into the economic mainstream
TRANSCRIPT
November 2, 2006
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Discussion Framework: “Inclusionary Growth"
Robert Weissbourd, RW Ventures, LLC | November 2, 2006
INTO THE ECONOMIC MAINSTREAM
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“We’re at a point where left and right are converging … it’s great that you are doing this. I’ve been trying to do this, but I can’t bring together thinkers on these issues, as the conservatives complain and the liberals won’t talk to me.”
- Conservative Policy Leader
The Process
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How Divided are We?Closely and Deeply Divided
RepublicanDemocrat
Source: Morris Fiorina, “Culture War?”
Public Impressions:
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How Divided are We?Closely and Deeply Divided
RepublicanDemocrat
Closely but not Deeply Divided
RepublicanDemocrat
Source: Morris Fiorina, “Culture War?”
Public Impressions:
Likely Reality:
At least on political issues, the general public shares much more in common than current rhetoric would imply.
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Searching for Common Ground
Market BasedDevelopment
Free Markets
OwnershipSociety
AssetDevelopment
Empowerment
Inclusiveness
Community
Devolution
BusinessInvestment
Individual
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Common Goals: Inclusive Economic Growth
Productivity InclusivenessAsset
Development
“I N C L U S I O N A R Y G R O W T H”Constructive Government
Ownership Society
Asset-Based Development
Economics & Markets
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Elements of Inclusionary Economic Growth
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Elements of Inclusionary Economic Growth
Increasing Productivity• Long term economic growth occurs through enhancing productivity of
individuals, businesses and institutions (including government) • Invest in technology, R & D, human capital, knowledge factors that
lead to innovation
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Elements of Inclusionary Economic Growth
Expanding Inclusiveness
Increasing Productivity• Long term economic growth occurs through enhancing productivity of
individuals, businesses and institutions (including government) • Invest in technology, R & D, human capital, knowledge factors that
lead to innovation
• Reincorporating wasted “market-ready” assets – such as underdeveloped land, underemployed labor or underserved markets – into the economy can increase efficiency and productivity
• This growth is not just good, but good for business – no trade-off between equity and growth
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Elements of Inclusionary Economic Growth
Developing Assets
Expanding Inclusiveness
Increasing Productivity• Long term economic growth occurs through enhancing productivity of
individuals, businesses and institutions (including government) • Invest in technology, R & D, human capital, knowledge factors that
lead to innovation
• Reincorporating wasted “market-ready” assets – such as underdeveloped land, underemployed labor or underserved markets – into the economy can increase efficiency and productivity
• This growth is not just good, but good for business – no trade-off between equity and growth
• Getting assets market-ready also makes economic sense• Also necessary for strong society: healthy economy and democracy
linked
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Inclusionary EconomicGrowth is about Markets
We need to find market based solutions or policies that stimulate market corrections, such as creating competition for payday lenders.
– Moderate Policy Analyst
We need to create a market culture that is currently missing in some communities and constituencies …
– CDFI Leader
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Common Means: Markets
ExchangeExchange
ProductionProduction ConsumptionConsumption
Market Environment Internal Market Operations
• Markets are how wealth is created and economic growth occurs• Markets determine which assets are included
Other Exogenous Influences:Infrastructure
ResourcesTechnology
Tastes
Institutional Context:Enabling Laws
Prescriptive RegulationEntry Barriers
• Transaction Costs
• Finding Costs• Measurement
Costs
• Productivity• Costs
• Income• Taste
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Aligning Markets and Development
Low AlignmentLow Alignment
High AlignmentHigh Alignment
Market Market InterventionInterventionMarket solution Market solution possible if possible if market market operations and operations and environment environment changed changed through public through public policy and policy and advocacyadvocacy
Market Market RedefiningRedefiningMarket solution Market solution possible if possible if market market operations and operations and market market environment environment changed changed through private through private activitiesactivities
Market RefiningMarket RefiningMarket solution Market solution possible with possible with new information, new information, products or products or networksnetworks
Pure MarketPure MarketMarket solution Market solution possible; market possible; market already already generates generates development development outcomesoutcomesNon-MarketNon-Market
No market No market solution; market solution; market is not the is not the appropriate appropriate channelchannel
