Is your city racing to the bottom or the top?

Playing the low-price game is a common economic development strategy, but that doesn’t mean it’s a good one.

Jordan Clark
Feb 11, 2019 · 12 min read
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Price vs. story

When you’re selling something, you have a choice to make about how you will position yourself to the market. You could make a play for the customer looking for the absolute cheapest graphic design job, for example. You’ll find you have a lot of competition for this position, though. And because this isn’t a question of quality, you’ll step into a race to the bottom. There is always someone, somewhere, willing to do the same thing, more quickly, more haphazardly, and for a few pennies less per minute.

In a “sort-by-price” world, though, you should be careful getting into a race to the bottom. Because, as Seth Godin is fond of saying, you might win. “Even worse, you might come in second.”

On the other hand, you could shun the low-price game altogether. Because “lowering the price is a one-directional, single-axis choice. Either it’s cheaper or it’s not.”*

You might instead decide that trading in trust, quality, identity, or story is more important. You could decide that, despite the hard work it will entail, you’re better off in the long run by creating something that people don’t want to give up. Something that they were never buying based on price tag to begin with.

“Every great brand (even those with low prices) is known,” says Godin, “for something other than how cheap they are.”

Cities are selling something, too

In many ways, the same is true of cities. Cities aren’t exactly businesses, for a number of reasons. But, like any business, they can’t operate at a loss for very long. They rely on revenues to keep the lights on. And whether they have a proper sales pitch or not, cities are selling something. They’re communicating: come to our city, stay here, make things here, do business here — or they’re communicating the opposite.

Just about every municipality has an economic development program of some sort. And in the economic development game, as with any person trying to sell something, cities (and regions) have options for how to position themselves.

They could choose to play the low-price game — and many do. There are cities and towns across the country that, in an effort to “attract jobs,” offer all kinds of tax incentives and giveaways if this or that corporation would just agree to set up shop for a few years.¹

But just like the person offering graphic design services for peanuts, you will constantly be competing with many others willing to charge even less (meaning, of course, you have less to live on and fewer resources to grow your capacity with). The threat of being undercut is always there. It’s a race to the bottom.

The low-price game is a common economic development approach among cities whose leadership believes they have nothing else to offer. In reality, it is a desperation play, and it looks like one, too. It will almost always attract corner-cutters, rather than long-term stakeholders. And it is imminently fragile. The moment a better (more extractive) offer comes along somewhere else, the type of “customer” you’ve attracted has no real motivation to stay. They were there for the low price, the tax break, the 0.1% bump in profits for a few quarters, after all.

“You might make a few more bucks for now, but not for long and not with pride. Someone will always find a way to be cheaper or more brutal than you.”

What a race to the top looks like for cities

But of course, there is a different way for cities to attract and sustain population and businesses. And that is by recognizing that you’re stronger in the long run if you cultivate a city that people never want to move away from. A place where people love to be. In this version, you choose to tell a story, to stand out, to focus on being (as my colleague Kevin Shepherd likes to say) “the best you you can be.”

There are cities — big and small — that do not have to beg and plead for people or businesses to move there. These cities already have so much going for them that people move there without having a job, because they just want to be there. That businesses set up in because, well, that’s where people want to be. It turns out, it’s much easier to attract new employees to a desirable city than a city whose main selling point is that it’s cheapest place to set up shop.

It’s easy enough to see this play out in a few of our superstar cities. San Francisco and New York and Vancouver will have no trouble remaining attractive places for people and businesses. They’re attractive because they’re special, not because they come up first when you click “Sort by price: low to high.”

But cities like these by no means have the market cornered on being attractive places. Your city does not need to be a global economic powerhouse to be special (though these places became economically important due in no small part to their specialness). Cities like Northampton, MA, and Asheville, NC, are examples of this. Or look at any of the winners of past Strongest Town contests (like Muskegon, MI; Traverse City, MI; and Carlisle PA).

So if it’s true that “every great brand is known for something other than how cheap they are,” how do cities position themselves for a race to the top? How do they become known as great places, lovable places, cities with a story people want to be a part of?

In short, they focus first on their people. On what it is that makes people comfortable and happy. Luckily, we know what a lot of those things are. Cities can’t just make people love them, but city decision makers can create many of the right conditions with the tools at their disposal. They can choose to be a people-centric city.

