That's Capital

Jonathan and I have been talking a lot about what it’s going to take to jumpstart the American economy. Certainly medical spending looks to be a growth center given the size of the oncoming wave of boomers and the increasing expense of medical treatments. I think that investment, especially in physical as well as soft infrastructure, could go a long way toward helping us get on the road to recovery. But something that’s really stayed with me for a few weeks is the potential benefit of refocusing our energies on local economies. Jonathan has been ruminating on this point and has been pushing me to think hard about it. When my pal Lori pushed me to read Bill McKibben’s latest book on revitalizing localized economies, Deep Economy: The Wealth of Communities and the Durable Future it seemed like I had to learn more.

McKibben and Jonathan come at the idea of local economies from different directions. I probably come at it from yet another direction; with a background in economics I still feel a strong attraction to the benefits of trade. More so, my life experience has borne out its manifold joys and advantages: great food, music from all over the planet, an array of friends from different countries, and a hometown that has been made more vibrant through immigration. (People often forget that Los Angeles was the nation’s “whitest” large city in the 1960 Census; over the course of my lifetime I’ve seen the whitest city in the US become one of its most diverse.)

Yet, what I perceive as advantage, most Americans perceive as confusing, uncomfortable, and even threatening. In fact, places with greater diversity actually exacerbate these tendencies according to Robert Putnam, the Harvard political scientist best known for his work Bowling Alone: The Collapse and Revival of American Community.

While much has been made of Putnam’s work in the political and social contexts, I’ve been thinking about the implications of his findings for economics. And frankly, I’m troubled. Because if he’s right that we’ve “hunkered down” in front of the TV and detached ourselves from engagement, circulation slows dramatically. Few vital systems, including economies, can thrive without circulation.

In essence, Putnam says that diversity makes a given social milieu more complex. As complexity increases, payoffs to social interactions become more unpredictable, or risky, and interaction requires more effort or investment. Given this situation, many opt out.

Putnam finds this dynamic most acutely expressed right here in the City of the Angels. I’ve had a sneaking suspicion about something like this for a long time; getting Angelinos out into the streets, and into new and unfamiliar parts of town, turns out to be very hard work. My years of work in arts organizations confirm this. But like most arts programmers in LA, I continued to hold out hope that my Angelino brethren would finally see the light and realize that the more you put into finding out about the city, the more you will get out of it.

Professor Putnam’s view doesn’t change this belief or have any impact on what “hunkerers” do, but his insights do give greater clarity to the shape of the impediments at work in places like LA. Getting people engaged will require that the risks of interaction decline, that the potential payoffs increase, and/or that those who interact learn how to do so more efficiently. Frankly, these all seem doable.

The risks of interaction tend to be exaggerated; media may be chief among the culprits here. However, one must be willing to tolerate a degree of confusion and coarseness or chilliness from others. I’ve certainly had some “moments” with the Korean shop owners in my neighborhood more than once.

This can be made easier if folks will just be flexible. I’m open to eating Korean food; at this point, I’d kind of like it if more Korean restaurants would meet me halfway. Specifically: I’m not an English-only nativist, but I certainly don’t think it would hurt too much to make menus available for those of us who do not read Hangul. The Chinese places in the San Gabriel may mangle the English in their menus, but at least they make the effort. Besides, it doesn’t seem like it would hurt business.

The potential payoff problem may be the most easily cleared hurdle; a city like LA, or virtually any diverse area, offers multiple chances for learning, meeting new people, and novel experiences. The problem here is that the perceived payoffs may be very low. And as with almost any experience good – something that can only be appreciated after experiencing it, like a movie or a meal – we need to actually get people to have the first one or two experiences to whet their appetites for more. In a culture with fraying social infrastructure, this may turn out to be exceedingly difficult. This is where the role of the “trusted friend” who knows more comes in handy. While many social sets have such friends, some do not. Or at least, they don’t have anyone who can work as “bridges” between social and cultural settings.

Finally, making interactions “more efficient” depends on helping individuals and groups learn how to “read” an environment and the people in it. Again, frayed social infrastructure and lack of trust makes this harder, but it is by no means impossible. Just take a look at your cadre of friends and you can quickly tell who has mastered the skills involved and who has not. Based on that, it’s easy to figure out who will spend next Saturday night at home.

Media have an increasingly important role (or set of roles) to play given the increasing complexity of social systems and the tendency for more persons to look to mediated communication for their understanding of the world around them. Alas, media have turned in a very uneven performance in helping individuals and groups navigate their environments. TV’s “if it bleeds it leads” style of journalism makes matter far worse rather than better. Radio’s tendency toward segmentation provides very little emphasis on what Putnam calls “bridging” human capital. And print outlets, which tend to drive from one deadline to the next, tend to be dominated by individuals who can fill up column inches, but may be spotty on careful analysis outside of a very narrow range of interests and areas of expertise. We know the fourth estate plays a fundamentally important role in liberal society, but of late, we have done all too little to hold the estate to account and to demand it to be more imaginative, useful, and effective.

While much of the basic intuition involved has come to me through being involved in the arts, the argument is the same for the restaurant business or booksellers, or more mundane enterprises like hardware or shoe stores. Moving around in a given locality opens up the possibility for more interaction. Some of these interactions will be informational, some social, and some transactional. While the last one most directly affects economic performance, the additional motion in any dimension will almost certain produce more friction and heat. If changed correctly, that energy could be vitalizing for a given economy or society.

Within Putnam’s findings the possibility exists for policymakers to take on the problem of “hunkering down.” The three targets seem fairly clear. The benefits for a city like LA, or even a smaller but still diverse enclave, seem potentially large. How large? Hard to say, but it beats staying at home and worrying about it in front of the TV set.

Titus Levi