Moving the Needle

Christopher (00:02.262)
Bruce, welcome to Moving the Needle. We're excited to have you. And as we get into this conversation, you've been at this work for a while now, really thinking about how can cities and regions develop a set of strategies to be able to boost inclusive innovation, think about sustainable economic growth, being able to leverage federal resources, state resources, to be as thoughtful and impactful as possible. And those are.

complex questions. And again, starting back from your days with the US Senate, and then going to work as Chief of Staff and Henry Cisneros over at HUD, we thought it'd be helpful maybe just to frame this up for us in terms of your own journey and what have been some of the key inflection points that you've learned along the way about what helps cities thrive in this ever-changing dynamic.

Bruce Katz (01:02.144)
Well, first of all, it's just great to be here and congrats to both of you for doing this. You know, this has been a long journey and I grew up in Brooklyn, New York in the day. So different Brooklyn, New York than the one that exists today. And I think when you think about cities, you know, in the mid 1970s and then through really good portion of the 1990s and what they were dealing with.

was a sort of radical decentralization of the economy of the US and some serious social ills that they were grappling with, you know, whether it was, you know, gang warfare, drug trafficking, crime, disorder. So a lot of my, the early part of my career was dealing with some pretty heavy dystopian stuff.

particularly when I made it over to, you know, HUD with Henry Cisneros. The trajectory of cities since that period has been, in some ways, quite positive, but it's been, you know, in the context of a national economy that was overly globalizing, offshoring, outsourcing, and diminishing.

the manufacturing base and the middle class base in this country, which has led, I think, to the some of the partisan divisions we have today. So I think what is happening now, the most exciting thing, mostly because of global geopolitical tensions, is the US is beginning to realize that it needs to make things again. And so we are in a period of

remilitarizing, reshoring, and decarbonizing. And cities, frankly, now need to find their space and their place in that economy. Because I think a lot of cities perfected what I would say is the consumer economy, the tourism economy, maybe the office economy, but that world, some of it still persists, but.

Bruce Katz (03:25.32)
I think we've entered a different period of economic restructuring. So there is a big major challenge affecting US cities right now as these bigger global forces are playing themselves out, catalyzed in some respects by federal funding. I don't think we're there yet. I think we're early days.

Johnathan Holifield (03:47.928)
Thank you. Bruce, over your arc, as Christopher called it, we've seen cities evolve from the 70s to where we are today. One constant in underserved, underestimated communities within our metropolitan areas. That infrastructure has largely remained the same.

It's from perhaps the great society of the 60s to today. It's largely unchanged. While we've seen regional collaborations and regional clusters and innovation economies, et cetera, now we're into a new frontier. Is there an opportunity to...

jump to the head of the line, if you will, and get in the game with this intersection today in a way that we weren't in the last 40 years or so. Is this a unique time to be active and paying attention?

Bruce Katz (04:56.568)
I think this is a remarkable moment because if you think about the stresses involved from taking an economy that willingly, I mean through policy choices and then through choices of capital providers decided to essentially dismantle its industrial best with some exceptions.

So we did that over the course of 30, 40 years. I mean, the steel crisis in Pittsburgh goes back to 1979. So this is, you know, 40 year old deindustrialization. We're now reindustrializing in a decade. What that's doing is it's basically compelling the Department of Defense, major companies to realize we have major workforce issues in the United States. And to bring

people in many of these disadvantaged communities into the middle of the industrial economy is a real possibility if we're able to sort of motivate, you know, community colleges and special high schools and so many other parts of the education business, you know, relationship. But there's also locational issues that are possible with this industrial transition because, you know, the...

the sort of cartoon version is we're building large semiconductor facilities and electric vehicle assembly facilities at the periphery of metropolitan areas because they need a thousand acres or however many acres. But the supply chain of industrial manufacturing firms can't be located and are located in the St. Louis's of the world, the Detroit's of the world, the Birmingham's of the world. So this is a moment where...

if you can understand these broader dynamics and then ride the wave, they can fundamentally be to the benefit of workers left behind, small, medium-sized businesses and communities. But it won't happen without some intentionality. And it's gonna require radical collaboration.

Johnathan Holifield (07:15.02)
Mmm.

