Thursday 27 June 2013

The way forward for local, asset-based recovery

Danny Alexander announced today the coalition’s plans for job-creating investment, in energy, road and rail infrastructure. 

Some of the priorities seem a little strange (I'll return to the question of whether road-building helps anybody except the road-builders). But it just so happened that, this morning, I was also talking about jobs – at the annual conference of the Centre for Local Economic Strategies in Manchester.  

Richard Kemp was there promising he would push for a Bank of Liverpool.  And I talked about 'asset-based' economics, where economies re-grow using their own resources.  Because, important as conventional job creation investment is, successive governments have forgotten the lost art of growing city economies from the bottom up. This is what I said:

Come back with me for a moment in my time machine to Birmingham in the 1870s.

An experiment was happening there in urban economics that is a bit like the opportunity that lies before us.

Here we are. Reading Far from the Madding Crowd.

Agonising about the farm workers strike.

And talking about the screw manufacturer Joseph Chamberlain.

A populist politician with a monocle and an orchid in his buttonhole.

At the end of 1873, he seized control of a city that was a byword for poverty and filth.

Yes it was the first city of the Industrial Revolution, but it was desperate too.

Overcrowded slums. Poisoned rivers. Occasional water supplies.

Chamberlain and his Liberal colleagues took control from a group of independent councillors who met regularly in a pub called the Woodman.

They had prided themselves on their ability to avoid spending any money at all.  They called themselves the ‘Economists’.

And Chamberlain revived Birmingham.  He paved it. Lit its streets. Infused it with enormous pride. Built parks and galleries and concert halls.

But the key point was that he did it using the assets at his disposal.  The foul water, the money flowing through, the local people.  He didn’t wait for central government grants or plead for corporate sponsorship.  He used the assets he had.

So there’s the shape of our opportunity too.

Because there’s a kind of learned helplessness about British cities now.

They have learned from the Treasury to stay clear of economics.

They have learned to beg for handouts or inward investment.

Neither of which are going to resume any time soon.

So there’s an opportunity. It may be the only opportunity.

It’s to look afresh at what cities have at their disposal.

And use them to stitch together a plan for regeneration that can happen despite the international gloom.

Using the people they have. Replacing their imports. Maximising local money flows.

It is absolutely urgent that they learn to do this, but there isn’t much to go on.

There are examples of what can be done all over the world.  Wadebridge or Bath for energy. Ludlow or Bridport for food. Cleveland, Ohio for local procurement.

But not a lot about how they can all be brought together.

So here’s my list of three things that need to happen first:

First, we need to formulate what we mean as one proposition.

Not as a list of good ideas, but as one asset-based idea.

We know what we’re talking about.  I recently had a strange experience in the lobby of the Treasury with eight of us from the local economics ‘sector’, if I can call it that.

We were meeting for the first time and realised immediately we were taking about the same thing.

We have to set it down, around these kind of propositions: Local institutions, assets, money flows, a sense of place.
  • There is money around, but not nearly enough institutions to invest locally and those which do exist are often too risk averse for growing local markets.
  • There are assets in communities – knowledge, skills resources, land and buildings – that can be harnessed to support local economic development.
  • There is money flowing through the local economy, but when there are few local enterprises and supply chains it tends to flow straight out again.
  • A sense of place, where all the economic levers belong and link together, underpins this approach.
Second task. More difficult this one.

We have to give it a name.

Something not so glitzy that it puts off the serious policy-makers.  Not ‘people power economics’.

But not so complicated that it puts off everyone else.  Not ‘endogenous local growth theory’

When it has a name, we can demand it.  We can say: Boris why aren’t you doing it?  We can hold mayors to account for their failure to do it. We can campaign for it at local level.

And then the third thing. Don’t undersell it.

We have to make no small plans here.  No failure to grasp the significance of what we’re doing.

We need to explain that this asset-based approach to local economics (ooh I named it!) isn’t just a nice thing you might add on to keep the proletariat happy.

It’s the critical factor that can make a difference between wealth and poverty.

And has always done so in the history of cities back through all time.

It is the way not an interesting new approach. It is the way forward.

It is the potential solution to inequality and dependence.

It may look small-scale, but small plus small plus small equals big.

We need to say that simultaneously to the right and left, and to American mayors as the same time as we say it to UK council leaders.

To working classes and middle classes – and I may say I feel particularly strongly about this one.

I’ve just written a book called Broke (shameless plug) and I can tell you this is as urgent for the middle classes as it is for the working classes.

The only people we don’t really need to worry about are the least friendly economists.

Hit them with a logical fork.  Where this asset based approach is tried, it works.  Economists will then either have to pretend it doesn’t work – and make themselves irrelevant - or incorporate it into their world view.

Either way, we win.

But there’s something else too.  Cheap energy has encouraged cities to specialise, based on the economic doctrine of comparative advantage.

They have trucked in their fresh milk and food thanks to the invention of refridgeration (also 1873).

They have flown in their tomatoes and strawberries at Christmas time.

The main reason the shape of cities is going to have to change is the rising cost of energy.

We need to find decentralised sources of energy which no longer waste a third in transmission.  And decentralised food production systems too.

The question is no longer whether aspects of this massive localisation is going to happen, but when it will happen.

That puts cities in the front line of change.

They urgently need the conceptual tools to help them make the shift.

To stop waiting hopelessly around for circumstances to improve or the Chinese to invest.

To make it happen.

And what I think we’re saying to them is this: where people live, then the resources, energy and imagination exist as well.

To create the local wealth they need.

Yes and well-being too, but we don’t need to dilute the message. It is wealth too.

Remember what Joseph Chamberlain said: “Be more expensive,” he urged other councillors.

I don’t think he meant spend more. He meant be more ambitious.

Be more imaginative.  Be more generous.  And I think we can now explain how it can be done.

No comments: