As Two Ships: the History of American State and Local Economic Development Since 1789 to the 1980’s

From Volume 14 May 2017 Issue of the Journal

 

American state and local economic development (ED) has been around since Day One (1789) of the American Republic—it didn’t start in 1937, 1945 or 1965. Recognizable forms of many current ED strategies, tools and programs can be found by the 1880’s. My recently-published “History of American State and Local Economic Development, 1789-1990: As Two Ships Pass in the Night” (As Two Ships) presents our historical evolution from George Washington to 1990—all 752 pages of it. You may be surprised to know George Washington (an investor in canals) and his Secretary of the Treasury, Alexander Hamilton were practicing colonial economic developers previous to their federal positions. Hamilton arguably created the Republic’s first industrial park near the New Jersey site where he was shot. Lincoln partly financed his Lincoln-Douglas Senate campaign from proceeds from a case successfully defending railroad tax abatement. There’s lots more surprises in the history.

The two-hundred plus year economic development chronology revealed four major distinctive “Eras”, and uncovered surprising movements, leaders, and policy debates. American ED is not what it is cracked up to be; it is lots more. The chronology conclusively demonstrated a vitality and an incredible diversity of ED practice and goals throughout the nation at any one point in time and place differs markedly from that found in current textbooks and academic literature. Perhaps the most startling revelation about American state and local ED is that it was, and is, at war with itself–because American state and local ED is bisected by two competing approaches that differ on ED’s goals, strategies, beneficiaries, policy-making styles,and philosophy: community development and mainstream business-focused ED. If the reader is thinking they already “know” our history,  that, for example, the “three waves” summarizes it all, I’d bet you would be quite surprised. Strip away the mists of history and the fog of war created by two opposing approaches to how to “do” ED and there is a lot more that went on, and is still going on, in American state and local ED.

My next two issues of the Journal will present twelve observations (six per issue) drawn from As Two Ships. I will infuse them with additional insight to provide perspective and a foundation for future issues of the Journal and make them easier to apply to current events. These observations will provide a background  and a base from which to rethink one’s ideas regarding the history–and purpose–of American state and local economic development. They will open you to new ways on how to approach your job, research, and your profession.

This issue will discuss the core fundamentals of my history and also will introduce what the book labels the “Chapter One Model” .The Chapter One Model, in my mind, logically flowed from the 200 year history. The model did not exist previous to my research; it flowed from it and was adjusted and added to during my eight years of research and writing on what I called “the Never-ending Project“. The Chapter One Model is the “story” told to me by that history. It is why I think American ED’s history and chronology unfolded as it did. It offers, I think, considerable insight  to the present day, and suggestions pertinent to our future. The model provides meaning, understanding, texture, context, perspective and a sense of what has been important to economic developers. Knowing the model makes the history more helpful, interesting and challenging.

 Top “Six” Insights Developed from “As Two Ships

  1. American economic development (ED) displays two different and often warring personalities. Since colonial history two different and often conflicting approaches/styles to American ED was (are) evident: mainstream economic development (MED) and community development (CD). These approaches are closely tied to two “macro” American political cultures: one Privatist, and the other Progressive. Each culture rests on values, experiences, preferences, and beliefs of those who currently reside in the community–and those who currently reside in its cemeteries.  These cultures are inter-generational and can be found in different strengths and versions in every community and state in the nation. They adjust to change and time by putting on different “clothes”, but underneath they change remarkably little. Cultures influence local policy agendas, shaped local policy-making institutions/decision-making and over time evolved into a distinctive and durable ED “style” or “why things happen” in  each specific community/state. Today they constitute a major element of what is commonly referred as “Red and Blue” economic development.  Immigration, internal migration, and generational cohort migration transmitted these cultures across time and geography. 

These two cultures are the “Two Ships” passing in the night. Privatism and Progressivism have existed in some form since the 1620’s. Economic development, as a policy area and a profession, overlap (think three Venn diagrams) with at least three realities:  the (1) capitalist economy expressed in industry/sector agglomerations resident in each jurisdiction’s economic base; (2) demographic/social groupings resident in a jurisdiction; and (3) political, social and economic competition those outside the community (we call these “competitive hierarchies”). These three fault lines unleash powerful, policy-shaping forces as they react to change, innovation, growth and decline–jurisdictions cannot escape them and ED is tasked to confront them. Through the course of American state/local history these overlaps/fault lines forged two vastly different macro approaches to ED: Mainstream “business” ED (MED) and Community “people” Development (CD). They seldom like (or even respect) each other. Each creates its own little “bubble” or safe room to practice their form of ED. They set up different ED organizations, CDOs and EDOs. They target different beneficiaries and usually operate in different levels in the community (neighborhoods, the community’s business firms), and when they collide–say in the city council or in a public hearing–watch out!

