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Tuesday, July 9th, 2013

Is Detroit the Next Berlin? by Justin Fox

[ Given the emergence of an artist movement in Detroit, the comparisons to Berlin are obvious. However, in this piece that ran over in Techonomy last year, Justin Fox argues the comparison is invalid. I'm glad to be able to repost it. And I'd also suggest that you might want to check out more of the material from Techonomy Detroit - Aaron. ]

After the fall of the Wall in 1989, Berlin had very cheap housing and industrial space, some in spectacularly grand old buildings. Years of division—with repressive communist rule on one side of town and isolation and economic stagnation on the other—had left the city depressed and underpopulated. Reunification initially only made things worse, as uncompetitive Eastern-side state-owned factories closed en masse.

This translated into, among other things, apartment rents much lower than in any other major Western European city. The low rents and post-industrial landscape drew artists and other bohemian sorts. Then low rents plus a burgeoning cultural scene drew young college grads who couldn’t find good jobs anywhere (German unemployment was high in the 1990s). They could get by in groovy, low-cost Berlin. This influx eventually translated into economic revival. Now Berlin is a boomtown, and everybody’s complaining about the skyrocketing rents.

Detroit’s roughly the same size as Berlin (measured by metro area population). It’s got a lot of cheap real estate, some of it spectacularly grand. It’s got abandoned factories. It’s got great cultural history (mainly on the music front). So … let the young bohemians come and the boom begin, right?

Uh … no. I’m moderating a panel at the Techonomy Detroit conference titled “Is Detroit the Next Berlin?” but I just don’t buy it. Sure, I’m rooting for Detroit’s revival. And the revival seems real, although still in its early stages. Studying and learning from the struggles and successes of other cities (as WDET did with its series on the Detroit-Berlin Connection) is never a bad idea. But the notion that Berlin could be a model for Detroit strikes this outsider as wrongheaded and a bit dangerous. It is an aspiration bound to be thwarted. Here’s what makes Berlin so different from Detroit (and vice versa):

1) Berlin is a political and cultural capital. The economic impact of becoming the capital of a reunited Germany in 1990 was actually a disappointment for Berlin at first, as some government agencies stayed away, and corporations did, too. But the reality of becoming the capital city of a major economic power, and the construction boom that went with that, eventually had a big impact. Berlin also was quickly able to regain its pre-World-War II status as the country’s artistic and cultural capital—thanks in part to massive federal subsidies. So it became Germany’s New York (minus finance and media) plus its Washington, D.C. (minus the huge defense and homeland-security industry). With super-cheap rents. That’s a lot of magnetic power, and by the late 1990s Berlin had become the default destination for creative, ambitious, educated young Germans. Detroit has none of these dynamics going for it except the real estate. Bringing in a few curious artists is great, but expecting a mass inflow of hipsters from all over America is crazy. It would already be a huge victory if lots of creative, ambitious, educated young Michiganders began moving to the city.

2) Berlin reunified. Detroit never had a Wall, but it’s been riven by its own division over the past half century, a stark racial and political separation between the city and the rest of the metropolitan area. There’s clearly been progress made in recent years, with new stadiums and other development downtown, and an apparent shift—born of shared economic desperation—toward more of a we’re-all-in-this-together regional attitude. But the divide is undeniably still there, and it means that even a successful revitalization will of necessity have to take a much different, less-centralized shape than in Berlin. Three quarters of metro Berlin’s 4.4 million people live within the city limits. In Detroit it’s the other way around; more than 80% of the 4.3 million inhabitants of the metro area live outside Detroit proper. Finding ways to tie city and suburbs together remains one of the area’s biggest challenges.

3) Berlin has good public transit. Yeah, its air connections have long been something of a joke, but that should improve dramatically with the opening next year of a new airport. The city is also linked by high-speed rail to the rest of the country’s major cities. Detroit’s got a great airport, but beyond that it’s built quite literally around the automobile. The millennials who would have to begin flocking to Detroit to make a Berlin scenario real don’t seem to like cars much. There’s no easy way around this: Detroit simply can’t afford to build a mass-transit infrastructure right now, and a Berlin-style, youth-oriented metropolis is almost inconceivable without such an infrastructure.

