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Sunday 27 December 2009
Urbanist's Economic Prescription Might Make Good Medicine Today

According to Jacobs, the engine of economic life is “import-replacement.” What this somewhat clunky term means is making the products you have been buying. For example, much of New England, where I live, is rich in hardwood forest. But there is no large-scale furniture manufacturing here. Aside from what a few artisans produce for a mostly upscale market, it’s imported: Our tables, chairs and bed frames are made from fast-growing trees in Southeast Asia, shipped over and stained to look like oak, maple or cherry. If made here, we’d no longer be dependent on furniture from elsewhere; workers here would apply their own innovations to create their own products and techniques and we’d have more products to trade with other places.

This process, replicated over and over and on a large or small scale, invigorates the economy. Workers gain skills, capital gets invested in new equipment, trading partners emerge, consumer taste gets more sophisticated, etc.

This does not happen when a large corporation plunks a factory down in a derelict neighborhood or rural outpost. But that has been the favored approach to perk up an area’s economy. The upshot is that the population becomes reliant on one industry that may not be appropriate for the setting. Supplies get shipped in from elsewhere and other wealth-producing activity languishes.

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