As two ships pass in the night: the short story of American economic development Thru the 1990’s
Chapter 20 could be viewed as an abridged version of our American economic development history.
Its more than that, however. Abridged and more broad-stroke than the individual chapters, it presents offers the reader a road map and a 200-plus year context. Also, the short history offers new material, describing the impact of environmentalism in the Transition Era in redefining growth—up to then the ultimate goal of all forms of economic development. In the Transition Era growth confronted economic decline—and a changing political culture that elevated the environment as a crucial factor in economic growth. Environmentalism will give way to climate change during the twenty-first-century Contemporary Era—but that is a tale for the next volume. The outline of environmentalism puts our finishing touches on the Transition Era.
Hopefully, this history puts an end to the notion that American economic development mysteriously emerged after BAWI, first or second waves (whatever they are?), or sometime after WWII. Economic, and later community, development has always been with us—even in colonial days. Onionization, our awkwardly named concept, alerts us that the past does not fade away; it remains tucked into its own niche, still functioning and playing a valuable role in the overall task of jurisdictional level economic development. The past, reflecting the political culture of the time, informs the present—as the twig is bent.
AS THE TWIG IS BENT
Population Mobility and Diffusion of Political Cultures
Population mobility, urban competitive hierarchy, formation of jurisdictional economic bases, and political cultures were chief drivers of colonial and Early American economic development. In these years our first American municipal policy systems were born. Many of Woodard’s Eleven Nations piled into, i.e. immigrated and then migrated, the continent. Our impactful colonial/state constitutions and city charters were written and approved—and our federal government came into existence. When we modified colonial politics/structures to accommodate Republic citizen participation, older traditional English sub-state structures (municipal corporations, counties, boroughs, city legislatures, court systems, and law) were transferred and adapted into state and local government constitutions and municipal charters, preserving in their ED-relevant structures the political, philosophical, and religious values of the late medieval/early modern period when the city’s economic base was agriculture and trade. The essence, certainly the spirit, of these state-level structures, remained largely unaltered in most states well into the Jacksonian Era and Gilded Age.
After 1800 population mobility was mostly domestic migration, with German, some English, and Irish immigration picking up after 1840. The Yankee Diaspora was a nineteenth-century phenomenon—but once the floodgates were open, the Great Lakes and northern Midwest were deluged by New Englanders. Town governments were established. But in the Midwest other Woodard cultures contested in the development of state constitutions. The Yankee Diaspora opened up the Great Lakes through Michigan to Minnesota. The states of the northern/Midwestern hegemony were established mostly before 1850; Illinois, the last, homesteaded by the Illinois Central Railroad (ICRR) in the 1850s.
The South also experienced great population mobility during the Early Republic but, because of its slave-based agricultural/plantation based economic system, little citybuilding resulted. The slave “Passage to the Interior” and Native American Trail of Tears cleared and repopulated the Cotton Belt. Scots-Irish Daniel Boone opened up Kentucky in 1809 and Scots-Irish like Davy Crockett, Andrew Jackson and Henry Clay settled and built out to the Mississippi River.
Population migration carried the values of the original 13 colony political cultures across the nation and incorporated them into new state constitutions and local charters. The form of government, the relationship between emerging private elites and fledgling, intentionally weak public sectors, and either centralization (to the state) or decentralization (to municipalities) of governmental powers were critical features snuck into these original documents. It should be noted the South (with fewer cities) retained more power at the state level, and Yankee state government retained more economic development-related powers as well. Towns, aside from infrastructure, were tasked with (people-focused) functions more associated with a future community development. Mid-Atlantic and central Midwest states, however, were more decentralized and their local governments more autonomous. New state constitutions were often hybrids with several political cultures duking it out at constitutional conventions. Regions mattered, and diversity and variation were evident from colonial times to the present.
Warner’s Privatist Philadelphia reflected a decentralized Pennsylvania’s, radical democratic politics and its passive Quaker business community. Power gravitated to merchants and emerging sector business elites rather than Quaker established wealth. Charleston and New York evolved differently, reflecting their own elite cultures— producing different policy systems. Quincy’s Yankee Boston reflected a Yankee political culture composed of a maritime and trading business elite and pioneering manufacturing entrepreneurs. Its emigrants, the Yankee Diaspora, spread towns, manufacturing, education, and ED transportation infrastructure through Upstate New York into the Great Lakes, the upper Midwest, and even to California and the Northwest Pacific. This diaspora sowed the seeds from which a post-Civil War economic and political hegemony developed. That hegemony would dominate American economic development until 1965–1975.
The American industrial age began a bit later than most think—long after the foundations of American state and local government had been poured. Coastal America, for example, enjoyed almost 200 years of non-industrial experience. These constitutions/charters and their economic development-related structures were pre-industrial, devised by plantation owners and finance/trade “merchants.” In 1790 much of what we associate with modern capitalism remained a good 50 years or more in the future. The Early Republic was mostly pre-industrial, with manufacturing, transportation, communication, and finance the new disruptive innovations, i.e. gazelles. In 1794, when the First National Bank (Hamilton’s National Bank) was approved, only 16 state-chartered banks existed in America (Klebaner, 1979). This was decidedly not the Era of Finance or Industrial Capitalism.
In these years, and over the next 100, the principal ED strategies reflected the growth of population, urban centers and manufacturing. Trade and transportation were the sectors that connected States and their cities, and upon which the first competitive urban hierarchy rested. At the municipal level, infrastructure and city-building were the chief ED strategies of the era.
Jurisdictional Economic Base Formation and Business-Dominated Policy System
Leaving aside “furnace towns”, the very first factory in America is alleged to have been the Slater Mills, a yarn spindle machine factory that opened in 1791 Pawtucket, Rhode Island. Slater is the “father of American factory system” and was called the “father of the American Industrial Revolution” by no less an authority than Andrew Jackson. The 1812 war with Britain provided the single most important spur to the pioneering New England textile industry by forcing the industry to develop American financing capacity and domestic markets; it also linked New England textile mills to Yankee ships carrying southern cotton to New England, not to Birmingham, UK. Shortly after textiles, chemicals and machinery started, mostly around Philadelphia. Jurisdictional economic bases evolved different sectors, and business communities reflected these subtle differences.
Over the next 50 years, any city of size attracted its own distinctive “agglomeration,” a confluence of firms in a single industry—and the local jurisdictional economic base emerged. Industrialization was largely a northern phenomenon and jurisdictional economic bases acquired a regional as well as local variation. Consequently, northern industrial agglomeration was the defining feature of what we call “Big City” economic bases and the core responsible for the “Big City” economic hegemony. For the most part, that agglomeration was not shared with other regions, providing the basis for a lag, or temporal imbalance among American regions. When the latter regions attempted industrialization, they did so in another time and different conditions.
In the colonial era, and continuing into Early Republic years, the jurisdiction’s business community, particularly its more successful entrepreneurs, were predominant participants in the ED municipal policy system. They defined ED in their own terms and needs; this meant ED was effectively “privatized”, delegated to private EDOs like Boards of Trade (pre-Civil War chambers did not fulfill the same functions as they do today). The Philadelphia Board of Trade, formed in 1833, was the nation’s largest at the time. Greed, self-interest and conflict of interests were less the issue than the business community’s low-tax, low government capacity/service expectations, which seriously limited the functionality of local government. American ED, through to the Depression, will be predominantly led by private business elites and their EDOs, rather than public and local government EDOs. We entitle the ED paradigm that emerged as Mainstream ED, and in these years it was closely tied to hegemonic Big Cities.
EARLY REPUBLIC: INFRASTRUCTURE, FIRST-LEVEL COMPETITIVE HIERARCHY, AND CORPORATE CHARTERS
Modern economic development and in particular our Big City mainstream economic development, is a creature of the industrial age. Economic growth was purely private sector driven, and weak governments meant that ED required the construction of an economic development organization (EDO) capable of blending the strengths of each into an ED strategy or project. A public/private EDO is labeled as a “hybrid” EDO. The search for an effective and accountable hybrid EDO will persist until the first decade of the twentieth century. Corporate charters were our first hybrid EDO. Dating back to late medieval/early modern eras, corporate charters were seized upon by Early Republic state governments to empower state-chartered, public-private manufacturing firms, banks, insurance companies, canals and railroads to implement and finance ED infrastructure growth strategies. They were the primary ED structures of the Early Republic.
Corporate Charters
Corporate Charters were both an ED “tool” (see Chapter 1) and an EDO. Neither the private side nor the public side of this public–private partnership was particularly experienced, and the challenges associated with early American infrastructure installation were severe. Using corporate charters, the transportation infrastructure of the day (canals, steamboats, and railroads) was installed—motivated by an incredibly intense and pervasive intra-municipal competition to become a regional, if not nationally, leading city. Corporate charters were the ED tool/hybrid public–private EDO that provided the muscle behind the first-level competitive urban hierarchy—the status/ economic powerhouse driver of economic development programs—and urban growth. Unfortunately, they possessed a Darth Vader/Luke Skywalker-style result.
Corruption did occur, but more importantly Early American corporate charters institutionalized conflicts of interest. State legislatures did not anticipate what lay ahead and corporate charter debts were theirs as well. In 1837 a horrible, long-lasting Panic began. The economic collapse took banks, farmers and railroad charter companies down with it. Corporate charters didn’t weather this storm, and to ED’s everlasting delight (sarcasm) in the 1840s the first phase of our infamous state constitutional gift and loan clauses was approved. Gift and loan clauses define the relationship between the public and private sectors—in this case in ED-related activities—and seriously challenged the legality of the corporate charter. The impact of gift and loan clauses on ED varied by state, cementing in place the diversity and variation of state ED patterns and EDO systems. In many states the state pulled out of ED, leaving the territory to the local governments. Local governments (in the North) then used corporate charters and, in so doing, growing municipalities assumed leadership in sub-state ED. The South was an entirely different story.
Early Republic: Modern Corporation/Railroad as an EDO
Within a decade or two, the corporate charter was replaced by the private corporation. Using the modern business corporation to conduct economic development meant entrusting to it government powers on top of its private functions and purposes (i.e. making that business corporation an EDO—think railroad and bond issuance/eminent domain). Pursuing a shared objective (a transcontinental railroad, for example) public and private sectors redefined, almost fused, their relationship in the pursuit of a common objective. ED, the policy interface between the two, was literally caught in the crosshairs.
With the legalization of a modern corporation, state and federal governments delegated the powerhouse ED tools of eminent domain, tax-exempt bond issuance, along with property tax abatement, directly to private corporations. Railroad companies condemned land, issued tax-free bonds and garnered tax abatements for the rails and bridges. They acquired immense public acreage which they sold off to homesteaders and municipal corporations.
Like the streetcar franchises a half-century later, railroads discovered the real money was in homesteading and city-building, not laying track and building bridges. In the last half of the nineteenth century, one could make a strong case that railroad corporations were a primary EDO of the period—its impact on western states and cities, and its fueling of Populist and later Progressive Movements is testimony to the behind the scenes impact of federal, state and local ED policy-making—for good and evil. Railroad infrastructure, aside from the Transcontinental, was chiefly a local affair. City-building, infrastructure, and municipal/state population/industry attraction strategies were dominant ED strategies of that era. The government/private relationship became pretty murky/corrupt and a new round of gift and loan clauses ensued, driven by the Populist and Progressive Movements. A search for a new hybrid (public–private) EDO recommenced.
Early Republic: Southern Gift and Loans
In the South, state governments consistently played a larger role in local ED, which was rural plantation based. The South did not construct transportation infrastructure using corporate charters or railroad corporations as intensely as did the North. Rather the South used them to create and fund state-chartered agricultural banks which lent to southern plantation owners. They went bankrupt even faster than northern canal charters. As a consequence, southern state legislatures approved some of the strictest state-level gift and loan provisions devised, facilitating the entrenchment of an export-slave-agricultural economy and inhibiting any pretense of following the northern industrial example.
Instead, the few southern large cities that existed were mostly coastal or river port cities and oriented toward export of commodities and import of goods. Southern ports then played, and still do now, a larger, more visible role in southern ED. Also evident in southern state and local policy systems were persistent, if periodic, “populist” movements that, for better or worse, served the function performed by the immigrant ethnic machines that developed in Big Cities up north. One might be forgiven for confusing 1931 Balance Industry with Agriculture (BAWI) with this southern populist legacy in that a southern politician answered popular demands to provide Depression era jobs by attracting manufacturing from the North.
Local southern policy systems did develop, of course, mostly after the Civil War. Southern (post-Reconstruction-era) ED was private, rural, geared to export and based on low-wage former slave, white subsistence sharecropper agriculture. The southern economy remained semi-feudal, and so was its politics. Since the railroad corporations, the key EDO of the post-Reconstruction era, were mostly northern-owned and the personification of the Big City/Northern state hegemony, they were none too popular in the South. Eventually, a deal was made and Northern railroads laid the infrastructure for southern industrialization, but they did so at the expense of fueling a southern perception/reality of northern colonization. The legacy of railroad corporations as a southern EDO played a profound role in twentieth-century ED.
CIVIL WAR AND THE EARLY INDUSTRIAL ERA: BIG CITIES
If there were to be a candidate for the fourth driver of ED, it would be war. The Civil War triggered more agglomerations, more steel, more railroads; and did it ever create steroidal population mobility—ranging from refugees to cities and homesteading to Kansas and the Dakotas. This is the era of transcontinental railroads that opened up the West, and emancipation of African-Americans that made the future Great Migration possible, if not inevitable. The devastation it wreaked on the South was enormous, and unappreciated up North. From lost generations to Sherman’s March to the Sea, war’s urban renewal program meant older southern cities had to be rebuilt. From these ashes, after 1876 Reconstruction, a “New South” business entrepreneur class slowly emerged.
What the war left in its wake, however, was a northern and Midwestern state Big City-based political and economic hegemony. Big City jurisdictional economic bases created sprawling empires in the South and West—empires that persisted into the 1960s generating bitter local feelings. The economic and community development that rose from Gilded Age industrial Big Cities provided the foundation, role model, and benchmark for economic development in all regions of the nation. This industrialization, loosely defined, and the reaction to it, was the midwife of modern American state and local economic development. During the Gilded Age, ED was locally driven, but Dillon’s Law involved the States as well—providing many an “opportunity” for state legislators. Big City ED also drew from the pressures created by immigration, absent in the South. Immigration vitalized and transformed the Progressive “ship,” and spawned the earliest forms of contemporary American community development. Immigrant votes sustained a bifurcated Gilded Age policy system—split between a businessman mayor and a machine municipal legislature. Each practiced their own forms of economic and community development. Big Cities developed a hybrid machine CD and Mainstream business ED policy system—which was widely recognized as one of the worst on the planet.