Mainstream approaches are capitalism-accepting, prefer limited government, believe in a natural inequality, provide direct business-assistance by typically lowering costs of doing business, attract a skilled but inexpensive workforce, and promote a friendly business climate. Tightly connected to the jurisdiction’s resident industries and sectors (and their corporate owners/managers), MED values retention, attraction of new entrants and public provision of infrastructure. In tune with capitalism’s competitive ethos, MED competes instinctively with other urban jurisdictions, even nations, for economic prosperity, prestige and even their citizens as tourists and potential new residents.  (MED). This has been America’s dominant and conventional state and local ED approach which today most observers instinctively call “economic development”.

A competing “people-centered” approach, however, also exists. Focused chiefly on its economically/politically disadvantaged resident population that lacks connection with capitalist prosperity, it pursues strategies and programs and often foster “movements”, focus on distressed neighborhoods and ethnic/racial/immigrant groups, which economically and politically empower these marginal people and/or their resident geographies. Community development has proven itself sensitive to population migration and is fueled by the inevitable inequality/social injustice that accompanies it. CD resents deeply status and economic competition of other cities, states, regions, and nations that often result in “mobile capital” which enhances inequalities and injustice. CD’s ties to the local or state economic base is often tenuous indeed. Uncomfortable with capitalism, profit and corporations, CD offers a strongly anti-capitalist contrarian approach to American economic development. If able to control local (or state) government (or city council or mayor), community developers will use government to serve their people-centered ends. Otherwise, CD can serve as a check on MED and its behind-the-scenes business/corporate advocates.

Historically, CD has exhibited an amazingly varied set of strategies, organizational forms (loosely labeled CDOs), and, not uncommonly resorts to “movements”.  In that economic versus social change is blurred (slaves, for example, were the South’s core workforce), and disadvantaged “people” priorities shift constantly, CD’s primary struggle with jurisdictional-based MED has ebbed and flowed. Through much of American ED’s history, CD has been off doing other things (women’s vote, education, mental illness, abolition, temperance, slavery, and in modern times civil rights, climate change, and in recent years, identity issues). The federal government has played a compellingly-large role in the post 1960 rise of CD which today challenges MED in most American jurisdictions.  In our Contemporary Era CD has “taken over” many municipal governments and promotes a neighborhood-level quality of life, sustainable, people-focused policies (housing-related, for example), pushing MED off onto private EDOs such as chambers, downtown BIDs, tourism promotion agencies and regional marketing/cluster development entities. The reverse is also very common. This is the hybrid-ED system we mentioned earlier.

The surprising element about our competing political cultures and their forms of ED in each American jurisdiction is how durable over time they are!

  1. As Two Ship’s contribution is it describes how culture is transmitted into ED/CD policy-making/implementation and how it diffused through the nation. A major reason why Privatist/Progressive cultures last so long and noticeably affect our ED policy-making/implementation is that cultural values have been embedded in our political and decision-making “structures” very early on in our history.  The values and cultural preferences of a community’s/state first settlers, the proverbial founding fathers and mothers,  were injected into the original community decision-making structures such as form of government, electoral systems, and relationships (1) between levels of government and (2) the private sector. Which level of government is responsible for ED and who should benefit from it, and who should make ED policy are all demarcated in the original and subsequent state constitutions and municipal charters. Subsequent judicial decisions and interpretations can cement or modify  these value preferences for considerable periods of time. Our community’s “structural” political culture can preference/protect/inhibit our two competing ED approaches and since this structural culture can last for incredibly long periods (with ebbs and flows) instilling an impressive jurisdictional continuity to the ED approach and ED policy-making it preferences. Continuing over two centuries, a sort of cultural “default” ED policy-making legacy hardens into “the way we do business here”. Given that “new communities” are formed constantly, after all even neighborhoods “change”, it is not surprising that migrants “sorted themselves out” and created new jurisdictions that reflect their “first settler” preferences.

With ebb and flows, updating and modification over time, our “Two Ships”, Privatism and Progressivism, diffused across the nation thru population movements–later generation change. Population diffusion across regions, occurring at different periods in our nation’s history, created distinct political cultural (and demographic) differences among regions (and sub-regions). That different cultural “regions” existed, and affected ED, is nothing new to ED.  While no means the first[i], Joel Garreau’s, the Nine Nations of North America[ii], is perhaps the most well-known. I rely mostly on Woodard and Barone[iii]–and others. American state and local economic development is seriously different in each of the nation’s regions–and has been so since the very beginning of our history.

