Sunday, November 29th, 2009

Midwest Miscellany

I have received some reports of badly distorted fonts with Firefox on Windows XP. If the font on this site is rendering horribly for you, I’d appreciate you sending me a screen shot, along with your browser and OS version. I’m investigating. In the meantime, you can see a cleaner version by either using Internet Explorer or using the alternate URL www [dot] arenn [dot] com. Please do not share any links using that URL, however, as I don’t want to confuse Google.

Neighbors for Neighbors

Joseph Porcelli, a friend of mine, has a very interesting project going on in Boston that I wanted to highlight. It is called Neighbors for Neighbors, a social networking platform that includes social networks for every neighborhood in Boston. This came out of his experience with his Jamaica Plain neighborhood, which was experiencing a crime wave and needed a way to organize. Fast forward, and N4N has launched, in official partnership with the city of Boston, with hyper-local based social networks that bring people together and span both the online and offline world. This is a model I think is worth checking out.

China’s Empty City

Here’s a fascinating video I found via the NYT Economix blog about an empty city in China from the Al Jazeera English language service. We keep hearing about China’s inexorable rise. Yet clearly there are massive speculative excesses built up in the Chinese economy. We just watched Dubai, another seemingly unstoppable juggernaut, suffer a debt crisis. China is obviously a much strong country, but stories like this make you wonder. (If the video does not display, click here).

Dangerous by Design

Transportation for America released a major study on preventable pedestrian deaths called Dangerous by Design. In the last 15 years, over 76,000 pedestrians have been killed in America. Here is where our 12 Midwest metros stacked up among regions of over one million people. The ranking is by most dangerous, so the top of the list is more dangerous than the bottom:

  • #7 – Louisville
  • #14 – Detroit
  • #20 – Kansas City
  • #21 – St. Louis
  • #31 – Indianapolis
  • #35 – Columbus
  • #37 – Milwaukee
  • #41 – Chicago
  • #43 – Cleveland
  • #46 – Cincinnati
  • #49 – Pittsburgh
  • #52 – Minneapolis-St. Paul (America’s safest major city)

Full data tables are available here.

Oxford Circus Pedestrian Improvements

For those of you who’ve been to London, you know pedestrians overwhelm the too-narrow sidewalks. The city has been looking at various ways to improve this, and one of the more interesting projects is one at Oxford Circus. Broken Sidewalk points us at this video (click here if video does not display).

Here’s the “Before” view:

Here’s the “After” view:

Best Performing Cities

The Milken Institute released their rankings of the best performing cities of 2009. Their index “ranks U.S. metropolitan areas by how well they are creating and sustaining jobs and economic growth. The components include job, wage and salary and technology growth.”

Austin, Texas was #1 in America. Here is how the large Midwest metros stacked up. On this one, a higher rank is better, like a normal league table. The ranking is out of the 200 largest metro areas. You know your region is struggling when it can’t crack the top 50. (In fairness, Peoria, a city I generally don’t cover, was #33)

  • #52 – Kansas City
  • #108 – Columbus
  • #109 – Pittsburgh
  • #123 – Minneapolis-St. Paul
  • #125 – Indianapolis
  • #128 – St. Louis
  • #138 – Cincinnati
  • #148 – Chicago
  • #151 – Milwaukee
  • #153 – Louisville
  • #186 – Cleveland
  • #199 – Detroit

No two ways about it, that’s a pathetic showing.

Detroit Roundup

The Wall Street Journal wrote up an interesting incident here a group of people found an old dump truck on the fourth floor of an abandoned factory and pushed it out of a window. Below is the video. If it does not display, click here. h/t Rust Wire.

Also:

An American Catastrophe (Bob Herbert @ NYT)
David Bing’s last second shot (WSJ)
Michigan’s roads are in a fix. The Detroit News reports that 1/3 of the states total road miles are in poor condition.

8664: River Fields Exposed

LEO Newsweekly, Louisville’s alt-weekly paper, had a great piece recently called Burned Bridge that talks about how River Fields, once a bona-fide conservation group, has become nothing but a front for East End NIMBY’ism. They are a group opposed to the East End bridge at all costs. They so hated this article, that apparently they might have pulled issues from racks to keep people from reading.

Everyone knows the River Fields agenda in Louisville. However, the National Trust for Historic Preservation allowed their name to be attached to the River Fields agenda in filing a lawsuit against the bridges project. Personally, I wouldn’t be sad to see the Record of Decision re-opened, since that is necessary for the 8664 option. But the National Trust may yet find that their own reputation ends up tarnished by linking themselves with an organization that is actually in favor of demolishing historic properties in downtown Louisville to build a bridge there. The River Fields agenda is antithetical to bona fide historic preservation. I actually asked the National Trust what their rationale was for joining the lawsuit, but wasn’t able to get much from them beyond the press release which said it was not about just the East End bridge, and the list of potentially impacted properties taken directly from the EIS. I think they ought to re-evaluate who they are getting into bed with, however.

National and International Roundup

Carol Coletta: Regionalism as identity theft for cities.

Brain Drain Report: Berlin Wall Edition (Burgh Diaspora)

Three simple rules for getting out of poverty – but how easy are they to follow? (One Story Up). Also from One Story Up, Don’t fall in the poverty trap – you night never get out. This is a great public housing oriented blog by Megan Cottrell. Worth checking out.

Housing bust halts growing suburbs (USA Today)

Paris debates plan for new subway (Yahoo News). Proposed 80 new miles of subways for inner ring suburbs at a cost of $31.4 billion.

High hopes and higher standards for Bloomberg 3.0 (Streetsblog)

LA Mayor seeks creative funding to prevent 7 MPH gridlock (Bloomberg)

Smart City Memphis offers Lessons from Great Mayors.

Grand Plans for Rail in Denver Hit a Wall of Fiscal Realities (NYT)

Salt Lake City passes gay rights ordinance with Mormon backing (USA Today)

California exploring detailed strategy for growth (SF Chronicle via @gosner)

Miami ponders whether the good outweighs the bad (NYT)

More Midwest

Chicago
Leaseback deals could come back to bite CTA unless Congress acts (CTA Tattler)
Company piles up profits from parking meter deal (NYT) – Related: Chicago’s parking meter deal a massive rip-off (Streetsblog)
What Oprah’s departure means for the Windy City (Julia Vitullo-Martin @ WSJ)
Review of Aqua (Blair Kamin @ Tribune)
5 year tollway project under budget and ahead of schedule (Tribune)

Columbus
Residents look for trees in I-70/I-71 plan (Dispatch)

Cleveland
An open letter to Cleveland (Cleveland Love via Brewed Fresh Daily)

Detroit
Detroit voters approve $500 million school bond (Detroit News)

Indianapolis
Indianapolis lands 100 more life sciences jobs (Indy Star)
Suburban counties slowly building loop roads to avoid Indianapolis (IBJ) – By the way, Urbanophile readers got the story here first – back in 2007.
Allen Plaza developer bullish on downtown (IBJ)

Kansas City
Mayor-manager system makes problems for Kansas City (KC Star)

Louisville
Would UAW wage concessions have been good for Louisville? (TNR)
Baxter Avenue elevated train station (Louisville Art Deco)

Milwaukee
A void paved over with concrete (Richard L. Birch @ J-S)
City may use water to lure business (J-S)
Republic Airways to add up to 800 jobs.

Pittsburgh
Ravenstahl at crossroads in defining his legacy (Tribune-Review)
How Pittsburgh is managing population loss (Newsweek)

St. Louis
St. Louis second worst city for crime, report says

Wednesday, November 25th, 2009

Thanksgiving Open Thread: Your Civic Ambition

I’ve long said that people with big dream and ambitions for themselves want to live in a city where the civic aspiration matches their personal aspiration. Of course, this isn’t always true. Many of us have a reservoir of affection for our home towns, our alma mater, etc. that transcends this. And it generally takes something to dislodge someone from where they are.

So as we in America celebrate Thanksgiving, I thought I’d throw it out there to everyone to chip in with what you would like the civic ambition of your city to be.

I will lead off with three cities I have a personal connection to.

For Louisville, I’ll share something tactical. It’s my hope that it will make 8664 happen. This plan to tear down an elevated waterfront freeway would save a huge amount of money and turn Louisville into a true river city once again.