Northern Big Cities were encumbered with the heritage of its over two-hundred-yearold political culture. Its awkward Early Republic governance fared poorly in the transition to the industrial age. Its incredibly weak, fragmented, and “messy” municipal and state governments policy systems produced compromised, often corrupt, evil smelling economic development outputs. The need to clean up and modernize American state and local governments proved to be the most compelling Gilded and Progressive Age prerequisite for modern economic development. That need to create “municipal governmental capacity” highlights the reality that political/electoral/ bureaucratic structures are critical to understanding modern economic development, as well as serving as vehicles for the transmission of political culture values across time and place.
Business and professional Privatist elites, lodged in chambers, pushed hard for capacity reform; eventually these business elites created our modern municipal bureaucratic, electoral, and policy systems. Along the way, they developed a system of professional, private EDOs, chamber-led (today sometimes mistakenly called first/ second wave), that served as the backbone of Mainstream ED and our Classical Era.
However painful to watch or describe, these policy systems over the next 50 years created a modern industrial behemoth that by the 1920s was the foremost industrial power in the world. Whatever else they did, Big City economic development policy systems managed jurisdictional economic bases that produced more widgets and first-class lifestyle that probably equaled or exceeded, any other nation on the planet. That it also produced injustice, and inequality—even misery for many—is also true. It also sustained hope, and hope, expressed in individual aspirations, made assimilation possible—at least for the immigrant population of this Era. The immigrant First Ghetto, the ghetto of this era, was in the long run a success story.
GILDED AGE HEGEMONIC BIG CITY POLICY SYSTEMS
Emerging after the Civil War, immigrant political machines arrived on the scene. Machines, from my perspective, were the initial expression of CD’s community organizing approach—and the most effective one. Machines opposed Warner’s Privatist business elites, who responded by conducting a full-scale war that lasted … well … forever. When the NYC Tammany–Tweed machine developed in NYC, the nineteethcentury chamber movement was born, quickly spreading across the country. Chambers were home base for the rising corporate industrialist, transportation/railroad and communication barons (our one-percenters). The king of American chambers was NYC’s; it became the chamber for the nation’s one percenters—the nation’s chamber. It found ample time, however, to deal with Tweed—sending him off to jail, and putting in place a Gilded Age Big Cities policy system. Mark Twain and Charles Dudley Warner wrote a novel, The Gilded Age (1873), that provided a name for this period.
The 1880s witnessed a bit of an inflection point for ED and Big Cities. Immigrants from new countries surged into Eastern Big Cities, and, from there, into Midwestern and western states. Entrepreneurism and innovation traveled with these newcomers. A solid army of surplus cheap labor also followed. Wage rates and income didn’t rise for a generation, but production and qualitative changes in urban lifestyle did. Immigrants settled in a mosaic of ethnic neighborhoods, which formed post-Tweed ward-based ethnic machines. Elected to the city councils (there were usually two) were the ward bosses who challenged business and professional middle class. Old money, corporate elites, young managers and professionals retreated into their chambers and civic clubs to fight back.
The resulting struggle defined Big City policy systems until the Progressive Age. It produced blended ED/CD policy systems with businessmen mayors accessing public powers for private EDOs through boards and commissions, and legislative machine majorities working through/against business transportation/energy franchises. From this tangled web, new twentieth-century ED and CD wings, professions and strategies would take seed. Out of this mélange, a governmental wing of ED slowly developed around engineers, public works and infrastructure installation. NYC’s Department of Docks receives the honor of being the first Big City governmental EDO.
Businessmen mayors and machine-dominated city councils accommodated this growth through infrastructure, water/sewers, parks and constantly changing transportation modes that tore up Big City streets and left them full of horse dung, mud, and dust. That same infrastructure permitted, if not drove, population to city peripheries and beyond as “streetcar suburbs” took shape; the second competitive hierarchy—the metropolitan—was already a feature of Big City ED in the 1880s. Disease led to water and sewer infrastructure, and pollution abatement. A Parks and civic improvement “Beauty” Movement spread across America, creating a new set of professions.
These professionals, by dint of their more community focus, pulled them apart from mainstream business; they advocated community-wide infrastructure and planning that sought goals such as immigrant assimilation, improving quality of life in the industrial city and political stability. Their infrastructure brought benefits to people and society above and beyond economic growth. They would form around architecture, planning, and parks/water infrastructures, and would eventually crystalize in the 1890s with the first phase of the City Beautiful.
Much of this was directly related to economic development—and would become an important strand in our history. In these years one can see early economic developers as engineers in public works boards and commissions, architects and landscape architects in parks and water systems, and upper-class activists in settlement houses, and a political machine-style community development in practice.
Mainstream Nineteenth-Century Big City Chamber-Style ED
Chambers were Big City ED’s most powerful EDO of the day. Populated by the heavy hitters of each Big City, they fought railroads and the robber barons on their own turf. Rising to the challenge of immigrant-driven population growth and the incredible innovation and entrepreneurism of the age that produced new sectors from nothing— new firms, new jobs, new pollution and a Horatio Alger popular culture. Big Cities, led by their business and professional elites, were prone to bouts of civic pride, and spurred on by competing with other Big Cities. They wanted theirs to be the best. Their EDO was the World’s Fair or Exposition.
The Exposition Movement beginning in the 1870s, peaked between 1893 Chicago and 1901 Buffalo World’s Fairs, and continued through NYC’s (and San Francisco’s) 1939 World Fairs. Lost in the fog of history, these Expositions were truly awesome ED initiatives that generated innovation and growth of everything from academic disciplines to planting kudzu to reduce erosion.
Each city took pride in the accomplishments of its jurisdictional economic base, and ability to attract cutting-edge technologies of the day. Exhibitions were also municipal tourism at its very best—allowing growing cities to strut on the urban competitive boardwalk. Their impact on professions and technological innovation blazed a standard for the future Silicon Valley’s trade conventions. From Atlanta’s 1880s’ cotton exhibitions, the Pacific Coast’s Progressive Era “coming out” affairs, to Boston’s airplane and airport conventions in the 1910s, this chamber-led, city-wide initiative pulverize detractors of civic pride and boosterism. From expositions one can argue the competitive urban hierarchy could produce innovation and foster urban growth. If one wants to understand the diffusion of ED programs and strategies across the land, look first at the competitive urban hierarchy.
From chamber-led initiatives came not only expositions, but Olmstead’s municipal park system which was installed in nearly every Big City. In this Era, the convention and tourism industry flourished. Atlantic City and municipal convention centers appeared. Chambers also served as brokers between municipal government, real estate exchanges, and transportation franchises. While they toppled Tweed’s machine, chambers found a way to work with Kansas City’s Pendergast and Cincinnati Cox machines. Operating through boards and commissions and businessmen mayors, chambers were a principal player in responsible urban growth of the era. Moreover, they recognized a weak municipal public sector could never counter the graft of city councils or cope with the never-ending growth of immigrants and urban modernization.
Accordingly, chambers provided the leadership and political support, by advocating meaningful capacity-building for city government. By the end of the Gilded Age a Progressive Movement, infused with business-led “structural reformers” and home rule activists, wheedled from state legislatures empowered municipal government home rule charters that let Big Cities eventually lead American municipal economic development.
BIG CITY PROGRESSIVE-ERA ED/CD (1890–WWI/1919)
As far as American economic development is concerned, this is one of the most important periods in our history. Its impact today has lost most of its luster in that its achievements and innovations are more than one hundred years old. After 1890, the physical landscape of the contemporary Big City assumed its present-day shape: neighborhoods, the CBD, modern urban infrastructure (including subways and airports) were installed, the drive to the suburbs began in earnest. Modern public policy systems (new forms of government, planning, budgeting, public works, municipal finance) were approved and put into place. From the physical landscape rose several nation-wide economic development movements (led by Daniel Burnham among others) such as City Beautiful, City Efficient, and City Functional. A viable and impactful neighborhood physical development revolved around schools and housing reform.
An explosion of critically important EDO/CDOs populated our profession and policy area: modern professional, membership-driven chambers, chamber industrial bureaus, chamber- (and privately) managed industrial parks, the US Chamber, state, and national professional associations, port authorities, municipal research bureaus, and government state/local departments and commissions. Most of what Mainstream economic development does today was institutionalized and converted into formal economic development strategies and programs in the Progressive era.
The academic Policy World flourished around emerging disciplines and disciplinebased associations; regional and national foundations entered into the arena, and professional associations (planning, for example, which in this period contained much that was relevant to ED (zoning, comprehensive plan, planned suburbs, for example)) assumed a critical importance in American ED. Modern business administration worked out new methods of management and production that set in motion the professionalization of our jurisdictional economic bases.
Big Cities became bigger cities. Market areas of jurisdictional economic bases expanded beyond a region across the nation. Oligopolies and concentration of industry cemented Big City dominance of the South and West. Pricing/production “systems” such as “Pittsburgh Plus” established a manufacturing colonialism in these regions and limited the diffusion of manufacturing. “Branch” factories became the target of chamber-style economic development across the nation; attraction and retention, and the construction of railroad-owned and chamber-led industrial parks spread to all regions. Tax abatement was a chief tool used to fight suburbanization of industry, and advances from neighboring states. Attacks from the South were felt most later in the 1920s. But in the 1890s, New York created and permitted new economic development initiatives to counter those from Pennsylvania. But Massachusetts in the 1890s encountered the first decline of its aging textile industry—it wondered if the cause was a new and rising southern textile industry. The first phase of economic development’s “Hundred Years War” commenced.
Tens of millions of foreign-born ethnics flooded into Big City ports and neighborhoods until 1924. Massive immigration made the push to Big City peripheries inevitable, but annexation was the economic development counter. Long before the Great Migration, Big Cities had segregated themselves by income and age of housing. In these early years a not-too-well understood neighborhood movement developed. Eventually, University of Chicago Policy Worlders conceived the neighborhood succession paradigm by the early twenties. Neighborhood succession was no real issue as long as Big Cities could annex, but by the turn of the century suburban annexation was being resisted and by 1920 was mostly futile. The Age of Suburban Autonomy was in place by 1920.
Emergence of Community Development
Our Second Ship of Economic Development crystalized in Big Cities during the Progressive Age. ED bifurcated in the pre-twentieth century into Mainstream Economic Development and Community Development. It is at this point our Two Ships become clearly distinguishable.
The story of Community Development is told through the description of its many “wings” or sub-movements. America’s first “great” period of immigration transformed neighborhoods into political “wards” that sustained political machines, fueled a residential housing and subdivision industry of residential/commercial developers, insurance companies, and, of course, streetcar suburbs to house those who fled from the immigrant neighborhoods. Immigrant neighborhoods also fueled housing reformers—the most successful wing of early community development. Also during this era, streetcar franchises became the fuel that elected socialist and social reform mayors—theirs was new policy system formed with its fragmented class-ethnic voting blocs competing and forming alliances.
From settlement houses and neighborhood schools, community developers plied their trade. By the turn of the century, however, these community development wings increasingly labored in the shadow of its dominant wing: the “housers”—concerned with immigrants, safe and modern housing, and municipal housing reform. Zoning, building codes, and planning, became early community development tools.
After the twentieth century’s mid-first decade, community development planners debated whether “the old industrial city” was a suitable place to raise an immigrant worker family. Survey’s measured the quality of ethnic and immigrant neighborhoods (Pittsburgh Survey), Some planners wondered if planned suburbs were better places to house workers and immigrants than the old battered industrial city. They planned affordable, garden-city style, suburban neighborhoods—than a complete suburb. Early foundations, such as Russell Sage, funded these suburban-style housing/planning pilot projects (Radburn et al.). Such experimentation gathered momentum well into the 1920s and the Depression years. The inability of the regional suburban-focused planning wings to deliver affordable suburbs set them on their back foot. They, however, never abandoned hopes. New (suburban) towns have always been a minority wing within CD, and periodically these folks will reappear throughout the twentieth century.
From the start, there was little organization or coordination among the multiple CD wings. Many community developers were not willing to abandon central city neighborhoods. To the contrary: viable neighborhood, recreation/school and even social worker were not about to abandon the Big City to its fate. A full-blown Big City neighborhood planning initiative and a model of neighborhood succession guided their efforts. Eventually, by the twenties a Big City housing wing advocated that large-scale, new, publicly owned housing was the strategy of choice to maintain the primacy of the Big City. With America’s entry into the First World War, however, another challenge to neighborhood CD appeared—the Great Migration had begun.
Mainstream Chamber-Style ED
Earlier we discussed the herd-like Exposition Movement. I blamed Expositions on civic pride and boosterism, but observed they were fantastic generators of innovation diffusion. Underlying all of this was an economic development whose ultimate goal was simple economic growth expressed in an urban competitive hierarchy. The competitive hierarchy had a darker side as well. In the Progressive Era growth was perceived as zero-sum—either a city grew, or it stagnated and eventually died. Growth was necessary to survive and flourish. Chambers assumed responsibility for growth and for protecting their Big Cities from these urban hierarchical threats. However, the story of how they adopted that role and responsibility is little known, but critical to our economic development history. The Progressive Era were turbulent years in the history of chambers of commerce.
After the turn of the century chambers were the exclusive preserve of the one percenters. The general business community could be found in Boards of Trade or trade exchanges like the Real Estate Exchange. After the turn of the twentieth century, however, the one percenters gradually left local chambers in favor of the US Chamber, state chambers, or municipal research bureaus. Chambers faced crises of membership, revenue and purpose. At this critical time a rival business organization, relying on membership from the general business (merchant) community, rose from nowhere (Merchant Association)—and older Boards of Trade became more active in ED.
Under duress, chambers across the nation professionalized under the leadership of a trained, experienced, and hopefully talented Executive Secretary, and new state-level Chambers provided state legislative support and some technical assistance and marketing to local chambers, but it was left up to chamber secretaries, such as Ryerson Ritchie, and Merchant Associations such as NYC’s, led by S. Cristy Mead, to conduct campaigns to both increase general business community membership and merge the multiple Big City business organizations to create the present-day chamber. Professionalization also meant adopting scientific management techniques and forming industrial bureaus to conduct traditional economic development activities, and spinning off tourist, convention bureaus, and industrial parks into separate entities.
