Blog: Reinventing Economic Development

Delusions of Adequacy

This recession has destroyed and will destroy many things: jobs, retirement plans, businesses, industries, banks and old ways of doing business. It also will probably destroy the economic development business as we have known it and practiced it for the past 30 years.

Once a well-defined professional practice that community leaders relied on to manage local economies and create jobs, most economic development programs had, even before this latest recession, become a waste of time, effort and money.

Think of it. Of the billions invested in the name of economic development every year in this country, how many communities do you think actually earned a return on that investment? Not many. Except for a dwindling number of elite economic development programs, most have been a colossal waste of time and money.

Why?

The phrase “delusions of adequacy” comes to mind.

Most economic development programs are that in name only. They’ve done almost nothing to raise the standards of living in their communities, and many economic developers seem content to think that attending summits and conferences means they’ve done their jobs.

It’s hard to find a local economic developer or community leader who can tell you in quantitative terms how many economic base jobs their community needs. Few have measurable goals for their programs, and there are no coherent plans for organizing the community’s resources to make it happen. they can’t say how many new economy-growing jobs their efforts have created.

Maybe the biggest sign that the economic development profession is in trouble is that no one can even define it.

Economic development is much harder now. Most communities will need to completely overhaul their economic development efforts and invest way more money than ever if they want to be effective.

Many of the underlying fundamentals of the job creation business have changed so that it has rendered much of what we do useless. If we don’t deal with it now, economic development programs will go the way of the buggy whip makers who couldn’t see that the automobile had changed things forever.

What scares me is that no one wants to talk about these permanent changes.

In the coming months, I will detail how the game has changed, what it means to you, your career, your business and your community, and what we can do about it.

Many want to believe that economic development is suffering a cyclical setback and that we just need to ride this out like everyone else.

It’s not. The changes are not cyclical this time, they are structural.

It’s going to take more than a weekend retreat or a summit to fix. Anyone who wants to compete from here will have to elevate their programs and innovate.

Why?

Banks aren’t lending money, companies aren’t expanding or moving, and the economic development business, like so many others, has stagnated. That isn’t going to change soon.

I figured that 15 to 20 percent of the pre-recession economy was fake. It was built on consumption financed by debt no one intended to pay off. The economy must grow back this lost demand and absorb millions of square feet of empty industrial and office space, put billions of dollars of idled equipment back to work and put millions of people back to work before employers can think about expanding or moving.

So even the elite economic development programs are finding it difficult to attract funding. Traditional sponsors – cities, counties, real estate developers, community banks and local business – have been savaged by the recession and are years from being able to fund programs at previous levels.

Finding ways to create new jobs has never been more important. Thousands of our fellow citizens need jobs, our tax-dependent institutions need revenue and businesses need customers. Growing a community’s economy is still the only sustainable way to reduce unemployment, increase tax revenues, household income and business receipts over time.

It will take intellectual clarity about real-value economic development and honest ways to measure the value of investment in programs, neither of which the profession currently has.

Unless we gain clarity about our predicament, develop new strategies and approaches, and figure out ways to measure our value, the civic enterprise we call economic development will need to be abandoned.

MARK LAUTMAN is a founding director of the Community Economic Lab, a private, non-profit think tank, and consults as Lautman Economic Architecture. He has three decades of experience in economic development. His column appears monthly in the Business Weekly.

Email: Lautman123@gmail.com

www.marklautman.com