Examining Economic Development in Trio of Scholarship Pieces

Against the backdrop of the pandemic and a myriad of government attempts to stabilize and stimulate economic development, Associate Professor Ted De Barbieri, director of the Community Economic Development Clinic within The Justice Center, published not one, but three, scholarly pieces looking carefully and critically at trends and developments in business support.

His essay on community-based tax incentives was published last year in the Pittsburgh Tax Review. Also in 2021, he wrote an article in the George Mason Law Review about excluding disadvantaged businesses. And he examined supporting small businesses in place for the Fordham Urban Law Journal. If there is a single conclusion to be drawn from these three works it’s that government economic incentives tend to benefit those in power, essentially providing tax havens for individuals who already enjoy privilege while doing little or nothing for the people and places who most need help.

“This mismatch, discussed in my work published this past year, addresses these issues, and hopefully draws attention to ways government can do better,” De Barbieri said.

De Barbieri’s essay for the Pittsburgh Tax Review (Community-Based Tax Incentives, 19 Pittsburgh Tax Rev. 1 (2021), explores “place-based economic development tax incentives” and argues that opportunity zones benefit “opportunists” such as developers and investors rather than the inhabitants of the designated area.

While tax incentives are politically appealing because they provide elected officials with a remedy that gives the appearance of action without raising taxes or user fees, “the academic consensus is that Opportunity Zones are wasteful, their promises of growth specious, and their benefits illusory,” De Barbieri said, adding that Opportunity Zones are more inclined to do something “to” rather than “for” low-income communities.

In the Fordham Urban Law Journal piece (Supporting Small Businesses in Place, 48 Fordham Urban L. J. 1107 (2021), De Barbieri examines two recent laws— the Paycheck Protection Program and the Opportunity Zone tax incentive. The former was intended to keep employees on the payroll during the COVID-19 pandemic, and the latter was supposed to spawn economic development in neighbor- hoods hit particularly hard by the Great Recession. De Barbieri concludes that
both “failed to deliver promised capital to the most marginalized business owners in places most in need.”

De Barbieri’s essay contributes to the growing body of academic literature on the Paycheck Protection Program and Opportunity Zones, providing a layer of critique and comparison not previously explored.

“The consequences of the economic shutdown following the start of the global COVID-19 pandemic are truly shocking,” De Barbieri writes. “Small businesses— including restaurants, hospitality, travel, and other sectors—saw their sales and revenue plummet as state laws, exercising police power, forced them to close…The decline was particularly severe for Chinese restaurants facing a backlash due to scapegoating.” He cited an April 2020 report indicating that roughly half of Chinese restaurants had closed nationwide.
 
The George Mason piece focuses on “disadvantaged businesses” such as those operated by individuals with criminal records who may not qualify for the Paycheck Protection Program. In “Excluding Disadvantaged Business” De Barbieri concludes that “scholars have failed to appreciate the regulatory result from laws designed to aid business owners in need of support.” Excluding Disadvantaged Businesses, 28 George Mason L. Rev.. 901 (2021) “There are both economic arguments and arguments tied to racial justice for attacking laws that exclude disadvantaged businesses,” De Barbieri writes. “The racial wealth gap—the result of centuries of institutionalized racism—hinders entrepreneurs of color from accessing capital.”

De Barbieri is skeptical of Opportunity Zones, largely because they lack transparency and there’s rarely an effective mechanism to measure their success or failure. But he said combining place-based and people-based incentives looks promising. “I hope my scholarship adds some data and analysis to the conversation about how government at all levels seeks to develop areas that struggle to attract capital and population,” De Barbieri said. “With respect to community development, as this field of law—community economic development—expands, my hope is that my work makes an impact on the actual tools, interventions, and strategies elected officials put into practice.