Community engagement, power, and planning ethics

PART I: ORGANIZERS - planners' ethics, public participation, and pragmatism

PART II: INTERMEDIARIES - communication and power in community development

PART III: CLIENTS - empowerment and willingness to participate

Planners seek to serve the public interest from the middle of political thornbushes that constantly tug on their moral and ethical principles in multiple directions. This uncomfortable mix of the ideal and the real in a planner’s work necessitates an orientating compass, so the American Institute of Certified Planners (AICP) in 2005 adopted its Code of Ethics and Professional Conduct to 1) outline the aspirational principles 2) specify rules for governing behaviors and practices and 3) define enforcement procedures. The second and third are fairly straightforward in the sense that they are like other rules we devise to minimize damage and debilitating conflicts. What’s complicated are the unenforceable principles. How on earth do planners maintain their integrity and ensure progressivity as fallible human beings working with incomplete information to bridge the gaps between stakeholders?

Let’s look at an integral module of a planner’s work: community engagement and public participation. Obviously, this takes myriad forms, which we can categorize by a number of useful parameters such as the stage in the planning process, goals and objectives, capacity of organizers, format and structure, targeted stakeholders, etc. But what I find most interesting is the intent of organizers (blog 3 of 3 in this series will explore the intent of participants) and the related goals or objectives and format or structure. Organizers can claim a set of objectives, but later use the information gathered for other purposes. The rationale for involving the public is commonly characterized as procedural vs. substantive. The former is just participation for participation’s sake. Substantive goals, on the other hand, entail outcomes, and hence value judgement behind their measurements.

One paper that every planning student reads is Arnstein’s (1969) A Ladder of Citizen Participation, because it provides a useful framework for cataloguing intent by the degree to which power gets redistributed through the participatory process. The lowest rung is “manipulation” in which citizens are led to believe that their input matters when in fact they are only there to be taught and persuaded, and the organizers simply exploit participants’ lack of knowledge about what to look out for with a particular proposal. It’s worse than no power redistribution because it actually disempowers people, in sharp contrast with the top rung “citizen control” where power is with the people. And there are those rungs in between, which we planners describe as various levels of “meaningful” engagement. Now all these types can be considered substantive, only for the lower rungs, the goal is less about human development and more about legitimizing certain actions/decisions.

What does all this have to do with those ethics? Well, the first aspirational principle of “serving the public interest” demands that planners “respect the experience, knowledge, and history of all people” and “develop skills that enable better communication” which suggests the importance of listening with intent and disseminating accurate information. Theories of communicative planning, developed from communicative/argumentative rationality (in contrast with the type of technocratic expertise that comes to mind), provide a guiding framework for tying together communication, power, and ethics. Instead of focusing on the individual, we shift our attention to the interactions among individuals and focus on evaluating only the interactions. So then, deliberate miscommunication of any information in any manner would be unethical, particularly by the powerful.

And this is related to the second principle on acting with “integrity.” But how is it possible to maintain integrity when faced with all the clashing values and manipulative tactics that aim to further private interests —unless maybe if good intentions and practices axiomatically led to good outcomes, which we know to be false as much as we want it to be true. Communicative planning, however, offers a way out of this quandary. By focusing on the integrity of the communications between individuals rather than individuals, we recognize the redistribution of power through equalization of knowledge. Poor communication, intentional or not, never leads to good outcomes except by luck and providence, and so is irrational by definition. As an example, I was recently told of a story where planners failed to disclose potential conflicts of interest, causing massive breakdown in trust and requiring years of reparation.

Decentering the agent allows planners to maintain their ideals and interrogate issues with a critical eye while being pragmatic about the politics. Communication pipelines and frames, which gird individual stakeholder values, interests, thoughts, emotions, and memories, are fortunately one of the few things within planners’ control. A critical pragmatism approach to “deliberative practice” would enable planners “facing complex multi-party ‘problems’ characterized by distrust, anger, strategic behavior, poor information, and inequalities of power” to see new possibilities and effect positive changes (Forester, 2012), thereby opening a path to reconciling the contradictions/dilemmas posed at the onset of this piece.

How did corporate incentives in the U.S. get so big? A trilogy

PART I: WHAT ARE INCENTIVES?

PART II: WHY ALL THE INCENTIVES?

PART III: HOW TO TALLY THE IMPACTS?

In the previous two parts of this blog, I wrote mainly about the rationale for incentivizing/subsidizing development projects and provided current snapshots of both the use and reporting of tax incentives. This last part focuses on the process and impact, not just ex poste impact of live projects but also impact predictions during decision-making. In the past, I have published some impact analyses using actual data -- specifically the impact of property tax abatements on school finances -- so here I would stay with more general factors to consider when conducting cost-benefit analysis.

Let's start at the beginning: state governments enable certain local governments to abate taxes for economic development; these aren't exactly tax breaks you might claim on returns, but rather companies typically go through an application and review process, during which impact analyses and negotiations may be conducted. The typical arrangement is for approved applicants to pay less taxes for a number of years in exchange for a certain number of new jobs paying certain wages accompanied by certain levels of investments.

