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Sunday, May 13th, 2012

On Break

I won’t be posting this week. Will see you all in seven days or so.

Thursday, May 10th, 2012

Will Yet Another Fiasco Finally Convince Rahm Emanuel to Cancel Chicago’s Parking Meter Lease?

Chicago’s parking meter lease is the gift that keeps on giving. Put aside for the moment the fact the parking meters are a bad type of asset for a long term lease in the first place. Even ignoring this, this deal continues to be Exhibit A in What Not to Do for privatization.

Recently the parking meter lessee claimed $13.5 million dollars in compensation for just one year’s worth of allowances for free handicapped parking. Over the course of the lease and with inflation at 3%, that would be over $3.3 billion paid to the vendor just for this!!! Figure in a discount rate of 12%* and that’s a net present value of $173 million. Rahm Emanuel is strongly disputing the payment, but the fact that he’s quietly pushed legislation in Springfield that would end free parking except for the most disabled is almost an implicit admission that the compensation claim is valid.

Now the Sun-Times reports that the vendor is demanding an additional $14 million in compensation for meter closures – and that just for the first nine months of 2011. Just as a refresher, whenever the city closes meters temporarily for construction, a street festival, or a NATO conference, it has to compensate the vendor for lost revenue if the duration exceeds the contractually agreed to closure allowance. Obviously the allowance wasn’t sufficient as this compensation on an annualized basis would be $18.6 million. With 3% inflation over the 72 years left on the contract, that would be $4.6 billion!!! Again, with a 12% discount rate that’s $238 million.

So if these compensation claims hold up, here’s the math for Chicago. The city took an asset that generated $23.8 million in revenue for the city and converted it into one where the city has to pay $32.1 million annual in compensation to the vendor. This is on top of the meter money the vendor gets to collect for the next 72 years.

In return for this, the city got $1.1 billion, which it promptly spent to paper over budget deficits. But even so, given the net present value of $411 million in compensation payments alone to the vendor, the city really only got about $740 million for the meters!

Now the compensation may be adjusted by legislation, arbitration, or negotiation. And these are back of the envelope calculations to be sure. You might prefer different assumptions around inflation and discount rates. But whatever the case, clearly this is a whole huge steaming pile of Bad News for the city.

The Sun-Times also reports that Rahm is talking tough on parking meters and plans to strongly dispute these payments. But they fail to ask the simple and obvious question: Why doesn’t Rahm unwind this disaster of a deal?

Yes, the parking meter deal can’t be cancelled under the terms of the contract. But I’m talking about a negotiated solution, which I’ve written about elsewhere. Whether my plan could work or not, I find it difficult to believe a guy like Rahm, a guy who doesn’t believe in the Can’t Do mindset, who actually is tackling structural problems like the deficit and pensions, couldn’t find a way to get out of this deal if he wanted to.

Why he doesn’t is a complete mystery to me. I’m assuming he must have at least looked at it. But I for one would like to know why he isn’t pursuing it. Especially since the alternative is dealing with the fallout from a disastrous deal for the next 72 years running. Hopefully this latest thorn in his side will convince Rahm to bite the bullet and do the right thing for Chicago by cancelling this lease.

Related:
Can Chicago Get Out of Its Parking Meter Lease?
Yet Another Privatization Debacle in Chicago
Three Years Down, 72 More Years to Go on Chicago’s Parking Meter Lease
Parking Meters and the Perils of Privatization

There is also lots of good parking meter coverage from the Parking Ticket Geek over at The Expired Meter.

* 12% is the mid-point of the range of discount rates suggested by William Blair, the city’s advisor on the parking meter lease, to be applied to meter revenues in valuing the system. So this is a very fair rate to use, though some have argued for a lower discount rate.

Wednesday, May 9th, 2012

Infographics of the Week: Social Media Neighborhoods, Civic Change

For my email subscribers who missed this update, the OECD report on Chicago actually now is available online. Thanks to Jim Russell for pointing this out.

Livehoods

Researchers at Carnegie Mellon University have developed a new way of looking at neighborhood definitions they call livehoods that determines de facto neighborhoods using an algorithm that looks at Foursquare checkins. It’s pretty cool, especially as the maps they generate are interactive. Here’s a static shot of San Francisco though to show you want they look like:

Maps are currently available for San Francisco, New York, and (of course), Pittsburgh, with more to come.

I found this via the excellent Flowing Data blog that I’d encourage any data visualization geeks to check out.

Think, Act, Impact Indianapolis

Another interesting infographic comes to us from the folks at People for Urban Progress. They put together an infographic showing how things get done in Indianapolis city government. If the zoomable image embedded below doesn’t display, click here to check it out on PUP’s site.

Wednesday, May 9th, 2012

Eduardo Paes on the Four Commandments of Cities

Rio de Janeiro mayor Eduardo Paes gave a TED Talk this year on his “four commandments” of cities, which you can watch below. If you are in Google Reader or similar platform, it won’t display for you, so click here to watch.