Bruce Katz (07:15.276)
between all layers of government and sectors of society because there's an ease to building, you know, 20 or 30 miles outside the core cities or older suburbs on the other side of the region. And I think what we're describing, you know, is sort of the, I think the 21st century started in 2021, I suppose.

You know, and I think we, you know, we're still operating with a lot of policies, institutions, and frameworks that feel like they're from a different world. And somehow, we just need to accelerate this transition radically.

Johnathan Holifield (07:57.7)
Quickly, Bruce, what I'm hearing you say is perhaps, perhaps not in our national history, have these forces aligned to create more optimal conditions, still gotta execute to bring more folks, more Americans into the national economy and the productive, the most productive areas of the national economy.

Because we need them. We were dominant in the 20th century with one hand behind our backs. Today we need more talent and the only place to get them is in these areas of the whole nation.

Bruce Katz (08:42.616)
Well, I do think that these market dynamics have an innovation imperative, they have a diversity imperative, they fundamentally compel addressing some of these issues from a market making wealth building perspective, as opposed to just poverty reducing, which I think has dominated a lot of the conversation for a long time. But I...

This shift is happening so fast in a very vile period where we're politically divided in the United States. But in the last two years, we've seen Russia invade Ukraine, we've seen the Middle East implode. We have serious threats in Asia because with Taiwan and...

and beyond. We've entered a different world, whether this is a new cold war which will persist for 30 years. I don't know what this is, but it is a different world. The world's a dangerous place right now. And this fundamentally affects the United States across many dimensions. Many, many.

Christopher (09:58.466)
Well, one of the things that you've talked about, Bruce, is how the macro intersects with the metro and trying to think about this idea of, you know, how do these macro trends affect and impact our metro areas and how do we think about it within the context of place-based systems change and to your point about this idea of intentional radical collaboration to be able to make sure that cities, regions, states are in a position to be able to harness and understand the macro.

context, and then be able to react positively to it in a way that leads to better outcomes for the overall population, not just at the national level, but also at the state and city level. So, in that spirit of radical collaboration and intentionality, it strikes me that there's a couple of different things that you've touched on, but I want to tease out a little bit. One is for a region to be really thoughtful about what its asset base is.

and be able to figure out ways that it can best differentiate itself within this industrial, this new re-industrialization that you're talking about. And then to do it in a way as Jonathan was just talking about with real intentionality around inclusive growth, which is, and those two things are not necessarily connected to one another. We do have a unique opportunity, I think, but it would be really helpful to get your take on.

Johnathan Holifield (11:07.771)
Thank you.

Christopher (11:25.654)
when cities are thinking about this, how do they think about both of those layers of intentionality, how they can compete and how they can do it through inclusive competitiveness to yield more wealth generation and not be in a situation where we're just further exacerbating some of the economic divides that face us.

Bruce Katz (11:46.232)
Well, I think you started to hit on the head. I mean, first of all, cities or more broadly metropolitan areas, or frankly, even more broadly regions, are going to have to resituate themselves in a radically different economy. So we've started to do a different kind of diagnostic where we understand, you know, for a given place, right? And cities not really the right geography. The bigger geography is...

Metro and beyond, but for a given place, what kind of investments are you getting year in, year out, direct from the national government and particularly the Department of Defense? I mean, the federal government for the most part is a healthcare company with an army. That's what it is. So when you start disaggregating what it actually buys, it's the largest purchaser of goods and services in the world.

What it's buying is a whole bunch of stuff to support our medical system, which is 18% of GDP and our military. I mean, that's what it's doing. And then occasionally it wakes up and does a few other things. But, you know, I, so understanding clearly, you know, what your starting point is, you know, do you have a large defense installation? Do you have major military production efforts because we're building the next generation of submarines and fighter jets.

Johnathan Holifield (12:40.14)
That's right.

