PART III

Foundations of Contemporary ED/CD

As the reader begins Part III she might consider that one foot is firmly lodged in the past, while the other is stepping into the future. Parts I and II have dwelled on the long history of what I call the “Classical Era” of American economic development. The reader is about to enter into the Contemporary Era. Let’s deal with each Era separately. The Classical Era is now reasonably known to the reader. It is Privatist, Mainstream ED, anchored by the chamber and chamber-led ED. The Depression, New Deal, and the changing Big City has put this approach on its back foot, and for better or worse, it has embraced urban renewal (and highways/freeways) as its solution to increasing suburbanization and a diminished vitality in its economic base. As we have seen Mainstream ED fought neighborhood, public housing CD over who would capture federal dollars, and the former was the more successful. Riding the urban renewal horse, however, will in the next chapters be like riding a bucking bronco—Mainstream ED will fall off the horse.

Community development is fragmented into wings—the neighborhood/public housing wing being “in power” at the moment—but all are facing headwinds due to ethnic migration to suburbs and the development of the African-American Second Ghetto. As we begin Part III, community development is facing an existential crisis on how to best deal with Big City neighborhoods. That will be an important storyline in the chapters ahead. By the time, we reach the Contemporary Era (about 2000), community development will be a strong rival of Mainstream ED. Municipal Big Cities, as they traverse the path through the next chapters, will evolve hybrid combinations of Mainstream and Community Development.

What about the South and the West? Their day will come in the next chapters. The rise of the Sunbelt will not be ignored, nor will we lack for description on the Second War Between the States. Future regional change means the urban/regional competitive hierarchy (the first level hierarchy) will shift and turn dramatically in the next chapters. To make matters interesting, the composition and configuration of regional jurisdictional bases will be different, and a new American economy will have evolved by the time we get to the Contemporary Era.

That brings us to the Contemporary Era. The Contemporary Era, in our mind, does not commence formally until the “Turn of the Twenty-First Century”. We are at the moment discussing the 1960s’ time period. What happened in between? This is the Transition Era (to the Contemporary Era—get it?) The Transition Era exhibited two distinct phases. First, the old Classical Era imploded—why? The Big Cities, and the northern hegemony, collapsed by 1975 or so. We shall detail those events and dynamics in Chapters 16 and 17 primarily. After 1975 (or so) a new “order” starts developing, complete with new paradigms, strategies, programs, and tools— policy systems, the vehicle that produces, these will also change. This development of a Contemporary Era is not a “turning the light bulb on or off” affair. The events and dynamics are very uneven during the Transition Age; economists early-on talked about “uneven development”.

There is a great deal of experimentation, a complex of policy whirlpools, the rise of new actors, and a dramatically changing environment during the Transition Age. There are no real paradigms that dominate in these transition years; there is much inertia. But the trend is private Mainstream EDOs will surrender ground to government EDOs. Old Classical Era strategies will persist: physical redevelopment, company assistance, jurisdictional economic base foci. Increasingly dynamics such as deindustrialization and the rise of “new gazelles,” a shift to service sectors and, to a polycentric metropolitan area will take their toll. Onionization, the survival of the older EDOs, in a rising sea of new EDOs is evident.

Despite an environment of revolutionary change, there is surprisingly a good deal of simple inertia, and continuity. The tendency has been to add departments and offices, and to continue those that cut their teeth in the past era. In many cases, older organizations, like chambers, refabricated their mission, even structure, and continued into the Contemporary Era as effective players. In other instances, older specialized EDOs occupy a niche, off-to-the-side of ED policy system. This is onionization. Port authorities are no longer thought of as EDOs.

Community Development with its neighborhood focus is another matter. That change will almost be revolutionary. At the onslaught of the Contemporary Era there will be probably as many CDOs working at the sub-municipal level as Mainstream EDOs working at the municipal and state levels. Mainstream EDOs will develop their own sub-municipal EDOs (BIDs, EDZs, FTZ, and TIF redevelopment districts). This is to say, that during the Transition Era the structure of American ED will change, as will its professional associations, Policy World, and supporting consultant/nonprofit complex that will evolve during these years. Siloization, forgotten since Chapter 1, will become a dominant characteristic of the policy area and profession by 2000.

If those changes were not sufficient, the political cultures of the Classical Era will also change—and that will be, arguably, as important to economic development as any shift in the American economy and jurisdictional economic bases. In Chapter 19 (and 20), the impact of environmentalism on American ED will be a theme that I suggest led to a redefinition of “growth”: the ultimate goal of American state and local ED. Population mobility and generational cohort shift in values and priorities will sort themselves out geographically (the Big (and little) Sorts), and will by the turn of the century result in a system that is polarized, politicized, Red State versus Blue State, Progressives versus Privatists, Community developers versus economic developers— which is a defining indicator that the “Contemporary Era” has finally arrived.

