Rebuilding Place in the Urban Space


Monday, January 20, 2014

DC's residential resurgence and "capitalism" (Talking a lot but not really saying anything)

There is a long article in yesterday's Washington Post, "Most in DC say neighborhoods are better, but many say redevelopment helps the rich more," using data from a recent poll of DC residents, which discusses the economic and demographic changes in the city.

Basically, people with more money are moving in and the poor, unable to compete in a rising market, are moving out.

... so now you know everything important that's discussed in the article.

2.  In urban economic development, there are two basic approaches: place-based or people-based. 

Place-based strategies invest in buildings, neighborhoods, transportation infrastructure, and businesses.  People-based strategies focus on the development of human capital, particularly education.

Place-based strategies have the advantage of seemingly showing results--you build something and it communicates "action."  On the other hand, "you can't see" human capital strategies working--teaching people, training/re-training people, work readiness programs, etc. doesn't show in the same way as constructing a building, especially when your local public schools and your local city-supported university, don't seem to be succeeding.

Place-based strategies are logical foci for cities and counties because they "fix" capital in the place where they are, while the problem with investing in human capital is that after it is trained it can and often does leave the place where it started out and/or acquired knowledge and skill.

It's a bit easier to focus on human capital strategies when there are tight connections between employers and educational institutions.  You see this especially with community college technical training programs linked to manufacturers in places like North Carolina.  It's not unlike an apprenticeship approach, which is Germany's claim to fame.  Etc.

3.  Community development as housing focused.  One of the problems of the community development movement and a focus of elected officials serving poorer constituencies has been an almost exclusive thrust on providing "better" and "affordable" housing.  While better housing is better for the impoverished, it doesn't help them participate in the market economy.  This is why most of the community development projects in the 1970s and 1980s had little structural impact on urban economic activity.

(The community development movement is the third phase covered in "The fifth phase of center-city revitalization," while "More on commerz in the 'hood" covers the failure of the urban renewal plan for H Street NE neighborhood to spark improvement there, despite the almost 100% realization of the plan).

In strong markets especially, the cost of providing such housing is considerable, and so in some senses, "market equilibrium" is achieved by people moving to places where the cost of housing equals their ability to pay for it. 

But if you have a bunch of it, and it remains affordable, it is a way to reduce displacement, because this type of housing (called social or public or assisted) is disconnected from the market so you don't have to worry about it going up in price.

4.  How do you help the impoverished compete in an increasingly competitive employment and residential market?   

One of the people quoted in the article blames "The Plan" for displacement. 

"The Plan" is the purported plan for White people to take back the city from African-Americans--African-Americans became the largest segment of the city's population after white flight in the mid-1950s.

In a market economy, people with more money outbid people with less money for goods and services.  There's nothing new or shocking about that.  

And the idea of "the plan" is more complicated because in the DC region because as they moved up the economic ladder, African-Americans have preferred to move out of the city.  That's why Maryland counties like Prince George's and Charles are now majority African-American.

(The article "The New Black Suburbs," published in the New York Times Magazine in June 1992, discusses this phenomenon.  The magazine's cover featured Jack and Leslie Johnson--Leslie was an administrative judge in DC, Jack a prosecutor in PG County. Jack became County Executive, Leslie a Councilwoman.  Both are in jail now for payoffs...)

The reality is that in a rising and more globally connected and competitive market--if you believe in the thesis of GMU economist Tyler Cowan that "average is over" ("Review: Average Is Over," Wall Street Journal) then you have to accept that "under-average is really over"--without extra-normal attention to re-educating/retaining/incorporating people into the workforce, people who are not for the most part participating in the market now, the poor will be displaced, "The Plan" or not.

DC is a lot less poor than it was 10 years ago and to live here going forward you can't be laggard.

To participate in the market economy you have to be employed.

5.  Workforce integration development through recasting approaches to some types of city contracts.  There are ways to integrate the poorer amongst us into the workforce, by being more creative in city contracting by using contracting opportunities--when they are conducive--to foster workforce and business development.. 

For example, instead of contracting all of the maintenance of DC owned properties to firms located outside of the city, locally developed micro-enterprises can carry out these activities.

Similarly, so-called "green jobs" like doing weatherization could be developed as a jobs and business development program also (see "Sometimes you have to get off your a**: DC green jobs edition")  or aquaculture ("Aquaculture in DC's future" and my discussion of this topic in the piece on the DC sustainability plan) etc.

Another strategy would be to refashion part of the high school education process into a co-operative education program, so that after freshman year, students would spend part of each year in various job and internship placements, thereby learning about and how to do work, potential careers, job readiness skills, etc.

6.  Microenterprise development strategies.  Paying a company to cut lawns is different than using the money you pay to cut lawns as a fulcrum for workforce (human capital) and business enterprise development practice.  Not unlike how the New York City public hospitals have created a health insurance product and are competing in the new marketplace created by the Affordable Care Act ("Public Hospitals Hope to Attract More Upscale Patients Under Affordable Care Act," New York Times).

The best way to participate in the market economy is as an owner.  But you need capital to be an owner.  One way to be an owner with limited capital is through participation in a business cooperative.

The Green Development Zone in Buffalo is an example of how to create a locally owned weatherization business to keep more money within the community, train workers, improve the existing building stock, and to cut energy costs for residents, saving them money, and giving them more disposable income.

Microenterprises and business cooperatives can be developed to support the provision of retail and other services in under-served communities as well. 

I mentioned the resources of the UK's Plunkett Foundation last week--the organization assists rural communities in developing business cooperatives as a way to maintain grocery stores, pharmacies, and pubs that have a difficult time surviving when owned by only one person.

