I just finished an interesting new book by Martin Sandbu, economics writer for The Financial Times. The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All was published pre-COVID 19 but is full of good ideas that would enhance our economic recovery from the pandemic and beyond. Sandbu seeks to understand the economic causes of the current backlash we’re seeing across developed economies. He argues that too many workers and too many communities now feel that they do not belong as part of a wider economy, and thus have chosen to opt out or protest in the streets, the ballot box, and beyond. He does not view cultural clashes as the key factors behind this backlash, and instead argues that economic disconnection is the driving force behind these sentiments. He is particularly focused on left-behind places and strategies for reintegrating them into the 21st century economy.
Finding ways to instill a sense of belonging are essential to moving people out of their current precarious economic circumstances and toward greater prosperity for all. His remedies are not necessarily new or radical, but perhaps unique coming from someone with a Financial Times affiliation. They include Universal Basic income (via a net wealth tax), an expansion of collective bargaining rights for unions and other worker organizations, big increases in spending on education and training, and a carbon taxation system. The Economics of Belonging is worth a read as it does an excellent job of both diagnosing our current crisis, and in providing a good compendium of potential solutions.
I will admit that I don’t spend a lot of time thinking about or studying fiduciary rules related to retirement plans, but a new proposal from the Department of Labor has me a bit concerned. Recently, DOL issued a proposed rule (with a request for comments by July 30, 2020) related to private sector retirement plans (such as 401Ks) that include funds with an environmental, social, and governance (ESG) focus. These ESG funds seek to promote both financial and social benefit goals, and have outperformed the market in recent years. The proposed rule would define ESG criteria as “non-financial” factors. This shift could have the effect of limiting the availability of these retirement fund options because fund managers are required to offer fund options based primarily on financial factors alone. Under the new rule, ESG advocates believe that fund managers would likely opt to avoid including ESG funds as an option in many retirement funds. (This is a very complex issue so if you want to learn more, visit here and here.) ESG advocates further warn that this move would greatly limit future funding for ESG-related investments that focus on supporting a triple bottom-line of profit along with environmental and social benefits. As a result, a promising, growing and successful set of tools for socially-responsible investing may be restricted. If you share these concerns, share them with DOL or reach out to your Senator or Member of Congress by July 30!
If you’re an entrepreneur working in rural America or in sectors with a focus on food and agriculture, consider competing in the American Farm Bureau Federation’s 2021 Ag Innovation Challenge. This annual competition recently kicked off, and the Farm Bureau and its partners are looking for startups with great ideas addressing challenges faced by America’s farmers, ranchers, and rural communities. Up to ten entrepreneurs will be selected to compete in the final rounds at the Farm Bureau’s annual convention in January 2021. Winners and top performers get lots of great publicity, coaching, mentoring, consulting services, and yes—money! EntreWorks Consulting assisted in the creation of this competition in 2015, and I’m really pleased that it is thriving. Some great companies have been past competitors and winners! If you have a great idea or a great business, consider applying. But, do so quickly, as the application deadline is July 31, 2020. Please also note that you must be a Farm Bureau member to compete, but you can sign up with your application. Details and application materials are here.
As communities push toward economic recovery after COVID-19, many regions will be making a big push to improve local broadband capacity. The poor quality of broadband in many rural locales is a disgrace, and I’m hopeful that our current mess will at least trigger some action to close the broadband gap. Fortunately, there are tons of great resources out there if you’re working on broadband improvements in your community. I have been especially impressed with ongoing work in North Carolina. The state developed an excellent broadband strategy that has been touted by Pew Trusts and others. North Carolina’s Broadband Infrastructure Office has also produced an excellent Community Broadband Planning Playbook. This guide has been out for a couple of years, but it’s definitely worth a look. It contains useful real-world tips and ideas on recruiting local leaders, connecting with broadband providers, and finding critical financing for local projects. The state’s broadband website also contains other useful information, like new grant opportunities such as the new BAND-NC grant programs for digital inclusion.
Economic recovery from the COVID-19 pandemic is uncharted territory, and none of us really know how, when, and if things will return to “normal.” I’m on the hunt for any type of lessons learned from past experiences, from history (such as the 1918 Spanish Flu pandemic) to more recent events. An interesting new Harvard Business School report, “Why Japanese Businesses are so Good at Surviving Crises,” looks at how Japanese firms dealt with the impacts of the 2011 earthquake and tsunami.