For Indianapolis, it is to find a high aspiration consistent with its character. The city is outperforming most of the rest of the Midwest and is well positioned to be an even greater success story. Yet it seems content to think of itself as the “Diamond of the Rust Belt”, notwithstanding that that’s like being happy to win the loser’s bracket in the JV playoffs again this year.

For Chicago, perhaps again a tactical example, but it is to create a transit system worthy of a great city.

Have a Happy Thanksgiving everyone and I’ll see you next week.

Tuesday, November 24th, 2009

Back From Barcelona

We just got back from spending a week in Barcelona. It’s a great city, the weather was perfect, and the crowds weren’t too bad. A very enjoyable trip all around. As usual, I have a few observations that struck me while there.

Urban Culture

I used to have a team I supervised in Madrid, so I had been to that city many times, but never made it to Barcelona apart from one brief in and out trip. I was eager to compare and contrast the two.

One thing that struck me was an analogy to the Midwest. Spain was once a mighty empire, but became a sort of backwater for quite a while. Madrid was always a sort of provincial capital not as important in world affairs as say London, New York, or Paris. And within Spain, Barcelona is a regional capital, one looking to assert its own cultural identity, such as by emphasizing the Catalan language. Some even want Catalonia to be independent from Spain. I definitely noticed that the Catalonian flag is ubiquitous while you need to look closely to see Spain’s national flag.

This is somewhat similar to the Midwest. Chicago is the provincial capital, and other cities in the region want to assert themselves on the national stage. Of course, we’ve got to be careful about analogies, particularly with foreign countries. No city in the Midwest is a rival to Chicago in the way Barcelona fancies itself a rival to Madrid. And Chicago itself is in some ways a second city like Barcelona. But I’ll try to tease out some provocations anyway.

The thing I found most interesting was actually a lack of distinct regional culture in Barcelona vs. Madrid. To me, Barcelona just seemed generically “European”. Sure, you knew where you were, but it was a similar experience to many other European cities. But when you go to Madrid, it is very clear you are in Spain, in a Spanish city. There’s the weight of all the history, the culture, and above all a notable lack of English speakers. Barcelona is much more cosmopolitan. In pretty much every establishment I visited, someone spoke good English, which is definitely not the case in Madrid.

Possibly the language matter is due to Barcelona’s embrace of Catalan. I don’t think it is unreasonable to expect that any Westerner should know at least a few words in Spanish and French, but clearly almost nobody is going to learn Catalan. Hence, if you want to embrace that language, you must be willing to engage in English with foreigners.

Consider also the artists. The artists that are the backbone of the Prado collection – Goya, Velazquez, El Greco – are ones that immediately conjure up Spain in the mind. But Barcelona’s native sons Picasso and Miró were modern artists whose names bring to mind place like Paris and MoMA above all. So too with architecture, as Barcelona has clearly more embraced the modern than Madrid. There are even more modern furniture outlets there.

If I were to draw a surmise from this, it would be that: when a regional provincial capital tries to assert its identity, the result is a sort of generic cosmopolitanism.

If you look at the Midwest, you see this in action. It is Chicago (like Madrid), not the other regional cities, that has the most unique identity. And most of the efforts smaller cities are putting into asserting themselves is through self-consciously embracing a sort of generic cosmopolitan style, by implementing standard urban items like sports stadiums, starchitect buildings, and transit systems that are as much about signaling as they are about actual results.

Beyond this, it seemed to me that Madrid was much more a business center. Barcelona didn’t give off that vibe at all. I’m not even sure what its main industries are. Also, Madrid seemed to have much more recent construction than Barcelona. Tons of new apartment blocks and office towers had sprung up there. And there was an orgy of freeway construction (including several underground tunnels) and transit system expansions, including many new tram lines that reach even suburban office parks. I didn’t notice nearly as much of that in Barcelona.

Density and Transportation

As with Madrid, Barcelona is an exceptionally dense city by the standards of the west. The core is about 40-50,000 per square mile, greater than any US core other than Manhattan. But as is often the case in Europe, this is in the form of 6-8 story buildings, not skyscrapers, refuting the notion that height equates to density. There are almost no vacant lots or surface parking anywhere in the city, though the interior of blocks often features courtyards or lower rise structures that make them look hollow. Here’s a view of the city taken from one of the bell towers of Sagrada Familia:

Naturally this enables a robust transit system, and Barcelona has an excellent, high frequency subway network that, as with many European cities but unlike in the US, is a mesh-like structure that serves most of the city, enabling you to get almost anywhere with a simple transfer. It is not a core-centric radial system. Headways are excellent. I never waited even one minute for a train and something like eight times in a row the train pulled into the station just as we arrived at the platform. There is also an extensive and well-patronized bus system with a modern rolling stock.

The streets themselves are largely a grid outside of the gothic-era core. Avinguda Diagonal cuts through the grid at an angle like Market St. in San Francisco. Many of the streets are very wide. I often hear people in places like Indianapolis bemoan their wide streets. I take exactly the opposite view. In most cases, the street ROW is actually too narrow. There are many Barcelona streets wider than the right of way of Washington St., Indy’s widest. The big difference is that in the US we give most of the ROW to cars, with only tiny sidewalks. In Barcelona and throughout Europe they accommodate plenty of cars, but give large amounts of the street to general sidewalks, wide medians, landscaping, and such, creating a much better pedestrian experience. Barcelona also has a plethora of one way streets, which seems not to have hurt it.

Speaking of pedestrians, there is a high density of them throughout the city. I did see some bike lanes, but most of these appeared to be carved out of previously pedestrian space, not auto traffic. There is also a bike share program, which accounted for about 80% of all the bikes I actually saw on the street. Barcelona’s biking culture far lags that of many US cities. The preferred mode of transit is instead the scooter, which is ubiquitous. It appears to be legal to park them on the sidewalk.

Unlike in the US, all of the sidewalks I saw were either flagstones or modular pavers. It also appears that they run most of their utilities under the sidewalk, not under the street pavement. I saw very few projects tearing up streets, but several on the sidewalk, though generally not disruptive. It’s a great solution. To access utilities, you simply pull up the pavers, shovel away the sand, and get at it. Replace the sand and pavers when you are done. Looks better than concrete and functions better than cobblestones. Also, they use granite curbs and wheelchair ramps. Very nice.

Architecture

Barcelona is known for its architecture, particular that of the so-called modernista movement (related to Art Nouveau). The best known exponent of this, and certainly the most original, was Antoni Gaudí. His works are heavily influenced by nature and come across as sort of a fairy tale setting.

His most famous work is the Sagrada Familia church.

Here’s a closer look at the bell towers. These are actually mosaics.

This project was started in the 19th century and is still under construction. It is estimated to be completed in 2030, making it like a modern day equivalent of the gothic cathedral projects.

Another well known Gaudí building is Casa Milà, also known as La Pedrera.

Facade detail showing the intricate ironwork railings:

Chimneys (aka Imperial stormtroopers) on the roof:

One last example is Park Güell:

Gaudí was fortunate to work at a time when he had access to modern construction techniques such as steel frame construction, but also to craftsman who could create his unique works.

When you think of all this old architecture that even today enchants visitors, it makes you think. There was a great era of architecture from say 1850-1914 in Europe and from 1875 to the end of the art deco era in the early 1930’s in the United States. It was actually a great era in many other ways. The French called it the Belle Époque. And it wasn’t just the modernista and Art Nouveau in Europe. Most of the core civic structures of the Midwest were built in this era as well. Virtually none were built after them.

I think of Indianapolis, where the Indiana State House, the Soldiers and Sailors Monument, Union Station, the movie palaces, and the Indiana World War Memorial (started 1926) all date to this era. Has there been a truly great building constructed in Indianapolis since the Scottish Rite Cathedral in 1929? A similar story could be told in most places. For much of the US, this is the era that defined the architecture that creates the civic sacred space. Europe obviously has a longer architectural history, but this era saw most of the last of the entries. If many of these were simply vernacular pieces, at least they were good ones, especially compared to what came later.

The mid-century period and beyond produced plenty of architecture that is critically acclaimed, but for the public at large even the best of these buildings inspire more respect than affection. And unlike previous eras, the vast bulk of the copies of the masterworks were severely lacking. Many of them blight our cities to this very day.

