of ideologies, identity politics, and the rise of groups threatened by each. The impact of all this on our two ships, Privatism and Progressivism, was profound indeed—most of that awaits our next volume, but we introduce it here.
Finally, our last chapter theme introduces the deluge of new programs, strategies, and tools that developed in the Transition Era. Most of these will be discussed in the next volume; it will be a core of the next book. Clusters, knowledge-based economics, innovation, and entrepreneurship deserve more intensive treatment than can be provided in the limited space available in this chapter. Likewise, BRAC and brownfields—even what happened to EDZs—ought to be discussed along with University-led ED. Still, a taste of it needs to be outlined. Several of the most interesting and important include departures by the 1990s’ Clinton Administration, the “New Urbanism,” the most pervasive new ED strategy ever—casino and other forms of gambling, and last, but a promising new strategy, Economic Gardening. These are only the tip of the strategy/ program iceberg, but they give a flavor to the incredible richness in programs that characterize the Contemporary Era.
DEINDUSTRIALIZATION
Agglomerations run out of steam, and the industry/sector profit cycle proved very real. How to fix a broken agglomeration, excuse me, cluster (which is more than an agglomeration), will remain one of life’s ED/CD mysteries. Below we give the beast its name: deindustrialization and introduce the reader to the Great Reindustrialization Debate—the breeding ground for much of the strategies, tools, and programs employed by ED/CD in our Contemporary Era. Call it deindustrialization or reindustrialization, it dealt with the intersection of the industry/sector profit life cycle, innovation/disruption, the third global competitive hierarchy—and the people and places left behind, and those that marched ahead. Managing creative destruction became, with few recognizing it, the prime goal of ED/CD—replacing growth or at least coexisting with it.
Like a Sledgehammer: Bluestone and Harrison
“Deindustrialization” is associated with Bluestone and Harrison’s (B&H) The Deindustrialization of America (1982). They defined deindustrialization as plant closedowns, disinvestment, mobile capital and runaway plants. B&H’s deindustrialization lay squarely within our Progressive–Communitarian tradition, playing off a 1980 special issue of Business Week. That issue rang out like an alarm bell in the night, warning:
The U.S. economy must undergo a fundamental change if it is to retain a measure of economic viability let alone leadership in the remaining 20 years of this century. The goal must be nothing less than the reindustrialization of America … to rebuild America’s productive capacity is the only real alternative to the precipitous loss of competitiveness of the last 15 years, of which this year’s wave of plant closings across the continent is only the most vivid manifestation. (June 30, p. 58)
Deindustrialization was happening precisely as Joseph Schumpeter (1942) had predicted—only he called it “creative destruction.” As described by B&H, Schumpeter asserted:
capitalist economies can only evolve to higher levels of prosperity through a “process of Creative Destruction” … a healthy economy requires perpetual reincarnation. The old industrial order, like a forest with its cycle of decay and renewal, must undergo constant transformation to provide the material sustenance for fresh enterprise. If this fails to occur, the economy and the entire society surrounding it will stagnate and eventually crumble … Disinvestment, and lots of it, provides the only engine for reinvestment somewhere else. (Bluestone and Harrison, 1982, p. 9)
Disinvestment—and reinvestment—in falling and rising sectors and industries is how capitalism grows. Capital disinvestment/reinvestment is a conscious decision, a corporate strategy to maximize profits.
The visible manifestation of capital disinvestment is a closed facility and/or a runaway plant. Community jobs are lost, accompanied by tax base reductions and workers on the streets. Creative destruction has geographic consequences which were not acceptable to B&H. In their view, the national productive capacity was crippled by conscious corporate decisions that chose short-term profits and shareholder returns in preference to reinvestment in existing productive facilities, their workers and the community. Instead, corporations relocated investment into unproductive and unnecessary mergers, foreign investment and profit-making financial speculation that “shuttered factories, displaced workers” creating “ghost towns” (Bluestone and Harrison, 1982, p. 6) Disinvestment causes deindustrialization. This is the “runaway shop.” The root of B&H’s disinvestment lay in the “fundamental struggle between capital and community”—the “capital mobility option” (1982, p. 19). Capital mobility severs the bond between workers, community, unions, the firm and corporate management.
B&H advocated a Progressivist, if not socialist, definition of deindustrialization that fell within the CD approach—it was people and community centered, and anticorporate. Worker and community are left “holding the bag,” forced to deal with the pathologies, despair and wrecked families. Disinvestment and runaway plants violated the social contract, breaking promises made to the community by the firm when it first located. Disinvestment and closed plants are corporate strategies to “discipline labor” and generate regional war from which tax subsidies could be exacted for new facilities. In place of Schumpeterian disinvestment B&H advocate a place-based ED that is concerned with the effects corporations have on people and communities.
B&H urged upgrading business retention. The special vulnerability of branch facilities, the realities of global competition and capital mobility necessitated a watchful eye and aggressive role by economic developers. B&H urged developing a constant relationship with corporate decision-makers and an “early warning system” be devised to anticipate problems. They called for worker lay-off pre-notification early warning system, and advocated enhanced workforce training focused on dislocated workers and skills retraining. Advocacy of worker ownership— employee stock ownership plan (ESOP)—as an alternative to plant closing brought visibility to a new concept.
B&H’s Deindustrialization was far from the first salvo in a debate, mostly within economics, that had raged for over a decade previous—and would continue for more than a decade after. B&H captured the Policy World, but not the Privatist and corporate worlds—nor, it seems, did it capture most economists. Most of the latter embraced the third global competitive hierarchy, until it became the “third rail” in post-2016 America. It wasn’t “deindustrialization” that became the paradigm of Mainstream ED, it was the “reindustrialization.” Whatever one chose, deindustrialization and reindustrialization became the equivalent of Dickens’s “Ghost of Christmas Future.”
Great Reindustrialization Debate: Platform for Twenty-First-Century ED Strategy
Deindustrialization was only one of many strategies/definitions floating about in the ED Policy World. During the seventies most solutions advocated a strategy to “reindustrialize” America. B&H were part of that reindustrialization debate—indeed their Part IV discussed the “Great Reindustrialization Debate,” stating that their contribution to it was “Reindustrialization with a Human Face.” For our purposes this history identifies five related but quite different strands of thought engaged in the seventies’ Great Reindustrialization Debate:
+ The oldest, harkening back to the 1930s originated within the American manufacturing itself (Shewhart, Deming, Drucker).
+ The second, deeply buried in the bowels of economic theory, focused on oligopoly and asserted that innovation was a coequal driver of economic growth along with supply, demand and investment (Lucas, Solow, Romer, Krugman).
+ A third evolved classic Keynesian economics into Neo/Post-Keynesian Liberal Economics focused on growing/declining industry sectors, comparative advantage, productivity, strategic planning and global competitiveness: Thurow, Rubin, Rohatyn, Krugman again, Markusen (1986), Michael Porter, and the Business Week special issue of 1980).
+ The fourth strand, originating with Hayek, stressed supply-side (savings and investment) was adopted by the newly elected Reagan administration (Gilder, Laffer, Butler).
+ Finally, our CD advocates (B&H) who “named the disease”: deindustrialization caused by disinvestment and mobile capital, inherent features of a capitalism that built and threw away communities and workers in their quest for profit (B&H, Reich, Harvey, Birch and later Markusen).
The unifying threads that ran implicitly or explicitly through all five were Joseph Schumpeter’s 1942 “creative destruction” and knowledge-based innovation.
From these strands came much of the twenty-first-century contemporary ED strategies which are commonplace at the time of writing. Porter (clusters/corporate strategy), Solow-Lucas—Romer innovation/knowledge-based economics, Gilder’s supply-side, limited government capitalism, B&H (deindustrialization) neo-liberalism, and Birch (small business) are the most well known. In retrospect, the Neo-Keynesian strand—stressing comparative advantage/free trade, sector-driven economic growth— arguably exerted the most impact and become the cornerstone of twenty-first-century global competitive hierarchy.
Schumpeter and Deindustrialization
Deindustrialization repudiated (but did not deny) creative destruction. In its repudiation, B&H deindustrialization reflected core assumptions of American community development. In so doing it formulated an alternative to other strands listed above, which accepted or were congruent with creative destruction. These latter strategists worked within the comparative advantage/free trade global hierarchy, while those who followed the road blazed by B&H are likely to decry Neo-Liberalism that created inequalities/ abuses such as the “two city/luxury city” ED, and drifted to a “protectionist” position advocated by many American unions. Schumpeter’s creative destruction has evolved into a fault line of American ED/CD.
B&H’s deindustrialization alternative is more apparent if we contrast it with Lester Thurow’s Zero-Sum Society. Thurow argued that disinvestment in declining sectors and reinvestment in growing sectors is normal and a required feature of a healthy capitalist economy. That is what he means by zero-sum. For Thurow America had to disinvest in declining “sunset” sectors if it was to compete effectively internationally:
To have labor and capital to move into new areas we must … withdraw labor and capital from old, low-productivity areas. But … disinvestment is what our economy does worst. Instead of adopting public policies to speed up the process of disinvestment, we act to slow it down with protection and subsidies for the inefficient. (Thurow, 1981, p. 77)
Classical economic models stress the need to shift from sunset to sunrise sectors as creative destruction moves into new industries and locations. There is no “runaway shop” in this approach to ED which is compatible with comparative advantage.
B&H simply do not accept disinvestment. Disinvestment for them is the principal cause of deindustrialization.
The essential problem with the U.S. economy can be traced to the way capital—in the forms of financial resources and of real plant and equipment—has been diverted from productive investment in our basic national industries into unproductive speculation, mergers and acquisitions, and foreign investment. Left behind are shuttered factories, displaced workers, and a newly emerging group of ghost towns. (Bluestone and Harrison, 1982, p. 6)
Corporate leadership chose short-term profits and shareholder returns in preference to investment in existing productive facilities, their workers and communities Do sunrise sectors make up for the losses elsewhere and make the whole process worthwhile? No!
Boomtowns like Houston, Texas that have doubled in population since 1960 have had their highways, water, sewer, and school systems stretched to the limit, as capital has rushed in to take advantage of the “good business climate.” The lopsided development that goes along with such frenzied capital investment, almost invariably leaves its mark: abject poverty counterpoised to extravagant wealth, a despoiled environment and crime rates that eclipse even those in the deindustrialized regions from which capital is fleeing … the creative destruction process has become synonymous with our conception of the “throwaway” culture … the pace of capital mobility has become so fast that people and communities are carelessly discarded to make room for new ones. (Bluestone and Harrison, 1982, pp. 11–12)
This is the nature of B&H’s disinvestment. It bears little resemblance to that of Schumpeter. The “root” of B&H’s disinvestment lies in the “fundamental struggle between capital and community” (1982, p. 19). It is what we now call “the mobility of capital.”
It is at this point that we truly see the implications of B&H and their clear break from mainstream liberal-classical economics. There is in B&H a core belief disinvestment severs the bond between workers, the community, unions and firms and its corporate management. To avoid disinvestment B&H’s treatment of sunrise industries injects a strong government involvement, in their words: “public–private partnership.” “Partial public ownership of subsidized private corporations is a minimum requirement” and “planning agreements” with clawbacks if public goals are not achieved. This, to us, exposes best (1) B&H communitarian roots and (2) the clear, unambiguous rejection of comparative advantage.
Deindustrialization: A Retrospective View
A more sober view of B&H has since emerged which takes into account decades of coping with deindustrialization. First, we didn’t actually deindustrialize—if by that we mean suffer a severe loss of manufacturing employment.1 Citing BLS data, 14.9 million worked in manufacturing in 1960, increasing to 17.3 million by 1970 and 18.6 million by 1980. In 1990 manufacturing employment was still at 17.9 million, falling to 17.2 million in 2000. The collapse occurred during the 2007–09 Great Recession, when manufacturing employment dropped to 11.6 million (Kutscher, 1993).
While not challenging the reality of plant closedowns, runaway plants, manufacturing unemployment or even disinvestment, we had not, as a nation, thrown millions of manufacturing workers on the streets when B&H wrote their book (Cowie and Heathcott, 2003, p. 25). What did happen was manufacturing’s share of the total workforce declined significantly after 1980 (an 11 percent decline between 1980 and 1990 alone). Non-manufacturing sectors (i.e. service, office and FIRE sectors) left manufacturing in the dust. Manufacturing declined because the service sector skyrocketed. More precisely, manufacturing stagnated after 1980, and facilities that could not compete globally downsized and some eventually closed down. As suggested, after Bretton Woods expired, comparative advantage hierarchy acquired a definitely nasty edge augmented by a recessionary and inflationary US economy. More precisely, what was occurring during this debate was that we were witnessing the effects of shifting sectors (to the service economy) and new gazelles.
