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Sunday, July 31st, 2011

Replay: Migration Matters

Wendell Cox provoked a bit of a predictable tempest with his recent piece on migration, “The Decade of the South.” I suspect Cox relishes his role as provocateur-in-chief. So I’ll let him provoke me into summarizing some of the thoughts I’ve had on migration.

There’s a school of thought at that net domestic migration is the primary statistic of urban health. I believe I’ve even said something of the sort myself. In this logic, people are “voting with their feet” about which cities and states are implementing the best policies.

Of course, this creates a challenge for urbanists because the migration data is all away from major dense urban cores towards the South and various Sprawlville, USA’s. Hence when these numbers are thrown in their faces, they dismiss or discount them.

But people who don’t believe this tells the whole story are quick to understand the power of migration logic in other situations. Cities that are attractive to international immigrants are feted, as are those that hoovering up the “creative class”. Becoming a preferred migration destination for “talent” is a standard paradigm in urbanist development circles. And of course the slowing of migration to the Sun Belt and a nascent back to the city movement have been heralded by some as the end or reversal of previous trends.

So I think at some level, we all realize that migration matters. The question is, what is it telling us? I won’t pretend to have all the answers, but wanted to share a few thoughts around various aspects of this.

Vote With Your Feet

This seems to be the dominant paradigm, and there is clearly something to it. In this view, people decide to relocate based on various factors like taxes and regulation, cost of living, amenities, type of environment, economic opportunity, and more.

If you look at the Midwest, the cities that are doing well on most measures – Columbus, Indianapolis, Kansas City, and Minneapolis – also have net in-migration or are nearly neutral, while places like Detroit and Cleveland are losing people. Chicago is an interesting counter-example of a place that is conventionally viewed to be successful but has net out-migration. I’ll return to that in a bit.

We also see that talent hubs like Seattle, Austin, Portland, and Raleigh are seeing people move in. They are certainly out performing many other less sexy locales.

And Austin of course is in Texas, where huge numbers of people have moved. As much as we urbanists might not like it, the Texas story is real. The state has generated enormous numbers of new jobs, a total unmatched by other states. The same is true of many other southern places.

So clearly there is something to this notion of voting with your feet.

The Limits of Net Migration

But when we look behind the numbers, we start to see interesting patterns emerge. First off, migration isn’t uniform within states. Cox notes that Ohio had huge out-migration and categorized it as an “economic basket case”, yet Columbus has in-migration. Indiana is losing people, but Indianapolis is not. Nor are suburban areas near Louisville and Cincinnati. Given that different regions within the same state perform very differently, state level policies like tax rates and right to work laws can’t be the only answer.

So although “vote with your feet” has validity, perhaps there are other dynamics at work.

Greenfields vs. Brownfields

The South is frequently touted as a place whose favorable tax and labor climate is attracting business. But that is far from uniform. Places like Atlanta exploded into major business centers, other cities did not. In Tennessee, Nashville is thriving while Memphis is not. The south even has outright Rust Belt cities like Birmingham. Why are there so many struggling places in this nominally favorable environment?

Jim Russell suggests another key driver of the move to the south is the enormous advantages of greenfield development:

Bankrupt Birmingham is located in Alabama, a right-to-work state. Tennessee also has this distinction and is home to recovering industrial-dependent Chattanooga. Both the South and the North experienced an implosion of the manufacturing sector. Supposedly better state policies in the Sun Belt didn’t save any of those places from this fate. Why would it work magic in Pennsylvania for Erie?

In the face of globalization, states seem increasingly impotent. I suspect that most people, including the politicians, don’t understand the forces at work. I see a number of parallels with the brain drain issue. There is a poor accounting of the current situation. Ideological thinking dominates political discourse and policy suffers as a result.

During the 1980s, deregulation was the economic dogma of choice. The states with the least rules and lowest taxes should win. That’s not how it played out. If your city was saddled with high legacy costs, then state policy didn’t matter. Just so happens that the Rust Belt had (still has) a lot more of those cities than the Sun Belt did.

You can find the same economic geography within regions concerning the urban core and suburban periphery. Essentially, Americans have moved from brownfields to greenfields. When the unit of analysis is state, that trend gets lost in the data noise.

This is not to absolve bad decision making. High legacy costs in part derive from bad policy choices. But there is an independent logic to greenfield development. Because the world constantly changes but things like your physical location don’t, and your built environment and institutions are difficult to change, this means any city will eventually find itself facing the call of reinvention. Things like infrastructure and buildings constructed to outdated standards, institutional cruft, and deferred liabilities are almost inevitable, no matter how well run your city or state.

For more on this topic, I’d suggest reading my “What’s Killing California?” or Ryan Avent’s “Disruptive Technologies“.

Network Migration

There’s also the fact that migration, particularly international migration, involves networks. Why do people move? What factors into their decisions? A lot of times, factors other than purely economic considerations come into play, such as a personal connection to a place, proximity to family, or proximity of ethnic kinfolk.

One Louisvillian told me that “Our most important export is our women.” By that, he meant that college educated women who moved away from Louisville often returned with husband and family in tow when they had children. In effect, a significant source of new blood in Louisville is people who marry Louisville women and move back to be close to family. This illustrates both “boomerang migration” (return to a place you left) and family networks.

It also shows importantly that where you live is also a function of where you are in your life. I don’t think it’s entirely reasonable to expect or desire people to live in the same place from cradle to grave. What makes sense for a young single might not make sense for a family with kids or for a retired couple.

International migration works on family and ethnic networks as well and is often startlingly specific. For example, many Mexican towns have developed almost sibling relationships with US cities because migrants from that town clustered in a particular place. One example is the centralization of immigrants from the town of Tala, Mexico in Indianapolis. This was the subject of a Nuvo cover story “Bienvenidos a Talapolis“:

[Tala] Mayor Cipriano Aguayo, one of the immigrant pioneers to Indianapolis in the 1970s, returned to Mexico when he was able to save enough money to support his family. Aguayo still has two brothers in Indianapolis. According to residents of Tala, including the mayor, nearly every home in the small town has a family member in the United States and the great majority of those are in Indianapolis. The money they send back is extremely important for Tala’s economic sustainability.

“More money circulates in this region due to remittances than anything else,” Aguayo says, “so we depend a good deal on the cash that comes from Indianapolis.”

Some of it supports civic projects, an increasingly common trend in Mexico. Lucila Madrigal, a Tala municipal official whose sons live in Indianapolis, reports that emigrant savings helped finance a bridge, renovate the cemetery and pave streets in the county. Local families depend even more on money sent home by their “absent sons.”

While Tala’s immigrants to Indianapolis maintain strong familial, cultural and financial ties to Mexico, they have also helped build the sort of cultural foundations here in Indianapolis that both facilitate assimilation and maintain the ties that bind this transnational community together.

“We Mexicans aren’t used to being without some family nearby,” says Fabian Alonso, who divides his time between Tala and Indianapolis. “So we all try to get someone from here to move up there and that’s how we created our neighborhoods that replicate those in Tala.”

Maybe economic opportunity brought original pioneers to Indianapolis, but much of the rest of the migration was driven as much by network effects as economic logic. Otherwise why not just stay in Texas rather than keep going north? And from what I’ve read, many of Indy’s original international immigrants arrived more or less by accident or mistake. The roots of the Tala diaspora lay in the 1970′s, when Indianapolis was a backwater town trying to shed it’s “India-no-place” label.

There are plenty of other examples around. Fort Wayne has 3,000 Burmese, not because it is an economic hotbed, but because of an active local policy to bring in refugees.

The large, traditional American port of entry cities have both the most and easiest physical connections to other countries, as well as long established and robust migration networks. So it is no surprise they remain dominant in international immigration. This may not say much about whether that is “logically” the places immigrants should go.

Retirement

Another source of migration is people retiring and moving someplace to enjoy it. As this often involves leaving places with lousy climates for more sunny locales, it is a built in source out migration from the Frost Belt. These people may be leaving for reasons that have nothing to do with the amenities, tax structures, or regulatory schemes that are favorable to business and labor. Rather, they want places that are good to enjoy their life and don’t place a financial burden on their particular financial profile.

Huge numbers of people moved to Phoenix, but does that mean Phoenix is a great business center, or just a great place to golf?

Network effects are also in play here. A retired couple I know from Pittsburgh just moved to North Carolina to be closer to their children who left years ago. This might have said something about what Pittsburgh’s economy used to look like, but it doesn’t have much bearing on what it is today. Economics might explain the children, but doesn’t explain the parents. Places that previously experienced an out-migration wave driven by a bad economy or policy might, for this reason, suffer a hangover for many years even if the local economy hits an inflection point.

