Sunday, October 31st, 2010
The latest edition of Lapham’s Quarterly is dedicated to the city. It’s worth checking out for sure.
1. The Guardian: London Bike Share Program to Turn Profit. It’s early days yet, but it is looking like the London bike share program is trending towards fully covering its operating costs in three years, and then implementation costs after that. Pretty impressive.
2. Rust Wire: Erie, PA Expatriates Seeking Jobs…in South Korea
Indianapolis Parking Meters
The city of Indianapolis made some changes to the proposed parking meter lease in response to public criticism. Among these are adding the ability to terminate with a penalty at ten year intervals. While I give the city credit for making some modest improvements to the contract, I still urge the council to vote it down. Key reasons are:
- Parking meters are still the wrong asset to be signing a long term lease on.
- The benefits to the public are modest even in the best case. This will only generate $20 million in upfront money (only 5% of the $400 million the water company transaction spun off). I cannot understand why the city is so strongly pursuing a deal with this little gain to the city given the nearly universal disapproval of the deal by everyone outside the administration.
- The city’s claim that it cannot afford to do the upgrade itself and keep 100% of the money for the public instead of giving away over half the value to a private vendor has been completely discredited by recent events. The city just found $8M/yr in downtown TIF money to send to the CIB, another $2.5M/yr for libraries, and has found millions more to subsidize the North of South and Clarian developments. There is simply no way to plead poverty on a $10M one time upgrade (and that cost is likely inflated) in light of all that.
- The contract terms remain poor for the city
Bike Share Status
There’s a very cool online application that shows the real time status of bike share systems. Here’s a sample of London, but they’ve got quite a few cities in there:
And here’s another really cool one called the Bike-O-Meter, which gives real time stats on system utilization in cities around the world. This screen shot shows some sample cities:
I see there’s a divide by zero error in the code.
Where the World’s Brains Are
Richard Florida posted this very cool map of where the world’s top brains are located. You can also check out his accompanying commentary.
The Spiky Social Network
Richard Florida also has an interesting take on the NetProspex 2010 Social Business Report city rankings. Here’s the graphic as a teaser:
World and National Roundup
The Guardian: Europe on track for Kyoto targets while emissions from imported goods rise – Unsurprisingly, while regulation in Europe reduced carbon emissions there, the savings were offset by importing more products from carbon havens. These programs are not helping the environment, but are only feeding the offshoring of industry from the developed world to places with weak environmental protections. If you want to reduce carbon, a global Carbon Added Tax is the way to go.
Forbes: Municipal pension tabs average $15,000 per household – It’s a whopping $42,000/household in Chicago.
David Brooks: The Paralysis of State
National Affairs: The Trouble with Public Sector Unions
Governing: Inefficient Government Rules and Regulations
Megan Cottrell: How Segregation Actually Caused the Housing Crisis
Richard Florida: Suburban Renewal
Virginia Postrel: The Bike Helmet Wars
Greater Greater Washington: What will autonomous cars mean for cities?
Detroit Blog: Blues Streak
Lynn Becker: Chicago Architects’ Post-Mortem on Daley: Too Much Sugar? – A “manifesto for fresh thinking”
Chicago Tribune: David Brooks on Chicago’s social fabric
There’s an interesting discussion in the comments on this thread at Glass House Conversations: What are the opportunities and risks of these emerging geopolitical constellations, and how should we prepare for an urban, post-national future?
Indian Railways Advertisement
Here’s a wonderful one minute ad for Indian Railways. (If the video doesn’t display, click here)
Halloween Critical Mass in San Francisco
Copenhagenize posted this fun video of last year’s San Francisco Critical Mass ride on Halloween. (If the video doesn’t display, click here).
I’ll end on a sad note. I was walking down Damen Ave. near my house in Chicago last week when I saw the bicycle death memorial below. According to a note posted at the site, Liza Whitacre was a 20 yer old junior at Loyola University and barista at Metropolis Coffee Company. She was killed on October 21 when she was riding by this spot and “she slipped off her bike and fell under a truck.” It makes me sick to see this happen, but sometimes, despite all that we do to create a safer city, tragedy strikes anyway. My condolences to Liza’s family and friends.
Thursday, October 21st, 2010
I got a suggestion to do more open discussion threads, so thought I’d try this one out. I’d love to have your contributions on things you think are truly world class about Chicago. That is, things that are either arguably the best in the world, or reasonably competitive with the best the world has to offer. I’ll start with a few examples of my own:
- Music scene. Chicago’s indie rock community, record labels, and performance venues have long been ranked among the world’s best.
- Live theater. Beyond Broadway type shows, Chicago has one of the world’s most robust theater scenes for sure.
- Food. Lots of cities have great food scenes these days. I don’t think you can argue Chicago is #1 in the world or anything, but it certainly has nothing to be embarrassed about.
- Architecture. While this is no longer the Chicago of Mies van der Rohe, Louis Sullivan, Frank Lloyd Wright, and Daniel Burnham, the city is still a major international architectural design hub, with important specialties like supertall skyscraper design.
- Orchestra. The Chicago Symphony is one of the world’s top orchestras.
- Derivatives. Chicago is still the world’s largest futures market as far as I know. This by itself makes Chicago a leading global financial center.
What are your ideas? Please try to be honest and realistic. I’m looking forward to seeing what you come up with (or how you disagree with my nominations). If you’d rather just share particular Chicago strengths or unique attributes, feel free and please note them as such.