Second, B&H’s concept of “plant closedown and runaway plant” was painted too broadly. For example their opening Chapter 2 sentence portrays the Chance–Vought Division of United Aircraft that moved from Connecticut to Dallas as a “runaway plant” and “capital flight” (Bluestone and Harrison, 1982, pp. 25–6)—despite our earlier description of that movement as not only ordered, but financed by the Department of Defense as a key part of their industrial decentralization policy. There is no denying that a lot of plants moved, downsized and closed in the period previous to 1982. We have in past chapters spent a good deal of time in that description, but a simple “body count” of jobs lost and companies relocated over an extended period of time can be quite large, imparting a false sense of simplicity to what was a very complex, uneven and multifaceted series of phenomena.
What was to be done with mature firms, sectors, industries and the regions in which they concentrated was not at all evident once the problem had a name. Assuming the reader accepts in some form our profit/oligopoly life cycle, deindustrialization and/or mature profit life cycle do not come with known solutions. That is why oligopoly and mergers occur as consolidation and productivity prolongs survival. In the CED World, a sort of permanent innovation has become the magic bullet to resolve its woes. Good luck with that; agglomerations age. As they age, they exhibit a propensity to become mobile, downsize, merge, close down and run away. They need to find new meaning, competitiveness and profitability before they go not-so-gently into the night.
Deindustrialization/profit life cycle has emerged as a fundamental tension in our CED/CD. Cowie and Heathcott rightfully acknowledge the costs of closedowns to communities and, most importantly to workers; many, maybe most, will never recover. As Bluestone asserts in his Foreword, this was a very tumultuous time for our jurisdictional economic bases—and, as he would insist, for the workers and communities left behind. Such trauma tears at the political culture, crushing the identity and resilience not only of affected workers, but community, its residents and decision-makers as well. Worse, it pushes the young away into distant jurisdictions.
The profit life cycle is not restricted to American economic bases. One can see the sad story repeating itself in no less a contemporary place than coastal Dongguan in southern China. Dongguan was China’s textile sector capital, its Lowell (USA) or Birmingham (UK), during the 1990s and pre-Great Recession. Now it is losing ground to cheap labor-intensive inland Chinese cities, Vietnam, and Bangladesh. Dongguan’s manufacturing workforce is hollowing out; runaway factories and closedowns haunt the city (Chang, 2009).
The fabrication of Deborah Stone-like “stories” is real; they haunt the implementation of ED and have created a Third Ghetto where economic assimilation is next to impossible (Wilson, 1996). Disinvestment inserted a wedge between ED and CD that developed into a fault line. Stage 4/5 firms are vulnerable, and their workers depend on them for paychecks and occupational survival. Economic developers cannot escape this. Should they be helped to survive as long as they can, providing what payrolls they can—or let to go to find their way into the night? This history has uncovered no magic elixir or miracle cure. And so we have Trump.
Trump raises the issue of the Forgotten People—the casualties of the third global competitive hierarchy. These poor folk are not supposed to exist if proponents of free trade and productivity/innovation disruption are correct. Every economist of any note that stands along with free trade, comparative advantage, innovation, and productivity asserts that in the end disruption will create more jobs than it destroys. There are tons of research to back this up, but I fear statistical methodologies have created an impregnable urban myth. Frankly, I am skeptical. To repurpose a famous Keynes quote (“in the long-term we are all dead”), a displaced worker is likely to say “in the long-term my son might have a job, but I will be unemployed or working for less for the rest of my life.” One may wonder the extent the children of these Forgotten People will get the eventual “created” job in the new rising sector—is it as likely to be someone’s else child in another region entirely?
Communities full of such folk stagnate and decline. I suggest displacement caused by the third global hierarchy is characterized by a temporal lag between the job destroyed and the eventual job created, and a shift across generations and perhaps geographies/place. Lag and Shift (L&S), also characterized the unspoken of “broken cluster,” as I witnessed for two decades in Buffalo, NY. One can wonder if L&S lies at the root of our chronically declining jurisdictions, be they rural, Great Lakes, industrial Mid-West, or coal country. Skills training has not proven successful in sufficient volume, and middle-age households do not relocate easily, willingly, or well. This issue extends into productivity-affected “routine jobs,” or work based on repeated tasks. Routine jobs fell from 40.5 percent in 1979 to 31.2 percent in 2014.2 The issue of “Forgotten People,” in my opinion, received little attention other than being relegated to the workforce’s “usual suspect” programs during the Transition Era. In 2017, it is developing into a serious concern with the free trade comparative advantage paradigm.
NOT YET READY FOR PRIME TIME ENTREPRENEURIAL STATE
Be prepared! The cards reshuffled, the tectonic plates of ED policy-making shifted. Our history is repositioning state government into its position as the dominant player in contemporary state and local ED/CD. The increased role/importance of state government—and, by the 1970s, it can’t be ignored—is a major-league shift in our professional and policy history. New strategies, goals, programs, relationships, actors/ EDOs and modifications of past observations: a quite different policy system/process appeared on the stage after 1980.
In this chapter, the “story of the state” appears but does not assume final form. Part of the reason for this is that states do not magically “enter stage right on cue”—but instead speak their lines loudly, softly, dribble and stumble through the 1990s. State leadership of the sub-state system is not unequivocal until after the turn of the century. Even then, it is a question of degree—many states allow substantial ED/CD decentralization. In any case, the “state–sub-state system (SSS) that emerged is a tension-filled network of EDOs, competing strategies, programs and tools; an ever-shifting locus of decision-making and a sorting out of responsibilities/goals by level of government.
What is clear is that the states assert and are thrust into leadership roles, starting in the seventies and picking up steam thereafter. They increasingly crowd out the heretofore dominant sub-state. States responses vary because of their history, political cultures, state of jurisdictional economic bases and their region. State governments originally settled by the Yankee Diaspora, most of which were former Big City hegemony states, seem most affected. This history cannot hope to cover the varied timing and content of state governments in these transition years; it is too large a task. Fosler (1988) provides the best sense of state diversity, but Eisinger (1988) captures the shift to new strategies and concepts.
In regard to state ED/CD agendas, Massachusetts was a leader. It was by no means the only state to do so, but it was among the very first to develop a reasonably formed “model”—built around more Progressive and Privatist values. The Massachusetts case study below documents the rise of state government in these years as a pioneer in trying to figure out how to deal with the issues raised by the Great Reindustrialization Debate—and home to Bluestone and Harrison. The extended description provides the reader with a sense of the complexity, experimentation and two steps forward one step back that nearly all states exhibited in these years. The detail is our counter to the smush and the fog of history that sadly is pervasive in our CED/CD World.
New Role of American States in ED
Since the New Deal, but especially after 1950, states modernized, upgraded structural and policy capacity and developed sufficient resources “to play ball.” Most rejiggered New Deal state planning entities into postwar ED-relevant state EDOs. These entities typically focused on attraction and retention; they were aggressive IRB/BAWI participants in the 1950s and 1960s. States were dragged into sixties/seventies’ economic/social disruption: inflation, stagflation, energy disruptions, unemployment, deindustrialization, regional change and shifting sectors—global opportunities and competition were commonplace. States were hard hit, expenditures went up, revenues down, taxes up and taxpayer revolts followed. Disruptions elevated economic development to a top priority in political/policy agendas. The implosion of Big Cities, the Federal Government pullback, and the diffusion of a polycentric metro area transformed them into a natural leader.
Pulled into economic development action, states experimented. State ED during the seventies and eighties ventured haphazardly along their own individualized paths— pulled in directions that politics, political culture and economic/political pressures shoved them. Lacking an instruction manual some states tried to write one (a plan); most, however, jotted down a few notes, issued reports, hired experts and mostly improvised strategies, EDOs, programs and tools as they went along. There was no single paradigm that emerged. There were huge regional and state variations. Former hegemonic Big City states, however, tended toward what we call in the twenty-first century “blue state” ED/CD. Massachusetts is one these. Blue States picked and choose from many of the various strategies developed out of the Great Reindustrialization Debate, and they were affected by the rising community development approach. That some of these strategies competed with each other was a reality that usually was not appreciated—in many cases it still is not. The thrust of the twenty-first-century Blue State, however, was its reliance on an activist state government assuming responsibility to promote entrepreneurialism and rejigger local economic bases to foster innovation and knowledge-based ED, new clusters or agglomerations (the concepts differ widely). The forerunner to this was Eisinger’s late twentieth-century “entrepreneurial state.”
The entrepreneurial state focused on the “entrepreneurial function,” moving away from supply-side incentives (direct assistance to firms and industries) toward demand-side market/product creation—led by, indeed created by, an activist state (and local) government (Eisinger, 1988, pp. 7–12). The entrepreneurial state was fuzzy at its edges, more coherent in the classroom than the streets. It ignored the ED rage of the period—the reindustrialization of America (a Privatist ED strategy)—completely. Many states, notably those that subsequently were labeled “Red States,” relied on old-style (first- and second-wave) goals/strategies, not the politically correct post-industrial, information age, demand-side goals. But entrepreneurial states did capture, in my opinion correctly, the rise of states in ED, and an increased involvement in local ED. The activist state was real. What states did, how they did it and why—is another matter entirely.
States defined growth and ED in different ways and tasked their new programs accordingly. In no way were the states on the same page—although they all seemed to have many of the same programs and used much the same rhetoric. ED was reconfigured to include other policy areas, admitted new actors/players into its policy processes, redefined economic growth and addressed its own perceived problems through the prism of its political cultures. The competitive global urban hierarchy constantly intruded in the form of a post-Bretton Woods currency-defined comparative advantage whereby defeated nations, such as Japan/Germany, upset our internal competitive hierarchies with foreign direct investment (FDI) while American firms “disinvested” in America to make investments in foreign markets. Into this hopeless tangle intruded the turbulence of Big City ghettos, black mayors (or wannabe mayors) important to state governor elections and governance. Potentially, rising ghetto CD introduced a version of CD appropriate to the state—a version that could redefine growth and redirect it towards CD, low-income minorities. Privatist ED, however, could and did resist.
To help understand this state-level ED/CD cattle stampede and how it evolved over the better part of two decades, our history describes Massachusetts as a proxy for how states experimented. In Massachusetts, we see the rise of the not yet ready for prime-time hybrid ED/CD state.
MASSACHUSETTS
“Taxachusetts”! State/local per capita taxes doubled between 1965 and 1971—third in the nation behind New York and California. Between 1968 and 1971 state bureaucrats increased by 33,000 to 268,000. State energy costs were among the highest in the nation (dependent on oil in an oil crisis). Its textile industry shattered, leaving behind crushed local economies, depressed machine tool sectors and empty factory complexes. A huge decline in federal contracts and competing increasingly in price-sensitive consumer markets forced Route 128 firms to “continuously innovate” and reduce costs—both impeded by the state’s hostile business climate. State taxes on the insurance industry inhibited that industry’s performing its then-honored role of serving as venture capital for new technology firms. An inability to attract key skills became a serious policy concern among Route 128 firms. Engineers needed to be recruited for the semiconductor industry; there were none locally (MIT did not offer semiconductorrelevant programs). Massachusetts was shooting its gazelles.
Economic collapse goaded the “historically aloof business and banking community” into action. Its concerns were cataloged in a 1972 pamphlet by the Bank of Boston’s chief economist, James Howell: Look Out, Massachusetts. The pamphlet urged tax reduction and incentives to stimulate business investment in much-needed plant and equipment (Lampe, 1988, pp. 8–9). Francis Sargent (Republican) made Look Out Massachusetts an issue in his campaign, promising to triple investment tax credit from 1 to 3 percent and eliminate inventory tax. He won. Incentives were approved in 1973, plus $500 tax credit for hiring welfare workers. The legislature, beyond Sargent’s control, also approved anti-redlining legislation and consumer and environmental legislation that made Massachusetts a national leader—and a business pariah. Sargent’s successful efforts, however, brought him little popularity. The economy continued its spiral down. Unemployment (1974) was 50 percent higher than the national average, reaching 11.2 percent. The state deficit topped one-half billion.
Time to elect a new governor. In 1974 Michael Dukakis—a “new breed” progressive, anti-business, ethnic Democrat from affluent Brookline and Harvard Law—was elected. Dukakis was a “child of Vietnam.” Not a Tip O’Neil labor union FDR Democrat, he belonged to McGovern’s wing—elected as an outsider to clean up the state. Confronting a deficit that threatened state default, he increased taxes (largest in state history) and put the “meat cleaver” to state programs, especially human services. In 1975 Fantus ranked the Massachusetts business climate as 46th of 48 states) so Dukakis assembled his Development Cabinet, putting Lowell’s planning (and ED) director Frank Keefe in charge—Keefe operated from the Governor’s Office of State Planning.
In August 1976 Dukakis released his “Economic Development Plan for Massachusetts”—with 100 initiatives for controlling costs and providing capital finance for firms: “Its greatest significance was that it made economic planning and development a clear responsibility of state government for the first time” (Lampe, 1988, p. 11). Dukakis’s first administration, however, did not cultivate the business community. His first ED action blocked a Pittsfield developer from developing a mall in a suburb: “Forget about your development. We just won’t permit it” (Osborne, 1988, p. 11).
In the meantime, his first administration attempted probably the most thoughtful, coherent state-level CD approach yet devised. What followed from this initial approach, not at all what anyone expected, was that over the next decade a hybrid CD/ED state-level economic development system evolved, arguably one of the more sophisticated in the nation—and one of the very earliest.
