The Professional Dilemma of Practicing Urban Economic Development.

The Professional Dilemma of Practicing Urban Economic Development.

I recently had lunch with a former student who now works for a local economic development organization in a Midwestern city. It’s always great to catch up with former students!

She’s employed by a private, nonprofit corporation that is registered as a tax-exempt agency using the IRS’s 501-c-3 designation. Like most such economic development organizations, the board of directors is a blend of elite private and public leaders. It is, by definition, a public-private partnership.

The Board includes elected and appointed senior officials from the local city government, the local County government, a community college president, a university president, two private foundations, the CEO of a local bank, the regional VP of a much bigger bank, two religious leaders, and senior executives from local law firms, several large publicly traded corporations, and the region’s largest Chamber of Commerce.

Getting this job was her dream. She grew up in the Midwest, surrounded by urban industrial decline and social disarray. She chose to study urban affairs because she wanted to help address the problems that framed her own lived experiences. She wanted to help stimulate more economic prosperity in a place that badly needed it. She wanted her chance to be “in the room where it happens.”

For the last four years she has helped many local companies find office space, manufacturing space, and employees. She has helped consultants gather data about her new hometown for her organization’s strategic planning process. She has represented her employer on task forces to advise policies for bus routes, training programs, and reducing homelessness on the city’s streets. She also has given many evening presentations to local groups to explain the economic development priorities that her organization has chosen.

After sharing several entertaining stories about specific projects, her tone suddenly became more serious. She had a question that was bothering her, and she wanted some advice. “My organization does a lot of good. I can see that we help create jobs that would not have been created without us. But our priorities are too narrow. Our outside consultants keep urging us to start new initiatives and expand the businesses we work with. I see lots of great ideas, and great opportunities, but the board is just not interested. How can I stretch what I’m working on without getting in trouble? As you know, I need my job.”

I smiled. By asking that question, I learned that my former student had become, in my opinion, a true professional in the field of urban economic development. Her question related directly to the core dilemma faced by thoughtful practitioners in the field. Furthermore, her question echoed a longstanding intellectual debate among economic policy makers and economic researchers about the wisdom of having elite, local public-private economic development organizations engaged in the process of urban economic development at all.

So, what’s the dilemma?

In the U.S., economic policy is dominated by Federal policy makers. Congress and the White House negotiate Federal tax policies, spending levels, complex regulations, and spending priorities. The independent Federal Reserve is charged with regulating monetary policy within the boundaries of balancing the competing goals of keeping inflation low and employment levels high on a national basis. And until recently, the Department of Defense and civilian organizations such as the National Science Foundation (NSF) and the National Institutes of Health (NIH) have used Federal grants and contracts to encourage scientific research and technological innovation.

Mainstream economic theory in the U.S. has supported these multifaceted interventions in the raucous process of market based economic growth because they can temper the national boom-and-bust cycles that plagued the economy in the late 19^th and early 20^th centuries and unlock the technological innovations that drive most economic growth in the 21^st century.

But apart from these macro-level policies, mainstream economic thinking in the U.S. traditionally discourages sub-national policy interventions. The overall goal of maximizing annual growth in gross domestic product (GDP), it is asserted, is best pursued by encouraging the free flow of money, jobs, civilian technologies, and human talent within the nation’s borders.

Any attempt by states and/or local governments to disrupt these free-flowing assets poses at least some threat to overall national prosperity by creating “artificial barriers” to domestic growth. Growth-oriented capitalism, they assert, is all about fostering continual change. At the local level, especially in urban areas, the process of change needs to be encouraged. In today’s global economy, growth is driven by rapid changes as new waves of technological innovation unlock new waves of what the economist Joseph Schumpeter called “creative destruction.”

Yet, in the view of most Federal policy makers, local economic development organizations tend to be dominated by existing businesses and existing elites, i.e. each local area’s status quo. Locally driven urban economic development, therefore, tends to reinforce the status quo instead of encouraging the erosion of existing sources of economic authority and the rise of new, and more prosperous sources of economic authority.

Defenders of local initiatives in urban economic development push back against these objections. The American economy, they assert, is filled with complex structural disparities caused by problems of culture as well as geography. These disparities create serious inequities that inhibit national economic growth by limiting the capacity of millions of residents to engage with economic opportunities. Only local initiatives can eliminate the complex local barriers that inhibit growth in many places. National economic policies can create a broad framework for more prosperity, but that framework won’t bring prosperity to specific places unless local initiatives can facilitate the necessary local adjustments.

Another argument in favor of local initiatives is that the competitive strengths of many industries inherently rest on key assets, both natural and human-made, that are local in their nature. Proximity matters. Therefore, local initiatives are best able to maximize the benefits of proximity.

Both sides of this longstanding debate have plenty of evidence to support their arguments. In the real world, locally based urban economic development organizations tend to be complex mixtures of backward-looking status quo interests and some forward-looking change agents. But there is an unavoidable balance of power that favors the proponents of the status quo. After all, annual budgets come from current members, not future ones.

Consequently, a core dilemma faced by professional locally based urban economic development practitioners is how to balance the interests of those who pay your salary and benefits today against the interests of those who are not yet on your board, but whose emergence is essential for achieving real economic growth that can improve the quality of life for residents. How do you keep one foot firmly planted in today’s world, with having your second foot firmly rooted in a future that is not yet certain?

There is no full answer to this complex professional dilemma. But there are principles that professionals can use to navigate a path through the uncertainties. These principles were taught to me by mentors, so I’ve been passing them down to my students and to those people I have worked with over my career.

First, before you start any new job in this field, create a list of at least ten professional actions related to your new job that you believe are unacceptable based on your previous experiences, your professional goals, advice from your mentors, your policy preferences, and your own sense of situational ethics (beyond actions that are just simply illegal to do).

Put that list someplace where it is easy to access. Bring it out at least once a month and start crossing off actions you have already done since starting your new job. The day you cross off more than half of your original list of actions, you need to quit immediately. You don’t quit until that point though. That’s because your job will teach you that the world is more complex than you thought it was when you took the job. You will learn that some actions on your list are actually second-or-third best choices that are viable once you learn the full complexity of some problems.

But once you have justified half of the actions on your list, you can no longer trust yourself to be a fair judge of how far you are willing to bend from your initial expectations of your own behavior. You must leave, quickly.

Very few true professionals in this field spend their entire careers in one organization. Indeed, one of my best mentors used to assert that if you’ve been working in a responsible job for three years and you haven’t been almost fired at least once, you likely have not accomplished anything worthwhile.

Consequently, the second principle for professionals in this field is, if possible, begin to arrange potential next steps in your career before you start your new job. Most people, of course, do not have a personal trust fund to rely on for income. So, if you suddenly need to quit your job because you have compromised your initial expectations too much, you will minimize the negative effects of quitting (especially on your spouse, your significant others, and your dependents) by having at least some groundwork for finding your next job.

These are the principles I used to help resolve that question from my former student. She had forgotten them, so we spent some time drafting up her list of unacceptable actions. Then she crossed off three of them but justified each based on new things she had learned since taking her job.

The remaining seven items gave her the framework she needed to start thinking about how she could respectfully navigate her way forward to stretch her work to accomplish some goals that were not on her board’s list of priorities. And she started brainstorming potential next jobs in case she stretched too far.

I look forward to our next lunch!

Bob Gleeson