As immigrants and migrants ambled about the nation, they brought with them past experiences/expectations, value preferences and priorities. When a region was first settled, the European “First Settlers” set up from scratch a governmental system, complete with conceptions of how public and private affairs related and if/how they could partner and participate in public policy-making.The embedded values in key policy structures and relationships (state constitutions, forms of government, electoral systems, municipal charters, legitimate relationship of private to the public, and subsequent judicial precedents) have proven to be an important factor in America’s ED history. Our strategies, tools and programs have been partially shaped by these structures along lines reflecting their original value predispositions.These different structures produce enormous variation among state and local ED/CD programs. Tax exempt financing, tax abatement, eminent domain and tax increment financing are only some of the key tools we use that vary across regions, states and even jurisdiction. There are fifty distinctive state ED policy systems. Don’t believe me–take a job in another state.

That is why, for example, Tax Increment Financing is noticeably different across the forty-seven states that authorize it. Using another basic, yet critical example, is “type of government”. One sees New England Yankees set up towns/townships (which are the least prone to prioritize ED), Pennsylvania Midlands set up instead multiple villages and cities, southern plantation owners seldom incorporated municipal governments, relying instead on weak counties and the state. In many states, the structural political culture embraced in the original state constitution was a compromise between two or more migratory flows peculiar to the state/time period (New York is one example, Ohio another). The value-embedded jurisdictional structural cultures can filter, define, set expectations, parameters, processes, goals and legitimate actors–forming over time and historical experience into a semi-unique jurisdictional heritage (enhanced by Deborah Stone-ish “stories[iv]) that define “how business and politics is done here”. Today there are fifty (at least) distinctive ED state/sub-state systems.

Why is it that Boston and Houston adopted/pursued different ED strategies for over (nearly) one hundred-fifty years? The partial answer is the regionally-dominant structural political culture. First Settler values became embedded in  jurisdictional political cultures, and incorporated into durable political structures that somehow persisted to the present despite population/demographic changes, economic change, home rule/state constitutional evolution, and the simple erosion of time and generational change. These values and embedded structures crystallized into a jurisdictional ED policy-making/implementing legacy that defines and frames issues, sets agenda and jurisdictional goals, and tilts policy approval and implementation.

Having made the case for the importance of a structurally-embedded political culture on state and sub-state policy system policy-making, the reader should not assume the value-bias in these policy-making structures “determines” policy outcomes. It does not. I’m unconvinced it can be “proven” or measured even if it does. Political culture can, subtly influence outcomes, and over time tilt policy outcomes toward its preferred “default” approach to ED. This tilt may, however, be the consistent involvement/impact of business elite’s cultural preferences. Significant segments of the business community (so-called local “one percenters” and professionals in particular) incline Progressive, while corporate managers and FIRE sectors tilt Privatist. Small local-market businesses “speak” populist/anti-size, and act Privatist. The matter of business elites is further discussed in Observation 3.

 

  1. ED is a policy made by a government or private EDO in a jurisdictional policy system. The jurisdictional ED-relevant policy system historically has been relatively closed and its most consistent participants have been the several business elites segments that comprise the jurisdiction’s business community–and elected officials, and EDOs themselves. This closed policy system began to change in the 1950’s, but gathered real momentum with neighborhoods/sub-municipal EDOs (and CD), government EDOs and generational change over the Transition Era (1975-2000). Today the typical jurisdictional policy system is a swirl of autonomous private,municipal-federal-state public EDOs, quasi-government/hybrid EDOs, sub-municipal EDOs overlapping across ED strategy/ program-specific whirlpools. It is a hybrid CD and MED policy system.

ED programs, strategies and tools do not mysteriously or spontaneously appear. ED strategies, tools and programs are policy decisions/outcomes produced by a jurisdiction’s government or a private EDOs that operate within a jurisdiction’s ED policy system. EDOs are the basic unit of analysis, the atom, of a jurisdictional policy system.  EDOs can be public or private, a jurisdictional policy system includes both. An important contribution of As Two Ships is how many current ED/CD strategies/programs/tools were first developed in the pre-Civil War, and that most MED strategies, tools and programs can be observed by the first decade of the 20th century. It would seem new dogs (EDOs) perform old tricks, while older dogs learn the new tricks to survive. Another burst of new strategies developed in the 1970-2000 Transition Era.

My research conceptualized economic development as a set of “policies produced within an overall “jurisdictional policy system”. What is this “thing” called a policy system?  ED strategies and programs do not spontaneously appear out of nothing. Somebody or some thing needs to organize, approve, support, and operate ED/CD strategies and programs. Many focus exclusively on government as the arena in which ED exclusively is conducted. History reveals this government obsession to be very wrong. Government makes public policy, but neighborhoods and business leaders can make their own. So can federal and state public and private entities. EDOs and CDOs are the basic unit of a community/jurisdiction’s policy system. A jurisdictional policy system includes any EDO/CDO, private or public, federal, state and local (even international in some jurisdictions) can and do make, approve, and implement their own ED/CD strategies and programs using their own resources or others if they can get them. Each defines ED in its own ways, and tasks it with its own set of goals and purposes.