Tuesday, May 8th, 2012

Re-Branding Indianapolis Through Humanitarian Efforts by Kelly Campbell

[ One of the traps of smaller cities is thinking that because the talent pool is smaller and very well connected, once you are plugged in, you must know everybody cool in town. But the reality for me in places like Indianapolis is that I am constantly amazed by how many cool and interesting people I've never even heard of, much less met.

Well, I recently came across a blog post by Kelly Campbell, one of those cool people I'd never heard of, that presented her passionate case for pursuing global humanitarian efforts in Indy, using her grass roots example to show how. Kelly previously worked in the fashion industry in New York, and now runs The Village Experience and writes for the Blue Vine Collective (She was also one of the IBJ's 40 Under 40 last year, and you can read more about her over at the IBJ). Kelly not only sees humanitarian efforts as a whitespace opportunity to exploit, they are a personal passion of hers. This shows it as an area that not only has good strategic relevance, but also fits with the cultural ethos of the city. Which is exactly what cities should be looking for. She graciously gave me permission to republish her post - Aaron. ]

Indianapolis has long been known as the “Crossroads of America” and one of the “Sports Capitals of the World.” We host large-scale conventions, international races, and very soon…the Super Bowl. Huge corporations including Eli Lilly, Cummins, and Rolls Royce call Indianapolis home. We are a relatively small city, but we’re on the map.

What I envision, though, is being on the map for something more meaningful… something more impactful. I see Indianapolis becoming a model for other cities to follow in regards to our local to global connections and our humanitarian efforts. Why couldn’t Indianapolis become known as the “humanitarian hub” of the country or even the world?

Many conversations in the community have been taking place around this topic. Indianapolis is now hosting monthly networking events through the Indianapolis Intercultural Network to connect young professionals with an interest in the international world – you walk into one of these events and the topics of conversation range from discussing shipping methods in Togo to recent adventures on the pirate infested beaches of the Kenyan Coast to improving the quality of water in Haiti to debating the image of the U.S. around the world. There is no shortage of interesting people or interesting and thoroughly exciting conversations taking place – all while supporting locally owned and operated businesses around town. This has really proven to be a catalyst to connect the right people to each other and jumpstart the move towards Indianapolis becoming a true international player in the humanitarian sector.

For years, several grassroots organizations have been leading the way in connecting Indianapolis to the rest of the world. The Village Experience has been working with artisans in over 30 countries and operating socially responsible trips to multiple countries in the developing world. Building Tomorrow has been constructing schools and making a huge impact on education in Uganda. Timmy Global Health has changed the face of healthcare in the developing world. The International Center has been bringing in foreign delegates and connecting them to local Indianapolis citizens and businesses. Exodus Refugee Center has been helping refugees make Indianapolis a home for many years. Provocate and Provocate Haiti have been centralizing international efforts and bringing awareness to social justice issues around the world and more specifically building community among all of those involved in Haiti. Without much media attention, these groups have been at the forefront of working in the international arena. What a great base from which to start this move forward.

One specific example of how Indianapolis is becoming more known for it’s international efforts is the East Africa Fundraiser hosted in September 2011.

Organizations and individual citizens approached the Village Experience with grandiose ideas of making a difference in this overwhelming disaster on the other side of the world…the only problem, not one of the organizations on its own had the ability to mobilize resources at the level desired. The solution…work together and make a bigger impact. Organizations such as Bluevine Collective, Indianapolis Intercultural Network, w/purpose, Provocate, Indego Global, and IUPUI joined forces, created a committee of members with large social media followings, and got to work planning a citywide event centered on bringing awareness to the East African famine and raising funds to help alleviate it. We used The Village Experience as our planning hub and as the venue for the event. We contacted the food trucks, local beer vendors, and our friends at Five Star Catering to join in and help us. We created facebook pages, blanketed cafes and coffee shops with flyers, sent out personal invitations, and promoted to all of our customers both in the store and through outside events. We reached out to Nuvo… and they responded by making it the featured event of the week. The pieces of the puzzle were coming together. The last piece of the puzzle… to which organization were we going to donate the money?

After weeks of research, we decided to donate any funds raised to the Global Enrichment Foundation. We didn’t want our efforts to be a drop in the bucket and go mostly to administrative costs at large organizations. We wanted our efforts and our funds to really make a difference. Global Enrichment Foundation became the perfect partner. They were a young, grassroots organization based in a small city in Canada. They maintained low administrative costs. Their founder was energetic and believed in sustainable development and helping people regardless of religious beliefs. And most importantly, they had a very personal connection to the people of Somalia and were working where no one else dared to go. They were on the ground in Kenya and Somalia trucking in life-saving food and water to those effected by the famine… and at the same time, they were developing programs to educate and empower women. It was the perfect fit.

