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Beyond Throwaway Cities: How To Build An Export-Proof Local Economy

We invest billions to create a functioning city. How do we create local businesses that won't be tempted to pack up our jobs and leave town?

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Each business focuses on the specific procurement needs of hospitals and universities as well as the local market. Local foundations, anchor institutions, banks, and city government have all committed resources to stimulate business growth. A cooperative development fund, currently capitalized by a $3 million grant from the Cleveland Foundation, expects to raise an additional $30–40 million to support a growing network of cooperatives.

New Forms of Planning

The Cleveland model is important not only for its own sake but because it points in the direction of community-based economic planning for long-term, stable jobs. (Related efforts are being discussed in other cities, including Amarillo, Texas; Atlanta, Georgia; Pittsburgh, Pennsylvania; and Washington, DC.) The relatively informal arrangements of the Cleveland model, in which nonprofits cooperate with public institutions and private employers, also indicates that “planning” need not mean remote government officials drawing up a blueprint and then imposing it. Rather, community economic planning can be collaborative, with multiple institutional actors involved—indeed, if such planning is going to succeed, it will need to be.

In general, green community wealth building strategies are also an important tool in neighborhood revitalization that benefits existing residents and reduces poverty (rather than moving poor people around). Reducing poverty improves the quality of life in both central city and older suburban neighborhoods, making them more attractive options for residents and thereby helping in a second way to achieve stability.

The overall economic impact of place-based community wealth building strategies has become increasingly important in recent years. More than ten million employees, for instance, own all or part of 10,900 companies through employee stock ownership plans (ESOPs)—firms that employees finance and increasingly own through pension contributions. These ESOPs have so far generated equity benefits of $869 billion for their employee-owners. Cooperatives, according to a 2009 University of Wisconsin study, now operate 73,000 places of business throughout the United States, own $3 trillion in assets, employ 857,000 people, and generate over $500 billion in revenue for their member-owners.

Because such efforts spread business profits among a large number of owners, green community wealth strategies also bring equity benefits—an important additional element in the strategy. Economic security of individuals is essential to building political support for a sustained green transition. If low-income and minority constituencies fail to embrace the green economy, urban politicians will continue to place other priorities higher.

Finally, community ownership of green jobs appears all but certain to yield more long-term employment than traditional corporate strategies. Traditional employers have an incentive to keep labor costs low and hence will use workers only for as long as they are needed on a particular job (such as weatherizing homes). Community enterprises, in contrast, aim to maximize employment over the long term. Instead of treating employees as disposable, such employers commonly seek ways to find new work for their workforce.

Important policy-support efforts have also been developing in different regions of the nation. An example is the Ohio Employee Ownership Center (OEOC), which has used a relatively modest amount of state funding (less than $1 million annually) to facilitate worker takeovers of firms whose owners are retiring or that are threatened with closure. Such firms, owned by workers, are city (and tax base) stabilizers: they do not get up and move. The OEOC has created enormous economic returns—retaining jobs at a cost of less than $800 per job and helping stabilize thousands of jobs in Ohio cities.

Another strategy aimed at stabilizing communities and furthering sustainability goals involves new forms of regional and national planning—indeed, given the continental scale of the United States, regional planning will be particularly important. Economic planning takes place today through government procurement, regulatory, and incentive programs, as well as through the provision of public infrastructure. A comprehensive agenda to stabilize America’s urban areas will require drawing on these existing policy instruments in a coordinated manner.

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