Good Money, Bad Money, Neutral Money

Every day each one of us buys goods or services from a business. Whether it is electricity, water, groceries, gasoline, meals, or cell phone we have made arrangements for a transfer of our assets to someone else. We all make decisions on the spending of our money, whom do we buy from and is it a want or a need. That decision on where to spend our money may or may not be based on a conscious process but we do need to learn how to think strategically in that decision.

Sometimes it is a decision based on convenience (I don’t have time so I’ll just get something to go from a fast food restaurant), on monopoly (There is only one municipal water provider), on social conscience (As much as possible, I’ll buy from the local farmers’ market), sometimes it is habit (I have always owned Fords), and sometimes its price (It is less expensive for me to get the product from Home Depot).

We can buy from a locally located Fortune 500 company, from a locally owned franchise, from an outside large corporation but with local factories. We can buy from a locally owned retail store that buys locally manufactured goods, we can buy from a locally owned business that imports all of its merchandise. We can buy locally grown or manufactured goods or we can buy goods that are shipped in from miles or continents away. We also can limit the amount of goods we buy to meet our wants. We can change our behaviors so as to reduce our needs.

However we do need to think about what happens to the money we spend. Most of the time there are local employees who receive pay and spend the money on their own needs. The profits are something else. That depends on whether or not the business is owned locally. A large Fortune 500 business may be local but the profits while going to the headquarters here, there is a distribution of money outside the community. Some large businesses distribute monies supporting activities in each community in which they have a presence so as to give back something to those that support them.

There are local businesses which while making money locally, are also involved in businesses outside of the community in which they use the profits from the local activities. Sometimes your own community is the beneficiary of investment by entities from outside of the region. Often there are businesses in your community which sell to people from outside of your region.

Money which comes from outside of your community and is reinvested and spent in your region is good for your region. Money which comes from your community and is spent outside of your region is not good for your region. Money which is earned and spent within the region is somewhat neutral.

Our goal in Economic Development is to increase the good money (money flowing in), decrease the bad money (money flowing out), and increase the speed of the neutral money (money earned and spent locally). This applies whether the region you are talking about is your own family, neighborhood, region, state, or country. The concept is not new but many do not think in these simple terms (simple but not easy).

Where did you spend your money this week?

Ode to a Dead Horse (Cleveland Economic Development in Action)

Dakota Wisdom says that when you discover you are riding a dead horse, the best strategy is to dismount. However, we in Cleveland often try other strategies with dead horses, including the following:

1. Buying a strong whip.

2. Trying a new bit or bridle.

3. Changing riders.

4. Moving the horse to a new location.

5. Riding the horse for longer periods of time.

6. Saying things like, “This is the way we have always ridden this horse.”

7. Appointing a committee to study the horse.

8. Arranging to visit other cities to see how they ride dead horses.

9. Increasing the standards for riding dead horses.

10. Creating a test for measuring our riding ability.

11. Comparing the state of dead horses today.

12. Complaining about the state of dead horses today.

13. Coming up with new styles of riding dead horses.

14. Blaming the horses parents.

15. Tightening the cinch.

16. Passing legislation which declares that “This horse is not dead.”

17. Harnessing several dead horses together for increased speed.

18. Trying to resuscitate the dead horse.

19. Praying for the dead horse to be resurrected.

20. Wisdom #1: Convince a stranger that the dead horse is resting up for the next day’s work.

21. Wisdom #2: Sell the dead horse to the stranger.

(I received this in the mid 90's relating to the activities of certain non-profit boards but I believe that it is often relevant to the economic development strategies in shrinking cities.)

National Revenue Sharing

There has been considerable talk and and some implementation in Northeast Ohio of revenue sharing among communities when companies relocate. How about looking beyond the smaller region and look nationally or even globally and share tax revenue with communities that lose businesses to the Midwest due a shortage of water (the most precious of resources next to air and brains)?

As time goes on and some resources become less available (water, coal, petroleum, minerals, etc) there will be greater pressure brought to bear to provide the diminishing resources to those with the most money making the resources less available for those with the least money. Such practices remove the community resources from one community replacing them with money in the hands of a limited powerful elite.