While I said cities shouldn’t fall into an asset trap, certainly identifying your strengths and leveraging what you have are an important part of civic development. I am hoping we can brainstorm a good list of these for Chicago.
Wednesday, October 20th, 2010
I’ve noted before how the fate of central cities and their regions seem to be linked. While again I can’t draw an arrow of causation, it’s rare to see a thriving region with a sinking central city.
It’s almost a truism that one of the most important drivers of urban success is educational attainment. So let’s take a quick look at educational attainment in core cities, using my Midwest metros as a proxy.
This probably isn’t a terribly surprising graph. Note the very low educational attainment of the city of Cleveland and Detroit. This highlights clearly the challenge facing those regions.
Here’s another view, looking at the change in college degree attainment between 2000 and 2009.
Another illuminating graph. We see again Cleveland and Detroit at the bottom, failing to even keep pace with the national average. On a more positive note, St. Louis saw a very strong increase, which bodes well for that city.
Just something to ponder. Note that I excluded my traditional look at Louisville because a city-county merger skewed the stats.
Tuesday, October 19th, 2010
In anticipation of a temporary move to Baltimore (more on that later), I was using Google Streetview to surf the city—extensively so.
After an hour or so of clicking and zooming and dropping the yellow Streetview man all over the city, several emotions came over me: shock, admiration, depression, and hope.
Shock, primarily, because I cannot believe how intact the city of Baltimore is. I found a fairly large area on the northern periphery of downtown that seemed to have been cleared and replaced with a series of modern housing developments. Yet, for the most part, Baltimore’s signature (and unrelenting) row houses are e-v-e-r-y-w-h-e-r-e. The density and population capacity the city must have had at its height are simply astounding! Even knowing something of Baltimore’s history and architectural vernacular, I was still caught off guard. This was where the admiration came in; at the power of cities working at their best to produce a better quality of life simply by being cities. By being walkable. By having services located nearby. By offering opportunities for a tight-knit community to form. While Baltimore’s rows seem more monotonous than, say, St. Louis’s more architecturally diverse vintage 1880s streetscapes, even they offer a level of democratic individuality.
(I know I’m romanticizing a lot, but keep in mind I’m speaking of cities at their utmost ideal; the fulfillment of their potential).
The depression took me upon seeing whole blocks of these rows boarded, vacant. No cars, no trees, no pedestrians lining the streets. Just walls of row houses sitting vacant. I could “hear” the eerie silence even behind the computer screen, hundreds and hundreds of miles away. I got to thinking: how has Baltimore not torn out more of these rows and created park space or built new housing or just left them fallow, waiting for a time when investment would bring something new? Do whole abandoned blocks not cause issues with surrounding occupied blocks? Do they not pull the image of the city down? This, mind you, was my gut reaction, even as an avowed preservationist. Of course, I was happy to see them remain—thus the hope that later kicked in—but even I was wondering how they could have been spared the wrecking ball.
Then I remembered that I’m a St. Louisan; an automatic member of the cult of destruction.
My leaders have, time and time again, supported the removal of a sturdy built environment and its replacement with something much less, something much worse. Often the replacement is meant to serve the purpose of moving or storing automobiles. This is the city’s greatest power because it is the simplest task at its disposal. Vacant buildings and lots provide convenient opportunities for combining narrow urban lots to form parking lots and garages. A 1920s-era bond issue already widened most roads to an extent likely even then excessive; certainly this was so by the time the region’s vast interstate network was introduced. So a declined city that wants to better move automobiles through itself need only maintain its roads and ensure every new development has ample parking.
The more and more I experience cities, the less and less I am willing to accept St. Louis’s exceptional status as a destroyer of its most unique asset, its built environment.
Check out this recent thread on Skyscraper Page, but especially this 1950s-era photo of a recently-constructed Pruitt-Igoe complex at Jefferson and Cass:
You might see where this is going: I’m going to rail on the brand of urban renewal represented by Pruitt-Igoe. It’s out of scale, tore down a dozen blocks in the making, and apparently was not very well-built to serve the population it intended to serve. Sure.
But look around! Pruitt-Igoe’s decline certainly had a strong influence on its surroundings, but no one at the St. Louis Housing Authority held a gun to the city’s head and demanded they do
Look to the south of the site (bottom and bottom-left in the photo). We see, in order, Cole, Carr, then Easton, today’s Martin Luther King Jr. Blvd. Row after row of cast iron storefronts—gone, no matter how irreplaceable they might have been! Look to the west (far left in the photo), today’s Jeff Vanderlou with apparently beautiful rows of mid- to late-19th Century houses, shops, and churches.
North (top and top right of the photo) shows the portion of St. Louis Place that’s now an “urban prairie”. This site was already tattered when plans circulated in the early 1990s to place a golf course and gated community on the site. Of course, since there was a plan, even an unfunded and ill-conceived one, the buildings came down. Now, naturally, Paul McKee, Jr., of the North Side development, is picking and choosing which of these structures represent “salvageable” “legacy properties”. In other words, we can reasonably expect yet more clearance of a good number of properties in this photo that have clung to life over decades of turbulent change.
New Orleans has endured decades of decline, like St. Louis, and, recently, one of the nation’s worst natural disasters ever recorded, unlike St. Louis. It is said that 33 percent of New Orleans’ structures are officially “blighted” circa 2009. Certainly blight in either city is formidable and a problem that needs to be addressed sensitively. The answer, however, is not to simply tear out buildings right as they become vacant. No New Orleans neighborhood–not even the most-storm damaged–is as empty as St. Louis Place. New Orleans did replace old neighborhoods with a series of low-rise public housing complexes, but their surroundings did not become the urban blank slates witnessed in St. Louis.