We set a date for our fundraiser, and in the meantime, The Bluevine Collective reached out to followers in the weeks preceding the event and were successful in raising a great deal of funding. The day of the event, we had a huge turnout and were extremely excited to see so many new faces that showed up to do their part in ending the famine in East Africa. We raised $10,000! Not bad for our first attempt at hosting a community based event in collaboration with local partners to tackle a social justice issue.

But, we didn’t stop there. We wanted Indianapolis to be different. We wanted to follow our money to East Africa and really connect to the cause. So, The Village Experience took a group to Kenya in November to hand carry over the funds and meet with reps from The Global Enrichment Foundation. The group volunteered throughout the country for two weeks and gained a better understanding of why events like this happen and why the world seems to turn a blind eye. The world, except Indianapolis, that is. We returned energized to strengthen this newfound partnership and were thrilled when Global Enrichment Founder, Amanda Lindhout, sent over photographs from the Convoy of Hope in December, which was funded in part by our efforts. I still get a little emotional when I look at these photographs and see The Village Experience and The Bluevine Collective logos on the trucks and at the food distribution sites in Somalia. Indianapolis was making a name for itself – and on the humanitarian level at that.

If we can do something like this, there is no reason we can’t do more. I challenge Indianapolis to take the next step. In October 2012, The Village Experience will be hosting Somaly Mam – human trafficking advocate from Cambodia and CNN Hero – for a night of networking and raising awareness. With 9 months to plan a citywide event, I am betting that Indianapolis will prove to be the best stop on her international advocacy tour. This is a woman who is changing the lives of young boys and girls by rescuing them from brutal human traffickers and challenging governments to do more to protect their children. Indianapolis has its own human trafficking task force and deals with this issue on a daily basis. Let’s all join forces and put an end to human trafficking… once and for all.

This post originally appeared in the Blue Vine Collective on January 17, 2012.

Sunday, May 6th, 2012

The OECD Reviews Chicago

The Organization for Economic Cooperation and Development (OECD) is an international organization that has its roots in the administration of Marshall Plan aid to rebuild Europe after World War II. The OECD was invited by the Chicagoland Chamber of Commerce* to perform a “territorial review” of Chicago’s regional economy. I believe this is the first such review the OECD has ever undertaken in the United States. The results were released a couple months ago. The Chicagoland Chamber graciously sent me a copy. (The report is available online here – thx Jim Russell for the link). I did a read through of this inch-thick, 332-page report and wanted to share a few observations about it. As the quote at the top might indicate, this report, like Rahm Emanuel’s economic strategy, was fairly gloomy. My points will be topical and not an integrated narrative as I did not get to undertake as thorough a review as I might like.

Performing the Study Demonstrates the Challenge

The review focused on the Chicago metropolitan area, though frequently included the Milwaukee metro area as well. Wisconsin and Indiana were invited to participate in the project, which was notable given the city-centric nature of most civic development initiatives in Chicago and the fact that the lion’s share of the people and economic output are in Illinois. It’s a recognition of the need to think regionally. Wisconsin did participate, but Indiana declined. Explaining why, Indiana economic development chief Mitch Roob said, “We don’t do studies, we do deals.” Indiana also made it clear that it intended to differentiate itself from Illinois to attract jobs, and that luring jobs across the border from Illinois was a core plank in their economic development strategy. (Interestingly, as I’ve documented elsewhere, Indiana has rolled over and actually allowed Kentucky to financially exploit it on the other side of the state, so the behavior is not consistent).

Indiana Governor Mitch Daniels loves to criticize Northwest Indiana for not getting its act together. Indeed, much of that criticism is fully warranted and Daniels has spent enough time up there to get an up close and personal look at regional dysfunction. Nevertheless, NWI functions as part of the metro Chicago economy. Its success is ultimately tied to Chicagoland’s overall success, not luring jobs from a stagnated region across the border. Indiana may have a few huge gas stations and liquor stores right on the border, but you can’t build an economy on that. (From 2004-2011, Mitch Daniels term in office, Indiana has actually lost a greater percentage of its jobs than Illinois and the migration of people from Illinois to Indiana also slowed, so the “Illinoyned” strategy obviously isn’t working). Indiana should clearly have come to the table for this review.

The fact that Indiana wouldn’t even participate in a study just goes to show how difficult regional cooperation can be. In that regard, the undertaking of the OECD review itself shows the challenge facing the region. I should note that the report authors did a good job of trying to fairly include and represent Indiana despite the state government’s lack of participation.

Interesting Statistics

The OECD review amassed quite a bit of interesting statistical data on Chicago and puts them in the context of other major cities in the 34 countries that comprise in the OECD. I think that by itself made the review worth doing. I might suggest other cities take a look at this to determine if such a study would be relevant to them, particularly as international comparisons can be difficult to pull off.

