5.11.12 | In a new, beautifully written book, “Just Growth,” BRR member Manuel Pastor and Chris Benner show why issues of equity are important to economic growth, and how regions manage to pull off both. Spoiler alert: if the answer were a bumper sticker, it would be “let’s share the same facts.”
As we all know all too well during this harsh recession, renewed economic growth is critical to not only our livelihoods but our well-being. Far too many are lying in bed awake at night wondering how on earth they are going to survive being evicted from their own home or whether they will have to pack up the boxes and move from their home state after 55 years. We need job growth.
But, as the authors argue (Pastor is an economist by training and Benner is a professor of human and community development), job growth alone is not enough. We have ample examples, they write in “Just Growth: Inclusion and Prosperity in America’s Metropolitan Regions,” of regional and metropolitan economies that were meccas of rapid growth, but also rapid polarization and inequality. We need more than just growth. We need “just” growth.
Achieving this, they argue, will require a stretch from both business leaders in the region, who have long been more concerned about growth than equity, and it will require a stretch from those who have long fought for economic justice yet “have not always thought about how best to promote the economic part of that couplet.”
Before the economists in the audience dismiss this prospect of both justice and growth, there’s a strong research base in recent years that have shown that equity and growth complement one another. At its most basic, instability and poverty, these studies find, can lead to social tension and political instability, which in turn can lead to lower investment, higher uncertainty, and thus lower growth. As a recent Federal Reserve Board report finds, a skilled workforce, high levels of racial inclusion, and progress on income equality “correlate strongly and positively with economic growth.”
Part of the reason for this connection between equity and growth, others have found, lies in the kind of global economy we live in today. Skills matter, but so does the quality of life in a metro area to retaining that talent. Social tension, inequity, and blight are parts of that quality of life. Benner and Pastor add to this the idea that:
[G]rowth may have something to do with the ways in which less equal areas underinvest in basic education, the impact of social tensions on economic decision making, the erosion of the “social capital” that can tie a region together, and perhaps the effects on health problems and hence worker efficiency.
Therefore, to get at the “how” and “why” equity matters to economic growth, they look at 192 metropolitan regions in the country, using quantitative methods to find which regions have performed better and worse than the median and the economic determinants behind their performance. They then drill down with a series of case studies in seven metro regions, spending time on the ground in discussions and interviews with key players, finding out why they performed as they had. Their case studies are in Kansas City, Jacksonville, Nashville, Columbus, Sacramento, Denver, and Cleveland.
In short, they find the following:
- Strong levels of unionization in the region has a dragging effect on equity.
- A strong public sector has a stabilizing effect.
- Less concentrated poverty has a positive effect on growth and equity.
- A large immigrant population enhances growth but reduces equity.
- An influential middle class of blacks and Latinos spurs equity and growth.
- A regional economy of high-tech economies produces more growth than equity.
- An economy with significant construction employment is associated with both growth and equity.
- Small firms tend to contribute to growth but not equity.
- A set of likeminded networks of professionals who can work toward consensus matters most.
The last bullet–and one of the most important — they call an epistemic community, or a shared sense of what you know and who you know it with.
A diverse epistemic community …is hardly a bumper sticker slogan–”no justice, no peace” has a more fighting ring and romantic tone than “let’s share the same facts”–but conscious efforts to develop a shared understanding of the region amongst diverse constituencies seems to make a difference for blending the imperatives of equity and growth. …The members of an epistemic community have similar normative values, and draw similar interpretations and make similar policy conclusions when presented with given situations…When such collective knowledge includes not just the “usual suspects” of urban growth coalitions but a broader constellation of community interests and perspectives, it seems to make a difference in regional trajectories.
The key here, they say, is that there must be a role or some process that helped bring a broad group of people to the table (and keep them there) to develop shared perspectives and understanding.
Their three main conclusions to making growth and equity happen are:
- To achieve equity, create ties that bind through a shared sense of regional destiny or other forms of solidarity
- To achieve sustained growth, create a responsive and stable employment base that can adjust to broad market changes and is cushioned by a stabilizing public sector
- To achieve both, regions need leadership that can be sustained through a shared understanding of the region’s problems and possibilities.
Ultimately, the authors argue, we have to arrive at a shared understanding that we’re all in this together, and that what works for some, must ultimately work for everyone. The book shows how to do it.
On a personal note, as a reader and writer, I have to say, the book is a joy to read. A book on regional economic development is usually on the nightstands of the wonkier among us–and usually is larded with ponderous, overly complicated prose. Not this one. The authors show how one can balance rigorous quantitative analysis with a light pen, and even a dry bit of humor. Well done.
The authors have created a website with case study information and other resources, as well as a space to join in the conversation.