Again, this is a result of stage of life, not per se local policy. Many people may choose to retire in place, but the reality is, many others won’t.

Moving Out, Or Not Moving In?

There’s also the question as to whether or not net out migration is more a reflection of people leaving or not coming. People are constantly migrating away from everywhere. The question is, are they being replenished? A place could have a below normal out migration rate, but if no one is moving there, it still shows net out migration.

This could particularly be the case in places that are near an inflection point. Bad conditions have stopped driving people out, but nothing has changed to create an inbound dynamic. Perhaps because there have been so few people moving in, there are few established inbound migration networks. Also, the reputation of the place (or lack thereof) may cause many to not even put it on the list. Portland gets touted as a great place in the media every day, so people who might be interested in what it has to offer will naturally have that city come to mind. That’s less likely to happen for Pittsburgh.

Jim Russell again argues that we should look mostly at in-migration, not net migration as the figure. I’m not sure to what extent I totally agree with this, but there seems to be something to it, particularly for cities at an inflection point.

New York City

Then there’s the case of America’s largest tier one cities, and especially New York. These cities have very high net domestic out-migration. Cox notes that the majority of New York state’s 1.65 million out migrants left from New York City.

But it isn’t hard to see that a place like New York is a structural exporter of people. First, it is a huge magnet for international immigrants. After a time in NYC, if some of them move on then, bang, they are domestic out migrants. On the domestic ledger that’s 0 in, 1 out, a clear net loss, but not the whole story.

Also, it’s noted that NYC takes in lots of young people, but many leave when they get marrie and have kids. Again, let’s play this scenario out. Two young singles move to NYC, marry, have two kids. When those kids reach school age, they move to the suburbs or back to the wife’s hometown in Kansas City. That’s 2 in, 4 out, a net loss of 2 people.

Is this a bad thing? I won’t suggest that we shouldn’t try to improve our urban schools or make our central cities more family friendly. Of course we should. But it strikes me that places like NYC are never going to be the destination of choice for families with school age children. Even if it captured more market share, it seems that it will always be exporting families.

Again, is it reasonable to expect that every place will be equally as attractive to people at all stages of their life? I don’t think so. Some places are better for young singles, some for families, others for retirees. So anyplace that is attractive to young singles is likely to be a structural source of out migration.

If you think again about New York, it takes in immigrants – raw recruits if you will – and spits out Americans. It takes in young singles – more raw recruits – and spits out up skilled people with families. There is huge value added in this. In a sense, New York City is a gigantic refinery for human capital. It’s a smelter for people. Perhaps we shouldn’t be any more sad about New York exporting people than we are about it exporting financial services. Taking in people, adding value, then exporting them is one of New York’s core competencies. Maybe we should be thanking it for providing this valuable service.

Whatever the case, any place that is a magnet for immigrants and young people, as most tier one cities are, are likely to be structural sources of out migration no matter what they do.

Jim Russell on Migration

It’s no secret I’m a fan of Jim’s thinking on talent and migration matters. His blog Burgh Diaspora is required reading, IMO. As I hoped he might, he chimed in with a comment here, which I’m including below so everyone will see it:

Interesting to see all the aspects of migration packed into one post. Still, some additional data categories should be considered. It’s not so much that migration matters, but demography matters. We tend to play fast and loose with net migration and population numbers. Declining population has become synonymous with net out-migration. That’s a gross distortion.

Each shrinking city has a unique demographic profile. Break it all down by age cohorts and the analysis gets very complicated. In my opinion, it also gets more useful. What’s the urban dependency ratio? A huge issue in cities with substantial legacy costs.

Concerning natural replacement rates, there is a striking variance among Rust Belt cities. Lower rates make the net out-migration problem more acute.

Overall, I think the net migration numbers tend to limit our thinking about how to make better cities. The population shift from Rust Belt to Sun Belt is dramatic, but the dominant narrative that folks such as Cox peddle won’t inform better policy. This is especially true if we insist on using state level data.

A good example is Texas, a big “vote with your feet” winner. A lot of good that’s done El Paso and other lesser-tier cities in the state. Houston, Dallas and Austin will Hoover up graduates from those places as well as the Rust Belt. They also suck up talent from the entire Sun Belt.

I think state policy is a red herring.

Migration, Properly Considered

In short, migration does matter. Any city that thinks it can be blasé about this is fooling themselves. On the other hand, surface numbers only tell us so much. We need to understand the dynamics going on underneath the hood.

This post originally appeared on January 7, 2010.

Thursday, July 28th, 2011

Geoffrey West TED Talk on the Surprising Math of Cities

I’ve previously featured writings about Geoffrey West and his band of researchers who have been trying to show that cities follow a series of fairly simple mathematical laws related to their size, similar to biological organisms. Their findings are controversial to many, but it’s certainly worth considering what they have to say if nothing else. Geoffrey West recently gave a TED talk on their findings that I think presents them in a very accessible way, so here it is for those who are interested. There are certainly some potentially interesting implications in here. (If the video doesn’t display for you, click here).

h/t Dave Hix

Update: Courtesy of Jim Russell, here’s a thougthful analysis of Dr. West’s work.

Wednesday, July 27th, 2011

How Urbanist Visionaries Can Muck Up Transit by Jarrett Walker

[ Again, if you if you are interested in transit issues and aren't already reading Human Transit, you need to get over there now. I'm very happy to be able to reprint this recent piece discussion how people often conceive of transit working versus how it actually works - Aaron. ]

Architects and urban visionaries play an incredibly important role in a leadership-hungry culture.  They have to know a little bit about almost everything, which is hard to do.  But for some reason, certain segments of the profession have decided that the basic math and geometry of transit isn't one of those things they need to know, even when they present themselves as transit experts.

To see what I mean, I encourage you to watch this short video from Gensler Architects in Los Angeles.  It's a concise summary of all the crucial mistakes that you'll need to confront in much "visionary thinking" about transit.  (If Gensler takes down the video, read on.  I've inserted enough screenshots from it that you can follow.)

The five most common "visionary" mistakes about transit, all on display in the video, are:

• Disinterest in costs and efficiency.   Visionaries do need to set aside cost and efficiency for part of their brainstorming phase, because by doing so they might come upon an idea that's efficient and affordable in a completely new way.  But they don't have a coherent idea until they've brought those factors back in, at least at the level of order-of-magnitude reasonableness. Sadly, some urbanists scoff when I use the word efficiency, assuming that this means I've lost touch with human needs, aspirations, aesthetics and values.  In reality, efficiency means how much of those good things you can have in a world of limited resources.  Even in the arts, we speak often of the efficiency or economy with which an artist achieves an aesthetic effect.  (The Gensler video, for example, is efficient in displaying all five of these fallacies in only five minutes.)
• Fixation on transit technologies as though they were the essential distinction between different  mobility outcomes.  For more on this, see here.
• Confusion about scale.  Because visionary thinking often focuses first on a prototype – a tiny example of the hoped-for transformation — it often goes too far without thinking about scalability.  Sure, this cool idea works in one suburb or in one cool building, but that says very little about whether it would work in a whole city.  Gensler's particular error about scale is …
• Confusion about "flexibility," a dangerous slippery word.  Gensler imagines that a demand-responsive style of transit, in which you make a request on your phone and the transit system somehow deviates to meet your personal needs, is scalable to a vast, dense city where the transit system is already very crowded much of the time.  More on this below.
• Ignorance about what's already working, leading to premature demolition fantasies.  Gensler seems unaware of very high ridership and efficiency of the existing transit system across the core of Los Angeles. This allows them to jump to the conclusion that the system should be replaced instead of incrementally improved.

So watch the Gensler video if you can, but you can also follow along via my screenshots and comments below.  You'll see these mistakes again and again in the urban visioning business.

0:27 Gensler states the question as "Get LA on transit HOW?"  No argument with the question.

0:51  Transit is divided into a set of vehicle types, and these types (light rail, metro, bus) are confused with "methods" of transport.  For more on the absurdity of treating bus/rail distinctions as primary, see here.

0:53  "We have only these methods.  What if we added more?"  An interesting question to which transit experts (and economists, and engineers) have a very good answer.  The more competing systems you establish in the same market trying to do the same thing, the less well any of them will function, and the less investment any one of them will justify.

0:56  They now begin to analyze vehicles in terms of distance, sustainability, flexibility.  What's missing?   Cost!  Efficiency!  Some things are just wildly expensive relative to what they deliver.  Darrin Nordahl has already been down this path, evaluating technologies by discussing only their supposed benefits.  That's not evaluation, it's either aesthetic rumination or marketing.  (Neither of those are bad things, but they have to be identified as what they are.)