Dukakis’s Capital Formation Strategy
Two strategies developed from the first term’s approach to ED/CD policy: “The first is … new financial institutions to promote economic development and the second is the governor’s strategy of geographic targeting” (Ferguson and Ladd, 1988, p. 36). Central to both strategies was “gap financing,” which became both a rationale and a tenet of “entrepreneurial state” financing initiatives. To start it off was Dukakis’s close ties with the “Wednesday Morning Breakfast Group” WMBG, led by Mel King, Boston’s most prominent neighborhood community organizer (and two election opponent of Mayor White).3 WMBG was a who’s who of Boston’s black and progressive communities and had recently blocked Interstate-95 expansion of the hated “Southwest Corridor.” King urged the formation of a Capital Formation Task Force to inject capital into Boston’s ghettos. Composed of his ED cabinet and 41 academics (our deindustrialization scholar, MIT’s Bennett Harrison, served), WMBG members, labor officials and business/chamber CEOs, the task force met through 1976 and issued a final report in January 1977.
The task force recommended a CDC/program (CDFC) to provide loans/equity finance to firms in low-income areas where conventional financing was unavailable. They proposed creation of three CDCs to provide gap financing in low-income, minority areas—in effect creating a CDC lending system restricted to EDZs. The money came from state-issue general obligation (GO) bonds. A CDC was created to help people navigate the complicated and nebulous process. The task force also recommended IRBs be restricted to distressed area commercial districts. Approved by the legislature, the legislation was not funded— the bottom line was that nothing came from the task force except the concept.
As the task force deliberated, a parallel process—a second task force organized by the New England Governor’s Regional Commission (NERCOM)—met and proposed a Regional Development Bank (RDB) and other policies to remove bottlenecks, “gaps” in the capital and labor markets. The (Massachusetts) insurance industry, seeking relief from a crushing industry-specific tax, supported the NERCOM report (Ferguson and Ladd, 1988, p. 40). WMBG, on the other hand, intensely opposed any pro-insurance initiative. Yet, the insurance industry and Dukakis agreed to the industry’s formation of a Massachusetts Capital Resources Corp. (MCRC, a private EDO operated by the industry) in exchange for removal of the tax. The insurance industry would grant MCRC $100 million to fund unsecured (mezzanine) loans to small businesses unable to secure financing elsewhere under affordable terms—gap financing. As of 2016, MCRC lent over $640 million to 300 companies. Eisinger cites MCRC as the nation’s first state “Developmental Credit Corporation”—and interestingly the approved, but unfunded, CDFC as the nation’s first state “Venture Capital Corporation” (1988, pp. 250–51, Table 10.1).
Geographic Targeting
Dukakis, along with others, strongly believed the normal mechanics of the private capitalist market system “did not always produce socially optimum outcomes” (Ferguson and Ladd, 1988, p. 46). To overcome these gaps in private market operations, government should target areas needing the greatest help (high unemployment, physical blight and declining jurisdictional economic bases). Targeting included steering development from areas where additional development would produce unwanted consequences (sprawl). The Dukakis administration’s geographic targeting was defined and implemented by his Office of State Planning (OSP). In 1975–78 it launched a “Growth Policy Process” and produced a 1977 report, “City and Town Centers: a Program for Growth.” Thirteen bills subsequently were approved by the legislature to carry forward its recommendations.
The core legislation, the 1975 Growth Policy Development Act, provided for, but did not require, Local Growth Policy Committees in each city and town. The committees would hold open meetings and develop a “statement” to be submitted to the OSP. Review by regional planning bodies was included: “The consensus in the local reports was that the state’s policy should be to support and encourage growth in the state’s older cities and towns, rather than suburbs and outlying areas” (Ferguson and Ladd, 1988, p. 47). Two examples of the geographic targeting that resulted are the Lowell Heritage Park and the Siting of Public Facilities.
Lowell Heritage Park
Keefe, Lowell’s former planning director, prepared the concept paper for what proved to be a Dukakis signature initiative: the Lowell Heritage Park. His concept paper called for a state heritage park, “a historic theme park to preserve the historic canals and other structures that tell the story of the development of the textile industry in downtown Lowell” (Ferguson and Ladd, 1988, p. 48). Dukakis loved the idea; his campaign manager/economic development department head (Alden Raine) solidified the concept into a $10 million (state/federal) program that led to designation as a state park and, in 1978, a national park included in the National Park Service portfolio. The Heritage Park proved an anchor for revitalized tourism and cultural museum. In the twenty-first century it has promoted architectural and historic preservation in neighborhoods adjacent to the park (Stanton, 2006).
Siting public facilities
Executive Order 134 (1975) required that moves/expansion of state facilities be within the central city. This reversed the previous public facility criteria which stressed such facilities be located “where the people are” and where they are moving—suburbs. While the state had no formal decision-making power over location of local public facilities (new schools), the Dukakis team jaw-boned locals: “We did everything we could to retard the use of that money for … sprawl. Thus a Lowell high school, adjacent to the Heritage Park, was renovated in lieu of a new school—and a bridge was built to link it to the park. North Shore Community College was located in the center of depressed Lynn instead of Route 128, and Roxbury Community College built on WMBG’s cleared Southwestern Corridor land. Depressed Fitchburg’s downtown got three parking garages, rehabbed commercial space, an expansion of GE’s industrial facility (now closed), housing developments, a transit terminal and a park with joggers’ paths.
Dukakis Limps into the Election
At the last meeting of the Capital Formation Task Force in January 1977, Dukakis was invited to receive the final report. He arrived late, preoccupied; he left after a few minutes. The CEOs of two large technology firms, members of the task force, were infuriated—to them it confirmed the Dukakis administration’s unwillingness and inability to take the private sector and ED (as opposed to community development). Believing something had to be done with the Massachusetts business climate and unimpressed by the tangle of CDCs and bureaucracy created to implement CDFC recommendations, they organized other high-tech firms to press for tax reduction and business climate reforms. In that year the Massachusetts per capita tax burden was 11 percent higher than the national rate.
In October 1977 they announced the formation of the Massachusetts High Technology Council (MHTC). The council’s membership by 1979 grew to 85 firms employing 140,000. MHTC drew up a nonbinding “social contract” promising 60,000 new high-technology jobs and an additional 90,000 manufacturing and support jobs if the state would take “substantive” steps to cut taxes and establish a “healthy” business climate (Lampe, 1988, p. 14). In 1980 MHTC intensively participated in the massive and successful anti-tax statute Proposition 21⁄2—regarded as being critical to its passage. MHTC went on to become one of the nation’s premier technology councils, responsible for a good deal of that state’s reputation as a leader in various technologies.
In the gubernatorial election that followed, Dukakis faced an internal rebellion within his Democratic Party, divided over budget cuts and “anti-business” administration. Edward King—who of all things was a professional economic developer—won the primary and subsequently the general election. During the campaign Dukakis’s CD was pitted against King’s ED.
King in his career as comptroller of Massport (the state’s powerful Port Authority, 1959), then as its CEO (1963), modernized/expanded Logan Airport (using urban renewal). Like all good ED CEOs, he got fired (1974). His next position was chairman of the New England Council, a multi-state chamber funded by private membership whose initiatives included resisting the legislature’s anti-business environmental restrictions and lobbying the feds for a solar energy research center. In October 1977 King announced his gubernatorial candidacy as a pro-life and death penalty, pro-offshore drilling/nuclear power/solar energy, less business regulation and sympathetic to Prop 21⁄2. His bottom-line ED position was reflected in an interview: “If you are anti-business, you are anti-people” (Ferguson and Ladd, 1988, p. 50). King signed MTHC’s compact scaling down the war between the business and government that dominated the past decade.
The Economic Developer as Governor
In 1980 a Prop 21⁄2 anti-property tax referendum was approved overwhelmingly. King presided over an administration that froze taxes and cut benefits, programs and services. By 1987 the Massachusetts tax burden was 10 percent below the national rate. Dukakis fought against Prop 21⁄2. In its wake Prop 21⁄2 left a divided Democratic Party—this last fostered a Dukakis comeback. But first, the King administration. King hired economic developers who thought as he did. Byron Matthews (mayor of Newburyport) became his Secretary of Communities and Development, and his Secretary of Economic Affairs, George Kariotis, was CEO of a microwave manufacture. Matthews bought into Dukakis’s Growth Policy Process. Under King, Massachusetts IRB issuance was limited to distressed areas, and levered with UDAG grants (the sole exception to this was Fenway Park luxury boxes). Matthews helped preserve HUD’s Small Cities Block Grant and his assistant, John Judge, transformed the state’s small business program into a program that became a national model (Ferguson and Ladd, 1988, p. 52). Dukakis’s Heritage Park program was continued. Yet, King’s very first action was to eliminate Frank Keefe’s Office of State Planning (King reportedly said “Planners are those who plan to see that nothing is done”). King, like all good economic developers, possessed a knack for alienating those around him. King worked well with private state-level MHTC and MCRC and created two mainstream ED state-level EDOs, the Mass Technology Park Corporation and the Bay State Skills Corporation.
Mass Technology Park Corporation
MTPC was created to address gap between “innovation” and “commercialization.” King was prodded into action by North Carolina’s Governor Hunt’s Research Park initiative jumping into chip-making. Kariotis fashioned a bill (1982) with equal funding from private and public sectors; competition from other states provided legislative votes. MTPC, whose board included academics, technology CEOs and public officials, pursued three programs. The first set up CAD capacity/programs and courses in the state’s public and private university system. Second, six “clean rooms” were funded for job-specific/management training and experience for students. Finally, a shared clean room, centrally located, was set up to manufacture cutting-edge integrated circuits. Private funding exceeded the bill’s match requirements, and university acceptance of the initiative was robust.
Bay State Skills Corporation
King’s signature ED initiative, the little-known Bay State Skills Corporation (BSSC), flowed naturally from MHTC’s need to find engineers for the state’s exploding tech industries. Kariotis turned to Northeastern University, which proposed a public/private partnership whereby it would found and operate a training center if firms paid 50 percent of the cost (the state the other 50 percent). The entity, a quasi-public EDO with public/private governance, was defeated by the legislature in 1980. King shifted money from his emergency fund to start the program immediately. In 1981 he reintroduced the bill, called technology industries “growth industries” and packaged it as an “educational” support program—it passed.
BSSC moved on to new target industries, including in its initiatives welfare recipients and displaced homemakers. In 1985 BSSC received a JTPA demonstration grant to develop BSSC into a national model. Dukakis would later link BSSC to his Center for Excellence initiative. BSSC became a national model, acting “as a venture capitalist in the training area, providing matching grants as a way to get corporations and universities to set up new training programs” (Osborne, 1988, p. 206). Interestingly, Pennsylvania’s Ben Franklin Partnership and California’s MICRO program approved in 1982, a year after BSSC, followed a similar venture capital matching grant design. Skills training for key targeted industries was an early state-led ED strategy—a key incentive in gubernatorial business attraction.
Politicization
These two Democratic administrations—night and day: Dukakis’s CD versus King’s more classical ED. King, the more successful, had not repudiated Dukakis’s CD, but instead integrated it into his own, resulting in a hybrid state ED–CD economic development policy system. A shared feature of both, however, was heavy-duty politicization of state-level economic development. Other states where genuine two-party politics existed resulted in partisanship as well as politicization. State-level ED was, arguably, inherently highly politicized. ED/CD as a policy area was central to both governors and prioritized. Dukakis’s chief economic developer was his campaign manager (Raine). He probably lost his renomination as much for his CD/lack of ED strategy as anything. King was an economic developer, Matthews was a former mayor and King’s ED department head, Kariotis, later ran for governor (and lost). Later both King and Kariotis changed party affiliation. Planning departments were CD’s natural ally at the state level, and an impediment to more Privatist ED. No one would ever argue that municipal-level ED/CD was non-political; but state level ED/CD had politics, partisan/ideological politics at its core from Day One—even in a predominately one-party state.
Dukakis’s Second (and Third) Administration(s): 1983–1991
King exhausted his welcome within the Democratic Party. Dukakis returned to favor and was reelected to a second term (1982). The economic backdrop, however, had changed radically. These were the years of the so-called “Massachusetts Miracle.” Route 128 finally produced jobs and prosperity—Dukakis claimed credit for it. (Hindsight consensus asserts neither Dukakis nor King played a significant role in the miracle.) Dukakis consistently opposed further Prop 21⁄2 tax cutting. But a vigorous public campaign, with MHTC still very much in the fray, continued urging restrained taxes, welfare and government payroll growth. This was not going to be a warmed-over CD anti-business administration.