4) Detroit knows business. Yes, the city’s main business has been through a really tough time lately, but metro Detroit is full of private sector expertise—not just in automobiles—and seems to be growing a new entrepreneurial class. Berlin has a startup scene now, but that’s been driven mostly by newcomers. When its long, slow return to prosperity began it was a city of bureaucrats, former communists, and the long-term unemployed. Detroit has a huge advantage over Berlin here, an advantage that should be exploited and emphasized.

5) Detroit has better immigrants. Sure, now Berlin is attracting jet-setters from all over—and has attracted hard-working immigrants from Turkey and Eastern Europe for years. But Detroit, and U.S. cities in general, have two big advantages over their continental European counterparts in attracting ambitious, entrepreneurial newcomers from other countries: (1) we speak the global language, English, and (2) despite occasional problems we have a deserved reputation as a nation where newcomers can thrive. The Detroit area has of course already benefited from its status as destination No. 1 in the U.S. for immigrants from Arab countries, and any realistic comeback scenario for the area and the city proper has to include a big role for overseas immigrants.

There’s an echo here of the competing visions of urbanists Richard Florida and Joel Kotkin. Florida is of course the progenitor of the idea that a new, urban “creative class” is the key economic driver of our time—and that cities (like Berlin) that can attract young creatives will thrive. Kotkin argues that this simply won’t work for most American cities, and that messy, immigrant-filled, strip-mall sprawl is an equally vibrant and more realistic model. Florida, who married a Detroiter, has been talking up the creative-class link to the city’s revival. Kotkin, in a recent newspaper profile of Florida, scoffed that “There’s not enough yuppies on the planet to save Detroit.”

In the case of the Detroit area, they’re both right. Locavore restaurants and design studios aren’t going to bring back the regional economy. That’s going to require other, more mass-scale kinds of business success, and possibly some big-time government investment. At the same time, returning the city of Detroit to its rightful position as economic and cultural heart of the region—which seems like an essential prerequisite to any truly sustainable revival of metro Detroit—will take exactly the kind of building-by-building, restaurants-and-galleries-and-cool-little-creative-businesses entrepreneurship that Florida loves so much. Detroit is not the next Berlin. But it may still get a little bit of that Berlin spirit.

Justin Fox appeared at Techonomy Detroit in a session entitled ”Is Detroit the Next Berlin?” For complete coverage of the September 12, 2012, conference, click here.

This post originally appeared in Techonomy on September 11, 2012.

77 Comments
Topics: Arts and Culture, Strategic Planning, Technology
Cities: Berlin, Detroit

77 Responses to “Is Detroit the Next Berlin? by Justin Fox”

  1. John Morris says:

    I think in Newark, many back residents said anger over urban renewal projects helped create rage. Chicago, may be an exception, but in most cities like Pittsburgh, the number of new housing units never replaced the number of units destroyed. Post 1950 projects often didn’t even pretend to build new housing and were more overtly about removing the existing residents.

    Several of my links talk about how dislocation created overcrowding in the remaining housing stock.

  2. John Morris says:

    In contrast to Chicago & Newark policy of mass removal here is a 1987 article about the much more, sensitive way Berlin deals with upgrades of poor housing stock.

    http://www.csmonitor.com/1987/1030/hberg.html

    “The organization’s mandate is enshrined in the “Twelve Principles of Careful Urban Renewal,” formally adopted by the West Berlin Senate in 1983. The “Twelve Principles” set forth a gradual plan for urban revitalization.

    “Repair should always come before modernization; modernization before demolition and reconstruction,” says STERN architect Axel Volkmann. “We renovated each house at a standard that met the wishes and ability of the tenants,” he explains.

    If the tenants were able and willing to pay the rent increase that accompanies modernization, then central heating, private baths, and double-pane windows were installed.

    If not, repairs were simply made to restore facades and put stairs, roofs, cellars, pipes, and utility lines in working order.”

