THE BEST – LAID PLANS

How Government Planning Harms Your Quality of Life, Your Pocket Book and Your Future

Government panning has become an accepted part of life in the United States.  Almost every city and county in the nation has a plan and employs planners to make studies and establish plans to better the future.  Most states require cities and counties to prepare plans, some being required to access much needed grant assistance to fund local projects.

In a recent study (spring 2012) Planning in America: Perceptions and Priorities     http://www.planning.org/policy/economicrecovery/ commissioned by the American Planning Association, the trade group for professional planners, 79%  of American’s like the idea of local community planning even if they are unclear about the goals that planning should serve”.

However, according planning critic Randall O’Tool author of the The Best Laid Plans, “a plan written with the best intention, will likely go horribly wrong”.

He claims that planners who “advertise their methods as the solution to almost any problem or controversy” allow elected officials to turn over thorny problems to the planning bureaucracy rather than force elected officials to make decisions.

He notes this planning decision process is run by “well-intentioned but often clueless people called planners, who, having graduated from architecture [and planning] schools and other universities are eager to bring their visions of utopia to the American people”.

O’Tool cites that it’s  a ”bitter irony, freely admitted by numerous planners, that many of the problems that planners propose to solve were caused not by the free marketplace, but by past generations of planners and other government bureaucrats”.

He basis his conclusion on two fundamental facts –

1. That rational planning cannot occur in a highly politicalized environment, and
2. The notion that competing groups can sit down together and negotiate the goals for all interest groups is unachievable.

While published in 2007, the validity of his statement surely is confirmed as demonstrated by Republican and Democratic Party actions during Presidential election and currently shown by congressional efforts to address the pending national fiscal problems.

O’Tool notes “planners tend to be attracted to fads over hard economic based analysis”.  Try TND, TOD, Smart Growth and today’s placed based community strategy, as examples.

He claims, planners unlike employees in the private sector, face no risk, allowing for planning to be done without the risk of failure.

This “no risk – no consequence” situation O’Tool suggests, allows planners to  “hide behind risk-free prepackaged concepts such as smart growth principles for their plans rather than doing detailed economic analysis that might or may not lead to success”.

The fundamental premise held by these planners is that “government can be blindly objective and even altruistic and create great plans, whereas private individuals and corporations working in their own self-interests cannot.  Only government can protect the common good”.

O’Tool’s opinions are obviously disputed by planners based on the results of their recent survey.

The recent (APA) survey disclosed that the American public recognizes the importance of government planning in economic prosperity with 92% of the respondents stating they believe “things work better with a plan and that community planning is important to the economic recovery” with local job creation ranked seventh in importance by over 70% of the responders.

Ironically, macro-economic theory is not typically emphasized as a critical component in planner education.  The educational framework of most planners is based on the notion that architectural design; the creation of a hospitable and livable physical environment, will dominate and shape people’s behavior.

O’Tool sees this dichotomy – the emphasis on physical environment shaping human behavior and providing the basis for job creation opposed to a free markets making the job creation decisions as the fallacy of government planning and reason that planning never will succeed.

So what are the planners to do?

Based on the notion jobs and economic development are to be higher priority for current community development strategy, planners need to gain a higher level of understanding of macro-economic influences that shape, or result from, community development plans.

Planners need to –

1. Gain macro-economic education allowing assessment of potential impacts of optional community development strategies.

1. Widen inputs into the comprehensive planning process to include greater consideration of government macro-economic policy upon future growth trends and the amount and timing of new development land needed to accommodate growth.

1. Elevate the importance of municipal economic viability and sustainability into the overall framework of plan implementation, as professional standards of practice.

1. Make mandatory the role of “concurrency” the notion that every capital expenditure must be confirmed by a funding source prior to inclusion into a comprehensive plan, thus eliminating speculative “build it and they will come” projects.

1. Seek closure of the gap between the practice of economic development and comprehensive planning, recognizing that economic sustainability is only achieved when both disciplines act together to implement the comprehensive plan.

1. Make real estate development economics a mandatory requirements of planner education giving planners a better understanding of private sector risk and reward principles for the creation of real estate taxable valuation which is the basis of local property taxes that derive revenue for local government operations.

1. Create new unique public-private partnerships infrastructure models in recognition that traditional forms of developer “exactions” specifically the donation of public infrastructure will become a remembrance and local governments will be called upon to provide infrastructure when un-fundable by the developer’s lender.

1. Create understandable and communicable matrices to quantify and measure success of plan implementation stressing short-term tangible results specifically new job and real estate investment creation.

1. Establish accountability performance requirements for plan implementation which hold planners , as well as elected and appointed office responsible for plan implementation.

1. Planners must also abandon the fundamental principle that community development and economic development programs must resolve multiple problems in order to be politically acceptable and fundable by local government officials. Planners must be able to “turn their back on certain problems which maybe a political impossibility under many current community and economic development strategies.