If Dukakis wanted things done, he had to change his style, negotiate and compromise. In regard to CD/ED, however, the same team was back in place (Raine and Keefe), and Dukakis returned to a CD emphasizing targeting distressed geographies. Dukakis incorporated the previous administration’s ED initiatives into his own. BSSC was sent a Dukakis Employment and Training Choices Program, offering training and jobs to mothers on public assistance. MTPC was pressured to build its integrated circuits center in a targeted area: Taunton’s Myles Standish (Heritage) Industrial Park—he was unsuccessful. His MassBank initiative (a financing authority to fund infrastructure) also failed, but he crafted a compromise between labor and business on early notification of plant closings (firm notification was voluntary, but if no notification was made the state responded to assist displaced workers—ironically making it more charitable not to announce future closings). In 1984 the Office for International Trade and Investment was established.
Geographic targeting continued as an important aspect of Dukakis’s CD strategy. Growth should be promoted by the state in areas devastated by deindustrialization. Five areas were demarcated as “Targets of Opportunity.” Southeastern Mass (Taunton) was really hard hit, and Dukakis made it his chief target. Back in 1976 the state turned over to the city a closed-down mental institution for conversion into an industrial park. UDAG funds were used for infrastructure, and King in 1982 funded an interstate off-ramp. Taunton’s Myles Standish Industrial Park captured media attention, resulting in GTE moving in. During Dukakis’s two administrations, however, growth in the overall Targets of Opportunity Program was slow. Something had to be added to targeting. In 1985 he pressed for Centers of Excellence whose purpose was for the state to create a “knowledge-based economy” to compete globally. The idea (a Commission on the Knowledge-Based Economy)—initially proposed by Dukakis’s Secretary of Urban Affairs, Evelyn Murphy in 1983—went nowhere.
Centers of Excellence
Murphy pivoted from the Knowledge-Based Economy Commission and called for Centers of Excellence. Visiting each of his Target of Opportunity centers (six by 1985), Dukakis argued the state’s future economic success rested on developing and commercializing new technologies. A huge one-day conference expanded on the theme and enlisted a constituency to support it. The approach constituted a fundamental departure in the role of state government in that the state chose those technologies it deemed as critical for future growth—targeting went beyond geography into “sector-picking” for the state’s jurisdictional economic base. “Strategically important sectors” essential to future interstate and global competition were asserted based on academic studies. Targeting individual sectors within industries, however, was one departure—the assertion that growth in these industries was “knowledge-based” yet another. Legislation was approved in 1985. The Policy World had developed the support necessary for the state’s targeting and sector-picking.
Centers provided partial funding for partnerships between business and universities to develop commercial products in polymers, biotechnology, marine sciences, solar energy and “advanced manufacturing.” The first round of grants commenced in 1986. Eligible activities ranged from incubators, applied research grants (SBIR-like), shared equipment, academic-business liaison programs, export marketing, technical education centers and academic uses such as distinguished professorships and conferences. The centers initiative relied on universities and formalized their role in a community (or economic?) development growth program. Incubators were intended to be “meeting grounds” between researchers, risk-taking entrepreneurs and students interested in a specific technology to be developed into a cluster that would spur that region’s future growth (Ferguson and Ladd, 1988, p. 78). Centers had two separate goals:
The first is to create the conditions that will introduce sustained growth of industrial clusters in the four targeted technologies and regions. Each of the regions is already home to small concentrations of firms and research institutions in their respective technology. … The other major goal … is to build the state universities in these regions into integral components of their regional economies. (Ferguson and Ladd, 1988, pp. 78–9; emphasis added)
It is not our intent to assert that Massachusetts was “first on the block” to innovate knowledge-based economics, clusters and sector targeting (it may be close). Our point is that by the mid-1980s the strategy was formulated, defined, approved and being implemented in Massachusetts. The main outlines of a “Blue State” hybrid CD/ED state economic development policy system were in place by 1985.
Commission on the Future of Mature Industries
Textiles had gone down for the count, but much of Massachusetts’ older manufacturing still functioned. Hand tools, industrial machinery, paper, shoes, plastics and clothing, mostly concentrated in western and southeastern cities and towns, still employed over a half-million workers. These mature industries were Dukakis’s Targets of Opportunity. The inspiration and drive for this program did not originate from business, but from labor and its allies in academia and citizen groups like Massachusetts Fair Share (Ferguson and Ladd, 1988, p. 65). The proposal had been pushed by labor during the King administration. The initiative served his larger political constituency and complemented his negotiations on plant closing legislation. The initiative was a key element in his campaign platform—put there by the Mass Labor Caucus. In his second administration (1983) Dukakis formed his Commission on the Future of Mature Industries. There were many birds killed with this stone. The Commission served as recipient and administrator of plant closing notifications. No politician wants to receive, be forced to announce and then be responsible for job losses. The 38 folks appointed to serve on the commission were charged with handling whatever “opportunity” there was in plant closings.
One initiative that emerged from the Commission was the Product Development Corporation, a public/private EDO that financed firms diversifying their product lines. Copied from Connecticut’s similarly-named EDO, pushed by the Labor Caucus and a key legislator, the entity was lodged under Evelyn Murphy’s department and located in the umbrella Industrial Services Program. That program included a mélange of business assistance, workforce and business retention monitoring programs. Workforce programs were directly linked to business assistance (i.e. traditional ED) programs under a common leadership. The intense pressure associated with plant closings had inspired greater coordination of preventive business assistance, inclusion of skilled labor and workers in decision-making and JTPA displaced worker funds (Ferguson and Ladd, 1988, pp. 67–9).
Assessment: Rise of the States
Our Massachusetts case study of two gubernatorial administrations collectively spanning 1975 through 1991 was important for our purposes. The issue for us was not only the “what” but also the “when,” and to some degree the “how and why.” Fosler (1988) asserts the role American states developed during this period is “not a departure” from the past. He sees continuity in state reactions to early industrialization when states created an economic climate supportive of innovation, and protected it from the onslaughts of foreign imperialism (Great Britain) and raids from other states. Attraction and business climate were chief strategies in those years. That may have been true then, but I am not so sure that Massachusetts once it industrialized has ever been attracted to business recruitment—and until the 1970s never obsessed itself with its business climate. Our history provides ammunition that states were more reactive—driven by forces.
Fosler and I agree, however, on an essential and important point: variation. Variation, of course, will not be evident from our case study of one state. Massachusetts followed an ad hoc path motivated by the “instincts” of state leaders—in our words the consequence of a policy-making struggle among conflicting actors over two decades. Fosler in his more exhaustive summary of seven states observes that there was no single path and no single end point common to the seven states at the end of this period. They were all bushwhacking through their own policy jungles. The similarity, which I agree, is that they redefined state climate to foster economic growth and, in so doing, forged new economic/community development state strategies such as seed and venture capital, gap financing, education and training, and removing regulatory barriers. In the case of Massachusetts (and California), we ought to throw in tax cuts forced on them by their business communities and taxpayers.
Fosler differentiates an old-style “business climate” which dwells on the costs imposed by state (and local) government on business enterprise and entrepreneurism and “economic climate,” much more broadly defined to include quality of life, capital formation, sector innovation, environmental protection and Eisinger’s demand-side workforce and labor. The latter cuts across a number of policy areas not always included in ED’s traditional Venn diagram. Inevitably, this enlarged the economic development policy process to include universities for example. One similarity that does emerge is that states in the post-1970 economic policy system enlarge the scope of policy areas relevant to economic development. They do so because they also share a belief, as Fosler asserts, that states can shape the economic future. He comments that California believed it could create or invent the future. Indeed! There is nothing reactive about that.
Our history has attempted to incorporate our two approaches: Privatist “mainstream” or “traditional” (Fosler labels them “core economic development programs); and Progressive evident in the dominant approaches to community development. The Massachusetts case study provides ample evidence that states tried both—and more often than not created hybrid policy systems. In any case, as years went by and administrations rolled over the dam, community and mainstream development strategies, programs and EDOs accumulated, coexisted and were often turned to suit the prevailing approach of the administration in power. After the turn of the century, states sort of “sorted themselves out” into Red and Blue States and our Contemporary Era commenced and developed its peculiar dynamics—an important theme in our next work.
BIG SORT: CHANGE IN POLICY SYSTEMS AND POLITICAL CULTURE
Our history lectures sternly that economic developers should take population mobility seriously. No one is arguing one should ignore the other two drivers, or that other forces not formally included in our model can affect ED, but population migration has been fundamental and a constant in our history. There have been periods when it seems economic developers have done little else than cope with the effects of population movement. Growth is consistently defined in terms of population increase and vice versa. One could make a strong case that non-economic developers’ chief measure of ED success or failure is population change. In ED the Census Bureau is far more important than the Bureau of Labor Statistics.
When most think of population mobility they think of the West—deservedly so. One has to be from another planet not to recognize the impact of settling a mostly unsettled land. But western population growth had to come from somewhere. Past population mobility established the northern hegemony as a monopolistic nineteenth-century immigration, and froze the South into a region impervious to time and change. The Southern Diaspora/Great Migration was a driving factor in northern suburbanization and decline of the monocentric metropolitan landscape. The Great Migration changed the nature and political culture of Big Cities—and fueled the rise of new CD wings. Population mobility played a large role in the seventies’ implosion of Big Cities. And the depopulation of the South too had its effects on southern economic development—as did post WWII repopulation as well.
As we lay the foundations for our twenty-first-century CED, it stands to reason that population mobility can exert its impact on economic development as did deindustrialization and reindustrialization. We will argue here that not only immigration but also a culture-infused generational cohort change has fundamentally reshaped our sub-state jurisdictional (and metropolitan) political cultures and policy systems in ways that contributed to the politicization of economic development, but has also paralyzed many jurisdictional policy systems from coming to grips with the reality of economic decline—encouraging them instead to follow ideological dreams. After 1970 generational cohort change substantially challenged the old definitions of “good” growth and offered an alternative definition of “good” ED. That redefinition prompted a true revolution, certainly a schism and fault line with American economic development.
“Good ED growth” is more complicated than the old “bad growth,” and that complication has fundamentally redefined economic development. There is one small problem with this redefined growth—not everybody, certainly not every state, has jumped on board. To redefine or not to redefine growth has been a major wedge within twenty-first-century economic development. Blue States have their Silicon Valley and Red States have Houston. It not only creates a Red and Blue State dichotomy, but it also reaches into the metro politics of most of our metropolitan areas. What became evident by the end of the (twentieth) century was that geographical ED variation resulted not only from the flow (volume) of people moving, but also from where they moved and the consequences that followed. We “sorted” ourselves out, clustering in communities perceived as similar to ourselves, and reinforcing policy systems and cementing into place ED/CD policy, goals, processes and strategies.
In this chapter, we discuss three types of population mobility, leaving aside “frictional” mobility within metropolitan areas: immigration, southern regional change and generation cohort change. We shall briefly discuss each. Before we do, however, we will introduce the “Big Sort,” which characterized much of the post-1970 population movements and which facilitated the increasing polarization and politicization of American economic development.
The Big Sort
ED/CD is a policy area whose policies/strategies/programs are produced by a policy system. The Big Sort is less about what created the types of policy systems in vogue during any particular period than how they came to be distributed across regions, states and metro areas. Big Sort population mobility is only one factor, an important one after 1970, but still only one factor. Because of the Big Sort our two cultural ships could dock in jurisdictions (and neighborhoods) within each metro area. Post-suburban jurisdictional demographic homogeneity, however, could easily result in metropolitan heterogeneity. This testimony to local democracy is also a prescription for polarization. Yet one more force has injected politicization and polarization into ED/CD policymaking. What is this Big Sort? Why is all this stuff happening?
Bishop’s (2008) The Big Sort provides a helpful backdrop to the reader—and a neat icon-like expression that guides our analysis of the interplay between political culture, population mobility, and policy system/policy output change. A few observations and caveats concerning the Big Sort are advisable. The book is focused on politics/voting behavior which can be helpful to us, but for the most part is not a primary objective of the history. More limiting is its close association with Richard Florida’s (2002) The Rise of the Creative Class and knowledge-based economics. A great deal of Bishop relies on the application and legitimation of Florida’s Creative Class. This history finds that linkage limits our analysis greatly—and for the most part we do not rely on the association of creative class migration with the Big Sort. To the extent that it has utility for the history, it comes from its overlap with our generational cohort concept.
Secondly, as might be evident from our past chapters, population migration inherently involves some level of “sorting”—it is not limited to post-1965 Big Sort. Also, as “Go West Young Man” implies, population migration has been historically associated with young, new households, and frequently men—with women and families more in a second wave. This has been captured by our generation cohort concept. The rising Sunbelt has caught a great deal of this generational mobility—to the extent that post-1970 generational cohorts have been integrated by many commentators into the redefinition of “western” economic growth, and the refocus of ED attention to the neighborhood. One reason we inject Del Webb’s Sun City is to alert the reader that one characteristic of post-1965 population mobility is that older generations can be an important element in our “Big Sort” and that intra-county migration by all age cohorts can play a meaningful role in our ED history.
Bishop asserted in the Big Sort that he discovered created “inequality” (which he never defined, or even indexed). He posited that “the Big Sort was creating greater inequality among cities—in patents, incomes, and levels of education 4—we wondered whether there was a relationship between culture and economic success”. Using Putnam’s “Making Democracy Work” civic culture, he concluded there was a negative relationship between the health of the local civic culture and the well-being of the economy. The tighter the social ties, the fewer the patents, the lower the wages, and the slower the rates of growth.