    What comes through is that Berlin put the preservation of community and retention affordability before building quality.

    “Displacement of families like Mr. Arik’s was kept to a minimum. Some tenants remained in their apartments while they were being renovated.”

    Perhaps this attitude has changed since, but my impression is this acceptance of gradual renewal over instant results helped develop & retain creative energy.

  3. James says:

    Alon,

    Was that because of the expressways?

  4. John Morris says:

    James, you are using population alone to argue that Urban Renewal, had few negative effects.

    The crime homicide rate rose from 7.9 to 10.3 per 100,000 from 1950- 1960.

    http://www.encyclopedia.chicagohistory.org/pages/2156.html

    A very steep increase starts in the mid 1960′s before the King assassination.

    Also, you are downplaying the full level of disruption, which went far beyond building a few highways. A major hospital; The Illinois Institute of Technology, The University of Chicago & huge public housing complexes were launched or planned using eminent domain before or during this period.

    Large parts of the South and West Side were labeled by the city as “blighted”. Even worse, the city often kept plans for these areas secret from their residents.

    The likely result was severe overcrowding in the remaining housing stock and owners afraid to upgrade properties

  5. John Morris says:

    Here is a chart of Chicago Homicides 1870-208 per 100,000 residents.

    http://chicagocrimescenes.blogspot.com/2009/07/138-years-of-murder-in-chicago.html

    The evidence certainly doesn’t prove you are wrong- violence does seem to explode in the mid 60′s civil rights era. However, a trend has been going up pretty sharply since the early 40′s.

    (I mean The IIT & University of Chicago expanded using eminent domain during this period)

  6. James says:

    No John, that’s not what I’m arguing. I’m arguing that urban renewal projects from the 50s didn’t cause the high rents of today.

  7. John Morris says:

    The discussion was about what caused Chicago’s huge loss of housing stock & what caused owners to abandon or not invest in their properties. Labeling large areas of the city as “blighted”, arming the government with massive powers to seize property & keeping the planning process secret were big factors at work.

  8. James says:

    Yes John and once again we will have to agree to disagree about this.

  9. John Morris says:

    A person reading just your comments might think Chicago only tore down empty, abandoned housing. The history seems much more complicated. Entire districts were labeled as blighted and all kinds of plans floated around to tear them down.

    Likewise, Detroit used eminent domain to tear up many parts of the city long before the 60s riots.

  10. James says:

    John, again you are mischaracterizing my arguments and I am beginning to think you are arguing in bad faith.

  11. John Morris says:

    Same here. Exactly why do you think the mass tear downs and labeling are not worth mentioning?

  12. James says:

    Because that was 60 years ago. And since then Chicago experienced a lot of things including deindustrialization, white flight, population loss, and increase and subsequent decline of violent crime rates. There is plenty of real estate in Chicago. Why it isn’t redeveloped is due to multiple factors based in large part to location within the city. I understand that you see it differently and I don’t think I’ve misrepresented you on this

  13. John Morris says:

    All of this was not 60 years ago. I linked to the 1987 article about a possible Bears West Side Stadium. There is a continuing pattern of abusive property seizures and threats.

    Many of the projects built during this era, like Cabrini Green were later torn down creating a cycles of community disruption. (In effect, creating refugee populations)

    Hardly any of your links even mention this.

  14. John is a libertarian. As such he naturally sees government interventions as the prime source of urban ills. I think there are plenty of government policies that did a lot of damage (like urban renewal and many of the freeway projects), but Chicago’s decline was primarily a product of market forces in my view. It wasn’t city policy that de-industrialized the city. (If so, you’d think there would have been one Rust Belt city that didn’t suffer from it, but in fact they all did to the extent they had industry). And as I highlighted earlier, blockbusting tactics were an entirely private sector phenomenon. There’s much more too.

    In a city that burned down once, it just isn’t reasonable to expect a government to allow wood frame homes to remain abandoned for any length of time, particularly as these older homes quickly become unsalvageable as dwellings if not not properly maintained.