The Midwest at one time was referred to as the rust belt but is now the water belt. If Georgia and the Southwest want water and are willing to pay for it, how can we encourage the recycling of the Midwest water in the Midwest by having those dry communities meet their needs by moving their companies and residents to the Midwest?

We need to encourage keeping the Midwest water in the Midwest rather than shipping it away to the South and West.

Economic Development: Thinking With Our Brains and Hearts

In a recent email to a researcher in economic development I wrote of my definition of economic development. My definition, as are open source technology and practices, is ever evolving. I see Economic Development as the linking and leveraging of assets (money, brain power, quality places) to sustain and increase the amount of "good assets" (assets flowing into the community from outside the community) and to reduce the amount of "bad assets" (assets flowing out of the community) as well as to increase the speed of the assets moving within the community and the speed with which the community positively responds to negative changes. The same would hold true no matter what the geographic constraints.

Civic leaders need to decide how best to effect economic development so that it ends up being “good” economic development. To decide requires thinking and doing strategically. We need to think with our brains and our hearts not with parts of our anatomy and our personal wallets.

The Questions Unite Us

There are so many things that we allow to divide us. We define ourselves by what we hold true and build boxes to separate ourselves from others who hold other truths. Then we spend tremendous amounts of brainpower and money enforcing our truths on ourselves and others.

I believe that we need to change our focus and energies to the questions which unite us. When we invest in the questions the answers will come but at a much lower cost and in a way that there is a greater acceptance because we are working together and we are part of the solution. The answers we arrive at may be different and activity occurs when there is community and passion in the answers.

Some of the questions are how do we deal with the poverty not only in our urban communities but also in our rural areas? How do we create sustainable businesses that don’t poison our environment and overly deplete resources? How to we fairly value our contributions to and in an ongoing society? How do we behave in ways that build trust and respect?

Accountability

For years Clevelanders have had the same development leaders. In the last decade their leadership has been less than effective as evidenced by the state of the region, especially in comparison to most other Midwest regions. At what point do we, as the community hold them accountable and either encourage them to severely change their behavior or move aside for people who embrace new effective practices?


Economic development leaders are community leaders only because the community says they are and treats them as such. It appears that these leaders are too much into invest, command, and control rather than invest and advise. As a region we need to refrain from viewing the behavior as a top down process but to turn everything on its side so that we are all on an even plane. We need to stop allowing hierarchies to be the driving force in Cleveland.


Let's return to the old Golden Rule; moving from "He who has the gold, rules." to "Do unto others that which you would have them do unto you."

"Strap on Your Goggles!"

As a Director of the Institute for Open Economic Networks, also known as I-Open, (click here) I help teach and sustain behaviors in regional economic activity guided by Open Source Economic Development. The principal behaviors addressed lead to strengthening brain power, connecting innovation and entrepreneurship networks, building quality, connected places, strengthening civic habits of dialogue and inclusion, and promoting an effective brand through sharing positive stories of activity.


In our process we develop innovation zones in a region through civic forums that focus on story telling of best practices, experiences, building trust, and deepening knowledge of ourselves and our communities. Not only is there much learning and collaborative networking taking place with these forums, there also arise initiatives through alignment of individuals’ interests. Through the initiatives growth occurs through creation of entrepreneurial enterprises but also the creation of supportive environments for new activity.


Most recently, the past week a remarkable meeting took place at Nead Brand Partners (click here) , one of the supporters of our activity in the midtown area of Cleveland. In the midtown area where I-Open has been building an innovation zone, the initiatives and partners have grown enough that there is a demand to grow the hot spot out from Midtown to the surrounding neighborhoods that are not in “Midtown.” There is now discussion to further involve residents, not just civic leaders and entrepreneurs. People involved with several of the neighborhoods are excited with what has been going on in Midtown and are requesting that the innovation zone be reenvisioned and renamed so as to discourage concerns over "ownership" and to encourage inclusion and participation throughout the region.

There is now a call out to find a "brand" for the innovation zone that is unique to the area as was "Midtown My Town." The I-Open civic forum on August 9, 2006 is now looking to be a kick off of that expansion with participation from many neighborhoods and local development corporations. There will be an envisioning process taking place as took place with the initiation of the Midtown Innovation Zone.

As has been said before, "Strap on your goggles!" The zones are zooming.