Want to solve short-termism? Invest in Cities
We are hearing a lot about short-termism this political season.
Hillary Clinton has called for an end to the “tyranny of short-termism” and the focus on quarterly earnings reporting in corporate America. Recently, Senators Bernie Sanders and Elizabeth Warren came out in favor of a bill to limit activist hedge funds, which they claim value short-term returns over long-run sustainable growth.
On the Republican side, former minority leader Eric Cantor cast a wider net, calling short-termism a problem not just for the private sector but for government and politics as well. “Where they have something in common,” he said, “is this lack of trust or faith in institutions.”
These Washington assessments of the forces driving short-termism tend, not surprisingly, to lead to federal proposals to curb the practices of short-term actors. I suggest another approach: provide more support for the places—cities and metropolitan areas—that are already thinking and acting for the long term.
Since their inception, cities have been built to invest in the future—in quality, enduring infrastructure to move people, goods, energy, and ideas; in the creation of authentic and vibrant places and destinations; and in the schooling and skilling of people to help them reach their full potential.
Cities do these things through a mix of investments by a broad range of public, private, and civic investors that cut across sectors as well as jurisdictional and disciplinary lines. Of course, cities are not exclusively governments, but rather broader networks of institutions and individuals—homeowners, universities, hospitals, philanthropies, private businesses, utilities—that are committed to, and fundamentally depend upon, the betterment of their place.
Unlike the short-termers, these urban stakeholders are patient investors, committed to long-term value appreciation and broad prosperity rather than the quick buck. They are both stewards of the past and foundation-setters for the future. Rather than viewing the city as a collection of separate and unrelated investments, they see it as a unified asset and recognize the synergistic effect of disparate investments—housing, infrastructure, education—that strengthen and reinforce each other’s value.
Examples of long-term investment—public, private, and civic—abound in our cities. Voters in Los Angeles, Denver, and Seattle have approved dedicated taxes to invest in state-of-the-art transit systems; voters in Broward County, Fla., King County, Wash., and San Antonio, Texas have done the same to invest in children. Major anchor institutions like Carnegie Mellon University in Pittsburgh, Drexel University in Philadelphia, and Texas Medical Center in Houston have embarked on significant expansion plans that are catalyzing the regeneration of adjoining neighborhoods and the growth of entrepreneurial companies, affordable housing, and locally serving businesses. The rebirth of entire sections of Detroit is being led by an eclectic consortium of philanthropies like the Kresge Foundation and corporations like Quicken Loans.
If the next president is serious about mitigating the broader issues around short-term thinking, he or she should commit to empowering the long-term institutions in our cities. This can be accomplished any number of ways: by increasing federal investments in basic science and applied research (the fuel for long-term growth); by locating satellites of isolated national energy and military labs near urban universities; by using new credit enhancement tools around transit systems, water infrastructure, and urban rail stations to attract large-scale private investment; by increasing flexibility in federal grants to local communities to let leaders on the ground decide the uses with the highest impact; and by standardizing and disseminating data—on new instruments like social impact bonds or regional venture funds—that gives city networks the market intelligence to make smart decisions.
The next president, in short, needs to recognize that cities and metropolitan areas require long-term financing in many forms and from a variety of sources, often pooled and combined in intricate mixes, to shape their economies, make quality places, and equip their workers with the skills they need to compete.
Classical philosophers coined the term ars longa, vita brevis—art is long, life is short. Perhaps it is time to modernize this maxim for our urban age: life is still short, but cities are made to last.
This post originally appeared on the Brookings Institution's Metropolitan Revolution blog.
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8 年"invest in cities" Translation: More government spending that enriches cronies. That won't solve short-termism. It will only enrich cronies. To solve short-termism, outlaw offshoring and outsourcing. When people can't keep their jobs because the CEO is looking to layoff people to get a big bonus check, that destroys the very cities you're trying to build up.
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8 年Managers, take note. Businesses need to have long term goals, and they must be willing to forsake short term gains if they do not lead to long term sustainability. We have become slaves to the immediate. We worry about winning a battle, but not about winning the war. Sometimes, we have to step back and look at the big picture, but few are actually taking that step and as a result, we are harming ourselves, our future, and the future of the next generation. Tend a business as you tend to your children. Guide them, give them what they need, not always what they want, and lead them to become productive, healthy, and able to sustain their offspring.
Infrastructure/Technology Project Management Consultant & Artisan Baker, Japan & Switzerland
8 年Short termism is easy to get rid of, but I doubt any politician really wants it. Measure #1: Impose voting regulations on joint stock companies Shares should only grant voting rights after they have been hold for a certain amount of time, for example 1 year. Unless you held these shares for at least that time, they will be non-voting stock. Measure #2: Impose capital gains tax depending on gain/time ratio Capital gains should be taxed depending on how much time has passed during which the gain was achieved, the shorter the time, the higher the tax. This is almost trivial. The only conclusion we can draw is that despite of what politicians are saying, they do not really want to do anything about the problem.