Thursday, October 3rd, 2013
Back in 2008 I posted a piece called “Corporate Headquarters and the Global City” in which I observed that global cities, which had previously been defined in terms of financial and producer services firms by Saskia Sassen, were now starting to attract corporate headquarters back as well. These weren’t the old traditional HQ’s, but rather what I called an “executive headquarters” consisting of just the top people.
We see another example of that in the case of Archer Daniels Midland, the agribusiness concern. ADM is currently based in Decatur, IL but is planning to relocate its headquarters. It’s nominally a bake off but Chicago is the odds on favorite and I would expect them to win. Beyond the jobs, which at 100 would be fairly small, this would a nice HQ for the city to have. ADM is a marquee name.
Additionally, Chicago tech startup Braintree, a payments engine, recently announced its acquisition by Ebay/Pay Pal for $800 million. That’s a nice exit. Some people had predicted even bigger things for them, but if someone offers you enough money up front, there’s no shame in taking it! In a bit of further good news for the city, Chicago managed to lure a 10,000 delegate convention from Indy after implementing much-needed work rule changes at McCormick Place.
I could go on, but these few recent news items show that the global city side of Chicago continues to hum along apace. Yet all of this takes place against the backdrop of serious and severe problems in the “other Chicago.” For example, 13 people were recently shot in a park. The long term finances of the city are terrifying and Illinois seems incapable of getting its act together on pensions. And so on.
What does global city Chicago make of all this background? Apparently nothing. That’s not to say no one cares, but it would appear that none of the problems have affected the business climate or attractiveness of Chicago’s global city side at all. Even the prospect of a municipal financial trauma seems not to worry ADM.
Indeed, if you simply come to Chicago as a tourist, you’d probably never know there were any problems at all, at least if you don’t check the news. I was there a couple weeks ago and the Loop and North Side were pulsing with life. You would have thought I was in a boom town. And in a sense that’s right.
Some may say, “Aaron, weren’t you the one who said Chicago wasn’t a global city?” To which I’d respond, I’ve always said Chicago is a global city. I only think that the global city side of Chicago is not sufficient to carry the load for this gigantic region and state. It can’t even carry just the city, though to be fair if you broke off global city Chicago into a standalone municipality of 600-800,000 like San Francisco, Boston, and DC, it would be a very different story, at the municipal level at least.
Even back in the 90s Sassen had noted that globalization tended to detach the global city from its hinterland. However, for a place like Chicago, I had always thought that the two halves of the city would remain linked because global city Chicago would realize that an implosion elsewhere would eventually drag it down to.
But would it? Other than public finances, it’s tough to see trends in most other areas getting materially worse than they are now in the other Chicago. Yet it seems to be having little to no effect on the attractiveness or success of the global city. It’s like a multi-stage rocket separating. The smaller upper stage is rocketing up higher and higher while the larger earlier stage is falling back to earth and burning up on re-entry. But there’s no longer a connection of shared interests holding them together.
One troubling question: what happens when global city Chicago realizes there’s a good chance it can simply let the rest of the city fail and get on with its business? One can argue it’s already happening, but I’ll save that for a future post.