Peter Kageyama takes on the subject of what makes cities lovable in his book For the Love of Cities. For him, a key point is that “the city as a whole is made by a relatively small number of ‘co-creators.’” These co-creators (we’ve featured plenty on our podcast) often “act without authority or centralized direction, and it is from their creative efforts that the rest of us benefit.”

Openness, social offerings, and aesthetics

There is no magic formula to becoming the city whose story people desire to be a part of. But there are things they tend to have in common. They are a mix of physical and social elements — and more often than we might think, those two are closely intertwined.

A few years ago, the Knight Foundation and Gallup ran a three-year study called “Soul of the Community,” which aimed to identify what it is that makes people connect emotionally with their city. The study concluded that the three most important factors in cities becoming lovable places were (in rank order): openness, social offerings, and aesthetics.

Kageyama highlights this study in his book. Openness, the most important factor, does not just mean “diverse” or “tolerant.” It means the city is a “good place” for young people, old people, gay and straight people, racial and ethnic minorities, families with kids, immigrants, and so on. “If people are cool with those other folks looking or acting differently, they will be OK with me and my differences.” For the co-creators mentioned above, “openness is synonymous with opportunity; the opportunity to make a difference, make changes, to create something different, unusual or untried and push it into the consciousness of the community.”

Social offerings, put simply, means there are fun things to do, and good, convenient places to meet up with others.

Aesthetics, while not absolutely essential, are definitely important. Appreciation of beauty is built into our DNA. We connect to places that have pleasing appearances and proportions. Although we find it possible to love ugly places, it’s usually because they’ve made up for it in other areas.

Creating the right conditions for stronger local economies

These aren’t things a city can just snap its fingers and produce. But now that we know what we’re after, we can identify some ways to put the conditions in place for a city to become lovable.

If the goal is to grow the city’s economic vitality and sustainability, then laying the groundwork for locally owned businesses to thrive is key. And these days, in many cities, local businesses (and the individuals of all means behind them) need a leg up or two just to level the playing field with national chains. Below are some suggestions your city could incorporate into a much broader economic development strategy.

A smaller approach to economic development—programs to invest in now

Courting corporations from elsewhere is an understandable strategy. At this point, it’s the norm. And we’re social creatures; we look to those around us to make sure we’re not crazy. But we have enough evidence from enough cities who have seen the dollars leave town as they’ve become more dependent on outside companies. The good news is that there are many good examples from around the country of cities who have decided to make investments in their citizens and their ideas. Here are a few strategies:

  • Instead of searching for businesses based elsewhere, amplify your efforts to cultivate a vibrant local business scene. Start an economic gardening program. Encourage citizens and local businesses to bank with local banks. Find the most vulnerable and underserved populations in your city, and offer entrepreneurship resources like financial literacy training and access to credit at fair market rates (like Local First Arizona’s Fuerza Local has done in Phoenix — great podcast interview here).
  • Look for the old buildings in town with good bones that, with a bit of loving restoration, could become unique spaces for retail, apartments, co-working spaces, libraries — whatever the neighborhood needs. People are drawn to the character of older, repurposed buildings, but the up-front costs to renovate may be too much of a hurdle for local businesses that could make use of the space. A program to finance some or all of the building renovation could prove a better investment than a tax abatement for a new formula store on the edge of town.
  • How to fill the new space? Chances are pretty good there all kinds of folks in your city who have ideas for a business that would serve their neighbors in some way. Host a “Shark Tank”-style competition, where people propose their ideas, citizens vote, and the winners receive a grant (and a physical space) to kick-start their business. (And while we’re on the Shark Tank subject, how about a “Small Developer/Builder Shark Tank”?)
  • Old buildings in the city’s core are always a great place to start, but you don’t need a historic building to create a viable space for local entrepreneurs. Just try copying what our friend Monte Anderson did in DeSoto, Texas, where he helped turn an old hardware store into a maker space — and its parking lot into a gathering space with food trucks.
  • The rehab shouldn’t stop at commercial buildings! Take a page from the folks at the Oswego Renaissance Association, which provides “resources, technical assistance, education and services to revitalize homes, downtown businesses, promote historic preservation and build positive communities.” The program put the power of neighborhood pride to work, and it did so at what initially looked like a very small scale. But little by little, the economic impact has spread — and five years in, the program already looks like a smashing success.

