Should Economic Development Focus on People or Places?

Photo by Flickr/Travis Wise

Photo by Flickr/Travis Wise

My latest column is online in the March issue of Governing magazine. It’s a piece about people vs. place based economic development strategies. My view is that we should prioritize people over places, but we also have to be realistic. Cities are inherently place based entities. But we need to be careful to invest correctly where we do target the place. Here’s an excerpt:

The fiscal liabilities of a locality attach to its territory, not to its citizens. So voters have every incentive to pull the lever for politicians who will minimize costs in the present at the expense of the future. Politicians can sign bad union deals with future pension promises that are hard to fulfill. They can go into debt to spend money now.

But the citizens who voted for those politicians can then simply move to another town, often to a suburb (or a different suburb) within the same region, to avoid paying off those debts. In many cases they don’t even need to change jobs. It’s like being able to run up big debts on a credit card in someone else’s name. If cities were people-based entities and the debts run up during the time citizens lived there followed them wherever they went, we’d surely see much more fiscal sanity.

Given their fundamental territoriality, however, cities can never really be people-based entities in that sense. Harvard economist Edward Glaeser, an advocate for policies that are first about people, is realistic about the choices facing local policymakers. As he put it in an article for City Journal, “No mayor ever got re-elected by making it easy for his citizens to move to Atlanta, of course, even when that might be a pretty good outcome for the movers themselves.”

Click through to read the whole thing.

from Aaron M. Renn


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