While O’Tool claims, “planners tend to be attracted to fads over hard economic based analysis”, there is evidence that a new fad – the recognition of macro-economic inputs into the shape, direction and viability of comprehensive planning may set direction for a stronger physical, social and environmental important strategy.

NEED, GREED AND SPEED – NEW RULES OF INNOVATION TO PROPEL GREATNESS

In the coming decades, “the quest for environmental sustainability and the need to meet the health demands of a fatter, sicker and older population may prove to be the greatest engines of innovation and, therefore the greatest economic opportunity of our lifetimes” according to  Vijay V. Vaitheeswaran author of Need, Speed, And Greed, How the New Rules of Innovation Can transform Businesses, Propel Nations To Greatness, And Tame The World’s Most Wicked Problems and  the Global Correspondent for the Economist magazine.

The author sets about to challenge some of the widely held views about innovation, the role of government versus business, the supposed global crisis and the failure of the world economy.

His book seeks to build a case for rethinking of how the world approaches innovation.

He believes the world stands on a cusp of a post industrial revolution and new rules of innovation will reveal these new principles and practices which will reshape the world’s economy.

This innovation will bring to the market place fresh thinking that creates value for a company for its customers and for a society at large.

This innovation will result in entrepreneurial activity new investment and new jobs.

What motivates idea generators in the new age of innovation is not mere profit – it’s also inspired by the passionate pursuit of purpose, in part meeting societal goals.

The three great forces that drive these passions are – need, speed and greed – the need for the innovative goods or services, the ability for the innovator to receive monetary return for the innovation and the speed in which the goods or service can be made available to the consumer.

These three forces drive the fresh thinking that creates something of value.

Today these changes are undergoing as an unpresented demographic, economic and environmental transformation, as mankind becomes a primarily urban species for the first time in history.

This mass urbanization will both demand faster and deeper innovation and offer the means for getting it; including –

The need for more urban  infrastructure,

• Responsive political systems, and
• Higher degree of interpersonal civility.

According to Vaitheeswaran, “the road from [economic] stagnation to rejuvenation results from innovation.

He supports the notion that innovation will be aided by:

• More STEM education,
• More immigration,
• Less restrictive government regulation,
• Less government interaction, and
• More accommodative government R & D spending tax policy.

According the Vaitheeswaran, greed is not only good but also does good – if, that is, there are clear incentives to tackle the wicked problems of society.

He believes that many of today’s efforts to support innovation are simply a sham, mostly being a throwback to the failed industrial policy tried in the 1930’s and 1980’s as remedy for a flailing economy.

He supports a more free market capitalist approach that uses need, speed and greed to maximum innovation opportunities.

THE PRICE OF POLITICS – PRESIDENTIAL AND CONGRESSIONAL DECISION MAKING “IN ACTION” – ONE WORD OR TWO?

Partisan bickering and lack of transparency are concerns of democracy.

While common place in government today and recognized by elected official and the masses, little is done to “open-up” the “back-room” discussion and negotiations that lead to decisions, not only at the federal level but also at the state and local level.

The Price of Politics is evidence of this trend of secretive discussion leading to decisions that transform daily existence of American citizens.

Bob Woodward does an excellent job showing how complex and secretive Presidential and Congressional policy making is today.

It also tells a story showing how most Americans are excluded from knowing who’s involved and how the process functions.

At no time in history has there been a more complex process of negotiation rendered by government economic leaders, beginning with 2009 collapse of the US economy.

The initial response and those since, demonstrate the complex process of seeking political consensus for remediation policy and actions necessary to reinstate economic stability.

Woodward chronicles the 44 day period during summer of 2011 where President Obama and House Speaker Boehner sought a compromise on tax increases and entitlement budget cuts to prevent further economic calamity.

What’s interesting to many will be, not only the role decision leaders Obama and Boehner but, maybe more importantly, their key staffers and staffers from a host of various unrecognizable government agencies who actually do the analytical work and create  policy that actually results in legislation approved by Congress and the President.

The reader walks away with a frightening revelation – it’s the government policy wonks, career “government betters” to use a label that Indiana Governor Mitch Daniels originated, who are in reality, the “all knowledgeable originators” of government decisions.

Woodward’s accounting, almost on an hour by hour basis demonstrates the role and influence these government betters have on critical decision that ultimately impact the daily life of every American citizen.

He also discloses the nature of the deep divides among multiple interests groups and their ability to channel special interests into a two party stalemated immoveable negotiation situation communicating only “my-way or their-way” “I’m right and their wrong” possibilities.

In today’s real world, as stated by President Obama, “if we are going to frame these [budgetary] debates in way that allow us to solve them, then we can’t start off by figuring out  a) which is to blame and b) how can we make the American people afraid of the other side. And unfortunately that’s how our politics works right now”.

Another form of compromise less confrontational, less policy work driven and more transparent to the average American is needed.

I believe Woodward would agree.

