Friday, December 19th, 2014

Why the Rent Is Too High, Reason #239

It’s no secret housing costs are high and going higher in major US cities like NYC, San Francisco, etc. I was just tweeting with someone this week who moved back from Park Slope, Brooklyn to Indianapolis because her rent was being raised by over 50% (possibly that’s a cumulative increase over time – not sure).

Most of the urbanist discussion tends to focus around zoning as the reason prices are high. That’s certainly an important factor. But there are also other things driving up costs and rents. The NYT highlighted one of them last Sunday, namely the permit expediter tax:

When Mark Brotter dies, the inscription on his tombstone will read simply: “Thank God — no more plumbing Schedule B.”

Mr. Brotter, 55, is an expediter, an imprecise term that is used to describe the men and women whose workdays are spent queuing up at the Manhattan branch of the New York City Department of Buildings to file the documents and pull the permits that allow construction projects — your kitchen renovation and the high-rise next door — to go forward. “I’m basically a middleman,” he said. For its part, the Buildings Department insists on the title “filing representative.”

Others are employed by large firms that do nothing but expediting, or are on the staffs of architectural or engineering firms. In the early 1990s, expediters numbered 300 to 400; today there are more than 8,300. (Filing representatives must register with the Buildings Department and pay a $50 annual fee for the right to stand on lines at department offices.)

The expediter’s fee varies depending on the outlay of time and the complexity of a job. The charge for securing a permit for a contractor ranges from $200 to $400; for filing a project, $1,500 to $3,500. Plans that must go before the Landmarks Commission are a more costly proposition, as are projects that involve the conversion of a commercial space to a residence.

Now these prices aren’t ridiculous in the grand scheme of things for New York City real estate. But the idea that there are 8,300 people making a living standing in line to file permits for people points to the entire structure of how development gets done in big cities (NYC is hardly alone in this particular industry) in ways that continually raise costs. This is beyond the cost of delays that a baroque permitting process introduces.

Particularly when you are trying to build lower rent buildings, all of the fixed costs you have to incur to built anything (land, permits, expediters, etc.) have to be recovered and amortized across the units. When you have a hyper-complex development environment, these fixed costs raise the minimum viable rent threshold and thus push the cost of construction towards the higher end of the market that is already being served.

To bring the cost of housing down, cities should be working on all fronts, not just zoning to make it happen.

This particular case is instructive regarding barriers to reform, however. If the city made it easy enough to file plans and get permits in ways that didn’t require an expediter industry, 8,300 people would be out of work. Presumably they would squawk about it. I’m sure I would if I were in their shoes As with many regulatory reforms, the benefits are diffuse and hard to see, whereas the costs are concentrated and obvious.

Also, just one reform in and of itself is unlikely to produce immediate substantive change. Broad based reform in many areas is needed, then there will be a lag as investors adjust to and take advantage of the new environment. This may involve shorter term pain for longer term gain, much like disruptive technical innovation.

That’s not a formula politicians like. It’s one reason Japanese Prime Minister Abe’s “third arrow” of structural reform remains mostly in its quiver. Too many interest groups face immediate pain from reform, but the payoff is raising the economic potential of Japan and creating conditions in which future growth can occur, the exact nature of which can’t be predicted. That’s a hard sell to make, which is one reason politicians tend to focus on things that have immediate benefits to at least some people, such as tax cuts or spending programs.

Regardless, beyond just changes in zoning or this or that process or regulation, there needs to be a mindset shift in how these cities approach development to bring about a broad based change in housing affordability.

Thursday, December 18th, 2014

The Urban vs. Rural Wars Within States

The well-known fault line between urban and rural portions of our states got a lengthy treatment (and one that not surprisingly tilts pro-urban) in the Kansas City Star:

It’s a formula played out in one state after the next. Rural areas hold political clout well beyond their numbers, winning regularly on the issues and in the division of tax dollars.

They triumph primarily by better holding their coalitions together — driven partly by the stubborn myth that they get the short stick from their big-city cousins — and because the drawing of legislative districts works in their favor.

The result leaves people in urban areas regularly outplayed at lawmaking. “We simply cannot count on the state government to help us,” said Kansas City Mayor Sly James, voicing a frustration felt by urban mayors across the country.