We must look to our peer cities and realize that our history and heritage, but moreover our urban built environment are our greatest assets. We need a comprehensive plan, backed by the force of law, to protect our remaining assets and to encourage the growth of new ones bound for their own protection one day. We need to make sure we no longer take lightly the piecemeal (or wholesale) destruction of our built environment for something less or worse than what was there.
We need to recognize that our auto-centric infrastructure not only destroyed neighborhoods upon its introduction. Our interstates and oversize roads continue to provide barriers to pedestrians and still lower adjacent property values and, of course, are still ugly and disrespectful of their urban context.
We need to be bold and comprehensive with regard to stabilizing and strengthening our built environment. Planners and designers of Pruitt-Igoe had the wrong idea–the superblock, the identical hulking towers, the clearance projects–but they had the optimism, the sense of direction, and the boldness and comprehensiveness nailed. Today’s stock of leaders in our city are diffident, conservative, fearful or unwilling to change anything for the better.
We need new zoning and urban design guidelines to ensure that neighborhoods such as those pictured surrounding the Pruitt-Igoe complex can repopulate and spawn a new, bold identity. While Paul McKee has apparently stepped up to the plate to do so, this blog has communicated before its lack of faith in the city to assure something bold and truly beneficial to the area, aesthetically or socially speaking.
So when I use this blog to harp on a business needlessly taking down two buildings for outdoor dining, or a gas station in Hyde Park demolishing a vacant but beautiful historic commercial row for expansion, or yet another church ruthlessly ripping out mixed use buildings for a parking lot…I’m thinking of the photograph above. If only we had pro-urban rather than anti-urban planning! None of this would happen. There would not need to be so many individual battles; prospective parking lot pavers would encounter difficulties, roadblocks in making our city less walkable, less enjoyable, more ugly, less human. The photograph shows we have suffered too much, too long, too deeply.
We can solidify St. Louis as an urban environment. We must!
This post originally appeared in Dotage St. Louis. Reprinted with permission of the author.
Sunday, October 17th, 2010
It might have been Kant who came up with the idea that the world doesn’t impose its meaning on us, we impose our meaning on the world. Call it a priori knowledge, paradigms, archetypes, narratives, frames, etc. It’s all the same basic thing. It’s the notion that we all have a preconceived lens through which we process the world.
One of the best expositions of this I’ve read is Thomas Khun’s Structure of Scientific Revolution. In this book, Khun describes his paradigm concept, in which science takes place within the scope of a certain “grand unified theory” of how the world works relative to a particular field:
An apparently arbitrary element, compounded of personal and historical accident, is always a formative ingredient of the beliefs espoused by a given scientific community at a given time…Normal science, the activity in which most scientists inevitably spend almost all their time, is predicated on the assumption that the scientific community knows what the world is like. Much of the success of the enterprise derives from the community’s willingness to defend that assumption, if necessary at considerable cost. Normal science, for example, often suppresses fundamental novelties because they are necessarily subversive of its basic commitments.
Like the choice between competing political institutions, that between competing paradigms proves to be a choice between incompatible modes of community life. Because it has that character, the choice is not and cannot be determined merely by the evaluative procedures characteristic of normal science, for these depend in part upon a particular paradigm, and that paradigm is at issue.
What Kuhn calls “normal science” takes place within the bounds of a particular paradigm. Indeed, science itself only emerges when there is a shared paradigm to which virtually all practitioners subscribe. The existence of a paradigm doesn’t mean it will last forever. Indeed, much of Kuhn’s work deals with the accretion of anomalies paradigms can’t explain, leading to a scientific crisis that ultimately results in switching to a new paradigm, such as the move from Newtonian to Einsteinian physics. (I believe Kuhn’s book, which was published in 1962, popularized the term “paradigm shift” as a shorthand for describing this, though I’m not sure the phrase actually occurs in the work).
The pre-scientific age is characterized by rival camps with various competing world views that are often philosophical in form. It doesn’t take much reflection to see that when it comes to understanding the function cities and what makes them successful, we are still in that pre-scientific phase.
In 2008 economist Joe Cortright did a study for CEOs for Cities called City Success: Theories of Urban Prosperity that examined no fewer than 18 different theories about urban success. These range from business climate to distinctiveness to industry clusters. Clearly, there is no consensus yet.
The other problem is that this question of urban success is fundamentally normative. It concerned with the type of communities we want to have and the type of world we think we should live in. Unlike describing the behavior of light, there’s little agreement on what urban success looks like. In that regard, it’s unsurprising there’s little consensus on how to get there.
Indeed, the very theories of success that are promulgated often leave the distinct impression that the strategy itself is actually the goal. In the “Sustainable City” theory that Cortright identified, I can’t help but wonder if its advocates see sustainability less as a means to success than as something they want to do in any case. Dittos for the “Business Climate City” or other matters. We argue in favor of policy based on both moral grounds and utilitarian ones. Unsurprisingly, people who claim their policies are right invariably also claim they will bring the greatest benefit. Isn’t the universe wonderful?
Given this situation, it’s unsurprising that various camps of urban policy advocates spend most of their time talking past each other. They inhabit entirely different worlds. What we at best hope for at the moment is at least some awareness of the true state of affairs, so that we don’t see all others who don’t share our own convictions as unscientific savages, but rather as fellow grovelers for the truth in a “hundred schools of thought” age in which a true science of cities has yet to emerge.
