This seems to have been composed some time in the early eighties when I was still using a mechanical typewriter -- economic development was the partner of urban renewal. Which, as we now know, had ulterior motives.
What does economic development mean? This isn't a question about expectations or results, but definitions. What kind of activity is economic and what constitutes development?
In its broadest sense economic activity is what people do to manage the resources necessary to sustain life. Because humans, unlike frogs for example, are not self-sufficient, managing resources--their allocation and distribution--is essential.
Humans can choose to allocate and distribute resources in a variety of ways. Some are dependent on social organizatio; others are not. Sharing, barter, sale and even theft all involve resource allocation, though not all are classified as economic activities.
Economic activity has come to be rather strictly defined as production that is intended for trade or exchange, not for one's own use. And, as the use of money as a medium of exchange has increased, economic analysis has focused almost entirely on those activities which can be calculated in monetary terms.
To develop is to undergo change in one of two ways. Development is either a process whereby something that wasn't is brought into existence, or it involves a modification or transformation of something into something else.
When barter gives way to monetary exchange, that constitutes economic development. Women earning wages is an economic development, as is the change from familial self-sufficiency to trading in the marketplace. By definition a self-sufficient family farm is not an economic entity and managing a household is not an economic actitivy. Economic development can not be measured by the amount of resources available to sustain a particular population, but by the amount of trade and exchange.
However, that economic development is beneficial seems obvious. More people are living longer, so they must be living better. Trade and exchange in the marketplace is more efficient than trudging from house to house and the use of money makes it possible to overcome not only the limitations of place, but time as well. Resources not needed here and now can, in effect, be saved for future use by exchanging them for money. And the invention of credit has made it possible to use today what we don't expect to need in the future.
But is that what is generally understood by those who promote and support economic development? Do they anticipate that the use of money as a medium of exchange will increase to affect an ever-incresing range of human activities, or do they merely look for the wages of paid labor to rise? Do they intend to increase production for exchange and trade, or do they anticipate an increase in the resources available for individual use? Do they expect economic development to increase self-sufficiency or expand the pool of people who depend on earning wages to survive?
Calls for economic development in Gainesville (FL) are usually associated with a perceived need to create jobs. Does that mean that more homemakers and asoorted volunteers deserve to earn wages for their work, or does it respond to a concern about people who aren't doing anything and are considered unemployed? Is there an awareness that these people represent a potential pool of cheap labor which depresses the wages of those who are already being paid, or does it represent a commitment to making the entire population dependent on a wage?
The latter represents an economic development which has serious implications for the survival of free enterprise, while the former can be accomplished through economic growth. Since we already have an economy in which most production is for trade and exchange, any development might well be negative. What we should be concerned with is how to make our economy grow.
What must we do to promote economic growth? Gainesville is generally described as having a service economy, which some people seem reluctant to promote. This reluctance is based, in part, on the perception that the production of services is less desirable than the production of goods. A service economy is thought to be less stable because the taste for services seems to fluctuate more than the need for goods. But the disctinction between goods and services is largely artificial. A bushel of wheat is clearly a good, but what we really pay for is the time, energy and expertise expended by the farmer in its production.
The alternative would be to plant and harvest our own, or gather a substitute. The farmer's investment of time, energy and expertise is essentially no different from that of the nurse whose service is more direct. The only difference is that what the farmer produces is easier to measure and calculate than the value of a nurse's care. Besides, agricultural production has a much longer history as an economic activity.
The distinction between goods and services is convenient from an economist's point of view, but it tends to obscure that the components of production are the same in either case. Time and energy are essential, whether production is for trade or individual use; expertise is what produces a surplus for trade and exchange.
Initially, expertise is the result of simple repetition. But time, energy and expertise form a peculiar equation. As expertise increases, the amount of energy and time needed to produce the same amount decreases. If time and energy are held constant, expertise increases production. Expertise is what drives economic activity. Moreover, while time and energy are essentially limited, expertise has the potential of increasing almost indefinitely. Trading goods in the marketplace fosters the exchange of ideas as well, leading to an accumulation of knowledge by which expertise is enhanced.
But, while the production of services has only recently developed into an economic activity, the development of expertise, i.e. education, as an economic activity is hardly recognized. Because expertise produces a reduction in the expenditure of energy and time, its value is even more difficult to calculate. And then, the introduction of money into any transaction tends to meet resistance.
That is what Gainesville is up against. Almost from its beginning Gainesville was a marketplace for goods because of its strategic location. The exchange of ideas followed quite naturally and was formalized by the establishment of the University. But its function as a marketplace was never fully realized. Various goods-producing enterprises, from cotton to citrus, phosphate and naval stores, were tried and, having exhausted the resource base, failed. The exchange of goods and ideas in the marketplace was looked upon as little more than a hedge against total collapse. Even now, economic development is touted in terms of producing tangible goods and the future of Gainesville as a marketplace is generally ignored.
Part of the reason, no doubt, can be found in the fact that the function of a marketplace is to provide service. Though it works much like a factory, whose success depends on the rate and volume of flow and, in the long run, the quality of what is processed through, this similarity has perhaps not been recognized. Nor has it been recognized that, while size is important, an increase in size to accommodate storage of inventories that can't be sold, is an indication that economic activity is being stalled. Of course, both a factory and a market can be converted into a warehousing enterprise, though such economic development usually signals economic decline.
Perhaps that explains why Gainesville has enjoyed little economic growth. Ignorance of its role as a marketplace has led to an emphasis on physical growth while the rate at which both goods and ideas are exchanged has slowed. Our students take to long to acquire expertise, and too many remain after the process is supposedly complete. And the commercialsector, which purports to trade in goods, behaves more like a purveyor to a cpative population, which it presumes not to have any alternatives.
The University of Florida, to its credit, has begun to reject the warehouse mentality. No longer will it concentrate on getting bigger; now the emphasis is on quality and efficiency. But already there's a perception that this threatens economic development.
Indeed, in Florida economic development generally involves warehousing. South Florida has developed to store the elderly and North Florida seems dedicated to housing criminals. Since neither population is economically active, producing nothing for exchange or trade, it's not surprising that Florida as a whole has experienced little economic growth.
Gainesville has an opportunity to be different, to expand its role as a marketplace of goods and ideas, rather than considering education as nothing more than the warehousing of the young. Gainesville is still at the cross-road. We can focus our energies on producing expertise to create economic growth, or we can fall in behind the rest of the state to develop warehousing alternatives as the young population shrinks.
Warehousing has lot of growth potential. The elderly population is growing and there's a lot of waste material that has to be stored. That sort of development might be stable but it doesn't generate economic growth. Expertise is the key to the future. Why would we choose to throw it away?