  15. John Morris says:

    OK, that is a legit point of view- many of these buildings were wood and “substandard”, but I’m pretty sure many were not.

    BTW, I did not blame all of Chicago’s ills on eminent domain but this almost certainly a huge factor at work.

    The issue here isn’t just about what happened to the buildings but what were the social effects of mass destruction and relocation on communities. Chicago’s highly secretive process also played a big role in inhibiting investment in large parts of the city.

  16. John Morris says:

    Here is a link about Urban Renewal’s effect on Roanoke, Virginia- the exact place, Obama gave his, “You didn’t build that speech.”

    Labeling large areas “blighted” or “Urban Renewal Zones” had huge impacts even if no property was ever taken.

    “Fullilove said the declaration of Gainsboro as an urban renewal zone “meant that people stopped investing. All neighborhoods require investment, so they kind of cut off the supply.”

    Richard Chubb at one time owned a business on Henry Street.

    “They’ve taken so much that it’s hard to say who can put that money back in,” Chubb said. “There’s been several opportunities, but people have rejected it so long. If you string somebody out long enough, they’re going to self-destruct.”

    http://ww2.roanoke.com/news/roanoke/wb/175114/

    Shareef broached the possibility of monetary compensation.

    Gainsboro property owner Walter Claytor set a precedent for that in 2001, when he filed a lawsuit alleging the housing authority’s development program devalued his family’s land and drove away their tenants with a 20-year threat to seize the land that was never consummated. He won more than $281,000 plus $70,000 in interest.”

    NYC, by the way was hardly a city without an industrial base. Why did so many of NY’s industrial & warehouse districts gradually get reused and so many of Chicago’s did not?

    Why did Hong Kong, which was once dominated by manufacturing make such a seamless transition to services?

    Wasn’t Chicago well positioned to make that transition?

    Remember that we are often talking about districts that are very close to The Loop. Is it reasonable to think market forces would have shown no interest in these areas?

  17. John Morris says:

    Ooops, the link ended up in the middle of the quote. Sorry.

  18. James says:

    John, to answer your questions:

    1. I dismiss the idea of the Bears moving to the west side because it did not happen. Instead they bilked the city to issue bonds to renovate Soldier Field into a hideous monstrosity that the city will pay for years from now. Not too much different than the Cubs threatening to move to Addison so they can put up bigger scoreboards and hold more night games. How can you really quantify the effect of something that never happened? From my view the damage was done to the west side before 1987.

    I guess I’d say some urban renewal projects were damaging but in the grand scheme of Chicago it wasn’t the big factor you say it is. And that is all I’m going to say about it, I think we said enough.

    2. I have argued in the past that New York was a rust belt city with all the rust belt problems: rising crime, declining population, waning industrial output, etc. But in the late 70s and early 80s computer tech really saved the city. New York was always the financial capital of America. But by the mid 70s the paperwork situation was so bad that the stock exchange had to close mid-week to handle the papers. With computers, less paperwork kept the market open and financial services started to take off. Especially the rise of the spreadsheet revolutionized accounting and other financial services. But because proximity to the trading floor mattered, New York was able to start attracting the yuppie crowd which rebuilt manhattan. From there New York transitioned to the city it is today.

    Chicago was never the financial capital, merely a hub. And so while financial services have helped Chicago, it hasn’t done enough to offset the loss of manufacturing. They are different cities with different histories. Hong Kong is another city dominated by the rise of financial services. So is London. They all have some elements in common. But this is a far off tangent.

  19. John Morris says:

    “And that is all I’m going to say about it.”

    I think it’s actually the only thing you said about it. Your comments and links make it seem like Cabrini Green, The Dearborn Homes, The Robert Taylor Homes and a dozen other projects never happened and that only abandoned/ neglected property was torn down.

    The Robert Taylor homes footprint was huge.

    “Composed of 28 high-rise buildings with 16 stories each, with a total of 4,415 units, mostly arranged in U-shaped clusters of three, stretching for two miles.”