To predict or evaluate the impact, convential economic analyses would look at new jobs, values, and tax revenues that would be or have been, respectively, generated directly and indirectly through multipliers. Given how key all these indicators are for deciding whether tax dollars are being put to good use through incentives, you would be surprised that many programs don't require the agency to disclose how many jobs are promised and created. Consideration for the added value implies that the industry matters -- that governments get different returns from subsidizing different sectors or type of industrial/commercial activities. For example, subsidizing the films and sports stadiums generally doesn't pay since often companies/activities leave after a production or event, and there have indeed been many studies (example) showing the bad business of these particular business incentives.

Last to consider is the tax revenues. This figure gets us closer to figuring out the social costs of tax incentives, if we can contextualize it in local finances and public service economics. Here we can pinpoint a source of the power asymmetry referenced previously between large corporations and community planners or advocates. For most companies, property tax is indeed a huge item on the bill, but it still accounts for a very small percentage of the total operating expenses. Meanwhile, half a million dollars in foregone revenues could go a long way in a poor community. Most school districts depend on property tax to provide often the most expensive public service, K-12 education, that tax abatements could cause serious burden. Opportunity cost analysis often converts the cost figure into the number of teachers that can be hired or extent of infrastructural upgrades.

There is also a spatial dimension and a temporal dimension to the story. Both the use and impact of tax incentives are geographically uneven. Research has shown that distressed localities are particularly driven to lure investment with incentives, but if the deal doesn't pan out, abating taxes won't help with the fiscal stress. For example, Kansas City Public Schools is openly opposed to the Missouri city's incentives that disproportionately hurt disadvantaged kids. And if things do work out economically, benefits tend to spill out into neighboring jurisdictions who did not pay for the investment. In some cases, tax abatements have been linked to increased gentrification. In terms of time, proponents of tax incentives would argue that these investments will pay off in time, but we are often looking at 20-30 years of breakeven period, and that's many students affected in the meantime.

All this is to say that for all the incentives we use, we do not scrutinize them nearly enough. There are many factors beyond just jobs to consider, and even jobs we don't know half of the story due to lack of transparency. What we know is that some school districts are feeling the harm, and that implications for social equity are not promising. To make incentives work better and hurt less, it's important that governments establish independent auditing committee to evaluate the net impact, protecting certain critical streams of funding (like the one for public education) from abatements, and removing barriers to open information.

How did corporate incentives in the U.S. get so big? A trilogy

PART I: WHAT ARE INCENTIVES?

PART II: WHY ALL THE INCENTIVES?

PART III: HOW TO TALLY THE IMPACTS?

Decades of research has shown that the economic impacts of tax incentives are mixed at best, and emerging research is showing that the social costs of tax incentives can be enormous. So then begs the question, why do it: Why risk abating taxes on stressed budgets to attract or retain a firm that already made up its mind to stay? Why risk subsidizing with tax dollars a project that may or may not deliver the promised benefits - instead of investing in something that generates sure, if longer-to-materialize, returns, like human capital.

These are not meant to be rhetorical questions; they are important things to consider when deciding to approve an incentive and determining how the incentive agreement needs to be structured. how long to tax a property at, say, half value for, or what to do if the company falls short on creating jobs or generates some other kinds of harm on the surrounding communities. PART III of this "trilogy" will suggest outcomes to consider.

So why incentives? The answer you're likely to hear from experts is "it's political (rationality)." It hardly matters that academic research doesn't support signing away this much tax revenues, if it makes sense for the decision-maker from his/her perspective to do it, and particularly when the analysis is ambiguous (it's generally difficult in social sciences and policy studies to isolate interventions for costs and benefits attribution). Only when deals fall apart spectacularly, like Foxconn in Wisconsin a few years ago, or when communities push back in a way that attract media attention (e.g., Queens, NY re: Amazon HQ2, East Baton Rouge, LA re: ExxonMobil, etc.) is there a strong enough reason to go against the prevailing currents at the individual, interactive, and institutional levels:

Individual - For the elected official, almost any deliberate action to improve things makes more sense to pursue than inaction. Signing a tax abatement agreement with a prominent firm carries a host of benefits. I cannot do justice here to this book by N. Jensen and E. Malevsky Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain. The authors argue that when "global competition for capital meets local politics," the result is personal drive to take credit for signs of economic growth, and pursuing economic growth strategies is a ready way to do it, regardless of whether the exact strategies are called for.

Interactive/social - Competitive dynamics, perceived or actual, permeate a decentralized governance system. Places compete, and sometimes quite openly, like those that bidded for the second headquarter of the e-commerce giant, Amazon.com. You almost never think of competition going the other way around (i.e., firms competing for places to locate), even though many incentives are competitively structured. Game theory suggests that power and information asymmetry can lead rational agents to make suboptimal rational choices in the absence of trust and coordination. The analogy of prisoner's dilemma is often applied, like in this piece by the Mercatus Institute. There has been a lot of research by political economists to address the problem at multiple levels. Some states are figuring out mutual or multilateral ceasefire options in hopes of ending these costly incentive wars.

Institutional/systemic - Arguably, deindustrialization of certain manufacturing cities, neoliberal restructuring, and the fervent pursuit of targeted, market-based strategies under the Clinton administration (i.e., all the special zones) left fertile soil for incentives to grow. As industries change, so do subsidy types. Nowadays, problematic ones proliferate, like sales tax rebate for data centers which eat up a lot of the grid and need few people to man, or property tax abatements for market-rate apartment buildings... imagination is the limit.