ImpactAlpha, July 30 – Democratic candidates have a chance to turn resistance into revival.
In this week’s debates in Detroit, policy wonks will spot in the planks of the presidential candidates proposals that draw on efforts for broad-based opportunity and ground-up economic growth that have been percolating for years in towns and cities across the U.S.
When Kamala Harris last week introduced a plan (“Reducing the opportunity gap”) to invest $12 billion to fund and support minority small business owners, she became at least the sixth Democratic candidate to do so.
Proposals from Cory Booker (“Paying it forward”), Elizabeth Warren (“Level the playing field”), Pete Buttigieg (“The Douglass Plan”), Beto O’Rourke (“America’s small businesses”) and John Delaney (“Commitment to Black America”) also include startup and business capital or support for women or entrepreneurs of color.
“If we’re going to get more jobs, it has to come from people of color,” Living Cities’ Ben Hecht told ImpactAlpha in an earlier interview. Living Cities and other investors have long worked to bridge barriers to capital that have stifled entrepreneurship and job creation, especially for founders of color. Still, at least 83% of entrepreneurs do not access bank loans or venture capital, according to the Kauffman Foundation. As the U.S. population mix changes, more investment is needed to ensure that the entrepreneurial mix keeps pace.
Policy matters. Smart tax incentives, subsidies and risk reduction can mobilize capital quickly, as Opportunity Zones already have shown.
The 2017 tax bill’s provisions for “Opportunity Zones,” which provide incentives for investments in low-income rural and urban neighborhoods, have attracted some 330 funds seeking to raise more than $100 billion. (The Opportunity Zone provisions were originally authored by Booker, with South Carolina Republican Sen. Tim Scott). But the details matter if policy is going to deliver true impact (see, “How and why to measure the impact of investments in Opportunity Zones”).
In the debates this week, Booker and other Democratic candidates will seek to move beyond resistance and stake out the foundations of an inclusive economic revival.
Good jobs and new skills. In a low-unemployment economy, it’s not only jobs, but quality jobs that are needed to drive broader prosperity that is inclusive of workers of all ages and skills (see, “Memo to candidates: Impact investors have a quality jobs agenda”). Impact investors and entrepreneurs around the country are already making bets that competitive companies need employees who are engaged in a superior way, which requires superior human capital investment. Most democractic candidates support at least a $15 federal minimum wage and support workers’ rights to form unions and bargain collectively.
Cory Booker and Tim Ryan have called for boosting apprenticeship programs. Kamala Harris wants she’d put $60 billion in science, technology, engineering and math education at historically black colleges and universities. Joe Biden would stand up against wage suppression through the growing problem of non-compete clauses. Bernie Sanders’ jobs guarantee would put millions to work rebuilding infrastructure and supporting schools and seniors. Jay Inslee’s Evergreen Economy Plan would invest $3 trillion over 10 years (along with $6 trillion in private capital) to build America’s clean energy future, while creating 8 million jobs.
Smaller is beautiful. Competition is the essence of capitalism, “yet it is dying,” write Jonathan Tepper and Denise Hear in The Myth of Capitalism. The U.S. economy has become increasingly concentrated since the 1980s, with fewer firms controlling more market share in a majority of U.S. industries. Across the country, a set of investors and entrepreneurs are deploying financing and ownership structures designed to prevent or even reverse the accelerating trend toward monopolization (see, “New trustbusters aren’t waiting for government to democratize the economy”).
Democratic candidates are making the case that a more balanced distribution of industry power is good for entrepreneurs, investors and consumers. Elizabeth Warren’s Accountable Capitalism Act aims to shift corporate accountability from shareholders to stakeholders, akin to the benefit corporation model, and allow workers to a bigger say in electing company boards. She would take the fight directly to Big Tech and spin off large tech platforms as “public utilities” and reverse mergers she calls anti-competitive. (Amy Klobuchar says she’ll tax companies that exchange the private data of their users.)
Bernie Sanders is taking aim at Wall Street, where he would break up “too-big-to-fail” banks that he says pose catastrophic risk to the nation’s well-being. Sanders would also challenge corporate consolidation in food and agriculture where he would target agriculture subsidies to small- and mid-sized family farms rather than a handful of the largest producers and invest in new farmers to purchase land and equipment for sustainable farming.
Building assets for economic security. Jobs can provide income, but assets may have more staying power. Public policy has largely failed to provide pathways low-income households to accumulate savings and assets. Such ownership can help provide economic security, the ability to weather unexpected events and a stake in the commonwealth.
Booker’s “baby bonds” are federal interest-bearing savings accounts that would be opened for every child at birth, giving even the poorest kids access to nearly $50,000 by age 18 for starting a business or paying for education. Bernie Sanders would provide an incentive for community ownership of farmland to allow more people to produce food locally.
Andrew Yang is proposing a universal basic income for every American over 18 of $1,000 per month, similar to a Republican-originated program in Alaska (see, “What Alaska’s oil dividend can teach us about Universal Basic Income”). Amy Klobuchar would require employers to contribute to the retirement plans of their employees. Julian Castro wants to increase economic links between the U.S. and Indigenous communities. Kirsten Gillibrand would expand access to affordable banking services and eliminate predatory lending by creating postal banking.