Strong Towns and job creation - navigating between Scylla and Charybdis

So far this blog has featured two posts directly on the Strong Towns movement, Strong Towns: The making of Place as Economic and Social Engine, and Strong Towns a closer look, as well as mentioning it a couple of times in Placemaking for communities the canvas becomes the art and Creating New Community Paradigms by Building Better Blocks TEDxOU - Jason Roberts. So there is a basis in claiming to have a basic understanding of the Strong Towns principles and a willingness to include those principles as part of this blog and creating new community paradigms.

However, there are still some points that either need further clarification or deeper inquiry. What I said before is that what I admire about the Strong Towns movement is not that they have all the answers, rather it is that they are asking the right questions. In this post I want to look deeper into some of the answers.

One difference raised before between the new community paradigms approach and Strong Towns that needs some elaboration is that a new community paradigm would depend far more on community members and not the political leadership or professional government management in city hall.

Under a new community paradigm scenario an individual or small group starts first organizing and then through increased inclusion creates a larger and growing component within the community. Then through direct democratic processes begins to involve the entire community rather than depending on the established institutional city hall government. The purpose of this blog and related wiki is to provide ideas, resources and connections related to that effort.

This could be done in partnership with the established institutional city hall government, in support of that government or in opposition to that government depending upon how those working to create a new community paradigm see their current municipal government’s relationship with the community. It does not depend upon permission from that government. This has been discussed before through Using Online Communities to encourage Direct Democracy for On-The-Ground Communities, Governance through Community and Finding Resources and Connections to Create New Community Paradigms.

It should be hopefully obvious that this does not apply to all city governments and this new community paradigms perspective is being freshly created on these pages and continues to evolve with far more being needed to square the circle.

Strong Towns seems to put their money on existing municipal government leadership, and while in some cases that could be a good bet, it is all too often the institutional political leadership of a community that has led that community down a non-sustainable fiscal path. A new community paradigm approach does not depend upon a four year cycle for meaningful community involvement.

Another area requiring some deeper inquiry is the relationship of jobs to local economic development. There is not really a disagreement with the Strong Towns perspective. It is the Strong Towns position that "jobs and growth are the results of a productive system, not the proxy for one". A new community paradigm approach takes the same view. It is also the Strong Towns position that:

In nearly every American city, the balance sheet does not benefit from a new job.

If we spend $100,000 at the local level to create jobs, there is no basis to believe that this will ever result in $100,000 being returned to the city through new tax receipts.

This perspective, though admittedly not without some resistance, has been accepted. The issue being raised here is what I will call a Scylla and Charybdis problem. In the story of the Odyssey, Odysseus or Ulysses must face two dangers at the same time. Being successful in avoiding one does not mean you can ignore the other.

The Charybdis problem, which Strong Towns focuses on, is pursuing growth by development scaled to the automobile. The result has been communities falling all too often into the trap of a government fiscal Growth Ponzi Scheme. This situation arises when additional revenue generated from new growth has to be used to pay off unfunded liabilities created from past growth rather than maintaining or creating new services.

There is a great deal of truth to what has been often expressed as the Strong Towns perspective on too great of a dependency on government professionals, though this is most often true when enmeshed in a bureaucratic system. A sizable portion of the responsibility is laid at the feet of economic development and planning professionals. However, the professionals I worked with have been talking about anti-sprawl planning for over a decade and sustainable development in California for at just about as long.

In some cases a Donald Trump mini-me style management, anxious to bring in new development, tells the city council what it wants to hear or doesn’t tell them what they need to hear, often on the implicit instructions of the city council itself. The Ponzi scheme has a dysfunctional relationship maintaining its existence. An approach to community based fiscal sustainability has been discussed in Economic Growth and Equity within a Community - Benefiting the 100%, Budgeting for Community Prosperity requires a Clear View and Second look at Making Cities Work.

Our current development patterns based on the automobile within a suburban landscape fail to create enough revenue within subsequent life cycles to be sustainable. The unfunded liability for infrastructure maintenance requires ever increasing rates of growth to sustain those long-term unfunded liabilities. We mortgage the future to pay for the past creating an ever growing hole pulling us down. Even if repented, the undoing of decades of mismanaged and misallocated development in a period of economic turmoil places communities in a fiscally precarious position.

The problem is that investment in basic infrastructure is not seen as generating a growing revenue stream or able to continue to add value to ROI or return on investment once built. The investment in five miles of road to a business at the outskirts of a community does not necessarily generate five times the revenue of a one mile road to a business in the community. The outside business may generate five times the municipal revenue through property or sales tax but the net benefit after the initial capital investment in the five mile road and obligation to maintain the road is often negative and not considered. Maintenance can also be easy to defer if a more politically popular use for funds can be found even if the funds were earmarked for infrastructure.