Bruce Katz (13:08.988)
etc. Drones, I mean, a lot of this is new technology. And do you have R&D, which is basically engaging with our defense, but also life science and energy? All these are fundamentally interrelated, frankly, to national security. So you need to understand your position in that big investment. Secondly, you need to understand your starting point with sensitive technologies like robotics and artificial intelligence.

a whole bunch of energy related technologies that are shaping our domestic economy, the global economy, and affect our national security. The third is green supply chains, because those supply chains are pretty sophisticated. But you don't want to just be a consumer of stuff that someone else is making somewhere else if you've got the ability to be an innovator and a producer. And the last is sort of trade and investment. Because that's shifting. I think today's New York Times...

reports that Mexico has overtaken China as our largest trading partner. No surprise there. We are nearshoring, we are friendshoring, we are doing it very rapidly because of these global threats. So you got to residuate yourself. I do think, Christopher, what this forces places to recognize is the old model of metropolitan statistical areas, which are based on commuter sheds. People waking up in one county and crossing the county line to go to work somewhere else.

may no longer hold for essentially an industrial economy, where basically supply chains and talent pools and company sort of relationships may force you to look at some broader regions. For cities, I think they need to fundamentally realize that they have a piece of this pie, it's not the full pie.

And it's all happening as remote work is playing itself out. So their central business districts are experiencing a level of office vacancy they haven't experienced in decades. That could be an opportunity to transition to something more pronounced, but it's not just gonna be the experience economy. It's gotta be rooted in this innovation and production economy. I think all of this has the potential to be inclusive because

Bruce Katz (15:32.052)
We have serious labor shortages and we have demands to take existing infrastructure, logistic sector and beyond, and have them realize their full potential. But most places have lost their muscle memory. I mean, they were really taught, we're the post-industrial city and that's over. And we're all moving forward to we'll just buy our goods from Asia or somewhere else.

Look, we were sold the bill of goods here, and at the end of the day, it destroyed a good portion of the middle class and completely upheaved our politics. So we're finally getting sane, but I think it's primarily because the world's a different place. I'm not sure if the world had remained in some kind of peaceful dimension when we were doing this, but I think we are adapting. But in terms of the country, as always.

There's a bunch of first movers, there's a bunch of fast followers, and the rest of the country hasn't gotten the memo yet.

Christopher (16:37.58)
Go ahead, Brit, Jonathan.

Johnathan Holifield (16:39.236)
Quickly, Bruce, you have an idea of our advocacy and what we're about with the podcast.

Would you support the statement that economic disparity is both a national security and a national competitiveness imperative?

Bruce Katz (17:00.308)
Well, it's definitely a competitiveness imperative. I don't think we can, you know, re-industrialize at the pace we need to re-industrialize without reaching it to some communities that have really been off the map. I mean, they've been hidden in plain sight, to tell you the truth. But it's, I mean, if you read the Department of Defense industrial strategy, which came out a month ago,

They use the term diversity, equity, and inclusion. They're not afraid of that term. Everyone else is sort of running from it, but right now the Department of Defense has embraced it because it's the reality of what they're dealing with. I mean, you know, we have serious threats in the world and we've got to restock our industrial base, which is withered over time, both on the worker side and on the supplier side. So...

And we've got to create more of a competitiveness within a system that has relied on incumbents that may not be as innovative. I mean, if you look at what's happening in the Ukraine right now, you know, mismatch forces between Russia and the Ukraine, the rise of new technologies and their application, you know, and again, I don't want to make all this all about, you know, really...

Johnathan Holifield (18:25.56)
Mm-hmm.

Bruce Katz (18:27.66)
dystopian stuff about war and so forth, but it is the reality of the world in which we live. And the relationship between the military, industrial conflicts and the civilian economy in the United States is much more pronounced and much more profound than we've understood for a long time, and now it's playing out. We're reshoring semi-conductor.

not just to put ships in cars, but to put ships in tanks, and to put ships in submarines and all the rest. So there's a overlap between national security and civilian prosperity and all the rest that I think we really need to understand, and we haven't understood really for, probably since the Cold War.

Johnathan Holifield (18:56.868)
Yeah.

Johnathan Holifield (19:21.408)
Yep. Well said.

Christopher (19:24.27)
I sort of teased out this question of readiness. And again, so much of this comes down to capacity. Do communities and regions have the leadership capacity and wherewithal to be able to actually go through a process of becoming a first mover or a fast follower? Because if you don't have the capacity...

Bruce Katz (19:27.04)
Yeah.

Christopher (19:47.73)
and you haven't really done the work to be able to come together in the spirit of radical collaboration, you very much risk falling farther and farther behind. So can you, can you comment on that just from a capacity perspective? And then what would be helpful is I know, you know, we've done quite a bit of work together over the years, but if you could call out a couple of examples where you feel like a particular region has come together in a way that has given them a significant

accelerant into being a more competitive region than they were 10 years ago.