Development, land use, and growth management

So much of what makes a city or a neighborhood a good place to be revolves around the built environment. Some places have a physical makeup that people find enjoyable and comfortable. I’ve heard Nassim Taleb call them “village-y” places; planners and designers use words like “human-scale,” walkable, and traditional neighborhoods. “Village-y” places allow us to get around on foot, to accommodate different people’s different needs, to interact with each other with more regularity and less effort. They make parks and gathering spaces and “fun” stuff (as well as just necessary stuff) more accessible and convenient.

The thing is, we’ve made them a lot harder to come by in the past several decades. But the old ones are still around. And the longer our automobile experiment has gone on, the more the value of these places shines. In many cities, these are among the most expensive places to live. Demand is high, but the supply is still too low. Making our cities more people-centric should be considered a central pillar of any race-to-the-top economic development strategy. Here are some ways (big and small) to make an impact economically by thinking differently about land use and development regulations:

  • Find out the ways your land use policies discourage “village-y” places, and amend them to require walkable development. Zoning code overhauls and comprehensive plans are big undertakings, but they drive daily decisions—and that’s where the real change is made.
  • Update your city’s zoning code and land use plan to encourage the creation of more “missing middle” housing. This provides more naturally affordable options for people in different life situations. The medium density they establish make neighborhood businesses more viable.
  • Begin cultivating a community of local small developers who are committed to viable, small-scale developments — including missing middle housing and commercial. Host a Small Developer Bootcamp or Workshop.
  • Plant more street trees. If you want to make a place more walking-friendly, and aesthetically pleasing, planting street trees is a great investment. They also increase the value of the properties along the street. (They work best on walkable blocks. You won’t gain as much from planting trees along a stroad.)
  • Allow your city’s built environment to flex and grow — from within. Allow by-right redevelopment to the next increment of intensity, and allow businesses and and housing units to coexist.
  • Instead of allowing (even incentivizing) new businesses or homes to be built out on the edge of the city, where they’re expensive to service, steer development toward the city’s core. Infill development around existing infrastructure is a better return on City investment, and it also reinforces the viability of your city’s downtown.
  • Begin “right-sizing” streets in neighborhoods where economic activity is concentrated; make them more friendly to walking and less subservient to vehicle traffic. People gather in places where they can comfortably walk around. Moving cars can be a genuine barrier to people’s enjoyment, and continued use, of a given destination. And this has a negative economic impact. Look for places to reduce traffic lanes, narrow lanes, create shorter crossings, add bike infrastructure, expand sidewalks, and add texture to the pedestrian realm. Jeff Speck’s Walkable City Rules is a great place to start for some good ideas.
  • Want help quantifying the return on investment for different types of development? Want to understand the resource gap between your city’s needs and available resources, so you can make the case for more economically viable land use, design, development, and economic development decisions? That’s our jam. (Listen to an early episode of our podcast about how fiscal analysis can change the conversation. Then give us a call.)

These two lists just scratch the surface. If I asked my colleagues at Verdunity, undoubtedly they’d point out dozens of great ideas that haven’t come to my mind while writing this. And that’s the point. We’re lucky enough to have so many resources at our disposal for making our cities stronger. But they’re only worth seeking out if you’ve decided the race to the bottom isn’t for you.

I’d like to end on a point that Joanna Taft made in her discussion on the podcast with me last year. The basis of community, she said, is that “all human beings want to be known and loved.” Community building, in her view, involves making sure that all people have a voice, giving them recognition, “elevating their story” to the point that they know they belong. In other words, a lovable city is one that loves you back. After all, it’s people that make a city. And the more we can invest in the types of environments — physical, social, business — that facilitate a life-giving story that people want to (and can) be a part of, the more resilient our local economies will be.

  1. My colleague Felix Landry has pointed out that “jobs” is not the same thing as residents, and it is quite possible that your city is merely subsidizing population growth for the town next door, especially if that town has better amenities and more entertainment options.

This story originally appeared on We also have a podcast, and you’re not going to want to miss that, so check it out here. Or subscribe in Apple Podcasts.

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