Using another Putnam database, the DDB Needham Life Style Survey, he found that the civic culture of high-tech cities was the reverse of low-tech cities. He believed this represented a post-materialist culture (Bishop, 2008, pp. 141–4). The difference between the two was the prevalence of Generation Xers (possessing the past-materialist culture). “Educated young people in the ‘creative class’ would flock to places where they would not be bound by old ideas or tight social ties” (Bishop, 2008, p. 144). While we may agree, I have no idea whether old ideas/tight social ties or the existence of jobs by rising sector gazelles—or any other confluence of multiple factors—prompted the migration, or that the ultimate destination was “chicken or egg.” Did creatives flock to a city whose culture appealed to them, or did that destination change as the flock of creatives landed? That the cultural values and proclivities of a young generation traveled with them as they escaped their parents and/or pursued economic opportunity, is, for me, an open question fifteen years later.
Bishop joined Gen Xer’s “culture” and migration to Romer and Solow’s knowledgebased innovation. Arguing that Solow’s third driver of economic productivity (the first two being the traditional land and capital), technical knowledge with Romer’s finding that cities grew according to their ability to arrange the three factors to “innovate” successfully. Having physical capital (a harbor) and capital was not sufficient; a city had to creatively create more value through ideas and processes (innovation) that produced growth. Cities made ideas and incremental innovation possible. The culture of a city either facilitated this innovation or it didn’t. Joel Mokyr’s A Culture of Growth presents a more sophisticated version of culture’s interplay with innovation, but with humility is willing to admit that: “We actually know remarkably little about the kind of institutions that foster and stimulate technological progress … and intellectual innovation” (Mokyr, 2016, p. 6).
The process for innovation was, Bishop asserted, at heart a social process, best advanced through face-to-face contact and sharing. The lack of social ties and weakness of old ideas facilitated this innovation process. What distinguished growing cities from declining cities was “their lifestyle” that derived from their culture—Gen Xers moved to cities for their lifestyle. These cities were Edward Glaeser’s “consumer cities” (Glaeser and Gottlieb, 2006) and Florida’s “creative cities” (Florida, 2005). And Clark’s “entertainment cities” (Clark, 2004).
The way Americans sorted themselves created a new kind of cultural separation. People living in different cities literally had different ways of relating to family, to government, to strangers, and to religion. This gave people choice. There were places they could enjoy the comfort of strong families, bustling civic groups, near universal political participation, and abundant volunteering. And there were cities that offered anonymity, the opportunity for self-invention, and the economic benefits [innovation] of loose ties (Bishop, 2008, p. 153).
Over three decades people separated themselves by education, income, race, and way of life. The best educated abandoned old manufacturing cities … and rural communities … and moved to high-tech cities. Finally, people segregated by the way they wanted to live … willing to pay a premium for the lifestyle found there … Prospects for prosperity deviated wildly, as innovation sprang from some cities, but not others. And all this migration created political imbalances that grew more pronounced by the year. (Bishop, p. 155)
While this history may not fully embrace Bishop’s linkage of Big Sort culture and innovation/knowledge-based economics, we are more on board when he argues that since 1965 or so, we have incrementally evolved into a “post-materialism culture.” Borrowing from Inglehart’s provocative research in The Silent Revolution (1977; and Inglehardt and Welzel, 2005), we left post-WWII moderation—characterized by a bipartisan consensus, public civility and non-ideological, expert-driven decisionmaking—for the current cultural mind frame. Inglehardt borrowed heavily from Maslow’s hierarchy of needs, and held that the booming post-WWII economic growth created a worldview (augmented by each successive generation) that increasingly replaced the previous, longstanding worldview.
With few aware of it, and with nobody’s permission, a new kind of politics gradually formed after 1965. The new society was more about personal taste than attachment to any specific public policy. It was more concerned with self-expression, aspirations and personal belief than with social-economic class issues (Bishop, 2008, pp. 103–4). People who knew their basic needs were satisfied could adopt different values from those who lived with scarcity. Slow growth, environmentalism, and eventually climate change could intrude into older definitions of economic growth that stressed “conquering or subduing nature” as essential to progress. Affluence permitted a new generation to climb up the Maslowian hierarchy of needs.
Some individuals or groups, of course, did not adopt the new culture and instead sought to retain the post-WWII traditional culture either as a defense against worsening economic tides or as some measure of stability, continuity and meaning in a rapidly changing world. For Bishop, religious orientation was especially important in this bipolar cultural evolution.5 Woodard asserted that the cultural values and traditions of the Eleven Nations played a role as well (Woodard, 2011). This geographic cultural Big Sort is the inherent driver of our politicization and polarization. How did this occur in our jurisdictions?
Bishop explained that migrants choose one jurisdiction over another, creating a “political segregation of American communities.” Borrowing from James Gimpel’s studies and Patchwork Nation (Gimpel and Schuknecht, 2004), Bishop found that “most of America and most Americans were engaged in a 30-year movement toward more homogeneous ways of living” (2008, p. 11); both political segregation and polarization resulted. Facilitated by the car and discretionary income that freed households from “want and worry” allowed them the opportunity “to reorder their lives around their values, their tastes and their beliefs. They were clustering in communities of like-mindedness” (Bishop 2008, p. 12). Mobile people selected neighborhoods and cities whose lifestyle and values reflected their own. Obviously, the household locational decision involves many factors. Certainly, price is one of them: “likemindedness” is another. Big Sort population mobility produced concentrated power bases for the two political parties—and distinctive policy systems.
Lacking the understanding and ties [issues, patterns and traditions that characterize a jurisdiction] … new residents will import and then act upon their own partisan affiliation and viewpoints. If a volume of migration is high enough, a place’s political distinctiveness can be washed away rather quickly as the native population is overwhelmed … by newcomers. (Gimpel and Schuknecht, 2004, p. 382)
Not all of Woodard’s eleven American cultures completely adopted the more secular, more Progressivist worldview. Some adopted only parts, or injected different meanings and definitions. Some nations change more deliberately than others. The various old political cultures that floated our two ships thus far through this history in one way or another became a part of this Big Sort polarization. The post-1970 Big Sort population mobility “docked” migrants into demographically unsinkable communities and jurisdictions
Immigration
The 800-lb population mobility gorilla is, of course, the massive post-1990 immigration inflow. The nation’s foreign-born population (9.7 million in 1970) quadrupled to exceed 40 million by 2010. In absolute numbers foreign-born in 2010 were the highest ever in our nation’s history. In 1910 14.7 percent of the nation was foreign-born; in 2010 it was 12.9 percent. California, New York, Florida and New Jersey led by absolute number and immigrant share of the total population. Texas was 3rd in number, 7th in population share. More than 27 percent of California’s 2010 population was foreignborn. Unlike nineteenth-/early twentieth-century immigration, every state attracted immigrant populations. Sizeable numbers of immigrants poured into the suburbs as well as central cities (Singer et al., 2008; Baxandall and Ewen, 2010). Hispanics captured the media headlines, but Asians also participated in large numbers.
During the 1970s net immigration—legal and illegal—was estimated at more than 7 million (Massey, 1981). The Immigration and Naturalization Service (INS) apprehended more than 1.2 million illegal immigrants and estimated 4 million eluded capture. Immigration during its early years in the 1970s and 1980s hit Miami, Los Angeles, New York City, and Honolulu (14 percent) the hardest. Miami’s foreign-born population was 54 percent in 1980, Los Angeles 27 percent and New York City 24 percent, Chicago and Boston about 15 percent, as was San Diego, Houston and San Antonio about 8 percent, Tampa 7 percent and Dallas, Phoenix, Albuquerque between 5 and 7 percent. Atlanta was only 2 percent (Mohl, 1993, pp. 149–50). It is important to understand not only who and how, but when, immigration struck the nation’s cities and metro areas. Immigration after 1990 was more intense, for example, than before; hindsight and broad stroke analysis can, unintentionally, result in distortion.
Immigration on this scale is a shock to jurisdictional policy systems in any number of policy areas. Until the Great Recession times were “good” and the economy’s capacity to “absorb” immigrants, mostly into low-wage employment, seemed remarkable. It is a testimony to the immigrants themselves that they were able to make it and raise families during these years. Economic developers focused more on highly talented, well-educated immigrants prized for their creativity, advanced degrees and hard work, as well as risk-taking entrepreneurs. This fit in well with high-tech/biohealth/information cluster-targeting common to the 1990s and after.
Immigration changed neighborhoods, created homogeneous ethnic suburbs and augmented high-end and low-wage labor forces. Regarding political cultures, Hispanic el Norte has already changed the cultural face of America. Hispanics are the largest “minority”; they elect representatives to all levels of government and have diffused and settled in concentrated areas. They are one of Woodard’s Eleven Nations. The already evidenced shock on California politics/ED by Mexican Hispanics and Asians may or may not auger what lies ahead for Texas.
New South: The Vanishing Sunbelt
During these years one heard more and more about “the New South.” The initial announcement was delivered in a 1976 Saturday Review, which hinted the South was “the New America.”6 In 2005 an AP-Ipsos Survey reported that more than one-third of those living in the South did not identify themselves as “southerners.” This might be because the South grew by 20 percent between 1980 and 1990, and another 17 percent the following decade. By 2000 the South held 35.6 percent of the nation’s population; by 2015 it was 37.7—more Americans lived in the South than in any other region. Not surprisingly, a literature has developed concerning southern identity (i.e. political culture).7
A part of the reason for the rise of the New South was a “reverse Great Migration” which supposedly started: “Between 1965 and 1970, the South lost about 280,000 African-American residents. Just a decade later, between 1975 and 1980, it [the South] gained more than 100,000, a trend that has only picked up steam since.”8 Between 2005 and 2010 a net average of 66,000 African-Americans resettled in the South each year (Cobb, 2005). College grads and retirees constitute a major portion of the reverse migration. New South migration was very uneven: Atlanta, Texas, Virginia, North Carolina, plus Florida captured the lion’s share—leaving the Old South largely untouched. The New South—the Research Triangle, auto alley, the Florida–North Carolina retirement magnet, Orlando’s Magic Kingdom, Atlanta its capital, Charlotte the financial center, and Texas its cutting edge—had finally penetrated northern and midwestern consciousness. Economic vibrancy was one thing, internal identity another—and whether the latter would allow a sustained resurgence was the question.
The Sunbelt ballyhoo of the late 1970s suggested that the realization of Henry Grady’s dreams might at last be close at hand. Like Grady’s New South, however, the Sunbelt South retained its ties to a past characterized not only by bright hopes but by recurrent disappointments. Thus, it remained to be seen whether the region could actually reach the nation’s economic mainstream in the 1980s and in so doing, make prosperity a permanent feature of a new “southern” way of life. (Cobb, 1993a, p. 208)
Cobb argues that the New South’s rise was based on a particular ED strategy: state business climate. State/municipal strengths had long been associated with recruitment, marketing, promotion and attraction programs. But the business climate strategy rests ultimately on one added ingredient: a perceived reality independent of marketing and advertising. Businesses didn’t need to be told or marketed; they could figure out for themselves the business climate and make their own judgments. In the New South, businesses no longer needed to be recruited. As the years rolled on, the South won more and more of these normal business decisions.
Cobb makes the case, and we agree, that Florida was the South in microcosm—and its leading edge. Florida captured many of the New South’s characteristics and led the region in capturing jobs and people. Florida had natural advantages of beaches and weather (?); it survived the civil rights era with a reputation of being “only moderately racist,” with “respectable conservative politics,” access to an abundant low-cost workforce and an easy place to attract workers and firms. As to establish its bona fides in business climate, Florida was literally the first state to enact right to work laws, in 1943 (and again legally in 1947).
Florida and Cape Canaveral launched the first space flight, the Mercury Project in 1961. What is less known is that the Cape launched its first rocket in 1950, and in 1959 the first successful launching of an ICBM. Since the 1960s Florida had lured northern residents seeking a warm retirement, carrying with them their social security and pensions. Ever more tourism followed; so did Disney World, which opened in 1971. As Florida gathered steam, residents, jobs, pensions and tourist dollars, it almost singlehandedly created the favorable growth statistics in the early 1970s for the entire southern region. Florida personified the non-manufacturing, service and government sector character of the New South. Also, worth comment is its tourism strategy, which became Florida’s top industry sector after World War II.
Other southern states did not enjoy such obvious natural advantages, plus they suffered from more difficult civil rights and historical stereotypes. But the seventies’ success changed the perception of the South by many outsiders. Watergate was a plus for the South’s image. The “good old boy” Sam Ervin, and also Howard Baker, performed well and responsibly; George Wallace and Lester Maddox had given way to Jimmy Carter, Fred Thompson (of Law and Order fame) and Reuben Askew. Country music was in; so were The Waltons and The Dukes of Hazzard—and Larry Hagman’s Dallas began in 1978. Equally important, the North (shall we say the Union) was at its lowest ebb. Big Cities were “hitting bottom,” fiscal basket cases wracked by bussing riots and northern white backlash.
