The “engineers” are the guys who make bug bets and try to pick winners. The engineers build groups like JumpStart, which can pick a few companies for some targeted investment in the hopes that a couple of them will grow (thus far, not so much).

“Farming” suggests that entrepreneurs grow businesses when a community enriches the environment, works hard to reduce obstacles to success, makes help available to folks who need it, when they need it, and otherwise stays out of the way.

The health plan, for example, and the workers comp plan, reflected the idea that, while small businesses create the majority of new jobs in the local economy, local non-wage labor costs, especially for health insurance and workers compensation, made job creation more expensive for small businesses than for large ones. Reduce those costs, and you reduce an important barrier to job growth.

The organization also offered management education programs to companies with shared levels of development…start-ups, surviving, and growing…and free management advice to over 1400 entrepreneurs a year.

Alas, those days are gone. COSE’s parent, GCP, knows how to do one thing: use the political process to capture (or hijack) public dollars to promote private development. Any job development which occurs is a distant, coincidental benefit to the organization’s main objective: making a few developers, lawyers, and investment bankers rich…with your money.

And COSE found that, with its membership stagnating because its health plan was no longer competitive, it would be much more profitable if it stopped trying to manage its health plans and just became a passive marketing channel. Today, three-quarters of its income comes from commissions on the health plan: a hidden tax imposed on participating companies.

So you’re right. The tens of millions of dollars Cuyahoga’s public and private sectors invest in “economic development” is largely tossed down the sewers. That’s because the only economy our “leaders” have any interest in developing is the economies of a few inside players, at the expense of everybody else. The opportunity costs are tragically huge. But that means nothing to our institutional “economic development leaders.” They have VERY cushy jobs, VERY nice compensation, and as long as their bosses are happy feasting at the public trough, things just couldn’t be better. After all, THEIR economies are doing just fine…

I spent the last couple months hanging around Cleveland’s Gordon Square Arts District, which is anchored by Cleveland Public Theater. To see the critical mass which has begun to propel that neighborhood is quite refreshing (very few economic development groups have been involved at all), and is a tribute to the folks who made a commitment to CPT 25 years ago. It’s a great story,

And…It’s hard to overestimate the role that artists…and those who think like artists…can have on innovation…They’re wired differently, and much of their success is the result of individual effort and entrepreneurship, and risk-taking. Too many organizations are run by accountants. It’d be great to see Cleveland actually embrace its emerging creative class, and come to understand the value which creative individuals can make to a companies’ vitality.

The idea was to pursue a “farming” strategy: enriching the environment by 1) reducing the cost of creating new jobs by lowering and containing health insurance and workers compensation costs, 2) providing entrepreneurs of all stripes with access to the answers (as opposed to merely information) and assistance they needed to be better managers, and 3) advocating for specific regulatory relief and legislative changes to reduce government-imposed barriers to growing a small company.

You didn’t need a Harvard MBA to qualify for assistance. You didn’t need to be in a “targeted industry.” You didn’t need to be in pursuit of equity investment. The programming was geared to be accessible to anybody with a good idea and the desire to start a business.

In a typical year, we’d reach 4000-5000 people with management education programs focused on specific stages of business growth, and provide direct help to 1400-1500 entrepreneurs per year.

The strategy worked for awhile. Into the ’90’s, surveys showed that, while the business start rate in the region was lower than average, the percentage of those companies which started and survived five years or more was a little higher.

And of course, COSE was rewarded with a membership which grew an average of 1000 companies per year (net of losses) for a dozen years straight…and Cleveland got national recognition for the dynamism of its small business ecosystem.

Alas, all that went out the window in the mid-’90’s. COSE is now an insurance agency, generating the vast majority of its income from commissions on insurance sales. After more than a decade of stagnation, membership is in decline…a reflection of both customer satisfaction and the quality of its programs and services.

Yet another missed opportunity…

There is a massive opportunity cost to channeling tens of millions of dollars to organizations which seek to pick “winners” in a local economy, whether the 12-15 companies which obtain financing through JumpStart or the developers building our publicly-financed private temples of commerce.

But it’s more fun, and has the symbolic value of giving our “leaders” golden shovels to wield, ribbons to cut, and specific buildings or companies to point to as surrogates for economic development.

What would our region be like if it invested 25% of what it invests in those activities in real hands-on support and advocacy for those many, many thousands of grass-roots entrepreneurs who invest all they have in their businesses, and just go about their businesses from day to day?…