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Do Cities Really Want Economic Development?

Wednesday, March 20, 2013

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Ask any civic leader the number one thing they want for their town and “jobs,” economic development, is what they will likely tell you. Yet when you look at the incredibly poor economic development track record across America, despite various untold billions of public dollars pumped into projects ostensibly designed to produce it, it’s enough to prompt one to question whether or not economic development is actually really wanted at all.

Jane Jacobs once said that “Economic development, no matter when or where it occurs, is profoundly subversive of the status quo.” This, in a nutshell, is why policies and programs that might actually move the needle and generate economic development are not implemented. The politicians, power brokers, businessmen, non-profit executives, etc. all at some level benefit from the status quo. Anything that disrupts the status quo is a threat to them.

I previously noted how it generally takes a critical mass of outsiders, enough to create a constituency for change in its own right, to drive real disruptive change in a community. These are the people who aren’t invested in the status quo. Absent that, getting reform that works will be a difficult challenge.

Economists have a concept called “revealed preference” that suggests that consumers reveal their true preferences through the actual purchasing decisions they make. Applying this to public policy, it’s hard not to come to the conclusion that the real preference of the powers that be in most places is the maintenance of the status quo, not disruptive economic development. It probably also explains why every city obsesses over “talent” publicly, but almost none of them undertake actions that might actually attract it for real.

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