1:20.  They talk about distances but their graphic is talking about speeds.  These are fair for personal modes but absurd generalizations for the transit modes. When your notion of "rail" conflates light rail, heavy metro rail subways, and 70 mile-long infrequent commuter rail, the word "rail" means nothing relevant about speed or travel distance, or any other transit outcome apart from capacity.  (Note that the earlier claim "we have only these methods" implies that these three kinds of rail are the same thing in every way that matters.) 

Likewise, if you think buses have an ideal distance, you're unclear on the role of local buses vs Bus Rapid Transit vs long-haul expresses, all of which are very successful in Los Angeles.  Gensler imposes a "technology first" frame on the data, thereby concealing almost everything that matters about how transit gets people where they're going.

In transit, the real speed distinctions within transit are usually not direct results of technology.  Speed is the result of how often you stop and what can get in your way.  See here.

2:00.  Staggering incoherence in comparing input (bus service) to an unrelated output (total ridership including rail).  What's more, the numbers are misleading.  Per the 2011 APTA Fact Book, Los Angeles MTA has America's 3rd highest total boardings and 2nd highest total bus boardings.   In the context of its starved resources and the vagueness of public support for it, the Los Angeles bus system is working brilliantly.

2:26.  Here is Gensler's biggest mistake:

Which of these two networks would you rather travel on?

Gensler has mistaken metaphor for logic.  They think that "liberating" bus routes has something to do with liberating or enabling people.  The idea is barely explained and totally incoherent. 

Today, in our supposedly "inflexible" system, you'll find a bus going down a major boulevard with maybe 60 people on it.  Some of them want to go somewhere straight ahead, some want to go to somewhere ahead and to the left, some want to to somewhere ahead and to the right.  Fortunately, they are in a high frequency grid system, which will take all of them to their destination, either directly or via a connection to a north-south line, probably by a path similar to what they'd have followed if driving.  So this huge number of diverse people making diverse trips are all moving toward their destinations on a reasonably direct path.  This is the extraordinary power of the high-frequency grid.  So instead, Gensler proposes bus lines should twist and turn just because somebody with an iPhone wants them to?

Personal technology has great opportunity to better inform us about all transit services, and it can transform the convenience of transit at low-demand places and times, by influencing the operations of low-ridership, low-capacity services, such as demand-responsive buses and taxis. 

Quite possibly, personal apps will allow demand-responsive service to replace some low-demand fixed-route buses, which is fine with most transit planners.  Those low-ridership buses run mostly for social-service or "equity" reasons, and if there's a more efficient way to do that, I expect many transit experts would be all for it.  It would let them concentrate on the high-ridership, high-capacity services that can achieve a great deal of personal mobility and sustainability, very efficiently. 

Successful high-capacity frequent transit needs to take on more of the rigidity of subways, in order to spread the benefits of subways (which we can't afford everywhere) more widely.  That means it needs to be even more frequent, reliable, legible, permanent, and reinforced with infrastructure investment.  Fortunately, within limited resources, many transit agencies are now trying to do that.

The video is full of entirely laudable and familiar green ideas, but then we get to this …

• 3:23  In Gensler's Los Angeles, every transit trip must be reserved.  Do you really want to have to make an appointment with a single vehicle and driver, because that's the only way to make any use of all the buses swarming around you on unpredictable paths?  Or might you prefer a simple frequent transit corridor where so many buses are coming all the time, in such a predictable pattern, that you can take any of them, and are thus almost guaranteed a vehicle soon even if one breaks down?
• 4:20  "What if we had PERSONAL service?" they ask?  Well, the extreme of personal service would be low-ridership system in a tiny town, where the driver has time to learn everyone's name.  Is that what Los Angeles wants to be?   Or would you rather live in a city where you can get anywhere you want to go easily, starting right now, without making a reservation, and even with the option of spontaneously changing your path or destination, just like motorists do?  

To me as someone who values my personal freedom, flexibility, spontaneity, human dignity, and travel time, Gensler's Los Angeles would be a hell-world worse than Blade Runner.  Fortunately, it's also mathematically impossible.

We've blown up transit networks before, of course, and Gensler's vision should remind us of what was thought about cars vs. transit in the 1940s.  Like personal technology today, cars were just so wonderful for the individual that we just assumed the world could be made in their image.  (The technical term for this idea — that the world will bend to reflect my emotional needs and enthusiasms — is narcissism.)  So we made a deep investment in a car-and-highway technology that could not possibly scale to big cities.  Gensler proposes the same mistake:  Because our iPhones are so cool, they assume that the city, at every scale, can be reinvented around them.

For a more positive vision of the future of Los Angeles, one that begins by noticing the city's strengths and looking at how to build on them, see here and especially toward the end of an interview here.

This post originally appeared in Human Transit on July 17, 2011.

Sunday, July 24th, 2011

New Data Shows Slowing Migration in America

The Internal Revenue Service just released its benchmark place to place migration data for 2009. This tracks moves from county to county and state to state for people who filed tax returns between calendar year 2008 and 2009. My initial look at the data confirms what other sources such that Current Population Survey have shown, namely that migration has slowed during the Great Recession. I’m going to cheat though and not actually show much of that despite my enticing title, and instead illustrate a few other points the come out from this data.

As I’ve said before, this data is a gold mine of information. Few people seem to use it though, probably because it is so cumbersome to work with for non-specialists. One of the biggest reasons I built my Telestrian system was to create a platform that would actually make this data usable for me. It is by far the best system I’ve ever seen for analyzing this data. And not only is it better, it’s cheaper. Just to get the IRS to ship you the full data set – in the form of over 3,000 Excel spreadsheet I might add – is $650 dollars, but you can get access to to it via Telestrian for only $49/year.

(If you are a researcher or other person who would be interested in getting a complete copy of the data in a file format that is ready to import into a database, email me. In addition to the base IRS files in a usable form, I’ve created a full matrix of in, out, gross, and net migration for people (exemptions), households (returns), income (AGI), household size (exemptions/return), and household income (AGI/return) for not just county-county and state-state, but also MSA-MSA and MSA-state for years 1996-2010. This is about 2 million rows per migration type, plus there are dozens of other summary statistics available from the files).

Megaregional Migration

With that out of the way, let’s take a look at some interesting things. I’d previously showed a chart of gross migration between Chicago and other major Midwest metros. Gross migration is one of the better measures of true human capital circulation between cities, and indicates which metros have the tightest talent linkages with Chicago. Here’s the update for 2000-2009 (note that year 2001 is people who moved between 2000-2001, so that’s why that’s the base year. This applies to all the charts and data).

You can see here the generally slowing migration I alluded to earlier in the 2009 data series though in some cases it’s still higher than the dot com recession earlier in the decade. The gap between St. Louis in Columbus is quite large as you can see. Clearly, certain nearby cities, as expected, have greater flows and thus are in a way better connected to Chicago.

You might be wondering what the net flows are. I’m glad you asked. Here’s the totals:

Unsurprisingly, struggling Detroit and Cleveland lead the list for inbound migrants. Looking at this chart, I also can’t help but wonder if the high net flows from Chicago to Indianapolis is what enables Indy to maintain a slight population growth lead over places like Columbus that are also rapidly growing in general.

Of course, people is one thing, but you might suggest that it is the high talent individuals that matter more for a city’s economic future. The IRS doesn’t measure that directly, but it does give data on income. You could potentially use this as a proxy. Here is a chart showing total income (AGI) flows:

Note that this data is in thousands, so in this case Detroit actually sent over the last decade households that earn $400 million per year. The total income lost over the decade actually is far higher, because as I note, that’s per year income, so we should really look at it on a total accumulated loss basis perhaps, but I didn’t calculate that for now.

That’s total dollars, but what about the income per person? We can’t quite get there, but we can look at the average per household (i.e., tax return). If we do that, here’s what we see:

Now there are some limits to this data. The annual values are arithmetic means. Probably median would be better, but that data is not available. Also, to save time I used a straight average of the annual values, when probably some type of weighted average would have been better. But as a quick look, this is fine. What it shows is that with the exception of Indianapolis, Chicago is losing higher income people to other cities. Again, I’d caution to do a more rigorous calc before reading too much into this.

The Indianapolis case is interesting. It is a high net importer, but is importing lower income households than it is exporting, which is contrary to the other cities. I took at look at the disaggregated inbound and outbound flows quickly, and it looks like the households going back and forth between Indy and Chicago are lower income than those of any other city. Plenty to explore here.