This report is a goldmine of stats and there’s way too much to list here, but a few things that jumped out at me:

• The OECD report benchmarked labor productivity, which is less commonly looked at in economic studies. Chicago’s is above average but growing more slowly than average.
• Chicago has trailed the nation in job growth. Had Chicago simply matched the national average in job growth since 1990, the region would have 600,000 more jobs than it does today.
• There was quite a bit of sectoral analysis of Chicago’s economy. In fact, they actually normalize the sectoral composition of Chicago’s economy when looking at job growth to see if its under performance in job growth was due to concentration in slow growing sectors – but it was not.
• Chicago is known for having America’s second largest business district, but it ranks only fifth out of the top ten regions in America for the percentage of its jobs in the core city. Between 1960 and 1990, over 96% of new regional jobs were created outside downtown.
• There were many other interesting statistics around labor force participation, mobility of educated labor, elderly dependency ratios, educational attainment, poverty, patents, the structure of governments, taxation, etc.

Excess High End Talent

According to the OECD, Chicago suffers from a skills mismatch in its workforce. This is not just true at the bottom end of the economy as might be expected, but also at the top end, where there is a surplus of highly skilled labor:

At the high end, there is a large pool of high-skilled, highly educated workers, in principle more than sufficient to fill the jobs available at that level … at the high-skill end, data for the tri-state region points to an apparent oversupply.

To some extent this shouldn’t be a surprise. Chicago is a desirable city for people to live in, particularly for educated workers inside its heartland catchment area. As with other big city talent magnets, the economy doesn’t always supply the right employment for all the people who want to live there. The many articles about unemployment in Portland, for example, illustrates this, and Chicago is similar. In that regard, you might see the skills surplus as a sign of local strength.

However, the skill concentration in Chicago isn’t producing the type of high end innovation economy seen elsewhere. As the OECD notes, “Indicators suggest that the Chicago Tri-State metro-region does not rank as highly among the US knowledge hubs as one might expect, given the size of its economy and population and its concentration of world-class research universities.”

Also, Chicago may not be as attractive a talent hub as its aggregate numbers indicate. Again per the OECD:

To be sure, the Chicago Tri-State metro-region remains an attractive place for many migrants, but it is less attractive than many of its US metro-region peers. Moreover, if the analysis is confined to highly educated people of prime working age (25+, with at least a bachelor’s degree), then the picture is even more problematic. During 2005-09, more such people moved into the area than left it, but the net gain was relatively small compared with other large US metro-regions. Los Angeles, for example, benefited from a net gain of nearly 80,000 highly educated people in 2009, compared with 3,500 for the Chicago Tri-State metro-region.

When you under-perform as a talent magnet and still can’t put high skilled labor to good use, that’s a definite sign of trouble. This was one thing that was eye opening for me in the study as I’d previously assumed the high end of the market was in pretty good shape and that skill mismatch problems were the result of a large under-educated population vs. open jobs requiring mid-tier skills.

Policy Prescriptions

The OECD’s recommendations were not nearly as strong as its assessment of the region’s conditions. This shouldn’t be surprising as it is easy to look at data and see what may be wrong, but it is not always obvious what to do about it. The recommendations fall into five broad categories:

• Better Skills Matching
• Improving Innovation and Entrepreneurship
• Investments in Transportation and Logistics
• More Green Industry Growth
• More Effective Institutional Arrangements

First off, including “green growth” as one of only five major chapter headings is a joke. The aggregate number of jobs identified as specifically green is small. And as I’ve noted many times, there’s no such thing as green industry. Pretty soon there will just be industry again – it will all be green. So if Chicago and the US aren’t doing well at today’s industries, why would we think they would do any better at tomorrow’s? “Green” isn’t some sort of fairy dust you can sprinkle on and work wonders with. If anything, the acceleration of transition to more green practices will only drive more manufacturing offshore, exactly as it did with light bulbs. The track record of trying to create “green jobs” almost everywhere has been poor and has failed to live up to the hype, so I can’t believe the OECD is doubling down on this snake oil.

For the other areas, the OECD doesn’t break much new ground, though does highlight some interesting international case studies of regions getting it right. The sections more or less regurgitate the laundry list of organizations and initiatives already in place, then tag on “do more and coordinate better.” Examples include, “create region-wide capacity to match skills supply with demand” and “broaden the innovation focus [to include] non-science-and-technology-based innovation.”

By contrast, there was little focus on what counterproductive initiatives might be trimmed. While, for example, the report notes that many of the excessive numbers of local governmental units probably should be eliminated or merged, it doesn’t really look at how many of the alphabet soup of various non-governmental civic development groups might likewise be better off euthanized. Given the unified civic leadership nexus of Chicago, this should in theory be much easier than killing off governments, which are famously resistant to elimination. It’s hard for civic sector leadership to scold state legislatures about the need to consolidate when they can’t even do it themselves. This shows that the OECD had to deal with local political reality, so it probably pulled a lot punches in the recommendations. Statements of raw flattery such as “All key public and private stakeholders are keenly aware of what needs to be done to address these issues effectively” show the extent to which the OECD wanted to avoid ruffling feathers and challenging the Chicagoland status quo, which is disappointing.

