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Sunday, January 30th, 2011

Indianapolis Must Reinvent Itself Again

Indianapolis has often been referred to as the “Diamond of the Rust Belt,” but its performance goes far beyond just being the best house on a bad block. Yet despite outperforming not just the Midwest, but America as a whole, long term challenges facing Marion County put the region at risk.

Few seem truly aware of how impressive metro Indy’s performance has been. Compared other large metros in the greater Midwest, Indy was #1 for population growth from 2000-2009, growing almost 14%, or close to 60% faster than the US as a whole. It also had positive net domestic migration – people moving in minus people moving out – of over 70,000 people while virtually every other Midwest metro was bleeding people. That’s like the entire population of Fishers packing it up from where ever they lived and moving to Indianapolis. People are voting with their feet in favor of Indianapolis.

Indy was also #1 in job growth, adding 19,000 jobs in that same period while the US as a whole lost them. It is #2 in GDP per capita, the basic measure of economic output per person, trailing only the Twin Cities. It even outranked Chicago, showing that far from the stereotypes of a low end economy, metro Indianapolis is in fact a high value economy.

But despite this great regional story, all is not rosy. In particular, Marion County as a whole is now starting to show signs of the urban struggles we typically associate with the inner city. For example, while its population has continued to grow, it has slowed to a crawl. It lost more than 50,000 people to migration in the last nine years. And it lost almost 60,000 jobs – a huge number. A report commissioned by Mayor Ballard early in his administration noted that three of the four largest townships in Marion County have declining assessed valuation. And the township school districts now largely trail those in the collar counties for graduation rates.

In 1970, Unigov united the old city with what were then its suburbs. But this proved to be less a solution to a problem than a stay of execution. Marion County as a whole now finds itself in the same situation the old city did back then. It is struggling with legacy issues while surrounded by fast growing, brand new suburbs. And this time there is no Unigov in the wings to fix things.

In effect, Unigov bought Indianapolis 40 years to create an urban core environment that would prove demographically, economically, and fiscally sustainable over the long term. Unfortunately, that time is running out and the solution hasn’t yet been found. Indianapolis did completely transform its downtown, an accomplishment worthy of every bit of praise that has been given to it, but that is not sufficient to animate an entire county.

The big problem is not with the old city. Center Township, despite its challenges, has seen an uptick in population after decades of decline and neighborhoods over a wide expanse have seen improvement. The real issues are in the old suburban townships. Their problem is that they are selling and older version of the same basic suburban product as the collar counties, only with higher taxes, more crime, and worse schools.

When you are selling an inferior version of a commodity product at a high price point, it should come as no surprise that there aren’t a lot of buyers. Hence the exodus from Marion County we have witnessed. People can get a shiny new product with no legacy problems just by crossing a border, so that’s what they are doing.

To avoid Marion County failing and taking the region – and possibly even the state – down with it, it must change course to redevelop itself around a different type of product, a more urban one that isn’t available in the collar counties. This will take courage, since it won’t be popular in some quarters, but continuing to fight the collar counties in a commodity suburb game is a game Marion County can’t win.

This column originally appeared in the Indianapolis Business Journal.

Friday, January 28th, 2011

Replay: The Importance of Social Structures to Urban Success

[ As a follow-up to my Cost of Clout piece I am re-running this 2008 post demonstrating the important of social structures and culture to urban success. ]

There seems to be a popular belief that what it takes to create an industry cluster in bioscience or whatever is to pair research with commerce. That is, to find an academic institution doing cutting edge research, and connect it with venture capital and entrepreneurs to start companies to commercialize it. Soon enough, you have a “cluster” of businesses that takes off like a rocket. This is the perceived Silicon Valley model, and no company epitomizes it more than Google, which was started by two Stanford students to commercialize their graduate research.

But is this true? There are many top flight research universities in this country, but few major startup clusters. When major research institutions fail to generate commercial spinoffs, this is often blamed on a lack of venture capital. But is that really the case, or is something else at work?

Anyone interested in this matter simply must read AnnaLee Saxenian’s seminal book, “Regional Advantage: Culture and Competition in Silicon Valley and Route 128“. A social scientist at UC Berkeley, Saxenian lived and worked in both Silicon Valley and Boston’s Route 128 technology corridor. She wondered why Route 128, which started out with far more of a technology business and economic base than Silicon Valley, eventually lost ground to become a clear number two. She sees this resulting from the different social structures that exist in the various areas.

According to Saxenian, Route 128 suffered from a culture that was oriented towards a traditional maturing industry, not a rapidly changing one like technology. This included more deliberative decision making; vertical integration and self-sufficiency; hierarchical, centralized command structures; focus on economies of scale; a high friction job market; geographically dispersed locations; and low levels of cooperation and sparse networks between firms in the region. In other words, all the standard traits of a typical large corporation. While she doesn’t dwell on this point, it also comes across that Boston, probably due to its New England locale with all the history there, was a much more closed society. The social network and hierarchy was more fixed (the phrase never appeared in the book, but I couldn’t help but think Boston Brahmin) and the process of establishing trust and credibility much slower than California. While famous as one of the bluest states, Massachusetts is socially conservative in many ways, and highly risk averse. This is the land of the suit and tie, and the difference between that environment and California casual was more than just a surface thing.

Silicon Valley, of course, was just the opposite. It adopted social structures that were very focused around innovation and time to market. It was open, with rapid, decentralized decision making. Firms quickly specialized, focusing on their core competency, and established close links with suppliers to fill in the rest of the value chain. These links were often such that it was not clear where one company ended and the other began. The clearly functioned on high degrees of trust. Even direct competitors often talk to exchange ideas and help each other solve problems. Here’s a quote:

Competitors consulted one another with a frequency unheard of in other areas of the country. According to one executive: ‘I have people call me quite frequently and say, “Hey, have you ever run into this one?” and you say “Yeah, about seven or eight years ago. Why don’t you try this, that or the other thing.” We all get calls like that.’ (33)

Clearly this is quite unique. I’m not even sure if it’s all legal, but hey, it works for them.

The job market in Silicon Valley is extremely fluid, with people constantly changing jobs, starting companies, etc. It is expected that you won’t stay that long with any given employer. Route 128 operated on the “company man” model and to leave was to show disloyalty, often resulting in ostracism. Since Silicon Valley was a new country with almost all immigrants of one type or another, family history and credentials meant little. What mattered was whether you could perform.

Now of course it was almost entirely men, originally white men, who set this up. The tech industry is famous for being one of the most gender imbalanced. What I found particularly interesting was that many of the founders had Midwestern roots. Again quoting:

This collective identity was strengthened by the homogeneity of Silicon Valley’s founders. Virtually all were white men; most were in their early 20’s. Many had studied engineering at Stanford or MIT, and most had no industrial experience. None had roots in the region; a surprising number of the community’s major figures had grown up in small towns in the Midwest and shared a distrust for established East Coast institutions and attitudes. They repeatedly expressed their opposition to ‘established’ or ‘old-line’ industry, and the ‘Eastern establishment.’ (30, emphasis added)
….
The many examples of engineers with humble origins who became millionaires by starting successful companies had no parallel in the more stable social structures of the East. Jerry Sanders, founder of Advanced Micros Devices … grew up in south Chicago, the son of a traffic light repairman. (38, emphasis added)

To digress for a moment, remember how I said the contrarian, ornery Hoosier/Midwestern attitude is, in the right context, a huge strength, not a weakness. This shows that in action. These guys didn’t toe the conventional wisdom line. Instead they created a whole new business model. I’ve got to believe the Midwest mindset played a huge role in making this possible. The unfortunate thing is that they had to leave the Midwest to do it. Imagine if they’d stayed home and made it happen around one of the great engineering schools there? Alas, to this day Midwesterners often have to leave to turn things into reality. Famously, Marc Andreessen had to leave Illinois to start Netscape, and in fact had U of I actively hampering him all the way. If the Midwest cracks the code on this piece alone, it would be a huge step in the right direction.

(By the way, for a wonderful look at how these Midwesterners invented Silicon Valley and the “elder days” of semiconductor business, see Tom Wolfe’s 1983 Esquire essay, “The Tinkerings of Robert Noyce“.)

These extremely fluid job markets, open social institutions, high trust customer and supplier interactions, and competitor information exchange create an environment of so-called “dense networks”. In a period of rapid change and innovation, these networks, by efficiently distributing information and dispersing risk, create an environment with very rapid speed to market and high levels of adaptability. A traditional Route 128 do it all yourself model simply can’t keep up with the power of this vast network.

It was this network, more than anything, that created the Silicon Valley we know today. The “cluster” we see in Silicon Valley is not an artifact of spatial co-location. It comes from the network. According to Saxenian:

Spatial clustering alone does not create mutually beneficial interdependencies. An industrial system many be geographically agglomerated and yet have limited capacity for adaptation. This is overwhelmingly a function of organizational structure, not of technology or firm size … The current difficulties of Route 128 are to a great extent a product of its history. The region’s technology firms inherited a business model and social and institutional setting from an earlier industrial area. (161-162).

Sound familiar? It describes the Midwest perfectly. What I find interesting is how Saxenian illustrates her thesis not using a struggling Midwestern burg as a case study, but rather Boston’s Route 128, the second largest technology hub in America, home to possibly the greatest collection of universities in the country, with massive access to capital, etc. If this town had its problems, how much more so places without those advantages? It certainly shows the scale of the challenge in building industry clusters.

Obviously, changing the social structure, culture, and institutions of a region is difficult to do. Even positive articles highlight the scale of the challenge. I’ll refer a recent article on Milwaukee startups that I linked that quotes a local businessman saying, with some pride I gather, “Milwaukee is a one-strike-you’re-out town.” That’s not a good thing. Silicon Valley shows that failure and risk taking are good. The way to innovate is to figure out how to try lots of things and to fail quickly and cheaply. If you are overly concerned that you’ll be permanently ruined if your business goes bankrupt, you’re not that likely to take a chance.