Again, you start looking at this and the possibilities for serious research are endless, but alas, we’ve only got time for a blog post.

What Type of City Are You?

Another interesting thing jumped out at me when looking at cities. It is the migration pattern differences between the large tier one cities and smaller regional cities. Let’s illustrate this by showing the top 10 sources of gross migration (circulation) for Chicago and Indianapolis. Here’s Chicago:

And here is Indianapolis:

Interesting, isn’t it? While Chicago does exchange people with regional cities, it also has a lot of circulation with other national and tier one cities, including it’s top two of New York and LA. Indianapolis, by contrast, apart from its huge circulation with Chicago seems to primarily recirculate people within Indiana. Its human capital networks are much more parochial.

New York City

I thought I would also take a quick look at New York metro. Here’s a map of net migration from 2000-2009 using a five bucket sort with separate positive and negative gradients:

It looks like New York is drawing in from the Heartland while exporting everywhere else, though the magnitude of the imports is far less than the exports. This is not surprising given that New York is well known for very large net out migration. (This is not necessarily nearly as bad a thing as it is frequently made out to be, as I explained here).

I’ve also read a lot about income migration from New York, so thought I’d throw that up. Here are the top ten places New York imports income from. Again, this data is in thousands and the cavet that this is not a total accumulated gain/loss applies:

Here’s the bottom ten:

Miami says thanks. No two ways about it, New York metro is exporting a lot of income. For those who are interested, you can download the full matrix of net AGI flows for New York.

Like I said, there’s some seriously interesting stuff in here, and I plan to keep digging into the new data for quite a while, so stay tuned. For more of what you can do with this, click here.

Friday, July 22nd, 2011

Let’s Face It, High Speed Rail Is Dead

My latest blog post, and one sure to make some people unhappy, is up over at New Geography and is called “Let’s Face It, High Speed Rail Is Dead.” In it, I argue that a mix of a fiscal crisis, Republican takeovers in the US House and in state houses, a poorly executed HSR program at the federal level (such as frittering away the HSR stimulus and not addressing regulatory hurdles), and unseriousness by most advocates has basically doomed the HSR project. A serious rethink is required.

Some have pointed to a bit of already in the pipeline money such as that which is earmarked for a short Central Valley segment in California as proof that HSR isn’t dead. But as in flight funds drain out of the system, it doesn’t seem likely any significant amounts will be forthcoming. Hopefully at least the Northeast Corridor investments will proceed in some way.

This isn’t to say that there isn’t potential value in high speed rail. It’s clearly needed in the Northeast Corridor for example, and perhaps some other places. (A lot of the proposals are outright boondoggles, however). But I don’t see how any major national system like the one envisioned in the map above gets off the ground any time soon.

Wednesday, July 20th, 2011

Desolation Angel by Detroitblogger John

[ If I had to pick just one blog in the world as the best, I would probably choose Detroitblog. The writer, who goes by the handle Detroitblogger John, captures the stories of the people of Detroit in a way that I've never seen in another place. His posts are always full of pictures, because if you couldn't see it for yourself, you'd never believe it.

Someone once insightfully said that one of the key distinguishing features of Detroitblog is that it resolutely refuses to treat the people of Detroit as hopeless victims, no matter their circumstances. Last year I was pleased to be able to share an example of this in a repost of Solitary Man, about someone who decided to face the challenges of his life and city head on by going "off the grid." Today I'm delighted to be able to share another example of what you'll find over at Detroitblog - Aaron. ]

They stagger in one by one — each with a story, each with a life of problems.

First comes the prostitute. Then comes a drinker. Every swing of the door brings another desperate person from the street outside.

People with addictions, with diseases, people living on the street. And people who suffer from none of those things but who are just drawn to this strange place.

Some talk to each other; one or two are talking to themselves, or the air, or whatever demons they hear in their heads.

It’s Sunday morning. It’s time for church.

At Peacemakers International on Chene Street, a little storefront ministry not far south of I-94, the congregation doesn’t just help people who are addicts or poor or homeless. Those people are the congregation.

They come here because this place has taken in dozens of people fighting years of addiction and, somehow, they say, it has helped them get off drugs.

People like Tony Cusmano, 52, who gradually stole a quarter-million dollars from his family business to feed a cocaine habit before ending up behind bars. Like Shirley Robinson, 53, who gave up a career and a house for a coke habit, which became a crack habit that left her selling herself on this street for a few years. Like Coy Welch, 39, a longtime drinker who was found living under a bridge a couple months ago and was invited to come here.

And from this ragged crowd, the preacher emerges.

At first it’s hard to distinguish him from his flock. Steve Upshur is 62, and wears jeans and cowboy boots and a leather Harley jacket. His hair is long. So is his scraggly mustache. He’s a biker and looks like a biker.

He used to be an addict, so desperate he once puked up his methadone at a clinic and then got down on the ground to lap up the drug-soaked vomit. He’s been a dealer. He’s been jailed. He even got caught up in a bank robbery once.

His flock relates to him because he’s been where they are, because he’s done as much wrong in his life as they have in theirs, but more importantly because he’s someone who found a way out of that hell. He’s walked the walk. And because of that, he’s earned their trust, earned his post as father of the wayward.

“When you get into crack and prostitution, anything goes,” Upshur says. “A lot of these people will stuff people in trunks, kill people. I’ve had people confess murders in here. I’ve heard it all.”

More people arrive. A homeless man. A woman one misstep away from being there. An old lady with a scowling face, muttering to herself.

The services begin right on time. But there’s no prayer to start things off. No reading of the Bible. No sermon.

Instead, a high-tempo, old-time gospel song — “I Believe” by John P. Kee — blares from the stereo. And as the beat kicks in, everyone in the pews who had been sitting quietly suddenly gets up and starts clapping along. A few even dance.

Then the pastor says a few short words, but right away another song bursts out of the stereo, and the congregation is behaving like it’s some kind of dance party. People who were living on the street or still are, people selling themselves there, people crippled by drug and drinking problems, are all dancing together, looking like they haven’t had this kind of fun in years. It’s an astonishing sight.

And just when it seems this can’t possibly be the actual service, it turns out that’s this is indeed how it goes at Peacemakers. Down here on Chene, going to Sunday service is almost like going to a party where, for a couple hours, the weight of everyone’s troubled past falls away.

“It’s just upbeat, you know?” Upshur says. “This isn’t a dead place where everybody’s sitting there. That ain’t the way a church is supposed to be.”

++++++++++++++++++++++++++++++++

Chene Street is a disaster. The rows of burned-out storefronts between the empty blocks are reminders of how bustling it once was. But after the riot, after the freeway and an auto plant split the neighborhood in half, after everyone packed up and moved away, almost everything just died off.

Pouring into the void left behind were outcasts and cast-asides — junkies and drunks, hookers and drug dealers, the mentally ill and the physically disabled. Like a few other areas of the city, it became a refuge of the underclass, a home for everyone with nowhere else to go, where they can wander freely without being chased away by store owners, or told to move along by the cops.

“It’s like the devil’s playground,” says John Simon, a minister here. “I mean, you got sexual acts in the middle of the day, shooting dope, smoking dope. Everything you can imagine is going on down here.”

This is the world in which Peacemakers established itself in 1994. In many ways it’s a typical inner-city, grass-roots church. The services are nondenominational and loose. And like any Christian ministry, the place seeks to create believers and followers in Jesus, though they give food and clothing to anyone who comes here, whether they profess a belief in God or not.

But something’s happening here that draws the people who work or live on the streets outside. Just about every member swears that sometime after they came here, there was a moment when everything changed for them, when their addictions simply vanished. Whether what took place for them was spiritual or psychological, whether the catalyst was from inside or out, the simple program offered here, they say, helped alter their lives. It’s not a 12-step program, more a strict combination of work, prayer and study that uses religious belief to shield against the temptation for an addict to return to their old life.

Maybe Peacemakers gives a template to people who’ve never had a code of behavior to guide them. Maybe some people just need a strict system of rules to follow. Either way, its members insist that this place works.

A whole system has evolved to support them, a virtual safety net in a neighborhood that never really had one. The church operates halfway houses for ex-cons and ex-prostitutes, set up gardens for flowers and vegetables, and keeps a chicken coop for eggs. It all goes to the neighborhood. And every day they give out food and clothes.

This place is often the last resort for neighborhood people whose choices or circumstances left them living on the lowest rungs. The program offered here is powerful and appealing because it’s so simple.

“The main thing is a sincere desire to find God and get your life together, and a willingness to stick to the rules,” says Jeremiah Upshur, the pastor’s 32-year-old son.

