We live in a democracy in which we are fully capable of electing talented people dedicated to improving the public good, as well as low-brow scoundrels bent on achieving power for their own self-serving purposes.
Speaking to the House of Commons in 1947, two years after winning a war but being unseated as prime minister, Winston Churchill said, “Democracy is the worst form of government, except for all those other forms that have been tried from time to time.”
And so it is. We are constrained and elevated by those to whom we elect, whether they be brilliant or ignorant.
Gridlock and Vilification
We also live in a curious time when politics have become so radicalized, so divisive, that finding solutions by compromise, traditionally the needed lubrication to making government work, is now viewed as weakness and betrayal.
Hence the gridlock and vilification, a political backdrop that too often holds that if someone does not share your views or is of a different political party, then they are not worthy of trust and should not be worked with.
With a middle class that has essentially been shrinking for the past 40 years, much of the electorate is scared and angry, certain of a system rigged against them that favors the ultra-rich and the big corporations.
And they see government, not as so much as the solution, but central to the problem and in collusion with special interests.
Stooges for the Rich and Powerful
This grassroots movement, more destructive than constructive, more revolutionary than reform, has filtered down from the national level to state and local politics.
And I am convinced this is central to why economic developers and the profession of economic development are under assault in so many places.
This suspicion of government and corporate America has given new impetus to the belief, which has always been there, that economic developers are mere stooges for the rich and powerful.
The detractors, the skeptics, and now a wave of newly-elected firebrands that are taking office, subscribe to a doctrine that holds that financial incentives given to a company in return for capital investment equates to nothing more than corporate welfare.
You hear this on the far right, particularly with the emerging Tea Party, and ironically, you hear the same on the far left with a self-described democratic socialist running for president.
And for years you have heard this same mantra — that virtually all incentives are bad and unnecessary — from both the press and academia.
The naysayers hold that economic developers are largely unnecessary because the free market will determine if, how, where and when a company will set up operations, expand or contract.
It’s Happening in Texas
Last week, I attended the annual meeting of the Texas Economic Development Council, which was being held in Dallas.
There I spoke to a number of economic developers with excellent track records of success who found themselves under the gun politically because of newly elected officials in their communities.
“Economic developers are tied to government and everybody is suspicious of government right now,” said one attendee to the conference.
“It’s a difficult time and there are a considerable number of players in TEDC who find themselves under attack.”
As a consultant to economic development organizations and to industry, I can tell you that this wave of anti-economic development sentiment is happening nationwide. I hear it on a regular basis, and ironically in places where economic developers have had a history of success.
It’s Happening Nationwide
A few weeks ago, I wrote about how North Carolina’s primary economic development incentive program was being left unfunded because of state legislators who were convinced the program was corporate welfare.
Eventually, North Carolina did pass a budget that restored funding to the Job Development Investment Grant program, but not without prominent economic developers having to go public to argue their case.
It was an ugly scene for a state where economic development has had a long winning tradition.
But with success comes envy, especially from those who purposely seek to cut, eliminate and in some cases raid a tax revenue funding stream.
Tempting Pots of Money
That is the story here in Texas. Economic developers in the Lone Star State are finding themselves in the crosshairs largely due to their success.
Keep in mind that with success comes jealousy and often in response anti-growth advocates. To add to the temptation, many local Texas ED groups are sitting on rather sizeable pots of money.
In 1989 and in 1991, the Texas Legislature created 4A and 4B sales tax dedicated to local economic development, allowing certain cities the ability to promote a wide range of civic and commercial projects.
The effect was to largely decentralize economic development in Texas. Suddenly, communities could and did build substantial war chests for economic development. It also gave communities, even small rural towns, added horsepower on the awarding of incentives.
(I know a one-person ED shop in Texas with $3 million in the bank.)
Willing and now able to put skin in the game on corporate investment projects, local Texas economic developers started seeing great success.
But in today’s political environment, that success has only placed a bulls-eye upon them.
“It’s part of the everyday narrative now among the economic developers of this state,” said one TEDC attendee. “It usually starts with a council member or a board member questioning what they are doing.”
Having Dodged a Bullet
Mind you, economic developers are not infallible, and elected officials have every right to ask questions and seek answers. But in the process of asking, I would hope they would try to learn from the professionals.
I spoke to one economic developer who found himself facing a newly appointed board “whose goal in life was to get rid of me.”
Fortunately for him, he had allies.
“The good folks in town got responsible people elected and the mayor dismissed my entire board and brought in a new board, and they are all very good people.”
Having dodged the bullet, he looks back on his efforts.
“I spent a whole year trying to educate them and it was like talking to a brick wall. It’s like my city manager says, you can’t fix stupid.”
Educating the Cave People
By the second day of the TEDC conference, I knew I was going to write this blog, and I mentioned it to one economic developer, a long-time friend.
“What happens when the cavemen get elected. That should be your title,” he said. “Because that’s kinda the way it is playing out. It seems like the citizens who are against virtually everything are now getting elected.”
But then he said it is incumbent on economic developers to educate those who are hostile and skeptical or have pre-conceived notions on what economic development is or should be.
“We’ve not done as good a job telling our story and we’ve not done as good a job with accountability. Are we building clawbacks into our agreements? We should be.
“Are we asking for performance data from the companies receiving incentives? We’re working with public dollars, so we should be. And are we modeling this to show a positive return for our community. We should be there, too. … It’s a tough business.”
Economic development is a tough business, particularly at the local level. And with the prevailing political winds, it’s probably going to get tougher.
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at firstname.lastname@example.org or at 972-767-9518.