Public Subsidies and the Role of Suburbanization in Urban Economic Development: A Reply to Timothy Bates

Abstract

This article commends Professor Bates’s analysis of the Minority Enterprise Small Business Investment Company (MESBIC) program, acknowledging its important object lessons: that size, excellent management talent, and effective cost and risk containment are critical to MESBIC success. I challenge, however, Professor Bates’s implicit indictment of the Clinton administration’s signature community development initiatives. The article argues that such community development investments are justified and should be understood as a small but important component of an overall strategy to connect economically marginal communities and the citizens who live there to the regional economy. More important, this article argues that the next wave of community development strategies sponsored by federal and state government ought to squarely address issues of regional inequity, avoiding subsidization of rapid suburbanization in a manner that exacerbates interjurisdictional disparities of tax-base wealth and of citizen opportunity.