Within each community, and certainly state policy system, a ton or EDOs and CDOs flourish, cooperate, compete, and even ignore each other as they stumble about “doing their own thing”. Go through your phone book (ha ha) and see what’s got a listing. In big cities the list can go on for pages. Just don’t limit yourself to city government. The reason why we use a “policy system” is that history forced me to. Government is a relatively late entry into ED and CD. In fact, even today most EDO/CDOs are non governmental–private or non profit–and many government EDOs are “quasi” government whose boards of directors are non-government people. Before 1950, local government did what the Chamber and the ethnic machine political bosses (think community development) told them too.

Almost inadvertently, mostly instinctively, my history wandered into a noticeably different temporal perspective than most economic developers or academic researchers encounter. Instead of concentrating on the internal dynamics, programs, crises and processes of an ongoing or current policy system (the economic development of “what’s happening now”), the As Two Ships historical chronology naturally led analysis into past policy systems and how they changed over time. The sweep of more than two hundred years of different policy systems–IN THE SAME COMMUNITY– plying their trade was not unexpected, but it was startling in that it naturally prompted different questions and explanations. One important discovery was the persistent involvement of one or another segment of the jurisdiction’s business community–and the equally important observation that “all” business people do not think alike and do not monolithically adhere to commonly shared ED programs/strategies and tools. Some varieties of business people have been long-standing adherents of Progressivist CD, some chambers have been consistently led by boards that were Progressive in the ED/CD-related policy-making. Some (a lot) of neighborhood EDOs are Privatist–AND EDOs OFTEN CHANGE IN DIFFERENT TIME PERIODS–and across regions as well. Neither MED nor CD is changeless or uniform through time or place.

ED historically—to the Transition Era (1975) for sure—was been the province of business elites and elected officials. The chamber was the jurisdiction’s lead ED agency. The ED-relevant elements of the jurisdictional policy system were relatively immune to citizen activism and involvement. Frankly, one does not see much evidence citizen involvement was repressed—at least until the Twentieth Century labor movement. The impact of political machines, which often dominated urban legislatures, provided an ethnic neighborhood/class avenue into urban policy systems for CD working class interests—and a check on local business elites. Streetcar franchise politics were a hoot to watch. To the extent the average citizen involved herself with ED/CD it was through their elected officials–or through membership in the Chamber. In any case, ED contrasts dramatically with other policy areas such as school/education.criminal justice, or even planning-relevant policy-making.

Progressive business elites (and Chambers) were/are far from uncommon, and given the closed nature of ED policy-making, political culture of the various segments of the local business community are a critical factor explaining the sustained tilt of the ED policy system toward one or the other ED approach. In Yankee-settled geographies, this tilt was Progressive in the context of the times. There is no mistaking the Boston, Chicago or Cleveland Chamber for the Charleston (SC) or Los Angeles Chamber. The collapse of the northern industrial hegemony (more on that below) was a watershed, and Transition Era’s rise and fall of industry sectors, globalization of American corporate structure/market area, and the rise of CD and neighborhood EDOs complicated the “closed” ED policy system—resulting in many jurisdictions in separate “hybrid” private MED and public/neighborhood CD, policy system.

 

  1. ED state and local policy systems change over time and vary across geographies.  Jurisdictions periodically form new policy systems in response to forces of change (drivers) such as population migration, sector/industry change in its local economic base, and urban/regional, metropolitan and global competitive hierarchies which affect “mobile” firms. Economic development is a dependent variable. Internally, ED-relevant policy system actors can come and go, gain or lose access, and most importantly older ED strategies, tools and programs (and EDOs as well) bent to serve different ends or goals in response to driver-compelled change. What constitutes “ED” (i.e. what strategies, targets, goals are defined as ED/CD) shifts, sometimes rather dramatically, as a jurisdictional policy system changes. Finally, different policy systems (and their EDOs) coexist in the regions of the nation at the same time.  Using a commonly-named ED strategy, tool, or program (e.g. tax abatement, TIF, housing) almost always winds up serving different goals/purposes/constituencies across the nation.

