Trust but Verify: Confirming Our Economic Development Results

“Trust but verify” was President Ronald Reagan’s phrase he often used when he was negotiating a reduction in nuclear arms with the Soviet Union.

Various complaints that the new job creation claims had been improperly inflated by different states’ E.D. organizations have been made in the past few years. With many states are spending hundreds of millions of dollars to improve their economies it makes sense to have results that can be proven.

The most recent illustration of this problem is the January 23rd report from Michigan’s Auditor, who claimed that the 12,000 new jobs claimed by the MEDC as a result of its Renaissance Zones cannot be confirmed. The auditor finds this troubling, given that the MEDC has abated approximately $820 million in state and local taxes on this program over a 13-year period for businesses in the RZ program.

Michigan’s situation is not an isolated case. This is likely to become a trend that will impact all E.D. programs.

Every E.D. organization – at the local, regional, and state level – needs to be out in front on this issue. Whether you are an E.D. professional or a volunteer board member of an E.D. group, you should be able to verify the results your organization is claiming.

E.D. is critical to every state and every community. Today, however, all economic development organizations need to take Reagan’s approach to arms treaties.

When we use public funds for this important activity, we must be prepared to maintain the public’s trust by verifying our results.

Why We Pursue Economic Development

How many times a day do you open a dictionary to find the definition of a word? Most of us rarely use dictionaries (including online ones) unless we’re unsure of a word’s spelling and our built-in spell checker doesn’t have the term.

Professionals in most fields generally agree on how their discipline is characterized and rarely think about its definition.

Economic developers, on the other hand, have trouble defining their own vocation. A common saying in our business is that every economic development professional has his or her own definition of E.D.

After three decades in this field, I’ve given up attempting to define this continually changing business. For me the important issue is not what E.D. is but rather why we do it.

Economic vitality is essential to every healthy community. We have all seen cities and towns that once flourished but are now dead or dying.

  •  Perhaps they served as agricultural hubs before that industry changed
  • Perhaps they were important way-stations between urban areas and were left stranded when the railroad went through 20 miles away
  • Perhaps they are 20 miles from the nearest interstate exit.

These communities lacked an economic reason for existence; their leaders failed to respond to a changing economic structure.

Today all communities still struggle during these uncertain economic times.  Economic development professionals pursue this trade to keep their communities economically relevant.

Moving into the Unknown: “Turning and Turning in the Widening Gyre”

The shelves in my office are crammed with books about change: Innovation Nation, Management in a Time of Great Change, and Winning Ugly are some of the more interesting titles.

As we near Veterans Day, the U.S. economy is certainly changing. It seems clear that the U.S. has left behind its dependence upon a semi-skilled manufacturing economy. Fewer than 10 percent of jobs in this country are in fabrication. Indiana is one of the most manufacturing-intensive states, and even here the sector accounts for just 13.1 percent of jobs.

But it’s far from clear what will replace the making of things as the main provider of middle class jobs.

At the end of the first modern war, which claimed 37 million casualties, W. B. Yeats wrote a poem about the death of Victorian society and the rise of a nightmarish and chaotic world. He began the “The Second Coming” with the image of a falcon flying in wider spirals – beyond the command of its human handler: “Turning and turning in the widening gyre.”

Nearly 94 years after Armistice Day, the world economy appears to be spiraling out of our control. We don’t know what directions the changes will take: will we continue to have a broad, well-to-do middle class, or will most Americans be living closer to the edge?

This is the challenge facing economic development leaders.

Thayr Richey