Chickens, Eggs and Economic Development: Imaginary assumptions = imaginary outcomes

My favorite explain-everything joke is the one Woody Allen, as Alvy Singer, recollects in a voice-over at the end of Annie Hall:

“This guy goes to a psychiatrist and says, ‘Doc, uh, my brother’s crazy, he thinks he’s a chicken,’ and uh, the doctor says, ‘well why don’t you turn him in?’ And the guy says, ‘I would, but I need the eggs.’”

Alvy is talking about romantic entanglements. But I think it describes most of the situations in which we embrace fantasy to duck the tough work of dealing with things as they are. Like, for instance, what passes for economic development strategy in many communities and regions.

Take a look at the chart below, which accompanied a New York Times story from January of this year.

That parting of the ways between the service and goods producing sectors of the U.S. economy began in the 1940s, and you can draw a trend line well into the future. Consider, for instance, this projection below by the Bureau of Labor Statistics for job growth and decline between 2010 and 2020.

The bottom line: For better than a half-century, the U.S. economy has become increasingly a service economy, with manufacturing jobs in the decline. And looking to the immediate future, manufacturing appears poised for more net job decline. That long-term trend has left an enormous surplus of abandoned or underutilized industrial sites throughout the country, giving remaining goods-producing companies near-unlimited choices for where to relocate, start up or expand. All of which makes the long odds of attracting and holding manufacturing firms even longer and raises the ante for communities determined to get into that game.

So given all that, what would you suppose would be the numero uno strategy of a high percentage of economic development entities around the country? Why, of course, let’s go after manufacturing and other major employers with a vengeance. Just think of the eggs.

In June of this year, researchers at the Lincoln Institute of Land Policy produced a report called Rethinking Property Tax Incentives for Business. Their conclusion: “The use of property tax incentives for business by local governments throughout the United States has escalated over the last 50 years. While there is little evidence that these tax incentives are an effective instrument to promote economic development, they cost state and local governments $5 to $10 billion each year in forgone revenue.”

Forgoing that revenue comes at a time when there is increased pressure on state and local governments to cut spending, including spending on lots of stuff that just about everybody agrees supports long-range economic development. The nation’s principal organization for economic developers, the International Economic Development Council (IEDC), puts out an Economic Development Reference Guide that lays out the three major areas for policy-making in support of economic development:

  • Policies that government undertakes to meet broad economic objectives including inflation control, high employment, and sustainable growth.
  • Policies and programs to provide services including building highways, managing parks, and providing medical access to the disadvantaged.
  • Policies and programs explicitly directed at improving the business climate through specific efforts, business finance, marketing, neighborhood development, business retention and expansion, technology transfer, real estate development and others.

While the IEDC nods to the predictable wish list from companies for low taxes, easy permitting and loose regulations, there’s also an assumption that somebody is minding infrastructure needs, education, parks, neighborhood development and even “medical access to the disadvantaged.”

Let’s see now, where might we find folks who’ve been working diligently on that broader to-do list for economic development support?

It seems to me that when policy-makers stop dreaming of imaginary egg producers and start hatching realistic strategies for sustainable economic growth, they’ll end up on the same page with New Urbanists and Smart Growth advocates. Even it takes a while.

The common ground is an economy that’s “place-based,” that privileges quality of life, choice and opportunity over the ill-defined goal of “jobs.” Though you wouldn’t know it by the tone in election campaigns, jobs alone won’t satisfy what’s missing to make communities healthier and more prosperous. The fact is, there are plenty of jobs that aren’t worth chasing. Not only because the costs of capturing them are higher than the potential pay-offs, but because some jobs actually threaten the abilities of communities to be safe, appealing places to grow families and businesses.

By broad consensus, communities already block or restrict some “job creators,” such as environmental polluters, adult book stores and strip clubs and those serving alcohol. Increasingly, communities worried about the costs of sprawl, are establishing regulatory frameworks that channel growth in ways that frustrate prospective employers whose business models require parking or drive-through configurations at odds with community character.

Strategies that favor “Smart Growth” and “sustainability” are under fire at the moment by the Tea Party and their sympathizers, who often have a legitimate beef about the way governments invest tax payers’ money. But those who are serious about return on investment and about preserving choice will find their thinking migrating towards the very strategies they currently misidentify with waste and crony capitalism.

The crossover discussion between economic developers and Smart Growth advocates has already begun. Check out Kaizer Rangwala’s Place-Based Economy piece in the IEDC’s Economic Development Journal in the Winter of 2010. Blogs like those from Kaid Benfield, Strong Towns, The Atlantic Cities, Richard Florida and Planetizen come at economic development issues from various perspectives. And, of course, PlaceMakers, especially with the research of managing principal Hazel Borys, have been hammering away at various components of the ROI discussion in these posts.

Bowl: Robert Archambeau. Eggs: Real Chickens.

A certain amount of “We need the eggs” wishful thinking is hardwired into humans. That’s why Alvy Singer’s joke is timeless. We recognize the strategy in ourselves. But we should also know there’s a limit to the nourishment we can expect in imaginary egg gathering.

–Ben Brown

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Comments

  1. Fernando Centeno says:

    I would say that to equate business development activities, the one-trick pony conventional Chamber-of-Commerce approach, is NOT “economic development”. Corporate subsidy, tax abatements, etc. is a 40-year old paradigm because it favors the private sector at the expense of the public sector.

    After all, “economic development” is a public sector term, and all that it implies.

    It’s long past time for a new paradigm; check out Progressive Planning magazine’s Fall, 2011 article “An Urgent Need for a New Economic Development Policy Approach in Economic Development Practice”, via Cornell University’s Planners Network.

    Thanks.

  2. Barley Singer says:

    The problem is were are in a rapid turn around society. People want everything right now. Quarterly profits are gained at the cost of destroying the entire company (often). Stock holders will do anything they are told will make them money. People get elected to the company boards for making those promises. THEY (once on the board) will be rich even if they fail (golden parachutes)

    Nobody with any actual power is thinking (or doing) anything about long term and lasting investments, long term product development, or anything past the next business statement. As a result the make a mess of the economy.

    As far as I am concerned an MBA is essentially a form of certification that verifies that the certified person is equally capable of driving any business of any kind into the ground…for entirely selfish reasons, irregardless of the damage done.

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