It reminds me of a discussion I once had with a friend from Germany. He told me, “We’re the children of the people who stayed” and bemoaned the highly conservative outlook of his countrymen. He noted the extreme reluctance to take risks because in Germany, if you go bankrupt, you’re stigmatized for life. Obvious some of that carried over to heavily German Milwaukee.

I should note that one should not over-internalize Saxenian’s case studies into some sort of cookbook solution. Every city and region needs to find its own unique path to success based on its own culture, institutions, history, etc.

I would be remiss I did not point out a few areas where I was skeptical of the Silicon Valley model. One intriguing factoid from the book was that in 1962 federal government purchases, principally defense related, accounted for over half of Route 128’s sales. Indeed, the area got its start in technology through defense related research during World War II. Could it be that dependency on government contracts is really what caused the dysfunctional culture there? Government largesse encourages rent seeking behavior at the expense of building a competitive business.

Also, Saxenian highlights how the non-business social networks in Boston substitute for the type of technology networks in Silicon Valley. But is this a bad thing? The books paints a portrait of Silicon Valley as a bunch of geeky guys who toil away long hours on tech projects and even talk about technology at the bar when they do go out. It’s like a community of idiot savants. Some might say “get a life!”

What’s more, there is some research that suggests dense networks themselves aren’t a recipe for success. In an thought provoking paper called “Why the Garden Club Couldn’t Save Youngstown” Sean Safford contrasts the experiences of Youngstown and Allentown, both small steelmaking cities. Despite similar dense networks, Youngstown failed while Allentown fared much better. His conclusion that was the dense networks in Youngstown only reinforced an already closed leadership circle who were economically aligned, while Allentown’s served to bridge otherwise non-overlapping groups.

Perhaps to a great extent, the key attribute is less the networks themselves, than the ability of outsiders and new thinking to penetrate them. Silicon Valley’s social structure was open, Route 128’s wasn’t exactly closed, but there were barriers to entry. In a globalized world of ever faster change, the ability to respond and adapt, to process new ideas and react to rapidly shifting global forces, is critical. This puts a bit premium on dense social networks that are also open and flexible.

This is somewhat the thesis also of Richard Florida. He has a somewhat different spin, saying that the economy is now powered by the creative class, and they want to live in places that are open, tolerant, etc. This is his “three T’s” model: talent, technology, and tolerance. The last appears not to be so much valuable in its own right, but for what it says about the openness of social networks. Thus a large number of gays in a community isn’t what drives economic growth per se. Rather, a thriving gay community is a signaling mechanism that lets people know that diverse ideas and people are welcome.

I think we all know places where the social network is impenetrable. This isn’t necessarily a function of size, prosperity level, etc. I mentioned the Boston old money, social register concept. In any number of southern cities, who your daddy is, or what sorority you went to in college is a huge determinant of your place in a social hierarchy. If you don’t come from the right family, the right schools, etc., you can forget it.

Perhaps this explains my Cincinnati conundrum. Here’s a city with better assets than almost any in America, but it is one of the all time relative decline stories in US history and to this day is on a moderately stagnant, slow growth path. Why is that? There was an intriguing study I saw recently called Who Rules Cincinnati? [dead link] This is by an independent researcher named Dan La Botz, who I get the impression is some sort of hard core left activist, so keep that in mind. Nevertheless, he uses a similar approach to the Garden Club study to track social networks in the city, coming to the conclusion that officers of seven major corporations basically run Cincinnati, mostly to that city’s detriment. Another person I know offered the interesting insight that when he meets someone in a bar in Cincinnati, the first question they ask him is where he went to high school. This both indicates a highly inbred culture as evidenced by the assumption one must have gone to high school in Cincinnati, and shows that the school you attended is an important social marker. (It perhaps also shows a lack of regard for higher education).

It could be that the Midwestern cities that have the best potential for future growth are those with the most open social networks, as well as exhibiting other of the characteristics Saxenian cites. I think this would be fertile ground for social science research. It also makes me wonder if perhaps that goes part of the way to explaining the relative success of the Midwest’s larger state capitals. State capitals constantly have people traveling and doing business there from all corners of the state. This flow in and out might potentially prevent a social structure from completely congealing into a small, impenetrable elite. I sense another potential dissertation topic here.

The key takeaway is not to focus on purely the institutional infrastructure (universities, venture capital funds, labor force, etc.) when trying to set out an economic strategy. The local culture, norms, and social practices, and in particular the density and openness of the social networks is critical. Clearly, as anyone who has found themselves mired in a corporate or governmental bureaucratic organization, changing a culture is an extremely difficult thing to do. But it is something that clearly warrants an examination.

This post originally ran on July 13, 2008.

Thursday, January 27th, 2011

The Urban Energy Efficiency Retrofit Challenge

My latest post is online over at New Geography. It is called “The Urban Energy Efficiency Retrofit Challenge.”

This is based on a true story. My furnace failed on Christmas Day. I thought I might take advantage of the last bit of the stimulus to upgrade to an energy efficient furnace and hot water heater, only to run into issues that prevented it. I suspect many others are in a similar boat. To me this shows how even the most seemly simple efficiency upgrades sometimes aren’t quite so simple.

Tuesday, January 25th, 2011

Yes There Are Grocery Stores in Detroit by James Griffioen

[ I'm delighted to be able to share with you today a story from Jim Griffioen, a simply wonderful writer living in Detroit and author of Sweet Juniper, which is not exactly an urbanist blog, but like everything in Detroit is simply unlike anything else out there - and in a good way. I know you'll enjoy it - Aaron. ]

I’m just one of about 800,000 people still living in the city of Detroit, Michigan, the nation’s 11th most-populated city. Because of the events of the last half century, this is a city that journalists and academics love to examine and study. In focusing on the sensational, they often concoct maddening generalizations about what they’ve found here. In the time I’ve lived in Detroit, I’ve come to realize that the most sensational claims and the public perception they create often have little to do with the day-to-day reality of being a Detroiter. This is a complicated city, and even in the most sincere efforts to cull some truth from it, visiting journalists often end up spreading damaging falsehoods.

One of the most annoying is that Detroit has no grocery stores.

This is something that I have been hearing about for many years. While attending law school in nearby Ann Arbor, I was told that everyone who lives in Detroit has to go to the suburbs to do their grocery shopping. With the recent spate of journalists visiting Detroit, this “fact” has gained even more traction. NBC’s Chris Hansen recently took some time away from his grueling schedule of catching predators to draw attention to how difficult it is to find groceries in Detroit: “There are more than 400 liquor stores in Detroit. But if you want to buy food, good luck. In the entire 140 square miles of the city, there are no Krogers, no Safeways, only eight supermarkets, and they’re discount stores.” (Dateline NBC, April 20, 2010). Andrew Grossman of the Wall Street Journal emphasized that Detroit lacks “chain” grocers: “No national grocery chain operates a store here. A lack of outlets that sell fresh produce and meat has led the United Food and Commercial Workers union and a community group to think about building a grocery store of its own.” (WSJ, June 16, 2009) And most recently, Richard C. Longworth (senior fellow at the Chicago Council on Global Affairs and former Distinguished Visiting Scholar at DePaul University) writes in Good Magazine: “This seems incredible—a city of nearly 1 million people without a supermarket—but it’s true. No A&P. No Meijer’s. Not even a Wal-Mart. Any Detroiters who want fresh store-bought fruits and vegetables or wrapped meats have to get in their car and drive to the suburbs. That is, if they have a car.”

I’m tired of being nice about this. That is such utter and total bullshit.

I know the traditional media is suffering. Reporters are overworked and underpaid. Scholars like Mr. Longworth, too, might not have the research assistants they once enjoyed, but I would certainly expect anyone who makes an unequivocal statement like Detroit “is a city of nearly 1 million people without a supermarket” to at least have done a 4-second google search to confirm it (six seconds, I guess, if google isn’t your homepage). In four seconds, here’s what I found:
 

Each of those orange dots is a supermarket, not a liquor or discount store. A couple of them are even Aldi stores, a chain supermarket operated by the same company that owns Trader Joes. Many of those dots represent “Spartan Stores,” associated with a regional food distributor that “supplies 40,000 private label and national brand products to nearly 400 independent grocery stores.” A quick search on the Spartan website shows how many affiliates exist within Detroit city limits:

While not the same as a national chain, an affiliation with Spartan Foods provides some uniformity among the products sold in these independently-owned Detroit stores. Many of these stores are operated by individuals and families from the large Chaldean (Iraqi Christian) community living in metro Detroit. The cleanliness and quality of merchandise and services provided by these stores definitely varies, and your average New York reporter might not be able to find his favorite lemon-infused chevre or organic arugula at all of them, but that doesn’t mean these supermarkets don’t exist, or that they somehow fail to serve the demands of their community. I went out looking for some of these mythical Detroit grocery stores, and while some aren’t particularly inviting, plenty of them are actually quite nice inside and out.

There is no question that many of the neighborhoods served by these independent stores are desperately poor. Sticking a pristine Whole Foods or even a Super Wal-Mart in these neighborhoods is not going to somehow solve the dietary issues poverty has created among their residents or provide jobs without displacing others. Those are incredibly complex problems and simply spreading hyperbole about a uniform lack of shopping options across a 138-square-mile city does nothing to solve it. Detroit does have individuals and organizations working hard to solve the problem of access to produce where it exists, and their efforts are often ignored by a media obsessed with the myth that Detroit has no grocery stores. A Detroit church recently opened a produce market called Peaches and Greens with an ice-cream truck that travels to the neighborhoods most in need of such options. The Eastern Market Corporation is working to create a CSA for seniors and others who cannot make it to the market but want fresh produce delivered. Several groups are also working diligently to put more fresh food options in the corner stores that may be the closest option for some neighborhoods. While a reality for some Detroiters, all this pervasive talk about the “food desert” is insulting to the large swath of the population that does have transportation and does make an effort to forgo fast food and cook with those healthier options that may be a few steps or blocks further down the road, but are nonetheless there.

What surprises most people who’ve heard that there are no grocery stores in Detroit is that there are actually independent stores far more appealing than any chain. One of the nicest grocery stores in Detroit is Honeybee La Colmena (I wrote an extensive profile about the store here). Honeybee is owned and operated by individuals who grew up and still live in the neighborhood where the store is located and they have created dozens of jobs for their neighbors. Honeybee has some of the best produce and prepared foods in the metro area, and it is actually a Detroit supermarket where people from the suburbs come into the city to shop.