Jurisdictional Policy Systems change over time in response to different environment inputs. ED is mostly a dependent variable (with the possible exception of city-building, the occasional regeneration project or attraction success). The major drivers of state and local ED change arise from (1) the evolution of the jurisdictional economic base reflecting its distinctive agglomeration configuration of industry-sectors as they confront the industry/sector profit life cycle; (2)  population migration (in and out); (3)  and since firms and industry sectors follow a profit life cycle and are geographically mobile in a capitalist system,  three levels of external competition emerge that offer opportunities and threats which the jurisdictional policy system must deal. The three levels of “competitive hierarchy” are: urban/region competition, metropolitan/suburban competition, and global comparative advantage competition.

In that our policy’s purpose (core goal) is to produce whatever is called “economic development” at the time, the ED policy area cannot be separated from the evolution of the American economy. That means ED must function in whatever is called “capitalism” by the jurisdictional policy system. From mercantilism to global oligarchy, from agriculture to technology to service sector, the structure and industry/sector shift in American capitalism provides the core framework for jurisdictional ED policy.

That the economy plays a primary contextual role in American state and local ED jurisdictional policy-making, however, does not mean economic realities dictate ED policy. Population migration and the three competitive hierarchies can and do interweave with economic realities as well as exert their own individual salience. It is a fruitless game to figure out which is chicken or egg and where the rooster enters the picture. This is particularly true if one acknowledges the rather profound differences in environment change factors on the various regions, and even states.

Drivers ebbed and flowed and interacted over time. Regions, states and individual jurisdictions have been unequally affected by these ebbs and flows. Accordingly, American ED displays enormous vitality, jurisdictional (and regional) individuality, and multiple and ever-changing goals. During our long history the regions of nation have not conducted their jurisdictional policy-making experiencing an identical three-driver environment impact. Southwestern urban renewal, for example, was a decade, or more, later than Northeastern urban renewal—and served different purposes salient to the region. A great deal of As Two Ships describes the impact of these drivers of change on state and local ED/CD policy-making.

 

  1. What causes much of this diversity and change over time and place is our three drivers of change introduced above. ED/CD confronts different problems, similar problems that vary in intensity or effect, or react to these change agents differently because of their different cultures and economies. Sometimes the pressures created by the three drivers of change are so severe they can destroy the existing state and municipal policy systems—a policy system realignment process becomes apparent. Jurisdictions shift and alter their their mix of policy actors, EDOs/CDOs and allow new actors (labor unions, for example) to play ED/CD ball. Realignment can lead to new, ED strategies, tools, and programs to confront a new set of demands and opportunities arising from impacts from the three drivers. Older EDOs/CDOs can adapt–or disappear. To provide some clarity to the two-hundred-year ebb and flow of change induced by our three drivers of change As Two Ships collapses jurisdictional (and regional) policy systems into four different Eras : Early Republic, Classical (hegemonic) Era, Transition Era, and today’s Contemporary Era. Within each Era there can be several “phases”; we call these sub-Era’s “Ages”–such as the Age of Urban Renewal[vi] which lies within the Classical Era.

Internal policy system dynamics, actors and especially goals of American ED policy change with policy system realignment. Naturally this means ED strategies, tools, and programs vary and are usually defined differently in each Era. During an Era, each regional jurisdiction may pursue common goals, but the strategies, programs and tools are adjusted and sub-variants are devised–for example tax-exempt bond issuance to attract/retain firms can vary hugely from state to state. Here the impact of embedded structural political culture is most pronounced as policy outputs shift to assist/harm different constituencies, intensity of use varies, and actors/constituencies/policy targets vary. Typically, new strategies and programs, sometimes tools are added. ED outputs reflect the particular characteristics/processes of each individual policy system. Despite these changes and goal realignments, however, much of the older systems persist—because the “need” or the constituency did not go away. Realignment does not usually mean the old EDOs, strategies and programs die. Rather they evolve. I call that process “onionization”. The “first and second wave”, if you will, didn’t go away. They remain, alive, well, and exceedingly robust.

For the first 150 years or so, Big Cities in the north (Midwest, New England and Mid-Atlantic) set the tone and led the nation. They did so because collectively they composed what As Two Ships labels as the “northern industrial hegemony”. Emerging after the Civil War was a northern (Union states) industrial hegemony whose primacy rested upon the North’s “Big Cities“, their industrial/transportation/ finance/communication agglomerations, their innovators and entrepreneurs, employing (mostly) an immigrant workforce and enjoying an infrastructure provided by the jurisdictional policy system. In the 20th Century internal migration supplemented and then replaced immigration. The hegemony’s national political predominance supplemented its dominance over economic “commanding heights”. Together they facilitated the North’s “control” over national markets and business investment in other regions of the nation—reducing them, at least in their mind’s eye–to mere colonies. For over a hundred years after the Civil War the course of American economic development was profoundly shaped by the existence and behavior of this northern industrial hegemony–and the reaction to it. Along the way, ED history became encumbered with a number of “urban myths” that persist and still influence our concepts and behavior.

