Monday, May 12, 2008

Social equity and economic development

"Promoting social equity requires explicit investments -- in jobs and wealth creation -- that are explicitly customized to connect low-income families to economic opportunity."

Robert P. Giloth, Investing in Equity: Targeted Economic Development for Neighborhoods and Cities. In: Michael J. Bennett and Robert P. Giloth,Economic Development in American Cities: The Pursuit of an Equity Agenda

In the spirit of reading, reflection, and acting, I include some thoughtful commentary about targeted economic development from: Class Blog, UC-Berkeley, CP223, Local Economic Development Planning, Spring 2008, Prof. Karen Chapple. It's bit long but well worth reading. I was thinking of deleting all the references to me, but it is nice to see your stuff read and thought about.

Targeted Economic Development - ELENA
> Targeted economic development seems like the summary of everything we
> learned this semester. If you truly want to achieve the goals of
> equity and social justice, which Fitzgerald and Green Leigh( Economic revitalization: Case Studies for City and Suburb ) argue are
> two of the primary goals of economic development, this is the approach
> to take. What I like about it is the reframing of the people vs.
> place debate, "investing in people through place" writes Giloth.
> Sounds great, why isn't this the way it's always done?
> As Giloth describes, targeted economic development is "an eclectic set
> of workforce, enterprise, human service, community organizing, and
> public policy practices that focus on economic opportunity" (25). But
> these strategies must be market oriented and results based to be
> successful. Giloth recommends three alternative approaches for local
> action and investment. The one I find most interesting is the social
> economy, where investment is made in social entrepreneurs and social
> services. In a time where government funding for all kinds of social
> programs is drying up, Giloth's argument that the social sector is an
> important part of an economic development strategy is almost
> revolutionary. But I don't think he goes far enough. The social
> sector doesn't just address the human side of economic development, it
> creates meaningful jobs and builds social and human capital. These
> are long-term community assets, and have the potential to make
> development sustainable.
> The other element of targeted economic development which I find most
> interesting is the part about making work pay. This is an essential
> aspect of job creation which I feel often gets overlooked. It's not
> enough just to create jobs, the jobs created must be quality jobs that
> pay a living wage and provide benefits that support family stability.
> Great investments in workforce development and bringing people with
> barriers to employment into the labor force will not generate great
> outcomes if program participants can only access low-paying jobs that
> don't end up being worth their time and energy. The cost-benefit
> analysis of long commutes, or child care difficulties, or iffy
> relationships with supervisors will make the job lose out if the wages
> are low. Living wages can be guaranteed by a number of different
> kinds of local policies, and should be included in any economic
> development plan.
> Re: Targeted Economic Development - Josh
> People vs. Place
> I liked how Mr. Giloth laid out the 'people vs. place' dilemma as his
> central debate in local economic development policy. I hadn't come to
> the conclusion on my own, but after thinking back over the topics we
> covered this semester they mostly clearly fall into people (workforce
> development, asset building, IDAs, etc.) or place (redevelopment,
> TIFs, etc.) first strategies. Of course a place inherently includes
> the people that live there and, conversely, all people seek out places
> to live and work, so the two ends of the economic development
> continuum are inextricably tied together. Either way the hope is that
> by investing in people, those individuals can improve the places they
> live or by investing in places, the lives of the people living there
> will be bettered (as the author calls is, 'investing in people through
> place').
> I was also reminded of Robert Putnam's recent work where he suggests
> that the more heterogeneous a community becomes, the less likely any
> single individual is to feel generous towards his fellow citizens.
> Take California and the UC system as an example – in the 1950s and
> 1960s the state's demographics were less diverse, both from racial and
> income perspectives. The citizenry supported huge investments that
> made an UC education almost free. Today that same promise is
> enshrined in the state's master plan for higher education, but funding
> has been cut and fees are climbing much faster than inflation. The
> fact that the majority of Californians are non-white and the wealth
> gap is steadily widening may have something to do with this.