Over a decade municipal businesses organizations consolidated, professionalized, and chambers emerged as powerful multi-faceted EDOs, conducting a variety of ED strategies They preserved their position as the Big City lead agency and elevated Mainstream ED into the golden years (1910–1930) of the Classical Era. In 1926 the American Industrial Development Council was formed as a subsidiary by the US Chamber of Commerce. The AIDC was the first pure, and durable, economic development national professional association.
Meanwhile, back to the one percenters. The Municipal Research Bureau formed in many Big Cities; its ostensible purpose was to modernize and professionalize the newly acquired capacity of municipal government. The one percenters, along with chamber structural reformers, battled to transform city government into the City Efficient. Municipal governance was augmented by adopting city manager, commission and strong mayor forms of government. Governance capacity was immeasurably enhanced through budgeting, accounting, planning, and the application of business-developed scientific management principles. Key professions such as budgeting, finance, and planning were organized into municipal departments and municipal government assumed a coherence it had never enjoyed. New planning tools, especially zoning and later the comprehensive plan, furthered ED goals and cities assumed responsibility for infrastructure. Modernization (electric, telephone, and asphalt roads) of most Big Cities was conducted by these newly installed modern policy systems.
The City Beautiful/Practical and City Functional
It was chambers, in partnership with new municipal governments, that advocated for what proved to be America’s first nation-wide CBD modernization initiative (actively promoted by Daniel Burnham): City Beautiful (CB). Arising from a confluence of the Parks Movement, the early planning movement and Burnham’s 1893 downtown Chicago Exhibition, the City Beautiful started out as an Olmsted proto-community development exercise in city beautification through parks and Beaux Arts architecture. City Beautiful abruptly changed direction in 1903 when social reform mayor Tom Johnson and Cleveland’s business and architectural community hired Burnham and adapted CB to build beautiful downtown government buildings, remove at-grade rail, build beautiful downtown central train stations and install a network of roads and freeways that ran out to the farthest reaches of the suburban periphery. City Beautiful institutionalized the downtown as the headquarters not only of retail and office but also of government and transportation. It tore up much of the original downtown, and should be considered as our first wave of urban renewal.
With ambition bigger than municipal budgets, however, in the 1920s CB throttled back to the City Practical and focused on a major governmental complex, the civic center. The civic center included key municipal buildings, a convention center, adjoining parks, and cultural institutions. As part of that complex, convention centers spread across the nation and tourism/conventions was elevated to first rank municipal strategy. Though it only partially achieved its initial ambition, CB was nationwide, yet another herd-example, a viable public–private partnership, led by the chamber and implemented by the more “capable” municipal government. Arguably CB was the major example of mainstream ED in practice and offers support for the privileged role the CBD enjoyed in Mainstream ED. It was also the first example of mainstream ED stealing a CD initiative.
Holy Grail Hybrid EDO: The Port Authority
Little appreciated today, a powerful EDO emerged during these years—the modern port authority. A creature of the Progressive Movement, the twentieth-century port authority’s purpose was to control/manage vital transportation, logistics and export/import functions of America’s coastal, river, lake and Gulf ports. Copied from a model organization created from London’s 1908 Port Authority legislation, it was imported to create a revolutionary American organizational form, the holy grail of economic development, an effective, modern hybrid, public–private EDO. The twentieth-century port authority acquired support from courts and popular/business support.
The port authority format/model over the next 50 years was applied/copied to address other ED problems such as: to issue tax-exempt bonds (IRBs); conduct public housing and slum clearance redevelopment; commercial area, eds and meds, and CBD urban renewal redevelopment; highway authorities; regional planning, industrial development agencies, and brownfield/BRAC redevelopment agencies. During the preDepression years, modern port authorities spread across the nation. Oregon, Washington and Texas (later Ohio and several southern states) used port authorities as leading EDOs in their state ED system. The dramatic growth of Houston can be traced to a big ditch dug by its port authority. ED would never be same after it had embraced the port authority model.
Suburbs: Metropolitan Competitive Hierarchy
Annexation, the ultimate form of population recruitment, through the Gilded Age to 1920 had been an essential arrow in the Big City ED quiver. But increasingly suburbs were of two minds concerning annexation. So long as it meant cheap and necessary infrastructure (water and sewers especially) it made sense to suburbs to support annexation. But Big City conflict-ridden politics and government, high taxes, corruption, and machine-populism played badly in middle-class peripheries. Convincing the state legislature to require Big Cities to secure suburban referendum approval was the principal vehicle used to stop suburban annexation. When annexation referendum were rejected by most suburbs, it was evident suburban autonomy—a de facto independence—had taken over Big City metro hinterlands. After 1910 or so, Big Cities found it difficult to chase population that spilled across their boundaries. By 1920, it was clear the second competitive hierarchy—the metropolitan hierarchy—confronted Big City hegemony over hinterlands. After 1920 (until 1990 or so), restraining, managing, or controlling suburban expansion would be the chief driving force, and the principal goal of Big City economic (and community) development.
Federal government encouragement of freeways and highways began around World War I—after suburban autonomy was in high gear. The explosion of automobile registrations and the movement of industrial sectors to expanses of vacant land for new facilities meant that decentralization by 1920 was not only set in motion but also surprisingly well developed. In the 1920s, pioneered by Kansas City’s J.C. Nichols, the modern residential subdivision and the mall were first built. The nation was now majority urban, and of that about 25 million lived in central cities and 9 million in suburbs (Hobbs and Stoops, 2002, p. 33, Table 1-15).
The first major ED strategy to contain suburbia was the City Beautiful, and the second, the metropolitan regional plan. Later in the twenties and thirties, a (City/ County) federation movement appeared. None came close to working; ED/CD gravitated toward “urban renewal.” Make no mistake, suburban decentralization was high on the urban agenda as early as 1910.
THE SOUTH AND WEST: CIVIL WAR TO DEPRESSION
As soon as we venture into other regions, the variation in policy systems and ED/CD magnifies. Neither western or southern policy systems/ED correspond closely to Big Cities’ experience. The West and South are each in another, albeit related, world with different histories, challenges, and political culture, and they must take into account the economic/political hegemony. Even those ED goals shared with the East (growth) are interpreted and defined differently. For example, the South’s followed a balance industry with agriculture strategy as early as the 1880s; it was intended to preserve agriculture’s privileged position in old South. The West and the South are literally in different time, a different environment, a different political culture—as well as a different place.
The South
Still mostly rural, with few even moderately sized cities, the South reacquired its state sovereignty at Reconstruction’s end (1876). On the whole its political elites envisioned a “back to the future” scenario centered about cotton export, subsistence labor, plantations, cotton (and mill) towns, and “the Lost Cause-colonial” mentality. The South did not participate, even minimally, in the immigration flood pouring through northern ports. Its own cheap labor was mostly (the Carolinas and Virginia excepting) locked in place on cotton plantations with their sharecropper labor force. Regarding industrialization, cities, and agricultural modernization, the South possessed a “divided mind”. The planter class (Redeemers) was dead-set against it, and the young “New South” entrepreneur, except for Atlanta, was too weak to seriously contest planters in the State Legislature—or municipal chambers. While the Gilded Age North industrialized, the South resisted manufacturing and laid minimal railroad infrastructure.
The work of creating a modern industrial southern economy fell to northern finance, railroad and steel barons. Accordingly, what Southern industry created in this period was a “branch” of northern heavy industry; its markets and profits severely constrained by a national system of industry production and price controls. The South (except for Texas) did not develop strong financial institutions, and southern investment capital was limited. Southern textile, food processing and tobacco industries were financed by mostly southern investors before WWI. The guiding phrase associated with Redeemer agricultural elites was that any industrialization had to maintain the existing balance, i.e. dominance, of agriculture in the southern economy. In short keep the South the home of King Cotton.
An awkward working relationship between Redeemers, New South entrepreneurs, southern state governments and northern capitalists installed the railroad infrastructure, built steel cities like Birmingham and established a meaningful, if uneven, manufacturing presence in the South. Traditional southern states empowered private railroad corporations with public powers, supplemented by ample incentives, loose regulation, and, above all, low taxes and cheap labor. Other northern investors, like Wall Street’s Flagler, built up a largely empty southern Florida with infrastructure, advertising, railroad-led tourism, and population recruitment through real estate booms—we call it Miami today. After WWI, the boll weevil spread incrementally through the Cotton Belt, disrupting the plantation/sharecropper system as it spread. Horrific floods in the Delta, primarily, displaced a goodly number of sharecroppers as well. Cotton prices fell internationally. In this context, a Great Migration and Southern Diaspora commenced. Not only did migration disrupt the agricultural economy, it depopulated increasingly vulnerable cotton/mill towns, the core economic unit of the Cotton Belt. We shall return to this in the Depression era discussion.
Stringent state gift and loan provisions kept northern railroads and steel companies from challenging Redeemer elites in the state legislatures, thereby preserving Redeemer’s control over the southern economy and politics through the Depression. That gift and loan provisions played a different role in the South during these years, they resulted in different ED consequences. Southern gift and loan clauses did not present insurmountable barriers against corporate incentives in the South. Accordingly, the need for a hybrid EDO was weaker in the South, given its ED goals and different tilt to its gift and loan clauses. In any event, the legacy of this “divided mind” economic development was constant tension between Redeemer and New South elites, a pervasive and bitter belief the South was the North’s colony, and a bitter determination to follow a path the South wanted, not where outsiders pushed them.
Divided mind notwithstanding, northern industrialists and railroad companies built large cities from swamps and fields, and laid track across the South. While in no way attaining a competitive position with the northern industry, the South did develop an industrial base by 1920. After the turn of the century, New South entrepreneurs gradually got the upper hand and, through control of the municipal chambers, were able to grow southern cities around service and financial sectors. A small, but helpful tobacco-cigarette industry developed in Tidewater areas. The Carolinas and Georgia developed a serious textile industry—with native and New England textile investment. After WWI, the second phase of the New England textile war erupted. Triggered by declining markets and cotton prices after WWI, New England’s textile industry accelerated its decline—a decline which became conflated with southern attraction. The fear of southern competition generated a surge of ED retention strategies in New England states.
Thoroughly Privatist and Mainstream, southern ED wasted little time, certainly by the second decade of the twentieth century, in adopting a “northern branch recruitment” (i.e. attraction) strategy based on advertising, site selectors, promotion—and trips by State Governors who had already set up state-level EDOs to coordinate and support municipal campaigns. Making lemonade out of the lemons of low-wage, unskilled, surplus labor and a low-tax, minimal services, nonunion, loose regulatory context, they fabricated a region-wide state/municipal business climate recruitment strategy whereby each individual state, to one degree or another, attracted manufacturing from the only place in America that had it—the northern/Midwestern hegemony.
Using a business climate strategy and a variety of incentives and tax abatements, southern states and larger cities (Atlanta being the most aggressive) went prospecting up North. The goal was to diversify the southern agricultural economy into low-wage manufacturing. The 1920s in particular witnessed an intensive, municipally driven southern attraction campaign that did attract a few northern firms, but succeeded mostly in riling up northern, particularly New England, political elites, and inspiring a low-level, poorly funded business retention program in some northern states.
In any event, a “shadow war,” this time fought with ED strategies, between North and South had started. The most common northern response authorized state- and local-level tax abatements for manufacturing; but they beefed up state-level attraction efforts—which mostly likely were used to retain existing firms. Local northern chamber economic developers pioneered sophisticated attraction programs such as the Scranton Plan. Northern attraction efforts were useless in that they could never attract nonexistent southern manufacturing firms, and so they pilfered their northern neighbors’. Not good. In this atmosphere, the US Chamber formed a subsidiary, the American Industrial Development Council (1926), to promote responsible ED through professional education and an understanding of how best to promote jurisdictional economic growth. In this context, America’s first professional ED national association came into existence.
Texas, far removed from the Confederate heartland, blazed its own path, with no divided mind. It deserves its own special treatment. Pursuing economic growth, its culture supported a closed commercial/financial elite-dominated policy system that adopted an equally closed and intimate public–private infrastructure and attraction growth strategy—with spectacular success. Agricultural, cattle-raising, food and meat processing nurtured a capital-rich Texan financial system that invested in railroad and canal infrastructure to exploit newly discovered oil and gas reserves. Profits were subsequently invested into oil/chemical production, refineries and pipeline transportation to the Texan Gulf. Multiple Texan port authorities, established with aggressive chamber advocacy, linked their cities to the Gulf. Texas State was supportive but economic development was municipally driven. Amazingly, this elaborate Texan ED tale started in Dallas, Fort Worth and Houston in the 1870s—and was largely in place by 1930. Texas after the Civil War should not be considered part of the old South, Confederate/Redeemer policy system operating within a cotton plantation export economy.
The West
Most of the West was (and is) federally owned or Indian tribal reservations; many states were territories—Arizona didn’t enter as a state until 1912.The West was empty for the most part in these early years. But it surprisingly was not rural. Despite its cowboy/ cattle trail image, the shoot-out at OK Corral was in an urban area, a small one to be sure. Overwhelmingly, the West in this era is much more urban—with people moving to population centers. Early in this era there are more people in San Francisco than the rest of the West combined.
The West needed infrastructure (water, roads, and eventually power). And the non-Pacific coast West had resources which during this era were increasingly discovered and mined by large corporations—who effectively took over much of its economy and many state legislatures. ED and eminent domain played a rather large role in this at a time when the East and Pacific were using port authorities to curtail exploitation from companies like railroads and shippers (coal, timber, minerals, and ore). On the other hand, the rest of the West was cow-towing (pun) to railroads in a massive city-building strategy.
These are only a few instances of many that demonstrate the same EDO-types, strategies, and tools differ across regions at any point in time. Oklahoma City’s Chamber of Commerce cannot be compared to Boston’s or NYC’s, and for that matter neither can the New Orleans Chamber or Houston’s. EDOs with the same name (type) are doing different ED things, pursuing different ED goals. This ought not to be forgotten as one read’s this section. Interestingly, some contemporary Policy World literature conflates western small town chamber city-building boosterism with the behavior of Big City eastern chambers. In my view that is a mistake and a distortion.
