As If We Needed One More Voice Feeding the Fallacy.

Keith McBride on July 28, 2014 in Macroeconomics, Practicing Ec. Dev.

I am a big fan of Aaron Renn.  I’ve been a subscriber to his Urbanophile blog for about 3 years.  When it comes to urban planning innovations, smart and sustainable urban land-use, and cityscape design, he’s brilliant.

But this article, published in Governing, is such a disappointment.

The theme of the article is that communities may not be seeing the economic development they claim to desire because  … well …  maybe they don’t actually want it.  He goes on to make the dubious conclusion that local actors (which he names only as “they” and “these people”) may be inhibiting economic development because “they” don’t want to see changes to the highly-profitable status quo.

Those of us in local economic development know what it’s like to fight against this perception:  that some black-hat-wearing, subversive force controls the town’s economic development activities, impeding the projects that threaten their personal interests, and jamming unwanted or undesirable development down the community’s throat as they see fit.  As I stated in a previous post, a community’s economic development official must be dedicated to public service, and to executing the community’s goals and vision for development.  That is our role.   And the reality is that it is a difficult and complicated task, and we control few (if any) of the variables.   We do not direct and dictate development or policy decisions.   We exist to facilitate and assist where it is within the community’s stated interests to do so.

The “black hat” fallacy of local economic development thrives with misinformation, and considering how well-versed he is in municipal governance, Aaron Renn’s contribution to this misinformation goes beyond merely unfortunate.   It is, in my opinion, irresponsible.

There are two reasons why I think his post will irresponsibly misinform readers:

1)  Exactly who is doing what to whom, here, Aaron?

At some points in the article, he seems to be referring to local government officials and/or economic development staff, but at others he more broadly describes “civic leaders,” and even later seems to refer to private real estate developers.   His lack of attention to this detail is irresponsible because he, intentionally or not, blurs the identities and roles of these economic development Boogie-men  in order to give his conclusion some semblance of validity.  For example:  he suggests a thought experiment, and asks the reader to consider that if a local community starts “booming” (which in this example seems to be defined by an influx of new real estate development) then the result is the attraction of new attention and investors who bring with them new ways of doing things, thus challenging the status quo.  On its face, it seems to make sense.

Now, let’s go beyond a superficial understanding of economic development, and try to put a real player into that scenario.  To whom would this be a challenge?  Would local landowners with developable parcels be threatened by the influx of new interest and investment?  Only if it threatened some illegitimate (possibly illegal) stranglehold they had on development approvals.  Would local government leaders be threatened by the potential for new property developments and tax revenues?  Only if they had some highly unethical (and almost definitely illegal) conflict of interest between their own best interests and that of their community.  Would local economic development officials be threatened by new projects, and the accomplishment of their community’s development goals?  No.  Maybe other local businesses might be threatened by competitors, but the research on agglomeration economies suggests that such clustering is actually a huge advantage and a draw for businesses.   The only players consistently threatened by new development projects are fringe, anti-development, anti-business and NIMBY voices, who are rarely comprised of the “wealthy” and “power-elite” types Renn’s article invokes.

In order to find any conclusion consistent with Renn’s point, you have to create and assume some black hat-wearing, Lex Luthor-type supervillain –someone who, from the shadows, roots and works for the failure of the community’s economic development goals.  Otherwise, the exercise does not support his point.

2)  Acknowledgement of the Cause-Effect relationship is not optional, Aaron.

Economic development is hard to define and nearly impossible to measure.   It is broad.  It can include initiatives for affordable housing, transportation, education, entrepreneurship, agriculture, recreation, infrastructure, etc., etc.  It all depends on what goals the community chooses to set for ED.

Renn’s article begins with economic development failure.  The opening line reads, “So many cities and regions continue to struggle economically.”  It’s a given — something for the reader to accept without questioning.   Then, Renn goes on to suggest a cause for the reader, ignoring the thousands of other, potential and more likely causes for local or regional economic stagnation.  And while he seems to indicate (in an off-hand, indirect way) that there are also some successful, economically thriving communities, he is too skilled at writing to ignore the rhetorical impact of his opening statement, and how the reader will personalize the remainder of his article, applying it to their own community without considering whether theirs is one of the “haves” or one of the “have nots.”  In fact, he encourages the reader to internalize it by saying, “… many of the same forces are at work in our own community.”

Renn either blurs or fails to understand the true cause and effect relationship between real world, private, market-based decisions and the accomplishment of economic development goals.  Labor pools, utility costs, transportation infrastructure, and site-specific concerns (i.e.: public utilities, exposure, accessibility, environmental concerns, and see Kevin Lynch’s Site Planning for about a thousand more) are the primary factors for businesses choosing to relocate, according to economic development research.  Understanding the actual reasons why certain types of economic development do or do not occur in any one community or region is extremely complicated, and is an important challenge for economic development professionals to undertake.  Unfortunately, the “black hat” fallacy is much easier to understand.  That’s another reason why it thrives.

But instead of encouraging a more comprehensive look and study of local economic development assets, strengths, weaknesses, opportunities and threats, Renn leaps the reader directly into an outlandish theory, laden with assumptions, and ignorant of the real factors that drive or impede economic development.   And those who believe in the “black hat” fallacy will always believe in it, until the legitimate economic development professionals are able to prove a negative.

That leaves this Urbanophile fan somewhat disappointed.  Well, nobody bats 1.000, I guess.