What went wrong? In the Great War and the Great Depression something in the human spirit was grievously wounded.

But today we see signs of recovery. While I have my quibbles with starchitecture, there’s little doubt many of these structures are beloved by the public in the way a Miesian monolith never will be. These architects remembered that aesthetics is the answer to the great question of “What is Beauty?”, a question too seldom asked in the modern world. While it is too early to judge, perhaps we are the start of another age of good design. I don’t think it is any accident that like the previous one, today’s design age takes place against a backdrop of economic revolution and all that comes with it. Will the Great Recession kill the baby in its crib? We’ll see.

Here are a few more shots from Barcelona. First, Casa Batlló by Gaudí

The Mercat de Santa Caterina

The Museu Nacional d’Art de Catalunya

The Palau de Musica Catalana

Dining and Entertainment

I won’t say much on this, other than that Barcelona is a famously hard partying town. Alas, I’m past the age for such things, but I did notice quite a crowd of people still carousing on the streets at 6:30am as we were in the cab on the way to the airport to leave. Reputedly there are over 20,000 bars in Barcelona.

The food is also quite good. I didn’t go hungry, that’s for sure. Very heavy on seafood, as one might expect being so close to the coast.

I’ll leave you with one of those strangely named restaurants that always gives one pause in a foreign country.

Monday, November 23rd, 2009

Migration: Geographies in Conflict

My latest post is up over at New Geography. It is called “Geographies in Conflict“. I examine the curious case of why there is so much net domestic out-migration from supposedly booming “world cities”. Some attribute this to high taxes driving people out. I have a different take. Yes, taxes are higher there, but generally higher costs and the public policy choices they make result from macroeconomic changes. Notably, bifurcation of the city into two economic geographies and labor markets and the resulting two-tier wage structures. Cost structures and public policy clearly follow the more economically high value group, resulting in an outflow of those losing out in this new world. There’s a lot more to it than this simplified summary, so please check it out.

I am increasingly taking a much more negative view of the rising income gap in America. I think the focus on the “top 1%” is a red herring. We’ve long had a handful of plutocrats in almost any city. What we see now is what we might think of as the development of an “overclass”. I’m not sure how big it is. Maybe 5-10% of the people, perhaps more in elite core cities. There are so many of these people that their mere purchasing power drives up real estate and other costs significantly, displacing others – not just new immigrants, but also the traditional middle class – from large areas of cities.

Thinking about this in terms of the Midwest, clearly we see that Chicago is experiencing this effect and other places aren’t. When I started work at my first job out of university at Andersen Consulting in Chicago in 1992, I made less than the median income. Today, brand new employees at Accenture (the Firm’s current name), make more than the median income. I noted before the widening gap between new law firm associate salaries in Chicago and Indianapolis. Once the gap was 30%. Now a partner at a top tier Indianapolis firm tells me it is 100%. When I previously gave that stat, someone else said it was really closer to 60%, but that is still a doubling of the gap in recent years. That shows the salary inflation that has taken place in Chicago.

Think about this in terms of housing costs. A $100,000 annual salary is not uncommon for Chicago professionals. Couple with another $100K professional and you’ve got a $200,000 annual household income. Using a rule of being able to buy a house 3x your gross annual income, that means this couple can buy a $600,000 home without any gimmicks at all. And there are thousands and thousands of people with approximately that purchasing power. Unlike in places like California, the run-up in home prices in Chicago, at least in upscale urban neighborhoods, is fully supportable by incomes. This is why housing is unaffordable there for so many and will remain so.

They dynamic unleashed by this large upper-middle overclass creates a two-tier economy and unbalances public policy in its favor, leading to the exodus of the traditional middle class from the city and region. That doesn’t mean top talent can’t still be coming in. There’s just fewer of them. This dynamic features a positive feedback loop whereby more top talent raises overclass wages even higher, more squeeze on the middle class, more migration, etc.

Still, Chicago remains among the cheapest if not as the cheapest Tier One type city in America. I attribute this to the fact that, while a powerful business services center and secondary financial hub, it is not the epicenter of any major 21st century macro-industry the way Silicon Valley is for technology, LA for entertainment, NYC for finance and media, DC for government, Miami as a Latin American gateway, or even Boston with its educational complex. And I’d argue that partially a result, Chicago is notably more pro-growth and pro-business than many other Tier One cities. I will have more to say on this topic at a future date. For now, let us just note that while the problem of a two-tier economy are present in Chicago, a lot of the symptoms of unaffordability are moderated in comparison with say NYC or California. Can Chicago figure out have the best of both worlds?

As for other Midwest cities, rather than moaning about not being Chicago, they should look on the plus side and take comfort that they don’t share this problem of a two-tier economy and major wage gap between an overclass and everyone else. Of course, the downside is that most of them also don’t have as much economic dynamism as they want. The challenge is to ramp up the economic engine without leaving a good chunk of the region behind. Since their economies are much more dependent on industries and competitive positions that aren’t subject to clustering economics, these places do need to keep an eye on the bottom line as they look to upgrade themselves.

That’s the challenge for them. How can they become more attractive to talent needed to power 21st century cities while not undermining their broad based economic attractiveness to the middle class? It’s not an easy path to walk. Again, more on that in a future post.

Thursday, November 19th, 2009

Ryan Avent: Disruptive Technologies

[ For those who don’t already read him, Ryan Avent is an editor at The Economist magazine who also writes for Streetsblog Capitol Hill and at his own blog The Bellows. Ryan is also an honest to goodness real economist too. He’s great for getting a more progressivist take on urban issues from the perspective of an economist, and you’ll often find him jousting with the likes of Ed Glaeser. I’ve been reading Ryan a while and he’s great. It was also great to get to meet him and person and be part of a panel with him at Rail~Volution 2009. I recommend checking his blog out.

This post ran on his blog back in August. Though I subscribe, I somehow missed it until reminded of it by Jim Russell. I thought you all would find it interesting so I am reprinting it here with permission. ]

Disruptive Technologies by Ryan Avent

I’ve been enjoying Tim Lee’s posts discussing the introduction and impact of a disruptive technology. Let me quote some (a lot) of what he’s been writing:

The key characteristic of a disruptive technology is that at its introduction, it is markedly inferior to the then-dominant technology, as judged by the existing base of customers. A classic example is the microcomputer. When the first microcomputers were released in the late 1970s by Apple, Commodore, and others, they were inferior in almost every respect to the minicomputers and mainframes that then dominated the computer market. People bought microcomputers for one of two reasons: they couldn’t afford a minicomputer, or they had an application where the microcomputer’s unique advantages (i.e. smaller size) were a particular advantage.

It’s important to understand that the innovator’s dilemma is not that disruptive technologies are “so innovative” that incumbent firms can’t keep up with them. To the contrary, disruptive technologies are often relatively pedestrian from an engineering point of view. Minicomputer manufacturers would have had no difficulty entering the microcomputer market if they’d wanted to. Rather, the innovator’s dilemma is that incumbents find it extremely difficult to make disruptive technologies profitably.

He quotes Clayton Christensen:

A characteristic of each value network is a particular cost structure that firms within it must create if they are to provide the products and services in the priority their customers demand. Thus, as the disk drive makers became large and successful within their “home” value network, they developed a very specific economic character: tuning their levels of effort and expenses in research, development, sales, marketing, and administration to the needs of their customers and the challenges of their competitors. Gross margins tended to evolve in each value network to levels that enabled better disk drive makers to make money, given these costs of doing business.

In turn, this gave these companies a very specific model for improving profitability. Generally, they found it difficult to improve profitability by hacking out cost while steadfastly standing in their mainstream market: The research, development, marketing, and administrative costs they were incurring were critical to remaining competitive in their mainstream business. Moving upmarket toward higher-performance products that promised higher gross margins was usually a more straightforward path to profit improvement. Moving downmarket was anathema to that objective…

Four times between 1983 and 1995, DEC introduced lines of personal computers targeted at consumers, products that were technologically much simpler than DEC’s minicomputers. But four times it failed to build businesses in this value network that were perceived within the company as profitable. Four times it withdrew from the personal computer market. Why? DEC launched all four forays from within the mainstream company. For all the reasons so far recounted, even though executive-level decisions lay behind the move into the PC business, those who made the day-to-day resource allocation decisions in the company never saw the sense in investing the necessary money, time, and energy in low-margin products that their customers didn’t want. Higher-performance initiatives that promised upscale margins, such as DEC’s super-fast Alpha microprocessor and its adventure into mainframe computers, captured the resources instead.