Japanese firms must be doing something right, as they are long-lived. In fact, the five oldest companies in the world are all Japanese. The oldest, Kongo Gumi, a construction firm, got its start in 578CE. In these case studies, Japanese companies pursued strategies advanced disaster relief and recovery, and strengthened their companies along the way.
In 2011, successful and resilient Japanese firms exhibited the traits known as “toku,” which refers to having a moral purpose in running a business. In our terms, Japanese firms are community minded or are pursuing a double or triple bottom line. The report authors discuss the model of “wise leadership” as driving the business response in 2011 and beyond. Wise leadership is not a complicated concept; it simply refers to a business focus on building both economic and social value. This is a welcome shift from an exclusive and maniacal focus on shareholder value, which is still embraced by many US corporate leaders. The pandemic seems to be changing this perspective, and there are many promising signs that “wise leadership” thinking may be gaining traction here. As these Japanese examples show, this approach not only supports business longevity, but it also helps with economic recoveries as well.
Back in a previous life (early March), my wife and I were preparing for a nice long weekend in Boston where, among other things, I was going to do a presentation at the International Business Innovation Association’s (InBIA) annual conference. Like so many other events, this one is now virtual and it’s happening this week. While we won’t have the in-person networking or Boston’s sights or good food, it will still be a great event. There are lots of great panels on key topics like ecosystem building, supporting minority entrepreneurs, working with special sectors like food and manufacturing, and many more. I’ll be part of a panel, with my colleagues Cathy Renault and Jocelyn Sterenchock, on Thursday, June 24, at 4:45PM. We’ll be discussing trends and effective practices for working with rural entrepreneurs. Hope to see you virtually this week.
I’ve long written and spoken about the important role of independent and gig economy workers as part of a region’s core base of entrepreneurs. While many of these workers are simply pursuing additional income, a large share are building businesses too. Yet, for a variety of reasons, they may not show up in the data, and thus we don’t fully understand their potential impacts on local economies. A new National Bureau of Economic Research paper offers a good look at these impacts. “Launching with a Parachute” investigates how the introduction of gig economy platforms affects business startup rates. (The researchers use the excellent Startup Cartography Project for their data. Check the project website for other useful work as well.) They find that the introduction of the gig economy to a community increases the local startup rate by around five percent, and also increases local lending to new businesses. The authors suggest that supplemental income from gig economy work offers “insurance” and additional resources that provide a “parachute” for those considering business startup. In effect, the gig economy work provides income and perhaps a test bed for business ideas and concepts too. The authors also find that these effects on startup rates are most pronounced in areas with lower incomes and higher credit constraints. As we continue to slog our way out of the current economic crisis, we may find that gig work will have an even larger impact on future startup activity.
We’ve just produced a new issue of our regular e-newsletter, EntreWorks Insights,. This issue offers suggestions for community talent attraction strategies as the worst effects of the COVID-19 pandemic weaken. We welcome your input and ideas! You can also subscribe to our newsletters here.
I’ve developed something of a tongue-in-cheek “formula” for what communities should consider doing to help spur recovery after the pandemic: T + I + E + BRE = R. Communities that invest in Talent, Infrastructure, Entrepreneurship, and enhanced Business Retention & Expansion programs will likely have the best potential for economic Recovery. If you want to learn more about the E in this recovery equation, you may be interested in an upcoming training opportunity from the International Economic Development Council. On June 18 and 19, I’ll be co-teaching an on-line version of IEDC’s Entrepreneurship and Small Business Development course on-line. My co-presenters will be Carol Lauffer of Business Cluster Development LLC and Tom O’Neal of GROW Florida. This course also provides credit toward IEDC’s Certified Economic Developer credential. Hope you can join us. (FYI—I’ll also be teaching a similar version of this class for the North Carolina Basic Economic Development Course in early August. Watch this space for further details.)
Our shambolic response to COVID-19 presents us with many bitter and painful lessons. One set relates to scenario planning. We’re obviously not very good at it, and, when we actually do advance scenario planning, we ignore the results. It probably behooves us—or at least those of us working in community development—to take a look at a useful new Lincoln Institute of Land Policy book, Scenario Planning for Cities and Regions, by Robert Goodspeed. This excellent guide is something of a one-stop-shop on scenario planning. I know a little about scenario planning processes, but I learned a lot here and was also reminded of many good ideas and techniques that I’ve forgotten over the years. I expect that I’ll use it regularly as a future reference guide—it would also be useful for student and newcomers to the field. It’s also an easy read, and relatively jargon-free—at least for us policy wonks! It’s well worth reading.