State and federal governments have also helped to enable this Ponzi scheme. Government transfer payments from the state or federal government have been used to build infrastructure but not to maintain it. Public money invested in transportation improvements—such as an increase in traffic lanes, construction of an overpass or bridge, installation of traffic signals, may have been intended to create a platform for enhanced local growth, but usually only for the initial capital investment and the community was left holding the long term maintenance obligation bag. In our current situation funding local improvements especially maintenance is unlikely to be a high priority going forward for either state or federal governments, more likely these programs will be cut for both financial and political reasons.

The ability of local governments to take on debt has been important in maintaining the Growth Ponzi Scheme, but the private sector’s ability to finance growth through leverage according to Strong Towns was even more important. In thinking about public debt, we have to question the purpose for that debt, whether to build bridges or fight wars. We also have to question the different types of private debt, whether investment in equipment or in subprime mortgages. Still, any hindsight view does not change the current financial reality.

Strong Towns advice to avoid this Charybdis is “Stop building to the scale of the automobile” and adopting as a means of adding value to the community landscape the concept of Economic Gardening that asserts that trying to capture growth from without is not as viable as building on growth from within. The Strong Towns perspective on viable community growth is also based on Placemaking Principles. This blog also supports Placemaking principles and agrees that the current propensity for automobile directed investment is not only a bad financial decision, it is also a bad Placemaking decision. Placemaking has been explored before in this blog in Placemaking, for communities the canvas becomes the art, Finding the soul of your community and the reason to create your own community paradigms, and Bicycles Build Communities, as well as the posts on Strong Town.

The Scylla, because it can be inflicted from numerous separate directions destroying the body of the community, comes through the economic malaise of job loss. Even if new jobs don’t consistently generate net municipal revenue for city hall, members of that community may still be in need of jobs. If a one industry community lost that industry then it can be well imagined that tremendous efforts would be made to bring in a new business to replace the old. The types of jobs available to members of a community will dictate the level of income, the value of property owned for residential or business purposes and the ability to contribute through taxes to city services. If this declines, it can be difficult to bring it back.

The question is what responsibility and capability does the leadership of a community and its government have in addressing this? Approximately 150,000 jobs need to be created to account for population growth on top of those needed to lower our current national unemployment rate of 8.3% and 10.9% in California. Communities today need to be able to deal with an ever changing business landscape with entire businesses being disrupted out of existence, Kodak being the latest example.

Geography will play a substantial factor in determining the extent to which either Scylla or Charybdis plays a role in a community. In one past discussion of Strong Towns somebody mentioned that there was no other town for 10 miles in any direction while in California I could drive about 50 miles before not running into relatively contiguous populated communities.

The economic demographics as to the types of businesses in a community and their relationship to other businesses will also play a role. The current perspective is that small businesses are creating the majority of new jobs. This has recently been questioned in both the Wall Street Journal Do Small Businesses Deserve Their Reputation as Job Creators? and the New York Times Small Companies Create More Jobs? Maybe Not. A study by the National Bureau of Economic Research says that it is not the size of the business but the age with young businesses being the primary job generators.

Regardless of the origination of jobs, each community needs to have at least indirect access to a diverse business environment depending not only on retail merchants or consumer services and business to business (or B2B) support but primary industries that create product or service.

According to the Wikipedia, article on the US Economy, the private sector employs 91% of the American workforce. Small businesses are the largest employer in the country representing 53% of US workers. Large businesses employ the second largest share at 38% of the US workforce.

One question that interests me is what is the percentage of employment created by small businesses that is in B2B support of larger businesses as opposed to small businesses that create product or services directly for consumers or are retail selling what others create. In this scenario, if the larger businesses say the automobile industry were to go out of existence then what is the impact of the smaller businesses located within the smaller communities that depended upon the larger car manufacturers?

Both the geographic and economic demographic factors also play an important role in the Brookings Institute’s report on Export Nation 2012: How U.S. Metropolitan Areas Are Driving National Growth. The report provides an interactive map to explore export trends in the nation's 100 largest metropolitan areas. Los Angeles County provides 540,700 jobs related to export making it number one for employment in that sector. On a national level, some consider the creation of a Jobs Engine to be essential in the coming global jobs war envisioned by Gallup Chairperson Jim Clifton.

This does not mean that because communities have to face the Scylla on their port side that they can ignore the Charybdis on their starboard side. The problem may be that communities are no longer the fundamental level of building economic growth and that both state and federal governments have placed an unfair and unsustainable burden on local communities. This only adds to the complexity of issues with which a community must deal raising issues of employment, fiscal policy and environment among others that have an impact on communities not only from a regional and state level but also at a national and global level. There are though some hopefully positive changes occurring at higher levels of government such as the HUD Sustainable Communities initiative.