Finally, during the Transition Era, two related dynamics will play out. The collapse of the Big City Hegemony will mean not only that the first level regional/urban competitive hierarchy will be turned on its head, but the second-level hierarchy, the metropolitan hierarchy, will become, controversially, polycentric. That’s change “enuf” one would think, but wait. A third-level global hierarchy will enter into American state and local ED in a very big way. The global hierarchy has existed throughout our history—but I ignored it for the most part because this is a 700-page book. I cannot ignore it in the Transition Years—and it too is a defining feature of the Contemporary Era.

The third global competitive hierarchy will generate a great discussion: the Great Reindustrialization Debate, which raged through the seventies and into the nineties. That debate produced a host of new strategies, tools, concepts, approaches—and God knows what else. Innovation economics, Neo-Liberals, deindustrialization, sunrise/ sunset industry sectors, “mobility of capital,” and knowledge-based economics are only the tip of the program/strategy iceberg that evolved by the time the Contemporary Era began. That these programs and strategies got “smushed” (simplified, distorted, manipulated, selectively redefined) and politicized should also be assumed by the reader.

This much turmoil, experimentation, entrepreneurism, and so on inhibited the formation of paradigms, and accordingly, one sees fifty states hit or miss devising their own path into the Contemporary Era. That is yet another defining characteristic; the Contemporary Era consists of fifty state and local economic development policy systems, each different even though they share seemingly common tools, programs, and strategies. They do not by any means pursue the same goals, however, and their implementation is strongly affected by their various combinations/ configurations of political cultures and policy systems.

That diversity, complexity, and variation, the hallmarks of the Contemporary Era, mean that our history copes with the second phase of the Transition Era by identifying several “foundations” or pillars upon which the Contemporary Era will rest. Those foundations are: (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. THE FOUNDATIONS OF THE CONTEMPORARY SYSTEM

Our three drivers (change in jurisdictional economic base, population mobility and competitive urban hierarchies) poured the foundation on top of the “Classical Era” described in Parts I and II. This is our “onionization.” Said and done, the old classic world was mostly Privatist and deeply rooted in jurisdictional business elites, our jurisdictional economic bases and the national, now global, corporate leadership. These elites were changing and new elites, public elites deeply rooted in the new municipal policy systems, had arrived on the scene. New actors—federal and state governments, global capitalist corporations, foreign investors and sub-municipal EDO/CDOs as well as a hyper-active, Progressive Policy World—were playing in our sub-state policy systems in ways that profoundly altered the processes of policy-making.

In this context, the foundations of Contemporary Era were incrementally, unplanned, semi-haphazard, unevenly poured over thirty years or so. Because almost everybody adopts the same strategies, uses the same tools, pursues virtually identical targets, and announces programs with essentially the same name, one might be mistaken there is some sort of consensus—that the herd shares the same values and goals. It doesn’t, and never did. States might be using TIF, for example, but TIFs differ state by state, and many states and municipalities don’t use TIF at all. How could we be polarizing and a battle of Red versus Blue states/cities exist if we all were doing the same thing?

The remainder of Part III describes issues and dynamics associated with each of the foundations specified above. The intention is to provide a bit of road map to the reader as she reads Part III. The reader is reminded Part III is concerned with the period previous to the turn of the twenty-first century.

1. The Federal Government

The government, for the most part an outsider to the classic state/sub-state ED policy system, stormed in and ripped the doors off the sub-state policy system in Chapter 16. It ain’t been the same since. The feds quickly pulled back, and appear to have settled into an important but secondary role (aside, of course, from macroeconomic policy which is outside our history’s scope). The Feds, for all practical purposes, relaunched and redefined CD in the sixties’ Great Society. Workforce, employment/labor assistance, and small business fall are federal carve-outs. A federal agency exists to support CD initiatives (HUD), and one (EDA) is a consistent ally of business/infrastructure/ redevelopment mainstream ED. A diversified system of federal agencies entered into the American state and local economic development world (NIST, EPA, BRAC),

2. Shifting Sectors, Reindustrialization Debate, and Jurisdictional Economic Base

The classic era of economic development centered principally on one sector— manufacturing. Certainly transportation, communication, energy, basic materials/ mining, and finance were meaningful in the jurisdictional economic base; but the gazelle was manufacturing. When deindustrialization hit much like the cotton boll weevil hit southern agriculture, that story seemed over. But simultaneously a sector categorized as “technology” and non-manufacturing sectors, loosely subsumed under the rubric of “service sector,” replaced manufacturing. Nevertheless, a Great Reindustrialization Debate ensued. From this debate a considerable number of strategies, programs, and tools essential to the Contemporary Era came to light. The management of the jurisdictional economic base changed character, stressing less business assistance than (1) chasing (i.e. attracting) and developing sunrise industries; and (2) development a new type of expanded agglomeration (cluster) through new strategies like entrepreneurism, innovation, university-driven ED—and many others.