The piece is worth a read.

I’ve written on this topic before myself. As a guy who is the Urbanophile today, but who came from a rural area in Southern Indiana, I feel like I’ve got a foot on both camps.

I completely understand and share many of the frustrations of urban areas. State policies towards urban regions are often awful, and too many states seem determined to destroy their biggest economic success stories.

But in my view urban folks have as many blind spots and prejudices towards rural areas as the other way around. Clearly urban dwellers have no intentions of leaving rural residents alone to live in the country with their guns, farms, etc., so it shouldn’t be surprising to see that rural residents are painting a target on cities too. Part of the detente we need to have here is to adopt something of a live and let live philosophy, so that, if urban and rural people don’t agree on a lot of things, they’ll at least leave each other to pursue their own definition of the good life.

I’d also remind urbanites that they tend to advocate for increasing redistribution, not reducing it. The redistribution of revenue from metro to rural areas is in my view very consistent with urban values as urban areas are more prosperous as a whole than rural ones.

But beyond redistribution there needs to be a great effort made to build bridges and understanding between these areas, something that hasn’t been on the urban agenda. Here below is a column I wrote for the January 2014 issue of Governing talking about this issue and the new bargain I think we need to find a way to strike:

Who could argue against making things better? It seems absurd. So why is it so hard to make progress? One reason is that there are often structural forces that act to suppress improvement. One force in particular is the increasing divergence in attractiveness and performance between communities.

Ball State University economist Michael Hicks, writing in Howey Politics Indiana, elaborated on the problem: “Almost all our local economic policies target business investment and masquerade as job creation efforts. We abate taxes, apply TIFs [tax increment financing] and woo businesses all over the state, but then the employees who receive middle-class wages (say $18 an hour or more) choose the nicest place to live within a 40-mile radius. So, we bring a nice factory to Muncie, and the employees all commute from Noblesville.”

This tells you everything you need to know about why Indiana’s state government has traditionally been hostile to efforts by localities to improve quality of place, whether through mass transit or through public services such as new libraries and better performing schools.

To the extent that a place like the Indianapolis suburb of Noblesville continues to improve itself, this only increases the advantages it has in luring residents and jobs away from struggling post-industrial communities like Muncie that have fewer resources to rebuild with and are further out from the urban center. This dynamic is hardly unique to Indiana.

Struggling places that surround prosperous communities may not be interested in seeing those successful towns improve any further. That’s not necessarily out of malice, nor may it even be explicitly considered. It’s simply an implicit incentive, and has a certain amount of logic. If those struggling places constitute an influential block in the state legislature, they can certainly put roadblocks in the way of community improvement efforts that would only fuel the divergence that puts their city increasingly at a disadvantage. This creates a structural barrier to change.

Removing this barrier requires a type of thinking and bridge-building that has fallen by the wayside in the contemporary economy, namely restoring connectivity between thriving cities and their broader but less-well-off hinterlands.

In the age of globalization, cities and states would rather build bridges to the world than to the town next door. Some of this is simply the way the economy works. As Richard Longworth, senior fellow at the Chicago Council on Global Affairs, wrote in his book Caught in the Middle: America’s Heartland in the Age of Globalism, “Chicago probably deals more, daily, with Frankfurt or Tokyo than it does with Indianapolis.”

He went on to identify the problem at hand, noting that “Globalization is beginning to isolate cities from their hinterlands: The hinterlands see this trend and are disinclined to do anything to speed it up. They perceive that most of these people—globalization’s winners—have never spent 30 seconds worrying about globalization’s losers.”

This is the two-tier society we see developing nationally playing out at the local level. It creates a tug of war at the state policy level, and it tears apart the whole notion that we are a commonwealth. It creates states that are, as Longworth put it, “hives of warring interests.”

There are no easy answers for many of the struggling post-industrial cities in America. Many places realistically may not recover, particularly if they are too far from a metro center or too far into decline. But we can have more successful places than we do. One obvious challenge for smaller areas is that they are cut off from global flows and economic opportunities. Building stronger links to their neighbors that are connected is critical. That’s their potential on-ramp to globalization.