I might also take issue with the way the problems were attributed to these structural factors without addressing at any great length many of the clear drivers of Chicago’s under-performance. For example, Chicago is the regional capital of a greater Midwest that has been struggling as a whole. It’s tough to swim upstream against that. (I’ll have more to say on other underlying factors in a subsequent analysis of my own).

In short, this report got it half right in giving us a very good look at the current conditions, strengths, challenges, and international comparisons. Where it lagged was in fully articulating the structural landscape driving the under-performance and developing compelling strategies for turning the ship around. Still, if I were a region out there looking for a good snapshot of where I stood in the marketplace, the OECD would be on my list of people to call.

* Disclosure: I won a competition sponsored by the Chicagoland Chamber in 2009.

Wednesday, May 2nd, 2012

Venice In a Day

Here’s your latest time lapse, this one a look at Venice in a day. As always, it’s worth watching full screen in high def. If the video doesn’t display for you, click here.

h/t Likecool

Tuesday, May 1st, 2012

Detroit: A Biography – A Review by Pete Saunders

[ You may remember Pete Saunders from his piece on the reasons behind Detroit's behind. I've long found Pete's insights provocative. I'm glad to report he is now blogging himself on his own blog called "The Corner Side Yard." Today he graciously shares another Detroit piece for us here, this time a review of Scott Martelle's new book, "Detroit: A Biography" - Aaron. ]

When I first got my review copy of Detroit: A Biography by Scott Martelle, I did the unthinkable: I started by reading the epilogue. I wanted to know right from the start where the author stood on the future of Detroit. Did his research suggest that revitalization is approaching, or even possible? Admittedly, my first reading of the epilogue seemed to be a repudiation of Detroit, that the city’s legacy has condemned it to failure.

Such is the defensive posture of a native Detroiter.

Reading the book from start to finish is an entirely different experience. Martelle constructs a well-detailed and finely crafted narrative of Detroit’s history, from its founding as a French outpost in 1701 to the present day (although Martelle glosses over much of the last decade or so, likely believing that the city’s die had been sufficiently cast). The book reads a lot like Detroit’s history – slow yet building over the city’s first two centuries; fast-paced and chaotic after the introduction and rapid growth of the auto industry; slower-paced, exasperated yet reflective as decline sets in. The historical narrative is interspersed with chapter interviews of native Detroiters who offer their insight on the past, present and future of the city. Martelle brings liveliness to the narrative, and his meticulous research is evident. It truly is a biography.

Detroit’s early history was really no different from its Great Lakes peers of Buffalo, Cleveland and Milwaukee, which all had varying degrees of French settlement, British rule and American growth. There is a lot of discussion about the French role in the creation of development patterns in Detroit – the ribbon farms – that led to a highly privatized riverfront. Once the French were gone and the British took over, there is similarly a lot of discussion about the contemptuous and oftentimes violent ways the British military elected to engage southeast Michigan’s Native Americans. The French and British did more to shape Detroit’s character than most realize.

Detroit, like the others, transitioned from regional trading center specializing in iron ore and lumber, to becoming a craftsman’s heaven building horse carriages, stoves and other metalworks. Interestingly, the author notes that late 19th and early 20th century Detroit was known as a top cigar-producing center. Who knew? But the number of skilled workers in the carriage-building and metalworks industries set the stage for the development of the “horseless carriage” industry in Detroit.

Of course, the singular power behind the founding and growth of the auto industry in Detroit is Henry Ford. Martelle is quick to make the well-known point that Ford did not invent the automobile; there were a number of “tinkerers” around the world, even others in Michigan. But he was in a position to take advantage of the local capital and skilled workforce to get the Ford Motor Company off the ground.

Martelle also alludes to the fact that as Ford the company grew, Ford the man’s flaws took root as pathologies to Detroit’s character. Ford’s aggressive business policies were well known and emulated; his racist, anti-Semitic and anti-Catholic leanings are acknowledged; his staunch anti-union sentiments led to bloody battles between the company and workers; his unwillingness to leave lasting institutions in Detroit, like an Andrew Carnegie in Pittsburgh, set the template for other Detroit industrialists.

The author paints a picture of Detroit breezing through the first third of the 20th century as the Silicon Valley of its time. Most people likely believed that economic growth alone would solve whatever underlying problems may exist, and there were many. Tensions grew as southern and eastern European immigrants competed for assembly line jobs with longer-established Scotch-Irish and German immigrants. Tensions further grew as African-American migrants moved up from the South for jobs, particularly during and after World War I.

Job competition intensified as the Great Depression emerged, and the rigid but informal segregation patterns in the city led to housing competition as well. The boiling tensions made Depression-era Detroit one of the most brutal places to be in America. The tremendous population growth of the previous decades was not supported by similar housing growth in Detroit, which made the city’s Depression housing shortage one of the most acute in the nation. The collapse of the auto industry at the same time made Detroit’s unemployment the worst in the nation. And the union battles of the time made the labor situation one of the most contentious in the nation.

