7 Paths to Development That Bring Neighborhoods Wealth, Not Gentrification

This article was adapted from Cities Building Community Wealth, a project of The Democracy Collaborative, for New Economy Week.

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In cities across the nation, a few enjoy rising affluence while many struggle to get by.

An August 2015 study by The Century Foundation reported that--after a dramatic decline in concentrated poverty between 1990 and 2000--poverty has since reconcentrated. Nationwide, the number of people living in high-poverty ghettos and slums has nearly doubled since 2000. This situation is created in part by the practices of traditional economic development, which prioritize corporate subsidy after corporate subsidy over the needs of the local economy. Current trends threaten to worsen, unless we can answer the design challenge before us.

Can we create an economic system--beginning at the local level--that builds the wealth and prosperity of everyone?

Economic development professionals and mayors are working in partnership with foundations, anchor institutions, unions, community organizations, progressive business networks, workers, and community residents. What's emerging is a systems approach to creating an inclusive, sustainable economy where all can thrive. The work is place-based, fed by the power of anchor institutions, and built on locally rooted and broadly held ownership. It's about building community wealth across the United States--in more places than most would imagine, a new kind of economy is beginning to appear. It's an economy that, because of its fundamental design, tends naturally to create inclusion and prosperity for many, not simply for the few.

If globalization is the hallmark of today's mainstream economy, relocalization is the hallmark of the alternative.

The answers are beginning to appear in cities nationwide--in the tools and approaches of community wealth building, as they are wielded by cutting edge city economic development professionals. This work is only beginning to be widely recognized as a cohesive field. Yet as this report shows, it is in fact a coherent, systemic approach to economic development--one that embodies a powerful set of common drivers, and offers a broad set of powerful strategies.

Building a place-based economy

Traditional economic development is too often captured by the demands of major corporations and site development consultants. The place that drives such players is in reality no place at all, for they embody a worldview of a generic, commodified economy, where firms are objects to be lured from place to place by the $80 billion in incentives given annually by cities, states, and counties.

The system that is supported in this way is one of wealth inequality, where most assets are owned by the few. The ownership driver is absentee ownership, with most incentives flowing to corporations owned outside the community. Inclusion is lacking, with benefits flowing to a financial elite--since ownership of publicly traded firms is overwhelmingly concentrated among those in the top 10 percent of society.

A real place is more than a free market of footloose players...

Inadvertently, but pervasively, incentives tend to neglect local firms, which can too often be driven out of business. Thus traditional approaches operate the multiplier effect in reverse: Taxes are extracted from local firms and residents and given to corporations whose ownership is not local, even as local schools and parks suffer cuts in funding. Missing throughout is the driver of collaboration, with little transparency or democratic public input into development decisions.

In its workforce drivers, traditional economic development focuses on counting the number of jobs created, but too rarely tallies whether these are living-wage jobs, or whether they go to those with barriers to employment. Traditional approaches also fail to subtract jobs destroyed when Main Street retailers quietly close their doors--or when firms outsource manufacturing and other work abroad, or move operations out of the community.

The mindset missing in traditional approaches is commitment to place, and a recognition that economic entities can be designed to benefit community.

More than a label, community wealth building is also a framework. It has multiple drivers that work together to create a system that delivers the outcome sought: an inclusive, sustainable community economy where all can prosper--particularly those normally excluded. This system can be defined as having seven key drivers.

1. Place

Community wealth building begins with loyalty to geographic place. If globalization is the hallmark of today's mainstream economy, relocalization is the hallmark of the alternative. Globalization works well for capital, which can move across borders with a computer keystroke. But the real economy of jobs and families and the land always lives someplace real. The real economy is place-based. And a real place is more than a free market of footloose players, where firms are like objects that can be moved anywhere.

In contrast to luring companies from elsewhere, building community wealth is about developing underutilized local assets of many kinds--social networks, the built environment, cultural riches, local ecology, anchor institutions--and doing so in a way that the wealth stays local and is broadly shared. When families possess assets--skills, social networks, a home, savings, an ownership stake in a business--they are better able to withstand shocks like unemployment or illness. They can plan for their future, send a child to college, and feel secure in retirement. A job may start or stop. Assets yield greater stability and security. As Boston's John Barros told us, "It takes a job to get out of poverty, but it takes assets to keep you out of poverty."