Now, here’s Lee again:

But companies aren’t big people, and it’s a mistake to think of them that way. In 1983, any given engineer at DEC could have easily quit his job making minicomputers and taken a job at Apple or IBM making microcomputers. But it would have been much harder for DEC as an institution to make that same transition. Turning DEC into a microcomputer company would have required a wrenching, years-long struggle to essentially build a new company from the ground up. Indeed, as Christensen documents, the few firms that have successfully pulled off such a transition have done it by essentially growing a new company inside the existing one: senior management would start a subsidiary devoted to the disruptive technology and keep it insulated from the parent company’s managerial structure. The hope was that by the time the parent company fell on hard times, the subsidiary would hopefully have grown enough to sustain the overal company’s profitability. There are a few examples of this strategy working, but it’s an extremely risky and difficult process.

Me being me, I read this and instantly began thinking about cities. One of the things I’ve been puzzling over recently is the implosion of formerly successful metropolitan areas. In theory, there’s no reason why the decline of one of a city’s principle industries should lead to the decline of the city itself; cities have useful infrastructure, institutions, and human capital, and the decline of one industry should free up space that can be utilized by a new, growing industry.

In practice, things tend not to work out this way. Cities that face the loss of one of their main industries tend to suffer through a long period of decline before recovering, if in fact they manage to recover at all. Why is this? Why should all of the many things that go into the making of city come undone in one place just because one particular business failed, while all of the things that go into the making of a city are rebuilt from nothing elsewhere in the country? It makes no sense.

I have tended to focus on negative feedback loops as a primary explanation for this dynamic, and I feel certain they play an important role. Loss of part of a city’s tax base will lead to reductions in the quality of services and increasing tax rates, which will lead richer households to leave, further shrinking the tax base. Declining services lead to failing schools and high crime rates which accelerate depopulation and so on. A city’s most talented workers will have the most opportunity available elsewhere, and so they’ll be the first to leave, sharply reducing an area’s competitive attraction, thereby encouraging further talent to leave, and so on.

Ed Glaeser has argued that it’s very difficult to recover from depopulation because of the durability of the housing stock. Falling population alongside steady housing supply leads to falling home prices. This, in turn, attracts those who require cheap housing — the poor — which will further degrade housing values and attract more poverty. An increasing population of poor residents will also tax city services which will further imperil budgets, and so on.

That certainly seems like enough to destroy a city, but it isn’t. In real life, cities experience negative shocks all the time, but they don’t always enter into a major downward spiral. And some cities which do face a downward spiral manage to pull themselves out of it and enjoy an economic renaissance. Why?

I think Lee’s disruptive technology post offers us a glimpse at an explanation. When a metropolitan area has an old, successful, established industry as its economic driver, that area builds its infrastructure and institutions around that industry. These institutions are likely to be unwilling and unable to accomodate and support growth industries. We can think about legislators in a Rust Belt state who fight to protect old industries even when the protections they seek would undermine growth industries. Or banks in old manufacturing centers that are reluctant to invest in start-ups with sharply different practices from the old giants.

If you have a daring new idea, you don’t take it to someone who’s living fat off something which has worked for decades. You take it to someone who is hungry. Many of the Sunbelt boom towns which have sprung up over the past half century grew at the start by accepting what investment they could. I’m reminded of my hometown, where leaders were anxious to attract high-tech investments to their new Research Triangle Park. It was lack of better options that gave them the idea in the first place — something which might not have occured to leaders in a city where hundreds of thousands of people earned good union wages in manufacturing plants. And while leaders definitely wanted to craft a research environment, they took the investments they could get. Not having recently been on top of the world, they had the benefit of not suffering from wounded pride when less-than-glamorous operations came to invest.

And I think there’s something to the idea that new growth cities aren’t inherently superior to older, richer metropolitan areas. Rather, their advantages are fairly mundane — they’re cheap, accommodating, and ready to please. On the other hand, older, richer cities don’t realize that they have a problem until it’s clear their bread and butter industry won’t ever be the same, at which point they’re faced with serious problems and have few resources to attract new industries. At that point, there are few routes to recovery. A city might get lucky (by, say, enjoying proximity to another metropolitan area which enjoys a booming economy). It might manage to retain enough in the way of resources from niche industries, like tourism, to maintain a framework capable to supporting a new growth industry. Or it might find that one of its older and smaller industries is capable of growing large enough to fill in the missing economic strength.

There are tricky implications to this. It suggests, for instance, that the availability of new metropolitan areas is crucial in maintaining a flexible, growing economy. That creative destruction doesn’t just mean the scrapping of once-proud firms but of whole cities. It also suggests that my previous prescription for fighting urban decline — a program of temporary fiscal support — could be counterproductive. It might delay inevitable economic adjustments.

I don’t know that I accept that it’s necessary to destroy old cities and create new ones to keep an economy fresh. Revolutionary geography could be interchangeable with institutional or political revolution. That is, places that are less flexible geographically might instead face increased pressure to change institutions or otherwise accommodate disruptive economic change. Still, this seems to be an important part of the story of urban decline.

Related on The Urbanophile

Creative Destruction is Real
On Innovation
Resolving the Paradox of Success

Tuesday, November 17th, 2009

Replay: Mega-Skepticism

[ This post inaugurates a three part series on “megaregions” and the applicability of this concept to the Midwest. It is a repeat of something I wrote on the subject a bit over a year ago. That should lay the ground work. Part two of the series will be a review of the book “Megaregions”, edited by Catherine L. Ross. The third part will be some thinking on ways the Midwest might be able to apply megaregional thinking to its problems. As you will see, I come to this subject as a skeptic.

This post originally ran on July 11, 2008]

There seems to be a lot of talk lately about an expanded concept of regionalism. Perhaps the best known exponent of this view is creative class guru Richard Florida, who published his thesis in a paper called “The Rise of the Mega-Region“. In Florida’s view, the mega-region is the logical unit of economic activity, superseding nation-states, US states, or metro areas. He defines mega-regions as basically a conglomeration of metros and their surroundings with more or less continuous development as indicated by light emitted and tracked from space. In this logic, much of the Midwest is in what he dubs the “Chi-Pitts” mega region, a collection of 46 million people creating $1.6 trillion in economic output (GDP equivalent) per year. This rates that mega-region third in world based on economic output. His map incapsulates the northern arc of the Midwest around the Great Lakes, extending from Minneapolis to Pittsburgh. Florida believes that thinking mega-regional is one way for struggling cities to boost their fortunes.

Author Richard Longworth has a similar view. He sees Midwest state boundaries as historical anachronisms unsuited to the modern economy. His travels while researching his book brought to light that few people in Midwest even know what’s going on in the next state, much less around the world. In his view the Midwest has great assets, but significant challenges, and the best way to deal with the latter is through a self-consciously Midwestern strategy developed through new regional institutions.

Academic institutions appear to be getting in on the game as well. The Committee on Institutional Cooperation (CIC), an organization of Big Ten universities plus the University of Chicago, recently held a summit on the regional future of the Midwest in Minneapolis, co-sponsored by the Federal Reserve.

It is easy to see the surface logic and appeal of this. The Midwest is collectively struggling, so it makes intuitive sense to pool resources and tackle the problems together. Who could be against regional cooperation?

What I can’t help noticing, however, is how few concrete proposals are out there that would appear to show any material uptick from regional cooperation. Other than holding conferences, what is it that cites and states in the Midwest are actually supposed to do to implement this strategy? What does a mega-regional solution allow a city to do that it couldn’t do on its own?

I have struggled to think of operationalizable actions, but can’t come up with many. In fact, most of benefits of thinking bigger appear to be elusive. Let’s think about why size and scale works in a business environment. There are a few reasons.

One is economies of scale. Typical scale economics comes from capital efficiency. That is, a large producer can substitute fixed costs for variable costs, and with large volumes produce a unit cost that can’t be beat by smaller producers that can’t absorb the fixed costs.