In addition to Honeybee, Southwest Detroit is also served by several other excellent Supermercados, including E & L, La Fiesta Market, Gigante Prince, Ryan’s, and dozens of smaller mom-and-pop grocery stores. The far east side has Joe Randazzo’s Produce Market for extremely affordable produce, and the far westside has Metro Foodland, a fine independent supermarket serving Rosedale and Grandmont for more than 25 years. An individual recently purchased a vacant storefront in the middle class neighborhood of Lafayette Park (where I live) and plans to open a full-service supermarket there this Spring. He’s bullish on its prospects despite another supermarket operating three blocks down the road and the neighborhood’s close proximity to Eastern Market. A family that’s been in the Detroit grocery business since the 1950s is reopening their Ye Olde Butcher Shoppe on Woodward Avenue in a new Midtown location this year, complimenting the offerings at Kim’s Produce just down the road, as well as Goodwells Natural Foods a few blocks over.

No, none of these places are a Wal-Mart or a Kroger. They’re much better for our community. The money that thousands of Detroiters spend at these establishments every week doesn’t pay salaries of executives in Bentonville or Cincinnati. It pays to support families that still live in this community and pays to support the livelihoods of their employees. It pays to support reinvestment in the stores themselves and the surrounding community. Further, it pays to sustain a unique shopping opportunity that is quite unlike any other.

* * * * *

The myth of a city without supermarkets is hard to kill, even faced with the evidence above. Ultimately, that myth perseveres because the mainstream media and its audience is steeped in a suburban mentality where the only grocery stores that really seem to count are those large, big-box chain stores that are the only option in so many communities these days, largely because they have put locally-owned and independent stores like the ones you find in Detroit out of business. It is true that the big chain stores have forsaken or ignored Detroit, for any number of understandable (and sometimes despicable) reasons. But in their absence, a diverse system of food options has risen to take their place, and the tired old narrative that Detroit has nowhere to shop for groceries needs to be replaced by a more complex truth: with a diversity of options ranging from the dismal to the sublime, Detroit may be one of the most interesting places in America to shop for food.

Much has been written about urban farming in Detroit. No one really believes these tiny farms will ever sustain the produce needs of an entire city, but few doubt that they will continue to play an important role in the city’s transformation and they will only grow in importance as an integral part of the city’s food culture. The vegetables and fruits grown in Detroit’s gardens are so bountiful that neighborhood produce stands pop up; a coalition of inner-city gardeners sells thousands of pounds of affordable produce almost daily during the growing season at local farmer’s markets. Soup kitchens and schools supply their own produce from extensive and expertly farmed plots. In 2010, several Detroit farmers banded together to start the first CSA deliveries consisting entirely of produce grown in the city. Small-scale farming in Detroit has actually become a viable part of the urban food system and not just a novelty as it is in other cities.

Even if Detroit didn’t have these independent grocery stores or its hundreds of urban farms, it would still have Eastern Market. Covering 43-acres at the heart of downtown Detroit, with convenient access to freeways and major bus lines, Eastern Market is the largest historic public market district in the United States. And no one is in a better position to swat down the stories of Detroit’s lack of produce or the pervasive and patronizing myth of the food desert than Dan Carmody, the energetic President of the Eastern Market Corporation. “How can they call this city a food desert?” Dan asks me. “When Detroit sits right in the middle of the best local and regional foodshed in the United States after the central valley of California!” Dan points out that Michigan is second only to California in the diversity of crops grown, and besides it has immediate proximity to Canada’s “sun belt” in Southwest Ontario (where excellent hydroponic tomatoes and other fresh vegetables are grown year-round in nearby Leamington, home the largest number of commercial greenhouses in all of North America) as well as the Amish/Mennonite belt that stretches from Pennsylvania to Indiana. Metro Detroit, with a population of nearly 5.4 million people, provides a huge market for these local and regional farmers, and the nerve center for distribution of their products is in Eastern Market at the heart of Detroit city.

Most Detroiters are keenly aware of the Saturday public market in the newly renovated turn-of-the-century market sheds, where as many as 40,000 people come downtown to shop for fresh local produce every week, and many have been doing it for decades. “If all these reporters are right when they say Detroiters have to travel to the suburbs to buy fresh produce, why do 15,000 or more suburbanites drive down here every weekend to buy fresh produce?” asks Mr. Carmody. The Eastern Market Corporation has worked hard to make the produce sold by its vendors accessible to all Detroiters. Saturday vendors accept tokens created through a program in effect since 2007 where shoppers can use their Bridge card to buy fresh produce. It has created the innovative “Double Up Food Bucks” program that “provides families receiving food assistance benefits with the means to purchase more fresh fruits and vegetables at farmers’ markets.” And the “Michigan Mo’ Bucks” program aims to stretch the amount of money families receiving assistance get when that money is spent on fresh produce. Eastern Market is not just for the overpriced localvore yuppie/foodie crowd, but it succeeds in serving the needs of all Detroiters. And nowhere is this region’s diversity on better display than a Saturday morning at Eastern Market, when tens of thousands of people from all backgrounds converge to buy fresh and affordable local produce.

What many people don’t realize is that Eastern Market buzzes with activity Monday through Friday. The wholesale business of distributing fresh produce to groceries and supermarkets throughout the region gets underway well before most people wake up in the morning. Mr. Carmody tells me that some of fanciest independent grocery stores in the metro area (Papa Joe’s, Plum, Westborn, etc.) all send buyers down to Eastern Market before dawn to pick out the best local and regional produce for their stores. That means the expensive tomatoes and apples sitting on shelves in suburban Birmingham and St. Clair Shores likely came through the “food desert” of Detroit. These wholesale buyers come to Eastern Market for local products first, before they head to the Produce Terminal (also in Detroit) for produce trucked in from California or elsewhere. As “buying local” becomes more and more important to consumers, so will Eastern Market and its longstanding ties to local and regional farmers.

In addition to produce, Eastern Market is a center of meat processing and butchering in the region. Many of the wholesalers welcome the public during the week, so Eastern Market is not just a year-round weekly farmer’s market where you can buy pretty much anything that’s grown regionally, it is a daily shopping experience that one might liken to shopping in an ancient European capitol, where you can go from shop to shop to buy bread, wine, dry goods, produce, cheese, fish, and any kind of meat you could possibly want from rib-eyes to raccoon. It is close enough to downtown that Eastern Market is convenient for office workers to swing by on their lunch breaks to pick up some groceries while grabbing a slice of Detroit’s best pizza or a sandwich at one of the city’s best delis. I profiled one of my favorite Eastern Market merchants,. R. Hirt Jr. (a business that has been in the same location and family since 1890) here, and I also wrote about a hardware store that has been doing business on the same spot in Eastern Market since 1918.  I consider Eastern Market my own “super center” and I walk there with my kids several times a week. Many of the shop owners and food sellers know me and my family by name, and shopping there is a unique experience that I treasure. Here is an excellent video that tells a bit more about Eastern Market, showing some of the farmers, wholesale buyers, and shoppers who make this Detroit institution such an incredible place even though it is always ignored by journalists eager to spread the shocking lie that Detroiters must leave their city to shop for groceries (click here if video does not display):

In addition to the Saturday market, there are also farmer’s markets in various neighborhoods around the city several other days a week, including a nice one on the campus of Wayne State University in Midtown (one of Detroit’s most walkable neighborhoods), one in Northwest Detroit, and one on Warren Avenue on the city’s east side. 

In the end, I hope this tirade accomplishes my primary goal of eliminating the gross generalization that there are no grocery stores in the city of Detroit and that its citizens are forced to leave the city borders to buy fresh meats and produce. That myth is fueled by the unfair assumption that big-box chain stores are the best and only places to shop, which is particularly nefarious in my opinion because the model used by those stores is largely unsustainable for our cities’ futures. Chinese-manufactured goods shipped and trucked tens of thousands of miles and sold for razor-thin profit margins may seem convenient, but I truly believe we still haven’t learned their true cost. In my opinion, it is the exurban and small town shoppers who must choose between the uniform selections of a Wal-Mart, Kroger, or Meijer that truly have limited options. I prefer to celebrate the absence of these national retailers in this city rather than add it to the heap of things we already have to complain about here. Grocery shopping in Detroit may not be as convenient as it is in the suburbs, but the model we have here is more sustainable, more diverse in its options, and certainly more fun and interesting. I just wish more visiting journalists would take the time to see that.

_______

James Griffioen writes a blog called Sweet Juniper. It’s not about Detroit specifically, just his ordinary life raising a family in that city. In 2006, he walked away from a career as a corporate lawyer and is now a freelance writer and photographer who spends most of his time raising his two young children. His photos and writings have appeared in Harper’s, Vice, Time, Dwell, O Magazine, Fortune, New York, Foam, The Baffler, Muse, Landscape Architecture and many other publications.

Sunday, January 23rd, 2011

The Urgency of Reform

Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before. – Rahm Emanuel

Rahm Emanuel took a lot of heat for that statement because some people didn’t like the policies the Obama administration tried to use the crisis to implement, but it’s absolutely dead on. We know there have been all sorts of things in our state and local governments that have needed to be addressed for years. But special interests and politics have kept us from doing a lot of them. Now that we’re facing fiscal Armageddon at the state and local level a lot of previously unthinkable things have gotten, well, a lot more thinkable.

This is the opportunity and imperative that are before us. The cities and states that step up and take this opportunity for reform are the ones that will put themselves at a competitive advantage for the long term. Those who simply try to muddle through may end up wandering in the wilderness longer than they think. It’s not just about jobs and balancing budgets in the here and now. It’s about setting the stage for the future.

