Newsletters

Since we launched the Innovative Finance Playbook in November 2022, Catalyze and the Nowak Metro Finance Lab have been assessing Revenue Based Financing, or RBF, as a tool to help address the capital gaps and deficiencies laid bare by the COVID pandemic; namely, the 83% of entrepreneurs who do not access traditional bank debt and venture capital. We recently released a report sharing our findings entitled “The State of Revenue Based Financing and CDFIs.”

The pandemic and post-pandemic period have been defined in many respects by capital. Beginning with the CARES Act and continuing with the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act, this capital period has seen the federal government dedicate trillions of public resources for a broad set of activities, initially related to rescue and recovery (a focus on preserving existing businesses and communities) in 2020-2021 and then economic transformation (an industrial/energy transition of monumental proportions) in 2021-2023.

In War and Peace, Tolstoy famously observed that “Nobody was ready for the war which everyone expected.”

I was reminded of this quote when reviewing many of the newsletters published this year. As readers know, this platform returns again and again to the wicked challenges that cities and metropolitan areas face during this disruptive post pandemic period. (It’s difficult to say “post” when COVID seems to be raging again, but so be it).

Since the passage of the Bipartisan Infrastructure Law in 2021, the Biden Administration has championed unprecedented federal investments in infrastructure, clean energy, and advanced manufacturing. While the scale of federal investment has continued to grow, a disconnect between federal organization and local community operation has persisted.

Three years after the first wave of the pandemic, remote work is challenging the role and function of central business districts in the United States. This disruption has already pushed down transit ridership and revenues in major US cities and metropolitan areas: it is now triggering general concerns regarding the urban fiscal health of cities since central business districts and downtowns typically generate a disproportionate share of municipal tax revenues.

It is a curious moment for small businesses in America. More than three years after small businesses were a key pillar of the initial response to COVID-19, small businesses are now grappling with third and fourth order consequences from the pandemic. Supply chain challenges and labor market issues remain. Inflation, while easing, remains high. And today’s elevated interest rates meant to stem inflation have brought about a credit crunch and increased borrowing costs. In venture capital markets, we are witnessing a pullback in activity.

As readers of this newsletter know, my attention has recently turned to the profound macro forces that are reshaping our nation and the world. As an urbanist, I am interested in the interplay between the macro and the metro and the ways in which large, disruptive transnational forces (e.g., rising tensions with China, the existential threat of climate change, the accelerated pace of technological advances, the dissembling norms of democracy) come to ground and affect the shape of communities and the lives of people.

For the past 30 years, with the fall of the Berlin Wall and the dissolution of the Soviet Union, the notion of a “peace dividend” took hold in the United States.  To use an old metaphor, less funding for guns meant more resources for butter.

As CIA Director William Burns asserted in a speech earlier this summer (DCIA William Burns Remarks – Ditchley 59th Annual Lecture), we are living through a rare “plastic moment” in history, one which is fundamentally remaking assumptions and arrangements that have been settled for decades.

Note: This article was originally posted on September 12th on the RealClear Pennsylvania website (How Pennsylvania Fares Amid the U.S. Industrial Transition | RealClearPennsylvania)

By all accounts, the post-pandemic period in the U.S. is characterized by a remarkable resurgence in advanced manufacturing—a response to such challenges as rising geopolitical tensions, the climate crisis, and supply-chain vulnerabilities. This transformation, which we have termed the “industrial transition,” is being catalyzed by increased federal spending—notably, via the Inflation Reduction Act (IRA) and the CHIPS and Science Act. Both acts confront these disparate threats by focusing on two key objectives: reshoring production and accelerating decarbonization.