Reimaging Detroit – Opportunities for Redefining an American City

Back in the early 1970’s, my first planner job was to count the number of roof-tops shown on aerial photos for traffic zones for a small metro area’s first computerized transportation model.

The model was designed to provide a “base line” for origin and destination auto trip and inter-metro entry/exit commuting data.

This data, with our projection of where, when and the type of future development, would indicate the roadway improvements to correct existing deficiencies.

The transportation analysis would also show where future improvements were needed based on our projected pattern of future growth.

Good stuff!

We built the 25-year metro future land use plan and scheduled the timing and location of major transportation improvements.

Today, other than for a few road capacity and safety improvements none of the grand plans have been completed and the few where started, are not fully completed.

Population growth didn’t happen like local government interests projected.

John Gallagher, in his book Reimaging Detroit – Opportunities for Redefining an American City, chronicles this phenomenon.

This book should be required reading in every planning and economic development educational curriculum.

John sets the stage, not only for stagnate and declining metro growth strategy, but really calls out the pro-growth biased planning education taught to the planning profession.

This pro-growth bias is based on the notion that global and national growth will be distributed, somewhat equally, based on historical trends and propel current population counts upward over time.

This bias means planners must always expand the urban and suburban pattern of development to include land for new commercial, industrial and residential development.

But in many cases, the continuous upward population growth mentality isn’t correct for some metro areas, as John profiles Detroit where the pattern of development will shrink both in size and population count.

This is a must read for anyone interested in American city planning and metropolitan growth.

John Gallagher, a Detroit Free Press real estate journalist does a complete job of chronicling opportunities for remaking of depopulated cities; Detroit being his proving ground.

John asks the tough questions including –

1.  How do cities deal with infrastructure sized for 2 million folks being funded by user fees from ½ the users

2.  How does government provide services to a scattered less dense pattern of physical development.

3.  What do cities do with abandoned no longer needed – formally used but now vacant – land scattered among the depopulated urban pattern of development.

4.  What is the role of regional government cooperation in capacity building that results in new models of government service delivery based more on economic inefficiencies rather than political identity and governmental self aggrandizement?

5.  Is there a need for a new planning mantra, one that encourages economic sustainability by reduction in size and possibly abandonment of infrastructures no longer needed and affordable?

6.  Will there be community planning mindset change recognizing land reuse – a replacement philosophy that encourages rethinking of local government and urban boundaries with the new realities of demographic and population densities.

7.  Will the citizenry recognize the inevitable – that certain cities must adjust their land uses, abandoning no longer demanded or needed uses by current and future population but at the same time offering opportunity for increased open space and reclamation of lost natural amenities – wetlands, forest, agriculture, etc.

8.  How do cities change the populist fallacy that community cheerleading and platitudes cannot change the economic realities of economic dislocation due to lack of jobs and population growth.

9.  The importance of job growth, both the number and local proximity being vital to sustainability of a city……”jobs, like people die-off” and must be replaced by a new generation.  Failure to create jobs, at least at rates necessary to meet replacement quotas will ultimately result in stagnation and in some isolated cases death of the city.

10.  How to create community based economic entrepreneurship and new business formation programs coupling them with existing business inubators and accelerator efforts to ignite the entrepreneurial spirits within the metro area to make significant impact on the availability of jobs and increase personal wealth.

As John “points out” there is no simple one-way story of when the decline in America’s industrial Midwest began. The curse is here today for many Midwest urban areas, especially those somewhat smaller ones disconnected and isolated from the major metro centers.

He also states that today “it isn’t wise or practical to look at growth as our only definition of urban success….smaller can mean better”.

He emphasizes that both government and business leadership must capitalize on assets “in place” rethinking that growth solves all problems.  He advocates applying a new urban planning theory of “right-sizing” as part of the solution to reengineer prosperity.

To make such changes will not be easy. John quotes the Mayor of Turin Italy, who notes “the deeper the crisis the bigger the chance to do change and innovate.

The curse of many metro’s growth and prosperity surely indicates change and innovation will happen.

BIG ROADS – TRANSPORTATION PLANNING & URBAN SPRAWL

BIG ROADS – The Untold Story of the Engineers, Visionaries and Trailblazers Who Created the American Superhighways.

A planner’s thoughts about “Big Roads”   and highway planning.

 INTRODUCTION

Contemporary planning theory stresses the return to pedestrian, cycling and bus/rail transportation as a means for future community sustainability. 

This theory also embraces the notion that additional communication technology will allow declustering of jobs to suburbia and rural locations whereby journey to work-to/from-work trips can be redirected to nonvehicle transportation.

For planners, this “holy grail” of shaping behavior is a fundamental premise of futuristic community planning.

But history demonstrates a rather different path.  “Big Roads” by Earl Smith chronicles the history of the interstate road system from the late 1800’s documenting the history and local economic reliance on Big Roads.

