Key Note to Nat. Ass. of Comm. Dev. Exec. Profs. & The Ass. of Nat. Res. Ext. Profs -June 26, 2016

Our Vermont state motto, “Freedom & Unity” expresses a unity of opposites, posing the goal of achieving equilibrium between the rights of individuals and the well-being of our communities. It’s a worthy goal and one we occasionally lose sight of, as we muddle our way forward. In these times of deepening disparities in access to education, health care, housing, justice, nutrition, the natural environment, and wealth accumulation, we need to remember our motto and reaffirm the beauty and justice of that equilibrium.

The Changing Business View on Economic Development:

There are those among us who hold that the key to achieving all healthy community goals lies in economic development – jobs, wealth accumulation, and consumption of goods. While, the dignity of work and the self-worth that gainful employment imparts is an important component of the security and health of our communities, material wealth is not the only barometer of well-being. The world is changing around us and so are its measures of success.

When I chaired the VT Business Roundtable some fifteen years ago, our 120 CEOs were a different lot than many of today’s. Business leadership interests have broadened considerably and focus now, notably, on early childhood education, affordable housing, and childcare. They understand quality of life and community resilience trump “tax burden” and “business incentives” in attracting and retaining entrepreneurs and innovators who will grow their businesses here.

Assuredly, the lure of the old “economic development toolbox” lingers. Our administration and legislature gave $1M last year to Global Foundries, to which IBM had paid $5B to take over their old business model. Was the $1M an incentive to stay and retain jobs in a business IBM had to pay someone to take over? Many Vermonters asked that question. Might that $1M investment – pocket change to Global Foundries – have been better used to incubate a dozen new green businesses rather than providing life support for an old one from Dubai? Since 1990, big business has eliminated 4M jobs while small businesses added 8M. In the most recent SBA census, the number of small businesses in the U.S. has increased 49% since 1982. 96% of Vermont businesses are “small” and they employ 60% of us.

Furthermore, the highly publicized comparison between the tax-slashing policies of Kansas with its 1.2% GDP and the consequent misery to its communities and new tax increases imposed by California and their own GDP growth of 2.8% denies the prevailing business mantra about tax burden as an inhibitor of growth. We all believe in jobs and meaningful work as a bulwark of community, but so, too, are the other assets of a strong community. In fact, we are learning they may be a prerequisite to a healthy business environment.

Vermont has a statewide labor force of 350,000, an unemployment rate at 3.1%, and 6500 job openings. These robust numbers tell us that investments in educational access, affordable housing, public transportation, and childcare are the wiser economic development strategies.

We are also coming to better understand the interrelationship of our most intractable community threats which we often measure and treat in silos. There is a clear link between access, or lack thereof, to education, quality nutrition, health care, childcare, affordable housing, natural places, and restorative justice, and our negative indicators such as addiction, crime, family breakdown, abuse, suicide, hunger, homelessness, and over-incarceration.

In London last year, policymakers saw a link between spikes in urban health care costs and the size of London’s homeless population. In order to mitigate health care costs, they invested in 900 affordable housing units to get the homeless off the streets. The concentration of that population allowed them to provide onsite pre-emptive clinical help and more aggressive chronic disease management and lowered considerably the cost of ongoing emergency care.

When UVM Medical Center had an unexpected positive fund balance (read “profit”) in last year’s operations, they recommended to the regulatory authorities investing this be invested in affordable housing, community mental health, substance abuse prevention, and dental services, all with an eye to diminishing future medical costs. This is pre-emptive and strategic community development.

Sadly, incarceration has become a barometer of our failures to investment in healthy communities nationwide. The school-to-prison pipeline has become a cliché. Here in Vermont, we spend $160M on corrections and $88M on higher ed – backwards at best.

The scale of incarceration in our country is much more than a gauge of domestic crime, it’s a socio-economic indicator, telling us how we are doing on the key metrics. Since local jails and state and federal prisons have become the catchall for our failure to make critical community investments and we now often jail our social and economic fallout, incarceration has become a powerful indicator of our collective failure to strengthen local communitiesdevelop strong communities. Incarceration’s original purpose, to punish crime, ensure public safety, and rehabilitate, is still with us but doesn’t come close to explaining the seven million Americans currently under the care and oversight of corrections.

The cost to imprison one American runs from $30-90,000 per year. This does not take into account the cost of caring for, or mitigating the damage to, the children of incarcerated single parents.