Friday, October 15th, 2010
California has a case of the same disease that felled the Rust Belt. Will the patient survive?
The troubles of California, and their causes, are a widely discussed topic these days. America’s most populated state by far, its successes and failures always loom large in the national consciousness. In the last year we’ve seen the state face a massive $42 billion budget deficit and the humiliation of having to issue IOU’s as payments. Its pensions are radically underfunded and there are other long term structural budgetary problems. Parts of the state were ground zero for the housing collapse and among the highest foreclosure zones in the country. Unemployment, high everywhere, is particularly so in parts of California. California, the place people once moved to, is now the place the move from, as the state is experiencing net domestic out-migration, leading to the prospect of losing a representative in Congress for the first time in its history. A complicated political system has led to decision making paralysis. Even disasters like wildfires have been played up.
There are no end to explanations for this which, unsurprisingly, tend to follow people’s political beliefs. To those on the right, California is the ultimate blue state, with high taxes, an anti-business mindset, and environmental and other regulations designed to send people and businesses fleeing for the exits. To those on the left, California’s problems are the comeuppance for decades of unchecked sprawl, the ultimate car culture, and runaway exploitation of resources. Whatever your particular policy pet peeve, California must be it.
But is this really the case?
The real problem could be much more simple and yet much more terrifying in its implications. California has simply now outgrown its youth and is now well into its middle age. Like the Rust Belt before it, California is now old. As with people as they age, “chronic lifestyle diseases” hit places too. These are: unfunded liabilities, the end of growth economics, and institutional rigidity, each of which builds on the one before it.
I’ve long noted that places have an incredible tendency to accumulate unfunded liabilities, most of them of the “off balance sheet” variety. The temptation to defer problems into the future is simply too great for most governments to resist, hence structural imbalances build up over time. The sources of these liabilities are many, but here are some key ones:
- Deferred Infrastructure Investment. As populations and development grow, infrastructure is built with a lag and generally there is a lack of funds for completion. As a result, cities and states end up with deficient infrastructure for their size, leading to all sorts of problems such as traffic and transit congestion. Clearly, California is suffering here.
- Infrastructure Maintenance. Similarly, cities build some infrastructure, then “sweat the assets” as long as possible. Infrastructure is often not well-maintained, and the periodic capital refresh unbudgeted. Condo associations do reserve studies and set aside funds to meet future capital needs such as roof replacements to avoid painfully huge special assessments, but government do not. I have yet to see any city or state that even has a schedule of major assets and infrastructure with needed maintenance and replacement timeframes, much less funding for any it. California’s Golden Age infrastructure is now aging, and it is facing repair bills merely to maintain what it has.
- Underfunded Pensions. Politicians love to sweeten public sector pensions. This buys both labor peace and a powerful political constituency. These are seldom funded at adequate levels – and with the rapid growth in life extending technology, it’s questionable whether any level of funding is sufficient – leading to major problems downstream. California’s pensions are unfunded by upwards of $300 billion.
- Other Redevelopment Costs. When ever homes and buildings are shiny and new, things are great. But what happens when your building stock gets old like in Rust Belt inner cities, and often no longer meet the functional and technical demands of the modern day, such as sizes, layouts, energy efficiency, etc.?
Add this all up, and it’s a huge bill that eventually comes due. The most important thing to understand about this is that the bill attaches to the territory, not to the people. So residents and businesses can avoid paying up simply by leaving for another jurisdiction. It’s like being able to run up a huge credit card bill in someone else’s name, then skip town.
This ability to run up massive deferred and unfunded liabilities, then leave, sticking other people with the bill, is one of the most powerful forces driving greenfield development. Even if there weren’t a drop of subsidies to, say, suburban expansion, the financial incentive to escape the huge liabilities of central cities and older suburbs is a key incentive on its own.
This why I’ve said it is critical to find ways to prevent governments from accumulating these liabilities in the first place.
The End of Growth Economics
Look at companies and industries. There is a standard growth curve to them. They start out in incubation and infancy, then, if successful, on to growth, then finally to maturity and decline. Why would we think that what is true for firms would be different for places? Why would we think that cities or states are immune from the forces of creative destruction? The answer is, they aren’t.
Having done consulting in the retail industry for some years, I often observed the growth curves played out in companies. Category killers came along and grew and grew and grew, seemingly as unstoppable juggernauts. But eventually, they hit the end of their growth phase, and had to endure a period of wandering in the wilderness. The reasons for this are varied – market saturation and consequent over expansion, changes in the marketplace, insufficient infrastructure and operational disciplines, more nimble competitors – but we’ve seen it played out before our eyes in America. Think McDonald’s, Home Depot, and the Gap.
The logic and economics of high growth are fundamentally different from that of operating a more or less steady state or low growth business. In the growth phase, everything is oriented towards expansion, mostly building more infrastructure to keep up with it. Also, scale economics are in your favor. With more people, for example, you are spreading fixed costs across more bodies and more buildings, so you can spend more money and tax less per capita all the same time. Your brand value is expanding with size, etc. That’s all great if you can pull it off.
But when something causes growth to take a hit – maybe accumulated liabilities, resource exhaustion, jurisdictional limits, etc – the equation changes radically. You can no longer rely on growth to provide unit cost efficiency. You have to start thinking like an operator. That is an extremely difficult mindset shift and requires a totally different set of skills. From what I’ve seen, companies have an extremely difficult time doing this. They generally have to struggle for some time, usually bring in new leadership, and undergo painful structuring. Many of them never really recover. But some do. I think of McDonald’s, which stopped relying on store growth to fuel its engine, but now relies on product innovation (Angus burgers, coffee, salads, etc) and operational effectiveness.