    “…. Planned for 11,000 inhabitants, the Robert Taylor Homes housed up to a peak of 27,000 people” (Which supports the theory that urban renewal never fully replaced housing stock and made overcrowding worse)

    http://en.wikipedia.org/wiki/Robert_Taylor_Homes

    Old shots of Chicago from the air show, miles of housing projects and clear cut areas- many not far from the Loop.

    On the West Side

    “Henry Horner Homes originally consisted of 16 high-rise buildings along with low-rise buildings”

    etc….

    As to Chicago’s inability to make a solid transition from a manufacturing dominated economy.

    A) The growing role of the futures markets should have played into Chicago’s hands.

    B) Chicago was not only a center for financial services but a leading location for corporate headquarters.

    C) Chicago was also the Midwest capital for business services like law, accounting, advertising, consulting etc…

    In all of these areas except perhaps finance, Chicago lost ground.

    Chicago also has mostly failed to create a dynamic technology or software sector.

    With so many torn up areas close to the core, it’s easy to assume that they played a big role in hurting the city’s ability to develop.

    Riddle me this- If anger over the King assasination alone was the driving factor in the 60′s riots, why did Chicago & Newark suffer so much more than Harlem?

  20. Jon Seisa says:

    Detroit just filed for Chapter 9 bankruptcy in federal court today. Well, the silver lining is Stockton, CA, is no longer the largest city in the U.S. to have filed for bankruptcy; they must be greatly relieved of that sad and tarnished honor.

    SOURCE: http://news.yahoo.com/detroit-files-for-bankruptcy-protection-202227106.html

    ARTICLE: DETROIT FILES FOR BANKRUPTCY PROTECTION

    DETROIT — The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, making it the largest municipal bankruptcy case in U.S. history.

    The filing outlined several factors contributing to the city’s financial woes, including a long-dwindling tax base, population flight, financial mismanagement and overall decay of a city that once had more than 2 million residents and was the world’s hub of auto manufacturing.

    According to the Detroit Free Press, the city is renegotiating $18.5 billion in debt. Chapter 9 bankruptcy would seek protection from creditors and unions.

    “The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” Michigan Gov. Rick Snyder said in a statement. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making.”

    The filing is expected to largely mirror the turnaround plan for the city introduced on June 14 by Emergency Financial Manager Kevyn Orr. Orr’s proposal drew criticism from some creditors who said the proposed cuts to city services and municipal departments were too deep, according to the Detroit News. The plan also did not include the sale of city assets, like the monument-adorned island park of Belle Isle and millions of dollars in prized artworks at the Detroit Institute of Arts, the newspaper reported.

    According to the federal court filing, the city has more than 100,000 creditors, more than $1 billion in assets and bills of more than $1 billion.

    Snyder said the city cannot meets basic obligations to it citizens and creditors, and the “only feasible path to ensuring the city will be able to meet obligations in the future is have a successful restructuring via the bankruptcy process.”

    The governor noted in the filing that the city unemployment rate has nearly tripled since 2000 and more than double the national average, the city’s homicide rate is at its highest 40 years and it has become one of the “most dangerous cities in America.”

    Citizens typically wait nearly an hour for poise to respond to call, compared to an 11-minute national average. The city’s police, fire and ambulances are so old that breakdowns make it impossible to keep the fleet or properly carry out their roles.

    Also 40% of the city street lights were not working in the first quarter of 2013. And the filing revealed that there are approximately 78,000 abandoned homes, business and other structures, creating public safety problems.

    The city is more than $18 billion in debt, and tax rates are at their legal limits, the governor said.

    The filing begins a 30- to 90-day period where the courts will evaluate the petition and determine if the city is eligible for bankruptcy protection.

    Orr was brought in earlier this year after Snyder declared a financial emergency for the city on March 1. Orr was tasked with getting the city of approximately 700,000 residents back on track.

  21. John Morris says:

    This is a news item in name only since many creditors had already been told they would be paid a fraction of what was owed.

    In 1961, long before the American Auto Industry went into decline, Jane Jacobs saw big troubles ahead for Detroit.

