Do Cities Really Want Economic Development?

A poor economy and all the problems that come with it actually benefit some people, giving powerful players less incentive to improve the status quo for the rest.
by | July 2014
A shopping complex in Washington, D.C.'s Columbia Heights neighborhood. Flickr/IL Primo Liomo

So many cities and regions continue to struggle economically. Even within nominally well-performing places there are pockets that have been left behind. Most of the have-nots in the current economy have been struggling for an extended period of time, often in spite of enormous efforts to bring positive change.

Why is this? Perhaps we need to consider the possibility that these places are getting exactly the results they want: Maybe they actually don’t want economic development.

Economist David Friedman once told this joke: “Two economists walk past a Porsche showroom. One of them points at a shiny car in the window and says, ‘I want that.’ ‘Obviously not,’ the other replies.”

That is, if the first economist had really wanted the Porsche, he would have bought it. Our choices tell us more than our words about what it is we really want.

The civic world is obviously more complex than this simple joke. But given the persistent failure to change the trajectory of so many places despite the enormous time and energy -- not to mention vast sums of taxpayer money -- spent on it, it’s worth pondering the possibilities.

Problems are problems, but they are also sometimes solutions to certain sets of questions. One of these is how to mobilize, allocate, and deploy community resources and power. Fighting decline has become the central organizing principle in many places.

As a friend of mine from the IT industry once put it regarding what he termed “rackets”: “A racket is when folks have something they complain about and commiserate about but don’t fix. Upon delving into the roots of a racket one finds that the folks don’t really want it fixed -- the subject of the racket is a unifying force that if corrected will remove the common complaint and thus the unifying force. The cultural changes that would ensue from the change in practices that ‘no one wants’ are not acceptable to [the complainers]. In corporate organizational behavior, it is important to break the rackets. It is also difficult. But, I imagine, far easier in a company with some semblance of common objectives than it would be in an each-man-for-himself city.”

In short, economic struggle can be a cultural unifier in a community that people tacitly want to hold onto in order to preserve civic cohesion.

Jane Jacobs took it even further. As she noted in The Economy of Cities, “Economic development, whenever and wherever it occurs, is profoundly subversive of the status quo.” And it isn’t hard to figure out that even in cities and states with serious problems, many people inside the system are benefiting from the status quo.

They have political power, an inside track on government contracts, a nice gig at a civic organization or nonprofit, and so on. All of these people, who are disproportionately in the power broker class of most places, potentially stand to lose if economic decline is reversed. That’s not to say they are evil, but they all have an interest to protect.

Consider one simple thought experiment: If a struggling community starts booming, that would eliminate a big part of the rationale for subsidized real estate development, which constitutes the principal form of economic development in all too many places, and which benefits a clear interest group. It might also attract highly motivated, aggressive people from out of town, folks who are highly likely to agitate for better than the current inbred ways of doing business. This would inherently dilute the positions of the current powers that be.

In our own communities, where everyone seems sincere and dedicated to improvement, this can be hard to see. But when we look at other places where we have more critical detachment, it becomes obvious. For example, those of us not from Michigan can look at Detroit and see the failure of that community’s leadership across the board -- white and black, suburb and city, Republican and Democrat. But for all too many of them, Detroit’s decline was a personally profitable affair, politically, financially, or both.

It’s tempting for us to shake our heads at Detroit, wag a finger and lecture them on what they should have done better. But if we were honest and introspective, we’d realize many of the same forces are at work in our own community. There are a lot of people who are personally doing quite well even in the midst of decay. In fact, the cold reality is that they are directly benefiting from that decay.

In places long in decline, it’s likely to take some outside shock to the system to break the rackets that are producing civic stasis and dysfunction. Detroit is in bankruptcy, and we’ll see if that finally forces it to change its way of doing business. In the meantime, let’s hope other communities find a more positive way to break free and embrace a path that leads to actual economic success.

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