California, for whatever reason, stopped growing. The trends in domestic out migration make this very clear. The fact that total population has not declined doesn’t matter. Most Rust Belt states never actually physically lost population. Their growth simply slowed to a crawl. And it was the most entrepreneurial and high skill classes that fled. In California that his been somewhat masked by outsized productivity in the technology sector and international immigration, but the overall trend is clear. California now has to think like an operator. Welcome to the world of legacy. California is now a gigantic “brownfield”.
As California struggles with this transition, the scale economics start to go in reverse. As people and businesses leave, the unit cost of all those unfunded liabilities looms large. Just as growth begets growth, decline begets decline. If you are young and ambitious, why stay in California and pay off all those pensions? All things being equal, it is much better to leave for a more greenfield location, where you can benefit from running up the credit card, not paying off someone else’s bill. If not arrested, decline eventually reaches a tipping point, as we’ve seen in so many Rust Belt cities.
The third symptom of civic aging is a creeping institutional rigidity that makes change difficult. In established, mature places, there many, many powerful institutions and interest groups. These can often be forces for good, but too often become barriers to change or getting things done. What’s more, these institutions were typically created in the past to meet the perceived challenges of that time and age, but survive today in a world that is very different. As most institutions are never sunset, and new ones form over time, there is a gradual accumulation of friction over time. Eventually, the gears and seize up.
These institutions can take many forms. Constitutions and political structures, non-profits, clubs and social networks, various trade-offs and political accommodations and deals from over the years, power structures, corruption, local business practices, unions, recipients of government funding, taxpayer or other advocacy groups, political party organizations, business groups, etc. Much is made of California’s many times amended constitution as a barrier to change, but that is only the tip of the iceberg.
As decline sets in, a toxic dynamic takes hold. In a growth mode, it is very easy for everyone to hold hands and sing kum-bah-ya. It’s comparatively easy to cut deals to divide the fruits of prosperity. In decline, those deals come back to haunt. The status quo is failing, but people are still profiting from it. Even in Detroit, America’s ultimate failed city, so many people and groups benefit from the current system that there is complete paralysis. No one wants to give up an inch of hard won gains, especially since in a dismal region there’s little hope of replicating that privileged position or income. Hard times promote solidarity, some say. But the reality is that hard times also often produce selfishness and civic dysfunction as well as people cling desperately to what they have instead of looking boldly forward to the future.
I’ve seen this shift happen in a few cities. Where once civic boosters dreamed of glory and invested their own money into the city, now they focus on what they can get out of it. So too in California. Everyone knows the Titanic has hit the iceberg, but they are determined to loot as many state rooms as they can before shoving the women and children out of the way and commandeering the life boats.
This institutional rigidity is another force driving people to greenfield locations. It’s a global phenomenon. Consider this Newsweek coverage of a study of Chinese industry that notes much lower levels of corruption and better governance in new cities than old.
An intriguing pattern is that governance is best in coastal cities that had very little industry when reform began in 1978. Shenzhen now has the highest per capita GDP in China. The same holds in Jiangmen, Dongguan, Suzhou–all were industrial backwaters in 1978, and responded to China’s opening by creating good environments for private investment and learning from outsiders. Cities that already had industry tended to protect what they had and reform less aggressively.
Jim Russell hypothesizes that this effect of frontier geography explains a lot of the success of the Sunbelt, which industrialized late.
Cities such as Austin, TX and Charlotte, NC have offered a frontier opportunity akin to the one observed in the boomtowns of China. On the other hand, Pittsburgh stagnates. Governmental reform is key for attracting investment and stimulating growth. This is unlikely to happen in Western Pennsylvania, leaving this region at the rear of economic globalization.
For Pittsburgh, substitute California and you’ve got a pretty good picture.
Writers like Joel Kotkin like to reminisce about the Golden Age of California, and the leadership of that age from enlightened members of both parties like Pat Brown and Ronald Reagan. But you can never go home again. That letter jacket from your high school glory days might still fit, but you’re never going back to the state finals. Brown and Reagan were products of their era – an era that no longer exists. While they might be better executives than Gray Davis and Arnold Schwarzenegger, even if you assume they could get elected today – unlikely – I doubt they’d prove much more effective.
It’s been said that China will get old before it gets rich. Well, California got rich first – but it still got old. Not old demographically, but old civically. The polity of California is now well into middle age. As with people, places that reach that point experience a mid-life crisis as they look back longingly at the optimism, energy, flexibility, dynamism, and endless capacity for reinvention of youth. That’s often a bitter pill to swallow.
Can California Recover?
Can California pull out of this? It’s hard to point to a lot of examples that offer hope. But California has a lot going for it. It’s got the stunning climate and physical geography. Cities like San Francisco and Los Angeles remain powerful. In addition to the technology and film industries, California also has a robust agricultural sector, an entrepreneurial immigrant base, as well as an American hub for contemporary art and other creative fields besides the movie business. So there’s a lot of assets to build on.
The challenge is that these existing strengths are part of the institutional rigidity. Another way to say “build on assets” is “defend the past”. Other than the its physical setting, the assets of California only exist because previous generations didn’t build on assets. If they did, Silicon Valley would still be orchards, not the powerhouse of the global technology industry. If a city or state is failing to create new industries, it has economically stagnated, no matter how prosperous it might be or appear for a time.