Two is purchasing power. This exploits economic inefficiency from being a dominant purchaser of inputs or producer of outputs such that a company can trade on favorable terms. We see just such a battle playing out for iron ore, featuring a large customer (China) haggling back and forth between a handful of large producers (Vale, Rio Tinto, etc).

Three is additional specialization and the division of labor. With more people, you can have greater specialization. This enables ever more division of labor which creates a more efficient production environment a la Adam Smith’s pin factory.

Four is diversification. This is the logic of the conglomerate like General Electric. Being in diverse businesses, it is better able to weather the storms that hit any particular one of its units. It should be noted that conglomerate thinking is definitely out of favor.

Do any of these apply in the case of the Midwest? It is hard for me to identify specific scenarios. To give a real example, I think of the triangle of cities formed by Cincinnati, Indianapolis, and Louisville. These are all smallish major metros separated by about 100 miles. While none would be mistaken for Sunbelt boomtowns, none of them are Cleveland or Detroit either. They are also a good example since they are in different states. How might these cities cooperate to take advantage of mega-regional thinking?

I can already name some small scale things that have been done. One is mutual aid. The electric utilities in the three cities have long sent crews to help out the others after major storm related outages. And the cities formalized a disaster assistance pact. This is sort of the diversification argument and seems to create something tangible.

Beyond this, are the cities able to take advantage of scale economics? I don’t see how. I could see some level of capital efficiency that could be achieved if, for example, the three cities shared an airport located somewhere between them. But they seem far enough apart not to be able to do that for anything I could think of.

Is specialization an option. In theory, yes. In practice, I’m dubious. Thinking about how this might work, I use the example that Cincinnati could be the headquarters city, Indianapolis the life sciences city, and Louisville the tourism city. Each city would specialize and the others would agree not to compete but support the chosen city for each individual segment. This would eliminate costly duplication of effort and allow more muscle to be put behind each individual item. But would this happen? Highly unlikely. None of these cities is giving up an inch in fighting for all three items. That’s just not gonna happen.

Now, we do see around the country some degrees of specialization in cities that are nearby such that one could argue they form an extended region. NYC specializes in finance, DC in government, for example, and there is a lot of travel back and forth. In Texas, Dallas, Houston, and Austin seem to have specialized in complementary niches. But I don’t see a great opportunity for this in the Midwest, at least not in a pratical sense.

Ironically, the one area I do it happening in is within those much maligned state boundaries. For example, Indiana University and Purdue University have a great degree of specialization. Purdue has engineering, pharmacy, and agriculture as specialities. Indiana University has law, medicine, etc. They complement each other so well, in fact, that they are able to share major regional campuses in Indianapolis and Ft. Wayne.

What about purchasing power? This is something I do see some logic in. Namely, if the Midwest congressional caucuses pooled their power, they could accomplish something. Again, how likely is this in practice? Most congressman and senators seem primarily concerned with their district, and not that likely to expend clout elsewhere. But if a Midwest caucus were formed in the House and Senate, there could emerge something. Perhaps the forthcoming battle over the Great Lakes Compact would be a good place to start.

There are certainly benefits to an expanded view of the market for state and local level procurement. For example, “home cooking” in terms of favoring in town or in state suppliers probably raises the cost of road construction, etc. Throwing this wide open to Midwestern competition, with common standards would be a financial benefit. But of course, so would opening it up to global competition. And that’s just unlikely to happen due to politics. Not in the Midwest, not anywhere.

Looking again at our three cities, I don’t see them able to reap much advantage from pricing power effects of cooperation. And even if they did, would this really materially change their economic fortunes? Unlikely.

So where are the benefits of mega-regionalism to be found? Jim Russell of Burgh Diaspora views it as less about scale than about critical mass, particularly critical mass of talent. This is a powerful metaphor because it makes us think that once a certain talent level is reached, a chain reaction will set off a powerful economic explosion.

I prefer to think of this as a concept I call “minimum efficient scale”. That is, there is a certain minimum size it takes in order to support certain things or to do them in house. For example, a city needs to be a certain size to support commercial air service, a pro sports team, or a Neiman Marcus. Would cooperation between our three cities enable anything they can’t support today because of inefficient scale?

There is some intriguing evidence here. Cincinnati seems to have benefited from this. They have a Delta air hub, a major league baseball team, a major amusement park, and an IKEA store. I would argue that most of these only make sense for Cincinnati in the context of exploiting the expanded regional population. However, Cincinnati has favorable geography (being also close to Dayton and Columbus and thus serving as a natural focal point) and was traditionally the more prominent and large city of the three. The benefits to Cincinnati are clear, but are there benefits to anyone else? Not anything significant. What’s more, none of these items required any mega-regional cooperation at all. They happened naturally because of the marketplace. What would the cities specifically cooperate on that would give them something they don’t have today?

When it comes to talent, there are certainly benefits to having more of it. But I don’t see any particular benefits to mega-regionalism here. What would they be? Idea exchange? Possibly, but there is no particular geographic advantage to that. I can exchange ideas with anyone. If I were a struggling Midwestern city, I’d probably be more concerned about building connections to successful places and to the overall global economy than I would be to my failing neighbor next door. Believe me, if a good idea comes up, people will find out about it. The Youngstown shrinkage experiment is a good example of that.

Could there be an expanded labor market? I’m having trouble seeing it. In our example, consider a life sciences company in Indianapolis. Would they be more easily be able to tap into labor in Louisville and Cincinnati if there were some cooperation in place? Perhaps if the respective life sciences communities were intertwined, there would be more awareness of job opportunities, but my experience is that people are either going to stay where they are, or follow the money. In the latter, they probably aren’t moving 100 miles for what are probably similar wages. They are going to go to San Diego and make some real bucks. What’s more, the regional cities I know seem to harbor a special contempt for each other, which would seem to make it doubly unlikely someone would move if they bought into that rhetoric.

I also do not buy into the “chain reaction” analogy. I’ve yet to see a successful example of this that spans metro areas.

Geographic proximity alone can offer some benefits. Philadelphia is certainly benefitting from proximity to New York as NYC prices turn it into the sixth borough. Pittsburgh can’t tap into that. But I view this as less of a mega-region, than just the colossus that is New York City expanding its sphere of influence as it becomes an ever more important world city. There is a similar effect going on with Chicago and Milwaukee, but is that replicable elsewhere?

I think again about this, what would proximity alone bring to our three cities? Well, for some it could mean easier access to professional sports. But other than Reds baseball, which has a very broad fan base for historical reasons, I don’t see it. A local Louisville blog recently noted the lack of inroads the Colts have had in building a fan base in that city, for example. And looking to the bigger city example, what benefit could Indianapolis reap from closer engagement with Chicago that say Kansas City, which is outside the Floridian mega-region, could not?

Florida himself probably offers the best potential explanation. He argues that mega-regional integration will lead to emergent properties that can’t be predicted based on the inputs. This is plausible, but not where I’d be hanging my hat if I were trying to figure out where to invest my time. And emergent properties could be good or bad and Florida doesn’t predict what they might be.

Longworth is also big on mega-regional thinking. He does a great job of diagnosing and describing the Midwest’s problems. But I do not see how the specifics of his proposed solutions will dramatically change the Midwest’s course. And he himself recognizes the political difficulty of making them happen. Among his proposals, he wants to see a Midwest regional think tank and newspaper. He’d like to see reciprocal in-state tuition. He’d like to see a higher degree of academic specialization among Big Ten schools with less competition. And he’d like to see states call a cease-fire in the economic incentives game versus each other. All good ideas, and potentially beneficial. But I don’t believe they are game changers, apart potentially from the academic specialization, which seems to be a daunting proposition.

I’m willing to be convinced. I clearly see the benefits of regional cooperation on a metro or economic area basis. Even there, however, we’ve seen significant challenges operationalizing even that idea. To really justify significant time and effort being spent on mega-regionalism beyond the quick and easy idea exchange variety, I think a specific program of recommended actions and the type of results we should expect to see from them needs to be put forward. Otherwise I’m inclined to view mega-regionalism in the Midwest as dinosaurs mating. Rolling up a bunch of weak players won’t make a strong one.

