Into the Economic Mainstream

1. Into theEconomic Mainstream Policies for Inclusive Prosperity Mark Pinsky, OFN and Robert Weissbourd, RW Ventures May 3, 2007

2. The Process • “We’re at a point where left and right are converging … it’s great that you are doing this. I’ve been trying to do this, but I can’t bring together thinkers on these issues, as the conservatives complain and the liberals won’t talk to me.” • - Conservative Policy Leader

3. Closely and Deeply Divided Democrat Republican Closely but not Deeply Divided Democrat Republican How Divided are We? Public Impressions: Likely Reality: At least on political issues, the general public shares much more in common than current rhetoric would imply. Source: Morris Fiorina, “Culture War?”

4. Searching for Common Ground Community Asset Development Ownership Society Empowerment Inclusiveness Free Markets Devolution Market Based Development Business Investment Individual

5. Common Goals: Inclusive Economic Growth “I N C L U S I O N A R Y G R O W T H” Economics & Markets Asset-Based Development Ownership Society Constructive Government Asset Development Productivity Inclusiveness

6. Increasing Productivity Expanding Inclusiveness Developing Assets Elements of Inclusionary Economic Growth • Long term economic growth occurs through enhancing productivity of individuals, businesses and institutions (including government) • Invest in technology, R & D, human capital, knowledge factors that lead to innovation • Reincorporating wasted “market-ready” assets – such as underdeveloped land, underemployed labor or underserved markets – into the economy can increase efficiency and productivity • This growth is not just good, but good for business – no trade-off between equity and growth • Getting assets market-ready also makes economic sense • Also necessary for strong society: healthy economy and democracy linked

7. Inclusionary EconomicGrowth is about Markets • We need to find market based solutions or policies that stimulate market corrections, such as creating competition for payday lenders. • – Moderate Policy Analyst • We need to create a market culture that is currently missing in some communities and constituencies … • – CDFI Leader

8. Common Means: Markets Internal Market Operations Market Environment Institutional Context: Enabling Laws Prescriptive Regulation Entry Barriers Exchange Other Exogenous Influences: Infrastructure Resources Technology Tastes • Transaction Costs • Finding Costs • Measurement Costs Production Consumption • Productivity • Costs • Income • Taste • Markets are how wealth is created and economic growth occurs • Markets determine which assets are included

9. Market Interests Development Goals Aligning Markets and Development High Alignment Low Alignment Pure Market Market solution possible; market already generates development outcomes Market Refining Market solution possible with new information, products or networks Market Redefining Market solution possible if market operations and market environment changed through private activities Market Intervention Market solution possible if market operations and environment changed through public policy and advocacy Non-Market No market solution; market is not the appropriate channel Adapted from Kahane-Weiser- Weissbourd/Ford CII

10. Aligning Markets and Development High Alignment Low Alignment Pure Market Market solution possible; market already generates ED outcomes Market Refining Market solution possible with new information, products or networks Market Redefining Market solution possible if market operations and market environment changed through private activities Market Intervention Market solution possible if market operations and environment changed through public policy and advocacy Non-Market No market solution; market is not the appropriate channel Market Works: Company profits while providing Development impact. Make Market Work (Addressing Internal Imperfections) Change Market Parameters (Using Market Mechanisms) Vital Work – but not market based! Market Interests Change Market Parameters (Using Non-market Mechanisms) ED Goals Adapted from Kahane-Weiser- Weissbourd/Ford CII

11. If we care about markets, what’s the role of government? • The government’s role is to reduce or eliminate market imperfections, and shine a light on areas of need. • – Republican Policy Leader • Structure incentives to bring people back into the labor market, to motivate people to join the mainstream, such as by lowering the payroll tax or expanding EITC. • – Conservative Think Tank

12. Enabling Improving Using Getting Assets Market Ready Role Create optimal infrastructure for market to perform; increase productivity Fixing markets Moving markets on their margins Moving assets to market (developing assets in ways which yield growth) Market Rationales Public goods; market preconditions Externalities, information imperfections, entry barriers Positive externalities; more efficient approach to non-market goals (equity, public welfare) Non-market objectives (but market awareness) Examples Property rights; law enforcement; transportation infrastructure Regulating pollution; education Empowerment Zones; New Markets Tax Credit (NMTC); CRA (in part) IDAs; Brownfield Remediation; Education and training Degree to which market and asset development goals are already aligned Implications for Government Roles What is the proper role and best means for government to enhance market operations towards inclusionary economic growth?

13. Aligning Inclusion with Growth Customizing to Particular Markets Expanding Individual Choice: Vouchers + ? Directly Investing in Productivity “Development as Freedom”  Capacity and Responsibility Implications and Issues

14. Into theEconomic Mainstream Policies for Inclusive Prosperity Mark Pinsky and Robert Weissbourd, RW Ventures, LLC | May 3, 2007 Discussion