This hegemony profoundly shaped the chronology  and character of American ED. To describe/understand that chronology, As Two Ships collapsed historical time frames into four Eras and within each Era several “Ages”. America evolved from its Early Republic Era (1790-1870), into a Classical (industrial hegemonic) (1870-1975) Era.  Within the hegemonic-dominated Classical Era were several “phases” or “Ages” during which most municipal-level jurisdictional policy systems confronted roughly congruent environmental pressures (distinctive to each region). These ages included Gilded, Progressive, and Roaring Twenties ages. It was the Depression and War Years (Age) and then the Age of Urban Renewal, however, that yanked American state and local ED into a brave new world–literally.  Stressed by the Depression/WWII, the northern industrial hegemonic jurisdictions entered into a final Classical Era “Age of Urban Renewal (1930-1975)”.

Given the impact/power of the hegemony, the Age of Urban Renewal became imbued with a special importance as American ED’s “hinge” and “scarlet letter” Age that culminated in the implosion of the northern industrial hegemony, rise of the Sunbelt, and start of a new Transition Era (1975-2000). When that hegemony finally imploded during the 1970’s (precipitated by impacts of each of our three drivers of change in combination—plus the federal government), it caused the most significant disruption in our ED history—a disruption so transformative it took over thirty Transition Era years to digest. That period of digestion I label “the Transition Era”, laid the foundations for economic and community development in present-day Contemporary Era (post 2000). Until the Transition Era, American ED had been an economic development of growth either in fact or, as the Age of Urban Renewal testified, in delusion. Haunting the Transition Era, however, was the specter of decline and a redefined “limited, managed or sustainable growth” that permeated into the theory and practice of ED.

During the thirty plus Transition Era years, American ED was reformulated, re-strategized, reconfigured, repopulated, and its purposes redefined. Without any doubt, in my mind the path-breaking intrusion of “decline” and limited/constrained economic growth into the calculus of American economic developers was the most dramatic and revolutionary development that emerged from the Transition Era. The prospect, the very real threat, and the actual confirmation of jurisdictional decline in and within American jurisdictions, has been the dominant factor that characterizes our Contemporary Era. As Two Ships does not deal with the Contemporary Era. I am writing that book as you read this.

 

  1. The South and West followed separate paths in American ED history from that of the northern industrial hegemony. When one looks at American economic development patterns As Two Ships strongly suggests one look at each region (and sub-regions) on its own terms. The three drivers of change (population, economic base, and competitive hierarchies)—not to mention each’s distinctive historical legacy—affect these jurisdictional policy systems differently—and their policy systems respond(ed) by tasking their EDOs and ED strategies, tools, and programs to serve different goals and constituencies. The emergence of the West and South during the Transition Era, while adding to the robust nature of ED/CD, also added to its complexity and proved a major factor in the polarization and politicization of American MED and CD. Our Two Ships no longer merely “passed in the night”, they battled throughout the day.  

The 18th and early 19th century South did not meaningfully urbanize or industrialize, and did not “enjoy” immigration as did the North. The South lost the Civil War. Whether or not one accepts the industrial hegemony/colony assertion, until 1940, or so, the South’s economic base was primarily commodity-driven low-wage agricultural-export, resulting in a bi-modal jurisdictional policy system (or “divided mind”). Whatever form of ED the South practiced, of the four regions, the South was, and still is, the nation’s poorest region[vii]. Southern ED never really partook  of, or accepted at face value the ED/CD as practiced in the North. The North in turn never forgot the Civil War and its hegemonic aftermath. In many, many ways we still conduct ED/CD “as we shot”.

The post-WWII  New South is itself quite variegated. Miami is not Atlanta which is not New Orleans—let’s not even think of Texas as southern—it is southwestern. Houston has more in common policy system-wise with Phoenix than San Antonio. Richmond (VA) historically Virginia’s largest city, is half (or so) the size of 2017 Virginia’s largest city, Virginia Beach.  Southern non-metro poverty is staggering, yet the most devastated suburbs are Midwestern. North Carolina ED is a fascinating story, a case study in intrastate policy system variation in economic development strategy (textiles mills, vocational education, Research Triangle and Charlotte banking)—as is Kansas, by the way.

Southern urban renewal got caught up in the 1950’s southern Civil Rights Movement and the Great Migration—it served purposes more akin to western cities than urban renewal in the hegemonic north—which, by the way, feuded and warred with the South through most of the 20th Century creating a huge heritage (remember the “BAWI”, and New England Textile War) in American economic development history. If you are from the North, southern economic development “piracy”, not colonization, was the cause of the feud. Ah yes, the “Lost Cause” still endures–in economic development at least. In 2017, however, we are less sure who lost.