Wards 7 and 8 are under-stored in terms of restaurants and supermarkets.  Take a self-help approach and develop the businesses and the opportunities for job development.

I have to say that I haven't studied the Mondragon cooperatives in the Basque region of Spain like I should, but that's the pre-eminent example of industrial cooperatives.  (Employee owned enterprises, called ESOPs, are another.)

7.  Dynamic economic development.  In "Jane Jacobs as a Development Thinker," Professor David Ellerman makes a critical distinction about how economic development ought to be focused on developing a greater number (variety and diversity) of enterprises as opportunities develop and "through programs of assisted spin-offs."  The paper discusses the Thermo-Electron Group, Mondragon, "township-village enterprises" in China and elsewhere as examples.

Getting back to lawn cutting, maybe, seemingly, it's not as "cheap" to get the lawns cut when you create a locally-owned microentreprise to do the work rather than contracting out to the lowest bidder. 

But having seemingly unemployable residents working, supporting local retail, and receiving fewer welfare benefits also has other effects on other parts of the city budget, so that this kind of business development vs. contracting out has the greatest positive economic impact overall.

It's the difference between "economic development" and "building a local economy."

Stacy Mitchell of the Institute for Local Self Reliance makes the point that the Small Business Administration is more focused on helping businesses become large.  This is definitely true in the federal government contracting realm (see the recent series in the Washington Post).  Instead, to the extent possible, local contracting should be used to develop the local economy.

Contracting and corruption.  Granted, this can be very problematic, when independently owned businesses lobby for special advantage (see for example "Pay-to-play on full display?" from the Washington Post), but if instead the businesses are cooperatives with strict accountability mechanisms then this should be much less of a problem.

I wrote about this in 2006 (and I suppose many other times since) in the series:

and in 2012, about H Street revitalization and the allegations that the process has been white-oriented at the expense of black-owned businesses:

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At 3:23 PM, Anonymous charlie said...

I'm sure you've seen this:

Although lets be honest what is happening in spain is SO horrible that I doubt anything can survive.

I had a chance in Cleveland to check out the Euclid Ave busl anes and their "success"

And I'd say it is 80% composed of the usual crap that you'd see community investments group throw up -- a nicer hair salon building is a nicer hair salon -- and 20% cleveland clinic.

(I won't mention how it killed Euclid Ave downtown, because that was dying for a long time, so the closures can't be blamed, just as you can't blame the subway for killing U st)

That being said, we also got lost and had to wander around Woodmont Hill and Buckeye -- where I was actually living from age 0 to 9 months -- and you can see Detroit level of destruction (houses falling down, zero signs of commerce, etc).

So, the busline as bringing in some commerce -- a win. In terms of investment -- not so much.

In terms of your other points, perhaps you'll address the minimum guaranteed wage scheme. You've made the point before that if we would spend 1 billion a year giving EOTR jobs we might save 2-3 billion in near time future.

And while we bitch about how much public contracts cost, having some sort of minimum spend on jobs locally is worth something. I had a chance to talk to a guy working at the cardozo renovation. Living in North Carolina basically lived in his car 3 days a week then drove back to NC.

At 8:46 PM, Blogger Richard Layman said...

sometime this year I will write a position paper on poverty and dealing with it. I am collecting stuff and finally, better organizing the materials.

Bolsa Familia in Brazil is one of the models, but you need to pair it with work. Doing city projects could be an element.

But make work projects (cf. the "Mayor's Summer Employment Program") that don't do much I don't favor.

2. and yes, as part of it might be a more careful organizing of business entities as job training and employment vehicles. Like the Cardozo thing.

At the start of the recession, preservation consultant Don Rypkema wrote a lot about how the French were using restoration projects as a job maintenance function too.

(I have crossed e-paths with a preservation consultant in the UK named Dennis Rodwell who does a lot of work with the UNESCO world heritage program and I expect I will learn a lot from his writings, although this is a bit more relevant to the other stuff I write about.)

3. Cleveland. I haven't been there for a long time, but I am skeptical about the ED claims about the HealthLine. I figure a lot of the stuff that's "happening" in U Circle would happen without the BRT, just on the fact that those types of institutions tend to expand inexorably.

... I did see a presentation about Euclid St. and transit in 2002 at a conf. in Cleveland and yes, Downtown Cleveland had been emptied out long before.

As far as the desolation goes, the problem of course with Greater Cleveland is that it has been pretty static population and job-wise for the last 40+ years, + sprawl.

Sprawl + population maintenance or shrinkage = desolation in the city proper.

That's Detroit's problem. Seeing images of Detroit, it's f*ing unbelievable with the wealth in this country that it's deemed that such a downfall is allowable.

4. Mondragon. Yep. Saw something in the FT or somewhere. Note that one of the people who commented on my Bilbao pieces is a PhD (Igor Calzada) who wrote his dissertation on Bilbao I think (I keep forgetting to look it up), but had worked many years for Mondragon. We had a bit of interaction and he's up for collaboration. We'll see what develops.

At 1:38 PM, Anonymous Anonymous said...

Have undoubtedly said this before but will say it again, DC (and probably every other place in the world today) confuses "economic development" with what is simply "economic activity"--positive, negative and otherwise.

More and more, I am convinced that most folks (with a few exceptions) are well-meaning in their attempts to foster "solutions" to seeming long-standing economic "problems" through government policy and intervention. However, I would say that these efforts are doomed to failure--with some liable to cause very surprising unintended consequences.
One of my "gurus" over the last three decades is Hazel Henderson, who is an ecologist and economist with a bent toward systems thinking. Henderson--quite aptly in my IMHO--equates economics with politics and has demonstrated throughout her career how economics is not a hard "science" but an "art" and needs to be recognized as such.


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