Bruce Katz (20:25.729)
Yeah, I'm not sure the issue in the US is as much capacity as coordination, because in the US, you know, the good news is no one's in charge. The bad, you know, the bad news is no one's in charge. I mean, I mean, we are the epitome of a chaotic, decentralized, distributed economy, right, and society. And that's good, because we innovate like mad.

Johnathan Holifield (20:37.032)
is no one is to charge, right?

Bruce Katz (20:52.288)
You know, so no one's waiting for the rules. I mean, for the most part, you know, people are just doing, you know, and when you get to cities and metropolitan areas, you know, as Jeremy Nowak and I wrote in The New Localism, it's all about networks because, you know, it's about public, private, and civic, and community, and labor, you know, working in closed concert. And the places that have perfected that,

have built up, I think, large, well-resourced leadership groups. And so what these groups do is they unite the corporate, the financial, the university, the philanthropic with the public at all layers. It's why Columbus won Intel, or attracted Intel. It's why Syracuse.

attracted micron. It's why St. Louis is now helping, you know, to help, is now working with Boeing on the defense side to build out major R&D, you know, efforts and workforce efforts in the north side of St. Louis, which is the most disinvested part of that metropolis. So at the core of this, the first movers really all have these leadership groups.

that understand their position in the changing economy, are fundamentally built on collaboration across sectors and across jurisdictions, and are hungry. Columbus put out a report a couple of years ago where they declared, we will be the most prosperous region in the United States by 2030. When they first put this out, I thought, oh my God, what are they talking about? But...

Now, it seems like, now we've been through a pandemic, so that took a couple of our high flyers, like San Francisco, and beat the crap out of it. But, you know, Columbus now feels, you know, with Intel and many other successes, they're making a claim, and they're making a claim not in, hey, we're a cool place, we're Nashville, you can come here, and you know, and I don't wanna dismiss the creative economy at all, but this is a different kind of economy.

Bruce Katz (23:14.968)
that's being built in Columbus off the platform of Ohio State, I think it's where the country's moving. And I do think that we're gonna see dozens of cities and metropolitan areas stoked in part by the Biden, competitive programs where they've built back better, regional tech hubs, and we compete, et cetera. I think we have the potential that dozens of places realize they're...

raise on detra and leverage it to the Hill. And I will say what's so different about going to a Columbus and going to like what is almost like a religious revival meeting, you know, when they're talking about winning Intel is how much inclusion and diversity is at the core of it. Yeah, it's not like, oh, well, you know, let's have, you know, nine panels and then the last panel, okay, we'll bring out.

Christopher (24:03.37)
Yeah, it's how they define prosperity, actually. Interesting to me. Yeah.

Johnathan Holifield (24:11.402)
Right.

Bruce Katz (24:13.736)
usual suspects and we'll talk about inclusion. No, it is baked in at every stage because if you don't have that, you don't have a workforce with the skills, you don't have suppliers, you know, that are, you know, you're innovators. Every level, you just can't compete essentially. So there's some authenticity to this which I think has been lost in the, you know,

partisan division and all the other nonsense that goes on in our country. But I, you know.

Johnathan Holifield (24:48.748)
You know, Bruce, when you talk about the authenticity in Columbus, I spent a lot of time in Ohio, both Cincinnati and Cleveland, and of course, Columbus as well. And what struck me early on about Columbus is you never heard the word next. We'll be the next Silicon Valley, the next Silicon Forest, Silicon Prairie or anything like that. They were always going to be Columbus. I mean, did that?

Bruce Katz (25:15.34)
Yeah, let's try it.

Johnathan Holifield (25:16.376)
That's the brand, Columbus, Ohio. And that authenticity spoke loudly and is really yielding or reaping significant rewards. Not trying to be the next, but the best of what we are.