3. The Rise in Community Development and Third Ghetto

CD was in disarray as we begin Part III. By its end community development had built up and expanded brand new wings and approaches, including an African-American “community economic development” wing which mirrored its dominant political culture. CD would thrive in the disruption created by the War on Poverty and later Great Society programs. The various movements and wings exploded during the 1970s, a Policy World infrastructure followed, and that decade was its golden years. From the 1980s onwards, CD has coped with the emergence of a Third Ghetto, a ghetto unable to penetrate the troubled, deindustrializing jurisdictional economic base, and unwilling, or unable, to assimilate into the larger society.

4. Rise of States as Primary Players in Sub-State ED

Owner of Dillon’s Law, the state government holds potential total mastery over sub-state ED policy systems. During the Classical Era the state was an intermittent, not always helpful player in ED. In the Transition Era period the state enters (and boy does it enter!) into state and sub-state economic development. Like the federal government’s, that forceful role could change, but it has crystallized since the 1990s. The pace of state involvement was uneven, often driven by both crisis below and gubernatorial initiative/ opportunity above. The involvement predictably varied by state and region—and political culture was again evident. An interesting variant, a state-level CD/ED hybrid, emerged, also with predictable variation in the balance between CD and ED. Chapter 19 contains an extended case study of Massachusetts as a teachable proxy for the 50 state/sub-state systems that emerged since the mid-1980s. Municipal jurisdictions on the whole lose power during the Transition Era.

5. The Third Global Competitive Hierarchy Challenges the Urban/Regional/Metro Hierarchies

The North/Midwest hegemony breaks asunder during Part III, accompanied by the rise of the Polycentric Suburbs and the simultaneous rise of the Sunbelt. Suburbs keep on growing, institutionalizing themselves as autonomous policy systems; in so doing they fade into the metro background. What emerges is a real or de facto polycentric metropolitan competitive hierarchy. Unimagined diversity, the suburbanization of poverty, aging of infrastructure and housing, and the demographic blurring of neighborhood succession exact their toll. The variation among suburbs is enormous. Chapter 18 will discuss a central city comeback, while acknowledging the institutionalization of the polycentric suburb. Our contemporary metro landscape is essentially in place before the turn of the century.

The national urban competitive system and the regional urban competitive hierarchies were radically disrupted by the mid-1970s’ Second War Between the States. ED is the principal battlefield in that war, dealt with mostly in Chapter 17 but again in Chapter 19. Called regional change, or the rise of the Sunbelt, it is more than that. The war passed, sort of, but became an element of contemporary politicization. In the wake of this change regions fragment into sub-regions, each with distinctive jurisdictional economic bases and styles and strategies of ED/CD.

Metaphorically, in 1973 another competitive hierarchy entered the picture—little noticed. What this history labels as the “hierarchy of global competitive advantage,” a global economic hierarchy formalized—a hierarchy extremely sensitive to our industry/ sector profit life cycle, trade, and currency volatility. 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. Currency rates in particular injected considerable volatility into sub-state jurisdictions. The industry/sector profit cycle became even more footloose and fancy-free. The effects of this new hierarchy have proven so profound that they will be a core element in the subsequent volume.

6. Hyper-Population Mobility

Population mobility again enters the ED picture in a very big way during the Transition Era. It comes in several forms, which include the largest immigration wave ever experienced by the United States. A succession of generational cohort migrations seriously affected the political cultures of their adopted cities, which, in turn, were presented with “opportunities” to exploit their alleged “creativity.” Finally, a new type of generational cohort mobility, the aged, wandered about creating Del Webb shuffle court and golf paradises, and a host of other new cities across the nation. Retirement communities became an accepted phrase in economic development as did “entertainment cities” and master-planned cities. Condos and homeowner associations, so-called Privatopia, further diversified metropolitan suburbs, and presented new challenges to suburban economic developers.

7. Environmentalism/Big Sort Redefine Growth

By the turn of the century the reality of “decline” had permeated into the previously exclusively growth-biased ED political cultures. Change and decline interact in Part III, and a notable feature has been a redefinition of “growth.” That redefinition struck at the core of the practice of ED and, expressing itself in an increasing politicization, partisanship, and ideologically polarized popular culture, has assumed a geographical expression due to a “Big Sort,” “Red and Blue” biased population mobility. This Big Sort reset the political cultures of many communities/ jurisdictions’ political culture and reset many a policy system. Environmentalism played a very big role in this transformation. This cultural evolution is fundamental to our policy systems and to the outputs they produce and implement. This evolution is so fundamental to American economic development that it is the concluding topic in Chapters 19 and 20—the key hinge topic to our subsequent volume.