Tuesday, December 20, 2011

Urban Development Legends

The history of local economic development is a story of academic fads. The 1960s, when I was a student at the University of Pennsylvania, were the heyday of growth poles and multipliers, of econometrics and mathematical modeling made possible by powerful mainframe computers. For a city, the key to generating jobs and income was to lure strategic industries by offering them tax breaks, loans at favorable rates, promises of infrastructure development that would benefit them, and so on. This approach would propel the entire local economy forward, the theory held, so long as the city picked the right industries. On a corridor wall in Penn’s Wharton School building was plastered a huge input-output table of the Philadelphia economy, which would help planners make the right choices. The direct and indirect employment effects of any investment could be precisely predicted. It was all very scientific.

Read the rest of Mario Polese in
City Journal.


Steve Layman said...

When I was growing up in the '60's,
my father was manager of the Union League in downtown Philadelphia. Many a night at the dinner table I heard him tell of "business flight" from the City - companies moving to the suburbs to avoid the ever rising City income taxes. All that planning for new businesses and they forgot the needs of the existing ones. Interesting. S

Michael Wade said...


Very interesting. The law of unintended consequences!


Dan in Philly said...

Of course one wonders how many of these scientific studies were funded by the industries which benefitted from the subsequent government subsidies...

Michael Wade said...


Good question.