Looking at the Rust Belt, we do see that tier one global cities have managed to renew their cores. Chicago, New York, and Boston have glittering city centers and a migration back to the city of upscale residents. This is a far cry from the sour days of the 70′s. But if you look beyond those zones, you see places with surprisingly unimpressive metro area statistics in many regards. And the states they are in look at lot like, well, California. A handful of metro thriving cores can’t energize an entire state or even metro area. Places like New York and Illinois have major structural challenges of their own. And California has already followed this program, with booming regions that are among globalization’s winners, with many larger areas of losers. Of course the alternative is worse – look at Michigan, with the same failures and no global city to even partially make up for it.
The global city phenomenon perhaps illustrates the way. Cities that have experienced that boom like to pat themselves on the back. Indeed, there has been some good leadership along the way. But when something happens in most similarly situated cities, you have to look first to a common force acting on them. Chicago, New York, London, etc. all had their own Rust Belt eras and suffered in the 70′s and 80′s. Starting in the 90′s a large number of what we now call global cities had urban core booms. As Saskia Sassen noted, the new networked global economy requires new financial and producer services, that tend to be concentrated in global cities. In effect, the global city is an emergent property of the globalized economy, just like the company town was in a previous era. I noted previously with regards to Chicago that it was the artifact, not the architect.
To me that shows that a state like California needs to look at and understand the macrotrends affecting it and the world, and figure out how to position itself to profit from them. One area it is trying to do so is in the “green economy”. I’ve got a few problems with “green jobs”. The first is that the entire concept of a green economy is a transitory one. Likely in a decade or so it will be gone. There will no longer be green industry, but only industry – it will all be green. This immediately prompts the question of whether, since we’re not going a very good job of competing in traditional industry, we’ll do any better in green industry. Indeed, China and others are already making a move here.
The other aspect of this is the huge gamble California is placing on the environmental trend. That is, it has imposed the strictest environmental controls in the world. There is no doubt this is one factor causing a lot of short term pain. But the state hopes that in the long term this will attract talent and, what’s more, position it for future success because other states will be forced into the same painful restructuring for environmental issues in the future and California will be ahead of the game. California’s ultimate goal here is clearly to push to federalize its policies to prevent any other states from not following its lead and producing a differentiated product. Because international migration is so much more difficult than domestic, this would, in theory, eventually help staunch the flow of people out of the state. Other states no doubt realize this and will resist the push at the federal level. It remains to be seen how this turns out on many fronts.
Other than that, it is difficult to identify a strategy California has other than more of the same. While the green realm might be a good place for California to put some chips, I don’t think piling everything on one square is a good idea, so new ideas are clearly needed.
And these economic strategies will only be ultimately a success to the extent that they enable California to reach an equilibrium and either successfully make the transition to an operator, or somehow reignite growth.
I would suggest that California and other maturing jurisdictions should look to partner with academics in our economics departments, and especially our schools of business, who have studied industry growth and maturity curves, and how to manage that transition over time, strategically and operationally.
Has the United States Reached Maturity?
Given the problems of California and the current Great Recession and associated talk of American decline, it’s worth asking the question: has the United States matured? That is, are the life cycle forces that are hurting California now affecting America as a whole?
Let’s consider our three harbingers: unfunded liabilities, the end of growth, and institutional rigidity. Clearly, we’ve racked up huge unfunded liabilities, just like every industrialized nation. I believe we are projecting a deficit of $1.8 trillion this year alone and that doesn’t even count off balance sheet problems like social security and medicare. So a definite check mark in that box.
As far as institutional rigidity, clearly we observe some. There is no doubt that it has gotten harder to do things in America and that one of the key advantages of China is its greenfield location and lack of this cruft, not just its low labor costs. Regulatory arbitrage, for example, can be a powerful motivator. Still, I haven’t observed a ridiculous amount of change here in my lifetime. At the federal level, it has always been hard to do things in America, by design. I do argue that in some areas we’ve turned the dial too far. In a country that desperately needs to make transportation investments, it shouldn’t take a decade to get approval to build a new transit line, for example. But on the whole the United States still feels like a fairly dynamic society to me.
Which brings us to growth. Clearly we have been in a major recession. The question is whether our best days are behind us. I say clearly No here. America is demographically healthy. Compared to Europe we have comparatively high birth rates, more or less replacement rate, in our native born population. This shows a society with confidence in the future. Also, people from around the world are still voting with their feet to come here. And I believe we’ll get back on economic track eventually.
But this is where the warnings signs should be looked for. If growth dries up, I believe the institutional rigidity will enter that toxic cycle and we could be in trouble. Keep an eye on immigration. When people stop wanting to come here – because they don’t want to pay taxes merely to pay off yesterday’s unfunded liabilities, because they think there are better opportunities elsewhere, or whatever – and especially if Americans start leaving in any material numbers, we’ll know we have a major problem on our hands.
Obviously no one can predict the future, but I remain bullish on America.
This post originally ran on October 8, 2009.
Thursday, October 14th, 2010
I can’t tell you how many economic development documents I’ve read that talk about cities “building on assets” or cataloging all the great assets a city says. While inventorying your assets is an obvious and valuable thing to do, cities are often far too enamored of what they find there.
Assets can be building blocks for the new, but can also be simply the legacy of the past, not the foundation for the future. The only reason cities have most of their assets today is because previous generations didn’t try to build on the assets of their day – they went out and created something new. All too often “building on assets” turns into “defending the past”, as cities and states try to protect the industries and ways of doing business that worked in the days of yesteryear, but are failed strategies for the new economy.
