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BBA Economic Digest: Where Are the Oldsters?

Where Are the Oldsters? I recently looked at an economic development website for a major city, and it was immediately apparent to me that while the staff was diverse in terms of ethnicity and gender, which is a good thing, it lacked -- how should I say this -- well, oldsters like me. Everyone on this sizeable staff from my perspective appeared to be young -- in their 20s and 30s. Maybe a few in their 40s. As someone who is in their 60s, I can personally tell you that we're not dead yet -- that we oldsters still have a lot to offer. (And want to.) If I were an older corporate CEO, I just might be more comfortable talking to a more experienced hand, someone with miles on the odometer. We might very well relate to each other better. (The Vietnam War would not be ancient history.) While it may be true that younger people seem to embrace technology quicker than their older counterparts, the seniors have seen more and done more. And there is something to be said for that. Diversity goes beyond ethnicity and gender. Older workers can complement a team quite nicely.

It's the Stories We Remember

Before economic development, before consulting, I worked 20 years for two newspapers -- one in Columbus, Ga., the other in Birmingham, Ala. In the newsroom, we never used the word "article." What we produced were "stories." As a reporter, I always wanted my editors to put my story on page one. I instintively knew the power of stories, especially those on the front page. When my story was played at the top of the front page across the banner, well, let's just say I've never forgotten that feeling. The truth is that you can try to make your case by spewing out data, statistics and charts, but if you want to pursuade, you tell stories. People love stories because they are wired so. We think in the narrative, and thus have been telling stories ever since the dawn of man with cave drawings. Economic developers take note: There are great, compelling stories in your community worth telling. My advice: Find them. Tell them. Also work with your local newspaper. They're in the story-making business and can be natural allies. You may not always like what they do and they may not always get it right, but do you? Keep in mind the old saying, that there are lies, damn lies and statistics. It's the story around the numbers that matters.

Remember Capacity Building?

It's a descriptive term denoting action and steps to be taken for improvement. I used to hear to hear "capacity building" a lot in economic development conversations. Not so much lately, and I'm not sure why. I think of capacity building as the fuel for positive change.

In essence, it means improving your community by investing either in physical infrastructure or in human resources, preferably both. To that extent the difference between community and economic development becomes mere semantics. Capacity building is also the process of developing an organization's strengths and sustainability. For an economic development organization to truly be successful, it must put resources and effort into business retention and expansion, business recruitment, entrepreneurial development, and perhaps most important talent pipelines. It's a tall order and a small-shop EDOs are hardpressed to do all of this well. But sometimes talking things out provides enlightenment, to which I am willing to help. The five most important questions (per Peter Drucker), are simple and yet profound, relating to capacity building within an organization. • What is our mission? • Who is our customer? • What does the customer value? • What are our results? • What is our plan?

The Costs We Bear

Last week, I spoke to a class to class on business retention and expansion at the University of Oklahoma's Economic Development Institute. The teacher, my friend Erik Collins, asked that I talk about something that is costing all of our communities dearly -- systemic racism. I spoke about the structural economic inequality, including inflated credential requirements for good jobs and biased corporate hiring practices, which have left many Black Americans stuck in low-wage work. I referred to a Federal Reserve reporting showing that the median wealth for Black families was less than 15 percent that of White families. A recemt report by an economist at Citigroup that stated that the additional economic output the United States would have generated since 2000 if it closed racial gaps would have been $16 trillion. The U.S. economy would have generated $2.7 trillion by closing the Black wage gap, $218 billion by improving access to housing credit, $113 billion in increased lifetime incomes by facilitating easier access to higher education for Black students. But the biggest piece of the pie is the additional $13 trillion that Black entrepreneurs could have generated for the economy if they had equitable access to lending. These are costs that we all bear. Our communities are less wealthy as a result.

Afterward, I got a message from an economic developer from Florida who was attending the virtual class.  "The attachment of social issues to the overall economic loss is not a perspective that I ever thought about much or seen presented in such a good manner. Thank you again for doing that."

Here are some of the comments from the economic developers attending:

Mary O: "This is the most honest session I've been in.

"Stephanie S: "Yasss!!!!"

Bethany H: "It is all too rare to have a white male stand up and say what you've said. It is incredibly impactful."

Gabriela A: "Thank you so much for your time and insight, Dean!"

Luke P: "Thank you, amazing!"

Tommy C: "Thanks - very candid and truthful.

"Hillary C: "Great presentation!"

Josh G: "The bluegrass state approves of the banjo!"

Per the last comment, Erik, who is the director of Montgomery County Community & Economic Development in Dayton, Ohio, asked that I play the banjo at the start of my presentation, which I did for about 20 seconds. 

I was surprised anybody listened to me after that.

Grow Your Own In his song "Homegrown Tomatoes," the late Guy Clark sang a line that I will always remember: "Only two things money can't buy, That's true love and homegrown tomatoes." As an economic development consultant, I would like to add a third -- homegrown companies -- but unfortunately the reality is that they can be bought out by larger concerns and moved out of a community. I've seen that plenty of times. Still, I think it should be a goal of economic developers to "grow your own" and create a great seedbed for business startups. Recently, an economic developer friend told me how he has set aside funding for tech startups and is actively courting venture capitalists. Smart move. Growing your own makes sense. I can't tell you how many Fortune 500 companies started off in somebody's garage. It all starts with an idea.

The End of Paradise

With the end of the Trump presidency, the paradise for big businesses may be over. The market capitalization of U.S. publicly traded companies has grown from around 200 percent of U.S. GDP in 2016 to a record high 266 percent of GDP this year — meaning corporations are worth roughly two-and-a-half times the value of everything produced and consumed by the U.S. in a year. In 1995, the number was about 80 percent of GDP. "Big businesses are outperforming the broader economy," Julia Coronado, president of MacroPolicy Perspectives, told Axios. "One of the things that's interesting is that market capitalization didn't get knocked on its ass in the current recession. It's at an all-time high." The 2017 Tax Cut and Jobs Act reduced corporate taxes from 35 percent to 21 percent, but it also eliminated the graduated corporate tax rate schedule and the corporate alternative minimum tax, disproportionately benefiting big companies which downsized their tax bills to record low levels. (President-Elect Joe Biden favors increasing the corporate income tax rate from 21 percent to 28 percent, not a radical proposition by any means.) Trump also cut funding for the IRS by $239 million in 2017 — the combination led to business taxes in 2019 accounting for the lowest portion of federal revenue on record, dating back to 1929. Business tax revenue as a proportion of GDP dropped by the most of any industrialized country in 2018, reaching just 1.1 percent.