Monday, November 6, 2017

Inclusivity and Economic Growth: Stronger Together

http://www.citylab.com; September 28, 2017

Hello Everyone:

Welcome to another week on the blog.  First thing first, tomorrow is an off-year election in a few states, including a consequential gubernatorial election in Virigina.  Go vote.  Every vote matters, regardless of what side of the aisle you sit.  Need more information?  Please go to vote.org.

Before we get started on today's subject, inclusive growth for a stronger economy, a word about the latest horrific shooting in Sutherland Texas.  Blogger would like to address the comment made by Mr. Donald Trump about this massacre being a mental health issue, not a gun control issue.  Allow Blogger to enlighten the current occupant of the Oval Office: the person responsible for the deaths of 25 church goers was the work of a male who was court martialed from the Air Force for domestic violence including breaking the skull of his infant stepson, and given a bad conduct discharge.  Further, the Air Force somehow forgot to make official note of this fact, which would have prevented this person from buying a gun.  Guns are often the weapon of choice for perpetrators of domestic violence.  This person texted threats to his mother-in-law before shooting up the church she attended.  Mr. Trump just rescinded an executive order, signed by President Barack Obama (naturally), that prevented people with a history of mental illness from buying guns and ammunition.  How do you not make a connection between perpetrators of domestic violence, mental illness, and gun use?  Further, Blogger just loves the way last week Mr. Trump was calling for the death penalty of that "degenerate animal" that plowed into the bike Hudson Greenway Bike Path, yet called for understanding for the shooter in Texas.  Yours Truly gets why.  Okay, shall we move on?

It is no secret that inequality in American cities is growing, yet amid this grim news item there have been more urgent calls for more inclusive economic growth.  In a statement of the obvious, Richard Florida writes in his CityLab article "For a Strong Economy, Focus on Inclusive Growth, "There's also growing recognition that with President Donald Trump and Republicans in charge of Congress and many states, this is an area where cities and local governments will have to lead."

Mr. Florida recently published an article, that we discussed, in the same publication (citylab.com; Sept. 21, 2017; date accessed Nov. 6, 2017), "What the New Urban Anchors Owe Their Cities," about how contemporary anchor institutions (i.e. universities, medical centers, real estate developer...) must become partners in inclusive prosperity.  Two new studies by the Brookings Institute's Metro Policy Program (brookings.edu; date accessed Nov. 6, 2017) takes a deeper look into the "widespread economic and social benefits of inclusive growth, and economic development organizations,..., can pivot their focus to reflect these new goals."

Richard Florida writes, "It's not just economic inequality we face, but the even more vexing problem of spatial inequality."  Over the past twenty years urban growth has become increasingly lopsided-something Mr. Florida refers to as "winner-take-all urbanism" (citylab.com: Apr. 18, 2017; date accessed Nov. 6, 2017).  He writes, "On the one hand, the divides between different cities have grown; on the other, inequality has grown the most severe in the most successful and knowledge-based cities and metro areas."

What are the arguments for more inclusive economic growth?

A more equitable economy is a stronger economy

The first study, Opportunity for growth (Ibid; Sept. 28, 2017), author Joseph Parilla makes the essential link between growth and inclusion.  Using empirical data at the national and metropolitan level, Mr. Parilla concluded: "inclusion is good for growth, and growth is good for inclusion."

However, it has to be the right type of growth.  In the past two decades, the crucial connection between inclusion and growth has by-and-large been severed.  Mr. Florida reports, "Each and every one of the 100 largest metros in the U.S. added jobs and increased their economic pout put between 2010 and 2015."  But only eleven-Denver, San Antonio, and Austin the largest metropolitans-experienced an increase in inclusive growth, gauged in terms of employment, earnings, and poverty.

Mr. Parilla charted the metropolitans with higher economic mobility demonstrating that metropolitans with higher economic mobility experience higher rates of growth (citylab.com; Sept. 28, 2017; date accessed Nov.6, 2017).  The graph, reproduced in Mr, Florida's article, illustrated that "...metro economies grow faster, stronger, and for longer spells when prosperity isn't limited to just a few segments of the population."  The reason for this phenomena is "...more inclusive metro can tap into deeper veins of talent, and draw from a more educated workforce with a broader range of skills."  these same metropolitans als trend toward higher rates of upward mobility, which contribute to productivity and economic growth.  Mr. Florida points out, "The study notes that if Atlanta-a low mobility metro, had the same economic mobility as Washington D.C.-a high mobility metro-it's metro GDP would increase by $18 billion, or about $3,000 per person."