For us planner’s educated in the 1970’s, the 3-C (cooperative, comprehensive & continuous) Metropolitan Planning process established by the Kennedy administration’s Federal Aid Highway Act of 1962  for metropolitan areas in excess of 50,000 population has special meaning.

It was the first time local governments in metropolitan areas were required to take a comprehensive look at the overall transportation system and to make choices of where to invest federal, state and local funds.

It established highway planning as a joint federal, state and local planning process for both road improvements and new road alignments.

It forced local governments to come together and give serious thought about the rate of population growth and geographic areas within metropolitan areas where this growth would most likely happen.

Some planners today confide the 3-C planning process, in reality, contributed to urban sprawl.

We planned for future growth without much real knowledge of what the future may bring, note some planners.

We designated major routes to support inter-city commuting, high capacity alignments for major activity centers like industrial parks, and others to serve areas where we thought residential development would happen.

There were no smart growth principles guiding these decisions, urban sprawl wasn’t coined and growth that increased local government tax base was most important.

We never considered that city centers would depopulate, suburban relocation of central city jobs would occur, or suburban transportation centric employment centers would develop.

Reading “Big Roads”, provides background about the growth of transportation planning from the 1839 national highway planning concept offered by the Department of Agriculture to the rise of the 3-C planning process in the 60’s. 

It also provides background for to today’s more current legislations – STAA (78&82), STURRA (87), ISTEA (91), TEA-21 (98), SAFETEA-LU (05), and the newest FPTA (Federal Public Transportation Act of 2012).

I’ll share some on my thoughts on the transportation planning process generated from reading this book:

1.  Historically, highway planning was a federal top down planning process.

While commonly held, highway planning for the Interstate System was not necessarily a federal defense matter but defense was used to secure federal spending authority and used as the basis for political decision making for federal investments chosen by congress and the president.

Fact #1 – Roads contribute lifeblood to community economies and inevitability is subject to political determination regarding need and location.

2.  Roadway improvements and new routes will be required in the future.

Nothing gives cause to the lessening of demand for highway usage in the future with a 25% percent population growth project by such noted authors as Joel Kotkin. In his book “The Next 100 Million”.

Fact #2 – Road capacity needs will increase as population increases however this demand will not be spread equally throughout the United States reflecting geographic residential and business location preferences.

3.  Road Diets will become a topic for planner and highway engineer discussion.

Credit John Gallagher, real estate correspondent for the Detroit Free Press and author of “Reimaging Detroit” for bringing the notion that when demand subsides, road capacity needs to be reconfigured providing the opportunity to bring a more pedestrian friendly space to the community.

Fact # 3 – Unneeded capacity allowing for newer multi-use of highway rights-of-way, or even road abandonment, will become prevalent in highway planning for areas of declining populations.

4.  Transportation planning will always be needed.

Historically from the beginning, roadway planning has been a prerequisite to funding transportation improvements, incrementally growing more formalized requiring every level of government to complete transportation plans as part of their government duties to secure funding.

Fact # 4 – Multi-layered increasing sophisticated transportation planning requirements will likely remain unchanged even in spite of funding shortages for planning and transportation construction projects. 

5.  Traffic counts will gain more decision making importance.

Transportation plans rely on supplying services where demand for service is needed.  Therefore data, specifically existing and future traffic counts, will continue to be critical and increasingly more important determinates in identification of where transportation projects will be funded.

Fact # 5 – Transportation is a numbers game and traffic origination and destination data for modeling future needs will always be one of the major determinates of funding decisions.

6.  Technology will increase traffic system capacity and vehicle flow.

Driverless vehicles technology is now available allowing for higher vehicle speeds and closer vehicle spacing both that increase safety and vehicle capacity while reducing origin/destination travel time consumption.

Fact # 6 – Technology, in the future, will become the sought after solution for reduction in spending and serve as an alternative to the construction of new roadway alignments and reconstruction of current roadways to increase capacity.

7.  The need for speed – the reduction in transport times will dominate investment decisions.

Cargo is a business expense while cargo is in transit making businesses seek the lowest cost and fastest means to ship cargo.  Physical locations which have the greatest transport time potentials will have a business location/expansion advantage.

Fact # 7 – The need for shorter transport times plus the least transport cost will become more important in  decision making for location of new roads as well as decisions to improve existing roadway capacity to reduce transport times.

8.  User fees will become more common sources of maintenance and new construction funding.

Today it’s possible to monitor, via vehicle computers, the number and time vehicles are driven.  This provides opportunities to consider different pricing user fee models including fees for each mile driven, different fees for the type of roads used and even premiums and discounts for when roads are used.

Fact # 8 – Reliance on motor fuel taxes to fund existing and new transportation projects will be altered in the future bringing into discussion use of user monitored mileage fees, congestion use fees and non-peak usae credits as remedies to lessoning needed revenue.

9.  Metropolitan vs. rural policies of state and federal transportation funding will be questioned and become a contentious political issue.

Competition for funding will increase policy discussion of where to allocate funds – metro areas where demand may be greater vs. smaller population centers where the demand is needed but at lesser scale.

