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S.A. should favor socioeconomic development over ‘economic development’ as currently practiced

October 6, 2018

In Michel Taylor’s “The Smart Money S.A.” column of Sept. 23 (“City smart to pass on Amazon’s HQ2 game,” Business), a little perspective seems to be in order.

Over many years, local officials, business and community leaders, Chamber of Commerce executives, journalistic and local pundits have used the “economic development” term to denote some semblance of business activity or development, but we never really know what this means.

In our city’s history, this term has never been defined. Because large amounts of public resources are spent each fiscal year in the name of “economic development,” it has become important to have clarity in its use. You can’t measure what you don’t define.

Economic development is a public term, yet it is constantly abused to simply reflect business development activity, which obviously is a private pursuit. The best qualified advocate for private sector activity and development is the Chamber of Commerce; this is its mission.

What is the mission of public sector actors? It isn’t to heavily subsidize the private sector in market-ready areas. It is to leverage its resources with the private sector to produce targeted public benefits or outcomes, such as job training, technical enrichment, human capital investment, and entry or midlevel employment in areas where needs are greatest — moving the needle in real terms.

In a city ranking No. 1 in the U.S. in economic segregation, have the heavy subsidies to the private sector carried out in the name of “economic development” delivered these public goods after 30 years?

Clearly they have not, as we remain a poor city.

Anyone who has worked in our field doesn’t use ideology to support or criticize the use of economic development incentives. In the 35 years I’ve worked or studied in this field, I have never seen “the left” or “the right” use language to properly describe this planning function.

As a planning tool, economic development techniques are examined for their use and utility, seeking to maximize benefits and examining the cost-benefit trade-offs involved. Yes, there is a lot to be critical of in the manner that “economic development” is understood and practiced at all levels of government. But using ideological jargon to describe “the incentive game” doesn’t fit in this environment.

With respect to the city’s decision not to pursue Amazon’s HQ2 competition (results of which will be announced soon), it didn’t take much smarts to walk away. Our educational, real estate and technological constraints as a metro region fall very short of Amazon’s requirements. About 50 regions meet the requirement of population of at least 1 million, followed by being competitive in innovation talent — top technical and managerial talent. Are we capable of having and retaining a “highly educated labor pool”?

Seattle, the home of Amazon’s headquarters, ranks No. 9 of 55 metro areas on this composite “talent pool” index. Imagine where San Antonio ranks. We don’t even rank in the top 20 metros in the U.S. using four key metrics: total metro population with a bachelor’s degree, the share of metro population with a bachelor’s degree, the metro area’s total number of STEM (science, technology, engineering, mathematics) jobs, and the share of STEM jobs in the local labor market. A “strong university system is required” as well.

Do we need to be “smart” to recognize our shortcomings on this criteria?

Our region also falls quite short in the core preference for “access to mass transit,” which means direct access to rail, train, subway/metro and bus routes “at site.”

In real estate terms, Amazon anticipates a minimum of 500,000 square feet in Phase 1, but with a total expansion of 8.1 million square feet, involving about 33 separate buildings. Then there’s the limitation of connectivity to major highways and airports “with direct flights to cities all over the country.”

This criteria alone disqualifies us. It doesn’t take “courage” to understand that our metro region isn’t really for the big leagues.

Our problem is worse than that. Our public actors don’t really practice “economic development.” They practice business development. Their idea of an important term is narrow, limited and superficial. Why are enormous amounts of public funds spent annually to “create jobs” in an environment of 3.9 percent unemployment? Why is this term even used when it has no definition and doesn’t address our economic disparities in areas where needs are greatest?

According to Mayor Ron Nirenberg, “We are investing in the fundamentals in terms of housing, water supply, a reliable energy grid. And we have a workforce that mirrors what the rest of the country will look like 20 years from now. We are making investments in that workforce before most cities have even woken up to that reality.”

This is all well and good, but, please, don’t call these investments “economic development.”

Just like the city’s “equity lens” mantra, these are all public works programs, projects or initiatives, but how will these public investments address our widening socioeconomic divide? By building a nationally competitive STEM workforce? Luring companies to move to the city rather than having homegrown champions? Heavily subsidizing the private sector instead of the public sector’s needs?

Why not, as a community, consider being “smart” and “courageous” by replacing the city’s “urban planning” model that measures “success” in business terms rather than in socioeconomic terms? Raise standards of living, quality of life and upward mobility opportunities not by endorsing charter schools, but by tackling economic segregation. Perhaps more than anything, we need public officials to understand the implications of facilitating and subsidizing their “economic growth” agenda for the built environment at the expense of struggling low- and moderate-income families.

With the current construct, San Antonio will never become a nationally competitive urban region.

Fernando Centeno specializes in community economic development strategies. He has a master’s degree of education, and in administration, planning and social policy from Harvard University. He can be reached at fcenteno@satx.rr.com

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