Bruce Katz (25:31.328)
Well, I think when you de-industrialize and globalize to the extent that we did, which was madness, really, I mean, complete madness, I mean, you know, you know, I do think that there was a scurrying around for what then became, you know, the superstar cities and venture capital being dominated by five cities and all the rest. I do think that this

you know, economic restructuring underway has the potential to rebalance growth in the US and allow a whole bunch of places to realize their distinctive advantages. And that's what makes us special. You know, we're a very large country, but we have dozens of metropolitan areas that really have a place in, you know, in this new economic order. And that's what's coming to the fore. Now, whether they use it or not, you know,

Hey, that's the thing about the US, it's up to you. The federal government is a big investor. They have no national plan really, but they have a lot of money. The states occasionally have a plan, but not particularly. So we leave it to every community, city and metro on their own. Hey, if you can get your act together, you're gonna do really well. If you wanna wait for someone to sort of take responsibility.

for you, you're screwed. I mean basically. So that's the American way. I mean we don't really talk about it, but that is the zeitgeist here.

Johnathan Holifield (27:04.696)
That's the American way.

Christopher (27:12.422)
Maybe in that spirit, but also to bring one more thing into the conversation. One of the themes that we have been teasing out over the course of several conversations with Moving the Needle is how do you really build generational wealth and the role of ownership in this context, right? And so in the labor class, you can very easily be part of the machine. Uh, and you're just never participating in the ownership.

of what the next future wave may look like. And yet, it's going to be imperative that as we are going through this process of reinvention, we're thinking about new forms of ownership, new forms of wealth creation, etc. So how do you think that communities are thinking about this? Are they thinking about it? Who's thinking about it well? Are we going to be in a fundamentally different place in the next 10, 15, 20?

years in the next generations that follow? Or are we going to continue to see the division between the labor class and the ownership class, especially as it's broken down demographically?

Bruce Katz (28:22.296)
Well, look, I think we're in the middle of a pretty substantial transition here. So I think we're beginning to see a different way of thinking about the world, primarily sort of motivated by these national competitions. I mean, I give the Biden administration and particularly the Department of Commerce, an enormous amount of credit.

because we're like a show me the money kind of society. So they're, okay, here's money. And it's for a different way of organizing and it's for a different thesis of economic growth. And it's a radically different thesis than we're just gonna drive up real estate prices or we're gonna focus on the next consumer technology.

which ultimately will be owned by one of the big seven companies anyway. So I mean, this is a different thesis. This is really about the interplay of production and innovation, different set of technologies that get ultimately implicated, different set of skill sets that are needed in the workforce. So that transition can't happen overnight, you know, and I, but I do think it's happening through action.

And it's basically revealing to some extent the deficiencies of the prior economy where, you know, we spent more time focusing on, I don't want to get into this fight, but, you know, more energy around bike lanes than freight lanes, you know, which is sort of like, you know, we're going to build the 15-minute city. Well, you know, frankly, most parts of the country don't live in those kind of places. They live in places that were probably.

built fast and cheap in the 1950s. And if you're in a 90 minute metro or a 60 minute metro, that's more likely to be your reality. So who are we building for and who are we planning for? And I think this economy is forcing some, it's both revealing deficiencies of our thinking, but forcing new kinds of designs and relationships, which are quite healthy.

Bruce Katz (30:49.536)
But we have to have quality places. That has always been the right, whether it's at the community level or at the metropolitan level. But we can't just focus on the physical setting or the physical. We have to focus on the economic setting and on wealth building and market making as the core of it. And I think we're a little in, we've been unbalanced to tell you the truth. I mean, really unbalanced in terms of.

what were the priorities for us. I think we're now getting into something more like a equilibrium.

Johnathan Holifield (31:26.916)
Building on the equity exploration, Bruce, trickle down versus pull down. We know what trickle down is. Pull down is more aligned with equity. You're empowered to reach up, grab hold and pull down value from the economy. You talked about policymaking at the federal level and those outputs have led to some great outcomes, but not...

all the desired outcomes. And in your experience, we've had some great policy innovations over the past 40 years. We certainly missed a few, but we've hit a few as well. But we're not getting that improved standard of living at the lowest ebbs of our economic strata, if you will. What are your thoughts? How can we improve that connectivity to the best opportunity?

we have.

Bruce Katz (32:27.456)
Well, I think the economy has got to produce jobs that pay decent wages with decent benefits, right? I mean, I think, again, I mean, as we accepted this notion that, you know, we're going to offshore and outsource to the max. And the quid pro quo, the sort of, you know, the Faustian bargain was we'll get cheaper goods, but we'll lose middle class jobs. I mean, you know, I mean, we've been having this debate for quite some time. That's getting...