That to me is the disappointing thing about the Illinois income tax increase. Rhetoric aside, even the business community there realizes that a tax increase had to be part of the equation for the righting the fiscal ship. The structural problems are so vast – a $15 billion structural deficit in the state’s budget and a $160 billion unfunded long term pension liability – that there’s no way to bring things back in balance through cuts alone. But the cuts and reforms have to be made anyway, and the state didn’t make them. In fairness, it did change pension rules for future hires, and did some minor tweaks to things like free rides for seniors, but this is no where close to what is needed. Now that the tax rate was increased as a first option, reform just got a lot more difficult.

It all starts with pensions. This is the root of the fiscal mess in many places. Defined benefit pensions are indefensible in an era of such long life spans, and when future medical technology means it is physically impossible to predict how long people might live. Also, the notion that you spend your entire career with one employer, even a government one, is an anachronism. Today, once you’ve got X number of years in, you are almost handcuffed to your government job for the duration even if you hate it because the value of that pension is so high. That’s why you always face a battalion of surly employees when you go to renew your driver’s license. Also, it creates a recruitment issue. Lots of people might want to spend some time in public service without making it a career, but it can be hard to do. In many places (though by no means everywhere), government pay is below market on a cash basis, with the balance made up (often more than made up) by generous pensions. So for someone who might want to spend say 3-7 years in government, that’s a huge disincentive. They would be paid below market and not get the pension. If they were paid market and had a 401(k) they could take with them, that’s a lot more attractive option. So this reform is critical to recruiting the skills we need in public service from the marketplace. Also, the scenario I described right now is why elected officials simply can’t be trusted to manage pensions for the long term. They are able to both pay less in cash now and make big promises to employees that someone else will have to deal with down the line. And even if pension reform gets implemented, it is way too easy to retroactively sweeten the pot down the road. Only a defined contribution plan enforces real truth in budgeting and real funding of the liabilities.

Alas, few places seem likely to really go this route. Even Indiana isn’t looking at it, despite their huge unfunded pension liability and a reform minded governor. It would likely mean a politically unpalatable raising of the bare bones public sector pay there. But the places that are able to do this will reap an enormous gain over the long term, both fiscally, and from a government talent management perspective.

Beyond that, there are a whole host of other areas where reform can be put through. Indiana Gov. Mitch Daniels, for example, unveiled an ambitious reform agenda in his state of the state address. Among these:

  • Local government restructuring/mergers. This includes completely eliminating over 1,000 township units of government. I don’t think merging general purpose governments saves money – arguably the opposite. But lots of states have tons of special purpose entities like Indiana townships. These are often cesspools of cronyism (in Indiana’s case rampant nepotism) and maladministration. There’s enormous opportunity here. For example, Brookings laid out a number of consolidation proposals in their report on restoring prosperity in Ohio.
  • Criminal Justice Reform. It’s no secret that we vastly over-incarcerate people in US. Indiana also has a criminal justice revamp on the table that would see many non-violent drug offenders sentenced to treatment instead of prison, among other reforms. This would incidentally save a billion too. In a world where no politicians ever lost votes by being “tough on crime”, it’s a amazing that the sheer cost of incarceration is forcing many states to reconsider their approach to sentencing.
  • Education Reform. Possibly nothing is more important to our long term competitiveness than education. Daniels proposals are of the conservative variety so many folks won’t agree with them. But increasingly education is no longer a Democrat/Republican issue and there are a variety of serious proposals from across the political spectrum looking to address the issue of education.

These initiative all face headwinds. In particular, townships may survive because the political class sees township organizations as their “farm team.” But at least Daniels is pushing hard. Even if you don’t agree with what he’s doing, he’s at least trying. And he’s not the only one. Jerry Brown is already making people mad with his proposals such as eliminating local redevelopment authorities in California. Andrew Cuomo in New York is starting to talk about new ways of doing business in Albany. Again, there’s no guarantee of success – Ed Rendell failed in his quest to lease the Pennsylvania Turnpike, for example – but at least these places are swinging the bat.

That’s the key. Every state and local government needs to be taking advantage of this (hopefully) once in a lifetime opportunity caused by the fiscal meltdown to pursue and implement reforms with a long term benefit. This includes of course creating fiscal sustainability, but also positioning them economically and from a service delivery standpoint. The places that pull it off will be among the ones to watch in the future.

Friday, January 21st, 2011

Urbanoscope

If the two options are federal aid or shutting down local services, I’m all for federal aid. Yet these states are not intrinsically broke – there is plenty of wealth in California and Illinois and New York – the problem is politics, which are not improved by the prospect of a federal bailout. – Ed Glaeser

Here’s a head’s up that I’m tentatively scheduled to be on WGN-AM in Chicago around 11:05am this Saturday talking about parking meters.

I was on Chicago Public Radio last week talking transportation and the mayoral election. I’ll embed the audio below. If the player doesn’t display for your, click here.

Top Stories

1. NY Times: Portraits from a Job Starved City – A powerful interactive feature with audio statements from people living in Rockford, Illinois.

2. Jason Tinkey: The New Provincials

Freeway Lane Miles

The Texas Transportation Institute just released its 2010 Urban Mobility Report. This data has been recently critiqued by CEOs for Cities and others. But even if you don’t like the way congestion is measured, there’s still a treasure trove of data in here.

Here’s one quick sample: the top ten urban areas for freeway lane miles per capita (per 1,000 population), for metro areas over one million in population

Looks like Kansas City has enough roads to last a lifetime. Cleveland and Ohio in particular look to be in a tough spot, as with a declining population the burden of maintaining all those roads will loom large.

The lowest per capita value? Chicago at 0.35.

What Makes a City Smart?

This video from Time has brief snippets of big city mayors giving their thoughts on smarter cities. (If the video doesn’t display, click here). It includes the mayors of LA, Chicago, and Philadephia.

World and National Roundup

The Observer: 25 Predictions for the Next 25 Years

El País: Bullet train, white elephant – An interesting article out of Madrid (in English) showing how the high speed rail debates are not limited to the US.

The US HSR debate appears to be taking a tilt to the anti-side, not just with Republican governors cancelling projects, but even the likes of the Washington Post editorial page saying Hit the brakes on California’s high-speed rail experiment.

Randy Simes: The Surprising Story of Sustainability in Seoul

NYT: State bankruptcy option is sought, quietly – Uh, oh.

WSJ: Amid Downturn, Sunbelt Gains College Grads

Streetsblog: Cycling up 70% on London’s bike superhighways

Ed Glaeser: Why Green Energy Can’t Power a Job Engine

NY Magazine: Who is the greatest mayor of New York?

AM New York: The Lost Generation: NYC losing young people to cheaper cities

Michael Barone: The Great Lone Star Migration

Greg Meckstroth: The Midwest’s 21st Century ‘Place Proximity’ Asset

Detroit Free Press: Detroit’s profile grows as investors, young professionals return to city

Planetizen: Dreaming Detroit: Decline to Renaissance

John Hilkevitch: Transit is a sleeper issue in race for Chicago mayor

James Warren: Wisconsin Sounds Off, But Misses the Point

James Warren: President Hu’s Visit Proclaims a Rising Chicago

It’s very interesting to contrast these two consecutive columns by Warren, one chiding Wisconsin, the other an unabashed paean to Chicago. The Wisconsin column is an example of the type of journalism we need, pointing out the bigger picture and where the purely local thinking of regional leaders is missing the point. The Chicago column is everything that’s wrong with the Windy City. It is 100% right down the rails of the party line of Chicago and how incredibly wonderful it is, not a cloud in the sky. The 350,000 jobs we lost in the last four years? The fact that Chicago is trailing even US peers on most economic metrics ranging from GDP to personal incomes? Etc., etc. That doesn’t seem to factor in. The throwaway bit at the end about cuts seems more a product of Warren’s center-left PoV, a general indictment of cutting government, than of Chicago. This is why Chicago has been struggling. Because people aren’t asking the tough questions. They’d rather lord it over Wisconsin. Let’s take the log out of our own eye first. I’m glad to see the Tribune starting to step up. Let’s hope that new attitude starts getting spread around a bit more.

I do believe in Chicago’s transformation. I wasn’t here in the 70’s in 80’s so perhaps don’t fully appreciate it as viscerally as Warren, but even since my first arrival in 1992 it has been a massive change. That’s a bona fide, legitimate part of the story. Guys like Kass who are still stuck in 60’s “Machine” thinking are missing the boat on this one. There really is a huge amount to celebrate here. But the transformation is only part of the story, even if a big part. Too many people seem to think it’s the whole story. It’s too bad Warren couldn’t have applied the same magnifying glass he took to Wisconsin to Chicago.

Chicago’s Bus Tracker on Streetfilms

Streetfilms paid a visit to Chicago recently to profile bus tracker. They focus less on the system itself than on a project in Bucktown/Wicker Park to stream bus tracker data to monitors in local shops and such. Pretty cool. (If the video doesn’t display, click here).

Cycling Sucks

A hilarious video on Copenhagenize. (If the video doesn’t display, click here). I believe this was a student project out of the Netherlands.

Copenhagenize the planet!

City of Gold

Here’s an interesting rap video about Detroit. (If the video doesn’t display, click here).

Thanks to Everett Keyser for sending this to me.

Ohio River Bridges Project Is Still a Boondoggle

Indiana and Kentucky have supposedly agreed on a plan to chop $500 million off the cost of the Ohio River Bridges Project in Louisville. Now the project will cost “only” $3.6 billion, or almost $3000 for every single man, woman, and child in the entire metro area – and a heckuva lot more than that once financing costs and user delay cost during two decades of construction are taken into account.

This project seems to be a quest for an answer to the question: How big a boondoggle does a highway project have to be before even the most fiscally conservative of politicians will go for a rethink? It’s amazing that leaders on both sides of the rivers continue to push for this plan that will be little more than a cash drain on the region. And a destructive one, obliterating a number of historic buildings in downtown Louisville and erecting an even more gigantic barrier across the riverfront.

There is a better way: 8664. This project will save a couple billion – and reconnect downtown Louisville with the river to boot. Much better, much much cheaper. What’s not to love? Go forward with the adjustment to move the pedestrian path the Big Four, then take the rest of the steps to make 8664 a reality.