> So assuming that investments in either people or places require
> political support from parts of society that aren't well-integrated
> with the low-SES target populations or neighborhoods, which strategy
> might go over easier? People or places?
> I'm certainly not qualified to offer any empirical assessment of this
> question, but let me take a shot in the context of the work I'll be
> doing next year. I plan to work in affordable housing and
> redevelopment law – definitely a place-based economic development
> strategy. These are largely funded with tax credits and tax-exempt
> bonds – financing mechanisms that are much more obscure than welfare
> or other aid that goes directly to the (poor, likely minority) needy.
> Along the way, bankers, investors, and lawyers get their cut before
> the equity is delivered into the project area. If all goes well the
> poor do end up with housing or improved amenities and financing
> covenants require that things remain affordable over the
> medium-to-long-term as a bulwark against displacement through
> gentrification. But one wonders if this money could have been spent
> better if delivered directly into the hands of the poor or local
> service providers.
> Re: Targeted Economic Development - COLBY
> Tying it all together!
> Aha! A method in the madness. I see how we were led through a quagmire
> of LED strategies, attempted yet ineffectual individually, to weave a
> story, a background, a platform for success. Naïve optimist that I am,
> Giloth's article was my favorite reading of all as he brought together
> all of the strategies for a neat and cohesive context for making LED
> happen. I'm especially a fan of the cross-sector building and the
> building-from-within strategies. Following on the heels of EARN –
> which was, by the way, a fantastic presentation – and asset building,
> and prefaced also by BIDs, business retention, neighborhood
> revitalization, CBA's, workforce development, etc. Giloth's article
> constructed the puzzle. He understands the importance of neighborhood
> identity within the context of regional networks. He articulates the
> importance of private and public cooperation, the importance of
> integrated programs, and the essentialness of human capital. He
> acknowledges the challenges inherent to development such as the
> tension between revitalization and property value increases. I
> appreciate the breadth and scope of his discussion that, while
> prescient might err on the side of ambiguity. I agree with Elena
> that more can be said about the human capital side in LED, i.e. the
> living wage. That said, he states that the solution (and the
> challenge) lies in integrated and targeted economic development,
> customizable per community and he gives us examples such as Milwaukee,
> Chicago, Philly, and Seattle. Can not the human side be included in
> this customization?
> We have these cyclical problems of poverty, discrimination, crime,
> illiteracy. We have the politics, the profiteers, the fear of failure.
> These are huge obstacles! Throughout our readings, we have seen
> glimmers of hope associated with each component of LED on its own as
> it faces these behemoths. Giloth suggests, and I agree, that a
> composite strategy wrought from a community's needs offers the most
> possibility. I have to say, I certainly appreciate the elements of
> LED I have learned this semester. At the end of it, my initial
> skepticism has been allayed by the opportunity ahead. There are ways
> to foster successful LED. What we have learned is the menu of tools
> that, when assessed and selectively combined according to a
> neighborhood's needs, can help us work toward successful LED. Those
> obstacles are there, but identifying maneuvers to by-pass or overcome
> them is a huge first step.
> In closing, a thought about "place". Giloth rightfully mentions the
> tension between place and building regional networks – I want to plug
> the importance of place itself. Although we haven't seen many examples
> of place as the best driver for LED, it is not a negligible factor. My
> opinion – we have to start there and build outward. Place is more than
> a neighborhood, it's the hearth to which each of us goes home for
> peace and rest and dignity. Let us all strive to allow each person
> that.
> Re: Targeted Economic Development - LUCAS
> A splendid summary of many of the economic development tools we've
> been exposed to over the course of the semester, delivered in a
> framework of optimism for the potential of wealth-creating strategies.
> The author criticizes the place-focused strategies that have dominated
> economic opportunity thinking over the years. Neighborhoods, though,
> include the human element that is necessary to administer the
> "aggressive federal policies" that Gilroth recommends – speaker after
> speaker has emphasized the importance of personal relationships to
> economic development efforts.