Johnathan Holifield (32:49.928)
Right.

Bruce Katz (32:57.42)
You know, we can't be economic nationalists to the extreme. And we're a great trading country and we're part of North America, which is a big strength of ours, a very big strength of ours to have Canada and Mexico in the mix. I think we're getting back again to some kind of sanity here, you know, where the economy itself can generate for a broader number of people, good jobs or good business opportunities.

for people who own business, you know, that are not just local servants, but they can be national providing or even export driven. So I think this economy that we're building still early, and there could be a lot of political disruptions along the way. And by the way, the decarbonization of the economy is an industrial act, you know. It's to sort of electrify the auto sector.

or to, you know, through so many other sectors, change building, same change transportation. These are industrial economic development hacks. They're not just the, this is not the, you know, 1970s version of environmental regulation. This is about capital investment from all sectors of the economy to build companies across all spectrums of workers who can participate. That's wealth building, you know?

So I think these big choices about what kind of economy you want to build domestically and how it fits globally really has enormous effects on the kind of racial, ethnic, and other disparities we've had in the US. But not discussed. It's like we thought we could just modify or iterate and then we could fit. No. It's going to take this kind of seismic shift, I think, to really...

fundamental change.

Christopher (34:55.722)
I want to underline a couple of quick things and then connect some dots, which is, again, one avenue to be able to get towards wealth creation we've talked about, which is how do we get good paying jobs with good benefits? The other is to how do we increase entrepreneurial participation in the traded sector? Bruce, I know that you're an active part of building out a great tool that I regularly use called the Small Business Equity Toolkit.

which is really helping regions do a quick analysis on where they are with the data. What percent of their black and brown and women entrepreneurs and small business owners match towards their white counterparts and where there is persistent disparity. And it does strike me that as we are trying to think about this kind of reinvention, it does offer an opportunity for participation on that level too. How do we help more?

Johnathan Holifield (35:25.412)
Thank you.

Christopher (35:54.002)
entrepreneurs of color and women entrepreneurs get into traded sectors in highly competitive industries where there's going to be enormous amount of growth. But it again requires that level of intentionality and purposefulness and investment into that type of supportive infrastructure. Again, love to get your take on it and maybe where you've seen a couple of communities do that well.

Bruce Katz (36:20.32)
Well, first of all, I think it requires people to accept that building wealth in a company and in a family is a good thing. Right? I don't have a problem. I mean, I think that's the American way. I think that's at the core of our society in some respects. And I do think, you know, from a boring diagnostic period, what we found when we did this small business equity toolkit is that Black-owned business is highly oriented to certain sectors.

Johnathan Holifield (36:34.562)
Yeah.

Bruce Katz (36:49.104)
of the economy, particularly the carrying economy. The Latino business owners are more geared towards construction and to some extent, you know, restaurants and so forth. We're talking about a different economy here right now. We're talking about an economy driven by technology, you know, driven by professional services. I mean, so what we need is the aspiration

to first understand which portion of whether it's Black, Latino, Asian, women-owned businesses are in a segment of the economy, whichever sector, where their revenue base is over a million or over five million, over 20 million, they are ready to scale. They're ready to participate. They have the capacity to basically move into adjacent sectors. If you're doing construction, you can move into energy.

You know, if you're part of the internal combustion engine supply chain, you can be moving to EVs or energy or military. We just need a different perspective of what it means to be business owners involved in part of the economy which yield high returns, also have risk involved. I'm not sure whether the conversation about

you know, supplier diversity, which is now under threat because of the Supreme Court, really had that at the core. You know, so I think this shifting economy is forcing a serious conversation about supplier development, not supplier diversity, about supplier development, about business building and wealth building. And it's gonna probably make a lot of people uncomfortable and it's probably gonna force

Christopher (38:34.792)
Yep.

Bruce Katz (38:41.464)
parts of the entrepreneurial support system and the financial institutions to be called out. You're not really dealing with firms that need to make a transition into that part of the economy that's gonna have the largest benefits. But, you know, hey, this is what's underway. And then some segments of our country will basically just take it and run with it. And other parts will say, what's happening here?