Those rules require members to be sober, to pray together and to participate in helping the poor by feeding, clothing and working to get them off the streets. But a stated belief in Jesus is not enough to stay here. They have to demonstrate those convictions with the people of Chene Street.

“It’s a hard ministry. The hardest thing that I’ve ever done in my entire life is to be a Christian,” Simon says of the work involved. “But it’s the most fulfilling.”

After Peacemakers opened, the street people out front saw their old friends suddenly sober, talking about this crazy church that’s feeding and clothing them and helping them get clean, even if sometimes it doesn’t last, and they began showing up out of curiosity. Soon, its reputation took on a life of its own, and strange things started happening.

“We would have fires in this giant fire pit back there, and people would be coming in, throwing their syringes in, throwing their crack pipes in, just giving it all up,” Simon says. “It was mind-blowing.”

++++++++++++++++++++++++++++++++

The pastor got here the long, hard way. He was a juvenile delinquent who became a teenage heroin addict. Petty crimes grew into bigger ones until he found himself nodding off at the wheel of a bank robbery getaway car one afternoon in the early ’70s in Detroit’s suburbs, just as the cops swarmed in. He barely escaped lengthy prison time for it.

He fled Detroit but kept his lifestyle. While in an Oklahoma jail in the early ’70s for some minor offense, an inmate told him these born-again Christians had a place nearby, and they could be easily suckered into giving you food and shelter. “So I’m thinking, ‘Well, go get me a sandwich; I’ll go hustle them for a sandwich,’” Upshur says.

But he was drawn in by their approach. “These people are talking to Jesus like he’s their buddy, and I grew up you’d have to probably be a priest or a nun to be talking firsthand to the main man,” says Upshur, who was raised Catholic. “I’m thinking this is deep. All of a sudden — boom! — this spiritual world opens up. I’m like, ‘You gotta be kidding me.’”

He was so inspired, he came back to Detroit at 25 years old, determined to stay clean, and started holding informal prayer meetings at a house next to his parents’ home to talk about spirituality or God or whatever anyone wanted.

At the first gathering, his audience was a bunch of teenagers who came less to hear another born-again and more to see the crazy bank robber. A week later, he had 35 kids there. Soon after, adults started showing up too.

The group kept growing and went from a house to an old, unused church in Detroit, and eventually to a church in St. Clair Shores with three pastors and a large middle-class congregation. Upshur preached out there for 16 years.

But he felt the pull of skid row. “That’s always where my heart was, ’cause I come out of that,” he says. “I grew up in the inner city, I’ve been homeless many of the years of my life, been in and out of jail all my life, a very rough life. Those were my main people that I grew up with. So when I got, quote, ‘saved,’ I knew I’d be back working with people that come out of my environment.”

A woman in the suburban church offered him a small old building on Chene that she owned, and he began his ministry in one of the city’s most miserable, drug-addled neighborhoods. “We take people who everybody else has given up on,” Bob Kaczmarek says. He’s a board member of the church, 64, a Catholic, a well-dressed attorney. He attends services elsewhere, but was so impressed by Peacemakers and its ragged flock he became involved.

“This is it,” he says. “For some of the people who are in the in-house programs, this is their last chance. And if they don’t make it here, then you find out they’re found dead somewhere.”

++++++++++++++++++++++++++++++++

There have to be at least 100 stuffed animals inside the bedrooms at the Mercy House.

Several women stay here right now, at the Peacemakers’ halfway house for those trying to escape a life of prostitution and drugs, or battered women trying to escape a violent man. Blocks away, there’s a halfway house for men out of prison, off the streets, just off drugs.

What’s striking about the women’s house are the delicate, feminine, almost child-like touches. Though the women here have led hard lives, there’s pink and softness everywhere — on the stuffed animals, in the decorations on the walls, on the clothes inside the closets. It’s as if the women here are trying to reclaim an innocence they lost years ago. Denise Benn walks into her bedroom, bounces onto her bed and grabs a blue stuffed dog. “I got this puppy I took care of right before I came in here, and it made me feel young again, ’cause I could take care of something,” the 43-year-old says, hugging it.

Benn’s history is written on her face. Her story is like one many of the women here tell. Her life collapsed at 12, she says, when she was gang raped by six men on the way to school. Soon after, she started doing drugs to bury the trauma, hanging out with the dropouts and the druggies because they were nicer to her than anyone else.

“I liked getting high,” she says. “People accepted me. I wasn’t part of my family because I didn’t get along with my family. But now I was part of something.”

By 16, she was pole dancing in Detroit strip clubs, strung out on heroin, and within a couple years she went from turning tricks in VIP rooms to doing so in cars.

Her life as a street prostitute was one harrowing night after another.

“Every day something horrific was happening to me,” she says. “I was either getting thrown out of moving cars or waking up with people’s hands on my throat, and I had a heroin addiction and I couldn’t stop. I mean, you should see the scars on my body. I’m not lying to you. I’ve had some horrific stuff happen to me.”

The women here — five right now — watch out for each other, keep each other’s spirits up when things look bleak and the street outside begins appearing appealing again. They travel in twos when they walk the neighborhood, and eat group dinners, and help out at the church together.

“I got a new way of life,” Benn says. “I’m productive here and I’m of use here. I’ve got a place here.”

But there are relapses here too.

Last spring she violated the rules against dating someone at a nearby halfway house for men, and, forced to leave, wound up back on the streets, living in an abandoned building.

“The first night I went there, I just cried, because I knew what was going to happen,” Benn says. She fell right back into drugs and prostitution. “I didn’t have nowhere to go. I didn’t have no resources. I didn’t have a dime in my pocket.”

Jeremiah Upshur, the pastor’s son, came looking for her and asked her to come back. Now she works for the church and tries to figure out how to build a new life. She has no money, can’t even get past a minimum-wage job interview because of the long gap in her work history, and has few skills other than the ones she picked up on the streets. It makes it tough to stay hopeful, challenging to remain on the path she’s trying to follow.

“It’s hard,” Benn says, dragging on a cigarette. “It’s really hard.”

++++++++++++++++++++++++++++++++

It all comes down to a single moment, they say. A line between their old life and their new one. And they all say it like they still half can’t believe it actually happened.

It happened to Simon too. He tells his story as he wanders the aisles at Joseph’s Storehouse, the church’s resale shop in Warren that he runs. This is where the church gets what little money it has — selling cheap things one or two at a time.

Simon, at left, is one of Peacemakers’ biggest proponents because he’s one of its biggest successes.

He’d already spent half a life on heroin, a habit he began at 15, when he first came here.

“I must’ve did $400, $500 worth of heroin every day, ’cause that was my daily do,” he says. “My lottery habit was a hundred and something a day, the cocaine I used to give out for free was hundreds a day. I literally had tons of weed. I was hooked up with these Cubans and Colombians in Florida. And I was the dope man, so I had some of the finest women God put breath in. I was out of my mind. It was just a big party continuously.”

He got conned into coming to Peacemakers by a concerned sister who’d heard this place seems to work when everything else fails.

Simon walked in, thinking he’d bail after a minute, but he found a remarkable scene that had him transfixed.

“First time I went down there, I just felt something,” he says. “Jeremiah, the pastor’s son, was standing in the middle of the kitchen with all these dope fiends and prostitutes just standing in a circle around him. And I knew these people ’cause I used to be down on Chene.”

Simon started attending services, but kept showing up wasted. He had to take $100 worth of heroin just to get into the door without being sick. He was listening to the spiritual messages but not the sobriety ones.

“I always heard you get saved and the ground’s gonna shake and lightning bolts, and I didn’t feel nothing. I shook his hand, went out in the car and got high,” he says, laughing.

One day, much to Simon’s discomfort, Upshur called him to the floor in the middle of the service. Simon had three bottles of methadone in his pocket. He was able to get them even while he was on heroin because the lady who ran the clinic would, for $5, give addicts a cup of her teenage daughter’s urine so they could pass the drug test and get their fix. That was her hustle on the side. She kept them addicted for $5 here and there.

The pastor asked Simon if he wanted to finally be free of drugs. Simon nervously said yes, pulled out the bottles and set them on the pulpit in an act of renouncement. The addicts in the audience started drooling over them.

“You know the crowd on Chene,” he says. “I heard, ‘Don’t do it, John! I’ll buy it!’ People were serious. These are drug addicts in the crowd. Each bottle could be $50 or more on the street. There’s people literally hollering like it’s an auction. They want my drugs.”

Like so many others here, from the pastor on down, he insists the spirit entered into him that day and his addiction vanished right then and there. No withdrawals, no cravings. That was 12 years ago.