 Naturally, the competition between metro vs. rural areas, will increase and take on a greater role in the political decision making process for allocation of scarcer future transportation funding.

 Fact # 9 – Traditional forms of funding will be dismantled and reprioritized due to inefficiencies in generating needed funding in proportion to needs.

10.  In response to increased demand for road improvements, tax authorities will seek to increase sales and real property taxes.

The reliance on motor fuel taxes to finance existing and new transportation projects will be altered in the future bringing into discussion the use of user monitored users mileage fees.  Alternatively, traditional forms of local government revenue based on real estate taxable valuation and generation of retail sales taxes, a portion of which, in  some communities is directed to general government operations will become of higher importance for allocation, in part, to support transportation fund deficiencies.

Fact # 10 – New forms of revenue generation including here-to-fore untouchable real estate tax funding in addition to “fee for service” modeled revenue forms, will top political solution discussions resolving transportation funding.

 LAST THOUGHTS – will future roadways lead or curtail sprawl?

Throughout modern vehicle history, highway transportation has been critical to the economic success of cities, villages, counties, regional areas, etc.  This trend understandably will continue……..

However, while historic funding tools will evolve to provide more revenue for highway and alternative transportation modes it will be the application of sound planning decisions separating “good from bad” planning that will contribute or contain sprawl.

THE YEAR 2050 WHAT PLANNERS NEED TO KNOW TODAY!

US POPULATION PREDICATED TO INCREASE BY 25%

Joel Kotkin in his book, “The Next 100 Million Americans in 2050”, states that “America will inevitability become a more complex, crowed and competitive place, highly dependent, as it has throughout history on its peoples innovative and entrepreneurial spirit and emerge by mid-century as the most affluent, culturally rich and successful nation in human history”.

He opines that 80%, or more, of the total US population growth has taken place in suburbia, a trend that will likely accelerate in the future.

If true, planners will be faced with a new suburban land use planning framework, one that focuses on:

providing multiple housing choices at higher densities,

1. walk-to-work/shopping opportunities,
2. use of energy efficient vehicle transportation, and
3. accelerated use of communication technology.

He concludes that in the coming decade communities will need to reinvent their economic and social viability.

Here are some thoughts on the trends, now forming, that will shape this new suburbia:

Suburbia population will grow, however not equally everywhere.

1. Race and ethnic diversity will increase.
2. Multigenerational households will become common sharing dwelling units.
3. Today’s minority will become tomorrow’s majority.
4. Globally, desire for US immigration will increase.
5. Civic and social suburban “town center lifestyles” will be critical to communitywide social connectivity.
6. Suburbs will continue to in increase geographic size and population density.
7. Jobs will follow people but more people will follow jobs.
8. Communication advances will expedite “declustering” of jobs into suburbia and rural locations.
9. Organizational patterns of governance will change as citizen demands change.

Under this scenario, in 2050 social and economic acculturation will have occurred deemphasizing ethnic enclaves in favor of a homogenized multi-ethnic mankind.

Under this scenario, there will be more bilingual suburbia residents but English will remain the dominate language for social and business communication.

Concentrations of racial and economic minorities will diversify from concentration in urban settings creation and exposing suburban geography to racial and economic diversity.

Immigrant entrepreneurism will continue to exceed native interests and serve as economic development opportunities for community job growth.

 End Note.

For planners and economic developers employing these trends today will foster wholesale changes to some redevelopment strategy.

Clearly, social and economic changes for the basis of successful land use and economic development planning resulting in true government supported community sustainability.

 Action today means successful communities here people will want to live today and in the future.

THE CIVIC ENGAGEMENT GAP – WHY SMART, OLD, WEALTHY PEOPLE ULTIMATELY MAKE COMMUNITY DEVELOPMENT STRATEGY!

Community and economic developers take note, community demographics answer the plaguing question of why older, better educated and more wealthy folks always seem to be more involved in making local community decisions.

Like me, I suspect, you have the same reaction when first introduced to a local government council, planning commission or economic development agency board of directors – where are the younger folks?  It seems today that only folks aged 50-years or more get involved or actually serve as the “public” participants in community meetings.

Maybe there is an answer to this question.

Reading “Fault Lines in Our Democracy – Civic Knowledge, Voting Behavior, and Civic Engagement in the United States” a recently released study sponsored by the Educational Testing Services Center for Research on Human Capital and Education Research and Development provides some interesting research possibly answering this question. 

http://www.ets.org/s/fault_lines/18719_fault_lines_report_web.pdf

The author’s study of 2010 voting participation and their recent survey data finds the lack of civic knowledge has a direct impact on the likelihood of someone becoming engaged in civic activities.  Their research further found that individual civic engagement participation differs due to age, income and education attainment.