  22. Robert Briggs says:

    As author James Howard Kunstler has pointed out, Detroit has great potential with its railroads and its being situated on one of the Great Lakes, a waterway with great potential. Detroit has good soil as well and can produce much food. There is a big community garden/farmers market movement there if I’m not mistaken. Medical marijuana is legal there which can have a huge economic impact. On the dark side I saw a recent National Geographic tv show about Detroits drug problem. I see this problem as more of a symptom of Nafta, or Unfettered capitalism, what Michael Moore discussed in Roger and Me, the film about GM’s flight to Mexico. I’m personall attracted to Detroit especially since it just declared bankruptcy, the reasons I stated above, and the cheap real estate. I can be very happy smoking a little herb, cycling across town, gardening, making music, etc. Why can’t more people discover this heaven on earth lifestyle is beyond me? Perhaps an influx of “hippies” could help Detroit secure a sustainable future-heck, they seem to be the only ones who have ever tried to that. Well, that’s my $ .02, cheap food for thought. Meanwhile Im sitting on a futon couch, indoors, ac cranked, in humid, oak lined streets of Gainesville, Fl. I think I will watch that documentary Detroitopia on Netflix.

  23. John Morris says:

    But the migration of Detroit’s factories towards the suburbs started way back, perhaps as early as the late 1920′s. The original Model T plant was obsolete a few years after it was built as car manufacturers moved towards the open single floor layout.

    Even had the industry remained “healthy” and dominated by the big three, the chances are high that few of the factories would have remained in town, or employed the vast numbers of workers they once did.

    Detroit’s story isn’t just one of people moving out towards the suburbs, the plants moved too.

  24. John Morris says:

    The single industry boomtown aspect of Detroit is one reason its history can’t be compared to Berlin easily. Chicago comes much closer.

  25. John Morris says:

    Some quotes from Jane Jacobs’s Death & Life of Great American Cities, published in 1961. (Diversity here means, street life and diverse business and cultural activity.)

    “Thus researchers hunting for the secrets of the social structure in a dull gray-area district of Detroit came to the unexpected conclusion there was no social structure.”

    “Virtually all of urban Detroit is as weak on vitality and diversity as the Bronx. It is ring superimposed upon ring of failed gray belts. Even Detroit’s downtown itself cannot produce a respectable amount of diversity. It is dispirited and dull, and almost deserted by seven o’clock of an evening.”

    “Detroit is largely composed today, of seemingly endless square miles of low density failure.”

    “The paradox of increasing car accessibility and decreasing intensity of users can be seen at its extreme in Los Angeles, and to almost as great a degree in Detroit.”

  26. John Morris says:

    A good example of how weird and unstable Detroit’s economy was even in the 1950′s is the history of the vast Packard plant.

    http://en.wikipedia.org/wiki/Packard_Automotive_Plant

    The complex comprised 3.5 million square feet of industrial space built solidly enough to have survived almost 60 years of total neglect and vandalism.

    From the time it was abandoned by Packard in 1957 till today it had only one other tenant which used less than 60,000 square feet of space.

    Detroit lacked a city or economy capable or interested in reusing it. In a an earlier age wasting such a huge asset would have been inconceivable. Detroit was a new model- the fully disposable city that expanded outward from a hollowing core until it imploded. (Perhaps to be reborn)

  27. John Morris says:

    Headline from CNN shows how little impact the auto industry has on the city. Only Chrysler still has a plant in town and only GM has its headquarters there- though most of the office jobs are also in the suburbs.

    “Casinos, not cars, are keeping Detroit afloat”

    http://money.cnn.com/2013/07/19/news/economy/detroit-bankruptcy-casino/index.html

    Detroit is typical of the migration of very large scale manufacturers out of inner cities in pursuit of space. The main difference is that unlike Pittsburgh, Detroit didn’t retain any dominance as a “control center”. Ford was never headqurtered in town & Chrysler left its Highland Park complex in the 1980′s. Many of the major service businesses that served the big three like Campbell Ewald Advertising were never based there.

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