South Carolina’s resurgence in this period is especially interesting. The South’s now almost two-decade old promotional and attraction campaigns bore unexpected fruit; the South overall was garnering 50 percent of all FDI. By 1972’s end, foreign firms had invested more than $5 billion in the South, and within two years that number had risen to $8 billion. By 1978 several southern states were attracting as much as $1 billion annually, with South Carolina, North Carolina and Virginia leading the way in numbers of plants, and petroleum-rich Louisiana ahead in terms of aggregate value of foreign investments. Cobb reports the British, West Germans and Japanese were particularly aggressive, the former building 57 plants ($1.25 billion), half of which were in the Carolinas. South Carolina captured way more than its fair share of all this foreign investment—in fact by the end of the seventies 40 percent of South Carolina’s annual business investment came from foreign firms. There was more West German investment in South Carolina than in any other location in the world (Cobb, 1993a, pp. 188–93).
In South Carolina’s case the active public–private partnership of the State, its EDO and local communities combined with “the same red carpet, kid-glove treatment afforded all industrial prospects by southern states” seemed particularly effective. Spartanburg South Carolina (population at the time about 50,000), the beneficiary of a local developer’s campaign to recruit foreign industry, lured one $200 million West German textile plant which in a few years became the fourth largest polyester plant in the nation. By the mid 1970s Spartanburg had landed 24 foreign firms (4000 employees). Population and tax base increases resulting from these investments were dramatic (Cobb, 1993a, p. 192).
As to why the South benefited so much from FDI a number of reasons can be cited. Rather than fight quotas and import restrictions, developing on-site capacity seemed reasonable—especially when low cost, right to work, southern labor could be employed. The business climate strategy mentioned earlier also was impactful in foreign decision-making. While states across the nation were regulating the effects of pollution, the South conducted a widespread deregulation of pollution (Cobb, 1993a, pp. 229–53). The impact of FDI did not go unnoticed in the North. In 1976 the New York Times issued a six-article series on the South and its glowing economic success, population gains and life-style advantages.9 The reason, however, it cited for all this southern prosperity was not FDI or Florida or southern business climate, but federal government spending.
The seventies witnessed a dramatic reversal in the perception and, to some degree the reality, of the southern economy and way of life. The New South lay alongside some redefined and reshaped version of the Old South. But by the end of the century an earlier observation by Goldfield and Rabinowitz (1993) seemed valid: the Sunbelt was no longer a useful term to describe the variated regions. Not only was the West in a different “space” than the South, but the Southwest also did very nicely on its own. Still largely undiscovered are “the Mountain States” and Alaska and Hawaii.
Generational Cohort Migrations
Generational cohort migration has permeated our discussion thus far and so it may seem confusing why this section concentrates on that topic. What follows are two sub-topics that flesh out the character of post-1965 generational migrations. The first (Retirement) injects the old farts, without whom Florida and much of the Southwest would look quite different. That older folk move in numbers is the departure from previous migration patterns. That cities are built with old folks in mind is something “new under the sun.” It surely adds a new dimension to ED people and tourist attraction. Sadly, we admit our failure to include “entertainment” as a third form of migration. That will be picked up in detail (Disneyland et al.) in the next volume.
The second topic (Boomers) is the more traditional, focusing on younger folk moving about and being environmental and creative. In that sub-section, we introduce the concept of “redefinition of growth” that accompanied the boomer migration. To flesh that out we end this topic in a final sub-section (Western Neighborhoods and Slow Growth) with three brief examples (Seattle, Portland, San Diego) of how generational migration and redefinition of growth changed politics/ED and formed new policy systems.
Retirement migration
A little-mentioned, hidden-in-plain-sight population movement with lots of implications for ED is retirement migration—a generational cohort migration. Yes, Florida and Arizona captured more than their fair share of this; indeed, one retirement community (Villages FL) in 2014 was the fastest-growing census area in the US. Retirement migration had a heart attack after the Great Recession, but during the period discussed in this chapter (1970–2000) robust rates of migration affected places like Myrtle Beach SC, Austin TX and Sunbelt locations like Las Vegas. Left in its wake was smaller cities in the industrial Midwest and Mid-Atlantic. New retirement communities (a post-suburbia development) sprang up throughout the Sunbelt, epitomized by the proverbial Del Webb community—which started in the 1950s.
Retirement destinations and the community left behind are obviously the most affected. Having said all this, however, most pre-2000 retirement-age households (90 percent) did not relocate. They were the most stable population group in America— only 9 percent (about 4.5 million) changed communities during these years. Among the states with the most in-migrants aged 60+ were New Hampshire and Idaho. Older Americans change communities; but they change houses more frequently (25 percent), and that means neighborhoods in both central cities and post-suburbia feel the effects of retirement migration. School districts beware; assisted living centers take note!
Boomers and progeny: it depends on what growth is
Of recent years, generational cohort mobility has focused on Generation X and Richard Florida’s Rise of the Creative Class (2002); but before they came along there were the boomers. In the seventies/eighties the baby-boomers in their early/middle twenties (1970s) exacted a huge impact on economic development—they did it by redefining growth. Growth, as noted previously, was heretofore the core of what American economic and community development was about. Questions concerning growth’s definition, however, assumed a great importance during the 1950s when poverty (inequality) was rediscovered. The rise of community development also redefined growth by urging inclusion of groups left out of it. CD as a strategy of income redistribution and identity politics was an ED response, largely affecting low-income distressed neighborhoods in Big Cities and the rising Sunbelt. The entry into society (and economy) of the baby-boom generation in the seventies, however, produced a serious assault on growth’s definition.
In particular, boomers who moved into the Sunbelt pressured the establishment to change growth’s definition to fit their environmentalist/quality of life concerns—and, in some locations, advanced issues today associated with “identity” (race/ethnicity, feminism and sexual) The first redefined the “what” of growth, the latter the “who.” Neighborhood level was home base. On the fringes of Sunbelt cities/suburbs, boomers challenged the dominant business/CBD growth nexus—Abbott’s “Neo-Progressives” as discussed in Chapter 15. This is when “anti” or “slow” growth first appeared—when “growth management” became a byword. Boomers held new ideas about cities and communities found in books by authors such as Jane Jacobs (The Death and Life of Great American Cities, 1961), Rachel Carson (Silent Spring, 1962) and Michael Harrington (The Other America, 1962). They also learned the art of political mobilization from protests and anti-war movements.
Young boomers entered the post-industrial workforce as professionals, professors/ teachers, government and nonprofit workers, entrepreneurs and corporate managers (Rowe, 2001). Harvey Molotch describes them as “cosmopolitan in outlook, pecuniary in interest”: they viewed cities and neighborhoods “more as residential environments than as economic machines.” Abbott labels these folk as “quality of life liberals” who worried that” breakneck development was fouling the air, eating up open space, sacrificing neighborhoods … and deferring costs of [pollution] to future decades” (quoted in Abbott, 2008, p. 205). Among other aspects, they were considerably less inclined to support economic growth to catch up with the city down the road (urban competitive hierarchy).
They also expected more from business than jobs and taxes. Spared the misery of the Depression and the horrors and loneliness of war, they expected more out of life—quality of life liberals followed an existentialism not associated with their parents or Abbott’s neo-progressive business elites. While eastern cities coped with fiscal distress and racial change, Sunbelt cities were coping with growth. Women became engaged in political life, facilitated by grass-roots neighborhood-level politics that tapped into traditional concerns of family, school and home. Western neighborhoodlevel and citywide alliances proved a training ground for women soon to be elected mayors of western cities. Oklahoma City elected Patience Latting in 1971, and over the next 20 years, women mayors were elected in Dallas, Fort Worth, Austin, Houston, Galveston, San Antonio, Corpus Christi, El Paso, Phoenix, Santa Barbara, San Jose, San Francisco, Modesto, Stockton and Spokane. By 1987, women were mayors in 26 western and southwestern cities whose population exceeded 50,000—half of the nation’s total of women mayors in that year (Abbott, 2008).
New ED/CD strategies were associated with this cultural change (new urbanism, smart growth) and tools (growth management)—try using eminent domain after 1980. NIMBY, BANANA10 and a host of other complimentary euphemisms came from these folks. So did the National Environmental Policy Act (NEPA), the State Environmental Quality Review Act/SEQR(A) and a host of other federal and state regulations that reshaped ED redevelopment and created a new strategy—brownfields. Even tourism was attacked as the “Devil’s Bargains” (Rothman, 1998). On the other hand, many young native-born westerners wanted to limit exploitation of the environment by extractive corporations, and were incensed with the paternalism and insensitivity of federal bureaucracies to local economic use of federal land. For them the federal government was increasingly viewed as a colonial power, its land management practices arbitrarily limiting growth and land use by fiat. This blossomed into a “Sagebrush Rebellion”—a rebellion which at its roots questions who controls western local economic development (Cawley, 1993).
Examples of our generational cohort policy shift appear by the 1970s, coming in several forms. In 1976 Denverites contested the city’s involvement in the Olympics— which was supported by the entire panoply of the city’s political and ED establishment. Earlier (in 1972), future Senator Patricia Schroeder and Governor Richard Lamm, leaders of the opposition, had raised 77,000 signatures for state and city constitutional amendments prohibiting public funds for purposes “that would only benefit tourism, business and real estate.” The Privatist Sagebrush Rebellion exploded in 1979 when the Nevada legislature demanded 49 million acres of federal land (86 percent of Nevada’s total land area) be transferred to the state.
Western Neighborhoods and Slow Growth
Sunbelt city boomers involved themselves in neighborhood issues and affairs. Ethnic, racial and sexual identity groups settled in concentrations in selected neighborhoods—an early Big Sort. A catalyst for their involvement was highway-related eminent domain. Moreover, single-minded pursuit of a CBD-infrastructure strategy easily was perceived as disinvestment of neighborhoods. Working- and middle-class neighborhood associations formed to protect themselves and assert demands for their fair share. In Sunbelt city after city, a neighborhood versus CBD/annexed periphery dynamic inserted itself into elections and policy demands. Tucson provides an excellent example of the role neighborhoods played in policymaking, and Albuquerque anti-CBD UR was hotly contested as well. Pacific Coast large cities (San Diego, Seattle and Portland especially) were distinctive as their overall policy system tilted toward neighborhoods as primary players.
Seattle’s neighborhood movement appeared alongside its version of UR (the Space Needle and the 1962 World’s Fair): “a perfect example of urban boosterism designed to stimulate economic growth, and to symbolize the modernity of Seattle”. Seattle’s 1957 plan listed 100 neighborhood units, but focused on freeways, CBD and high-density development. As these delights unfolded during the sixties, neighborhood opposition mounted—a 1968 bond issue required at least 20 percent of its proceeds be spent on critical neighborhood needs. The War on Poverty/Model City neighborhood associations participated in the bond campaign, and that success was followed by a “wave of grassroots activity” for neighborhood preservation. The wave stopped freeway expansion, saved the historic CBD Pike Place Market and acquired significant representation on the new planning initiative—“Goals for Seattle 2000” (1972–73). Between 1967 and 1971, a city council responsive to neighborhoods was elected. The council set up EDOs to encourage neighborhood participation in ED and planning decisions. In 1970 newly elected Mayor Wes Uhlman established nine mini-city halls, created an Office of Neighborhood Planning and (1971) started 28 neighborhood improvement plans. Included in these plans were requirements incorporating the state’s recently approved environmental review and impact law (Abbott, 2008).
Portland in 1972 (and 1976) elected a young mayor, Neil Goldschmidt. His charisma set the tone for city politics for the next decade—centering on neighborhood planning/ preservation, each neighborhood possessing a citizen-governed EDO intended to keep the “neighborhood livable.” Freeways were blocked and stopped, and major UR-style redevelopment projects put on the shelves. Increases in housing and citizen participation in decision-making were institutionalized—the Portland Development Commission was reoriented to CBD historic preservation and housing. An Office of Neighborhood Associations was established to liaise with organized groups of citizens seeking neighborhood livability so they could impact zoning, planning, budgeting decisions of the city. Initially (1974), it included 30 neighborhood groups in its work plans (Abbott, 2008). By the end of the 1970s Portland’s famous “urban growth boundary,” enforced by a regional “metro,” government was in place.
San Diego’s Pete Wilson, elected mayor in 1971, feared his city would be a “Smogsville,” so he overturned the city’s previous development motto, “City in Motion,” and replaced it with “America’s Finest City”—stressing neighborhoods and quality of life instead. Wilson aggressively implemented his “managed growth” program to restrain sprawl and promote revitalization of city neighborhoods. Charleston SC also initiated a strong neighborhood planning, citizen participation and historic preservation program—demonstrating Sunbelt neighborhood initiatives stretched from sea to shining sea. In San Antonio, Hispanic-led neighborhood CDOs effectively redirected neo-progressive CBD, highways and infrastructure strategies into powerful neighborhood infrastructure and community/education services.