It could be argued that Strong Town principles could form an effective basis for cooperation on a regional level because each community was more self-reliant locally. Locally self-reliant communities though still have to work together to create regionally sustainable economies. This blog will continue exploring how to do this from a bottoms up grassroots approach. I will leave the last word, for now, as how to do this to Chuck Marohn, Executive Director of Strong Towns to talk where he answers a question on community engagement. There is still far more to think about.

Civil society as a platform for new community paradigms

We have continued to delve deeper into the three broad areas that have so far defined the effort of creating new community paradigms, the physical livability of communities [Livable Communities wiki page], community-based governance [Governance wiki page] and economic viability [Economics wiki page]. We have explored where these concepts have come together such as with Place as Economic and Social Engine wiki page. There is however still something fundamentally important missing. The role of the agents bringing all of this about and a system to hold them together.

A claim to be seeking new paradigms within our communities needs to go beyond changing institutions which would be similar to transplanting a new organ to changing the basic means by which individual community members interact within the governance of their community which would be similar to cellular gene therapy.

This blog looks for resources for developing new community paradigms through community and economic development programs across the nation. It is also willing to cross oceans for good ideas. One source is Vern Hughes, Director for the Australian Centre for Civil Society and host of the LinkedIn group Civil Society Global Network.

It should, however, be made clear that what comes next and how it relates to new community paradigms is only the view of this blog and not necessarily of anybody else in the Civil Society Global Network group. I do have to though give a great deal of credit to Mr. Hughes and the other members of the Civil Society Global Network group for many of the ideas or at least their inspiration.

The Australian Civil Society movement uses the term “Civil Society” in a manner different from what we may be familiar with:

The term does not refer to 'politeness' or 'civility' in public life, as important as this is. It refers to that part of society that is not part of the state, hence the term 'civilian' when used to distinguish a person in civil society from military personnel or state officials, or the notion of a civil offence in law which is an offence between persons in civil society rather than a criminal matter.

The term Civil Society in this context defines a different role for the citizen or perhaps reverts to an older role particularly concerning ‘voluntary participation‘ as opposed to 'volunteering' in one’s community making one a producer of democratic governance and not merely a consumer.

According to the Civil Society Global Network's profile:

Around the world, individuals, groups and movements are searching for ways to empower citizens and communities, and reconfigure the relationship between civil society and states and markets.

The term 'civil society' refers to the relationships and associations that make up our life at grass-roots levels of society, in families, neighbourhoods and voluntary associations, independent of both government and the commercial world. Our aim is to strengthen civil society and empower people within it.

One important contribution to this effort has been the creation of a Manifesto for the Mobilisation of Civil Society.pdf which is also featured on the Civil Society wiki page.  The Manifesto for the Mobilisation of Civil Society.pdf is

directed to political movements, parties, governments and social movements around the world. It is seen as a tool for the awakening and mobilization of civil society as a transformational force in global affairs. It provides a set of signposts for where political movements, parties, governments and social movements should be heading, and a checklist for use by civil society in monitoring their movement.

‘Manifesto for the Mobilisation of Civil Society.pdf’ is

a demand and a declaration by those individuals who have decided to actively take part in civil society that these organizations or institutions will need to and shall made to re-orientated their outlook to fit the awakening of civil society. It also seeks a mobilization of civil society to achieve this shift.

This, as this relates to the creation of new community paradigms is in my view, not only a trend, it is a necessity and it is my belief that this must start at a community level. It is fundamental in maintaining a necessary sense of civic engagement in the governance of our communities, particularly in defining the relationship between individual community members and institutions.

This is not calling for a change in institutions but a change in the relationships between citizens with state and customers with markets. Institutions cannot contain or express the diversity of connections and initiatives that people in civil society want in shaping their lives and are now more possible than ever.

Our role as citizens over time has increasingly been defined through institutions. It is in part the growing dependency upon institutions or organizations that have separated people from matters of civil society decisions. People have become consumers of political and economic institutions changing back and forth from one supplier to another.

Some of the changes now going on in the public sector are apparent. There is no doubt that the means by which we finance the public sector has to change and that the private sector will play a larger role in many aspects. This should not mean though that the relationship between the community and place should be reduced to a consumer-based relationship.

Purpose
Civil society in my view is distinct from political movements, governments and markets. It has been in the background for too long and can be renewed and energized by deliberative public decision-making and entrepreneurial initiative by individuals.

The political philosophies and economic theories which led us to our current state of affairs were based primarily on political institutions of the state and economic institutions making up our markets. This new form of civil society being proposed is not dependent upon formal organizations or institutions.

