Tuesday, November 2nd, 2010
Photo Credit: Flickr/wallyg
Crain's Chicago Business, the city's business weekly, has a first-rate lead article this week on Chicago after 21 years of the reign — there's no other word for it — of Mayor Richard M. Daley. The article is of greatest interest to Chicagoans, of course. But it also raises crucial questions for anyone interested in global cities, and whether they can work.
Chicago is a global city — perhaps the only one in the Midwest. These cities are the places where, increasingly, the world's business is done. They have the most corporate headquarters, the key global business services, the universities, the foreign students, the busiest airports, the immigrants and the most vibrant culture. As the Crain's authors Greg Hinz and Steven R. Strahler make clear, they also have problems that, as this global era dawns, are nowhere near being solved.
The big problem is that global cities make some of its neighborhoods and their citizens very rich and very well-served, while leaving most of their people farther behind than before.
Daley took office in 1989 — coincidentally, the year the Berlin Wall fell, Communism began to crumble and no less than 3 billion new workers — mostly from ex-Communist countries like China but also India and Indonesia — joined the world economy.
These events, together with the communications revolution since then, created globalization. One result was the exodus of heavy manufacturing from old industrial areas, like the Midwest, to formerly Third World countries, like China. A second result was the creation of global cities — metropolises that became command-and-control centers for this new economy. If the manufacturing spread around the globe, it was controlled by the global citizens — the bankers, managers, lawyers, consultants — who gathered in the global cities.
New York, London, Paris, Tokyo and Hong Kong stand atop this new global Hanseatic League. Just below them are a second tier — Los Angeles, Singapore, San Francisco, Sydney and the like. Chicago ranks at the top of this second tier: it was eighth in the top 10 in a ranking published by Foreign Policy magazine two years ago. Even with the recession since then, it undoubtedly ranks that high today. No other Midwestern city comes close.
This sounds good and, in many ways, it is. It's certainly better than the plight of many cities, like Detroit or Cleveland, where the heavy industry went away and nothing replaced it. Anyone who remembers the grey, rusty Chicago of the late 1980s, when Daley took over, has to be dazzled by the throbbing prosperity that greets any visitor today.
But that's the point, Crain's says. This visitor sees the Loop and the Lakefront. He visits friends and clients in Lincoln Park and Lakeview. He goes to games and restaurants on the near west side, or marvels at the development on the near south side. For sheer urban glitz, these neighborhoods hold their own with neighborhoods anywhere in the world.
Nor are their residents a tiny elite. These residents account for about 465,000 people. This mass of people — bigger than Minneapolis or St. Louis — is a force in the economy, and their sheer presence has transformed the city. About 20 percent of them earn $100,000 per year or more — the same percentage as in the suburbs, which is a big change. According to the Brookings Institution, 32 percent of Chicagoans hold bachelor's degrees or better, more proportionately than in New York.
But as Crain's points out, these half-million people are only one-sixth of Chicago. How's the rest of the city doing?
The answer is, not so hot. The increase in income in the city's eight wealthiest neighborhoods is greater than the total income in 38 other neighborhoods. High-school graduation rates have risen from 46 to 56 percent, but most of the dropouts still live in the great swatch of the city outside the glittering downtown. The city's murder rate is down sharply, but the victims still come disproportionately from the inner city, not the Gold Coast.
And as Crain's points out, success itself has a cost that must be paid.
In his 21 years in office, Daley has pumped billions into the city to give it the amenities and beauty that any global city must have. The result is new stadiums, Millennium Park, flowers everywhere, a theater district, a rerouted Lake Shore Drive, the revamped Navy Pier, the ongoing modernization of the city's two big airports, and much else. All these are crucial to the city's sheer verve and vitality.
But another result is huge debt. The city's operating budget is running a 16.3 percent deficit, twice that of New York. According to Crain's, total bonded debt and long-term capital leases for city government are up to 263 percent on an inflation-adjusted basis: the city's property-tax base is up too, but barely half as much. Tack on huge unfunded pension liabilities, and the city's in a financial jam.
And then we get to the most glaring statistic of all — jobs. Chicago, even in its old Rust Belt days, had 1,334,000 jobs in 1989, when Daley took over. This was down to 1,235,000 in 2008 and (no doubt because of the recession) was down to only 1,175,000 at the last count, in 2009.
In other words, Chicago – the only old industrial city in the Midwest to transform itself into a global city, a big success story in the global rankings — still can't provide as many jobs for its residents as the old sooty City of the Big Shoulders.
What does this say about the ability of the global economy to create a decent standard of living?
Saskia Sassen, formerly at the University of Chicago and now at Columbia in New York, literally wrote the book — "The Global City" — on global cities, and was a lead writer on the Chicago Council's 2004 book, Global Chicago. She is perhaps the world's leading theorist on global cities, and what Crain's reported didn't surprise her a bit.
Global cities, she told Crain's, are cities within cities. The true global citizens in these cities have more to do with the global economy, and hence with other global cities like Paris or Tokyo, then they do with the rest of Chicago. A global city needs them, because they are a terrific source of income and prestige, and hence lashes out on the parks, schools, theaters and other amenities that bring them in. But these amenities exist to serve these global citizens, not the rest of the city. This is why Chicago today has many excellent public schools, including some good high schools: these global citizens have kids and they demand good schooling. Meanwhile, schools in the rest of the city are nearly as bad as ever.
This is no less than a new class structure. The old industrial city created an industrial middle class, based on good jobs for anyone willing to work hard. That city is gone. The new global city creates a global class, with splendid jobs for people also willing to work hard — and with an MBA to boot. In a global city, some people — quite a lot of them, in fact– move up, and other people — the majority, it seems – move down, leaving not much in the middle.
It's a puzzlement. In today's global economy, cities may have to become global cities or decline. Chicago, for all its problems, still is much better off than Detroit or Cleveland. But can these global cities create a vibrant economy for all its citizens, not just for a lakeside elite that, in some sense, doesn't really live in the city at all?
Richard C. Longworth is a Senior Fellow at The Chicago Council on Global Affairs. He is the author of Caught in the Middle: America’s Heartland in the Age of Globalism.
This post originally appeared in the Global Midwest blog on June 18, 2010. Reprinted with permission of the author.