It was the West, not the South, that captured the attention of most Americans, then and now. Western ED was way more urban than our cowboys, wagon trains, cattle trails, Wyatt Earp and Billy the Kid popular image. In the Gilded Age, the West engaged heavily in entrepreneurial city-building; outrageous city-builders, railroads, chamber boosters and homesteaders were its chief protagonists. Tales of individual city-builders are famous and nefarious (and convoluted as in Portland’s case). Western city-building “boosterism” so ridiculed in the literature, while characteristic of the era, was only an element of a longer-term city-building phase that developed the urban West. Western city-builders paid off railroads for access (i.e. provided incentives), but attracted northern hegemonic commercial investment and firm relocation less by incentives, than by PR; boosterism convinced investors they were a growing market area. Remarkably successful, it explains how cities like Tulsa rose from arid plains and Seattle, Portland and Minneapolis–St. Paul from transcontinental railroads.
San Francisco gold rushes sparked its first population wave; the Alaska Gold Rush (1898) leap-frogged Seattle’s economy and population, bringing people like William Boeing from Harvard to Seattle. Great Plains railroad- and cattle-driven economies soon discovered oil, as did California, and more population flowed in. The Pacific Coast cities followed City Beautiful, Parks, Burnham and Olmstead, exhibitions and world fairs, and thus were very much cast in the experience of the hegemonic East—compete with unions. In short, the region in its earliest days exhibited considerable diversity.
Manufacturing located in Pacific Coast cities, like Los Angeles, which drew its population from the South and Midwest, and proceeded to fashion its own unique urban experience, aggressively pursuing sprawl, fostering growth coalitions, and heavy-duty Privatist chambers. Infrastructure was key to its growth, and nothing stood in LA’s way to get what infrastructure it needed. The most successful, the epitome of chambers’ population recruitment, advertising, and branding campaigns, had to be Los Angeles and its chamber President, Frank Wiggins. Chamber-style economic development built Los Angeles—that and a cohesive one-percenter business elite. Spectacular growth and a unique sprawling city that encouraged suburbanization from Day One, Los Angeles was always the exception that proves the rule.
Beginning in Houston TX and culminating in Los Angeles, a series of cities, now linked by Interstate 10, forged their own way of conducting economic development. Otherwise, the West’s ED story involved infrastructure, creating national parks and fostering tourism, and harnessing water—mostly on federal government-owned land to develop crop and orchard farming, mostly in California. That story dominated western ED through the Depression and into World War II. National Parks, water, and power projects and, in California, massive irrigation projects, subsidized industries (truck farming, orchards). If California agglomerations are any guide, federal infrastructure can be a powerful cluster strategy catalyst.
Pacific Coast cities recognized that the 1914 Panama Canal opening would create major opportunities for their ports and jurisdictions. World War I erupted in the same year, exposing the West Coast’s military vulnerability. The first line of defense, a brand new Pacific Fleet, became even more pressing as a militaristic Japan invaded China in 1931. Recognizing a good thing when they saw it, Pacific Coast cities turned to their chambers to design and implement a “Fortress California” defense-spending strategy to attract federal funds and facilities based around jobs, supply chains and soldier/sailorattraction.
Port facilities, dredging, airports, repair bases and even fleet headquarters were specific projects for which each city competed. Californian, if not West Coast, regional competitive hierarchy was in the highest of gears in the three decades leading to WWII. Enlarging upon an older strategy (defense spending had long been sought after by cities like Charleston and San Antonio, if not Boston), a formal iron triangle government lobbying and sophisticated chamber-led local implementation reached deep into the Armed Services, Congress and even the White House to gather support for federal defense initiatives and implement them with local involvement. San Diego probably came out the best, but all Pacific Coast cities added new growth sectors/projects to their jurisdictional economic base using this strategy.
DEPRESSION, WAR, AND NEW DEAL
At this point our history enters Part II. The American and global economy collapsed in 1929 and never recovered until after WWII. By 1930, 25 percent of American workers were unemployed. The Dust Bowl hit and the South, previously the nation’s poorest region, were simply devastated. All this happened in the space of about one year, so abrupt was the crisis. Rich and powerful Big Cities were overwhelmed (they went broke trying to provide welfare), their chamber-style ED proved futile. State governments, undernourished and under-capacity, were little help. The sheer extent of America’s economic collapse simply reduced state and sub-state Mainstream ED to irrelevance.
Roosevelt’s New Deal was dragged deep into state and sub-state ED. Building housing not only created jobs, but it put roofs over impoverished unemployed families. In any case, the federal government was the only game in town with the resources and scale to offer any serious resistance to the Depression. From this point on, the federal government will be a primary player in American state and local economic development.
Under FDR federal activism was less ideological (although, of course, it favored a strong government activism); it was a response to economic collapse that threatened America’s system of government as well as its economic prosperity. The Depression was more than a Panic; it involved collapse of the global financial system and was an unprecedented crisis—that was followed by an even worse crisis—World War II. When WWII was over, America was arguably the leading global power and its single most powerful economy. Little of this was conscious or planned—almost all of the change, despite efforts to plan, was necessity and reaction. Massive external systemic crises changed the nature, configuration, dynamics, and the priorities of urban policy systems, and expectedly shook the foundations of classical American ED/CD.
The problem for us is that what it took to cope with the Depression, successfully fight a World War, and then assume responsibility for world peace and prosperity changed everything. America in 1950 was no longer the America of 1929. A great deal of what the feds did in these two decades substantially confirmed the importance of our Chapter 1 model. Populations moved about, jurisdictional economic bases shifted, regions acquired new economic meaning—and population. Entirely new competitive hierarchies developed and intruded profoundly into state and local affairs. Virtually everything that followed after 1950 and before 1990 was a derivative of the change unleashed during this period.
And as Fortress California Pacific cities had discovered before the war, leveraging federal investment was a lucrative, if not transformative, state and sub-state ED/CD strategy. The feds often have been criticized for consciously, or at least semi-consciously, introducing change for its own ends. To me it was more reactive to crises, opportunities, and deadlines du jour, and vulnerable to its own bureaucratic/ electoral processes that allowed groups, regions, and EDOs to manipulate its outputs. As the comic strip character Pogo said: “the enemy is us.”
Sub-state ED and CD adjusted its strategies, tools, and programs to use the federal government to its advantage. This changed what had been a core element in Classical Era ED/CD. In this shift, sub-state ED/CD, which heretofore had been the driving force of American economic development, was during these years looking to Washington for resources and inspiration. It was not until War’s end that sub-state ED reasserted itself and pressed for its own agenda.
Depression Year’s Overview
Chambers and mainstream ED became FDR’s not-so-loyal opposition. Much, but not all, of corporate America thought him a socialist, or worse. Roosevelt enjoyed a 100-day honeymoon, passing the National Industrial Recovery Act (NIRA) and Agricultural Adjustment Act (AAA), but after that he had a tough slog getting things done. FDR was an old-style Progressive, not a Progressivist community developer. He was not a lover of Big Cities—he had never lived in one. His second home in Warm Springs Georgia sensitized him to the plight of the South. More than anything he wanted to get people back to work—this brought him into sub-state ED/CD territory.
In the West (and South), he installed infrastructure: dams for power, water and irrigation; highways, defense facilities—and worker housing for relocated defense firms. He launched an agricultural revolution that electrified rural areas, but also pushed surplus farmers off their farms and into cities. The Tennessee Valley Authority (TVA) was the first area-wide economic development program to develop power, electricity and jobs in the South’s most depressed areas. FDR pioneered what would later be called “area-wide” development in which a federal agency, the TVA, administered by southern governors, developed an ED strategy to promote economic growth. The federal government embraced a concerted and comprehensive “Big Push” to create regional economic growth.
For Big Cities, he provided relief and social security through states to unemployed workers and families. He also funded infrastructure projects such as the George Washington Bridge—projects that added to the fame and power of an important ED icon, Robert Moses. Moses, by the end of the decade, was America’s best-known economic developer. Like him or not, he was the wedge that separated Big City public economic development from planning. He did not do it by himself (municipal one percenters and mayors were critical) but more than anyone else, he developed a professional and policy nucleus/nexus from which Big City Mainstream ED would develop and expand over the following 30 years.
Blame It On the Feds: The Origins of Urban Renewal
FDR was personally indifferent to CD houser/planning initiative to demolish Big City slum neighborhoods and build publicly owned housing. That initiative, contested by business lobbies, had kicked around in Washington during Hoover’s last year, was employed by his Brain Trust to create trade union construction jobs under federal (NIRA) agencies and financing. A 1933 federal program, operating through grants to limited-dividend nonprofit housing corporations, directly injected New Deal federal agencies into demolishing blighted inner-city housing and neighborhoods, building limited-dividend nonprofit housing in their place. This was the start of a 40-year series of programs that today are collectively labeled “Urban Renewal.”
When NIRA was declared unconstitutional, New Deal administrator Harold Ickes initiated a two-pronged response: (1) to use federal entities to directly clear slums and build housing, and (2) to successfully urge states/municipalities to establish housing redevelopment agencies and transfer to them NIRA’s defunct slum demolition and housing construction program. By 1938, nearly all states and all Big Cities approved housing redevelopment CDOs. Throughout the nation, most cities of any size were engaged in slum clearance and public housing built by municipal housing authorities. In 1937 community developers negotiated passage of the Housing Act, which provided funding for public housing and slum removal to restore vigor to troubled inner-city neighborhoods. Using the housing redevelopment agencies most cities (including suburbs) and almost all Big Cities commenced large-scale neighborhood slum clearance and built different styles of public housing—in what by this time had become Hirsch’s Second Ghetto.
Urban renewal proved to be the most important single program in the history of American Economic and Community Development. During the 1930’s alone, three federal programs, the second two with local participation, established a solid redevelopment program that to this point in American history was the most significant federal involvement in local CD.
FDR’s Second Reconstruction
Determined once and for all to break the South’s low-wage, subsistence export King Cotton economic system and substitute a higher-wage, manufacturing-based urban economy, FDR during his second administration unleashed an unfortunately-named Second Reconstruction. The Second Reconstruction was firmly resisted by much of southern business, and a good deal of its political establishment. Considered nothing less than an unwanted economic and political revolution to the South, its most important feature forced plantations to mechanize, driving surplus labor from agriculture to industry and cities. The bulk of surplus labor (the Southern Diaspora) migrated up to northern Big Cities and Los Angeles.
The second element of FDR’s strategy was a manufacturing minimum wage that struck at the heart of the southern ED low-wage business climate strategy. Minimum wage, however, became infused in Congress with union efforts to unionize southern manufacturing and New England’s effort to save its struggling textile industry. The South’s reaction to minimum wage was complex, but on the whole the Second Reconstruction left deep scars, bad feeling and sustained southern pushback to federal programs. Whatever positives came out of the minimum wage and farm mechanization, both were imposed from above by northerners, adding yet another layer to the Civil War and the South as a northern colony. Race and unions further confused the initiative.
The Southern Diaspora and Great Migration picked up considerable steam and the South noticeably depopulated, scaring the wits out of the southern establishment and citizen alike. In this midst of this disruption and Depression-era misery, the South’s most famous ED program, Balance Industry with Agriculture (BAWI), was fabricated. Beginning in 1931 in a small cotton town, and eventually adopted by the poorest state in Depression America, Mississippi, the program was short-lived, small scale, but more successful than most would admit. BAWI became the metaphor for southern ED imperialism and bad economic development. Today, the core of BAWI, a state-supported industrial development bond for manufacturing firms, is accepted ED and commonplace. But BAWI after WWII set America on the road to the 1970s’ Second War Between the States.
The Second Reconstruction was indeed a revolution. It merged with WWII war production, but the federal agencies that implemented its programs continued into the late 1940s. The Second Reconstruction and war production achieved a considerable transformation of the southern economy and southern jurisdictional economic bases. Massive regional change resulted. Unappreciative, the South in its turn, experimented (Florida, 1943), and then took advantage of 1946 federal legislation, launched a multi-state “right to work” anti-union strategy that, in its way, has since become a cornerstone of American economic development. If the South was to industrialize, it would do it under its own terms—nonunion.
War Production and Industrial Decentralization
Whatever transformation the Depression-era New Deal injected into state and sub-state ED/CD, it paled in significance to FDR’s WWII’s industry-managed war production program. War production (initially aircraft and ships) geared up after 1938 and took off in earnest by 1941. Federal contracts went to existing factories, which in the main benefited the Big Cities and Pacific Coast. Job creation, Southern Diaspora and Great Migration mobility accelerated. When war began, existing factories could not hope to generate sufficient volume. New factories, lots of new factories had to be built—fast. Existing firms were encouraged to select new sites and construct new facilities, to be paid through federal contracts.
New facilities meant airfields, factories, military bases, shipbuilding yards, supply and logistics centers, and highways and rail connectedness. Production/military facilities required lots of vacant space, rapidly built; inevitably most wound up moving outside Big City boundaries into suburbs and unincorporated areas. Infrastructure and facilities, housing and military bases remained after war’s end. War production and military bases jump-started western and southern regional change. The attraction of federal investment became the principal strategy of most economic development-related actors. Chambers excelled at this, and the Fortress California strategy was easily Big City, the West and South’s most copied ED strategy.
Each of these facilities required worker and military housing. Public housing stopped and was redirected to war production-related housing. The sheer amount of such housing, however, was needed immediately, resulted in federal contracts to private developers. Most war housing was pretty basic (and destroyed after the war); but in inner cities neighborhoods were cleared and, if in the suburbs, new residents moved in. A number of “new cities/suburbs” sprang up from nothing to produce highly secret Manhattan Project material. Big City suburbanization went on steroids and, in the West especially, simultaneous suburbanization occurred in which central city and adjacent suburbs exploded simultaneously in population and jobs in incredibly short periods of time.
For the next four or five years, western and southern cities reeled under the impact of massive population growth inside and external to city boundaries. Municipalities were simply overwhelmed by the hordes of new residents, and schools and infrastructure construction, also crime, stressed cities and their native populations. Some cities nearly doubled their population in less than a year. The federal war production assault on jurisdictional economic bases overpowered long-term planning and political concerns. Not sprawl as conventionally defined, war production effectively burst through central city boundaries and ended what had been a measured rate of suburban expansion. Much of the new manufacturing war production was external to central city boundaries.
Industrial Decentralization
War production included another program/strategy that survived for a generation after the war: industrial decentralization. Military vulnerability was increased if vital production and military bases were conveniently located for enemies to bomb or otherwise attack. German submarines threatened the entire East Coast. In postwar years, nuclear bombers and then missiles could reach practically anywhere in the USA. So, a concerted effort was made early on to disperse new facilities to areas beyond war’s reach. The Gulf area, home to petrochemical and energy agglomerations, received a goodly injection of federal money to augment pipes, ports, refineries and the like. Aircraft facilities in the Central Plains states were greatly expanded. Places like Utah became supply and training centers. When the time came to demobilize, downsize and reconvert to peacetime uses, pressure to keep the flow of contracts constant, minimize local economic disruption and preserve growth was intense—a new ED strategy resulted. Federal industrial decentralization continued as a very serious federal economic development issue, and formal federal ED and sub-state program, through the 1960s.