The caveat in these positive sounding revealations is that growth is a two-way street.  "A more dynamic economy generates more jobs and economic opportunity for more people."  Further, higher levels of innovation generate more economic diversity, and build resilience to sudden economic shocks like the Great Recession.  And it goes without saying that faster growing economies begets more economic output higher tax revenues that can be reinvested in job training and a broad redistributive economies-which can create more inclusive places.

the takeaway is that it is erroneous to consider growth and inclusivity in opposition with each other-or develop policy that addresses one or the other-when really they are mutually beneficial to each other.  Richard Florida puts it this way, "Metro economies and national ones, are stronger when growth and inclusion go together."  What was that campaign slogan?  "Stronger together?"  Right?

The Role of Economic Development Organizations in spurring Inclusive Growth

The second study, Committing to inclusive growth (brookings.edu; Sept. 28, 2017) co-authored by Ryan Donohue, Brad McDearman, and Rachel Barker, which highlighted the central role of economic development organizations play in encouraging inclusive growth.  EDOs are "organizations that typically lead regional economic developments, like bids for Amazon's HQ2, for instance."  EDOs  throughout the nation have played important in supporting local business districts, spurring innovation, entrepreneurship, and high-tech development initiatives, attracting and retaining talent, strengthening and diversifying regional economies.  However, their statments of purpose have not typically extended to issues of quite and inclusion.  Those agendas have generally been left to other non-profits and community development organizations often functioning at the community level.

Richard Florida points out, "...this report argues that EDOS have key assets and strengths that can spur more inclusive growth that would work in concert the goals of neighborhood non-profits."  The study draws from the conclusions of the Brookings Metro Policy Program's Inclusive Economic Development Lab, "a six-month pilot project that worked with regional EDOS in three metro-Indianapolis, Nashville, and San Diegoto develop more effective strategies to frame inclusive growth as an economic imperative."

The main conclusion was "...the work of the Inclusive Economic Development Lab was broader than specific EDO policies, programs, and initiatives for equity and inclusion."  The most important first step for regionally based, business supported EDOS is the creation of a regional narrative that could help alter the way business and civic leaders, and the region more broadly consider inclusive growth.  The hope is that I'll lead to new partnerships and strategies in addressing these matters.

EDOS can bridge the gap between equity and economic development, which for far too long have been viewed as separate issues, requiring separate conversations.  They can accomplish this task by "emphasizing the development of human capital and skills across the board, especially by broadening the agenda to include upgrading low-wage service jobs."  EDOs can also concentrate on connecting potential employees to jobs in the workforce and much needed affordable housing, and "by ensuring that regional transit and transportation initiative connect neighbohood's to hubs of economic activity."

Thus far, the response of larger anchor institutions (citylab.com; Sept. 21, 2017) has been encouraging, there is some skepticism-and some contradictory purposes still remain.  Richard Florida writes,"Not all businesses are convinced that EDOS should make this shift."  Smaller and medium-sized businesses find it difficult to increase wages and upgrade jobs in the prospect of financial hardship.  Some neighborhood and community organization are rightfully concerned that regional EDOs, which have not always acted on equity and inclusion concerns, are stepping onto their turf.  Mr. Florida reports, "To be effective, it's critical that EDOs address these concerns and develop truly broad-based partnerships with these groups and organizations."

The plain truth of the matter is that cities and metropolitan regions can no longer depend on state or federal government's to address inequality, affordable housing, economic disconnect, and social disadvantage.  The Economic Development Organizations can step into the void and spearhead local public-private sector partnerships that help rebuild and revitalize metropolitan economies in the wake of urban crisis.  It will fall to the EDOs to help facilitate the pivot to more inclusive growth.

Enought with the winner-take-all urbanism, the time has come for a more broadly inclusive urbanism for all.  Recently, an anonymous economic development officer told Richard Florida,

For too long we emphasized economic growth, and that has helped accentuate many of the problems our cities and regions now face.  Our profession is called economic development and that's what we should emphasize; not just growth but full development of our people, neighborhoods and communities.  

This, my friends and fans, is what inclusive growth looks like.