Simply stated, the likelihood of a person becoming engaged in a civic activity increases with their age, income and educational attainment.  The “oldest most highly educated  and highest-income group is nearly seven time more likely to become involved compared to low-income persons having high-school (or less) education.”  The “well-educated (bachelor’s degree or more) middle-aged folks are five times more likely to become involved when compared to high school (or less) educated persons”.

Thus – the “Civic Engagement Gap”.

There’s over an 80% chance that someone have a graduate degree aged 55-64 years with a household income of $100,000 can be enticed to become involved in civic activities.

It answers the question why smart, old wealthy folks determine the community economic development strategy.

So there we have it….the lack of civic knowledge and demographics today determines who most likely guides the formation of community economic development policy.

The authors provide some interesting thoughts on why participation is low for some populations groups:

1. Lack of civic education of our youth – the family, elementary, high and college driven education.

2. Lack of “role model” and mentorship by family members.

3. Difficulties in participation – meeting time commitment and committee functionality.

4. Lack of civic knowledge and understanding the degree of personal importance.

5. Lack of confidence in political leadership.

6. Personal frustration due to lack of successfully accomplishments.

7. Intergenerational biases.

8. Status quo bias of “in power leadership”.

9.  Lack of employer corporate civic engagement sponsorship.

10.  Disenchantment – dissatisfaction and alienation with government.

So what do we do about the lack of participation?   

For community economic developers their work programs will ultimately require more attention to selected constituent group participation, especially less educated and lower income group involvement.

How we elevate civic interest to increase participation rates will be challenging, time consuming and an extra cost burden to already limited resources, but necessary to assure  consensus agreement on the community economic development strategy.

We all know that preparation of the community and economic development strategy is a fundamental local government sponsored process that binds the community‘s civic and social fabric together and serves as a fundamental cornerstone of a strong community democracy that builds trust in government.

We also realize constituency involvement leads to implementation success.

I hold the opinion, that community economic development strategy must promote junior & senior school civic education improvements.

My personal involvement with community economic development strategic planning exercises with junior and senior high school students finds student leadership having great concern for the future of their community.

When given a chance to participate interesting results occur; one being reinforcement that the next generation of community leaders are “in the making” – serious and concerned – fully aware of their disenfranchised and alienated classmates who represent the future “civic engagement gap”

Today’s community economic development strategies need strong involvement of the youth of the community; participation urged on by parents and educators alike.

ECONOMIC DEVELOPERS TAKE NOTE – THE GREAT RESET IS HERE!

Our post-recession economy will be different from history.

Richard Florida provides a convincing argument that the new economy, now in the making, will change not only what we do and how we do it but where we do it.

Community and economic developers, take note, the “Great Reset” will be characterized by the new technology and new patterns of land use.

How we react today will either hasten or hinder the eventual change separating growing from declining communities.

Florida summarizes two historic resets, the (1^st)   rural to urban the farm to city movement of the late 1800’s and the (2^nd) urban to suburban movements of late 1940-50’s.  Florida notes that in each, the change “gave rise to new district geography” for the pattern of development.

He opines that the current “Great Reset” will likewise take shape around a new economic landscape and a whole new way of life that is in line with the emerging social and economic realities of our times – less orientation around cars, houses and suburbs…being concentrations of population within urban centers.

Florida bases his theory on the notion that an economic crisis ultimately helps economic growth and this growth is inevitable as documented by history.

He supports the theory that concentration of urban humanity creates “long term innovation” a necessary ingredient that keeps cities vital and forms a catalyst for change.

As the subsequent recovery plays-out, Florida believes “we will see the rise of certain cities and regions, within the US and the decline of others”.

Cities that fail to keep up will be trapped when they depend on one or two backward-looking industries deflated entrepreneurial spirit or by high cost and outmoded organizational social structures.

So what’s to be done by local governments to enable and nurture growth?

Florida’s answers include -

1. Support innovation

2. Install new systems of technology and infrastructure

3.  Create new living and working environments

4.  Remold the economic landscape and pattern of current living environments

5.  Breed tolerance – cultural, sexual, religious, social and personal economic stature

Government’s role is to enable and accelerate these changes by creating the fertile environment where they can grow and develop.

The challenge before community and economic developer’s is how to identify the creative and special features of every single person in their community and organize these into a program of community economic development that creates jobs that increase individual productivity and wages.

This is most aptly done by:

1.  Individual educational improvements

2.  Municipal infrastructure investment to create new technologies and living environments

3. Increasing concentration of urban population thus increasing innovation

The end product is a new lifestyle and new economic landscape that can power new kinds of development and serve as the foundation for new economic growth.

These changes will increase what is termed “urban metabolism” which, as the urban population grows faster, more frequent innovation leading to faster growth.

Economic developer’s now have their assignment according to Florida……..making the Great Reset work to their communities advantage!

WILL PUBLIC PENSION DEBT BECOME THE NEXT TAX PROBLEM FOR ECONOMIC DEVELOPERS?