This was Detroit’s second critical moment, after the explosive growth of the auto industry. City leaders and industrialists elected to let the economy sort out the city’s growing pains when things went well, and they again elected to let the economy do its thing as the city faced its first existential crisis. They were right – in the short term. Detroit emerged as the “Arsenal of Democracy” that built the armory that saved America and Europe. However, the lack of action by city leaders and industrialists had long term impacts that became evident after World War II.

It is at this point in the book that a fascinating set of what-ifs are implied by the author:

• What if there had been better early cooperation between the auto industry and unions?
• What if the industrialists like Ford had established enduring local institutions?
• What if the housing and overcrowding issues had been dealt with differently?
• What if Detroiters had had local representation (i.e., wards or districts) that could have represented the wishes of diverse residents and forestalled or diffused tensions?
• What if Detroit had become a defense contracting center that could’ve led post- World War II growth?

Unfortunately, Detroit’s leaders did not appear to be asking themselves these questions at the time.

Martelle then argues that Detroit’s path after 1950 is one of social and economic decline. Detroit becomes the epicenter of a Supreme Court legal battle on housing racial covenants; efforts by white residents to violently intimidate blacks from moving into all-white neighborhoods become commonplace. White flight has its start in Detroit well before it does in other major cities. The Auto Big Three (Ford, General Motors and Chrysler) decide to control more of the manufacturing process themselves and put the squeeze on auto parts suppliers. They begin to shift manufacturing jobs first to the suburbs, then to the South, then out of the country. Finally, the riot of 1967 begins to solidify the image of Detroit as being out of control.

The author is clear about the challenges that face Detroit today. Racial animosity and mistrust, usually couched in city vs. suburbs terms, is at a level virtually unmatched in the nation. Coleman Young, Detroit’s first black mayor, is often viewed as the wedge that widened the divide between white and black in Detroit. However, Martelle portrays him as someone who wanted Detroiters to directly confront its racial legacy, but was still nurturing the resentments of his segregated upbringing. Meanwhile, he paints many whites as believing that past indignities experienced by blacks are indeed past, and are resentful of the management of the city after they left it. But who can manage a city when jobs and middle class residents flee?

I read the epilogue again after reading the rest of the book. The second time around it read like a lament, a cry of sorrow and anguish for the city that gave us not only the automobile, but the idea of a stable middle class. Martelle clearly demonstrates that Detroit was uniquely impacted by national and global trends and policies, and that any city established in the same fashion would have suffered the same fate. Sadly, however, he says that the nation has left Detroit behind, and wonders if the nation will ever repay the debt it owes to the Motor City.

Sunday, April 29th, 2012

Replay: Megaregions – A Review by Aaron M. Renn

This review of the book Megaregions, edited by Georgia Institute of Technology Professor Catherine L. Ross, is the second in my three part series on megaregions. I put my cards on the table in my post with initial skepticism about the usefulness of the concept. I will follow this up with a look at potential applications of megaregionalism in the Midwest.

I was very struck by the quote at the top when reading the book. How often to do you find people questioning the very validity of the topic at hand when writing a piece for a book on it? The fact that Ross brings in people who are willing to ask tough questions about megaregions is a testament to her intellectual integrity. It would have been very easy to simply glom onto a topic that shows some early stage notions of being popular in the world at large and trying to flog it for all it was worth. Indeed, Ross is known on this topic, but here she takes an opportunity to shine a light on this emerging concept to see what she might find without excessive boosterism on the subject. As she notes herself in the book, “The quality of a new idea can be judged by the possibilities it creates, especially when such possibilities stimulate new and unbounded interpretations and allow more innovative and beneficial outcomes.” I see this book as dedicated to exploring some of those possibilities and trying to collect and develop frameworks for understanding it and applying it.

The book consists of thirteen chapters, each written by different authors, exploring some aspect of the topic, including looks at Europe and Asia. I will focus primarily on the United States, but don’t want to mislead into thinking this is a US only book.

One of the key questions to answer is, just what the heck is a megaregion? There are a few definitions, but the one I thought was best came from America 2050, a project of New York’s Regional Plan Association. They describe it as “a large, connected network of metropolitan areas that are joined together by environmental, cultural, infrastructural, and functional characteristics.” In short, it is a collection of linked metro areas in a given region. There is an entire chapter in the book devoted to ways to identify and delineate megaregions. And, of course, map them. Here’s the map America 2050 created using their approach:

A few things jump out from this map. First, the megaregion is really an eastern US concept. West of Texas, most of these regions have one main dominant metro, possibility with a satellite or two. The exception the Pacific Northwest “Cascadia” region. Second, the megaregion concept relies heavily on intuitive eyeball appeal. That is, we look at the map and see these clusters of regions and it just seems to make sense that they are related, apart from any academic methodology of boundary delineation. That’s not to say there isn’t logic behind the map, but I believe a lot of the popular appeal comes from its intuitive plausibility. America 2050 does a great job of recognizing this when they reference the cultural aspects of the megaregion. We think of, for example, the Midwest and Northeast as having distinct regional history, culture, values, and economic structures. This powerfully reinforces the intuitive appeal of megaregions. The idea is that we have cities in close proximity, with a lot of common culture and problems, so wouldn’t it be great if they figured out how to work together to solve them?