I welcome any thoughts on this subject, of course.

[Update 7/12: For a 1990’s take on the concept of a super-region from the perspective of Cincinnati, refer to the Gallis Report (9MB PDF)]

Sunday, November 15th, 2009

Principles of Privatization – Part 4: Guidelines for Action

I’ll conclude my series on privatization with a series of guidelines for action or best practices you should look at to determine if privatization is right. I take a pragmatic view on this. The private sector and government are always going to work together. We just need to make sure we do it right. I had a list of considerations I had developed it, and supplemented it some insights from Indianapolis blogger Paul Ogden. Ogden is a strident populist Republican who used to favor privatization but is now mostly skeptical. Even if you don’t go for his politics, I think he made some good points, so I included them.

  1. Understand why you want to do the transaction. There are lots of potential motivations and we should understand the ends we are going for. This is often independent of the entity in question. For example, when Indianapolis Mayor Steve Goldsmith privatized the water utility management, the motivation was typical “good government” efficiency and a belief that a private operator would do it better and cheaper. Today, water and other privatizations tend to be more about jackpot payouts.
  2. There should be clear, obvious, and compelling value, and transparency how it is being generated. Given the risks inherent in any transaction, it should only be undertaken if the value is clear. Back to my post on value levers, we should understand which ones we are pulling.
  3. One time funds should be spent on one time expenses or put in the bank. Any operating tails created should be fully funded.
  4. There should be a universe of multiple qualified bidders. If there is one or only a couple firms who can provide the service, this exposes the government to the risk of bad deal with a near monopoly and no alternatives. When looking at contracting out to non-profits, this is also a risk. For example, Community Development Corporations tend to be territorial monopolies. Given the size of most of those contracts, the financial risk is not high, but certainly there is risk from having a single or handful of organizations consistently do everything.
  5. The transaction should be as purely financial as possible to maximize bid fairness. Think about highway construction projects. These are subject to a sealed bidding process where every contractor has access to the exact same specs and the lowest qualified bidder is required to be picked for the job by law. The Indiana Toll Road and Chicago Skyway leases were similar. The terms were known and the competitors were merely putting out dollars. Not not every service is this way. Professional services are generally not, because skills are so different, the deliverable often is not sufficiently spec’ed to give a true apples to apples comparison, and relationships are very important. But that does render them more subject to outside influence.
  6. Avoid contracts of excessive length. In a large scale private outsourcing, the benefits are usually higher a few years down the road. It takes time to centralize, offshore, etc. In fact, doing that can even cost more money in the short term. So to get the client to buy, the vendor has to generate current year savings for the client by effectively fronting some of the benefits. They hope to recover in this, along with their investments in efficiencies and transition costs, in the later years. That’s one reason why durations can be longer, such as 5-7 years. The vendor needs to have a long enough time span locked in to recover those up front costs. So it can be reasonable to have longer term contracts, but that should be based on things like recovery of investments and pre-funded benefits. We shouldn’t just sign a long term deal just because.

    I always wondered why infrastructure leases are so long. The Skyway and Toll Road leases are 75 years. I’ve never seen an investment made on a 75 year business case. For the IT investments we used to make, we expected maximum three year payback. When you start discounting back the revenue from 75 years in the future, the present value of the money can’t be that high in the out years. I haven’t figured it out completely, but one thought is that vendors want the long term lease so that they can force the government into an advantageous renegotiation at some point.

    Consider the toll road leases. I noted that part of the value of these lease in the hedge created. The lessee is taking on all of the risk about revenues, repair costs, traffic volumes, etc. If something takes a turn for the worse, as with the current recession, the concessionaire is left holding the bag. But conceivably down the road some provision of the lease might trip up the government as well. For example, highway leases often contain non-compete clauses that prevent the government from improving parallel roads. If the government ever wanted to change something, they lessee is now in a strong position. The longer the lease, the more likely something like this will happen. Think of it as a hedge for the hedge.

    Whatever the case, we should understand exactly why the length of the deal is what it is and it should make intuitive sense.

  7. Termination for convenience. The government should be able to terminate the deal with some appropriate notice period and the payment of a known in advance and reasonable termination fee. We should not be stuck with an under-performing vendor and the government should have the right to get out of the deal without having to sue for breach of contract. It is clearly reasonable to expect to pay a penalty to do so, but this should be a reasonable penalty, negotiated in advance, and declining over time. Possible there could be a variable element in things like Toll Road leases to protect the vendor from the government canceling the deal just because it would look advantageous to rebid it in the current market.
  8. Avoid impairing the right of future governments to change public policy. This can be very subtle. The non-compete clause in a highway lease is a good example. That one is probably ok, as long as it is not overly broad. But vague wording could be disastrous. Outsourcing water utilities shouldn’t do anything to prevent various water usage reduction initiatives the city might want to take on, or cause problems with other regulations related to the use of the systems.
  9. The privatized service should be one that is visible to the general public. Someone in a Chicago newspaper said that privatizing sewers would be better than privatizing water because people care about what comes out of their tap but not about what goes out of their toilet. My view is just the opposite. Perhaps sewers are politically easier to privatize it, but we should want to privatize things where the public itself will provide an extra layer of vigilance. Things like roads, parking meters, and water are used by a broad section of the public and it is very visible whether or not they are being managed well or poorly.
  10. Do not privatize services consumed by vulnerable populations who cannot effectively protest against poor performance. Ogden criticized the Indiana social services outsourcing contract as an example of how not to do it. However, I think this one actually worked. That is, when it was discovered that the contract was not working, the state backtracked. Those in need of social services are, unfortunately, fairly numerous. Also, there are established advocacy organizations that serve as watchdogs. So while this particular contract didn’t work out, ultimately the public oversight function worked. I would agree with Ogden, however, on privatized corrections. This seems to be a pretty popular function to outsource, and it is easy to see why. People who are incarcerated probably can’t vote, have little ability to influence policy, and are publicly unpopular. I can’t imagine a scenario in which I believe privatizing corrections is a good idea. That’s not to say all vendors and contracts are performing poorly. But there is just no possibility of public oversight.
  11. Vendors in privatization contracts should be subject to open records laws related to those contracts as if the government provided the service. Privatization of services should not involve moving government behind closed doors. However, there are probably some viable differences here. For example, with a vendor on a fixed price contract, it probably isn’t necessary to be able to find out what they paid subcontractors for materials and services. That’s legitimately sensitive competitive information. But clearly when operating in the public sphere, businesses need to be accountable to the public. If they don’t want to be, that is there choice. They can simply not bid on the contract.
  12. Avoid asset leases or sales in bad markets. Right now would not be an ideal time to try to, for example, lease a toll road. Credit it tight and the economy is tough. Indiana and Chicago leased their toll roads at the peak of the bubble. You can’t always time the market, but anyone can tell that right now is a tough time to get deals done and the terms probably aren’t the best.

More in This Series

Friday, November 13th, 2009

Reducing Carbon Should Not Distort Regional Economies

My latest post is online over at New Geography. It is called “Reducing Carbon Should Not Distort Regional Economies“.

Here is a map of proposed compliance costs by quintile for the pending cap and trade bill in Congress put together by the Brookings Institution:

As you can see, the costs vary widely by region of the country, with the lower Midwest through the Mid-Atlantic and the South getting whacked. New England, the Upper Midwest, and the West – notably California – get off light.

When it comes to carbon, here’s my really simple Hoosier logic. I don’t know what artificially inducing a material change in the composition of the atmosphere by pumping large amounts of carbon dioxide into it will do, but chances are it will do something. Since I like the world the way it is – I’m a Hoosier, remember – maybe we ought to think about maybe not doing that. I’m not sure I’d spend unlimited sums of money on it, but I’d spend something. And if it reduces our dependence on oil from unsavory regimes, so much the better.

I tend not to opine much upon national debates. However, I’m not going to just sit there and let California try to knife a good chunk of the Midwest’s economy. Any carbon reduction regime should be as neutral as possible in the way it distorts regional economies. And it shouldn’t encourage manufacturing businesses – of which, believe it or not, there are still plenty in the Midwest – to move to carbon havens like China, where they already would get the “benefit” of lax environmental laws, dubious workplace safety requirements, and no independent unions or much else in the way of labor rights.

