Creating a Wise Economy

The Wise Economy manifesto, first draft | November 16, 2009

As I discussed in this post, I have spent most of my adult life thinking about how to deal with the impacts that economic change has on the health and quality of life of communities.  I firmly believe that economic change is inevitable, but I also believe that change creates opportunities, usually at the same time as it takes away what we knew before.  Of course, that doesn’t mean it’s easy.  As a Cleveland native, I had an early front-row seat at the spectacle of the implosion of the 20th century industrial economy, and I can tell you first hand about the pain and harship that causes.  But I don’t believe that there is any point in trying to turn back the clock to some magical Time Before.   Not only is it impossible, but that Time Before wasn’t too great for at least some people, either.

As a result,  I believe that the best service I can do is to help communities figure out how to thrive — how to find a bright future in the face of  swift and often unnerving change.  Most of our communities aren’t naturally inclined to handle that any better than many of our residents are, but both job hunters and thoughtful community leaders know that if we don’t find a way, we won’t succeed.

I have previously summarized my theory as Sustainable Economic Development, but I have been moving away from that term because of the potential for confusion with the economics of green construction.   What I am concluding, however, is that what I am really talking about is how to create a Wise Economy – an economy that makes the right decisions not just for today, but for the future.  Here is what a Wise Economy does:

• Looks constantly for new opportunities — and particularly seeks the unexpected ones.
• Embraces its differentiators and values its assets, understanding that differentiation leads to value and away from the chase to the bottom, and that liabilities turn into assets depending on how you look at them.
• Begins with the end firmly in mind, and sticks to a shared plan of action.
• Understands that the life of a community is a marathon, not a sprint (but celebrates winning the stages as well).
• Bewares one-shot solutions and magic pills.
• Maintains bravery in the face of setbacks.
• Grows by cultivating its native species, rather than investing everything it has in transplanting something exotic, finicky and not interested in the community’s differentiators.
• Fertilizes the soil.
• Feeds the cockroaches
• Supports a healthy local government that can provide the high quality public goods and services that the community needs.
• Understands not just what is going on in the larger world, but the unique role that it can play in that world.

Despite my own mostly brown thumb, there is a horticulture thread here that I think lends some valuable insights.  Many of the communities I deal with have been left with exhausted economic soil – the products we are used to making, the ways that we have been used to extracting them – are worn out.  We are left to deal with the leftovers – what economists call “externalities.”  An externality sounds like it should be a non-problem — it’s external, after all — but this is one of the tricks of economics: an externality to one, such as a business, is usually an impact on others.

But leftovers can also become fertilizer.  The big question is, what new opportunities exist because of our assets? How can what we thought was waste fertilize new opportunties?

If you’ve ever had a garden, you know that  just throwing leftovers on a field will not give you healthy plants.  Composted leaves make a rich fertilizer, but if you just leave those leaves to cover the ground over the winter, you will have bare dirt when the time comes to grow again.  The investment of time and resources is what turns the leaves to compost.  It doesn’t have to be a very big investment, but we have to see the value of what we thought was waste, and put in some effort to transform it into something new, before we can enjoy that new growth.

The kind of  growth that we are seeking won’t just drop from the sky – even if it takes the form of a casino, a streetscape, a convention center or the typical incentive – based city program.  Those may have short-term impacts, but their impacts will only last as long as the casino has a monopoly, the streetscape looks clean and new, or the little piece of the economy that they were depending on is holding strong.  When that fails, the benefit of that one-shot solution fades, and we are once again faced with the search for opportunties.

Just like real change in a person’s lifestyle has to ultimately come from internal motivation, a Wise Economy grows from the investment and the dedication of the people of the community.  These aren’t the Captains of Industry of decades ago – these are the people who have the will, the audacity, to roll up their sleeves and make it happen.  These are small retailers, franchisees, established industries, creative thinkers and technological innovators who are willing to take the risk  -  willing to buck the old conventional wisdom – and make something new.

Just like you don’t farm with bare hands alone,  however, the community’s new captains need a variety of tools to grow a new economy.   They need safe and clean places, space to work on their opportunities, places to experience being part of the community.  And they need encouragement – they need to know that it can happen, and that their investment will pay off.

Right now, though, the big question is:  what am I missing?

I am working these ideas out in detail in blog entries filed here under Wise Economy.    I hope you’ll come along for the ride and share your own ideas of how a local economy can become wise (and if you can see where I am going dumb, please let me know that, too, OK?).

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