I mean, but my view is like, okay, let the first movers move and let's codify that and get that spread and scaled. And then for others, it's a brutal society. I would hope that we would have a way to even this out. I'm not really sure we've ever figured that out.

Johnathan Holifield (39:30.488)
And you know, it will be a, I suspect it will be a permanent tension within our society. And that can yield as an old football player, best coaching staffs have a lot of tension, boy, but they're all, they all have one goal is to win the game, you know? Um, I was intrigued building on this, um, entrepreneurship discussion, uh, in the revenue-based financing, uh, as a tool.

Bruce Katz (39:59.511)
Yeah.

Johnathan Holifield (39:59.608)
that certainly, as you point out, CDFIs are doing some things with it, but it's not a widely available tool in the US. Talk a bit about revenue-based financing as different than debt and equity that opens up a potential new avenue for fueling business growth entrepreneurship.

Bruce Katz (40:21.676)
Well, I think the capital system needs to be upheaved because we do have this binary kind of world of, hey, we're gonna give you more debt. Well, most, first of all, even get into that system where you need collateral, which many black and Latino businesses may not have. It's already like putting a thumb on the scale, right? And the equity that we see

you know, in the venture world or near venture world, you know, is not available to really large numbers of entrepreneurs. So I think, look, we're smart enough, whether it comes out of CDFIs or whether it comes out of regional banks or it comes out of credit unions or it comes out of impact investors. I mean, the great thing about the U.S. is we got so many doors to open here. And it is hyper competitive. The question is whether the policy community.

which likes to seize on like one half can open itself up to the fact that there's never one half of the US. I mean, you know, we're always operating on multiple cylinders here. So CDFIs, yes, but CDFIs generally for political, the political class is a way to check the box. We took care of the capital problem. We put some more money into CDFIs, we're done. Hello?

I mean, what are we talking about? I mean, when I'm in most of these cities and I'm talking to ready to scale firms, they don't deal with CDFIs, they deal with regional banks. That, you know, they're dealing with serious financial institutions with deposits, or they're dealing with some alternatives. We need to start from the entrepreneur and reverse engineer the capital system, not start with a bunch of capital institutions.

and then say, okay, what's a little bit of iterative stuff we can do? Let's start with the folks who are ready to move now and ready to grow. And then I think we're going to end up with a capital system that makes some sense. Revenue-based financing, absolutely. For some portion of the market, you know, it's a way to get people the kind of capital they need to grow their business, you know, realize their dreams. All the rest of it that debt can't do.

Johnathan Holifield (42:44.78)
Yep, they're good.

Christopher (42:46.45)
So Bruce, one of the things that I've always appreciated about our conversations is that you always feel like you've got your finger on the pulse of what's going on and are thinking actively about what does the future hold in store, what's around the next corner. And so I'm curious about how you keep tabs on things. Where do you put your...

finger on the pulse of things from a reading perspective, from a conversational perspective. For those who are not familiar with your active newsletters that can be found on newlocalism.com, the newlocalism.com, you've got this great newsletter that came out in October for Books for Our Times. Called out a couple of different books that I've got on my reading list, in particular, Going Places Somewhere and Nowhere by Louise Nooring, which sounds awesome.

Bruce Katz (43:35.448)
incredible book.

Christopher (43:37.922)
It's sort of futuristic, like thinking about, okay, how do we think about things in the future in different contexts? So for our listeners, what are some of the things that you're reading right now? What are the ways that you keep tabs on where the future is going? And anything that you could recommend would be great.

Bruce Katz (43:56.416)
Yeah, well, the first thing I would say, I get up every day and devour the New York Times.

Street Journal and then read The Economist as the weekend. I would say most of what I write about with Macro Dynamics comes out of those four news outlets. Particularly the Financial Times. Financial Times is a remarkable newspaper. So particularly

Christopher (44:21.89)
And I would say that I love about your perspective often is your global nature of it, which the Financial Times obviously then provides insights into what's happening within the global economy, not just the national economy.

Johnathan Holifield (44:28.13)
All right. Let's get going.

Bruce Katz (44:28.63)
Yeah.

Johnathan Holifield (44:33.622)
Thank you.

Bruce Katz (44:34.376)
And I was a history major in college, so I tend to like reading about history books. So Goliath by Matt Stoller is a great sort of book about what populism was in the US going back. It was very much about small enterprise before it was hijacked by right wing crazy people. But you know.