The West on the other hand, despite its rural cowboy motif, has always been the nation’s most urban region—even when practically no one lived there. The West is a “smush” region comprised of notably different sub-regions such as the Southwest and Pacific (Left) Coast—each benefiting from different population migrations (economic bases as well) at different time periods. Comparing pre-WWII Western policy systems (and EDOs) to those in Eastern cities is a perilous enterprise. Postwar western urbanization was WWII/Cold War-inspired, followed by generational cohort population migration, which in turn was followed by Hispanic and Asian immigration. How this compares with chronic legacy cities of the Great Lakes and Mid-Atlantic is anyone’s guess. Suburban growth in each of the four regions is noticeably variegated; American suburbs exhibit regional distinctions that persist to the present. EDO behavior, jurisdictional economic bases and policy systems vary considerably across regions.

The several sub-regions of the West, and the role of their newly-active state governments, increasingly has set the tone of American ED/CD in the Contemporary Era. Silicon Valley, San Francisco, Seattle, Berkeley not Harvard, Stamford not M.I.T. Heavy duty Asian and Hispanic immigration has altered its former political cultural heritage–Los Angeles and Orange County have been turned inside out culturally-speaking. A vastly pervasive neighborhood-based ED/CD movement, heavily impacted by an intense environmental sensitivity, has led in the creation of new ways of conducting American ED/CD. As to decline, the West will have nothing to do with it. It just doesn’t want to grow that much. The Pacific West stands in stark contrast to the chronically-in-decline Great Lake Midwest, and the 2016 election suggests those “Forgotten” mid westerners are themselves demanding new forms of ED/CD to address their situation.

 

Conclusion and Segue Way

A huge part of As Two Ships consists of bushwhacking for the first time through history to uncover and fabricate an ED/CD path upon which others can follow. It is not perfect and it is certainly will not be the last word on the subject. The concepts and observations discussed above are the most fundamental lessons learned from hacking my way through history. But there are six more to come in the next issue. We will start talking about economic development organizations, ED/CD strategies, tools and programs through history. The role of the federal government in state/sub-state ED/CD cannot be ignored, nor can the dynamics and legacy of the northern hegemonic implosion. The explosion of new forms of EDO, strategies etc. that arose from the Transition Era and which dominate today’s ED/CD Contemporary Era needs to be mentioned. And above all–the Big Sort and the effects of recent population migration on the resetting of the jurisdictional political cultures and policy systems must be discussed. Finally, some thoughts offered on our Contemporary Era, the structure of our profession and policy area, and the need to redefine the role of state and local ED/CD, as a “manager of creative destruction” which, somehow, combines the talent and complementary strategies of ED and CD in a common struggle against decline. Look for us when you hear Game of Thrones is back: “Winter is Coming” and the forces of magic and might must join together to escape defeat.

Footnotes

[i] My introduction to political culture in 1969 graduate school was Almond and Powell’s, Comparative Politics (Boston, Little, Brown & Co, 1966), and most importantly Daniel Elazar’s, American Federalism: a View from the States (New York, Thomas Y. Crowell, 1966). The “historical” literature is endless, but the 900 page David Hackett Fischer’s classic, Albion’s Seed (New York, Oxford University Press, 1989) would be an excellent start.

[ii] Joel Garreau, the Nine Nations of North America (New York, Houghton-Mifflin, 1981 5th Ed)

[iii] As Two Ships relies on Baltzell, E. Digby. Puritan Boston and Quaker Philadelphia. New York: the Free Press, 1979; Barone, Michael. Shaping Our Nation. New York: Random House, 2013; Bishop, Bill. the Big Sort. Boston: Mariner Books, 2008; Russo, David. American Towns. Chicago: Ivan R. Dee, 2001; Warner, Sam Bass. the Private City (2nd Ed). Philadelphia: Philadelphia University Press, 1968; Woodard, Colin. American Nations. New York: Viking Press, 2011.

[iv] Stone, Deborah. Policy Paradox (Rev Ed). New York: W. W. Norton & Company, 2002.\

[v] The same could not be said for Orange County CA—but the explanation for its change supports the process As Two Ships asserts brings about such change: a population with a different culture migrating into the area.

[vi]As Two Ships does not attempt the Contemporary Era and confines itself to introducing the Transition Era “foundations” dominant in the Contemporary Era.

[vii] https://www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-being/geography-of-poverty.aspx

Comments

Thanks for another thoughtful, insightful, & comprehensive summary of ED history. Much to digest & reflect upon . . .