Civil society defined here in its broadest terms is antecedent to these institutions. Our democratic forms of government arose out of civil society not the other way around. Unfortunately, somewhere along the way, there was a disconnect that only grew bigger.

As the rights of individuals under civil society are not endowed by institutions whether political or market there are means by which citizens can exercise their democratic rights not only over political institutions but within markets over private companies concerning resources, have an impact on the environment, financial sustainability and other issues.

This perspective of civil society provides a meaningful framework for understanding the aspirations, relationships and initiatives of people in civil society. The emerging dynamism of civil society can make it possible for people to reshape political institutions and economic systems to fundamentally reform them to satisfy social initiatives and connections arising in our communities. To do so though, civil society efforts to implement new community paradigms must contend with two forces, bureaucracy and politics.

Our institutional forms of government and political parties seem incapable of finding common ground and making rational decisions. If the actions of civil society were made into another institution, we would be no further along. It would do little good to create a system of formal civil society organizations to merely compete directly within the existing political space with existing state actors or institutions. To my mind, such a strategy does not fully appreciate what is being proposed by the civil society movement. The creation of new community paradigms needs to address issues in an organized manner but this does not mean that an entrenched organization or institution needs to be created.

Bureaucratic Institutions
Communities are not limited to a choice of depending upon entrenched bureaucracies or putting more power into the private sector. They can also recognize the collaborative power that can arise from civil society.

The question is not one of more or less bureaucracy but of a workable bureaucracy, that benefits civil society. It should be recognized that bureaucracy can be used to serve in maintaining the daily activities of desired programs. Civil society on its own may not always ensure welfare and democracy, particularly on a daily basis in a cost-efficient manner. Institutions may arguably remain a necessary vehicle to implement many of the broadly applied social policies we wish for our communities but we have lost the community or civil purpose behind these efforts bowing instead to the needs of the institutions. Over time the focus has become more a matter of maintaining the institution and not the social needs of the community for which it was created.

A functioning civil society based on new community paradigms would be more able to implement a ‘working’ bureaucracy, i.e. an efficient one, working for the benefit of a community to address the essential requirements to maintain the social welfare and democracy.

Political Institutions
Another important aspect of the need by our communities for new community paradigms is the inability of our current institutions to adapt to the new emerging times. In the era of social participation and social networks, we still use public participation systems which are hundreds of years old despite there now being technological systems that can get responses by the public on specific policy measures being approved at the broadest level in real time instead of every four years. We have the technology available in modern society to access information which could be made available and transparent to help drive critical decision-making to more local levels.

Public institutions might be expected to make investments in technology systems that are capable of providing secured private and confidential participation by the public in policy decisions, and some communities do but often only in a limited manner and not every governmental organization is that eager to give up their power.

The establishment of a civil society perspective would allow principles of democracy to be applied more widely. civil society could develop a system for contributing to a strong democratic bureaucracy that is adaptable and responsive to the needs and will of the citizenry, rather than unilateral regulations from a rigid bureaucratic machine.

Establishing a system of organized collaboration and deliberative democratic participation based on principles of civil society could be readily optimized with available technological resources and modern practices of deliberative democratic organizing. Deliberative democratic organizing based on civil society principles would focus on community needs, not political wants.

This is an organic, community-based bottom-up approach meeting somewhere in the middle of law and regulation emerging from a top-down institutional approach. Incorporating civil society principles into the effort of implementing new community paradigms creates a means of working within decision-making processes to effect change.

Continuing Considerations
What remains to be answered is what organizational and political responsibilities rest with civil society itself and how do we make this binding? Implementation of these principles will be a challenge not only in reeducating ourselves as participants in civil society but from avoiding pushback by institutions seeking to maintain their hold on power or by those who simply don’t like change. There will always be those would try to take advantage using these principles for their own gain, but any attempt to be predatory or to accumulate wealth at the expense of others would not be based on principles of civil society. These changes will also come slowly until some type of tipping point is reached. Until the culture around us changes profoundly many political organizations and institutional bureaucracies will continue to suffer the abuse and bullying that is so evident everywhere.

Even if the principles of a civil society were fully implemented there would still need to be discussions about the balance of individual rights and social needs and welfare. For example, how much influence can be imposed upon individuals how they run their own business or organization that they have created? To what extent do other people get to directly decide how much a grocer should charge for goods or is that better left up to free market competition and indirect influence through the market?

The principles of civil society provide a platform on which these discussions can take place without being usurped by institutional powers.

The strengthening of civil society can be seen one antidote to the failures of institutional government’s calcification of means and purpose into unresponsive bureaucratic regulations. It can also be a vaccine to the continued loss of democratic governance within those institutions and the ability to define one’s community based upon common community principles and not merely a list of menu choices unilaterally offered by a MacGovernment.