> He mentions minority-owned businesses – it seems that the benefits
> (intergenerational wealth, minority employees) would accrue most
> effectively in ethnic enclaves, rather than in more diverse
> situations. Are they more likely to survive as well? He seems
> skeptical of those who do survive and prosper. But I see these
> businesses as creating a great deal of social capital, provided they
> maintain their ties to the communities from which they emerged.
> With regards to manufacturing, I would have appreciated a bit more
> detail of the argument that market dynamics and (especially) public
> policy have encouraged the survival of inefficient, low-wage firms.
> This seems plausible, but I'm missing the connection.
> Even though I know this course is strongly focused on urban areas and
> inner-ring suburbs, what sorts of opportunities exist for the harder
> to employ that live in rural areas? I grew up in Iowa and it has
> always been painfully clear that poverty thrives in the countryside,
> although it may be less visible.
> Another point, I should have mentioned last week – in the section on
> Individual Development Accounts, the first two goals listed are
> "buying a home" and "starting a business". This bothers me somewhat,
> potentially creating an incredibly frustrating problem where the
> asset-poor manage to scrape enough together to purchase a home, but
> end up in foreclosure and losing their equity. A similar possibility
> exists for starting businesses. Investing in other forms of capital –
> tools for self-employment or education – would seem to be wiser in
> many situations; perhaps the behavioral benefits are more important.
> Sobering observation that most economic revitalization has occurred
> only through gentrification. Can we count Boston's North End?
> I had one final comment, regarding the "High Cost of Being Poor". It
> conjured Barbara Ehrenreich's popular book (which was eye-opening for
> me). Last week in transportation policy, one student presented the
> concept of grocery store-oriented development, an idea that I liked
> more and more as it rolled around in my head. The idea is that you
> provide affordable housing immediately adjacent to a grocery store
> (perhaps right on top of it), potentially reducing both transportation
> and food costs for its residents (theoretically – but the example
> involved a Whole Paycheck store). This also creates a natural transit
> node and the potential for low-skill jobs. Another innovation is the
> location-efficient mortgage, providing better loans for those with
> demonstrably lower transportation costs.
> Re: Targeted Economic Development - Fontane
> The Giloth article is definitely provides a nice summary of what we've
> learned for the semester and ties everything together quite nicely. I
> agree that it is important to keep in mind that economic development
> should be approached from many angles and that there isn't a single
> solution. I think it's often tempting to compare methodologies as if
> there is one right way to go about it. I have to confess that I am of
> the endogenous development camp when it comes to job creation.
> However, as we've discussed, this can be an impractical approach if
> there are no businesses in the area to make use of the skilled
> workers.
> Additionally, I think Giloth brings up a good point that many low
> income people may have barriers that can't be resolved with more
> education or more training. It is interesting how he describes these
> difficulties as a "nonlinear process with many ups and downs" that
> involve barriers in their skill-levels, work experience or family
> problems. Not that I'm particularly math-inclined, but I think it's
> an interesting way to put it, and it reveals our (or just my)
> inclination to make assumptions about the relationship between
> training and employment. I would indeed like to believe that the more
> skills you have, the greater likelihood that you'll have a job (and a
> good job at that!). However, it is reminder that it is not so simple.
> Even putting aside the vast literature on gender and racial
> discrimination in hiring, the equation is not so simple.
> I enjoyed the fact that Giloth takes care to incorporate a broader
> picture to development issues. It is indeed important for CDCs to
> take on a more comprehensive approach to neighborhood revitalization.
> However, it seems to be our natural tendency to want to find one
> solution that will make all the difference. It is easy forget the
> "Now what?" of our development strategies. What good is job training
> if there are no jobs to be had? One cannot give everyone training in
> computer technologies and simply expect to be the new Silicon Valley.
> Similarly, one cannot only worry about living wages if the unbanked
> are being gouged at check cashing services and local grocery stores
> provide food at exorbitant prices. As far as I can tell, we have
> people working on all these issues, but not necessarily as a concerted
> effort, as Giloth seems to suggest. Giloth definitely brings in some
> interesting points about how we think about planning in the grander
> scheme of the world.