By the way, the Star said this was a “Kentucky delegation” and didn’t mention any Southern Indiana representation. I noted one of the cost saving measures was downscoping the east end bridge. Did Kentucky pull a fast one on Mitch? The east end bridge goes through Louisville’s equivalent of Zionsville and the big money types there – who are hugely influential – have never and will never give up on cancelling that bridge outright or, failing that, reducing it as much as possible. This looks to me like Kentucky maneuvering for position moreso than cost savings. Watch out, Indiana.

Post Script

The Economist had another fun map naming each state after the country that most closely approximates its state GDP.

Thursday, January 20th, 2011

A Better Way to Look at Data – Beta Testers Wanted

I love doing data driven posts here at the Urbanophile. But I’ve always found it ridiculously tedious and time consuming to do what I’d consider even basic data analysis without resorting to expensive and complicated tools, ones that normally assume you’re doing some type of hard core economic modeling or something. Or else doing hours of hand cranking. So I decided to fix that by building some infrastructure to let me do in seconds what it used to take hours before, or things it almost would have been impossible for me to do without it. Then I figured, if this is so incredibly valuable to me, why not to other people? So I plan to release this soon to the public as a commercial service – and a powerful one at a very attractive price point.

I’ve had people on my system for a while, but I’ll soon want to do a more broad beta test, so I’m asking for volunteers. An an enticement for this, I’ll be offering a discount to my beta testers – with no obligation to buy, of course. This is the system I’ve been talking about that has easy query access to the IRS place to place migration data, including MSA-MSA migration. I’m not including access to that data set in the beta, but if you are interested in it, you’ll definitely want to sign up for this. Just shoot me an email.

To give you some reasons to check it out, here’s a teaser sample of what you can do with the system that should show you some of its power. Note all that off these charts were made in less than 30 seconds each end to end. I repeat, less than 30 seconds start to finish.

College Degree Density

You may remember my recent post on changes in college degree density. It was an extension of work done by Rob Pitingolo. This post attracted tons of national attention ranging from the Wall Street Journal to the Atlantic. Here’s the main chart:

Keep in mind again that I made this in less than 30 seconds. Here are some of the implications of this:

  • This is just some cool information. The fact that Manhattan increased its college degree density by more than the total population density of most cities is pretty amazing. If it weren’t so hard to do stuff like this, maybe we’d be finding a lot more cool facts.
  • You can see that I’ve got not just college degree attainment from Census 2000 and the American Community Survey, but that I can automatically apply functions like density to it. There are many other functions like this that can be invoked with a click.
  • You can see that I can also run actual queries, in this case to get the top 10 counties. Queries can both accommodate a change over a date range, and apply the transformation functions like density. Again, there’s much more where this came from.
  • The data can be rendered on a bar chart for easily dumping into a blog post, document, or presentation.

I asked Rob Pitingolo how long it took him to do the data analysis for his blog post. He told me a week. I doubt he was heads down the whole time, but he told me it was a ton of tedious work. His post was a bit different from mine, but this should show you the kind of time savings and capabilities we’re talking about here: one week vs. 30 seconds.

Free Yourself from the Tyranny of GIS

You always see people do cool thematic maps like those red-blue election maps that turn states or counties or regions different colors based on data. (Technically, these are called “choropleth” maps). You ever wonder how those were created? I did.

As it turns out, they are usually cranked out using complicated professional tools like Adobe Illustrator or ArcGIS. Tools like ArcGIS are super-powerful, but also pricey and complicated, mostly requiring specialist GIS jockeys to use. Using ArcGIS to create a simple thematic map is like using a tactical nuclear weapon to get rid of the spider in your bath tub.

My system is different. Here’s another 30 second chart, this one from my post on the 2010 Census state population results. It is states that grew faster vs. slower than the US average:

One of the things my system does is let you render the result of almost any query in the system automatically on a thematic map for states, counties, or MSAs – all without knowing a single thing about shapefiles or cartography or other stuff you probably don’t care about. So not only can you run a query, and apply a function like percent change, you can also map it just as easy as bar charting it or showing it in a table or exporting to Excel. And you get the map in a format you can actually use.

In this case I took advantage of a built-in function that lets me do separate colors for values above or below a threshold. One of the built-in values is a comparison vs. national. You don’t even have to know what that national value is – the system pulls it automatically, though in this case you can see the value of 9.7% in the legend. I elected a monochrome pattern, which is one of the built-in coloring algorithms, but I could have picked a different one. Again, all of this done in less than 30 seconds end to end.

Liberate Yourself from Bogus Restrictions and Hand Summarization

One of the things that irks me is how so many of the free query tools put bogus restrictions on what you can do. One of them is asking you to select a geographic level before doing any analysis, like “Do you want to look at states, counties, or MSAs?” The Census Bureau’s population estimates data is a classic example of this.

But why not let me query anything I want together as long as the data is comparable (which population certainly is)? Here’s another 30 second chart I created that compares population growth last year in what I call my “Chicago vertical stack.”

Mayor Daley should be pleased. The city of Chicago didn’t beat the national average, but it beat out every other level in my stack. Back to the city, anyone?

My system defines basically all of the standard hierarchies as you can see. This includes things like the BEA Economic Area that aren’t widely used. The Census Bureau doesn’t actually slice data by Economic Area, but since I know what counties it is comprised of, my system automatically rolls up the data if it is present and there’s a rollup rule. This lets you use constructs like Economic Area that may never have been easily usable before.

You may be wondering whether, if I can roll up standard hierarchies, why not custom ones? Well, I can. You can see the line labeled “CMAP Service Area.” This is the seven county area serviced by the Chicago Metropolitan Agency for Planning. You can see that it is labeled as user defined, and it works just like any standard geography in the system.

Now you’re asking, “How is it possible to have done all this in 30 seconds? You couldn’t possible have defined that CMAP region and created this list in 30 seconds.” No, I couldn’t. But I didn’t have to. Since this is a way I like to look at the Chicago region, I created them a long time ago, and saved them to a list. The system lets me do that, and now when I come back, I can run queries like this against my saved list without having to go through the tedium of re-selecting all the geographies. Now that I’ve got most of my frequently accessed geography lists defined, I find that I more often than not bypass completely the geography selection process, saving even more time. It’s awesome for benchmarking.

Beta Testers Wanted

If you work for an organization that uses data – demographic, economic, and other data about cities, counties, regions, and states – then you’ll definitely want to check this out. The price will be $495 per year (only a bit over $40 a month), which is frankly a no brainer for any real organization. Keep in mind that just getting the IRS to ship you their data on a CD – in the form of over 3,500 Excel spreadsheets I might add – is $500. You’d pay about $360 a year just for a GIS-free mapping tool like Indiemapper. If you participate in the beta test though, you can sign up at a price of $395 a year (a bit over $30 a month) – a 20% discount. Right now I’m only going to roll out annual plans. A monthly plan could follow, but it would be at a significant price premium to annual and not include IRS migration data.

I hope you’ll be interested. To sign up for the beta and qualify for the discount, again with no obligation to buy anything, just send me a note. If your head hurts as bad as mine does after trying to use the new Census Factfinder, you’ll be glad you did. And thanks for your help.

Tuesday, January 18th, 2011

Erie Expatriates Seeking Jobs…in South Korea by Kristi Gandrud

[ Rust Wire is a great source of news and insightful essays about the Rust Belt from the viewpoint of championing its resurgence without too much sugar coating. I'm pleased to be able to bring you a sample of what you'll find there today - Aaron. ]

When I was an undergraduate headed to Canada for my freshman year, I remember trying to get a money order to pay for my visa application in advance of crossing the border. Standing at the counter in my credit union in Erie, PA, trying to persuade the clerk to make a money order out in Canadian dollars? I might as well have asked for Mauritian rupees. Before I left the credit union, half the staff had been called on deck to figure out how to perform such an exotic transaction. I shook my head at the apparent difficulty of using the currency of a country which, on a clear day, I could see from my bedroom window. Eventually getting what I’d come for, I left the credit union in disbelief of my hometown’s provincial ways, and made for the border.

Four years in Canada and one linguistics degree later, I found myself living in Seoul, South Korea as an ESL kindergarten teacher, far from the shores of that provincial hometown. I had, at some point in my undergraduate linguistics career, heard the drumbeat of the overseas ESL market, and registered for a one-year intensive Korean language class. When Koreans ask me how I got here, that’s what I tell them. I say, “Yeah…I studied the language in undergrad, so I got interested in Korea, and I just ended up here…”

But what I really want to say is: “Well, I come from a pretty economically depressed region of the US, and when I finished my undergrad, I had no viable options for a job in my hometown, and few personal connections for jobs anywhere else. I was able to get a job in Seoul that paid about $23,000 a year, included free housing and round-trip airfare, provided health insurance, and only required a bachelor’s degree,” –which is more along the lines of the truth. My Korean studies did help me move to Seoul, and my linguistics background did nudge me toward language teaching, but the main draw of the Korean labor market was stable, decently remunerated employment for my 22-year old self.

And it seems, I wasn’t the only Erie native to figure this out. Most obviously, there was my boyfriend (now husband) Chris: we were hired together by a major Korean ESL conglomerate, YBM, and were placed in different schools in Seoul. Chris was in as much of an employment bind as I was: he had just finished a one-year master’s degree in political science at the prestigious London School of Economics, but lacking professional opportunities in Erie—as well as personal or professional networks in London—he spent five months pounding the pavement before he finally gave up on getting a job in the UK, and heeded the call of the East Asian ESL-teacher experience.

Also somewhat obviously, there was Chris’s brother Nate. He finished a degree with top marks at Bard College—also, by all accounts, a well-regarded institution of higher education –but, lacking immediate opportunities to start earning an income, followed in his brother’s footsteps to Seoul. Nate now works as a kindergarten teacher at the same company where Chris and I worked, somewhat improbably given his double major in philosophy and history.