This was the age when neighborhoods became effective units of economic development policy-making. As such, neighborhoods provided a vehicle for expressing the shifting trends in a community’s political culture; they also reinforced the growing trend toward the Big Sort. The most radical use of neighborhoods in this era, however, was to bring about municipal policy system change—which, if successful, could easily change the character and direction of municipal ED/CD strategies.
NEW STRATEGIES
The reader who has suffered through this history may by this point have realized that through the 1980s, slowly, surreptitiously, incrementally a variety of “Great Forces” transformed economic development as a policy area and profession.
By the late 1990s/2000 it evolved into our present-day “Contemporary Economic/Community Development Era.” Providing a taste of what lies ahead in a future book, this section briefly outlines a number of selected strategies, programs and tools that were developing previous to 1990, but flowered after that period. Chosen for inclusion are economic gardening, casino gambling, and new urbanism. We start, however, with a discussion/description of Clinton’s 1990s’ federal initiatives, including New Markets, and their awkward fit with the community development nexus.
Federal Government Carves Out a Role: People v. Place
Community mobilization and CDC neighborhood community economic development strategies blurred if Alinsky’s IAF was any indication. Neighborhood-level CD could not escape its place-based approach to empower, mobilize and revitalize deteriorated geographies populated by low-income and minorities in an era of deindustrialization. That meant assimilation requiring movement to other geographies, potentially at cross-purposes with its place-based focus. People-based and comprehensiveness remained cornerstones, but were linked with revitalization of deteriorated, mostly central city neighborhoods. It was difficult enough to change people, but to change neighborhoods physically and economically at the same time was no small feat, with or without Reagan. More and more the likelihood a Third Ghetto may have developed—a ghetto that no longer had believable hope that a job was achievable.
The national atmosphere that sustained aggressive community organizing began to lose steam previous to Reagan’s election—or, more precisely, Privatist anti-tax referenda (and organizing) captured the media and the public’s attention. Reagan deemphasized and defunded HUD-style housing and CD programs. That, of course, set back local CDCs. Reagan and Bush moved in a different direction, providing assistance directly to people. Reaganism had stolen CD’s thunder. Two programs in particular— earned income tax (EIC) and low-income housing tax credit (LIHTC), expanded by the 1986 Tax Reform Act—dramatically reshaped federal anti-poverty and low-income housing approaches. Reagan’s initiatives were not limited to distressed neighborhoods; those eligible got benefits wherever the low-income person resided.
LIHTC provided incentives to private investment in low-income affordable housing. Today it is estimated that more than 90 percent of low-income affordable rental housing utilizes LIHTC, which is not linked to distressed central city neighborhoods. EIC (which actually started in 1975) provides tax credits to qualifying low-income families with children. At least 26 states have added their own EIC tax credits as well (2012), as have some sub-state jurisdictions (Montgomery County, MD, NYC and San Francisco). Both programs have incrementally expanded several times since their creation. To think of these federal “direct-to-people” programs as Privatist CD would be controversial; both fall in a cultural limbo (or gray area). Still, as early as 1990, a major study of CDC financing reported 94 percent of CDCs that responded received more than $50,000 annually from LIHTC for program support.11
The same could be said for HOPE VI, a page-turning public housing redirection that is usually credited to the Clinton administration but actually grew out of the 1989 Congressional National Commission on Distressed Public Housing. The Commission’s recommendations/action plan called for a radical redirection of federally supported public housing. Congress and the new Clinton administration concurred, approving legislation that among other reforms provided substantial funds for demolition of severely distressed public (high-rise) housing. Remembering that such public housing was Age of UR outputs, HOPE VI represents real page-turning legislation. Snuck into the legislation as one of its three goals was to provide (replacement) housing that would avoid or decrease the concentration of very low-income families (Popkin et al., 2004). This countered CD’s place-based distressed neighborhood focus.
Clinton continued Reagan-era federal direct-to-people anti-poverty/welfare programs. EIC was expanded and the minimum wage increased. Clinton’s main focus was welfare reform: Aid to Families with Dependent Children (AFDC), Temporary Assistance for Needy Families (TANF). With a reenergized EIC, the emphasis was to “make work pay.” Families and households got a meaningful lift from EIC, mitigating some of the dour effects of TANF. TANF was the newest block grant on the block, and its passage was treated with some skepticism by community developers.
TANF significantly reduced the number of people on welfare rolls, although those concentrated in high-poverty inner-city neighborhoods were least successful in leaving welfare. It is not clear, whether the lot of former recipients has improved. Many simply went from the ranks of the “welfare poor” to the “working poor” with no betterments of their living standards. (Dreier, 2002, pp. 129–30)
By this point it was clear this form of intergovernmental transfer was preferred to Great Society categorical grants.
One could see in Clinton’s signature 1993 Empowerment Zone (EZ) legislation the need to break up concentrations of poverty by connecting people to opportunities, not only in suburbs but also across the nation. The EZ initiative designated 11 zones, each eligible for $100 million in grants and tax credits for investment and hiring of low-income residents; also created were 95 Enterprise Communities (ECs) eligible for more limited grants and credits, and 4 Enhanced Enterprise Communities (EECs).
The EZ initiative satisfied Clinton’s electoral covenant with cities, but its reliance on private sector market incentives was not well received by many community developers. In linking low income to opportunities, wherever such opportunities might be, EZ pursued a bottoms-up, locally driven, comprehensive set of programs in distressed inner-city neighborhoods—”community-building partnerships for change”; but it challenged physical/economic neighborhood revitalization. EZ, however, included the usual “comprehensive” array of social programs (housing, education, job training and human service programs) and was coordinated by a “community service board” with residential membership as well as governmental and agency leadership (O’Connor, 1999, pp. 115–17).
The ambiguity between place-based people community development and deconcentrating poverty made some community developers wonder if Clinton and they were on the same page. EZ asserted that it sought to invest in people and places, recognizing the old dichotomy as false. Many community developers were not sure it was false. In 1995 this tendency toward dispersion, rather than “gilding” the ghetto, was made more explicit in Clinton’s 1995 HUD Urban Policy Report, which asserted that:
America’s cities have been in trouble. Poor families and poor inner city neighborhoods have become disconnected from the opportunities and prosperity of their metropolitan regions, the nation, and the emerging global economy. A vicious cycle of poverty concentration, social despair, continued outmigration and fiscal distress in central cities undermines the ability of metropolitan regions to compete … Moreover, the polarization of urban communities— isolating the poor from the well-off, the unemployed from those who work, and minorities from whites, frays the fabric of our nation’s civic culture.
A later pilot program, “Moving to Opportunity,” provided Section 8 vouchers to 7500 residents from six inner-city neighborhoods “to escape ghettos and move to better neighborhoods.” Another pilot program, “Bridge to Work,” provided enhanced transportation access for poor inner-city residents to jobs in the suburbs (Dreier, 2002, pp. 129–30).
New Markets
In his second term Clinton struggled with a resurgent Republican Party, Contract for America, and attempted impeachment. If anything were to be accomplished it would be bipartisan, and likely involve corporate America and more Privatist forms of ED (physical redevelopment and financing). Foundations and philanthropies provided a convenient meeting ground and a forum for incubating new ideas for public/private, central city, low-income neighborhood reinvestment. The New Markets Tax Credit, Clinton’s last major urban initiative, developed out of this nexus.
The American Assembly, a bipartisan business-led think tank, issued a report after its 1997 annual meeting. During that meeting debate, triggered by Michael Porter’s research on the potential of inner-city redevelopment, urged business to invest in inner cities to foster something called “community capitalism.” Community capitalism was a fancy name for business investment and job creation in distressed communities, with government and the neighborhood community playing a supportive role. Access to capital and provision of technical assistance to investors by knowledgeable intermediaries were essential requirements. The American Assembly sent its report to the White House, where it caught the attention of Al Gore—who was contemplating a run for the presidency. New Markets Tax Credit in the Community Renewal Tax Relief Act of 2000 was the reaction.
New Markets was a vehicle to provide investment (equity or near equity) to distressed low-income communities (and presumably neighborhoods)—both urban and rural. An annual “allocation” of tax credits is made by Congress, and its administration handled by the Department of the Treasury’s CDFI Fund. CDFI awards tax credits to Community Development Entities (CDEs) that award them to specific qualified businesses making a fixed asset investment in defined low-income geographies. Advantages include lower interest rates and less strident terms and conditions—without New Markets such projects would likely not have sufficient financing available. Through 2014, New Markets dispersed over $38 billion to leverage $75 billion in new investment to troubled geographies. The program formally expired in 2014, but lingers on in several bills at the time of writing. New Markets targeted certain geographies of concern to community developers. It is hard to envision, however, it being described as a community development program—again exposing Clinton’s awkward dance with community development.
Economic Gardening
The 1987 recession prompted the folk in Littleton Colorado to take a second look at their economic development program.12 The two “big boy” firms in the community of 41,000, Martin Marietta and Marathon, were cutting back employment—and that was very bad news. So the economic development staff and several members of the city council reviewed the efficacy of their past ED efforts. Up to that time, Littleton had joined with state and regional programs that recruited firms, especially from vulnerable California. The results were best described as “erratic.” On top of that, the city’s top urban renewal project (an upscale retail center) was languishing and well on the way to its eventual “belly up.” Since bad new comes in threes, the final knock on the head was a home improvement company, a recipient of a tax-exempt bond financing that went bankrupt and closed. In 1987 it seemed nothing was working well (Woods and Gibbons, 2010).
Deal-making and tax abatement seemed especially worthless as long-term ED tools. Staff and council members began a review of the various programs “out there,” and they came across David Birch’s The Job Generation Process (1979) and a research paper by Paul Romer (1986), “Increasing Returns in Long-Run Growth.” From Birch they were impressed with the power and importance of small business as the creator of jobs; from Romer they gleaned that the real driver of successful companies was innovation and knowledge (creative ideas), both of which were “sustainable”—no depletion of existing resources. Because Littleton was at its core a farming community, the team adopted the metaphor “economic gardening”:
We presented the city council with an image of a garden: when you plant a garden, you do not know which of the vegetables will produce the greatest yield, so you fertilize and water all of them equally. To contrast this strategy with the corporate and deal-making strategy, we used a big-game hunting metaphor. As every hunter in Colorado knows, you can go for many years without bagging a trophy elk. Similarly, economic hunting can be an exciting strategy, but the better odds are with economic gardening. (Woods and Gibbons, 2010, p. 3)
After finding qualified staff, the first economic gardening program started in 1990 when they offered a customized data search service to local firms. The insight came from interviews with individual firms. The need for data by firms for one thing or another was high, and the program immediately exploded. By 2010 this program had expanded to four full-time staff and had extended its scope to search engine optimization, social media, GIS and graphic design—and dealt with 300–400 service requests annually and an additional 100 customized consulting. There is no eligibility, no picking of winners or targeting key sectors or clusters. Littleton’s job growth in this period was from 15,000 to 30,000; unemployment remained below the national average.
Economic gardening is not a search engine optimization program. It is asking your existing firms what it is the community can do for them—then sorting through and giving them what they asked for that the community can realistically and reasonably provide. It’s more than a retention program; it is a growth-oriented program as well. It is focused on small firms and abandons for the most part the big supply-side tools. It disavows deal-making and attraction-recruitment. No one claims this strategy fits all communities. Littleton officials suggest suburbs are most conducive to its charms and rural areas may have a tough time developing the expertise needed to run the programs. There is no reason it couldn’t be an element of a larger ED program—save for its philosophical origins.
Casino Gambling: Don’t Bet On It!
Economic developers have an awkward relationship with gambling, particularly casino gambling. This is somewhat strange in that economic developers typically claim credit for virtually any economic growth within their jurisdiction. Casino gambling is mostly a state-driven ED program, with the state doing most of the negotiation and garnering a goodly share of tax and fee proceeds. Legal gambling (all forms) in 2012 generated nearly $100 billion in revenues. Casino gambling in 1991 produced $9 billion in revenues; in 2013 casino revenues were in excess of $50 billion.13 In 2012 an incomplete assessment by the casino industry (not including for example tribal gambling) asserted that nearly $8 billion were paid to governments in 22 states.14 I’ll wager it has increased since then. In fact, the onslaught of online gambling, combined with New Jersey, Nevada and Maryland doubling down approving new facilities in 2012–13, promises yet a second wind to gambling’s continued growth.
Taxes generated from casinos and lotteries have been an increasing mainstay of state governments and education systems; the jobs provided by casinos are significant and well appreciated by the public as a whole. ED community college workforce programs train casino dealers and offer certificates. Casinos are reliable visitor destinations, spinning off their fair share of hotel rooms and retail sales. Casinos have proven to be an economic development home run—and a moral disgrace to the profession. If tax receipts are any guide, casinos (and other forms of gambling) are the most successful and lucrative single economic development program in America.
Casino attraction usually requires controversial legislative approvals at state and local levels. Casino attraction has been a gubernatorial prerogative-initiative. The usual ED recruitment programs are largely inappropriate to casino attraction. Also consider the rather sad image of providing tax abatement to a casino? How long it can continue, with a casino on almost every street corner, is anyone’s guess; but the odds are casino gambling has a few years left. The last thing we attempt is a history of gambling in America or a comprehensive analysis of casino gambling and economic development. Economic developers, however, should have some familiarity with this strategy, if only because in the sad event the bubble eventually bursts, economic developers will be tasked to clean up the mess—and maybe blamed for it as well.