According to an April 28-29, 2012 Wall Street Journal article, unfunded public pension liabilities are becoming a concern of business – fear of political decisions that may place added burden upon business in the form of higher business taxes.

This is especially important in the Midwest where Illinois is already grappling with increased business taxation.

Laffer & Moore in their 5^th Edition of Rich States – Poor States Economic Competitive Index also note government unfunded obligations as one of many governmental policy issues that will soon contribute to both personal and business location decision making.

Based on the theory that people and business “vote with their feet” due to high taxes, the potential for increased taxation will undoubtedly add another location criterion for economic developers to address.

Economic developers know uncertainty is a problem in their efforts to convenience businesses to locate or expand in their community; especially when it could mean paying higher taxes.

While not on the radar screen yet, this issue will become more important as news media messages inform businesses, politian’s and the public of sizeable unfunded obligations and options to counter the financial problems they create.

The PEW Foundation’s Center for the States estimates there is a $1 trillion gap between “what the states set aside for funding and the actual price tag for benefits promised”.

In the Midwest this accounts to $12.8 million in Illinois, $11.5 million in Ohio, $9.9 million in Michigan and $6.5 million in Indiana.  The budgetary impact ranges between $1.2 to $3.7 million annually or $0.13 to $0.29 per capita.  Michigan leads the Midwest states, with Illinois having the higest funding requirement.

What this means to the economic developer is that a new topic of professional conversation is being thrust upon us.

How we prepare responses will be important.

Let me share some thoughts –

1. Unfunded public pension obligations will become a media “buzz”.

There is no doubt the pending $1 trillion unfunded obligation of state employee retirement benefits will cause a political upheaval.  How these obligations will be funded will dominate public government funding discussion.  The allocation of this burden between taxpayers and retirees will be difficult.  This difficulty will result in a media “feeding frenzy” and draw attention to unfunded differences among states. 

Expect “media buzz” to bring the problem to attention of taxpayers and business owners making it an economic development matter.

2.  Unfunded pension obligations will increase business uncertainty.

Taxation makes a difference in business location decision making. Uncertainty in the amount and timing of any increase in taxation is the antithesis of good business or household budget planning.  This uncertainty will be reflected in slower or alternative location decision making by individuals and businesses alike.

Expect potential tax increase uncertainty to be a matter to be addresses during every business expansion or location discussion.

3.  Government actions, or inaction, will increase, or decrease, business uncertainty.

Government response to uncertainty will be important.  Action, or inaction, will drive the question and answers sought by existing and new businesses.

Expect economic developers to become a major source of information and serve as a spokesperson on the subject of potential business impact.

4.  Tax uncertainty will draw attention on total tax burden of business.

While taxes are ranked eleventh in corporate location importance, none the less, taxes do matter.  While Laffer and Moore display convincing data supporting the notion that people and businesses “vote with their feet” and locate in states having less tax burden.  Imposing an additional increased tax burden can contribute to out-migration, or slower growth of population and businesses.

Expect the possibility of increased tax burden upon business due to unfunded pension obligations to raise the subject of business taxation to a higher position in business decision making.

5.  Tax abatement will become of greater important in economic development.

Tax abatements have historically been the counter attack to equalize (or incent) tax burden in competition for new business investment.  Additional tax burden, imposed by unfunded obligations will heighten the demand and need for incentives offered by economic development practitioners.

Expect economic developers to lobby the states for greater use of abatements to offset current higher tax burdens and possible increased burdens imposed by unfunded obligations to continue successful recruitment of business investments and location of new businesses, dressed in the overall goal of community job creation.

6.  Economic developers will be asked about unfunded obligation impact upon business.

Economic development professional are the “go to folks” with the answers.  They are required to have prepared information about almost every topic of concern raised by the existing business or new business seeking to make an investment decision in their community.  Economic developers must be able to speak about everything from local wage rates, spousal job opportunities plus educational, social and religious community opportunities.  Now added to the needed information will be unfunded pension obligations and probable business impact.

Expect new knowledge to be needed for top job performance providing information to address the positive and negative impact of unfunded obligations upon the competitive position of the state in relation to others.

7.  Expect state differences to become a topic of negotiations.

New business location is a competitive decision; how our site compares with others using a score card, most likely unknown to the economic developer.

Where typical location criteria sometimes 100 or more, in number, requires economic developers to prepare and showcase their community’s compliance, a new criterion is now added, the potential impact of unfunded obligations.

Expect to be quizzed on the differences between your state and others – the current obligation, means to fund the obligation, and actions to remedy potential for future deficits.

8.  Inaction by state government will be viewed as anti-business.

Can a state be characterized as “business unfriendly”…..the many varied state economic competitive indices seem to indicate so.  The reality is, where a state is determined to rank low on any competitive score card, it’s viewed as business unfriendly.

Changing competitive ranking is not an easy challenge, typically requiring legislative action sometimes requiring several years’ efforts to achieve.