Most assets require significant investment to maintain over time. So you’ve got to make a choice of how much to sink into that versus building new. Too often cities get the balance wrong and innovator’s dilemma style end up over optimizing for the past. When the world changes, they are no longer relevant.
Clearly, an asset-led strategy is an important part of a city’s development approach. But it’s only a part. It’s not just about building on what we inherited from previous generations, but creating brand new things to bequeath to tomorrow.
Thursday, October 14th, 2010
Today the Pittsburgh City Council gave a thumbs down to a proposed parking meter privatization/long term lease. It now appears almost certainly doomed when the final vote is taken Tuesday. The City Council was skeptical about may aspects of the contract, and the public was overwhelmingly against it. The vote comes despite a looming December 13 deadline for the city to top up pensions to avoid a state takeover:
“We need to get this dead lease plan off the table now so we can start to figure out what the real solution is going to be,” Councilman Patrick Dowd said….A second, final vote on the bills is scheduled for Tuesday. While a change of mind is possible, council members left little doubt about how they — and their constituents — feel about the mayor’s plan.
“At this point, I think it’s irresponsible to actually entertain a plan that has been universally panned by the citizens of Pittsburgh,” said Councilwoman Natalia Rudiak, the first to call for a vote.
Councilman Bill Peduto said not a single constituent in his district has expressed support for the lease. “I’ve never been in a situation where 100 percent of my constituents were opposed to an issue,” he said.
I’ve been extremely critical of the proposed Indianapolis parking meter lease. While I haven’t looked at the Pittsburgh proposal in detail and so cannot pass judgment on it, this city council vote should certainly be something Indianapolis city-council councilors should take note of – especially as public opinion in Indianapolis is similar to that in Pittsburgh.
Tuesday, October 12th, 2010
Urban transportation: What are we going to do about it? Fewer cars? More mass transit? More bikes? Fuel taxes?
It’s tempting to try solving transportation problems with more transportation. The sight of rush hour traffic jams in cities, or the experience of riding an overcrowded bus or train, suggest the need for increased transit capacity. As a short term solution, that may indeed be the best remedy. In the long run, however, it’s more like supplementing a junk food diet with a few healthy snacks.
Modern industrial societies are addicted to mobility—something Ivan Illich points out in the passage above. Most of us have always lived within this milieu and it’s hard for us to equate less movement with better movement. Our cities embody the assumption that individuals will gladly bow to the demands of transportation systems. New York, Chicago and London all enjoy “strong centers” complete with roads and trains that can pump hundreds of thousands of people into their central business districts every morning and back out again every evening. An hour a day is generally a normal amount of time to spend commuting in these cities—I can live six miles from my job because the infrastructure exists to move me there quickly.
Interestingly, the strong-centered cities with great transit are paragons of urban form in western society. They certainly look great in comparison to the sprawling, decentralized megalopolises that have followed them. I can’t imagine wanting to live in any other kind of city, but the utopian in me wants cities where people spend less time moving from place to place. Christopher Alexander describes such a city in A Pattern Language, writing that the separation of residences and work create “intolerable rifts in people’s inner lives.” He suggests that cities use zoning laws and tax incentives to spread workplaces throughout cities.
Unfortunately, urban transportation is not planned in a way that favors less transportation. Individual agencies generally have one main task, and no agency can be expected to argue against its own existence. A transit planner would never decide that less transit ridership would benefit the city as a whole, unless transit planning was only one component of a broader job description.
Nevertheless, it might be a helpful first step to scatter workplaces throughout dense cities using the types of policies that Alexander describes, along peripheral transit lines or within walking and biking distance of neighborhood residences. A lot of work disappeared in 2008 and plenty more is sure to vanish in 2009. If and when that work comes back, it doesn’t all need to end up downtown.
This post originally appeared at Where on February 6, 2009. Reprinted with permission of the author.
Sunday, October 10th, 2010
This is another in my Future of Chicago series, examining major issues that go beyond the headlines of the moment in the lead up to the mayoral election.
My Chicago Worldview
A lot of my thinking on Chicago has been shaped by an overarching view of its performance. Believe it or not, I used to be a huge Chicago cheerleader. I don’t think there’s any doubt that during the 1990′s, Chicago rediscovered its mojo and was really tearing up the charts of performance for big cities. But something changed in the mid-2000′s. I date it to the opening of Millennium Park. Millennium Park was a huge home run for the city, and obviously a key positive part of Mayor Daley’s legacy, no matter what the cost over runs. It added hugely to reconnecting the Loop to the lakefront park system, created a huge tourist attraction, and probably more than any other single factor sparked a residential boom in the Loop itself.
But Millennium Park was also a sort of high water mark for the city. While I can name a lot of great things the city did before then, after that, there have arguably been more negatives than positives, ranging from a failed Olympic bid that monopolized civic attention for far too long, to a white elephant of a partially completed $300M train station under Block 37 (which hopefully will some day look like a wise move in retrospect), to a disastrous parking meter lease. What’s more, Chicago started hemorrhaging jobs and its economic performance cratered. I think anyone who looked at the situation honestly would have to admit a good chunk of the wind has gone out of the city’s sails. That’s not to say Chicago is doomed. It has fantastic strengths and resources. But it is trending the wrong direction.
I think this is massively underdiscussed locally, both because the city is imbued with an admittedly not uncommon booster club society culture, and because America’s struggles generally of late make it seem like Chicago is just part of a macrotrend. It is, but it’s more than that.
