In a report distributed to business leaders, President Clinton, cabinet members, members of Congress and governors, and released publicly today, private and public sector leaders argued collectively for a market-driven initiative to renew America’s distressed urban neighborhoods.
“Community Capitalism: Rediscovering the Markets of America’s Urban Neighborhoods” says that the time is ripe for a new wave of private sector capital investment in urban areas, and encourages businesses to work with non-profit organizations, community groups, organized labor and government to harness the underdeveloped economic potential of urban neighborhoods. In today’s economy, the report says, urban neighborhoods can be magnets for investment and capitalist engines of economic growth, capable of empowering residents and helping redress poverty, crime and unemployment through profit-driven entrepreneurship. The “Community Capitalism” report was prepared by a coalition of 65 business and community leaders and government officials brought together under the auspices of The American Assembly of Columbia University, a non-partisan domestic and international policy forum organization. The group concludes that investing in urban areas today is a paying proposition for the private sector, and that many urban areas perceived to be distressed are actually viable locations for major capital investment. The report contends that renewed investment can help inner city neighborhoods grow their way out of endemic urban problems and create economically vibrant and sustainable communities. “The genius of American capitalism has always been its ability to be profitable while having a broad benefit to community residents,” said project director Paul Brophy.” Community Capitalism means adapting that philosophy to today’s economy. Right now, the economy offers some specific opportunities to connect profitable business investment to empowerment for residents in these urban areas.
Relatively poor access to capital for urban businesses, lack of integration into the regional economy, and resulting competition from ex-urban areas have often deterred large-scale private sector investment. But today, a strong and sustained growth trend in the national economy has intersected with a sharp downturn in urban crime, better community policing, improvements in public housing, the rise of empowerment zones, new community banking strategies, brownfield remediation and other positive trends in urban centers. “The result,” the report’s framers say, “is a window of opportunity for inner city economic development in which private investment, urban businesses and local residents can flourish.” The Community Capitalism report specifies 32 recommendations to business and government to leverage this opportunity, including:
- Establishing a federal trade mission to distressed American urban communities; Improving access to equity capital and early-stage capital for urban entrepreneurs, and supporting a wider range of fair lending activity; Increasing private participation in work force development, putting federal employment training into local hands, and placing a higher priority on worker training; Leveling the playing field between urban and ex-urban locations by assembling developable tracts of urban land and working to remove some of the municipal regulatory barriers to developing them; and Focusing the philanthropic community on providing sources of investment capital for economic development.
- Adopting investment guidelines that address racism, economic segregation, public safety concerns and public education.
The report has garnered praise from both Democratic and Republican policy makers as well as from economists and business leaders. “Businesses are now opening up in our poorest areas across the country,” said Vice President Al Gore, “from the new grocery store in west Philadelphia to the first catfish plant in Itta Bena, Mississippi — and these businesses testify to a simple truth: The greatest untapped markets in the world are right here at home, in our distressed communities. I applaud the Community Capitalism initiative for reaching out to the private sector to further spur investment in these communities. And I look forward to the enhanced role that businesses can play in promoting locally-driven solutions.”
“Since the Berlin Wall, the Iron Curtain and apartheid have fallen, U.S. businesses are moving into new markets in Eastern Europe, even Africa, China and Russia,” said Jack Kemp, co-director of Empower America. “If we can do that, how much more urgent and more beneficial to our economy it is to move into new markets in urban America. For urban residents, problems like crime, poverty and socialized public housing have been economic equivalents of the Berlin Wall. But the barriers are coming down now — crime is down, housing is improving, and the opportunity to connect private investment capital to urban neighborhoods is here. Practicing Community Capitalism in the inner cities will bring not only profits to investors, but jobs, training, entrepreneurship and empowerment to urban residents.”
“There is genuine economic potential in the inner city that has been largely unrecognized and untapped,” said Michael E. Porter, C. Roland Christensen Professor of Business Administration at the Harvard Business School, founder and CEO of the Initiative for a Competitive Inner City (ICIC), and a keynote speaker at the colloquium that produced the Community Capitalism report. “The private sector is able to play a critical role in regenerating America’s distressed communities by capitalizing on their competitive advantages such as strategic location and under served consumer markets, and by developing business-to-business relations with inner-city companies.” The Community Capitalism colloquium was chaired by Hugh L. McColl, Jr., chief executive officer of NationsBank, who stated that nearly one-fifth of his bank’s total book business, including loans, deposits and sales of financial products, is done in “what we would call distressed communities.” “Cities that attract jobs, people and businesses are progressive and peaceful places where the people have a shared vision and shared goals,” said McColl. “We operate under the philosophy that community development is more than the right thing to do — it is essential to our success.”
The project was organized by The American Assembly of Columbia University. In addition to NationsBank and ICIC, individual participants in the Community Capitalism initiative came from a broad range of private and public sector organizations, including the AFL-CIO, the Brookings Institution, Chase Manhattan Bank, Fannie Mae, the Federal Housing Finance Board, the Harvard Business School, the International Council of Shopping Centers, the mayors of New Haven and Stamford, the Sara Lee Corporation, the Trammell Crow Corporation, community-based development groups and empowerment zones from Boston, southern Dallas, Louisville, St. Louis, New York City and New York State, as well as the U. S. Departments of Commerce, Housing and Urban Development and the Treasury, to name a few. Funding for the project was provided by The Chase Manhattan Bank, N.A. and The Ford Foundation, together with NationsBank. The full text of the report is available by contacting The American Assembly at 212-870-3500, or on The American Assembly website: Http://www.columbia.edu/cu/amassembly/
The American Assembly of Columbia University is a non-profit organization founded in 1950 by Dwight D. Eisenhower. Its mission is to “illuminate issues of national policy” through expert fora and publications, and to focus their impact on policy making in the United States. The American Assembly’s projects gather leading figures in their fields to address diverse policy topics ranging from international relations to domestic economic issues.
