Krumholz, N., (1991). Equity and Local Economic Development. _Economic Development Quarterly_, 5(4): p.291..

Norman Krumholz, Master of City and Regional Planning from Cornell, is “a professional city planning practitioner turned uneasy academic” (291), lately Professor at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. He is a past president of both the American Planning Association and the American Institute of Certified Planners, and is considered among the top thinkers in planning today. His is an equity planning approach, favoring the poor and working people as they struggle to retain their livelihoods in a postindustrial economy.

Here Krumholz worries local economic development professionals become mired in the marketing and promotion of economic development projects, usually at the behest of private development interests. In the process, a planner can lose her bargaining power as rational planner without gaining proof that said development assists actual local economic conditions. This paper “offers a more equitable negotiating model” (291). Whatever form local economic development takes, it is to fulfill the “public purpose” and “manage resources to stimulate private investment opportunities in order to generate new jobs and taxes” (292).

The “rational comprehensive model” and its textbook analog suffer from the three following critiques: (1) its optimization goal is impossible for managers who instead “satisfice” in a process known as “disjointed incrementalism” (292); (2) its value clarification is, at best, more complex than it’s sold to be and “an exercise in elitism” (292) at its worst; and (3) overlooks the considerable legal, political, and cultural limitations that will confront apparently optimal solutions. And once things are set, the planner’s time is spent “packaging” (293) deals and operating as the private investor’s right-hand-man in the local government office. In the end, evidence does not support the public subsidization of private investments.

Krumholz provides the following glaring examples. The Urban Development Action Grants (UDAGs) of the 70s and 80s, which mostly underwrote festivals and hotels; tax abatements, which amount to a regressive shifting of tax responsibility from corporations to individuals; tax increment financing (TIFs), which are really only successful when the public absorbs the costs and often established in un-blighted areas; and Industrial Revenue Bonds (IRBs), which actually cost quite a lot. “Flagrant examples” in cities: Cleveland, New Orleans, St. Louis, New York City.

Krumholz proposes solutions. (1) Invest in education as it’s the single most effective way to improve local economic development because educated labor forces are “competitive and productive” (298); (2) prioritize children from poor and minority families should receive in the education programs; (3) enact labor subsidy programs (e.g. wage-subsidy, public service employment instead of capital subsidies; (4) provide national family assistance or income-maintenance plan to low-paid or no employment households; and (5) subsidize existing neighborhood or hopeful local businesses with stipulations. The best example of such practices is the 1984 Chicago Development Plan.

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Filed under Annotated Bibliographies, Community Development, Major Field, Research Fields

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