> Re: Targeted Economic Development - ANA
> I agree with everyone else that the Robert Giloth chapter summarizes
> the material from the semester well and connects a few dots in the
> process. The one thing to be certain of is that there is no silver
> bullet to overcoming the many barriers to economic development in
> poor, inner-city neighborhoods. Giloth recognizes that it is crucial
> to take an integrated approach toward solving all those problems if
> progress is to be made at all. The question should be not which
> strategies work best, but which work best in the local context and,
> most importantly, how the different strategies can complement and
> enhance each other.
> The challenge then is to figure out how exactly to integrate those
> strategies. There are people working on all those different issues and
> fronts – whether ensuring that jobs provide living wages, organizing
> CBAs, or working to build assets for the poor – but how does one get
> them to communicate and coordinate with each other? I am optimistic
> that this is possible and that a stronger, integrated, well-organized
> economic development coalition can emerge.
> Lastly, like Fontane, I also wanted to comment on Giloth's observation
> that becoming attached to labor and escaping poverty is a non-linear
> process for many low-income people. Rather, it is a process that has
> ups and downs, and that takes time and persistence because of the
> complexity of the problem of poverty and its structural causes. A job
> does not automatically result in long-term positive outcomes,
> particularly when you're fighting against unemployment that is caused
> by powerful economic forces (such as the decline of the manufacturing
> sector) and social inequalities (such as racial and ethnic
> discrimination). It is easy to see how the LED effort may be very
> frustrating or even seem futile. But this once again points to the
> idea that it is through an integrated strategy and a coordinated
> effort that economic development professionals can effect change and
> make improvements in the lives of the inner-city poor.
> Re: Targeted Economic Development - RICHARD
> Looks like I'm not the only one here who's relieved to see a pattern here!
> I did appreciate this week's reading assignment by Robert Giloth. He
> did an excellent job organizing all the LED tools we've been exposed
> to this semester. He readily points out that there is no "one
> solution"--that "no one investment is sufficient to improve social
> equity." However, in listing the four dimensions of targeted economic
> development into wealth, jobs, assets, and place, he made it clearer
> for me how we can organize all these various items in the ED "toolkit"
> into categories. It was a great way to review and help us organize all
> the different strategies we'd picked up this semester.
> What really interested me the most, though, was in Giloth's
> conclusion. He seems to be writing not just to economic development
> practitioners, but to anyone in local government. He outlines three,
> common sense approaches for us policy wonks to follow:
> 1) "identifying and filling policy gaps"
> 2) "municipal leaders can help identify dedicated investors and intermediaries"
> 3) "social entrepreneurs require support and nurturing"
> I think the final two approaches are going to be key, especially in
> large, progressive cities like San Francisco. The public sector can
> only do so much to bring about targeted economic development to
> neighborhoods in regional economies that may be rising but
> experiencing increasing disparity internally. The business and the
> private sector--the market, in other words--will need to cooperate and
> go along with any plan for economic development. The most successful
> politicians aren't those that simply mandate minimum standards or
> require equality across the board. What successful politicians and
> policy makers can bring to the table are Giloth's "investors and
> intermediaries" to fuel the economic development in these divested
> communities.
> Re: Targeted Economic Development - ANDREW
> This week's reading covers a lot of ground, and I think it does so
> quite effectively. But given our advantage of 20/20 hindsight vision,
> I think it's worth it to read some of Giloth's comments in light of
> the recent subprime housing mess.
> Though some of the previous commenters have alluded to this already,
> this is one area we haven't really explored in depth as a class, so
> I'd like to express my thoughts on it here: Are we ready to ask the
> question of whether or not we as a society are pushing homeownership
> too much? At some point we have made owning a home a prerequisite to
> achieving the American Dream. And although homeownership can be an
> effective way to build assets, I think the recent turmoil in our
> housing markets has shown us that it's not for everyone, and to
> continue pushing it is both irresponsible and economically
> inefficient. Many low-income families who were incentivized into
> buying homes simply bought into more debt, which is hardly an optimal
> way to build assets.