So, we must ask ourselves if prison is the best and most cost-efficient way of handling our neighbors who fall through the cracks in our communities. In health care we know that an ounce of prevention is the best investment. We must shift our social and economic investments from storing our fallout in cages to ensuring that we make the investments in our communities to encourage economic independence, equal opportunity, and decent living conditions. But if we think job creation is the only answer to all our socio-economic problems, we better start building more prisons.

Although, we have made great strides in harmonizing diverse components of our society, economic segregation is the new diversity issue and we must now pay attention to inequities in earning opportunity. Equitable taxation is part of the answer, along with education, housing, healthcare access, and a general investment in social and economic opportunity.

In recent comments for the U.S. 2016 Article IV Conference Christine LaGarde, the Managing Director of the International Monetary Fund, made three disturbing observations. First, U.S. Labor Force population is declining, as is productivity, which has dropped to a quarter of what it was in 2007. Second, the distribution of income and wealth has become dangerously polarized. And finally, the share of Americans living in poverty – almost 50M –  is at very high levels. She further notes: “Not only does poverty create significant social strains, it also eats into labor force participation, and undermines the ability to invest in education and improve health outcomes. By holding back economic and social mobility, it creates an inter-generational persistence of poverty.” Her recommendations include a higher federal minimum wage, more generous earned income tax credit, upgraded social programs for the nonworking poor, paid family leave to care for a child or a parent, childcare assistance, and a better disability insurance program. I would just note that the U.S. is the only country among advanced economies without paid maternity leave at the national level and U.S. female labor force participation is 12 percent lower than that for men. Sensible skills-based immigration reform could also raise the labor supply and boost productivity.”

This is the official IMF view of the richest country in the world.

Our Successes Linking a Healthy Environment with Resilient Community Growth:

But let’s take a deep breath and look at the opportunities ahead. I’m proud of our little state with only 620,000 people, a citizen legislature, and the agility to make needed change. The leadership paralysis affecting Congress has not yet infected Vermont, although it rears its ugly head on occasion.

Our small communities propel us together like a nuclear collider. The neighbor with whom we disagree may be the nurse monitoring our life support in the emergency room, buying our excess rhubarb, or teaching our child in school. This neighbor–proximity helps ensure civil discourse and mutual respect.

Let’s review Vermont’s long history of respect for the environment. Renewable energy companies in Vermont are thriving, and our state now leads the nation in clean energy jobs per capita.

In 1857, Justin Morrill of Strafford, Vermont proposed the Morrill Land Grant Act which was signed into law five years later by Lincoln. The laws intent was “…to teach such branches of learning as are related to agriculture and the mechanic arts … in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions of life.” This led in 1914 to the funding of the cooperative extension service, which has served us all so well in the intervening century.

When I was 12, my first job was on a neighboring farm. Before school, I would go up to the barn where Mr. Farr had been milking since 5 AM, open the oak stanchions, and lead “the girls” out to the pasture. I’d stop in the farmhouse where Gladys Farr was making breakfast for Volney and she’d offer me a doughnut or oatcake to eat on my walk to school. After school, I’d walk out to the pasture, open the gate where the girls would be waiting for me and lead them back into the barn. Usually they would go right to their own stanchion but sometimes they’d get addled and just stand there until I led them back. The extension service in those days had the stature of firemen and ministers among the locals.

In 1970 under a Republican administration, Vermont passed the most progressive environmental legislation in the country and Act 250 continues to guide and regulate the nature and quality of community development.

In 1992, The Vermont Council on Rural Development debuted, and under the leadership of Paul Costello since 2000, their work in and with communities has led to a community-driven plan to build local capacity and frame environmental and economic stewardship. VCRD framed the policy behind The Vermont Working Lands Enterprise Initiative and built the team to push for the development and funding of this vital initiative later made into law in 2012. Most recently, they are actively leading the “climate economy” initiative promoting and networking the many Vermont businesses that are growing and profiting from climate change mitigation technology, renewable energy initiatives, and from “green design” in construction.

In 2009, also under a Republican administration, our Farm-to-Plate enabling legislation was passed to “increase economic development in Vermont’s food and farm sector, create jobs in the food and farm economy, and improve access to healthy local foods.” UVM Extension has been a key player in making the Farm-to-Plate initiative so successful. The breadth and impact of their work is already being felt in farms, on the landscape, in food systems, regional markets, and on plates all over the Northeast.

In 2012, the legislature passed Act 142, The Working Lands Enterprise Initiative, a public – private partnership to responsibly stimulate the forest and agricultural sectors of the economy to preserve and protect the working landscape. The principle goals were “to attract a new generation of entrepreneurs to Vermont’s farm, food system, forest, and value-added chain by facilitating more affordable access to the working landscape; and to increase the amount of state investment in working lands enterprises, particularly when it leverages private and philanthropic funds.”