Adapted from Kahane-Weiser-Adapted from Kahane-Weiser-Weissbourd/Ford CIIWeissbourd/Ford CII
Market InterestsMarket Interests
Development Development GoalsGoals
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Aligning Markets and Development
Low AlignmentLow Alignment
High AlignmentHigh Alignment
Market Market InterventionInterventionMarket solution Market solution possible if possible if market market operations and operations and environment environment changed changed through public through public policy and policy and advocacyadvocacy
Market Market RedefiningRedefiningMarket solution Market solution possible if possible if market market operations and operations and market market environment environment changed changed through private through private activitiesactivities
Market RefiningMarket RefiningMarket solution Market solution possible with possible with new information, new information, products or products or networksnetworks
Pure MarketPure MarketMarket solution Market solution possible; market possible; market already already generates ED generates ED outcomesoutcomes
Non-MarketNon-MarketNo market No market solution; market solution; market is not the is not the appropriate appropriate channelchannel
Market InterestsMarket Interests
ED GoalsED Goals
Adapted from Kahane-Weiser-Adapted from Kahane-Weiser-Weissbourd/Ford CIIWeissbourd/Ford CII
Make Market Make Market WorkWork
(Addressing (Addressing Internal Internal Imperfections)Imperfections)Change Market Change Market
ParametersParameters
(Using Market (Using Market Mechanisms)Mechanisms)
Change Market Change Market ParametersParameters
(Using Non-(Using Non-market market Mechanisms)Mechanisms)
Vital Work –Vital Work –
but not market but not market based!based!
Market Works:Market Works:
Company profits Company profits while providing while providing Development Development impact.impact.
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If we care about markets, what’s the role of government?
The government’s role is to reduce or eliminate market imperfections, and shine a light on areas of need.
– Republican Policy Leader
Structure incentives to bring people back into the labor market, to motivate people to join the mainstream, such as by lowering the payroll tax or expanding EITC.
– Conservative Think Tank
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Implications for Government Roles
Enabling
Create optimal infrastructure for
market to perform; increase
productivityRole
Public goods; market
preconditionsMarket
Rationales
Property rights;law enforcement;
transportation infrastructure
Examples
What is the proper role and best means for government to enhance market operations towards inclusionary economic growth?
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Implications for Government Roles
Improving
Fixing markets
Externalities, information
imperfections, entry barriers
Regulating pollution; education
Enabling
Create optimal infrastructure for
market to perform; increase
productivityRole
Public goods; market
preconditionsMarket
Rationales
Property rights;law enforcement;
transportation infrastructure
Examples
What is the proper role and best means for government to enhance market operations towards inclusionary economic growth?
November 2, 2006
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Implications for Government Roles
Using
Moving markets on their margins
Positive externalities; more efficient approach
to non-market goals (equity, public welfare)Empowerment
Zones;New Markets Tax Credit (NMTC); CRA (in part)
Improving
Fixing markets
Externalities, information
imperfections, entry barriers
Regulating pollution; education
Enabling
Create optimal infrastructure for
market to perform; increase
productivityRole
Public goods; market
preconditionsMarket
Rationales
Property rights;law enforcement;
transportation infrastructure
Examples
What is the proper role and best means for government to enhance market operations towards inclusionary economic growth?
November 2, 2006
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Implications for Government Roles
Degree to which market and asset development goals are already aligned
Getting Assets Market ReadyMoving assets to
market (developing assets in ways
which yield growth)
Non-market objectives (but
market awareness)
IDAs; Brownfield Remediation;Education and
training
Using
Moving markets on their margins
Positive externalities; more efficient approach
to non-market goals (equity, public welfare)Empowerment
Zones;New Markets Tax Credit (NMTC); CRA (in part)
Improving
Fixing markets
Externalities, information
imperfections, entry barriers
Regulating pollution; education
Enabling
Create optimal infrastructure for
market to perform; increase
productivityRole
Public goods; market
preconditionsMarket
Rationales
Property rights;law enforcement;
transportation infrastructure
Examples
What is the proper role and best means for government to enhance market operations towards inclusionary economic growth?
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Implications and Issues
Aligning Inclusion with Growth
Customizing to Particular Markets
Expanding Individual Choice: Vouchers + ?
Directly Investing in Productivity
“Development as Freedom” Capacity and Responsibility
Discussion
Robert Weissbourd, RW Ventures, LLC | November 2, 2006