I’m going to illustrate Chicago’s reversal today by comparing it to New York City, looking at various key civic performance data. I’ll try to compare both metro and city where possible (all data is metro unless explicitly labeled as city), and to back to 1990 where possible, though for many items I could only conveniently get data for the past decade. You’ll see that where once Chicago was crushing New York, now the situation has reversed itself, erasing 20 years of relative gains for Chicago.
New York’s Quality of Life Program
While reading this I want you to keep in mind my recent post on New York’s quality of life agenda. I said I would demonstrate how that is paying dividends, and this post shows that too. Though perhaps I can’t claim causation, think about the correlation at least. In the 90′s and early 2000′s it was Chicago who was the leader in transportation and urban space, with its streetscape program and median planters, the wrought iron fence program, one of the first large scale bike lane deployments, the McDonald’s cycle center at Millennium Park, and more. Now Chicago has stagnated while New York powers ahead on all those items I’ve written about before. It’s hard for people to make the mental leap from stagnant transport planning and banal public place design to economic performance. So hopefully this helps make the picture clear.
Here’s a chart from the last decade. For these charts, I am sometimes inconsistent on my use of percentages as multiplied by 100 or not. I did not have time to make them consistent, but keep in mind that any 0.XX value should be multiplied by 100 unless otherwise noted.
Population Growth – July 1, 2000-July 1, 2009
Source: Census Bureau Population Estimates Program
This one is a mixed result. Both regions have anemic growth, but Chicago wins on the metro measure while losing on the city measure. Despite the city of Chicago’s massive condo building boom, its population has been stagnant.
Here is where it starts getting ugly.
Source: BLS Current Employment Statistics
You see Chicago jumping out to a big lead in job in the 90′s, only to see that relative performance gain almost completely erased by today. A year by year view shows this in action.
I think this is the scariest one of the bunch. I think back to 1992 when I first started work out of college. My employer was still hiring aggressively in Chicago even though it was during a recession, while one of the first rumors I heard when I started was about an east cost layoff. This chart backs that anecdote up. Now the shoe is on the other foot.
If you pull the monthlies for 2010 to date, the situation is continuing on this trend.
Unsurprisingly, we see the same trend at work in the unemployment rate, where New York was far higher than Chicago in the early to mid-90′s, but is now consistently below it.
Source: BLS Local Area Unemployment Statistics
Gross Domestic Product
GDP is a basic measure of economic output. The data is only available at the MSA level for a short term period at present, and there’s some debate over how accurate narrow geographic parsing of this variable is, but the same trend is in evidence.
Source: BEA Regional Economic Accounts
Please keep in mind that for this and most of the other charts, I rendered them as percentage type comparisons to make the data comparable between cities. If you looked at the actual underlying values, New York’s GDP per capita is already far higher than Chicago’s – $57,097 vs. $45,463. The chart above only measures the growth in the spread between them.
Personal and Household Income
Again, not surprisingly, the trend flows through to per capita income:
Source: BEA Regional Economic Accounts
And the year by year view of the same data:
One might argue that this is influenced by the finance bubble that particularly blessed New York. And possibly so. So let’s take a look at an alternate data point, median household income from the Census Bureau. As a median value, this should be less likely to reflect huge gains at the high end. Unfortunately, the Census 2000 data for MSAs is based on the old definition, and it wasn’t a straightforward matter to recalculate this to current definitions, so here is city only performance for the last decade:
Source: Census 2000 and ACS 2009
Doesn’t matter – same result.
I’ll round out with a couple of additional factors often viewed as important. First, the increase in percentage of adults with a college degree. Note that this is a percentage point change (difference), not a percentage change in the total value.
Source: Census 2000 and ACS 2009
Back to a mixed result, with New York winning on the regional basis, but Chicago doing better in the city.
And lastly, a couple of commuting stats. First, public transportation mode share for commuting. Note that this again is a percentage point change, not a percent change.
Source: Census 2000 and ACS 2009
There’s debate to be sure on the value of public transit, but clearly New York has outperformed on getting people onto buses and trains. How has that changed commute time? Let’s take a look:
Source: Census 2000 and ACS 2009
The city of Chicago had a much bigger drop in commute times. I personally wouldn’t be too excited about this since since lower commute times nationally appear to be driven (so to speak) by the poor economy rather than transport efficiency. Whatever the case, New York performed slightly better on a regional basis.
Before concluding I should note that the ACS survey has a margin of error associated with it, which should be taken into account before reading too much into changes in values derived from it. I’m only reporting the headline number.
While Chicago had a couple of bright spots, it’s pretty clear that not only is New York ahead of Chicago, something that is to be expected, but it is pulling away. It would be easy to say that New York is one of a kind and that nobody can compete with it. Well, it is one of a kind, and while it isn’t a direct competition, Chicago was doing far better than New York as recently as 15 years ago. So it can be done and indeed was being done.
The reality is that Chicago is falling behind versus traditional peer cities, to say nothing of emerging global cities around the planet. Perhaps it’s not a direct competition, but if you aren’t creating jobs, economic output, and wealth, you aren’t going to be able to make the investments to stay relevant. One reason New York has been doing what it has been on the public space and transportation front and Chicago has not is that New York is in a lot better shape financially. We are watching the cultural institutions of Detroit get dismantled before our eyes as that city can no longer afford them. Clearly, Chicago is no Detroit and never will be. But that can serve as a sort of cautionary tale of what happens when the wealth generating capacity of your city erodes. Chicago is going to find it tougher and tougher to keep up unless it figures out a way to restore the regional economic engine to good working order. That, more than anything, is the key challenge not just for the next mayor, but for all the city and regional leadership.