This is doubly true since increasingly it seems like this cap and trade bill won’t even reduce carbon emissions. Two of the EPA’s own San Francisco lawyers penned a Washington Post op-ed to this effect. They also have a You Tube video comparing the cap and trade bill to the Challenger disaster.

The Avenue

The Brookings information on cap and trade was presented in a blog called The Avenue, which they are producing in conjunction with the New Republic. Brookings, through the Metropolitan Policy Program, is one of the most respected names in urban policy, so this one is worth checking out.

Pecha Kucha Indy

There was a little something different for Pecha Kucha Indy Vol. 7. This event was part of the Spirit and Place festival and involved a competition. Each entrant was proposing a project designed to make the city a more inspiring place, and the winner was awarded $10,000 from the local community foundation to make their project a reality. I was privileged to be one of the judges.

The winner turned out to be Growing Place, a proposal to create a slow food edible garden in White River State Park. Congrats to presenter Laura Henderson. Another proposal, to create murals depicting the narratives of the lives of the diverse residents in the East 10th St. corridor, was awarded an extra prize of $4000 from the community foundation and LISC Indianapolis. Congrats to presenter Mark Latta.

It was great to get to meet several of my readers for the first time. Thanks for coming up to say Hi. I always like to engage with my readers. Also, it was great to finally get to meet fellow judge David Hoppe for the first time. It’s another example of why Indy is not the small town you might think it is. You just assume everybody must know everybody, but I continue to be amazed at people who I would be sure know each other intimately but have never even heard of one another.

David everyone knows but I hadn’t physically met. He’s a columnist for alt-weekly Nuvo. He’s a staunch man of the left, but even if that is not your cup of tea, his writings on arts and culture, and also urbanism are among the best and required reading. Of course if you live in Indy you already know that. I think about writing a blog for three years, but this guy has been at it for over a decade, week in week out, not just writing about but helping to create the Indy cultural scene. Great to shake hands finally.

On Vacation

I’m going to be on vacation next week. I’ve got a few articles queued up but might not be around much in person.

Wednesday, November 11th, 2009

Indy: Parallel Societies

[ If you are looking for something related to Gabe Jordan, scroll down to the bottom of this post ]

Until recently I had an apartment in the Fountain Square neighborhood of Indianapolis. Fountain Square is a small commercial node surrounded by houses on the near southeast side of the city that has long been my favorite ‘hood in the city. I’ve been hanging out in the area for over 15 years.

Fountain Square was a sort of lower working class neighborhood. The South Side of Indianapolis is notably more Southern in character than the north. In fact, some have said that Washington St. (or I-70) is the real Mason-Dixon Line. In the case of Fountain Square, it is literally Southern. A good chunk of the population is from Appalachia. This has been true a long time. Back in the 1960’s, then Mayor (now Senator) Richard Lugar commissioned a study called “The Appalachian in Indianapolis” to study the question of whether or not the city’s Appalachian community needed special help like other minority populations. The epicenter of Appalachian Indianapolis is Fountain Square. Even today, many people are new arrivals from places like West Virginia. There’s a lot of circulation back and forth. Sometimes kids who get in trouble in Indy get sent back home to West Virginia to stay with relatives there, for example. In effect, Fountain Square is an ethnic immigrant neighborhood, but instead of traditional immigrants from places like Poland, Italy, or Mexico, it is made up of domestic migrants from a particular region and with a distinct culture. New arrivals are, in effect, straight off the boat. As with waves of immigrants from elsewhere, they are seeking better opportunities. Fountain Square is the traditional port of entry for people from West Virginia and similar places to Indianapolis.

The area is about a mile and a half from the center of downtown, and is one of the few intact commercial nodes left in the city. So it was long targeted for development. A few enterprising people bought and refurbished the Fountain Square Theater Building, which now houses restaurants, a duckpin bowling alley, and a boutique hotel. A former department store was converted into cutting edge art galleries and studios. An indie rock club has opened. Many restaurants dot the area and it is really a destination dining district in some ways. (Santorini on Prospect is the best Greek restaurant I’ve ever eaten at). A lot of artists and culturally inclined types have moved in. My apartment was previously occupied by an assistant curator of contemporary art the Indianapolis Museum of Art, for example.

When the artists started moving in I was originally very worried about gentrification and the area becoming unaffordable to anyone without lots of money, like Lockerbie Square or Chatham-Arch, displacing all the original residents. But that didn’t happen. Housing remains extremely affordable and despite the influx of newcomers, they are still a minority.

What’s notable about Fountain Square, and similar areas in other Midwest cities, is that a lot of these artists are able to buy homes. This means they are likely here to stay even if prices go up. That’s in contrast to NYC, SF, or Chicago, where the artists rent.

In any case, while Fountain Square may go upscale, wholesale remaking of large chunks of the city a la Chicago is not likely to happen. Despite the increase in demand for urban living, there is not enough demand to materially increase prices outside of selected district because of the vast acreage of land that has fallen to nearly zero in value. It is a huge overhang. Also, the type of wage inflation and resulting salary gap that you see in bigger cities, which I’ll argue in a future piece is a big driver of their two-tier societies, didn’t happen in Indianapolis. For example, a partner in a major local law firm told me that a few years ago the salary difference for new associates between Indianapolis and Chicago was 30%. Now it is 100%.

So unlike in so many other cities, in Indianapolis yuppies and artists can live side by side with traditional neighborhood residents for a long time. When I lived in West Town in Chicago, my area was probably 30% Mexican, 30% Puerto Rican, 30% yuppie, and 10% other white ethnic. But that was only a transitional period presaging a yuppie takeover. In Fountain Square though, I expect the Appalachians aren’t going anywhere for quite some time, even if the core area around the commercial district does gentrify. (Perhaps the arrival of a spur of the Indy Cultural Trail may by a catalyst for that – we’ll see). I often describe the demographic of the neighborhood as “Artists and Appalachians”, though that doesn’t do it justice since artists are a minority of the new arrivals, who are often professionals, especially those who merely patronize businesses in the area, and there is by my eyeball estimate a 10% or so African American population.

But just because two groups of people live side by side doesn’t mean they interact socially. With some exceptions, I rarely observed much in the way of interaction between them. The upscale restaurants and art galleries are not affordable or perhaps even of interest to West Virginia refugees. Similarly the rent to own stores for yuppies or arts crowd.

There are some older institutions that are, however, used by everyone. One of them is a greasy diner called Peppy’s Grill. If ever a place deserved an exemption from the smoking ban, this is it. The place just hasn’t been the same. Good burgers, great atmosphere. But not a lot of conversation between the two sets of customers.

Another is the Liquor Cabinet, the neighborhood package liquor store. They carry a large inventory of 40’s along with a cooler of top end microbrews from the likes of Three Floyds – all behind a bulletproof glass shield. There’s a drink for every taste and budget.

As an aside, is there any better example to show why, despite what one may think, Indianapolis is not an overgrown small town? I mean, physically, it basically is one. I’ve long noted that a residential street in Indianapolis is not that different from one in the first state capital of Corydon, population 3,000. Heck, Fountain Square is like a literal small town, with its fading Main St. shops along Virginia Ave., the Theater Building and its surrounding streets the courthouse square, and the tidy rows of small, single family homes that have seen better days around it.

But appearances can be deceiving. Function does not always follow form. How many Indiana small towns have a liquor store like that? Or a piece of contemporary architecture like the Craig McCormick designed Ragsdale House on Pleasant St.? Or several edgy contemporary art studios? Or an indie rock club?

Need more proof? Just look at the city’s blogosphere. One of America’s leading LGBT blogs is based in Indy. The leading Republican blogger in the city is gay. A hardcore libertarian anti-tax activist is a former professional dominatrix. And a prominent political pundit is a cigar smoking, whiskey sipping Black Muslim stand-up comedian – and Republican.

No, my friends, this is no small town. And it has a lot more character – and characters – than you might think.

Back at the Liquor Cabinet, a variety of people come together to buy their nightly libations – but I don’t see any real conversation or interaction. Only occasional light banter of the type one might make with strangers – because that’s what we are. There’s no connection or bond that has been built between the different groups, with some limited exceptions such as at the Community Development Corporation.