I would argue that our “profession” suffers from a lack of clarity and common understanding of a major planning concept w/in the public sector where it originated, centered around the evident need for public sector intervention to compensate for the lack of “lifting all boats” consequences in the capitalistic, private sector economic system we supposedly admire and excel in. No one ever defines “economic development” to begin with, but that’s because everyone assumes it means nothing more than business development. How wrong they are!

I say if you want to advocate, support & finance private business development, join the Chamber of Commerce, as this is their mission in life. The mission of true “economic developers” is to raise standards of living & quality of life outcomes, in real terms, by leverage public dollars with the private sector to achieve worthy public goals & objectives, neither of whom are able to achieve on their own. By law, public sector entities must meet a “public purpose”; are they being monitored to see whether this purpose is being achieved? No. Do we see transparency or accountability at all levels of the non-profit & govt levels? No.

Regrettably, Chamber types & their cohorts of bankers, lawyers, developers,marketers, designers, architects, etc. now say they do “economic development”, which reveals not only their ignorance, but it reveals how poorly our “profession” has become, cannibalized by the strong economic forces which have long dominated the planning landscape.

Pls note that “economic development” is a public term, not a private one. What would be the logical public goods or outputs from the use of massive amounts of public funds year in & year out? It isn’t to expand the built environment, stress the natural environment, increase taxes, fees, and burdens upon middle & lower income families, or to promote gentrification. It isn’t to define “success” in business terms, but in socioeconomic terms, but this idea continues to be a top secret.

Unless “economic development” is clearly understood for its public sector goals & objectives, distinct from private sector pursuits, we will always suffer from conceptual conflation, rendering key planning terms, concepts and principles as meaningless. We need referees to throw big red flags each time the “economic development” term is used & abused, which easily can lead to full time employment for many of us.

I don’t know of any other “profession” so self-afflicted.

Comment by Fernando Centeno, CED on May 25, 2017 at 5:31 pm

I failed to add my most important point from my previous comments, and that is, in our history, the U.S. has NOT practiced “economic development”. With the heavy use of public subsidies, we have practiced business development to artificially “spur economic growth”, and, we have practiced public-private partnerships, to achieve needed public infrastructural improvements.

But these efforts or achievements do not constitute “economic development”, as they all involve expanding the built environment, the “urban” planner’s idea of “economic development”. A natural, healthy, competitive business environment would accomplish these activities WITHOUT the need for public subsidies. Given that heavy subsidies are used at all levels of govt to achieve “economic development”, reveals the weaknesses of our capitalistic system.

Unless, and until, “economic development” focuses upon moving the needle in socioeconomic terms, aligned with its legal requirements as a public term to fulfill their tax-exempt “public purpose”, we are not practicing “economic development”. Done right, standards of living & quality of life outcomes will be achieved in real terms because public funds were wisely leveraged with the private sector to “move the needle” in a positive direction.

Note that we cannot continue to see “strong economic growth” using economic development funds and yet see a growing divide between the haves and have-nots, economic segregation, and concentrated, structural poverty at the same time. Folks in public office confuse private sector growth & prosperity with “economic development” rhetoric, which only reveals that they don’t know basic planning terms & concepts. Private is private, public is public; “economic development” is a public concept, hence, the need to see public outcomes in areas where community needs are greatest, not where market-ready areas are primed for more growth to help influential commercial real estate interests & all of their cronies. This is the way the game has been played for centuries.

The two ships on the water ideally represent our two sectors, public and private, working as a team to accomplish mutual goals and objectives. Unfortunately, the private ship has boarded the public ship & taken its goods in the name of “economic development”, defined as a “success” because it has privatized the benefits and given a token fee to the captain & his crew (Mayor & Council) of the public ship for forfeiting their public responsibilities to the taxpayer who paid for it. The Chambers of Commerce & business press applauds such success, as this is an example of entrepreneurship, creativity, and initiative.

It all looks good on paper, until the Titanics hit the icebergs, which happens every day.

Comment by Fernando Centeno, CED on May 26, 2017 at 1:45 pm

In my neighborhood/state economic development is giving tax breaks to millonaires for real estate speculation and money to the medical industrial complex to create jobs for the already wealthy and educated. A Harvard researcher just came out with a study that shows that relying on the medical industrial complex makes health care unaffordable. But that information is not allowed a seat at the table because it is all the rich have to work with here. Much of my work is trying to prevent the rich from self dealing in a way that harms communities and stopping their really bad projects that create some private profit but saddle the community with huge debts. Thankkfully we ahve been able to stop some of the worst scams like container ports that if built would have opened as the Great Recession started and baseball stadiums. Your article is useful for the historical perspective on the thieves.

Comment by Greg Gerritt on June 6, 2017 at 9:48 pm

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