The South got more military bases, but its manufacturing capacity was significantly expanded as well—large Big City unionized manufacturing firms took up residence in southern cities. Relocation of these firms would, a decade later, lead to a noticeably different balance of power within the southern business community. Also, huge volumes of soldiers, and their dependents, greatly stressed small and medium-sized southern cities. War production and military housing needs were so intense the military often simply overwhelmed the physical landscape and local governance. Bars, brothels and gambling, schools and housing became serious local crises—all complicated horribly by race. The municipal police force became MPs and Shore Patrol.
The cumulative transformation incurred through the Depression, Second Reconstruction, war production phases and industrial decentralization simply broke apart the previous southern economic system, and severely stressed its social and political way of life. Urbanization in places like Florida, Texas and Virginia increased. While the Great Migration and Southern Diaspora accelerated, a counter-flow of non-southern residents migrated to the South. The West may have exploded as well, but in the South growth was accompanied by systemic disruption and political and social counter-reaction. Not surprisingly, economic development, long a high-priority southern policy area, would be caught in the crosshairs. Urban renewal, for example, was often postponed or ignored to deal with a rising Civil Rights and a 1954 Brown v. Board of Education desegregation decision.
But whatever the disruption, southern growth was indisputable. At a time when substantial numbers were fleeing from its confines, a growing number of migrants were flowing in. The much decried “branch” manufacturing economy had, because of war production, taken root in the South and planted seeds for change in jurisdictional economic bases and shifts in the business political culture—and chambers, a key driver of Privatist ED policy. Little of that was visible in 1960. What was visible was the increasingly acrid dialogue within our economic development national debate.
BAWI, IRBs, and the Shadow War
BAWI, at War’s end, evolved into a state-coordinated industrial revenue bond (IRB) financing tool that quickly diffused in many variants across the nation. Early IRBs, with their built-in federal tax abatement, made Washington the natural place to push back on the growing, incessant, disturbing southern ED aggression against northern jurisdictional economic bases theoretically made possible by the BAWI IRB. Combined with New England’s continued inability to come to grips with its declining textile industry, the Washington ED-related atmosphere turned nasty toward the South in the late forties and fifties. Hearings, ACIR reports and pontificating Senators (JFK) entered the fray. A “shadow war” between the states had begun.
In retrospect, of course, many disruptors were at play as the shadow war permeated national discussion and ED/CD Policy World. For example, the “problem with no name”—deindustrialization (or our Chapter 1 profit life cycle)—was singing its tune—unnoticed and unnamed. But hegemonic states took note of firms leaving or closing down. In the fifties and sixties states picked up on the local ED discomfiture, and put their toe into the ED pool, reorganizing their state EDOs, expanding the arrows in their quivers. BAWI/IRB diffused across the nation, with it the associated creation of multi-powered hybrid EDOs to issue bonds and coordinate is use.
On the surface, many northern states and cities embraced attraction strategies, but the reality in this period was that attraction was focused on existing domestic firms, i.e. it was really retention. The problem was who were the attraction targets for the hegemonic states? The South—with its Northern-owned branch industries diffused by federal war production and industrial decentralization? If so, the enemy could be found in Washington as well as in existing firms in each jurisdiction’s economic base. To the extent northern states “attracted” industry in this era, it was mostly their immediate hegemonic neighbors. So, hegemonic states sharpened their tax-abatement/incentive pen to attract and repel advances from the fellow hegemonic states—attributing blame to an “ED environment” created by southern aggression.
By 1946 we were demobilizing and in 1950 remobilizing to fight in Korea. WWII yanked us into mid-twentieth-century global politics as the “Leader of the Free World.” In 1962 the Cuban Missile Crisis took us to the brink of nuclear war. In 1964 hundreds of thousands of American soldiers were shipped off to Vietnam. Often called “postwar years” America was in an age of Permanent Cold War that lasted into the 1970s. There was no “Return to Normalcy.”
The 1956 interstate highway legislation was entitled the National Inter-State and Defense Highway Act, we had GI Bills and veterans’ housing, and unbeknownst to the average Joe, contract after federal contract went to Los Angeles, Dallas, and San Jose area manufacturing facilities to build radar guidance systems and long-range bombers, then missiles using computers, chips, software—all tied up to this permanent war. So was the Space Race and Cape Canaveral, not to mention Houston Space Center. Detroit produced cars, Los Angeles bombers and Dallas missiles. Texas drilled and refined the oil and gas that propelled them all. As William Dean Howells said after the Civil War, “things were not the same anymore.”
Today, looking back, it was America’s golden “wonder bread” years. At the start, Europe devastated, the dollar was reserve currency; a Bretton Woods global finance system was in place and we were the master of global finance and trade. Free trade worked so well when few nations possessed an industrial proletariat. That would change too in the following decades, but who was paying attention. I, for one, was too busy adjusting the rabbit ears of our new TV. Our economy and individual prosperity were going gang-busters, at least relative to the forties. Regional change was obvious— except it was not. Just as American industry developed new sectors that hid in plain sight. American sub-state ED changed in ways that seemed natural and no one noticed or sensed that something transformative was going on. Port authorities are an example.
During Depression and war years, port authorities garnered considerable federal investment in the form of airfields and shipyards. With War’s end port authorities inherited these facilities or new port authorities were created to operate the transferred asset. Port authorities were in the airport business and they merged with bus, subway, and/or rail companies. Port authorities, not General Motors, handled transition from the bus to the urban transportation system that serves us today. In the process, they became the transportation behemoths. Their service area crossed over hinterland/metropolitan jurisdictional boundaries, making them metro in scope, often autonomous from the Big City, easily accessible to the multiple growing suburbs.
Taking advantage of free trade, Port authorities (the NY–NJ Port Authority specifically) invented containerization, and connected it to the new interstate highway and rail lines, all of which mean shipyards, docks, and ports themselves relocated from the Big City—into the empty metro hinterland; yet one more indication of a decentralizing polycentrism. By the 1960s no one, including port authority employees, thought of themselves as economic developers anymore. They were, of course, the nation’s most powerful EDOs, even if they were transportation-focused. Out of sight and out of ED mind, the port authorities drifted out of mainstream ED’s orbit—a major example of Chapter 1 onionization.
Yet another example of a new State and sub-state-ED/CD player was the federal government. Truman tried, but it was Eisenhower who carved out a federal role for small business in 1954. Actually it was the Democrats who controlled Congress and Eisenhower desirous of ending the small-business residue of FDR’s Reconstruction Finance Corporation who set up the Small Business Administration (SBA), a nationwide lending/guarantee program that, despite periodic controversy and consistent lack of Republican support, continues to the present day—unless Republican Trump ends it. In the late fifties, LBJ added a new arrow to the SBA’s quiver: Small Business Investment Corporation (SBIC), a venture/mezzanine capital-like entity to provide support to younger and smaller firms. Eisenhower also approved the federal government’s first rural ED program. Finally, federal programs associated with industrial decentralization continued through Eisenhower’s administration. A complex alliance system developed in Congress which defied regional boundaries and instead pitted the “have nots” against the “haves”—resulting in even more military-related manufacturing and technology decentralization.
Eisenhower is best known for the 1956 Interstate Highway system—the one that blasted its way through neighborhoods into Big City CBDs. More about that shortly. The effect of highway construction on municipal neighborhoods and jurisdictional economic bases (small business) across the nation was profound and disruptive. In particular, Big City metro hegemony was deeply stressed as highways ejected neighborhood residents, small businesses and on the whole cemented suburbs as the principal location for consumer discretionary spending. It did, however, help facilitate a 1970s’/1980s’ refunctioning of the CBD.
What mostly captured Big City—and Western cities—attention was postwar suburban expansion after the war. Most Big Cities were stable during the Wonder Bread years; perhaps stagnant is a better word. A few declined—but population decline accelerated after 1960. The Great Migration had not stopped, and its impact on Big City neighborhoods was physically as well as socially disruptive. After four federally financed slum demolition programs, public housing and war production housing programs ended in 1945. Big Cities were on their own to deal with the housing crisis, the neighborhood crisis, the racial crisis and CBD decline. Big City after Big City experimented with its own version of the last phase: urban renewal (UR).
BIG CITIES ADOPT SLUM CLEARANCE AND URBAN RENEWAL TO PRESERVE METRO HEGEMONY
Little known today, Big Cities began fighting about neighborhood slum clearance, public housing, and anti-blight CBD-focused urban renewal back in the early 1920s. Even in these years, community developers/housers in particular battled against real estate groups/exchanges. The first major slum clearance campaign was authorized in mid-1920s’ New York State/City with special purpose real estate nonprofits (limited dividend) empowered with eminent domain and tax-exempt financing to build Big City privately owned housing. Several larger states followed suit.
Community development foundations and sympathetic private developers embraced limited dividend as well, as did life insurance firms—the nation’s chief real estate investment financer. The limited dividend corporation hung around for many years (Met-Life’s 1942–47 Stuyvesant/Cooper Villages used limited dividend), but without public involvement the structure could not produce affordable housing nor make a profit. The search for alternative structures moved to Washington (looking for funding) immediately after the Depression hit. Professional associations took up the battle, and with FDR’s election, community development/housing/ planning national associations accessed Roosevelt’s advisors and gained the upper hand over business-led NAREB and ULI.
Beginning in 1933, FDR used the CD strategy as a job-creating instrument, initially using limited dividend corporations and direct federal ownership. The volume of housing created was limited and, since slum clearance created more jobs, it was more attractive and developed into a legitimate ED strategy. The feds continued used the strategy until the courts forced the feds out of direct ownership of city-level public housing—at which point Roosevelt publicly urged states to empower municipalities to establish housing redevelopment agencies. By 1938 nearly all had done so. Using a variant of the port authority model, municipalities, with federal funds, could clear slums and build public housing. The 1937 Housing Act legitimized and funded the strategy and municipal housing agencies built large quantities of public housing through 1941—clearing neighborhoods in the process.
The real estate industry licked its wounds in the meantime. It picked up an important ally during these years: downtown property owners and their professional association (BOMA). The latter was concerned with declining property values, increasing CBD congestion, property obsolescence, and an dramatically increasing fear of suburban retail/office development. Joining forces in Washington at the start of WWII, the coalition impacted the design and leadership of the bureaucracy responsible for war production worker housing. After 1941 the federal government stropped public housing construction and shifted municipal housing agencies into war production worker housing, built by private contractors—as well as direct federal funding of private contractors. This continued until War’s end in 1945. Most war housing was temporary, a lot built in suburbs, and when built in the Big City cleared more neighborhoods. In 1945 it all ground to a halt, and municipalities were left to their own devices—the feds were out of the slum clearance picture.
Enter Robert Moses. Unloved by both LaGuardia and FDR, Moses had nonetheless become NYC’s master builder during the Depression. The litany of his projects, bridges, tunnels, and airports, and the 1939 World Fair, elevated Moses into the nation’s master builder. Hired by chambers of an astounding number of major US cities as a “planning” consultant, Moses devised “growth” plans intended to modernize, upgrade, refunction, and maintain the primacy of CBDs and the Big City. Attacking the paradigmatic “comprehensive plan,” Moses separated his “plan” from the planning profession and, over the next decade, it became lodged into a new quasi-public EDO, the redevelopment agency. The redevelopment agency, essentially a beefed-up housing redevelopment agency, targeted commercial (business-related) blight instead of public housing. ULI developed the concept in Washington, and Moses convinced New York State to empower the NYC housing agency (which he controlled) in 1942. With these new powers, Moses and LaGuardia cut their deal with Met-Life to build Stuyvesant/Cooper Villages. He then followed up in 1945 with the UN project (essentially a corporate HQ). By 1946 Moses had split from the planning profession, developed the first pure ED plan, forged a new powerful redevelopment EDO, and engaged in two nationally watched major CBD projects. Big Cities quickly picked up their old Moses plans and fabricated their own. Pittsburgh (the Allegheny Council, Mayor David Lawrence, and the State of Pennsylvania) was the first and, by 1947, using a 1939 Moses Plan and mostly private (and State funds), Pittsburgh’s Golden Triangle became the nation’s first CBD urban renewal project.
No doubt most current economic developers are of two minds concerning Moses. He did not “create urban renewal,” but he assembled its parts and commercialized it. Not since Daniel Burnham had any economic developer played such a transformative role. He personified a new set of strategies meant to sustain the Big City and prevent its encirclement by a ring of independent suburbs. The essence of these strategies was to clear, rebuild, and modernize the housing, neighborhoods, CBD, and infrastructure of today’s central cities. Lest we forget: slums or neighborhoods were cleared, and their residents/businesses displaced. BTW, there was no federal involvement in any of this.
The Depression and War now over, municipalities needed to tackle the problems that had built up over the decade and a half. Pollution, decentralization/suburbanization of residences, retail and business, and a serious obsolescence of housing and neighborhood—and funding—were top-ranked urban issues. The Great Migration and Second Ghetto added another layer to tackling the last two issues. Both CD and Mainstream ED embraced the physical redevelopment and infrastructure strategy—one to build high-rise, high-density public housing, and modernize neighborhoods, the other to upgrade and refunction the CBD, commercial centers, industrial areas, cultural, education, hospitals, and adjacent downtown neighborhoods. Each believed their strategy-focus would minimize the suburban exodus.
In May 1947 Levittown, NY opened the doors to its model home, and in two days over 1,000 units were sold. A new urgency followed and each Big City had to devise its own strategy to deal with suburbanization. Essentially, two models were available: CD neighborhood/public housing and Mainstream ED downtown/eds, meds, and culturals. Both prospered in the immediate postwar period. New York City blazed its path, Moses did both versions, but Pittsburgh led the CBD version and Baltimore the neighborhood.
Between 1947 and 1955 each Big City devised its own path: Philadelphia followed a largely private sector/federal Department of Interior CBD and an independent CD/Planning neighborhood clearance and housing path. Over the fifties/sixties Philadelphia broadened its UR considerably. Boston attempted the same, but its CBD urban renewal projects were stopped until 1961. San Francisco was frustrated also, as was Portland and Seattle. Baltimore, under James Rouse’s leadership, finally abandoned its pioneering neighborhood strategy and pursued privately funded CBD commercial urban renewal. Each Big City had its own story to tell; an important take away, however, is that whether CD neighborhood and housing or CBD, eds and meds focused, the municipalities drove the projects.