Sweeping unfunded obligations “under the rug” won’t work this time …somehow pension debt must be liquidated.  As with any government action, it sends a strong message; with inaction being viewed, in this case, as being anti-business due to the uncertainty it communicates.

Expect inaction and delay as governments refuse to address the issue resulting in state to state economic competitiveness rankings to reflect which states have greater probability of imposing greater business impact (higher taxes) and being noted as less business friendly.

9.  Expect pension value reduction to elicit union backlash.

Pension reform is inseparable with unionism.  Changes to existing pension and future pension benefits will be a “hard fought” battle between union and government leaders.  Union contact litigation will follow along as governmental leaders seek to balance government revenues with demands seeking greater worker pension contributions.

Expect union states vs. right-to-work state differences to become a major union vs. right-to-work tax discussion point as solutions asking for greater union concessions and higher business taxes are offered as solutions to unfunded obligations.

10.  Union backlash will favor states having right-to-work preference.

One of the most pressing issues in the Midwest is union vs. right-to-work state economic advantages, with pension benefits being a scared bargaining matter.

Interestingly, right-to-work has become a selling point for economic development advantage.

This presumed advantage will continue to be emphasized with great “fervor” with right-to-work being a solution for future pension reform.

Expect right-to-work to be discussed and treated as a means to temper union demanded direction of the worker pension system in favor of business supported individual employee directed pension programs.

End note –

Times they are a changing so the song lyrics say…so too are the times changing for the economic development profession.

A new business  location criteria is being forced upon the practice of community economic development, one that will drive considerable discussion as state legislatures battle tough entrenched positions on who and how much of the unfunded obligation are to be levied upon the worker and tax payer.

The outcome undoubtedly will effect where both people and business choose to locate.

Smart leadership today to remedy the problem will shape state economic competitiveness for the future.

WHAT’S WRONG WITH THE AMERICAN ECONOMY?

Just ask Jeffrey D. Sachs, as a left leaning economist he espouses more government economic planning to remedy the recessionary economic ills.

Sachs is a “firm believer in the market economy, yet American prosperity in the 21^st Century also requires government planning, government investment and long-term policy objectives that are based on the society shared values”.

His book, The Price of Civilization – Reawakening American Virtue and Prosperity details how “our challenges lie not as much in our productivity, technology or natural resources but in our ability to cooperate on an honest basis”.

He asks, “Can we make our [current] political and economic system work to solve a growing list of problems?

He answers no, “not with out major changes”

He claims the laws of supply and demand have stopped functioning as the best means for both the individual and society and that government must step-in to assure that the existing mixed role of the private and government market is converted to:

1. Redistribute income to protect the poor and unlucky,
2. Provide public goods such as infrastructure and scientific research, and
3. Stabilize the macro economy.

He is critical of government leadership where “Washington gradually stopped steering the economy in the Mid-70’s and increasingly handed over direction to the ‘corporatocracy’ composed of elite business leaders”.

Large corporate business is now the problem, rather than a solution participant according to Sachs.

Where in the past, labor unions and government provided principles of interclass equity balance, today corporate and business political influence have tipped the balance – social and economic fairness and equity is no longer possible without greater governmental involvement.

He chides American for letting this happen, “our government can go its merry way because much of the public allows this to happen by not working hard enough to stay informed” and lethargies to take action.        

He characterizes the economy as rigged, due to:

1. Weakened national parties and strong local political representation promoted local needs ahead of national needs.
2. Large military – industrial complex with dominance of a significant proportion of the national budget.
3. Big corporate money financing elections, funding which significantly determines election outcomes.
4. Globalization and the race to the bottom mentality that tilted the balance of power toward corporations away form workers.

Sachs believes that Americans would prefer to “give up some income through taxation in order to achieve shared social objectives” and it’s the role of government to raze sufficient tax revenue, by whatever means to meet these social objectives.

In order to achieve this goal, Sachs notes that “middle class Americans will need to make changes.  Today middle class American are “so sure that higher take home pay is the key to happiness, that they have lost touch of the need to pay taxes to fund society-wide undertakings and avoid an explosion of public debt.”

He advocates that richer folks should pay more and that social objectives should evolve from a higher degree of government planning that includes;

1. clear goals and benchmarks,
2. the mobilization and use of human expertise,
3. creation of believable and acceptable plans,
4. focus on the far distant future,
5. termination of the corporatocracy,
6. restore acceptable public management of government, and
7. decentralization of government decision making, somewhat.

This change would create a new civilization for the 21^st Century

Sachs, to me, is a recreation of FDR’s Rexford Tugwell who promoted more government planning as a means to change human behaviors creating a government controlled economy that not only cured depression ills but implemented social objectives.

Tugwell’s vision of a planned economy never materialized nor was many of the purported economic benefits for the depression “forgotten” ever achieved.

Only time will justify whether recommendations advocated by Sachs will take root and benefit Americans.

Readers will walk away with a better understanding of “Progressive Political Theory” being the foundation for much of the current Democratic Party election rhetoric.