America 2050 doesn’t have the only map going. Richard Florida, a leading popular exponent of megaregions who wrote a paper on the subject with Tim Gulden and Charlotta Mellander called “The Rise of the Mega-Region“, used images of light emissions from the space to draw boundaries of areas that seemed continuously developed. Here’s his map:

Florida’s definition is based on continuously built up areas, but doesn’t necessarily imply any functional integration, though he has posited this is the case.

And here is the map that is being distributed with the Ross book’s promo materials:

Reading the book and looking at these maps really crystallized in my mind possibly the biggest appeal of megaregions to federal level planners in the Unites States and Europe, even though I have never seen it actually stated anywhere. Namely, megaregions are a convenient abstraction for federal level thinkers to make sense out of the large number of diverse metro areas in America and Europe.

Think about it, there are a huge number of metro areas in the United States. There are a bit over 50 metro areas of over one million people. The Brookings Institution Metropolitan Policy Program deals with the top 100 metros in America. These numbers are simply too high to give proper attention to each.

I’ve championed the notion that there is no one size fits all urban policy and that cities need to develop unique strategies and solutions based on their unique local context (see, “The Mayor as CEO” for instance). But think about it from the standpoint of a think tank in Washington or New York, or from that of Adolfo Carrión, director of the White House Office of Urban Affairs. How do you cope with policies for 250, 100, or even 50 metros? It would be extremely difficult. But it is certainly feasible think about 10-12 megaregions. I think that’s one reason why people so much want there to be validity to the megaregion concept. It provides a very convenient intermediate level of abstraction between the large scale United States (or Europe) and the fine grained detail of individual metro areas.

Brookings did this by positing a “Great Lakes” region to help organize a portion of its thinking. And I did too. As someone who has expressed skepticism on megaregions, I’ve got to admit that my own blog is to some extent a product of that thinking. One of the keys to its success was to pick a topic scope greater than the individual city (and thus to have more than purely parochial interest) but smaller than the nation (where I likely would never have been able to gain traction amongst long established big names). The 12 one million plus metros I focus on is conveniently similar to the total number of megaregions in the US (and the 12 Florida identifies in Europe). And I’ve been able to extrapolate out lessons from them that are relevant cross-regionally, and also to a broader audience as well. The metros of the Midwest actually have a lot of diversity. The strengths, weaknessnes, challenges, and opportunities of, say, Chicago, Detroit, and Columbus are radically different. They require very different policy approaches. Nevertheless, there seems to be some benefit in thinking about them together.

So apart from any real world manifestation megaregions might have, they are an important organizational construct in creating a hierarchy in any sort of large, multi-city geography like the United States or Europe. Megaregions enable people to conceptualize and manage these complex, fine grained territories. It is applying to metro areas the same regional aggregation concept used for functions like the Federal Reserve System (12 regional fed banks) or the federal district court system (11 appellate districts). That is, megaregions are necessary purely as a level in the hierarchy, even if they prove to be a phantom level. They can be defended purely on the basis of organizational and managerial theory even if they have no other application. Indeed, the fact that people persist in trying to find applications for them despite the lack of clear cut success to date shows that at some level they intuitively understand this organizational need.

Robert E. Lang and Arthur C. Nelson had a chapter that hints at this as well, noting that the mere act of formalizing a construct by the government causes people to start paying attention to it. Their example is how the OMB created the construct of “micropolitan areas”. Clearly the idea is that if the federal government created official megaregion definitions, and reported data against it, the concept would take on a life of its own by virtue of that. (Data collection would likely be trivial since megaregions would no doubt be made up of counties, such as by creating a layer above Economic Area). Their idea seems more to create something called a megapolitan area rather than a megaregion, however.

Tridig Banerjee has an interesting chapter further trying to refine the megaregion concept by identifying types of megaregions along a two by two matrix (which, with my management consulting background, I of course love). The dimensions are “galaxy” vs. “corridor” and “mosaic” vs. “network” (hierarchical). The Midwest would be a galaxy-network. Scott Campbell has a chapter asking a number of useful questions, such as the one at the top of this piece.

