The Right Investment Model When Big Business Comes to Town
Amazon is back in the news with the recent revelation that it’s slowly increasing its presence in New York City. And once again the debate seems very narrowly focused on whether or not Amazon should have corporate subsidies, and what impact, including the number of jobs it will create, it will have in the City. We should always critically assess the proposed public benefit from efforts to use public money (some would say lavishly in Amazon’s case), to lure wealthy businesses to the city in the name of development. But relying, as we have for the past decades, on corporate tax subsidies to drive urban development lacks imagination and leaves vast resources on the table that could otherwise create more robust and enduring pathways to wealth creation. I know, because I was born, and still live, in the country’s poorest urban county, the Bronx, NY, where we are now experimenting with such approaches. With inequality accelerating, they should be a regular part of the urban development discourse.
Growing up as a person of color in the Bronx, surrounded by some of the highest concentrations of wealth in the world, I experienced a constant reminder of how our economy supports the few and the white. Big developers and businesses came into my neighborhood with claims that community benefits would follow, but they never did—in fact, living in our neighborhoods got harder. As a young kid, I soon figured out that each new development project portended painful stress and struggles for my family. Would rents rise, stores close, and, for me, one of the most critical questions at the time -- would l they jack-up the prices of potato chips and quarter juices AGAIN? Learning the hard way that they inevitably would, at age 15 I set out, with some of my friends, to try to fix the inequities. Fifteen years later, many of us are still at it.
The Bronx is ranked 62 out of 62 New York counties for the worst health outcomes, yet healthcare is our borough’s largest industry, with thousands of employees and growing. Many live with their families in neighborhoods with poor access to affordable fresh and healthy food, yet the Bronx is home to one of the largest food distribution centers in the world—the Hunts Point Cooperative Market. Many Bronxites do not earn a high enough wage to cover their expenses and many local small business owners who are committed to supporting their communities are struggling as well. Yet collectively, our institutions have tremendous purchasing budgets that generate tens of billions of dollars, much of which could be redirected to support Bronx residents in those very same communities. Why, then, are we the poorest urban county?
This reality is actually a hopeful contradiction—and the Bronx, and indeed many communities around the country, are filled with them.
Although the Bronx can be characterized as resource-poor, as many movies, TV shows, government and popular narratives, and news outlets like to show (eg., the most dangerous street in Bogotá, Colombia is called Bronx street), the borough is in fact asset rich. Many of the economic development deals in the Bronx and throughout New York City, including the proposed second headquarters for Amazon in Long Island City, were a missed opportunity to leverage those assets and drive a development strategy that addresses the most important economic issue in the U.S.—the racial wealth gap.
In fact, studies show that corporate subsidies, like the $3 billion offered to Amazon, have not created jobs or narrowed the racial wealth gap. Inequality has actually increased over the past 50 years, even as big companies have moved into communities with promises to help. People of color continue to see disproportionately lower income, housing, and health. The numbers indicate that the general strategy of seeking to entice wealthy people and companies to address issues of equity is ineffective, lacks ingenuity, and, most importantly, renders invisible the vital possibilities that exist right within our communities.
The solution is not inviting big business into communities with the hope that subsidies will create opportunity. We need bold and grounded economic development ideas that build shared wealth, structure community ownership in the assets that already exist in our communities, and that drive our regional economies; and deeply engage those most affected by inequality in defining the problems and designing the solutions to address them. We need look no further than the “poorest urban county” to see examples of this transformative economic development paradigm that many call Economic Democracy.
One clear example of the right kind of economic development in action is the work coming out of ideas my friends and I hatched 15 years ago. Now called the Bronx Cooperative Development Initiative (BCDI), it is a game-changing collaboration between a diverse set of local stakeholders that builds shared wealth and ownership among working-class people of color. We have brought local community organizations, businesses, large anchor institutions, local electeds and others together to unlock local resources, advise on policy-making, grow local businesses owned by people of color, and train networks of community members to scale the work. BCDI is pushing institutions to adopt a new paradigm that takes a long view of economic development. That paradigm builds on residents’ direct experiences with institutional failure and sets goals based on their aspirations for health and wellness. It creates spaces to develop the trust and mutual reliance needed to nurture sturdy public-private partnerships and collaboratively creates metrics to track progress towards long term goals. This more methodical approach can avoid the fiery deal-by-deal shortsightedness that the Amazon proposal sparked.
Cooperative Home Care Associates (CHCA), the largest worker-owned cooperative in the United States, is another living example of economic democracy. With more than 2,000 worker-owners who are overwhelmingly immigrants and women of color, the workers wield decision-making power over company the matters and all share in the profits that it generates. In addition to being a worker cooperative, it is also unionized through 1199-SEIU, strengthening members’ collective bargaining power and more generally their pay and benefits. Another example is Co-op City, the largest cooperative housing development in the United States. The majority of its 40,000 residents are people of color. Co-op City remains one of the more affordable places to live in New York City, stands as an example of residents exercising greater ownership and governance over the places they live, and was built through a combination of state finance and union pension funds. Collectively, unions hold trillions of dollars in pension assets. These are huge assets that dwarf anything Amazon can bring to the table in building an equitable economy that addresses the racial wealth gap. Brokering subsidy deals with large companies like Amazon, while an entire ecosystem of unions, businesses, community groups, and finance organizations are poised to take the same investments, but instead grow our economy WHILE significantly addressing issues like the racial wealth gap, is just willful blindness at this point.
While these examples are local to the Bronx, people of color across the United States have a deep legacy of using shared ownership and economic cooperation to survive segregation, racial exclusion and systemic violence, and to serve as the basis of a new economic development paradigm. In fact, there are countless examples when you look at the leadership of W.E.B. DuBois, Ella Baker, and the present progressive leadership across labor, community, and government today. What is missing is the infrastructure to support the adaptation and scaling of these models as we continue to refine them.
When Amazon announced in 2017 that it planned to build a new headquarters, state and local governments around the country moved quickly to identify and leverage tax breaks, infrastructure subsidies and other incentives to lure the mega-giant. Amazon’s tax revenue projections and the promise of 25,000 jobs landing in a place all at once was tantalizing. And while there is every reason to attract smart and competitive companies working to solve problems and create goods and services that people need, the Amazon deal proposed the very development approach that has driven some of the largest gaps in wealth and income in urban areas.
It now appears that a more prudent course would be to rely on a gradual and sustainable approach that preserves or develops shared ownership and governance of local economic assets that are critical for equitable development.
Such an approach would invest in growing the existing economic democracy ecosystem in the city. Now that, as some predicted, Amazon is back seeking to expand its New York City footprint, rather than get swept up in the binary of Amazon or not, let’s have a thoughtful public conversation about how to build generational wealth through widespread local ownership, particularly for working people, especially people of color.
Yorman R. Nuñez, Board Member, Bronx Cooperative Development Initiative; and Director - Just Urban Economies, The Massachusetts Institute of Technology’s Community Innovators Lab (MIT CoLab))