Vermont’s varied landscapes and waterways have always been integral to the lives of Vermonters. Our four seasons, our working landscape that has provided sustenance for generations of Vermonters, the built landscape that makes up the 250 small towns and few cities in which we live, and the wild places in which generations of Vermonters have hunted, fished, skied, logged, hiked and gathered food are all defining elements in our lives. The four legislative landmarks above link the well-being of Vermont communities to their natural, working, and built landscapes.

 What Then Are Our Current Challenges?

The quality of our waterways has deteriorated as a result of runoff from our commercial areas and farms located in or near the Lake Champlain and Connecticut River watersheds.

Like the rest of the world, Vermont, too, is urbanizing. Once vibrant downtown retail has migrated up and out into suburban malls and e-commerce.

When I was growing up in a small town northeast of here, our town of 3500 had a hospital, three drug stores, all with soda fountains, a downtown hotel, two movie theaters, two dry goods stores, a hardware store, a jewelry store, a newsstand, a drycleaner, a bank, two grocery stores, and a blacksmith-foundry. What little retail enterprise remains today is mostly on the outskirts of town. Twice a year, our family made the two-hour drive from Morrisville to Burlington to “trade for goods,” as my grandmother used to say. The first indication we were approaching Burlington was the building we are in today – a large farm called the “Cupola Farm.”

With the outmigration of retail and the flight of capital that characterizes e-commerce, and the less consumerist orientation of young Vermonters, we are seeing an economic renaissance in small enterprise farming, arts and crafts enterprise, and most importantly green energy jobs that reduce our dependence on fossil fuels and build new revenue sources around renewables.

This is being driven by state and community policy choices as well as by the 25 Vermont colleges. Schools the size of UVM, Middlebury, Vermont Technical College, and Community College of Vermont down to the smaller colleges like Green Mountain, Sterling, Goddard, Marlboro, Lyndon, and Johnson all have courses of study that focus students on the world as-it-is becoming. The VT Law School curriculum in environmental law leads the country. VT Tech teaches young people not just how to think, but also how to “do,” offering courses in diversified agriculture that feed our emerging food culture with brewers, distillers, raisers of grass-fed beef, cheesemakers, and other specialty food businesses that are benign on our working landscape, have generated jobs and wealth, and have brought the Vermont brand to the attention of the world. Woodchuck Hard Cider of Middlebury sold in 2012 to Ireland’s C&C Group for $300M.

 Let’s Look Ahead.

One of the challenges we face together is a leadership stasis, if not vacancy, complicated by the corrupting influence of special interests. The equilibrium between the rights of the individual and the well-being of their communities is overshadowed by the outsized influence of big business interests on policies that affect the lives of individuals and the health of communities. We’ve lost sight of government’s purpose. Many of those who govern have become deaf to the voices of those they govern.

The economic architecture that has traditionally driven our economy is likewise changing. The non-profit or mission sector provides roughly 20% of all jobs. In Vermont, the largest employer is our Academic Medical Center, UVM Medical Center with 7600 employees. Next is the State itself with 7000 employees, followed by Global Foundries with about 4000 employees and UVM with 3500 and then Middlebury with about 3000. You will note that four of the five largest employers in the State are not businesses per se but are in the medical, educational or governing sectors. We can expect this trend to continue. Our greatest job growth is in healthcare.

We are also seeing a movement away from traditional capitalist enterprise towards newer forms of ownership, community accountability, and profit distribution. Newspapers, bookstores, restaurants and even small retail stores are migrating to alternatives such as “B” Corporations, co-ops, nonprofit ventures, and employee-owned businesses or ESOPs.

We must look to our young and understand the deep cultural changes they espouse. They are not us. Raised with the certainty of global warming and the effects of pollution, many seek a different lifestyle, one that is less dependent on cars and more dependent on low-carbon public transportation; denser, affordable, energy-efficient housing units for those living and working in cities and towns; and a need-based consumerism focused on local food and artisan production. The current burden of market-rate housing costs, college education loans, and car ownership defy their entrepreneurial dream of independence and productivity for the next generation.

Finally, we must parse the art of the possible… what is within our capacity to change. Our problems are global, national, local, and individual. Don’t waste time on Quixotic campaigns. Fix what is in front of you. Pay attention to the world but fix what is within your reach. We cannot enjoy a secure world without strong communities, a sustainable environment, and economic justice.

Thank you.

Bill Schubart

 (2748 words / 25 minutes)

Comments are closed.