Smart Growth, or Productive Growth?

Who could be against the concept of growth that is environmentally, fiscally and economically sound? Lots of people. If you attended The Thoreau Institute's "Preserving the American Dream" conference last month, you might have wondered if anyone was really in favor of "smart growth." Conservatives have long taken issue with any policy or action that seeks to place restrictions on personal freedoms, including mobility and the use of private property. Go here to learn more about the conference. Personally, I am not a fan of big government. At the same time, there is little question in my mind that government must play an appropriate role in reminding all of us of the need to grow and develop in way that minimizes harmful impacts on society.

While a significant number of economic developers favor smart growth, many remain suspicious of it, seeing it as a guise for increased government control of economic activities and a clandestine move by environmentalists to restrict growth. I see value in growth that treats the environment with care and deals with the fiscal and economic costs and benefits of growth in an equitable manner. The economic development community has made progress in these areas in the past decade or more. In my strategy work, I think I have just about seen it all in terms of both "smart" growth and "dumb" growth. One thing is for sure. We cannot afford to make any serious environmental mistakes that undermine our future--in an economic sense and otherwise. We have flirted with near tragic environmental disasters in many parts of the country.

I would like to introduce a new idea that might help solidify the tie between economic development and smart growth. Productivity is actually a close cousin to smart growth. Think about it. Few businesses would argue that productivity is not important to them. If they do not make the most productive use of their resources, businesses fail to grow and prosper. There is no profit without productivity, unless you operate in a monopolistic market, which most businesses do not. My view is that American communities need more "productive growth" in the future.

Productive growth at least gives back at least as much as it takes, and in most cases, returns more benefits to the community than the costs it creates. Break-even in most cases is not good enough. Perhaps more economic developers would "buy" the idea of smart growth if it were cast in productivity terms. And maybe the concept of "productivity-based" growth would help more environmentalists see value in economic development.

The concept of productive growth does not take away any respect for the environment in its own right. Economic developers should value the natural environment in its own right; that is beyond its economic utility. Economics is not really an "end-game" consideration in this sense, despite what some might claim at times. Of course, economics is relevant to almost all aspects of our lives, but economics is a means to achieve an improved quality of life. We do not work, start businesses, or earn money simply to create an economy. Instead, we create an economy so meaningful and rewarding work, business and other economic activities can be created and sustained in society. Most economic activity seeks to serve personal or social end-game purposes in life, such as enhancing the standard of living and quality of life of people.

Economics is a power tool that when used properly can help us make the right decisions that reflect our overall interests. Economic thinking is vital to both economic development and environmental improvement. It reminds us that: 1) our actions create both costs and benefits; 2) every opportunity has a cost; 3) many costs also create opportunities; and many other things. In this context, productive growth, in a net sense, should create more social and economic benefits to society than costs.

Truthfully, we really do not know the full range of impacts produced by our actions. Life is full of unintended consequences. Technology, globalization and many other developments have greatly increased the ripple effects of even small actions that we take. This is something we should remain mindful of as we lay our future economic plans. I don't have to tell anybody that life is full of risks and uncertainty, as both are highly elevated across the world at this time. Even our most carefully planned actions embody uncertainty and create risk in the world. Economic developers need to give greater attention to "risk management," which has gained relevance in just about everything we do. Productive growth hinges on risk management. That is an important connection we should be aware of.

In conclusion, I think it is important for our future economic development strategies to be environmentally sustainable and sound in an economic and fiscal sense. Perhaps if we saw the proposition in the context of productivity we would have an easier time understanding why smart growth principles are important to economic development.