Long time readers know I care a lot about the notion of a “commonwealth”. That is, a city and region where people feel that their fates are linked together, where they rise an fall together, where they feel like they have a stake in the system and in a shared prosperity for everyone.

I think it is harder to view ourselves as sharing a common destiny with people who are very different from ourselves. But if we get to know them personally at some level, there is generally some base commonality there. How do we foster that type of connection, not just of the “Isn’t this weather nice?” variety but some type of real relationship?

I’ve thought about this a bit and it often seems to require some type of pivot point or area of mutual concern people can connect around. I think about, for example, how back in the early 90’s a lot of heavy metal bands and gangster rappers started hanging out together and promoting each other’s stuff. They saw the marketing possibilities yes, but also a way to tap into the common alienation and marginalization their respective audiences felt from the mainstream.

Because each pivot point is likely to involve a subset of people, it is best to have multiple of them. Then you start creating all sorts of cross-network pathways. I thought about this with regards to Fountain Square and came up with a few ideas.

  • The obvious neighborhood institutions: neighborhood associations, local schools (such as the area charter school), the library branch, the CDC, etc.
  • Back to our musical example, a shared sense of being marginalized in a community felt by both artists and Appalachians. Certainly both of those groups have a shared interest in not seeing runaway real estate prices. The artists already had a scare recently when the Murphy Building which houses many of their studios and such was put up for sale.
  • Bicycling. Fountain Square is the heart of Indy’s bike culture. One of the people behind the Indy Cog blog lives there and is brave enough to live in Indy with only his feet and bike for transportation. Joe’s Cycles on Virginia is a local gathering place. But in Fountain Square, lots of people ride. It’s not just hipsters or people making an alternative transportation statement, it’s kids and regular neighbors, people black and white, a true neighborhood cross-section. Seems like an opportunity.

These are a few examples in only one neighborhood. The bigger point is that a big part of what makes a city is its social infrastructure. It’s not just bike lanes and buildings. It’s people and relationships and networks. Especially where there is so much traditional distrust between groups who have often had big differences in interests, finding ways to bring people together across those boundaries, at least at some level, is a way to help strengthen civic social capital. A mixed neighborhood is of limited benefit if people do not, in fact, mix. We should be looking for ways to break down barriers that too often create parallel societies.

A Word on Crime

This week in Indy a horrific shooting left Gabe Jordan, wine steward at upscale specialty grocery Goose the Market, in critical condition and likely paralyzed from the waist down. This was an apparently random act of violence. He was shot in the back during a robbery while he was out walking his dog late one evening near his home on the East Side.

I didn’t know Gabe personally, but the staff at the Goose are familiar faces, so this one hits close to home for me, and for many others I know. For example, the shooting took place a block from the home of frequent Urbanophile commenter cdc_guy.

Urbanist blogs don’t often talk a lot about crime or education or race. I have talked the race issue buy am a rarity. Those conversations tend to happen in more specialty places. But things like this remind us that things like safety and education and social justice are the basics. If you don’t have safe streets, all the light rail lines in the world aren’t going to save your city.

A lot of us are accustomed to thinking crime only happens to other people. We’re told, and I’m sure it is true, that most murders involve drugs and gangs, or some sort of domestic violence incident. Thus, they aren’t likely to affect us. Or the victims are of another race or class in a way that, as the main part of my post says, we don’t feel a great idea of identification with.

This reminds us that crime is everyone’s issue. Shootings like this, rare though they may be, not only have horrible consequences for the victims and their families, they also have a major chilling effect on our efforts to renew our cities. The fact that this was so apparently random makes it even worse. Gabe wasn’t dealing drugs. He was on a well lit street, not in a dark alley. It was 11:30, not 4am. The message is clear: it could happen to any of us in this place.

I’ve walked all over the East Side. I’ve walked around Fountain Square and other places at night by myself frequently and nothing has happened to me. The odds of anything like this happening to anyone are probably very low. But the plain fact is it would be nearly non-existent in a place like suburban Fishers.

Things like safe streets are a necessary but not sufficient condition for a city to succeed. You have to provide more than just safety, but you still have to provide the safety. Public safety is job one for government, and rightly the #1 issue on which its success or failure should be judged.

We shouldn’t panic over a single crime. In any city, anywhere things like this do happen. Even in Indianapolis there have been worse crimes committed and there are many murders every year. But the fact remains that a man who believed in Indianapolis enough to plant his flag there and make a commitment to it when so many others with choices left is in the hospital and paralyzed right now. He’s paying a high cost for that commitment, one nobody should be forced to bear.

My thoughts and prayers, and I’m sure yours as well, are with Gabe and his family right now. You can follow Gabe’s progress at his family’s web site.

Tuesday, November 10th, 2009

The Urbanophile in the News

The Urbanophile has been in the news a lot lately and I haven’t had time to link it all, so I put together this media roundup of my latest coverage. Back to more original content tomorrow.

My piece on Detroit as the new American frontier was featured by the New York Times as a must read Idea of the Day. It was also featured at Time (actually, featured twice). This attracted the notice of the Detroit News and MLive.

Also discussing the piece were Michael Barone at the Washington Examiner, the National Review, Instapundit, and Andrew Sullivan. Actually, I was linked four times on Andrew Sullivan recently.

And it was linked on dozens of other blogs and discussed on numerous web forums, including, interestingly, Kid Rock’s. It was even linked by Italian design publication Abitare.

The NYT and others homed in on the urban agriculture angle, which is a common Detroit meme, but I think missed a key point of the piece. It’s not about any particular strategy for renewal, but about creating a narrative of Detroit as the laboratory for alternative ideas of urban life and a new American frontier, a new narrative that can start attracting people back to the city. It’s not just agriculture, it’s artists and Afrocentric educators and more. It’s the possibilities of Detroit.

This resonated with a lot of the news sites on the free market right because I mentioned the light hand of government as a key factor in enabling this. But it also caught the attention of the left because most of the things actually happening in Detroit are more along those lines. In fact, you can look at parts of Detroit as a sort of commune or artists colony, for example.

My piece the White City was even bigger. Obviously I knew that would be a controversial piece and stir up conversation in the urban blogosphere. But I didn’t know it would turn into a big international story.

Somewhat understandably, it got caught up into a left-right debate, possibly due to my use of the term progressive. I didn’t mean that in the political left sense (a number of my non-progressive cities like Cleveland are purest blue), but rather in the urban policy innovation sense. Also, outside urbanists circles, the “Portland meme” of how great that city is isn’t as well known. A number of people criticized it for other reasons, such as ignoring variables of diversity other than African Americans. I did address this a bit in the piece. Frankly, even if you just look at purely white population, the thesis is still pretty strong. Austin is about 20 percentage points whiter than Dallas, Houston, or San Antonio, for example. (I actually changed the graphic for a syndicated version of the article).

I won’t link all of these because there are just plain too many of them. But places discussing it included the Economist, the London Daily Telegraph, Andrew Sullivan, Ta-Neshi Coates, Matthew Yglesias, multiple writers at the Root, Streetsblog, Race Wire, the National Review, the Oregonian, the Kansas City Star, Daily Kos, Ann Althouse, Instapundit, and many more. The article was also re-syndicated into the print editions of the Dallas Morning News and the Omaha World-Herald.

The piece is still going strong – it is as of this writing the #2 most popular current article at New Geography – three weeks after it appeared. (The #1 currently popular article there is a syndicated version of the Detroit piece that was posted several days ago).

My What’s Killing California piece has also been discussed in various places and continues to float around out there. One notable sample is over at the New America Foundation, along with overlawyered.com. Actually, lots of the articles I put up these days are discussed and referenced in all sorts of interesting places.

I’m obviously very happy about the increasing attention this blog continues to receive from people of all different stripes at the national and international level. When both Free Republic and Democratic Underground link to your site and like it, you know you must be doing something right. I’m glad that I’m able to be part of a broader conversation on cities in America.

I just want to thank all of you, my readers, for all the time you’ve invested in reading and reacting to this site. It took a long time to get the point where a lot major media outlets are reading and covering the blog. Thanks for coming along with me and being part of this journey. I hope you’ll continue to be there with me as we go forward from here.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

About the Urbanophile

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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