By Manuel Pastor, University of Southern California
As part of our 75th anniversary, Irvine commissioned a series of posts from California experts and thought leaders about the state’s most important trends and how we might collectively respond to them. This post is the last in the series. We invite you to read other posts in the series and share your reactions below.
The lore of California has been one of a place of plenty — abundant harvests, growing industries, excesses of land and opportunity. While that vision has not always rung true for some, in the last few years, many in the state are starting to question if there is, indeed, enough to go around. It’s little wonder they wonder: earnings for those in the bottom four-fifths of the state’s income distribution have been falling for decades, and the current recession has left gaping holes in both our state budget and our private hopes.
My colleague, Angela Glover Blackwell, and I have a saying — it’s more hers than mine, but she’s a sharer — “equity is the superior growth model.” It’s not just warm-hearted rhetoric: Using sophisticated statistical techniques, we have been able to demonstrate that metropolitan regions that pay attention to reducing inequality and racial segregation experience more sustained economic expansion, with our seemingly controversial results confirmed by none other than the Cleveland Federal Reserve.
Of course, much of that research was conducted in better times in America (although in one study, we noted that the positive effects of equity on growth were actually more pronounced in weaker regions such as Detroit). Still, the policies that often flowed from the analysis — living wage ordinances, community benefits agreements, affordable-housing requirements — were largely predicated on the notion that expansion would occur and redistribution could be built-in.
So what do you do when the bubble bursts?
What happens when it’s not just the jobs of janitors that are unstable, but also those of the software engineers whose offices they clean? What do we do when the pensions of public sector workers are threatened but so is the solvency of the cities they help to run? What is the plan not just to get benefits to local residents but also to make sure that development itself occurs?
We know the wrong answer: growth now, equity later. Trickle-down economics has a poor record, and it’s a particularly bad recipe for an economy already marked by sharp disparities. As Nobel Prize-winning economist Joseph Stiglitz has noted, inequality has its price — in the form of declining investment in schools as the wealthy bail out of the educational system, in lower consumer demand as middle class incomes decline, and in excessively risky financial instruments as the rich scramble to park their assets.
That said, those of us on the social justice side of the equation also need to turn our attention to how we generate and not just redistribute economic expansion.
This will mean better linking efforts to promote the public good and the private sector, including better coordination of regional business programs and job training in community colleges; linking procurement for transit projects with opportunities for local and state employment; connecting venture capital in green technology with grassroots efforts to build worker expertise; supporting the expansion of tourism even as we improve the climate for unionization of hotel workers. The list goes on and on.
It’ll also mean acknowledging some hard truths. Our state tax base is too small — but we also need to honestly deal with the mismanagement of what is there. Developers do have a tendency to turn a deaf ear to communities — but our permitting system also needs streamlining because growing cities are dynamic cities. Our teachers do deserve better — but we also have to hold them accountable to effectively training a next generation of Californians.
Meeting the challenge of both policy innovation and critical self-examination will require a social justice leadership that is capable of engaging the basics of economic development — and one that is confident that the pro-equity, pro-growth message will win the day. It will also require a business leadership that gets it — that knows that the state’s future, like any company’s future, depends on the skills, teamwork and optimism of its workers.
And this is how funders can help. First, they can help infuse social justice leadership with the best economic thinking even as they help business leaders understand their self-interest in inclusion. Second, they can play a convening role; rather than have the economic strategies being cooked in one room and the justice strategies in another, they can bring together new sets of people for new types of conversations. Third, they can help to fund new projects and policy experiments that show not just that equity is the superior growth model but exactly how it is.
We will get past this recession. But whether we get to the California we really want in 2037 will depend on the quality of not just our human capital but also our social capital. We need to restore our tattered civic infrastructure, turn negotiations into discussions, and insist that growth and equity are not opposite ends of a seesaw trade-off but rather the twin pillars of a strong state.