“I went to meetings, NA, AA, methadone clinics, whatever they have. Nothing worked for me,” he says. Now he’s a minister here trying to do the same for others who come in. “God set me free that day. Everything stopped that day.”

++++++++++++++++++++++++++++++++

Jada Fields sits alone in a pew on a Sunday morning, staring forward without an expression. And tears are streaming down her face.

She was a crack-smoking prostitute working Chene down the street from the church, waiting for johns to pick her up one day, and Upshur called her over. She told him flat-out what she was doing. He offered her money to instead come inside. “I’ve been here ever since,” Fields says. She has nine children, seven grandchildren. She’s 39.

That was eight years ago, eight years of relapses, of going back to the streets and then being welcomed back to Peacemakers. This time she’s lasted a year here.

Behind her, a man stands there alone, and he too is crying to himself. Across the room, moments later, a man has his face buried in his hands, in tears or in shame.

This happens early in their newfound sobriety, some here will say, when the remorse of a wasted life sinks in. There’s joy in starting over, but there’s deep sadness too over all the time that’s been lost forever. Sometimes the realization is overwhelming.

But now a song interrupts their sorrow as the service begins. Once again the song is gospel, so raw it has no music backing it at all, only a quick beat driven by foot stomps and a tambourine, and carried by the raspy voice of its impassioned singer.

Everyone rises and starts clapping along. Some dance or jump up and down in place. An elderly man shadowboxes the air for lack of another way to express his emotions. A few people come to the front and start dancing in tandem, like they’re doing the Hustle. The party’s on.

As each song fades away, Upshur says a few things into a microphone. They’re not so much religious exhortations, more like a pep talk. “Now we know we all come out of different backgrounds, all kinds of craziness, we all got a story to tell,” he tells them. They shout in agreement. His manner is gentle, his tone is soothing. No yelling, no fiery eyes. “But we’re gonna help one another cross that finish line, whatever it takes. We’re draggin’ one another through them pearly gates!”

Though the Gospels will be read aloud toward the end, though there’s no doubt this is a religious gathering, the services here are more like a celebration of everyone’s escape from their own hell, whether they’ve done it yet or are still trying. It’s a sing- and dance-along that, more than anything, is meant to cheer up people who’ve had little to smile about.

“Let’s have a knock-down, drag-out for Jesus!” Upshur shouts excitedly as everyone starts dancing to another song. “Let it all hang out!”

Every week, the service stops midway through for a hug break, of all things. But it’s actually more striking than corny. Few who come here have families, most have few real friends. So prostitutes turn to hug alcoholics with tremors, and the mentally ill embrace the homeless. Five minutes of everyone melting into each other’s arms.

Kaczmarek thinks back to something he saw recently at one of the services. “One fellow got up and said he was thankful because, for the first time in his memory, he feels that he has a family, that he is loved, that he is able to love others who will receive it. From my perspective, that was the best moment of the evening to hear something like that.”

These troubled people, holding onto each other in this little room in the ghetto, have created their own, safe protected world here, where they can have friends who won’t pull drugs out of their pocket or have liquor on their breath. They’re convinced something miraculous can happen to them here, even if it takes a bank-robbing preacher and a flock of addicts and hookers to help them do it.

“It all works somehow,” Kaczmarek says, smiling. “Isn’t that amazing?”

This article originally appeared in the Metro Times and Detroit Blog.

Monday, July 18th, 2011

Why States Matter

This is the second part of my point-counterpoint series on the usefulness of states. You can read the “anti” state side at “Are States an Anachronism?.” Today we look at the opposite case.

There are a lot of reasons why, despite their obvious flaws, states continue to play a crucial role in our nation. The first is that in a huge, multi-regional, multi-polar country like the United States, we can’t effectively govern the entire place from a single city on the east coast (with perhaps administrative subdivisions), nor would we want to. Our federal system provides independent sovereignty for states that are part of the general principle of separation of powers in our system, one that provides a check and balance against excesses of various types in Washington. Cities and regions, no matter what their economic rationale, simply cannot play that role. It takes something like a state to be able to stand up to the federal government.

Also, whatever the dysfunctions of states, their problems arguably hold no candle to Washington. Plus with a large nation that’s largely homogeneous at a broad level culturally, with a single currency, few internal trade barriers, and unlimited freedom of movement, there is in effect market discipline between states. The fact that they can’t literally print money or borrow without end means they end up facing reality fiscally a lot sooner than Washington. This is why regardless of the party in power, when times get tough, state governments have to get serious and try to do something. Ok, at least in most places.

And some have argued that state policy does have a greater economic impact than I generally give them credit for. Joel Kotkin has looked at the economic role of states in his annual “Enterprising States” report for the US Chamber of Commerce.

And of course there is the idea that states are our “laboratories of democracy.” Perhaps states are often too heterogeneous in their needs to really function as government units. But if that’s true, then it’s doubly true for our nation as a whole. We clearly have to solve that problem at some level. States give us a smaller scale model of the station to find out what works and what doesn’t. They can serve as testbeds for new policy ideas. And they can be a sort of “farm system” for creating national leaders.

But one area I’d to explore in more detail is the notion that states don’t represent a community of interest. As Longworth has shown, many states don’t really hang together. But is that universally true? Or is there sometimes data that shows there may be more to states than we might think. Let’s look at a couple of interesting data points.

One chart I’d like to return to again is the Common Census maps of sports team fan allegiance. Here’s one for the NFL:

While a number of states are split among various teams, I find it curious how unified many states are fairly unified behind a single team. Consider Indiana (Colts), Michigan (Lions – except the UP), Tennessee (Titans), etc. Some of this is an artifact of geography. Some teams have large catchment areas that makes this is a slam dunk (e.g., Denver), but that’s not always the case. (Other states have multiple cities with teams, which cuts the other way of course). Now this isn’t perfectly seamless. The Northwest Indiana area, as befits a Chicago suburban region, cheers for the Bears. And it does have quite a few people. But it’s hard to argue there’s nothing to this state thing.

It’s a similar thing with the NBA. Look at the Midwest, where the state lines are much clearer than for the NFL.

Next we can look at some maps that have been floating around recently that were put together by an IBM team based on cell phone data from AT&T. They tried to map states base on patterns of county to county calling to determine which places talk and text to each other the most. Here’s the one for phone calls:

Some have highlighted states where there are clearly splits – Illinois and Wisconsin jump right now. But what I find interesting is how many aren’t really that split. Again, Indiana, Ohio, and Michigan hang together. So does Texas. And if you look at places where two or more states seem to be joined together – say Alabama and Georgia, I’d say these also provide evidence for the relevancy of states. If there’s a community of interest that’s greater than an entire state, then obviously the state itself contains that same community.

Here’s the text messaging map, which shows some interesting changes. I find it interesting how greater Cleveland lines up with Pittsburgh in this one, versus Ohio in the other. But it still seems to reinforce the same model.

Lastly, let’s look at migration data. Based on where people move as reported from IRS tax return data, let’s look at where people move from and to with regards to a major county in a state. This is gross migration from 2000-2008, so it’s in and out migration together, shading those counties where there was any measurable migration under the IRS methodologies (generally more than 10 returns per year).

First, here is Franklin County, Ohio (Columbus):

Next, here is Marion County, Indiana (Indianapolis). This one is slightly different (I’m pulling canned graphics from previous posts) since in migration is in blue and out migration red. But it shows the same basic pattern.

The boundary between Indiana and Ohio doesn’t appear to be an entirely arbitrary line on a map, at least not today. It’s a sharp as a razor in dividing two communities. (You could argue it shouldn’t be, but that would have to be the topic of another post).

Note everyplace is like this of course. Here’s a migration map for Philadelphia County, which just so happens to also represent the city of Philadelphia, as a counter-example:

(By the way, if you like these maps, they were created by my Telestrian system, which I believe has simply the best and most usable information related to this migration data available anywhere).

While there are certainly no perfect places on these maps, and some states, like Illinois, certainly seem fractured, it looks to me like there’s at least some evidence that quite a few states actually hang together as communities after all. This means it should be much easier for their residents to make common cause among themselves than we might think.

Thursday, July 14th, 2011

Replay: Do Cities Need a Creative Director?

[ The second part of my point-counterpoint on the usefulness of states is a bit delayed. In the meantime, enjoy this one from the archives - Aaron. ]

Cities that suffer from various brand stigmas or problems often want to give themselves an image makeover. Even cities that are doing well can fret about how their brand is faring versus the global competition. This had led some cities to ask whether or not they need to appoint a creative director, as in the private sector. For example, see this article about Birmingham, UK. Tyler Brûlé, whom I mentioned yesterday, listed appointing a creative director as one of the five things he would do as mayor of a city. As he put it, “All strong brands have a creative director with a strong vision. Cities need them too. And no, they’re not called mayors.”