First things first. Gambling in America has a longstanding tradition, dating from colonial times to “Maverick on the Riverboat Queen,” pari-mutuel horse racing and, of course, the ubiquitous state lottery.15 Casino gambling as a widespread state ED strategy, however, is relatively recent. Casino gambling skyrocketed after 1989 but got started in 1931 when Nevada legalized casino gambling. In 1947 Bugsy Siegel opened the Las Vegas Flamingo. From 1966 to 1970 the quirky Howard Hughes purchased Las Vegas properties and transformed them into legitimate business corporations; in 1973 Harrah Entertainment was the first casino to be listed on the New York Stock Exchange. New Jersey, in 1976, saw an opportunity and legalized Atlantic City as the nation’s second legal location for casino gambling. The Mirage Hotel and Casino opened in Las Vegas in 1989 (3000 rooms) and the era of Las Vegas as a world-known tourist destination commenced. By 2003, Las Vegas had 61 casinos, amassing $5.3 billion in revenues and attracting 35 million visitors annually to fill in excess of 100,000 hotel rooms. At its peak Atlantic City held 13 casinos and generated $4.3 billion in revenues with 32 million visits housed in 12,000 hotel rooms.16 In 1989, however, casino gambling got complicated.
Since the 1980s the Cabazon Indian Band (near Indio California) had been struggling with the state of California over the operation of bingo games and poker halls (i.e. casinos).17 The legal struggle reached the United States Supreme Court in 1986. The Court’s decision was that the federal government, not the state, had the power to regulate gaming on a tribal reservation—upholding tribal sovereignty, but in the process potentially making gambling and casinos legal upon any congressional action. Congressional legislation (Indian Gaming Regulatory Act), signed by Reagan in 1988, provided for casino gambling subject to a “compact” (i.e. tax) being agreed to with the state. The legislation launched the Native American casino industry, which in 1988 garnered an estimated $100 million to a sector which in 2012 achieved nearly $20 billion in revenues. By 2011, 12 states had authorized 28 casinos and a total of 25 states had authorized Native American casinos.
Shades of Mark Twain, riverboat gambling (the third form of casino gambling) started in Iowa and Illinois in 1991 and then spread to Indiana, Missouri and Mississippi. Land-based casinos followed in Louisiana and Michigan, which authorized such casinos by 2003.Since 2003, when nine states had authorized non-tribal land-based casinos, 23 states (22 with operating casinos) have placed a bet on land-based, non-tribal casinos. At least eight others were considering authorization, and a number of states were approving legislation to increase the number and type of casinos in their states. The industry claims to employ over 332,000 workers (170,000 in Nevada with over 400 casinos, $13 billion in wages), generates in excess of $37 billion in revenues (not including Native American casinos) and has paid an estimated $8.6 billion in taxes to states. Las Vegas, Atlantic City, Chicagoland, Detroit and Connecticut are the top five markets—all generating more than $1.2 billion annually in revenues.18
The issues, salient to economic developers, arising from casino gambling are several. The historically volatile nature of the public’s willingness to accept legal and public gambling is testified to in that casino gambling is usually credited to be the “third wave of American gambling.” The other two waves eventually went down for the count. Scandal, crime, individual misuse and shifts in public and private morality provided plenty of opportunity for casino gambling’s deck to be reshuffled. The “close” contractual and regulatory relationship of state governments with interstate/ international casino companies raises issues of potential concern.19 The dependence of states, localities and even school systems and unions on casino revenues and taxes merits additional concern. The overall effect of casino revenues on state finances is beyond our ken and purview—but clearly could lead to unfortunate realities under certain conditions. Casinos were approved and depend upon a public acceptance largely linked to goals traditionally perceived as economic development related. The public perception of economic development is indirectly tied to casino gambling.
In 2015 it was estimated that the total spent on all forms of gambling in the US (including lotteries) was in excess of $104 billion dollars, from which state governments’ share was about $20 billion. Lotteries comprised about two-thirds of the state receipts (2015) and casinos less than $9 billion (31 percent).20 Casinos on Indian reservations are not included in US statistics and in 2015 they generated nearly $30 billion in revenues from 459 casinos in 28 states, which compared to $38.3 billion revenues from US commercial casinos. California, dominated by Indian casinos, placed second to Nevada in revenue. Pennsylvania’s commercial casinos garnered the most at $3.2 in 2015, surpassing the struggling Atlantic City.
Las Vegas depends more on tourism spending than gambling, which peaked in 2007 and has not yet recovered to its pre-recession high of $6.8 billion. As of 2015 only three states (New Jersey, Delaware, and Nevada) had legalized online gambling—attracting an estimated 10.8 million gamblers and $6.8 million in revenue, most of which was offshore and extra-legal. Legalized online gambling yielded only $160 million in revenues. BTW slots generated about 75 percent of casino revenue. In 2015 only Hawaii and Utah had no legal commercial or Indian casinos, lotteries, or other forms of gambling. Rhode Island, according to the Rockefeller Institute, collects in excess of $457 per resident from gambling—the highest state rate—but NY collects the most money overall from all forms of gambling to fund the state government ($3.2 billion); Pennsylvania is second ($2.4 billion).
Market saturation and economic downturn (the industry is cyclical) will also play a role in its long-term evolution. Casino gambling, especially destination gambling (as opposed to day-trip gambling), is real estate driven. The ultimate impact of the internet and its forms of gambling has yet to play out. A downturn in casino gambling can have serious consequences for local real estate markets and unemployment rates—witness Atlantic City in 2016. All this is true of many industries and sectors, but the casino gambling sector is one which may or may not respond to normal sector competitive dynamics and counter-checks.
NEW URBANISM
It had to happen sometime. At some point, one always knew suburbs would become “chic” and “the place to be” to those who really mattered in society. New Urbanism, which today describes itself more as “neighborhood”-style development, took center stage with the building of a small resort village in Florida’s Panhandle. In truth, New Urbanism began in 1981 from a Cooper Hewitt Museum exhibit on suburbs managed by a Columbia University professor, Robert A.M. Stern and the periodical AngloAmerican Suburbs. Most of the exhibit featured stuff we have discussed in earlier chapters such as Forest Hills Gardens and other Garden Cities. That is an important tidbit to know because a core thrust of New Urbanism was its rejection of Modernism and post-Modernist planning and architecture (our friend Le Corbusier) in favor of a return to “a blast from the past.” To be fair, the New Urbanism was also a rejection of the subdivision-style suburban sprawl—and, although it was pre-McMansion, it would have rejected them also.
New Urbanism has a little of something for almost everybody. It could tap into nostalgia for Howard’s and Unwin’s past, the extravagance of the City Beautiful, and accommodate green technologies, smart growth principles and solar energy conservation. Most importantly, it implied a return to the honesty and simplicity of small town America—in the modern age. Much of the New Urbanism, particularly in the nineties, identified with a modern variant of city-building. In some measure this was due to its first demonstrated success at Seaside Florida, developed by Robert Davis and his two architects, Elizabeth Plater-Zyberk and Andrés Duany.
Duany and Plater-Zyberk worked for Stern and Anglo-American Suburbs and were at the Cooper Hewitt exhibit. The Seaside project began in 1982 as a new resort community, planned to include 300 houses and approximately 300 cottages, shops, retail outlets, etc. The Seaside concept embraced density and design as central principles and that became translated into an entirely new and picturesque new-style community:
Seaside is different. Narrow streets radiate from a central green as in a New England village. The houses are vaguely Victorian, with tradition pitched roofs, porches and white picket fences. The lots are small and the buildings are extremely close together, bordered by heavy undergrowth. Sandy footpaths provide shortcuts behind the gardens. The casual atmosphere and the cottage like houses recall an old-fashioned beach community. (Rybczynski, 2007, p. 19)
Dolores Hayden describes Seaside in different terms:
In a remote location, reachable only by car, they developed a master plan for a small pedestrian-oriented resort of neo-traditional vernacular houses set in indigenous landscaping. The project was specifically designed to recapture a pre-automobile way of life. The developer wanted a place for “extended” porch-sitting, leisurely strolling, and sharing time with those you care most about. (Hayden, 2003, p. 205–16)
Seaside, after a sort of rough start, took off by the end of the decade. In 1990 Time magazine included it in its “Best of the Decade” issue; between 1988 and 1990 Duany and Plater-Zyberk contracted and started design on more than two dozen New Urbanist communities. Seaside was the location for filming the Truman Show. In 1993, they, along with others, formed the Congress of New Urbanism, which quickly moved into an image of being the cutting edge of architecture and planning (Duany et al., 2000). In 1994 the Walt Disney Corporation hired another developer to construct a New Urbanist community, Celebration, outside of Orlando. It too has been an enormous success.
New Urbanism, no matter how popular and trendy it may be, does have its critics. Some criticism simply taps into the diversity of consumer and household tastes. New Urbanist communities and neighborhoods do not suit the fancy of all (lack of privacy is a major concern). That leads into a more serious concern—that New Urbanism attracts white, upper/middle-class, affluent households and that these communities are simply not affordable on any scale to even middle-class folk. Diversity is not New Urbanism’s middle name.
Nevertheless, New Urbanist design principles have since been incorporated into hundreds of completed projects, ranging from public housing, malls and gentrification of neighborhoods. New Urbanism does offer a realistic, proven business model alternative to large-lot suburban subdivisions. Moreover, in reviving much of the neighborhood living focus of Perry’s early twentieth-century neighborhood movement, it returns to a more humanist sense of community many feel has been honored only in the breach.
NOTES
- Part of the problem with B&H data results from its use of David Birch’s Dunn & Bradstreet database, which has been severely critiqued to the point that Birch himself moved away from it in subsequent publications. See Steven Davis, John Haltiwanger and Scott Schuh, “Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts,” NBER Working Paper 4492, October 1993, http://www.nber.org/papers/w4492.
- Guido Matias Cortes, Nir Jaimovich and Henry Siu, “Disappearing Routine Jobs”, NBER Working Paper No.22918, December 2016.
- King ran a program in MIT’s Department of Urban Studies and Planning.
- Bishop also asserted post-material cultures were characterized by greater talent, individual skills, and economic growth. This is Richard Florida’s Creative Classes at work—an assertion with which I do not concur.
- Religion, as Bishop treats it, is not doctrines, denominations or specific religious practices; religion is a value system which is expressed in choices, behaviors, expectations and hopes carried forth daily in one’s life. Religion forms a prism which colors how one evaluates events and ideas and which sets one apart from other religions or from the secular perspective.
- Horace Sutton, “The South a New America,” Saturday Review, vol. 3 (September 4, 1976), p. 8.
- The region with the fewest people throughout this period was the Northeast/Mid-Atlantic, which held 19 percent of the population in 2000 and 17.5 percent in 2015.
- Greg Toppe and Paul Overberg, “After Nearly 100 Years, Great Migration Begins Reversal, USA Today, http://www.usatoday.com/story/news/nation/2015/02/02/census-great-migration-reversal/21818127. This was in response to William Frey’s report (2004). Cobb discusses this in Chapter 10 of Selling of the South (2003a, pp. 261–87).
- New York Times, February 8–13, 1976, p. 1.
- Build Absolutely Nothing Anywhere Near Anything (or Anyone).
- Christopher Walker, “Nonprofit Housing Development,” Housing Policy Debate, vol. 4, no. 3, pp. 369–414.
- . Littleton Colorado is a suburb of a suburb (Colorado Springs). Colorado Springs is a boomburb.
- Global Betting and Gaming Consults LLC, as cited in the Wall Street Journal, August, 2013, p. 1.
- ncsl.org/research/financial-services-and-commerce/casino-tax-and-expenditures-2013.aspx; and file:/// C:/Users/emiletebo/Downloads/direct_taxes_casino.pdf.
- Congress itself in 1823 approved a lottery to fund Washington DC beautification. Beauty was in the eye of the beholder, however, as the lottery managers absconded with the funds.
- Thomas A. Garrett, “Casino Gambling in America and its Economic Impacts,” August, 2003, pp. 4–5; http://www.stlouisfed.org/~/media/Files/PDFs/Community%20Development/Research%20Reports/CasinoGambling.pdf.
- A Seminole tribe in Florida was undergoing a roughly comparable process as well.
- Figures are taken from the American Gaming Association, “2013 State of the States: The AGA Survey of Casino Entertainment,” at http://www.americangaming.org.
- State regulation, unknown probably to most, specifies the “casino take” or the payoff ratio. The interrelationship of the payoff revenue with annual tax proceeds is truly complex, hidden largely from sight and inspection, and fragile.
- Lucy Dadayan, “State Revenues from Gambling”, Rockefeller Institute, April 2016 (the Blinken Report), http://www.rockinst.org/pdf/government_finance/2016-04-12-Blinken_Report_Three.pdf; Wall Street Journal, September 19, 2016, R2.
Ron W. Coan 