That, of course, is all in the family. But how about Emily, a girl from my graduating class at my high school? What are the chances that I would go thousands of miles from home, and meet a classmate working in the very same city, in the very same industry? And this didn’t just happen to me: Nate also met a classmate of his in Korea via Facebook, a girl in his graduating class who now works as an ESL teacher in Busan, on the southeast coast of the country. And what about the steady stream of emails from Erie residents that I’ve answered in the last four years: ‘My cousin is moving to Korea soon, do you think you could write to her with some advice?’ or ‘My neighbor’s son is looking for a job in Seoul, do you have any recommendations?’ or ‘My friend is thinking of doing a year abroad at Yonsei University, what do you know about it?’ When I can momentarily set aside my own gratification at having apparently developed a celebrity reputation in my immediate circle as the pre-eminent South Korea guru, I marvel at the unlikely number of Erie natives heading for the Land of the Morning Calm.

I won’t attempt a detailed review of the positively unfathomable, never-before-seen-in-human-history growth that the South Korean economy experienced from the 1980s to the present. Let’s just say that 50 years ago, it was the poorest country in Asia—malnutrition was widespread, and the infant mortality rate would make even the most hardened social statisticians cringe. (For reference: a Korean friend of mine who is in her mid-30s, the oldest of five children, grew up in a mud hut in the southern city of Gwangju.) Today, Korea’s economy is among the most developed in the world: it gained membership in the OECD, the rich world’s premier economic social club, in 1996.

If you don’t have a Samsung cell phone in your bag or pocket right now, you probably know someone who does. The last time I visited Erie, my father-in-law proudly gave me a detailed demonstration of his top-of-the-line, front-loading LG washer and dryer, and I must admit, they were quite nice. When my cousin from Pittsburgh wrote me to say that his Playstation soccer game contained a Korean league team called the ‘Pohang Steelers,’ I pointed out that, as home to steel manufacturing giant POSCO, the coastal city of Pohang has taken much more from Pittsburgh than just the name of its football team. That friend of mine who grew up in the mud hut? She now lives in Seoul in a beautiful high-rise apartment with her successful lawyer husband and a three-year-old daughter. Can this country afford to employ legions of 20-somethings from depressed areas of the US to teach their kids English? You bet it can.

I’m living in Seoul now, and having gotten a master’s degree, have moved up a rung on the expat employment ladder: I work as an editor at Seoul National University on an English proficiency test. From March to July of this year, I spent a grueling 5 months in Erie trying desperately to find a job that would enable me to live closer to my parents, sisters, and grandparents. To no avail: even the interviewer at the temp agency told me the pickings were slim. I finally threw in the towel and decided to come back to a place where I knew employment, a decent wage, and health insurance awaited. This past week, I helped my father and sister-in-law book tickets to Seoul for Christmas. Since my brother-in-law, husband, and I will already be in here, it made sense to do the holidays in Korea.

A few weeks ago, I was on the phone with the good people at the Erie Federal Credit Union. I’ve been sending remittances home, and I wanted to check on a few of the details of the transactions. I explained to the teller than I was actually living and working in South Korea, and so I understood if my requests to deal in Korean won were a bit out of the ordinary. Fully expecting to don the outlandish mantle of the long-lost hometown girl, I was taken aback when the teller at the other end of the line said, “Oh, no, that’s fine. We deal with won all the time.”

Indeed.

This post originally appeared in Rust Wire. Reprinted with permission.

Sunday, January 16th, 2011

Chicago: The Cost of Clout

The Chicago Tribune has been running a series on the challenges facing the next mayor. One entry was about the Chicago economy. It described the sad reality of how Chicago’s economy is in the tank, and has been underperforming the nation for the last few years. I’ll highlight the part about challenges building an innovation and tech economy in Chicago:

The region also has lagged in innovation, firm creation and growth in productivity and gross metropolitan product over the past decade, according to economic development consultant Robert Weissbourd, president of RW Ventures LLC. Daley’s two long-held dreams of Chicago emerging as a high-tech center and a global business center remain just out of reach… “We haven’t made the real global jump yet, and we have not made the tech jump either, but we are finally poised,” said Paul O’Connor, who for many years ran World Business Chicago, the city’s economic development affiliate. “We are still a major contender, but, yeah, we can blow it.” Or, as [Chicago Fed Economist William] Testa put it, “Given the poor performance of this decade, we need to rethink the challenges for Chicago.”

“If I could wave a magic wand, I would get government to start thinking differently about … what are the levers that we need to push, away from the traditional (tax increment finance district) thinking and away from the traditional thinking of, ‘Let’s just get a big company to move here,’ and toward thinking about how to foster innovation and creativity,” Christie Hefner, former chairman and chief executive of Playboy Enterprises Inc., said at a recent economic forum.

It has been extremely rare to see people with establishment positions ever say a discouraging word about the city. Most honest observers would have to rate Daley highly has a leader, but certainly not perfect. Yet any criticism at all of him (directly or implicitly by that of the city he runs) has been studiously avoided by most. They are terrified of being excommunicated or broken on the wheel if they deviate from the script. To have corporate executives asking tough questions is unusual, and hopefully an example of a forthcoming “Great Thaw” we need to have here in the wake of Daley’s retirement.

Chicago’s inability to build an innovation/tech economy is pretty remarkable if you think about it. Here’s third largest city in the country, one with enormous human capital, tremendous wealth, incredible academic institutions, and above all an ability to execute that far outclasses virtually any city I know. How is it then that Chicago has been unable to execute on this?

Believe it or not, a lot of it goes back to that bane of Chicago politics: Clout. People in Chicago tend to write off clout and political corruption in Chicago with a shrug, as a unique or even amusing local affectation, or just part of the character of purely political life of the city, but one that doesn’t fundamentally change its status as the “City That Works.” But nothing could be further from the truth. Chicago’s culture of clout is a key, perhaps the key, factor holding the city back economically.

Chicago’s Ambition: Clout

In Paul Graham’s essay Cities and Ambition, he writes about the subtle messages cities send about what you should try to achieve, and how that shapes their fortunes:

“Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder. The surprising thing is how different these messages can be. New York tells you, above all: you should make more money. There are other messages too, of course. You should be hipper. You should be better looking. But the clearest message is that you should be richer.

What I like about Boston (or rather Cambridge) is that the message there is: you should be smarter. You really should get around to reading all those books you’ve been meaning to. When you ask what message a city sends, you sometimes get surprising answers. As much as they respect brains in Silicon Valley, the message the Valley sends is: you should be more powerful.

How much does it matter what message a city sends? Empirically, the answer seems to be: a lot. You might think that if you had enough strength of mind to do great things, you’d be able to transcend your environment. Where you live should make at most a couple percent difference. But if you look at the historical evidence, it seems to matter more than that.

Chicago’s ambition, the message it sends is: “You should have more clout.” Does that matter? You bet it does.

What Is Clout?

Clout is a term of art in Chicago that normally refers to the ability to use connections to obtain jobs, contracts, subsidies or other favors from government. But more broadly, we can think of clout as the ability to influence organizational action within the context of a particular power structure.

But if that’s the definition, isn’t saying you should have clout the same thing as saying you should have power like Graham said of Silicon Valley? No. Having power, like that held by Mark Zuckerberg or Larry Page and Sergey Brin, is about being autocephalous. It’s about have an independent base of authority or ability to act others are forced to respect. Clout, by contrast is all about petty privileges. Clout can be given, but it can also be taken away. That’s what makes it so corrupting. Tellingly, no one ever talks about Mayor Daley as having clout. That’s because he has real power instead. Having power is like being a king or a duke or a baron. Clout is all about being a courtier.

To see this in action, just contrast Jesse Jackson with Al Sharpton. Both are prominent national civil rights leaders and black ministers. But Jackson rarely goes hard after anyone in Chicago, at least not anymore. Jackson has clout. One son is a congressman. Another somehow managed to acquire ownership of a lucrative beer distributorship. Jackson bought into the system in Chicago.

By contrast, Sharpton wants to be a power player in New York, to be someone to whom even a would-be mayor has to come visit and, as they say, kiss the ring. He’s not interested in being bought off. Sure, he’ll make alliances. But he’ll never give up his independent base of power that makes him someone to be reckoned with. That’s the difference between power and clout.

The Chicago Nexus

John Kass likes to talk about clout in terms of the “the Combine,” or the bi-partisan system in Illinois in which the Democrats and Republicans have often proven less rivals than partners in crime, sometimes literally. But I prefer to think of “the Nexus” – a unitary social structure that pretty much everyone who’s anyone in Chicago is part of, one that goes far beyond the world of politics.

Ramsin Canon had a good illustration of the Nexus in a piece he wrote over at Gapers Block:

With big city economies cratering all around him, the Mayor was able to raise in the neighborhood of $70 million dollars to fund the Olympic Bid. At the same time he was able to get everybody that mattered–everybody–on board behind the push for the Olympics. Nobody, from the largest, most conservative institutions to the most active progressive advocacy group, was willing to step out against him on that issue.

The list of big donors to the Chicago 2016 bid committee is a comprehensive list of powerful Chicago institutions. I mean, it’s exhaustive. Economy be damned, when the Mayor called, they listened. Why? What did those conversations sound like? And do we believe that the Mayor is so powerful–or that their relationship with him is so close–that they must obey him? Or–more likely–is it a mutual back-scratching club with an incentive to protect the status quo? Chicago’s political infrastructure isn’t about the Democratic Party or “the Machine” or special interest groups or labor unions. Those are elements of varying importance. It’s real power lives in the networks that tie that list together.

Replace the man on the Fifth Floor–Bureaucracy Man, the superhero who keeps our alleys clear–and will these networks evaporate? Will they just disappear? How long would it take them to reorganize around the new personalities that moved in there?

All cities have elite networks, but I have never seen a city that has a unitary power nexus to the extent Chicago does. I believe the Nexus resulted from the culture of clout combined with the fact that, with the exception of the interregnum between Daley pere and fils, power has been centralized on the 5th floor of city hall for decades. The Nexus may have come into being around the mayor, but now it has become a feature of civic life, one that practically longs for what Greg Hinz has labeled a “Big Daddy” style leader to sustain the system.

Clout’s Effect on the Culture of Chicago

The emergence of the Nexus is one of the key cultural impacts of clout in Chicago. If clout is only effective within a given power structure, then clearly the clouted want to see their power structure expand. The ultimate dream of the clout seeker is a centralized unitary state like Louis XIV’s France. In Chicago, we’ve come amazingly close to achieving it. It’s not that there’s no conflict, but it is all of the palace intrigue variety, not true conflicts between rival power centers. Without centralized political power and a tradition of clout, the Nexus would never have come into being.