Desperately desiring federal funds, they turned to Washington for assistance. Advocates and politicians from both strategies duked it out in Congress and fought to a stalemate that was broken only when Truman intervened in 1949. The 1949 Act was mostly a victory for the CD housers, but was badly flawed in design, required a host of mandates and prerequisite steps (plans, codes, surveys, etc.), so only a few housing projects took advantage of the legislation. Most applications became mired in a very frustrating process that intensified the conflict between CD and Mainstream ED: CBD urban renewal.
Eisenhower convened a task force to make the recommendations that culminated in a fix-it 1954 Housing Act. That Act formally introduced the concept of CBD “urban renewal,” but submerged it in a sea of neighborhood slum clearance and housing. It did produce a flurry of applications/projects, but advocates for both sides fought on, and amended Housing Acts were passed in 1957 and 1961. Each legislation made CBD urban renewal more fundable—and doable—to the extent that Mainstream ED could “brag” that they redefined the 1949 Housing Act to fund CBD urban renewal. The hostility and separateness engendered between CD and Mainstream ED in these years still beclouds the profession. The two approaches have become bitter enemies, each with its own federal sugar-daddy, each with its separate professional associations and Policy World.
In the midst of this federal-level struggle to define and fund either neighborhood public housing and/or CBD redevelopment, two significant developments crashed into the debate and program implementation. First, was the previously described 1956 federal Interstate Highway program. Funded by Washington, administered by State’s Department of Transportation, designed by traffic engineers, highway construction tore up urban neighborhoods, usually choosing poor, minority, less powerful ones. Highways inserted a wall of concrete that bisected neighborhoods, ruptured their solidarity and identity, and physically displaced a good deal of their residents and businesses. Lumped into the basket of deplorables we now label as urban renewal, its abuses and legacy have confused and distorted our understanding. The complicity of municipal officials and planners, however, not to mention economic developers also beclouds our understanding. The problem is that during this period planners and economic developers became complicit in highway construction to save Big Cities from their suburbs by adopting the principles of one of America’s most famous urban planners, Victor Gruen.
Gruen, post-1955, was arguably America’s most famous urban planner. Called the “father of malls” he designed mall after mall across the land, over fifty—in suburban areas. After 1955 the problem, as Gruen saw it, was Le Corbusier’s (and Moses’s) build-to-the-sky density-fostered CBD congestion. CBD congestion fueled suburban growth. Gruen intended to convert the CBD into the metro areas’ prime shopping/ consumer nexus—maximizing its sales, pedestrian traffic, and profitability. In 1956 his plan to remake the Fort Worth CBD required a pedestrian-only CBD. This could work only if highways and freeways from all parts of the metro area led to the CBD and terminated in parking garages at CBD’s edge. His plan embedded the CBD in a ring of parking garages linked to highways by ramps. The traveler must park, get out, and then walk into the CBD to shop—just like he/she did for the suburban shopping center. The shopper would willingly park and walk because the CBD provided the experience and pleasure they expected. That meant the CBD had to be redesigned. Gruen planned Fort Worth, and 70 other CBDs.
What Had UR Wrought?
Redevelopment agencies, growth coalitions, strong mayors, and urban renewal changed the structural landscape of municipal Mainstream ED. Chambers played a significant role along with the one percenters who bellied up to pay for much of renewal projects. Chamber’s role in the projects themselves was minimal, but many formed and spun off Downtown EDOs to restore CBD retail, pedestrian, and office tenants—and lead the UR effort (Denver, for example). Their day as the municipality’s chief lead agency was, however, over in the Big Cities. They gave way first to redevelopment agencies, and then to ED Czars, like Boston’s Ed Logue, housed in the Mayor’s office. In many cities, housing agencies and redevelopment agencies sparred, but government ED/CD departments and quasi-public entities appeared under a variety of names, dispersed within the city hall bureaucracy. In Big Cities government was ED’s new lead agency.
Moreover, the Big City EDO structural landscape had by the 1950s become quite complicated. CD housing redevelopment agencies, CBD-oriented redevelopment agencies, a network of specialized EDOs, federal EDOs, and CBD sub-municipal EDOs had arrived on the scene.
Off to the side, a new-style Second Ghetto had formed—rising from 1940s’ slum demolition and neighborhood change—Black, and not at all disposed to white community developers, real estate developers, or white mayors. This Second Ghetto presented a serious challenge to old-style community development that had dominated the Big City neighborhood landscape for nearly 50 years. These new Second Ghetto CDOs, with their own leadership (like Woodlawn in Chicago), mobilized their communities to resist UR, public housing, but most of all highway slum removal that simply wiped out neighborhoods and divided them with a river of steel and concrete. By the mid-1950s old-style community development was in conceptual turmoil, an existential crisis, as to how it could respond to majority black and Puerto Rican neighborhoods. A period of experimentation financed by foundations (Ford especially) followed.
THE SIXTIES: HUMPTY DUMPTY FALLS OFF THE WALL
Big Cities has placed all their eggs in one basket, or, to continue a bad series of metaphors, Humpty Dumpty was sitting on the wall. Translation—Big City metropolitan hegemony, under threat from the suburbs, had uniformly in a herd-like manner adopted some combination of neighborhood slum clearance and urban renewal to modernize and upgrade, and had allowed a network of highways to be blasted through their neighborhoods so they could link themselves to their hinterland to exercise influence from their re-powered CBD and considerable economic base. The monocentric metro area would continue. Left unsaid was that if Big Cities lost control of their hinterland, they were vulnerable to a reset in the overall regional and nation competitive hierarchy. Indeed, nothing short of preservation of the now aged northern hegemony over the West and South was on the line.
As the reader well knows, it didn’t work out too well. That failure is the Big City story of the 1960s. During that decade, a series of events and dynamics shattered Big
City hegemonic pillars and Humpty fell off the wall. In no particular order: (1) it became apparent to many that slum clearance and urban renewal was not going to work, either because of opposition internal to the Big City, or it simply was not sufficient to the task. Also, (2) the southern Civil Rights movement shifted north. Activists as well as the ghetto’s rank and file residents were simply “not going to take it anymore.” From 1964 through the remainder of the decade nearly every Big City suffered through major riots with devastating economic, social and political consequences. On top of this, (3) the federal government launched a series of municipal-level initiatives (War on Poverty, Great Society, Model Cities) that disrupted existing municipal policy systems, opening the door for policy system change—and prompting a new exodus to suburbia and elsewhere. Finally, (4) population mobility, industrial decentralization, and the silent, but felt, rot of “deindustrialization” continued unabated weakening the primacy of the northern hegemony.
The simple, but obvious trigger for the disruption and innovation that characterized American economic development to the turn of the twenty-first century was that the above forces (and others) combined during the sixties to implode the northern hegemony, destroying both the regional and local competitive hierarchy and basically shattering the Big Cities metropolitan hierarchy. Big Cities mostly collapsed internally, policy systems at their own pace eventually fell, economic growth stagnated/declined, population loss intensified, and, by the seventies, most Big Cities were a fiscal basket case, in desperate budgetary distress. The federal government unintentionally, of course, played a role in knocking Humpty off the wall, and having done so began a process of pulling back from cities to work out a more sustainable, and less destructive (and less expensive), relationship.
Big City hegemony did not recover from the War on Poverty, the riots, nor could it live with the program instability associated with the Great Society/Nixon Thermidor, which were unable to satisfy the demands and expectations previously unleashed, never mind seriously tackle the profound pathologies of the Second Ghetto. Big Cities began to break down, blaming anybody for their problems. The five stages of denial played out, before reality set in. Collapse did not come overnight as the Berlin Wall metaphor implies. Big City hegemony fell apart piece by piece, unevenly as each Big City reeled and fought back; decline was often in spasms. When the nadir arrived, late in the 1970s, the classical age of American economic development was over. The hegemony was no more.
What followed after 1970 was a 30-year transition as the Policy World, economic developers, and political leaders identified what had gone wrong, and devised, experiment with solutions. American economic development between 1970 and 2000 was a policy area in transition from a former classical age to something poorly understood. Around the turn of the twenty-first century, the foundations for a new “Contemporary” economic development policy area and profession had been largely forged, and a new era started. Writing in 2017, one wonders how long that new order will last? No matter. The Contemporary Economic Development Era will be the subject of another work. This volume must content itself with identifying and describing how the main pillars of the new Era, the foundations, were constructed during the Transition period.
TRANSITION TO CONTEMPORARY ECONOMIC DEVELOPMENT
Our history suggests that a variety of factors and dynamics characterized the Transition Era. Obviously a new urban/regional competitive hierarchy was in place by the turn of the century. The West and South were, if anything, in ascendancy and both are still growing economically and demographically as I write. Big Cities have mostly stabilized but Great Lakes (plus St. Louis) legacy cities have stubbornly resisted ED/CD initiatives and strategies. Regarding the second metropolitan hierarchy, whether accepted in the Policy World or not, suburbs are major players and for the most part nearly all sizeable metro areas are polycentric, with a great deal of suburban political—and economic—autonomy. All of this took decades to work out, and the process, as described in the history, was tension-filled and uneven. The outstanding issue is the recognition of a third, global hierarchy which shall be discussed below.
The Policy World increased dramatically during the Transition Era. An economic development and community development “complexes” which includes “the academy,” a raft of specialized nonprofit and profit consultant industries, site selectors, think-tanks and foundations (state, federal, and local), and siloization has become a dominant characteristic of “the profession.” Given that there exists a massive chasm between CD and Mainstream ED, the Policy World has bifurcated also. Much of the Practitioner World, on the other hand, isolated in small departments/offices and scattered across the nation, was connected, if at all, by state professional associations, and national professional associations mostly composed of EDOs from major cities. Rural fit poorly in both Mainstream and CD complexes.
Still, it is very clear that sub-municipal EDOs, strategies and programs have dramatically grown during the Transition Era, and that neighborhoods and CBDs, far and away, are the most numerous EDOs in American ED/CD. The profusion of EDOs is also affected by onionization, the legacy of history which preserves a goodly number of viable EDOs in obscurity. My personal estimate is over 50,000 economic and community developers ply their trade in American state and local ED/CD.
Between 1975 and the turn of the twenty-first century, American ED/CD slowly transitioned from the old Classical Era and adjusted to the opportunities, issues, and problems unleashed by the collapse of the Northern Hegemony and a host of changes in its environment and the economy. The experimentation and the environmental turbulence of the Transition Era resulted in an explosion of EDOs, CDOs, strategies, tools, programs, and simple noise that befuddle. Any attempt to put some order to this cat stampede risks denigration and laughter from the peanut gallery. Bravely stepping forward, the history in Part III focuses on seven “foundations” of the Contemporary Era that took shape during the Transition years: (1) federal role; (2) shifting sectors, reindustrialization debate, and jurisdictional economic base; (3) the rise in community development and Third Ghetto; (4) the rise of states as primary players in sub-state ED; (5) the third global competitive hierarchy challenges the urban/regional/metro hierarchies; (6) hyper-population mobility; and (7) environmentalism/Big Sort redefine growth.
We briefly outline each, but the reader is reminded we are describing only the Transition Era (pre-2000), not the Contemporary Era. A future volume will deal with the Contemporary Era.
The Federal Government
The War on Poverty and Great Society were formative in disruption of Big City policy systems and in triggering the rise of Community Development to almost equal status with Mainstream ED. The former, however, generated a pushback in the form of a Nixon Thermidor and a Reagan Devolution. Workforce programs endure, amazingly with little real change during the Transition Era—but demonstrating the primacy of the federal government in this strategy. The latter fabricated Privatist community development (EPIC, for example) and Section 8 Public Housing that seem to have become durable programs. EDZ was never adopted by the Feds (Clinton’s Empowerment Zone being a more-CD version), but states have dominated the former.
The Feds pretty much got out of the urban physical redevelopment strategies (setting aside BRAC) with the termination of UDAG in 1988, keeping a toe in with Clinton’s New Market financing programs. SBA is still active and a major player in local economic development. Small business, however, has proven to be a fault line between Privatist and Progressive approaches, with Privatist Presidents and Congress often ill-disposed. HUD emerged as community developments home-agency and EDA/ Commerce Mainstream Eds.
During these years, a new set of federal players, typified by NIST and DARPA, have evolved to deal with cluster, productivity, and knowledge-based economic development strategies, and EXIM and FTZ in export. EPA has been a persistent if changeable player in state and local economic development. Congressional earmarks became an important source for federal support for a variety of strategies and programs: Boston’s Big Dig to Buffalo’s Advanced Training Center. Despite the increased use of block grants, categorical grants still flourished in these years—but it is hard to ignore that the federal role remains constrained and its preference has been to work through states. The Feds have consistently resisted an infrastructure bank or industrial policy/plan— and Carter was unable to institutionalize a federal “urban” policy.
Shifting Sectors, Reindustrialization Debate, and Jurisdictional Economic Base
Arguably, the greatest disruptor in American economic development during the Transition Era was the shift away from manufacturing to technology, service, and FIRE-related sectors. State and local ED substituted technology (broadly defined) for manufacturing as their preferred gazelle, but service and FIRE sectors were harder. Producer services were accommodated in western and southern states, but former hegemonic Big Cities never lost their attraction for manufacturing. The volatility associated with Route 128, compared to the resilience of the Silicon Valley (and Dallas/Seattle), gave a distinct regional tilt to technology gazelles—but Houston and Texas developed their own core energy-related sectors, and Miami developed into a “world,” more precisely Caribbean, Central, and South American, trade, tourism, and finance capital. In short, there was considerable flux in the Transition Era urban/ regional hierarchies.
Foreign Direct Investment played a major role in these years. A new Japanese/ European Auto Alley “sprung” up along I-40, I-64, and I-70 corridors (and the Texas border)—with dramatic effect on domestic auto production viability and location. The decline of America’s domestic auto industry during much of this Transition Era was probably the deciding factor that rendered most Great Lakes states as the chief distressed area in the nation. Each state tried mightily to combat this decline, but in hindsight it was far from successful. Los Angeles, Honolulu, and Seattle, however, did very well in grabbing more than their fair share of Pacific FDI. In contrast, the last vestiges of America’s textile industry departed the Carolinas during these years.