I think this notion has appeal because a) most cities have no concept of brand or vision, and b) strong creative directors have pulled off miracles in the private sector by reviving fallen brands. Tom Ford at Gucci comes to mind.

Yet while strong branding consciousness is clearly an imperative for cities – and I mean branding in the true sense, not just creating logos or marketing – I wonder if a creative director is the type of person could pull it off.

In the the private sector, a creative director is actually in charge. In the public sector, a wide variety of agencies and private institutions are doing their own thing. What would the creative director for a city actually control? Logos? Signage? Street design? Planning reviews? It strikes me that in almost any case, the creative director would be a classic “czar” – that is, someone with nominal responsibility for something, but no real portfolio. The job of a czar is virtually impossible, as anyone who has held one can attest. If you don’t own bodies or budgets, you are basically reduced to begging people to do what you want. This requires deft salesmanship and relationship skills, but are those what creative director types are known for?

Consider Adolfo Carrión, who recently moved over to HUD from the White House Office of Urban Affairs. He took a lot of flack from certain quarters for not making more of an impact. But consider this poor guy’s position. Unlike Sec. LaHood, he doesn’t own a bureaucracy or a budget. He had a tiny staff. And he was trying to create a cross-functional federal urban policy for the first time ever. The degree of difficulty is overwhelming. It’s hard enough changing a battleship organization even when people actually report to you.

A czar only has influence to the extent that the CEO provides support. In this light, the mayor – or another major power broker such as a local billionaire or business leader – absolutely does need vision and to “get it” on matters of brand. As I wrote previously, CEO responsibilities like strategy and brand very much are the responsibility of the mayor. Maybe he doesn’t need to know every detail, but he has to at least get it at a high level. As Machiavelli put it:

This is an axiom which never fails: that a prince who is not wise himself will never take good advice….Good counsels, whencesoever they come, are born of the wisdom of the prince, and not the wisdom of the prince from good counsels.

The input of the best creative director in the world would be wasted if the leadership doesn’t get it. Before seeking the best creative input, what is first needed is to cultivate an understanding of the importance of brand, strategy, and vision in municipal leaders. The new 21st century competitive landscape demands more from leaders than ever before, and they have to grow beyond operational excellence and prudent financial management to having the skills such as brand vision that have traditionally been the hallmarks of the private sector. Only with that prerequisite in place does hiring a creative director or other expert make sense.

This post originally appeared on May 6, 2010.

Wednesday, July 13th, 2011

More Privatization Good News in Indiana

I’ve written before about how the privatization of the Indiana Toll Road was a grand slam home run for the public (see “Australian and Spanish Investors Hurting, Hoosier Taxpayers Smiling,” “Major Moves is Majorly Great“, and “The Shrewdness of Mitch Daniels.” The Chicago Skyway lease was similarly great). The evidence just keeps rolling in for how great this deal was, this week in the form of a Bloomberg News piece (via the Indianapolis Business Journal) describing how the Toll Road concessionaires are missing financial projections bigtime.

Eleven million trucks. That’s how many 18-wheelers needed to rumble across northern Indiana in 2010 for the state’s 157-mile toll road to break even. Unfortunately, only about half that many did and the road came up $209 million short. This sounds like the beginning of yet another story about recession-ravaged states bleeding cash. And it is, sort of. The twist is that the Indiana Toll Road is managed not by the state, but by a group of corporate investors…Now five years old, the Indiana deal has yet to turn a profit, or break even…..It turned out to be a bargain for the taxpayers of Indiana.

$209 million per year. That’s how far short of original projections the Toll Road is performing. The good news for Indiana taxpayers is that this is not their problem. The state already has the money in the bank. Regardless of income, the concessionaire still has to maintain the road to standards. (In fact, they are in the middle of a lengthy project to reconstruct and widen several miles of the road through Gary). And if the concessionaire goes bankrupt, presumably their lenders will take over and still be on the hook. In any event, if there’s a default on the contract, the state can take the road back. They could even lease it again for even more money.

I don’t see how it would have been physically possible for the state to have gotten this good a deal itself. In effect, the vendor way overpaid at the peak of the bubble. (I wouldn’t worry too much about them – they are big boys who no doubt syndicated away much of the risk and who also have a big portfolio across which to diversity the unexpected wins and losses). Could Indiana have conceivably negotiated even stronger protections? Sure. It could have negotiated in that if the Borman were closed for flooding or something, motorists could drive the Toll Road for free. But even with compensation the state has had to pay in a few borderline cases like this, it is still way, way ahead.

I don’t think it’s possible to get a deal like that today, not with the way the markets have turned. But with massive transport investment deficits looming across the country, finding ways to tap into private capital, management, and operating expertise is still very much something cities and states should be looking to do. These can be risky deals if done poorly. But done right, and with the proper public scrutiny, they hold enormous potential.

Monday, July 11th, 2011

Are States an Anachronism?

Today and Thursday I’ll give a point-counterpoint on the relevancy and importance of states in the modern era. (Note: Part two is now online as “Why States Matter” ).

Obviously states aren’t going anywhere anytime soon, but a number of folks have suggested that state’s aren’t just obsolete, they are downright pernicious in their effects on local economies.

One principal exponent of this point of view is Richard Longworth, who has written about it extensively in his book “Caught in the Middle” and elsewhere. Here’s what he has to say on the topic:

In the global era, states are simply too weak and too divided to provide for the welfare of their citizens…The reason is a deep, intractable problem. Midwestern states make no sense as units of government. Most Midwestern states don’t really hang together – politically, economically, or socially. In truth, these states and their governments are incompetent to deal with twenty-first century problems because of their history, rooted in the eighteenth and nineteenth centuries.

Longworth expounds upon this to identify a series of specific issues, which I’ll put into my own terms.

1. States do not represent communities of interest. With some exceptions, states consist of cities, rural areas, and regions that have very distinct histories, geographies, economies, and and event cultures. As a result, it is incredibly difficult for legislators and leaders from various parts of the state to find common cause.

Here’s how Longworth describes Illinois:

Illinois, like Indiana, is three states, and for the same reasons. The southern third, again south of I-70, is a satellite of the South – more give to conservative religions, gun racks in pickup trucks, and a deeply conservative Republicanism….Most of the rest of the state is called Downstate to differentiate it from Chicago, even though some of it, such as Rockford, is actually north of the city. It is an unfocused place…what unites this heterogeneous region is a dislike of the third region, Chicago. Chicago dominates Illinois – politically and economically…If the rest of Illinois obsesses about Chicago, Chicago gives the impression – an accurate one, in fact – of never thinking about the rest of Illinois.

Additionally, I might add my observation that this creates a situation where the policies which are right for one area may be wrong for another. Since it is the nature of governments to promote uniform rules, this often leaves one or even all regions of a state with suboptimal rules. In fairness, there are are often some types of flexibility, such as that provided by different classes of cities. But important macro policies remain one size fits all.

Consider Illinois. It’s a combination of a global city core in Chicago, a Rust Belt hinterland, and a southern fringe region. State policy is set by the Chicago elite as a general rule, and predictably it follows a big city, global city favorable model: strong home rule powers for large municipalities, a high tax/high service type model, strong public sector unions, etc. This pretty much works for Chicago, but for downstate it puts their communities in a major economic vice since they don’t benefit from global city friendly policies and are competing against other places that have optimized in other ways.

Indiana being one example. It is pretty much the opposite. Its largest city region is only about 25% of the state’s population, meaning Indiana is dominated by rural and small city constituencies. As a result, Indiana has optimized for a “Wal-Mart” strategy such as through its low-service/low-tax approach, weak environmental rules, and very weak (I’d argue nearly non-existent) home rule powers for even its largest municipalities. This is great if you are a small manufacturing city trying to beat out Ohio, Michigan, and Illinois for low wage manufacturing and distribution jobs (which sounds bad but is realistically the best short term play these places have). But it’s pretty terrible if you are Indianapolis and trying to fight to have a place in the global economy, attract choice talent, build biotech and high tech business clusters, etc.

2. Arbitrary state lines encourage senseless border wars. With limited exceptions, the major cities of the Midwest (and often elsewhere around the country) were founded on major bodies of water like rivers, lakes, or an ocean. These were often boundaries of states, thus major cities are frequently at the edge, not the center of states. This means not infrequently you find multi-state metro areas, which creates structural conflicts of interest. The logical economic unit is the metro area, but it matters from a local fiscal point of view (i.e., the ability to collect income, sales, and property taxes) where particular businesses locate. Thus we frequently see the case where localities spend tons of money on incentives simply to get businesses to relocate within the same metro area. You can have bidding wars without multiple states (such as neighboring suburbs competing over a Wal-Mart), but these seldom involve major state level incentives.