There are many other cultural impacts as well. As Douglas and Wildavsky note in Risk and Culture, “An individual who passes his life exclusively in one or another such social environment internalizes its values and bears its marks on his personality.”

People are bought into and defend the system. They mapped these social environments along the axes of “grid” and “group” – the degree of hierarchy in the system and the degree of group cohesion. The Chicago Nexus is a high-grid, high-group structure, or collective hierarchy, with centralized decision making and a high cost of defection. Even groups that in other cities tend to be more oppositional to government will say something like, “Decisions get made in the mayor’s office here, so we have to play that game” and buy into the system. I’ve lost track of the number of times I’ve heard, “That’s just how it works here.” Of course, this means the basis of their own ability to make things happen then becomes influence – clout – within the Nexus. Thus they defend the system, because if it went away, so would their ability to make things happen because they’ve cultivated no alternative vectors for action. Also, the Council Wars period of the 1980’s still looms large in many leaders’ minds. Chicago remains heavily segregated and racially balkanized, as the recent quest for a single black mayoral candidate illustrates. There’s a lot of worry about what might happen if the current system breaks down.

Conservatism and favoring of the establishment. Following on from that, the system fosters a sort of generalized conservatism, one dominated by a desire for institutional stability. It takes a heavy hitter to get the mayor’s attention or even access to the mayor, which reinforces establishment control, an inherently conservative model. This conservatism is even visible the realm of public design, as I’ve noted in discussion the retro-nostalgia design of the city’s streetlights and other streetscape elements. The evidence of clout-fed conservatism is literally graven in into the very streets of the city.

Parochialism. Though fancying itself a cosmopolitan burg, I don’t see that Chicago is that much less parochial than most other Midwest cities. You see this in a thousand little ways. For example, in the way beloved long time personalities dominate the local airwaves. As the New York Times noted about turmoil at long time ratings leader WGN-AM, “Chicago tends to be unforgiving to newcomers. And with WGN pulling in the second- most radio revenue in the market behind WBBM, its moves are fraught with risk. ‘It was always difficult to bring someone in from out of town,’ said Bob Sirott, a longtime Chicago broadcaster.” (Longevity seems particularly prized here generally, as unless you are fortunately enough to be born to the right family or in the right parish, it takes time to accumulate clout). Or in the focus on local and hyper-local news in the local internet journalism community.

Fear. As a high-group social structure, people are terrified of being kicked out of the club. Hence the unwillingness to cross the party line on almost any issue. As Tocqueville put it: “That which most vividly stirs the human heart is not the quiet possession of something precious, but rather the imperfectly satisfied desire to have it and the continual fear of losing it again.” People are even afraid of collateral damage if others near them cross the line. As Mike Doyle said, “In systems like Chicago’s, people don’t just refrain from rocking the boat, they do their best to keep anyone else from rocking it either.”

Total Rejection of the Other. Anyone who exists outside the structure is a potential threat. Hence they are either co-opted or marginalized. The best illustration of this is the very title of that wonderful book on Chicago politics, We Don’t Want Nobody Nobody Sent. Or as Steve Rhodes said to me:

One of the bartenders at the Beachwood says it took her awhile to figure this city out. In other cities you apply for a job with a resume, talk about your experience, etc. Here they just want to know who you know, who sent you – even at the bartender level….I’m not naive enough to believe this doesn’t happen elsewhere, but nowhere near as it does here, where it’s in the DNA. …Here, merit counts for next to nothing…In New York, everyone wants to know: “What do you do?” In Chicago, everyone wants to know: “Who do you know?”

Why Clout Is Toxic to the Innovation Economy

When you think about these cultural impacts of clout on Chicago, it becomes obvious why the city has failed to build an innovation economy. Innovation is fundamentally about new ideas, new ways of doing things, new players in the game, those from the outside, about merit, about dynamism. Clout is about what happened yesterday, the fruits of long years of efforts, and the same old – sometimes really old – players, about insiders, about connections, about stasis. As Jane Jacobs noted, “Economic development, no matter when or where it occurs, is profoundly subversive of the status quo.” Innovation driven economic development is fundamentally about disrupting the status quo. Clout is all about preserving it. Innovation welcomes the outsider, the clout-fueled Nexus abhors the Other. Innovation and clout are enemies.

Think about the innovation hubs in America. They are all places that welcome the new. Not that it’s easy to make it in them. In fact, these place are often brutally competitive. And of course they have elite networks where the scions of the rich and powerful have a leg up and such. But the new is an important part of what makes them tick. In Silicon Valley, they are always looking for the tomorrow’s HP, Apple, Cisco, Google, Facebook, or Twitter, not just celebrating the past. They know that success today is ephemeral and, as Andy Grove put it, “only the paranoid survive.” DC loves its establishment, but the very nature of the place assures there will always be new players in the game. President Obama comes out of nowhere to gain the White House. But two years later it is the upstart Tea Party’s turn. Possibly because of their entertainment industry clusters, NYC and LA are always on the lookout for the fresh face and the next big thing.

But Chicago? What do you think is going to happen when an ambitious 20-something with a great idea for a new business but no clout shows up in Chicago trying to make it happen and knocks on the door?

I may not be 20 anymore, but at the risk of making this post sound like merely a bit of personal pique, I’ll share a true personal story to illustrate one example of how this plays out in real life in Chicago. In 2009 I received an award from the Chicagoland Chamber of Commerce for innovative thinking on public transit, winning first prize in a global competition they ran to solicit ideas for boosting public transit ridership in Chicago.

I was thinking at the time that I might want to do something more entrepreneurial. I knew that the Chamber ran a sister organization called the Chicagoland Entrepreneurship Center chartered with boosting startups in Chicago. In the wake of my award I decided to check them out and see how they might be able to help me.

There was just one problem: they wouldn’t return my phone calls. I made many attempts to get in touch with them by phone and email, and couldn’t even get them to give me a “No Thanks” or pawn me off on a peon. Now I’m a guy who a) had significant business experience, who b) built up one of America’s top urbanist sites from scratch, an inherently entrepreneurial act, and a successful one, if you think about it, and c) just got an award for innovation from the Chamber itself. Yet they wouldn’t even give me the time of day.

What’s more, the Chamber mothership never showed any interest in engaging with me post-competition either. It was clearly just a PR exercise for them. Now don’t get me wrong, I’m delighted to report it was a very successful one. I got my picture on the front page of the Chicago Tribune above the fold. It exceeded my wildest expectations. I think the folks at the Chamber are nice people and I was extremely pleased with how it went. But clearly from their perspective, that’s where it ended. Actually uncovering innovators or something was not part of the agenda.

From standpoint of the the Chicago system, this experience actually makes perfect sense, as I don’t have clout, nor can I bestow it on anyone. So why burn cycles on me?

If you think about my profile and the treatment I got, can you imagine what a 23 year old armed with nothing but a crazy idea would get? A lot of ink has been dedicated to talking about how far Chicago and Illinois have come since they days when Mark Andreesen was actively harassed while trying to commercialize his web browser, then run out of town on a rail. But there is no doubt in my mind that if the next the next Andreesen showed up today, he’d get the exact same treatment. (I’m not familiar enough with Andrew Mason’s history to know how he was treated pre-Groupon, and pre-his association with the likes of big money Eric Lefkofsky. It would make an interesting case study to look at the history there – though he is a possible exception. I don’t know. In any case, his major local profile came after Groupon was already a huge success).

This is what clout in Chicago hath wrought. The culture of the establishment Chicago is simply incompatible with an innovation economy. It’s not just about money or resources. It’s about respect. It’s about what this town respects, and more importantly what it doesn’t. It’s about what Chicago whispers to you about what you should aspire to achieve, what success means in this city, and the subtle – and not so subtle – messages about how you get ahead here.

Until you’ve already made your millions or somehow wormed your way into connections or up through the hierarchy, establishment Chicago has no use for you in its economic plans, no matter what talent, ideas, or ambitions you might harbor. (Ironically, the biggest exception is Daley himself, who was famous for seeking out and rapidly promoting young talent like Ron Huberman and Richard Rodriguez. That’s another example of how he is head and shoulders above your average leader).

By contrast, the local entrepreneurial tech community gets it, is energized, knows where the city is and where it needs to be, and is working hard to make progress with a sense of legitimate optimism backed up by recent good news. Grass roots and “by tech for tech” institutions ranging from Technori, to the Chicago Lean Startup Circle, to the folks at Groupon – which is a huge, inspirational success story, with people who get it and are committed to trying to build up Chicago’s tech scene – are hugely supportive of anyone trying to make a go at it no matter what stage they are in, and providing legitimately useful info and help along the way. Every single person in this group I’ve talked to has been more that willing to do anything to try to help me out, sometimes even more than I’d hoped or asked for – 100% of them. (Yes, this does mean I am starting an internet business myself – watch this space).

I’ve long said Chicago isn’t going to be the next Silicon Valley and should seek only to get its “fair share” of tech. Having said that, as the third largest city in America, a fair share is still pretty big. If Chicago’s going to make it, this collaborative effort by the local tech community is what is going to get it there – not the Nexus.

The Way Forward

Pretty much every report out of officialdom – from Gov. Quinn’s Illinois Economic Recovery Commission Report to CMAP’s Go To 2040 Plan – suggests the public and quasi-public sectors need to do more to boost innovation. But what’s really needed is cultural change in the establishment. Until that happens, I’d suggest that what’s really needed is to take a page from the Getting Real playbook and for them to do less.

Think about it. If Joe Investor shoots you down, you know the odds were probably long in the first place. While you might not come away feeling good about him, you probably don’t feel any worse about Chicago. But if you approach an official or quasi-official organization chartered with promoting “innovation”, “entrepreneurship”, “clusters”, “technology” or whatever in Chicago and they shoot you down, it’s not just them but your city you feel has rejected you. It’s one thing to generate a negative interaction with a private entity, but with an official entities that hurts the very thing they’re trying to promote. If an official or quasi-official organization can’t say Yes, or at least make sure that well over 50% of the people it says No to feel good about the experience, it should be shut down, because it’s doing more harm than good.