Johnathan Holifield (44:53.837)
Mm-hmm.

Bruce Katz (45:00.164)
The book I'm reading right now, I'm finishing, is around 1923 Germany, which is when that society began to go off the rails. And Hitler took power in 1933, so 10 years after. But it's a really fascinating year look at a lot of different dimensions of the post-war crisis in Germany. I'm about to start a book about...

I think it's called Founders Forge, which is basically how the US was able to mobilize its industry during the Second World War. The end of the day, what's so fascinating about this period is that militaries win battles, economies win wars. We understood that in the Second World War. I'm not sure we totally get that yet. I think the Department of Defense gets that.

but I'm not sure the rest of society gets it. But, you know, and I don't wanna be completely dystopian, but that's the world we've sort of, you know, meandered into right now. So I'm reading a lot of history about periods of time when the US was able to change its economic, you know, trajectory, because mostly because of threats, real or imagined, I suppose, but, you know, that were external.

And I think we're entering one of those periods.

Johnathan Holifield (46:32.168)
I just want to pick up on just very quickly to get a quick insight from you. Perhaps, you know, I'm from Michigan and the arsenal of democracy, Detroit, from Henry Ford and the auto industry, et cetera. There was a sense of, I'll use the word loyalty because I don't have another word right now, to the nation.

Bruce Katz (46:42.892)
the

Johnathan Holifield (46:56.028)
and among business leaders. We were less a globally interconnected economy. You're an American company and American people, et cetera. We've obviously grown since then. And is there an opportunity to appeal to our industrial sector in a new way? I don't wanna say nationalism. That's not what I'm talking about, but.

Christopher (47:18.103)
Bye!

Johnathan Holifield (47:20.908)
We're people. We provide the means for our country to conduct global capitalism. We protect American interests all over the world and we should be beneficiaries and participants in the upside of American global capitalism as well.

Bruce Katz (47:38.848)
Well, I think there is something about what are Central American values and the role we play in the world positive.

Johnathan Holifield (47:41.814)
Hahaha!

Bruce Katz (47:50.856)
whether we can get through this election, because I think a lot will depend on whether the country can get back to some kind of sensible continuity around values and principles off of which economies can be built. But we're early in the year and there's a lot to happen here. But I mean, we're having this conversation when

You know, the Congress doesn't seem to be able to pass bills to support the Ukraine, support Israel, support Taiwan. I mean, this is just ridiculous. I mean, I, I mean, this is fundamental to who we are as a society. And we're playing political games. So I am, I'm worried. I generally tend to be more optimistic at the end of the day, but I'm worried about our inability to stand for things.

because ultimately that has enormous effects on the kind of economy and society.

Johnathan Holifield (48:52.964)
Very good.

Christopher (48:54.454)
Bruce, we always appreciate the insights that you're able to share with us and so glad you were able to join us today. So as we wrap up, I just wanna thank you for the contributions you're making, not only in this conversation, but also I think in the national dialogue to help cities, regions, leaders think about how we can better navigate these difficult times, complex times. I would say that...

You know, my dad sometimes says he's a short-term pessimist, long-term optimist. And I think hopefully this has instilled that sense of possibility, even as we recognize through realistic lenses, some of the immediate challenges that face us. So thank you. Jonathan, anything to wrap us up?

Johnathan Holifield (49:41.636)
I know I'll just modify a famous quote from Dr. King, the arc of the national universe is long, but it bends toward optimism. How about that?

Bruce Katz (49:54.808)
That's a great way to end.

Johnathan Holifield (49:56.912)
right.

Christopher (49:58.194)
Bruce, thanks again for it. This has been great.

Johnathan Holifield (50:01.032)
Absolutely, my man. Boom, boom.

Bruce Katz (50:01.565)
Great to see you guys. Talk soon.

Christopher (50:03.278)
Yeah. Thank you, Bruce. Really appreciate it. We look forward to talk to you again soon. Yep.

Johnathan Holifield (50:08.184)
Hold one sec.

Bruce Katz (50:08.264)
Now I have to figure out how to get off this kind of technology.

Johnathan Holifield (50:11.704)
Ha ha

Christopher (50:11.838)
Yeah, this day.