In the United States, we have a myth about the power of private industry. We believe that the private sector is robust, efficient, and always provides the correct and stable equilibrium needed to solve problems and provide us with innovation. We see free-market competition as the only legitimate way to advance and grow, with popular TV characters expressing ideas such as, “Capitalism: God’s way of determining who is smart, and who is poor.
Public action, on the other hand, is downplayed and typecast as an incompetent, greedy villain. Accepting aid from a public agency is seen in some ways as a cop out, or only as something that is acceptable for a short period of time as long as you are deserving of assistance by working hard, trying to be smart, and following all the rules that others lay out.
For those who have achieved success, this model fits nicely with the worldview that they would like to see and believe. It elevates them while framing poverty or economic distress as a moral failure.
As we move forward as a globalized society that is able to adapt to technological changes and new institutions, we will have to realize that this myth does not reflect the reality of public programs or the private sector. In The New Localism Bruce Katz and Jeremy Nowak write the following about their idea of dynamic new approaches to policy and governance,
“Successful network governance models show the complex and varied interplay of the public, private, and civic. The models eviscerate the cartoon version of an efficient private sector taking the place of an inept and incompetent public sector. Rather, network governance combines the entrepreneurial capacity and capital of business and philanthropy with the legitimacy and broader concerns of local government.”
Government and public institutions have an authority and responsibility that is hard for the private sector to replicate. Because government agencies don’t have a profit motive, they are able to focus on public priorities and concerns in ways that businesses cannot. However, because businesses have private capital available for investment, they can take risky bets and make investments that public sectors could not. Finding ways to merge the strengths and weaknesses of public and private sectors is crucial to develop networks that have the appropriate capacities to invest in the future and implement changes to help regions grow and advance.
Simply claiming that the private sector always provides the best outcomes or that the public sector is slow and bloated does not help us think about what is really needed for economic growth and development in the 21st century. Both sides need to be understood clearly and appreciated for their strengths and unique features. Future governance models will combine aspects of both the public and private sectors to get stuff done.
Bruce Katz and Jeremy Nowak’s third highlighted feature of New Localism in their book The New Localism is that it, “reflects a commitment to a new kind of problem solving that is distinct from the uniformity of policymaking.” American cities and metropolitan regions are leaders in innovation, diffusion, and development in the United States. The networks formed between university researchers, students, business and industry, government agencies, and local non/not-for-profits or charities help new research translate into real-world applications and eventually into new innovations. Crucially, this is not just true of new technological innovations. In medicine, material science, and communications technology we see new devices entering the market to change the ways we live, but outside these areas we are also seeing cities and metropolitan regions innovate thanks to dynamic networks and united stakeholders. New Localism is helping to drive new forms of governance, new forms of funding for local projects, and even new ways of engaging communities.
Katz and Nowak continue, “It adapts the risk-taking and attitude of individual entrepreneurs and investors to the collective sphere. It is experimental and tolerant of failure. It is the twenty-first century embodiment of Franklin Roosevelt’s words in his famous 1932 speech: It is common sense to take a method and try it. If it fails, admit it frankly, and try another, but by all means, try something.”
Government is frequently criticized for being slow and unresponsive. Rules and regulations take over, and creativity, customer service, and improvements seem to disappear. Without a profit motive, it is hard to see why governments should feel a pressure to move quickly and why they should feel a pressure to be highly responsive to the public. Free markets on the other hand (and especially tech start-ups), seem to operate on a model of, “move fast and break things.” They feel pressured to always up the design and innovate, although they also face a pressure to provide gimmicks and overstate their level of innovation and fast-breakiness. New Localism helps by finding a way to establish more of a common ground between these two extremes.
New forms of social and civic organization can help create quasi-governmental structures that provide the regulation and oversight necessary to protect citizens, but businesses can find profit and reward from working closely with those structures to innovate in a way that actually solves the local problem. Funding from associations and foundations help reduce the risk that government agencies would otherwise face, again providing a new avenue to help encourage innovation and development while avoiding typical roadblocks in a standard policy making process. These new ways to solve problems are a direct result of new networks and local action to address challenges in a cohesive manner.