The Great Reindustrialization Debate raged through the entire of the Transition Era. The importance of this debate to the evolution of American economic development cannot be understated. The “deindustrialization” paradigm as well as the Keynesian “sunrise/sunset industries” have, in many ways, defined the Contemporary ED Era— Two Cities, spatial fixes, and Neo-Liberalism has done the same for community development.
Most of the new strategies, concepts, tools, and programs that were institutionalized in Contemporary ED Era derived from it (cluster, knowledge-based, innovation, productivity/ manufacturing effectiveness, strategy/management/logistics, and free trade/comparative advantage are only some of the innovations derived from the Reindustrialization Debate). That debate overlapped, considerably, on the third global competitive hierarchy and will be developed more at that point. Finally, one might argue the shifting sectors/decline of manufacturing played a very considerable role in creating the Third Ghetto. The Third Ghetto proved to be a formidable barrier to neighborhood-level community development revitalization.
Managing the jurisdictional economic base has always been the principal task of Mainstream economic development. It remains so in this Era. The tools/strategies and programs that evolved period are much too numerous to even list. Revolving loan funds, technology and office parks, export and workforce programs persisted, albeit constantly changing, during the Era. Attraction, with the entry of the State as the dominant player in that strategy changed dramatically—in scale, use of incentives but targeting still remains gazelle-focused (each city and state has its own fantasy league of winning sectors—pretty much clones as herd-behavior consistently defeated most attempts to initiate agglomerations). The incentives employed (tax abatement, IRB, workforce, energy, and infrastructure), as well as promotion techniques, remain fairly consistent with the Classical Era—although site selectors aggressively pushed database-driven, shovel-ready sites, and one-stop shopping.
Physical redevelopment and infrastructure remained cornerstone Mainstream ED strategies, as did amazing new forms of city-building. The former, in the form of festival/waterfront redevelopment, played a large role in stabilizing former Big Cities. Not fully appreciated in economic development, city-building remained an important element during the Transition Era.
Rise in Community Development and Third Ghetto
Old-style community development had trouble dealing with the Great Migration’s Second Ghetto. Its dominant wing, the public housers was a major player in slum clearance for construction of public housing—bitterly opposed by neighborhood residents. The Ford Foundation stepped in and funded a series of projects that reformulated its traditional neighborhood approach, emphasizing a “comprehensive” attack by many agencies on multiple neighborhood problems simultaneously. A RFK Task Force on Juvenile Delinquency integrated it with an empowerment strategy advanced by Cloward and Olin. “Out of the blue,” LBJ announced it as his War on Poverty. Over the next few years, OEO community action agencies hassled with city halls, mayors, and bureaucracies across the nation commencing the disruption that played a major role in Big City policy system change.
Coupled with the riots that followed over the next five years, neighborhoods organized in Big Cities, turning themselves into a vibrant and multi-faceted community development movement. Almost from nowhere CDOs became the cutting-edge instrument of change, empowerment, and economic revitalization. Several neighborhood level approaches, including Black Capitalism, Black community economics, neighborhood revitalization, and Alinsky and neo-Alinsky community organizing movements appeared and swept across the nation. During the 1970s a host of new strategies, such as redlining, neighborhood housing services, and South Shore Bank, revolutionized community development. Several mayors pioneered little city halls in neighborhoods.
If their golden years were the seventies, the eighties and after turned into a tougher slog. Reagan pulled back HUD, and advanced several Privatist forms of community development. In a difficult environment, community development went back to the basics, housing, and even a faith-based Nehemiah slum clearance program that was copied in many communities and by HUD.
By this time, disinvestment was an accepted reality and neighborhood community developers struggled with finding a path for residents to leave the ghetto. Locked into the ghetto, foundations attempted yet another massive intervention (CCI) designed to transform desperate inner city neighborhoods, like Sandtown in Baltimore— unsuccessfully.
Other attempts like Boston’s Dudley Square and the Harlem Children’s Project were more successful. In the West and South Hispanic, Cuban, and Mexican neighborhoods were organized and became reasonably successful players in the municipal policy system. White neighborhoods in the Pacific Northwest also dominated their policy system, as happened in San Francisco, San Diego, and many other California cities. Community development tapped into a new phenomenon, identity politics, mobilizing gender and Lesbian and Gays. In Massachusetts (and other states) community development reached into state-level programs (Lowell). The Clinton administration devised a community development-like empowerment zone, and experimented with other programs intended to induce assimilation and mobility out of the ghetto— generating some comfortability with many community developers who stressed empowerment and social mobilization, not assimilation.
In short, by the turn of the twenty-first century, community development, complete with a flourishing Policy World, professional network, a proliferation of foundations such as LISC, and literally thousands of affiliated CDOs was challenging Mainstream Economic Development for primacy. Not without its internal tensions, and an inability to coordinate or even link its multiple wings, movements, and strategies, community development offered a viable alternative—with a track record and professional infrastructure.
States as Players in Sub-State ED
States had been developing capacity and professionalizing since the first decade of the twentieth century. By that time many states had fabricated rudimentary attraction/ promotion/tourism strategies. Southern states in the 1920s entered into a serious attraction campaign to diversify their economies. Given the opportunity to take over federally required regional planning agencies, many states converted them into EDOs. Post-WWII, however, was the period in which most states development a state-level ED capacity. Competing with the South, empowering state and local IRBs, redevelopment and urban renewal agencies, taking over surplus airfields and ports, states were now active on a variety of ED-related fronts.
We do know states are the owner of Dillon’s Law; and, if anything, our history suggests that states seem more sensitive to herd-like diffusion than municipalities. As one state became active, it raised the activity level of other states, especially neighboring states with which there often was a bit of rivalry. When Nixon transferred funding to states with block grants, and set a workforce (CETA) with a meaningful state role, states were clearly on the move. By that time Big Cities were fiscally distressed, and, willing or not, states had to provide large doses of inter-government aid to keep them afloat—either that or form an entity (e.g. Big Mac) to take over their fiscal affairs.
States now had a reason to promote ED at the municipal level; they became a partner with Big City ED, and developed additional capacity to operate their own sophisticated ED efforts. When the Second War Between the States started in 1975–76, northern states attempted to lure FDI investment and land mobile corporations. An incentive war between states for high-profile firms quickly became a mainstay of gubernatorial administrations. With each passing year, the deals became more competitive, expensive—and controversial. During the 1980s and 1990s, almost all states established some type of EDZ at the municipal level to operate state programs in targeted, sometimes distressed cities.
Our Massachusetts’s case study revealed that Massachusetts was listening to the Great Reindustrialization Debate—it even elected an economic developer Governor. Responding to multiple pressures, Massachusetts’s private sector funded several note-worthy EDOs, still in operation, including a well-respected Technology Council to coordinate state-level financing and development of its vibrant tech sectors. California was also a national leader in technology. Governor Dukakis formed commissions on mature industries, geographic targeting, targeting sunrise industries, and developed what may be the nation’s first knowledge-based, cluster state-wide strategy using universities.
There was/is a downside. Politicization. Even in the Transition Era state legislatures overall did not check the Governor’s “seizure” of economic development as his/her policy sphere—so long, of course, as they got their “fair share.” Earmarks became a way of life, as they had at the federal level. ED projects paid for by the Governor’s special funds, combined with log-rolling cluster of projects carefully relegated to hard-to-unravel state, or off-budget entities, were a consistent feature in state economic development.
One thing we do know, as R. Scott Fosler and Peter Eisinger attest, is that states after the 1980s were deeply involved in cutting-edge, new-fangled ED and even CD strategies and programs. Like fingerprints and snowflakes, no two states were exactly alike; variation among states and regions was the norm. The reality was that, by the turn of the twenty-first century, American ED was composed of 50 quite distinctive state-led EDO systems
Competitive Global Hierarchy
Metaphorically, in 1973 a third competitive hierarchy entered the American state and local picture. It had always been an important force affecting jurisdictional economic bases; we could have called attention to it when we discussed the impact of tariffs on international cotton prices, for instance (or on tariffs protecting early American manufacturing). We chose not to complicate affairs more than necessary. It is imperative that the third global competitive hierarchy is discussed in our Transition years. That global hierarchy, considerably more than the regional/national competitive hierarchy (or even state business climate), is extremely impactful to our industry/sector profit life cycle. Trade deficits and currency volatility create and restrict markets, facilitate oligarchy, and, as everybody now knows, determine who has “cheap” labor.
After 1973, postwar Bretton Woods international finance gave way to a new economically competitive system in which floating currencies, not the gold standard, profoundly affected the flow of goods and services across nations, injecting considerable volatility into sub-state jurisdictional economic bases. The industry/sector profit cycle became even more footloose and fancy-free. The increased salience of global competitive hierarchies to American state and local jurisdictional bases fostered new strategies dedicated to import/export, trade counseling, promotion and financing, foreign direct investment, foreign trade zones, regional “free” trade agreements, entrepreneur visa programs, off-shoring, re-shoring, dredging and port modernization, import substitution and the old low-cost, regulation-friendly business climate standby.
Comparative advantage is the ultimate determinant of which sectors are sunrise and which sunset—the driver behind Schumpeter’s creative destruction. How one reacted to creative destruction, pretty much made the decision as to which side of the Great Reindustrialization Debate you supported. In Contemporary Economic Development Era deindustrialization, spatial fixes, “luxury city,” or “two cities,” Neo-liberal, and inequality are the operative concepts/strategies. Replacing Reagan’s tired “supply-side” as the arch-enemy of people, workers, and communities is still used decades after supply-side fell out of style. In 2017 anti-austerity, pro-stimulus is the cry. In any case, Neo-Liberals are the culprit and the reason why the third global competitive hierarchy works as it does. For the most part, the CD approach does not deny the existence of the global comparative advantage hierarchy—it rejects it.
Mainstream economic developers cannot afford the luxury of not dealing with the third global hierarchy: their strategy identifies and promotes those sectors which enjoy a comparative advantage globally. This means “advanced” manufacturing, not commoditized manufacturing based on cheap labor. Innovation and knowledge-based economics allows our firms to capture the high end of manufacturing, technology services with cutting-edge innovation/disruption, knowledge-intensive management and workers; encouraging foreign direct investment, promoting trade missions, skilled entrepreneurial visa programs (which can even be used to redevelop infrastructure, university campus and technology/accelerators).
What made this strategy attractive, and the dominant paradigm of the Contemporary Era, was the firm belief that innovation produced more jobs than it cost—the “creative” produced more jobs than the “destruction” caused. In the Transition years, this was assumed to be a “fact.” No matter how it was measured, study after study validated this assertion. Again, I am skeptical and advance my temporal lag and generational/regional shift concept to explain what may be the most troublesome and intractable problems economic developers will be ask to solve during the early twenty-first century.
Hyper-Population Mobility
As observed in Chapter 19, after 1965 America witnessed a consistent acceleration of immigration that had not been rivaled since the 1880–1924 Great Migration. This immigration, however, came from several sources, and was not limited geographically—instead, over time, penetrating to some degree every state in the Union—urban, suburban, and rural areas. Entire cities (Miami as the best example, with Los Angeles and southern California not far behind) changed their demographic character. As will be discussed below, population migration of any kind carries with it inputs into a jurisdictional political culture, its labor force, and sooner-or-later, its electorate. Community development, particularly in western/southwestern states, has responded, reinforcing neighborhoods and community organizing as major elements of Transition Era economic development. Mainstream ED, in this Transition period, however, was more hesitant.
Immigration on such a scale, and for so long (it did not abate until the Great Recession) probably cannot be overestimated in terms of its impact. Asian workers in California and the Northwest have played a huge role in Silicon Valley and the technology gazelle sectors. Visa quotas, today, are a major item in the economic development’s quiver of arrows. At the metro level, immigration has produced its own “little sort,” creating suburbs, neighborhoods, and aggregations of residence primarily for immigrants. This is a new dimension of place-based ED that developed in the Transition period.
Place-based immigration is quite diversified, with barrios in Texas, and middle/upper class, almost gated, communities in San Jose. Watts is now Mexican. Almost any moderate-sized city/town/village has its “special” corner where low-wage workers are hired each morning and transported to their workplace. The impact of this demographic and wage force turbulence seemed to overwhelm economic development, and to a considerable degree in the Transition Era, it was swept under the urban rug. Even in our Contemporary Era it is typically reduced to a smush-like, theoretical/conceptional, hard-to-measure “inequality.”
If immigration were not enough, domestic migration proved widespread and complex as well. As suggested in Chapter 19, and in the next sections, generational cohort mobility has become a fixture of our demography. As in the hit movie American Graffiti, generational coming-of-age mobility has: (1) divided generations between those who leave and those who don’t—a sort of its own which is poorly understood, but probably quite critical to economic development; (2) fueled the Big Sort neighborhood/environmental nexus that swept first across the Western cities that altered existing policy systems, and often created new ones (Seattle and San Diego). (3) As subsequent generations fueled mobility, newer value streams (think identity politics) fueled urban, and state policy systems, politics, and political cultures.
Finally, (4), a somewhat-age-related mobility has created a new type of economic base, the Entertainment City. Orlando is far from the only city/region—think Yosemite, Grand Canyon, and our national forests) that have developed around a tourist-traveler economy. The stability of political culture that supported economic development during its Classical Era was not repeated in the Transition Years—or as the reader shall see in my next volume, in our Contemporary Era. Instead, as described shortly, our Big Sort has produced a Red State/community vs. Blue State/community schism which is so divisive that it is, for the most part, left untouched and unmentioned in the professional literature.
Again, Mainstream ED was put on the back foot with conflict during the Transition Era, and over those decades we can see an uneven movement of government-driven municipal-level ED into the orbit of community development/housing/planning neighborhood-orientated ED, and chambers and new private sector EDOs assuming responsibility for marketing/attraction, business assistance, cluster development, and Mainstream ED in general. Knowledge-based/innovation economic development which gathered steam in the later Transition years has relied heavily on “Creative Classes” and creative class-friendly community, which at its root is generational cohort mobility. These strategies have been able to bridge the chasm between Mainstream and Community Development—although they differ in the manner in which they are implemented.
Finally, a major feature of the Transition years was another form of generational cohort mobility—the elderly/retirement boom which also has become engrained in our demography. This group is not a merely a “second-home” group which has always existed; rather, it builds cities and transforms blocks, if not neighborhoods—cities (Scottsdale) and regions (south Florida and Myrtle Beach). Early on—January 1, 1960, Del Webb produced an entirely new type of city—for those over 55. Sun City, a privately planned city/jurisdiction, served as a prototype for cities built on older generation-cohort mobility. Indeed, city-building was a major-league enterprise in the Transition years.