Longworth again summed this up masterfully in a recent blog post called “The Wars Between the States” where he documents the incentives being doled out to convince companies to move back and forth across the state border in the Kansas City metro area:

It would seem impossible for Midwestern states to get any sillier and more irrelevant, but they’re trying. In a time of continuing recession and joblessness, with crunching budget problems, failing schools, crumbling infrastructure and no real future in sight, these states have decided to solve their problems by stealing jobs from each other.

The most recent example is the so-called “border war” between Kansas and Missouri, as the two states compete to see how much money they can throw at businesses to move from one state to the other. The focus of this war is Kansas City — both the Kansas one and the Missouri one, basically a single urban area divided not only by an invisible line down the middle of a street but by a mindless hostility that keeps its two parts from working together.
…
Competition with “Europe, India, China and the rest of the world” has nothing to do with this juvenile job-raiding. In fact, this “border war” keeps Missouri and Kansas from competing globally — indeed, robs them of the tools they need to compete globally. Some rational thought shows why. It’s precisely these states’ inability to compete globally that causes them to declare war on the folks next door. In a global economy, Kansas and Missouri aren’t competing with each other, any more than Illinois, Indiana and Wisconsin are competing with each other. The real competition is 10,000 miles away and all Midwesterners know that we’re losing it.

3. Many state capitals are small, isolated, and cut off from knowledge about the global 21st century economy. In some states the state capital is a large city that is well-connected to the global economy – Atlanta, Indianapolis, St. Paul, and Nashville come to mind. But often state capitals were selected because they were in the geographic center of the state, not because they were major centers in their own right. Some, like Indianapolis, managed to grow into major cities. But many others did not. Think Springfield, Jefferson City, Frankfort, etc. This means that the state capital of many states is not very large, and often not very plugged into the global conversation. Longworth again captures the implications of this:

There is another reason why state governments are botching the economic needs of their states. Some 150 to 200 years ago, state capitals were picked not for economic reasons, but for geographic ones. Many of them remain in this isolated irrelevance today, far from the real action of any of the territories they are meant to govern…In this era of globalization, with overnight shipping and instant communications, this shouldn’t make any difference. In fact, it does. Global cities such as Chicago depend on face-to-face contact, and isolated state capitals live out of earshot of this conversation. The winds of globalization are transforming state economies and generating new thinking about state futures, but the news takes a long time to get to the state houses and legislatures.

4. Metro areas are the engines of the modern economy, but the rules for municipal and regional governance are set by states, and often in a manner that is directly contrary to urban interests. In this Longworth channels the Brookings Institution, which has tirelessly documented the importance of metro area economies to the nation as well as all the ways states, frequently controlled by non-urban legislators who are actively fearful of cities, have often imposed enormous burdens on those metro areas by tying them down with a morass of Lilliputian rules. Again Longworth:

States set the boundaries of urban jurisdictions and decide whether or how they can merge. They tell cities who they can tax and how, whether this helps cities or not. State governments help finance local infrastructure and dictate, from miles away, how that money is spent. State priorities on education and workforce programs leave city residents incompetent to deal with the global job market. Highway funds go to rural areas, not to cities that need them more; job creation money goes to wealthy areas, not to the core of battered cities.

Some urban regions have more or less given up any hope that their state will ever change or be a positive partner, such as Kansas City, as Longworth notes:

When the Greater Kansas City Community Foundation issued a report on the city’s future, it pretty much told the state to get out of the way. “Nations and states still matter,” it said. “They particularly can do their cities harm. But cities have to take the lead. San Diego did not become San Diego by looking to Sacramento, not Seattle to Olympia.” When the authors talked about Sacramento and Olympia, one felt their really meant Jefferson City.

I’d probably go even further than Longworth. I think that historically states imposed rules on cities deliberately designed to hobble their growth. For example, the laws that restricted branch banking in most states until recently had the effect of keeping big city banks from buying up rural and small town banks around the state. The end game of course is that when deregulation occurred, the banks in most big cities were so small because of these rules, they were easy prey to out of state acquirers. Thus most states saw basically their entire indigenous banking industry swallowed up.

Also, states seem to more or less treat their urban regions like ATM machines. Every study I’ve seen documents how, contrary to popular belief, cities actually are net exporters of tax dollars to their state government. Marion County, Indiana for example (Indianapolis), sends a net of about $400 million a year to the state – enough to cover the entire public safety budget of the city.

I actually don’t have a problem with some redistribution as cities are generally economic engines and more efficient to boot, so they should be expected to be donors at some level. On the other hand, when states proceed to starve those cities of the critical funds they need stay healthy and strip them of the powers they need to manage their own affairs, this is like sticking a knife in the golden goose.

Again I can use Indianapolis as an example. As part of a tax reform package the state took over all operating educational funding for K-12. So far so good. But they also imposed a funding formula that severely disadvantaged growing suburban districts by denying them equal per pupil funding. The net result was a major funding problem for the best suburban Indianapolis districts like Carmel, Fishers, etc. Many of these districts had to go to referendums to raise local taxes to make up the difference (which was no doubt the state’s plan all along – it simply outsourced the unpleasantries of a tax increase to localities). Here is a state that claims it wants to be in the biotech business, the high tech business, etc, yet it singles out the school districts where the labor force you are trying to attract for those industries is likely to live for outsized cuts. That hardly seems like a winning strategy.

It’s the same on transportation. The I-69/I-465 northeast corridor in Indianapolis is the most congested in the state, yet there’s no plan to deal with it. Despite a record construction program enabled by a great toll road lease, the state somehow still can’t find the money for this. In fact, a start at a fix that they did have in place was recently canceled. Similarly, the state planned to upgrade three sections of US 31 to a freeway, but the suburban Indianapolis section was put last and the vast bulk of that project is unfunded – despite it being the primary north-south corridor in what is by far Indiana’s fastest growing county. Where did all the toll road money go? In fairness, the state did step up and do a lot of Indy projects, but a disproportionte amount of cash has gone to a plethora of mega-projects to build four lane highways through rural areas, generally ones of dubious benefit/cost. (It’s a similar story in Ohio, where the state DOT postponed a reconstruction of the crumbling Cleveland Innerbelt while spending $150 million on a bypass around a town of 5,000 people, the state’s largest stimulus project).

Indiana also keeps its cities on a tight leash, with some of the weakest home rule powers around. Indianapolis basically can’t do much without legislative approval (a transit referendum, for example, will require specific legislative authorization). And the legislature seems to like it that way. Indiana’s property tax caps, which I support generally from a percentage of assessment perspective, include a lot of poorly advertised gotchas. For example, regardless of assessed value, the total tax levy can only grow at a rate equal to the average personal income growth over the last six years. I’ll caveat this by saying I haven’t studied this in detail and thus may be a bit off base, but the levy cap appears to be a de facto spending cap at current levels regardless in growth of tax base. This may be ok for some, but not others that are growing say their commercial office space base at a rapid clip and need to expand infrastructure and services to support it.

Clearly many of these policies have no real benefit to the Indianapolis region, which is more or less being asked to be the economic engine of the state and finance state government without being given the tools to do that job property.

The list goes on but that should give you a flavor. Similar things occur around the country.

To this list I’ll add one of my own, which has also been richly illustrated by Jim Russell. Namely,

5. States can’t to much to help, but they can do a lot to hurt. A lot of the national debate seems to center on whether the “red state” or “blue state” model makes the most sense. But to a great extent, policy almost doesn’t matter. In Ohio, with one set of state policies, Columbus thrives while Cleveland struggles. Tennessee is a right to work state with no income tax, but Nashville booms while Memphis stagnates. Texas is doing great with its red state model, but Mississippi and Alabama not so much. And even within Texas, there are plenty of places that are hurting badly.

While good policy can set the stage for growth, it can’t guarantee local economies will prosper. But bad policies can hurt regions that otherwise would thrive. Extremes of either the blue or red model seem to lead to problems. Witness California, for example, which seems to be holding up a sign to business saying, “Get lost.”

This puts states in the difficult position of being almost being able to aspire at best to being a neutral influence on their own economy. But it’s easy for them to screw things up.

Feel free to chime in with your ideas on why states either don’t matter or are actively harmful for economic growth in the current day. I’ll be back to give the other side of the argument in a few days. Stay tuned.

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