What’s more, these organizations and leaders glom on to these hot phrases du jour and, as someone put it, “suck the oxygen out of the room.” They hog the microphone and the real stories and the real discussion that need to happen out there don’t get told in the press because big names are the default easy answer for reporters. Just look at the number of big titled civic folks and such quoted in the Tribune piece, for example. Startup blog Technori has already told me more in two months about things that matter in tech than the Tribune and the Sun-Times combined did all last year. As Mike Madison said of Pittsburgh:

Tech-based economic development is not something that can be conjured in  meetings of mayors and CEOs.   That’s top-down, old-school, clear-the-skies, ACCD thinking.  In fact, I would guess that the more that the Downtown Duquesne Club crew gets in the middle of this process, the more the real entrepreneurs and innovators and risk-capital investors get turned off.

Or as Paul O’Connor put it in that Tribune piece I led off with:

“What we have now, to some extent, is a stodgy Midwest establishment, and underneath them are the kids who moved here, some of them in their 30s now,” he said. “They get it; they know how to do it. … We either give them permission and invite them to the table, which the next mayor should do and which Mayor Daley has begun to do a little bit lately, or we let them do it themselves.”

Blowing Up the Culture of Clout

Clout is so persistent in Chicago not just because of the people who personally benefit from it, but because there’s little perception of the ways the culture of clout affects Chicago outside the political realm. Indeed, to the extent people regard the Chicago Way at all, it’s often positively, because it enabled the city to “get things done.” It’s the same thing that causes Thomas Friedman to have his schoolgirl crush on China.

But unfortunately for Chicago (and likely China too down the road) it doesn’t just matter if you can get things done, it matters what it is you do. And it also matters how you do it and who is involved. Until people understand the linkage between clout and other parts of the city like its economic under-performance, and care enough to change it, the non-political members of the Chicago Nexus are not going to feel the need to change the way things are done here. It’s not that these folks are corrupt by any means. Far from it. I believe they are completely sincere in their desire to better the city. But they don’t perceive the issue at the level that will collectively move them to action, or else feel the status quo is better for their institutional interests.

Changing the culture is mission critical to Chicago realizing its ambitions as a global city and a center of the innovation economy, and a lot of other things too. The notion that you can have a centralized, top-down, clout driven Nexus infusing your civic culture but that somehow you’ll have an innovation driven economic culture – that’s just impossible. The attempt to fix and transform Chicago’s economy with a bunch of behind the scenes maneuvering and initiatives by a few heavy hitters has failed. We need to try a different way. That doesn’t mean Chicago has to become paralyzed with dysfunction of in-fighting or civic anarchy. But there need to be multiple power centers and a receptivity to everything innovation is all about. And it will be a bit messier. I think that’s a good thing. There’s no doubt Chicago is a great city with incredible assets and capabilities. There’s no reason it can’t join the ranks of the innovation elite – if it’s willing to start jettisoning the culture of clout the so hobbles its ambitions and embracing a more dynamic future for the city. What will it be, Chicago?

More on Chicago economic development:
Chicago’s Eroding Competitive Performance (Chicago vs. New York) (October 10, 2010)
Urban Universities Done Right: Chicago’s Loop U (August 29, 2010)
Chicago’s Structural Advantages and Professional Services 2.0 (July 25, 2010)
Chicago and the Epicenter (June 20, 2010)
Corporate Headquarters and the Global City (August 9, 2009 – updated version)
Reconnecting the Hinterland: Metropolitan Linkages (February 11, 2009)
Chicago: A Declaration of Independence (January 17, 2009)

Friday, January 14th, 2011

Replay: A Tale of Two Blizzards

[Since it's winter and snow clearance has been in the news lately, I thought it was a good time to rerun this piece looking at the different expectations people in different cities have for public services, and how regardless of where you fall on that, everybody's feeling the pain right now.]


Photo Credit: flickr/meryddidan

January 1979 saw one of the worst blizzards in city history hit Chicago, dumping 20 inches of snow, closing O’Hare airport for 46 hours, and paralyzing traffic in the city for days. Despite the record snowfall, the city’s ineffectual response was widely credited for the defeat of Mayor Michael Bilandic in his re-election bid, leading to Jane Bryne becoming the city’s first female mayor.

In January 1978, a similar blizzard had struck the city of Indianapolis, also burying the city in a record 20 inches of snow. Mayor Bill Hudnut stayed awake nearly two days straight, coordinating the response and frequently updating the city on the snow fighting efforts through numerous media appearances. Nevertheless, the airport closed and it was several days before even major streets were passable. But when it was all over, Hudnut emerged a folk hero and went on to become arguably the most popular mayor in city history, serving four terms before voluntarily stepping aside.

While major snow is much less frequent in Indianapolis than Chicago, and Hudnut’s response certainly bettered Bilandic’s, these twin blizzards illustrate a powerful difference in citizen expectations between these two cities, reflecting two of the broad approaches to urban service provision in America today.

People in Chicago expect and demand high quality public services. Chicago is the “City that Works”, and woe be to the mayor when it doesn’t. That’s why every mayor since Bilandic has treated snow clearance like a military operation, deploying a division of armored snow trucks to assault the elements at the merest hint of a flake, often leaving more salt than snow in their wake. If Chicagoans pay relatively higher taxes than the rest of the country, at least its citizens know that they are getting something for their money, whether it be snow clearance, garbage collection, street lighting, landscaped boulevards, or bike lanes.

In Indianapolis, by contrast, public services are not the main concern. People gripe if snow is not cleared, but are not outraged. No Indianapolis mayor ever lost his job for failing to deliver good services. Rather, taxes have always been the primary issue. Nothing illustrates this better than the most recent mayoral election. Buoyed by an emerging demographic super-majority, a large campaign war chest, and the support of almost every establishment figure of both parties, Mayor Bart Peterson confidently raised city income taxes by 0.65 percentage points shortly on the heels of a major property tax jump. In the fall, however, he lost his re-election bid to political neophyte Greg Ballard, who ran on a taxpayers first platform. Ballard won without significant backing from his own Republican party, supported only by a collection of grass roots activists, bloggers, and his own relentless door-knocking campaign.

The divergent citizen and policy preferences of both cities continue to the present, amply illustrated by this very winter. Mayor Daley, facing a recession-induced budget gap, decided to save money by ordering that residential streets not be cleared by workers clocking overtime. Citizen unhappiness over the state of the streets during December snows led even the widely popular Daley to backtrack on this experiment, reverting to the traditional all out assault for the balance of winter.

In Indianapolis, after 12.5 inches blanketed the city this January, crews took several days to clear its snow routes and, as per its standard operating procedure, did not plow residential streets at all. The local media carried tales of people’s laments, but ultimately the city government knows that the response to the snow will be forgotten soon after it melts. Higher tax bills, by contrast, are long remembered. In an inverse situation to Chicago, people in Indianapolis sleep at night knowing that, if services haven’t been all that great, they at least have more money in their pockets.

While both cities have long seemed happy pursuing their respective courses, storm clouds are gathering over both strategic models of operation.

Backing down from a high service stance in government is almost impossible. Government spending only ever seems to go one way. Faced with that logic, and the clear expectations of its citizens, Chicago in effect decided to double down. With the much celebrated resurgence of urbanism, Chicago put its chips on a soaring Loop economy driven by an emerging status as one of the top global cities, a real estate boom, and a series of tax and fee increases. It embarked on a civic transformation epitomized by community showplaces like Millennium Park, miles of top quality streetscape improvements, a new terminal at Midway Airport and the start of a multi-billion dollar O’Hare modernization, one of the nation’s best bicycling infrastructures, and perhaps most ambitiously, a bid for the 2016 Olympic Games.

This model is increasingly showing signs of strain, however. Many taxes and fees, including the nation’s highest sales tax at 10.25%, appear to be close to maxed out. The real estate crunch hit hard at Chicago’s transfer tax revenue, another key source of city funds. This, in combination with a weak economy, has hammered the city’s budget, leaving Daley with tough, often unpopular choices to make. The CTA recently raised fares. City parking meter rates will be quadrupling under a privatization plan recently signed, hopefully plugging operating budget holes – something Daley had previously resisted. As with New York City, Chicago may be faced with the cold reality of both service cuts and tax increases.

More importantly, as with the dot-com bubble before it, there are real questions as to whether the financial and real estate driven economy that fueled Chicago’s boom will come back in full force any time soon. In the meantime, the economy and cost of living in the city are squeezing the middle class harder by the day, and despite perhaps America’s biggest condo boom, the city’s population is slowly shrinking. All this leaves Mayor Daley, although still very popular, with perhaps the toughest leadership challenge of his tenure.

Meanwhile Indianapolis faces problems of its own. It too has budget challenges, just as years of deferred investment are finally catching up with the city. Indianapolis has a $900 million unfunded backlog of curb and sidewalk repairs alone. It is the 13th largest municipality in America, but has the 99th largest transit system. And, more troubling, the city now finds itself outflanked by its own suburbs.

At one time Indianapolis could comfortably decide to purchase bronze-level services while other cities paid more for gold. But now its own suburbs are offering silver, and at a lower price point in taxes than the city is selling bronze. Many of its suburbs today not only have better schools and safer streets than the central city, they feature fully professional fire departments, large park acreage, lavishly landscaped parkways exceeding city standards, and even better snow removal. In the recent storm, upscale north suburban Carmel finished plowing its cul-de-sacs before Indianapolis finished its main arteries. When people can pay less and get more just by moving to the collar counties, that’s what they do. Tens of thousands of people have left the merged central city-county in recent years. Only a large influx of the foreign born has kept Indianapolis from losing population.

The current economy is exposing the long term structural weaknesses of both civic strategies. Chicago and Indianapolis show that both higher service and lower service models face big challenges and that neither approach represents a safe harbor in the current economic storm.

This article originally appeared in New Geography on February 14, 2009.

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