Monday, June 11th, 2012
City Journal is the quarterly magazine of the Manhattan Institute, a free market think tank. I really consider it a must read for the serious urbanist. Clearly their political point of view does not jibe with that of many progressive urbanists, but even so, every issue has articles that will appeal to even those who may generally share an opposing political persuation. Consider for example Nicole Gelinas’ piece in praise of NYC Mayor Bloomberg’s transportation policies.
I’m delighted to make my debut appearance in City Journal’s Spring 2012 issue with an article on Chicago called “The Second-Rate City?” In it I pull no punches laying out the bigtime under-performance and challenges facing the city. To wit:
1. Chicago was a national leader in urban revitalization in the 1990s, outperforming competitors like New York and LA. But these trends totally reversed in the 2000s and Chicago is increasingly falling behind on a relative, if not absolute, basis. “But despite the chorus of praise, it’s becoming evident that the city took a serious turn for the worse during the first decade of the new century. The gleaming towers, swank restaurants, and smart shops remain, but Chicago is experiencing a steep decline quite different from that of many other large cities. It is a deeply troubled place, one increasingly falling behind its large urban brethren and presenting a host of challenges for new mayor Rahm Emanuel.”
2. Chicago’s problems span a wide gamut, but weak demographics, a weak economy, and fiscal problems all loom large. “Chicago’s economy also performed poorly during the first decade of the century. That was a tough decade all over the United States, of course, but the Chicago region lost 7.1 percent of its jobs—the worst performance of any of the country’s ten largest metro areas. Chicago’s vaunted Loop, the second-largest central business district in the nation, did even worse, losing 18.6 percent of its private-sector jobs, according to the Chicago Loop Alliance. Per-capita GDP grew faster in New York and L.A. than in Chicago; today, Chicago’s real per-capita GDP ranks eighth out of the country’s ten largest metros.”
3. Key problems include:
- Poor leadership at the state and city levels that allowed huge unfunded liabilities to be incurred. “The debt and obligations begin to explain why jobs are leaving Chicago. It isn’t a matter, as in many cities, of high taxes driving away businesses and residents. Though Chicago has the nation’s highest sales tax, Illinois isn’t a high-tax state; it scores 28th in the Tax Foundation’s ranking of the best state tax climates. But the sheer scale of the state’s debts means that last year’s income-tax hikes are probably just a taste of what’s to come. (Cutting costs is another option, but that may be tricky, since Illinois is surprisingly lean in some areas already; it has the lowest number of state government employees per capita of any state, for example.) The expectation of higher future taxes has cast a cloud over the state’s business climate and contributed to the bleak economic numbers.”
- The lack of a calling card industry that will generate outsized economic output and financial returns to the city. The flip side is that the city is well-diversified, but diversity is about wealth preservation, not accumulation. Mark Zuckerberg didn’t get to be a billionaire through diversification. “Chicago, however, isn’t the epicenter of any important macro-industry, so it lacks this wealth-generation engine. It has some specialties, such as financial derivatives and the design of supertall skyscrapers, but they’re too small to drive the city. The lack of a calling-card industry that can generate huge returns is perhaps one reason Chicago’s per-capita GDP is so low. It also means that there aren’t many people who have to be in Chicago to do business. Plenty of financiers have to settle in New York, lots of software engineers must move to Silicon Valley, but few people will pay any price or bear any burden for the privilege of doing business in Chicago.”
- The fact that Chicago’s global city footprint is too small to carry the region on its own, though that seems to be the only real strategy the city has. Contrary to one blog, I do not say that Chicago isn’t a global city, merely that it needs to be much more, and that Chicago still should to a great extent be viewed as a regional capital city, and the capital of a struggling region at that.
- A very poor business climate, especially for small business. “Red tape is another problem for small businesses. Outrages are legion. Scooter’s Frozen Custard was cited by the city for illegally providing outdoor chairs for customers—after being told by the local alderman that it didn’t need a permit. Logan Square Kitchen, a licensed and inspected shared-kitchen operation for upscale food entrepreneurs, has had to clear numerous regulatory hurdles: each of the companies using its kitchen space had to get and pay for a separate license and reinspection, for example, and after the city retroactively classified the kitchen as a banquet hall, its application for various other licenses was rejected until it provided parking spaces. An entrepreneur who wanted to open a children’s playroom to serve families visiting Northwestern Memorial Hospital was told that he needed to get a Public Place of Amusement license—which he couldn’t get, it turned out, because the proposed playroom was too close to a hospital!” (Sadly, I’m told Logan Square Kitchen will close next month despite the red tape reduction Rahm announced there after my article had already gone to press).
- Corruption and Chicago’s unique “culture of clout.”
4. What Rahm needs to do to start turning the ship around. While my article is certainly negative towards Chicago in many ways, you’ll note that I’m fairly positive on Rahm. And while it isn’t in the piece, I’m happy to go on record as saying he’s been a breath of fresh air in the city. (Though of course I don’t agree with 100% of what he’s done).
Click through to read the original article for the whole thing. I intend to delve into all these things in more depth in coming weeks in a series of follow-up blog posts here.
Some have accused me of being overly negative on Chicago in this piece. I think the facts speak for themselves on the city’s performance. And consider this: in the national media, outlet after outlet like the Economist and Newsweek have come in and done what are nothing more than outright puff pieces on the city. If nothing else it’s past time for a corrective. And I didn’t even go into everything I could have. Another common complaint was that I ignored the rising crime problems, for example. Chicago’s murder rate is up 36% this year through May.
Perhaps I have soured a bit in the last couple years on Chicago’s performance and strategic position. In that light, after wrapping up this blog series, I’ll probably go mostly silent for a while. I’m not interested in endless pilings on. Especially as, though I live in Providence, Rhode Island right now, I consider myself half Chicagoan, half Hoosier. I love Chicago and think it’s an amazing city. Perhaps that’s why I’m so tough on it. It’s hard to watch a city you love not living up to all it can be.
Comments welcome as always.