> The extent to which government policy is responsible for this is
> upsetting, to say the least. Recent policies have, for example,
> allowed individuals to purchase homes with less money down, sent the
> wrong signals by keeping interest rates at unsustainably low levels,
> and approved the use of "creative financing" that was highly
> susceptible to predatory lending practices. And amid the current
> turmoil in the housing markets the dialogue hasn't changed much at all
> – proposed policies are all trying to keep people in homes, which may
> only delay foreclosures instead of curing them.
> Yet even the dialogue among academics does not seem too far removed
> from what we're hearing from politicians. Even though Giloth seems
> somewhat cautious in portraying homeownership as a potential, but not
> perfect way of building assets, I still think his view of it is rosier
> than it should be given what we're seeing now. By actively promoting
> home ownership we stigmatize renting, a financial decision that makes
> a lot of sense for a lot of families. People like to point out that
> owning a home offers psychological benefits, but to what extent have
> those psychological benefits been actively shaped and promoted by
> government policies?
> Thus, while I agree with almost everything Giloth proposes as viable
> ways of promoting economic development, I feel society would be much
> better served if our government took a new approach to asset building,
> one that veered sharply away from homeownership and focused much more
> on incentives to improve the wage-earning capabilities of low-income
> citizens. Because if there's anything this subprime crisis has taught
> us, it's that individuals too easily buy into the illusion of asset
> building. The last thing we need is government policies that help
> perpetuate those illusions.
> Re: Targeted Economic Development - ALEXIS
> Like others, I enjoyed that this week's reading wrapped up a lot of
> the topics we've been covering. I also liked the discussion of people
> vs. place. The rift between people and place is what differentiates
> gentrification from upward mobility. You can either revitalize a
> neighborhood or focus on resources for its residents. If residents
> achieve financial success, they leave their neighborhood to find a
> better one. These are things that come up frequently when discussing
> these topics. To me it isn't a question of either/or, it's a question
> of how to best link the two.
> One minor note... I thought the bit on page 38 about predatory
> financial practices was very interesting and would have liked to touch
> on this more during class (although I guess studying predatory
> practices doesn't work well in a class that's supposed to be about
> positive strategies). It's something that has come up several times in
> our discussions. In this part of the chapter, Giloth says that many
> residents end up paying more for the same of poorer-quality goods and
> services than their higher-income counterparts. This shows the
> perverted way in which the purchasing power of certain neighborhoods
> is exploited. High-qaulity stores won't want to move into an area due
> to an idea that the residents won't be able to afford its products,
> yet those same people are routinely targeted as a viable market for
> high-priced, lower-quality services. Something doesn't add up.
> I agree with others that the discussion of asset building didn't get
> far enough into the importance of diversifying people's investments.
> The best way for the average American to gain equity is to purchase a
> home - we're seeing what this can do to households and the greater
> economy when things go awry. I would have liked to hear about
> strategies for building equity other than homeownership assistance and
> IDA (which only allow for a couple thousand dollars).
> Re: Targeted Economic Development - Deric
> I agree with Elena's comment about how the Giloth reading neatly
> summarized the main economic development themes of the course:
> business development, job creation, wealth creation, asset creation,
> and revitalizing urban areas. Targeted economic development takes from
> a variety of economic development strategies and applies them to a
> specific situation. I also liked how Giloth defined the targeted
> economic development problem as a "people versus place" policy
> dilemma, as that really encapsulates the recent history of government
> programs designed to alleviate the problems of the urban and minority
> poor.
> Giloth focuses on a broad-spectrum approach, and I agree with his
> conclusion that there is no one particular strategy (business
> development, workforce development, sector initiatives, asset
> building, etc.) that holds the answer to the problems. Rather, it is
> through a comprehensive approach that positive change in poor
> communities will be realized.
> I especially liked the section discussing the dual problems of
> concentrated poverty and urban sprawl, and wholeheartedly agree with
> the conclusion that the best targeted economic development strategy
> would be to push development towards the existing built environment:
> this means supporting and revitalizing existing businesses and
> industry in urban and inner-ring suburban areas, in and creating
> policies that provide incentives for economic growth in these areas. I
> hope to be working on these issues from the housing angle,
> specifically changing policies that currently create incentives for
> mobile families to participate in the urban sprawl that is a major
> threat to long-term environmental sustainability.