Ross herself seems particularly interested in the transportation aspects of megaregions, and this is one where it seems to have the most direct applicability. For example, most of the various high speed rail proposals out there revolve around megaregions. There are shared corridors of interest, such as interstate highways, and other important features, such as the Great Lakes. The question is whether these are items of relevance to a megaregion properly so-called, or if they are just the focus of ad-hoc “coalitions of the willing”. I actually suspect the latter as there are many of these (think of the I-69 and I-35 NAFTA corridor coalitions for example, or California’s high speed rail proposal) that exist independently of megaregions. In my view a megaregion would need to represent some true community of interest, in the way that a metro region does, to represent some sort of truly functional element, and I haven’t seen it yet. In fact, I have argued that even things like the Midwest high speed rail network shouldn’t be thought of as a network, but rather as a series of point to point connections linking outlying areas to Chicago. Chicago will not be an HSR hub in the way that O’Hare is a hub – that is, for traffic interchange. Indeed, in we see this in Europe, where there is very little transfer traffic of this type. There seems to be something to this megaregional transportation idea, but I’m not sure what is yet.

The piece I found most compelling was the chapter by Saskia Sassen. In my original piece on megaregions I noted that lots of people talk about them, but no one says what it is we should actually do with them in order to create real value. Sassen suggests how this might happen. Here’s an excerpt:

I argue that the specific advantages of the megaregional scale consist of and arise from the coexistence in one regional space of multiple types of agglomeration economies. These types of agglomeration economies are distributed across diverse economic spaces and geographic scales: central business districts, office parks, science parks, the transportation and housing efficiencies derived from large (but not too large) commuter belts, low-cost manufacturing districts (today often offshore), tourism destinations, specialized branches of agriculture (e.g., horticulture or organically grown food), and the complex kinds of agglomeration economies evident in global cities. Each of these spaces evinces distinct agglomeration economies and, empirically at least, is found in diverse types of geographic settings, from urban to rural, from local to global.

The thesis is that a megaregion is sufficiently large and diverse to accommodate a far broader range of types of agglomeration economies and geographic settings than it typically does today. This would take the advantages of megaregional location beyond the notion of urbanization economies. A megaregion can then be seen as a scale that can benefit from the fact that our complex economies need diverse types of agglomeration economies and geographic settings, from extremely high-agglomeration economies evinced by specialized advanced corporate services to fairly modest economies evinced by suburban office parks and regional labor-intensive low-wage manufacturing. It can incorporate this diversity into a single economic megazone. Indeed, in principle, it could create conditions for the return of particular activities now outsourced to other regions or to foreign locations.

I wrote a four part series in early 2009 called “Reconnecting the Hinterland” which was all about searching for value in attempting to foster a re-created interlinked economy between Chicago and the rest of the Midwest. An answer to Sassen’s question is actually what I was looking for. The simplified idea being, to find some economic activities in which geographic proximity, though not necessarily always in a dense, face to face setting like downtown Chicago, is a source of value; to ask, is there some medium between the “spiky world” of Manhattan and the Loop and the “flat world” of China and India?

I don’t want to jump the gun and go into detail, since that is a part of the next part in this series, but if you are interested, you might want two check out two pieces in that series, “Metropolitan Linkages” (about extended labor markets) and “Onshore Outsourcing“.

One curious omission from this book was the difference between megaregional and non-megaregional locations and whether there was some benefit to being in a megaregion. I can’t help but notice that in the Midwest, Kansas City (in most maps) and Des Moines are both outside of the megaregion yet are two the of the absolute best performing metro areas. Not being part of a megaregion does not appear to have hurt them any. I’d be interested to see some analysis on this.

In any case, for those interested in these things, this is a nice survey book to pick up. It is accessible to the general educated public, but is written in the style beloved of academics, so is likely to be very dry to all but those who are wonky about this stuff. Read the Sassen excerpt to get a sense of what is in store. For those who are in the planning or related fields, it is worthwhile to educate yourself on the megaregion concept to be able to parse a lot of the rhetoric out there about it. Reading this book would be a good way to do so.

I’ll leave you with this quote from Lewis Mumford’s The City in History, to give a perspective from one of the all time great screedmasters on this subject:

Instead of creating the Regional City, the forces that automatically pumped pumped highways and motor cars and real estate development into the open country have produced the formless exudation. Those who are using verbal magic to to turn this conglomeration into an organic entity are only fooling themelves. To call the resulting mass “Megalopolis”, or to suggest that changes in spatial scale, with swift transportation, in itself is sufficient to produce a new and better urban form, is to overlook the complex nature of the city. The actual coalescence of urban tissue now taken by many sociologists to be a final stage in city development, is not in fact a new sort of city, but an anti-city. As in the concept of anti-matter, the anti-city annihilates the city whenever it collides with it.

Don’t hold back Lewis, tell us how you really feel.

This post original appeared on December 6, 2009.

Thursday, April 26th, 2012

Common Driver Behaviors

Steve Vance, who co-runs the Chicago transport blog Grid Chicago, is a huge bicycle advocate. He put together the following short video from clips he shot cycling around the city showing how drivers commonly behave on the streets of the city. If the video doesn’t display, click here.

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