Woodlands was our proxy for a new, mostly suburban, phenomenon that can be found in most states in some form—a private, master-planned community—complete with specific housing (condo), design, and even a semi-political governance, the homeowner’s association, that has exerted serious impact on many municipal policy systems/school districts, redefined neighborhoods, and neighborhood-based ED initiatives. We end with the creation of assisted living centers which are small communities of the advanced elderly—and the (edge city) city-building associated with the “New Urbanism” and we can see the Transition years created a new diversity of suburban jurisdictions, probably with their own distinctive policy systems and distinctive approach to ED/CD. Our fascination with large cities and metro areas has obscured our sense of the incredible diversity of ED/CD and urban types/economic bases in the municipal and county levels. There is very little literature on these topics.
Our Two Ships Meet Environmentalism and the Big Sort
Environmentalism
In this history “environmentalism” is at times a “movement”, or a set of values, beliefs, and priorities, resident in a jurisdictional political culture expressed in an economic development strategy. Post-WWII generational cohorts, through a Big Sort-style population mobility, have injected environmental values into jurisdictional political cultures that have greatly impacted economic development priorities, strategies, and practice, particularly after the 1970s, redefining economic development’s traditional ultimate goal—growth.
As such, environmentalism has heavily affected our three drivers, in particular the jurisdictional economic base through consumer demand, government regulation, and formation of new sectors and industries. Population migration has also been affected by environmentalism through density development, zoning and various codes. The reaction to environmentalism has also influenced the three competitive hierarchies.
Old ED/CD strategies have been “tweaked” to include an environmental dimension, and new strategies, programs and tools have been devised in response to it: pollution control, smart growth, “brownfields”, density-development, forms of energy, energy emissions/efficiency, and state/federal environmental reviews that have affected “shovel-ready” siting, eminent domain, and development/redevelopment. Specific events such as the 1969 Santa Barbara oil spill (and Exxon Valdez and Alaska Pipeline 1989) exerted a huge impact on California/Alaska politics, planning, and economic development. Love Canal is yet another significant event. NIMBY, BANANA, and the joys of public hearings have become standards for economic developers.
Environmentalism resulted from the cumulative and incremental evolution through several waves/forms and events starting in the Fifties and continuing to the present. Hays (Hays, 1987) presents a three-stage chronology from the early 1950’s to the middle 1970’s. The earliest were outdoor recreation, open space and wilderness preservation (Wilderness Act of 1964, Endangered Species Act of 1973, 1975–1979 Tellico Dam (Tennessee), TVA and the Snail Darter; Alaska Natural Interest Lands Conservation Act of 1980, Spotted Owl v. Hodel (1988).
The anti-pollution and pollution control (air and water) second wave started in the early 1960s (Water Pollution Control Act of 1948, Air Pollution Control Act of 1955, 1962 Rachael Carson Silent Spring, Clean Air of 1963, 1967, 1969 Santa Barbara Oil Spill/Cuyahoga River fire, National Environmental Policy Act of 1969, April 22, 1970 First Earth Day, Clean Air Act of 1970 (EPA created), 1977, Water Pollution Control Act of 1972 (Superfund), 1977, 1987, Safe Water Drinking and Water Quality Act of 1974, 1978 Love Canal, Comprehensive Environmental Response Compensation/ Liability Act (CERCLA) 1980, Clean Air Act of 1990 (acid rain, ozone depletion, auto gas emissions)).
The third wave focused on energy (nuclear, clean fuels, to energy conservation); Price–Anderson Act of 1957 (limited utilities liability for nuclear accident), 1974–77 Alaska Oil pipeline, National Energy Act of 1978 (initial subsidy for ethanol); 1979 Three-Mile Island – movie China Syndrome 1979)).
Global climate change first hit the headlines in the late 1980s (1988). Earlier nuclear war, nuclear winter, and global cooling in the fifties/sixties alerted researchers to ozone depletion, global surface warming, and climate change in the late eighties. Carl Sagan, a NASA scientist at the time, launched his career (1983) with a crusade against global cooling. In 1988, however, computer models and projections (James Hansen) asserted the first link of “greenhouse gases,” carbon dioxide in the atmosphere to melting polar ice caps, coastal flooding, disease, and famine—resulting from change in climate. In that year, the World Meteorological Organization and the UN created the Intergovernmental Panel on Climate Change (IPCC), home base of the movement. Global warming picked up momentum in the 1990s (Al Gore and Kyoto Agreement in 1997, the “hockey stick graph”, 1998,1 the Nobel Peace Prize to Gore and the IPCC in 2007). The net effect was by the turn of the twenty-first century economic growth had been redefined. Today, for example, we talk about “eco-tourism” and a federal “national monument strategy.”
Predictably, despite the rather huge impact environmentalism exerted on ED, passengers on each of our Two Ships developed their own reactions. Privatists often share the same concerns as environmentalists, yet, the stereotype conveyed by our media friends, is that “environmentalists see their critics as greedy special interest groups that show no signs of conscience as they plunder the earth. Counter-environmentalists … see their adversaries as the enemies of economic growth [who] stop social progress and stifle initiative under an avalanche of bureaucratic regulation” (Allitt, 2014, p. 8).
While mostly sympathetic to a better environment, Privatists stress out over government regulation and expanding bureaucracies. Regulatory bureaucracies usually trigger concerns with one or another of the competitive hierarchies. Allitt suggests that Progressives tend to see “environmental crises” and apocalyptical compressed time frames that require urgent and often dramatic action by government (Allitt, 2014, pp. 1–8). Whatever the division between our two ships, the enactment of so much environmentally focused legislation dramatically affected the definition of, and the implementation of, economic development strategies, tools, and programs. Between the April 1970 First Earth Day and CERCLA in 1980, 28 environmental laws were approved by Congress and the President (Allitt, 2014, p. 74).2 During the Transition years, we talked about “slow growth,” “smart growth,” “no-growth,” and seem to have settled on “sustainable” growth. During these years, it was increasingly evident that our grandfather’s idea of growth was no longer a paradigm.
Big Sort
Without re-hashing Chapter 19, we know the Big Sort played out hugely (or “bigly, if you prefer) during the Transition Era. The Big Sort persists in the Contemporary ED era. The Great Recession slowed down immigration, demobilized population mobility, accelerated stagnant incomes, and depressed business investment—not good! A new generation has arrived and is necessarily changing priorities and practices. But jurisdictional policy systems, now reduced to a cog in a state-dominated system, are locked-in ED/CD strategies that reflect a Big Sorted jurisdictional policy system that may fit the political culture, but may not be able to counter the dynamics of our three drivers of change. True, the network of specialized EDOs (the SBA, for example) still operate and rays of light appear from time to time; but overall, we may be in a holding pattern waiting for something—Godot perhaps. My fear is we await further decline.
The (political) cultural evolution of our jurisdictional policy systems that occurred over the last nearly fifty years has left us with what arguably is the major characteristic of Contemporary Economic Development: politicization. Our jurisdictions and policy systems have “sorted themselves out” into more or less solid, homogenous, one ideology/one ship policy systems. Sorting out in this fashion, we have frozen ourselves into a sort of Red State/Blue State partisan competitive dichotomy whose ultimate goal is more political than economic. Big Sort polarization provides a degree of security if not control to residents in a very uncertain environment; but is also provides paralysis and stagnant economic development as well. Polarization and partisanship are distinctions without meaning in economic development—they both mean politicization. We have become hopelessly politicized.
In this atmosphere, the Policy World/media has flourished. In contemporary economic development Privatist ED practice is shoved to one side, with allusions it is on the wrong side of history—contemporary economic development Privatist forms of ED are described as “Red State,” “First Wave,” “Neo-Liberal” or simply Republican (even when practiced by Democrats). Privatist, classic mainstream ED still exists, of course, quite viable and active and in many geographies, dominant. Hybrid ED/CD policy systems flourish. It is, of course, unknown as to how the Trump election will change all this. I prefer not to speculate: he who looks into a crystal ball had best be prepared to eat crushed glass.
In the meantime, the three Chapter 1 drivers continue to play. And so, hammered by a “tech bubble”, a Great Recession, “Productivity Crisis,” and Inequality, contemporary economic development has been characterized by slow, or no, growth, stagnation and an ever-increasing potential for serious decline in many sub-state jurisdictions. A so-called “populist” reaction has now become a likely scenario for the intermediate future. “Forgotten Peoples” are now a legitimate target for an economic development that is likely to be somewhat redefined to deal with this new development. That puts a lot of pressure on ED’s ability solve our state/sub-state problems.
Contemporary American state and local ED, in my opinion, seems to be driven less by strategies—which are a dime a dozen these days—loosely aggregated into a rhetorical planning morass, promising fantasy-land assertions of growth, magic bullet exaggerated scenarios (Uber, Tesla and the gig/app syndrome are the latest), and myths such as: for every job destroyed by innovation, more will be created. If ED-related growth is restricted to certain sectors only—all jurisdictions must compete to develop and house those sectors—the jurisdiction/state horde that chases after too few firms distorts and destroys the growth prospects for the few sectors whose growth is legitimate. Fads and new hot sectors (craft breweries seemingly have replaced server farms these days), magic bullet strategies, deluge the internet—offering hope to both young, and isolated ED/CD small department practitioners—and promising “Happy Trails” for those who faithfully conform. Contemporary Economic Development increasingly is characterized by rankings, blogs, reports, plans, hot button strategies, programs and tools, studies, and the like.
To this author, much of the Contemporary Era has been almost surrealistic. It is not impossible in my mind, that the Contemporary Era, in hindsight, may prove to be a third phase in an extended period of transition. “Eras” require some degree of order, predictability, workability, effectiveness over time. This climate underlying the Contemporary Era does not offer much hope for cities, counties, neighborhoods, taxpayers, and residents of our sub-state jurisdictions. For example, we must grow (Second Law of Thermodynamics), but we have redefined growth so that we really cannot. As William Bendix (a fifties’ TV comic) would have said: “What a revolting development this is!” Moreover, in the politicized, polarized, herd-driven culture that dominates Contemporary ED/CD, it is hard to focus on fundamentals. In this social-media, ADHD world, it is hard to focus and sustain anything. How can we combine a redefined growth with the rage of Forgotten Peoples?
But shouldn’t we try?
To deal with the potential to decline requires a new ED and CD—a dramatic reformulation. If the Depression is any guide, any future serious decline will test the mettle of the states and overwhelm sub-state policy systems/economic and community development. No doubt, many will cheer the return of the Great Sugar Daddy—but look at the unintended disruption induced by Top-Down Big Push economic development. Is there another path we could try?
UNTIL WE MEET AGAIN … CREATIVE DESTRUCTION to You
This volume ends in a challenge to economic developers, Policy and Practitioner Worlds both, to better understand how we got here—that has to be the first step—then to minimize the ideology and politicization. Throughout most of our history our Two Ships have passed each other silently in the night, each traveling to their own separate destinations. Then they started fighting—time, change, affluence, workings of the three drivers—war. All, and more, conspired to start the fussing between the Two Ships. In the past, we couldn’t find our Mistoffelees-like political culture; today it pokes us in the eye with logs, not sticks. To change that situation, I think we ought to accept the possibility, indeed the reality, that American economic development must cope with decline as well as growth (however, defined). Coping with decline does not mean revitalizing cities or states—economic developers cannot accomplish that pipedream. Cities and States revitalize because the three drivers turn in their favor—and not until.
My reading of this history is that we have been dealing with decline for quite some time—since the textile wars began in the 1890s to when Big Cities discovered decentralization and devised strategies to cope with it (slum clearance, public housing, highways and CBD renewal). Neither turned out so well. The underlying drivers created a maturing Big City, suburbs (many now mature), and the “problem with no name”. And now we have inequality fighting Forgotten People, and economists, God forgive them, searching for a Messiah that restores productivity. Rather, the challenge posed in this conclusion is three-fold: how to incorporate decline into our strategy; how to experiment rather than too quickly adopt (ideological) paradigms; and how to engage our two ships (which aren’t going away anytime soon) in a constructive partnership— each using their strengths to counterbalance their weakness?
Believe it or not, incorporating decline, at least the potential for it, may be the hardest for American economic developers. Rightfully so. Politically, decline must be repackaged to successfully operate in a contemporary policy system. Certainly, I do not argue we should “embrace decline,” give it a hug or anything like that. Politicians cannot “run” on a platform of managed decline, and policy systems don’t respond well to negativism. Objectively, however, decline has already appeared in many of our jurisdictions; the seeds of decline already planted in many others. The three Chapter 1 drivers, like Dickens’s Christmas ghosts, keep on waking us up and disturbing our fantasyland contemporary economic development strategy paradigms. The potential for decline compels us not to accept it, but to fight it with both ships.
It is not likely that either of the Two Ships will win their present-day fight against the other. More likely they will both sink or come close to it. Each ship offers strengths and weaknesses in what is economic development’s greatest task and goal: to manage the “creative destruction” unleashed by our three competitive hierarchies— particularly the global one. Our jurisdictions have a common enemy; our Two Ships have a common enemy. One ship (Privatist) can best solve the “creative” and the other (Progressive) the “destructive” forces that create opportunities and wreak havoc on the jurisdictional economic bases and the people, workers, citizens and consumers dependent upon them. Together, however, their competing strategies and approach could complement each other. To manage today’s “creative destruction” we need both placed-based business assistance and people-based economic and community development.
Our Two Ships need to do more than Pass in the Night or Fight in the Day. They share a common enemy that requires their sailing together—each doing what each does best. That requires the redefinition of both and integrates new definitions of growth, while recognizing that growth ultimately is the only way we can help Forgotten Peoples and deal with inequality. We can no longer ignore stagnancy, and the threat of inevitable decline.
Ships that pass in the night, and speak [to] each other in passing.
Only a signal shown and a distant voice in the darkness
So on the ocean of life, we pass and speak [to] one another
Only a look and a voice, then darkness again and a silence.
(Longfellow, “The Theologian’s Tale: Elizabeth,” Tales of a Wayside Inn, 1893)
NOTES
- Michael Mann, Raymond Bradley, and Malcolm Hughes, “Global Scale Temperature Pattern and Climate Forcings over the Past Six Centuries”, Nature, vol. 392, 1998, pp. 779–87.
- In his five years as President LBJ signed into law nearly 300 conservation enactments (Allitt, 2014, p. 69).
Ron W. Coan 