> Re: Targeted Economic Development - AMY
> The Giloth article eloquently summarizes the most important components
> of local economic development. The discussion of strategies for the
> harder to employ was, perhaps, one of the more interesting sections.
> More severe barriers to employment, such as criminal records,
> substance abuse and dependency, homelessness, or disabilities, can be
> very difficult to overcome. The topic reminded me of recent
> discussions in Raphael's class about the labor force and criminal
> background. Although the authors fittingly note that this issue "in
> many cases, has disappeared from the public policy radar screen."
> Finally, I agree that finding a first job would be one of the best
> means of overcoming the barrier, especially in the case of criminal
> records. As I've mentioned before, I think that a publicly-funded,
> short-term job program (either several months or a year) could
> successfully bring these harder to employ individuals back into the
> workforce.
> The asset building section reiterated last week's readings about the
> inequities of a tax policy which allows for mortgage interest
> deductions but provides considerably less assistance for low-income
> families. While promoting homeownership is an important component of
> community-building, it seems unfair that policies focused toward
> supporting those that most need assistance is so controversial and
> polarizing in present-day politics. This important point related to
> asset building, in my opinion, also tied into Giloth's final comments
> regarding the "high cost of being poor." I so strongly agree with this
> sentiment. Food, insurance, banking, and credit, for example, are
> often more expensive for those living in disenfranchised
> neighborhoods. While some of these additional costs are due entirely
> to geographical location, and unrelated to an individual person, I
> would argue that financial literacy could bring incredible savings to
> some residents in these communities.
> Re: Targeted Economic Development - DANA
> I felt relief and conflict reading this last article. It's true: the
> best approach to local economic development, to revitalization,
> health, etc is through a comprehensive approach. However, how do we
> make this work in the working world? Social problems which keep
> people stuck in poverty are not just going to be solved by job
> training. The racism and issues of economic inequalities become
> engrained in some people, and just having the skill set for a job
> doesn't fill in the rest of the gaps. We need to incorporate better
> schools, healthy grocery stores, safe alternative transportation, etc.
> I think that Giloth would agree with me.
> The human experience, the way we approach social capital and look at
> who funds social services, and how we create healthy communities is
> all created by a mix of approaches. If all of the job training
> programs, asset management ideas, and marketing strategies were
> designed together to focus on benefitting the community, then perhaps
> local economic development would be more sucessful.
> I wanted to echo what some of the other people have been commenting
> on, without sounding negative (especially after having read such a
> positive article!) I do believe in this comprehensive approach, and
> believe that organizations, cities, and businesses need to speaking to
> each more. However, they all have such different agendas. In light of
> the grocery store problem in West Oakland, there are organizations
> working to develop local food systems. There is EBASE working on
> livable wage campaigns. There are businesses wanting to open,
> developers who want to make money, and city governments which want to
> improve their neighborhoods. Basically, I think everyone is working on
> all of the necessary fronts. But how do we talk to one another? How do
> we get all those groups to communicate, or even just agree on a few
> common visions? Even if a more comprehensive approach would be more
> beneficial for all stakeholders in the end, the slower process seems
> more costly, and less attractive. I would love to have spoken more to
> how to work together more holistically amongst all of the LED
> groups/institutions.
> Overall, I am grateful though to end on an encouraging note! I was
> flustered sometimes, trying to decide which program or strategy is
> "best", when really it just confirms that people need to be working
> together to create healthy, safe, and economically stable communities.


Colin Austin said...

Ahh, Berkeley. I knew I should have gone there for planning school. Carolina was all land use and GIS. These are really great comments and increase my hope for the future.

Bob Giloth said...

What I liked about planning school, UIC, was that it attracted people with an itch to think about the world and make change. Of course, we also wondered about how to get a job and maybe have a career. I think that's still the attraction