What’s needed is a new bargain in our states and regions. Larger metros and thriving regions will be given the authority, tools and financing they need to improve themselves and meet the demands of today’s globalized, talent-based economy. In return, they will be expected not just to send back tax “remittances” to the rest of their state, but also to deploy some of their intellectual and policy resources toward the problems facing the left behind areas. The losers need to let the winners get on with their winning, while the winners need to remember where they came from and who brought them to the dance.

Creating those connections won’t be easy. But it starts with a conversation, with getting to know each other, building trust and creating commitment. That’s not as sexy as an overseas trade trip. But if the winners want to get the losers on board with state policies that promote civic improvement instead of fighting every step of the way or trying to steer the course toward a race to the bottom, this is something they very much need to do.

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Topics: Public Policy, Urban Culture
Cities: Kansas City

Wednesday, December 17th, 2014

Paris / New York

This week’s video is a split screen comparison of New York and Paris that’s kind of fun. If the embed doesn’t display for you, click over to Vimeo. h/t Likecool

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Cities: New York, Paris
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Sunday, December 14th, 2014

The Inevitability of Tradeoffs, or Understanding New England’s Sky High Energy Costs

People advance two main sorts of arguments in favor of things for which they advocate: the moral argument (it’s the right thing to do) and the utilitarian one (it will make us better off). As it happens, in practice most people tend to implicitly suggest there’s a 100% overlap between the two categories. That is, if we do what’s right, it will always make us better off too with no down sides at all.

But is that true?

For most of us, our life experience suggests that there are always tradeoffs and there’s no such thing as a free lunch. Urbanists tend to argue in way that suggests this isn’t the case. The types of policies advocated by urbanists tend to be presented not only as right in a certain moral sense, but also ones that make society better off in every way. When things go awry in some respect, as they always seem to do, this is always seen as an avoidable defect in policy implementation, not as a problem inherent to the policy itself. Urbanists aren’t alone in this of course. It affects most of the world. But since I cover the urban beat, I’ll focus on us for a minute.

Today the New York Times opens a window into the type of trade-offs that are studiously avoided in most writings on the subject of climate change. Called “Even Before Long Winter Begins, Energy Bills Send Shivers in New England,” it talks about how a lack of natural gas pipeline capacity is sending electricity and gas costs through the roof as the temperature turns cold.

John York, who owns a small printing business here, nearly fell out of his chair the other day when he opened his electric bill. For October, he had paid $376. For November, with virtually no change in his volume of work and without having turned up the thermostat in his two-room shop, his bill came to $788, a staggering increase of 110 percent. “This is insane,” he said, shaking his head. “We can’t go on like this.”

For months, utility companies across New England have been warning customers to expect sharp price increases, for which the companies blame the continuing shortage of pipeline capacity to bring natural gas to the region. Now that the higher bills are starting to arrive, many stunned customers are finding the sticker shock much worse than they imagined.

I’ve written about this before re:Rhode Island, which is among the most expensive states in America for electricity (most of which is generated by gas). But all of New England is high, with Connecticut ranked as having the country’s most expensive electricity. Gas prices spike every winter to levels far above the rest of the country, as the graph below that I found via City Lab shows:

This would appear to be a simple problem to solve: just build more pipelines. I included on my list of starter ideas for improving economic competitiveness in the state.

Unfortunately, planned pipelines haven’t been built due to environmental opposition:

The region has five pipeline systems now. Seven new projects have been proposed. But several of them — including a major gas pipeline through western Massachusetts and southern New Hampshire, and a transmission line in New Hampshire carrying hydropower from Quebec — have stalled because of ferocious opposition.

The concerns go beyond fears about blighting the countryside and losing property to eminent domain. Environmentalists say it makes no sense to perpetuate the region’s dependence on fossil fuels while it is trying to mitigate the effects of climate change, and many do not want to support the gas-extraction process known as hydraulic fracturing, or fracking, that has made the cheap gas from Pennsylvania available.
….
A year ago, the governors of the six New England states agreed to pursue a coordinated regional strategy, including more pipelines and at least one major transmission line for hydropower. The plan called for electricity customers in all six states to subsidize the projects, on the theory that they would make up that money in lower utility bills.

But in August, the Massachusetts Legislature rejected the plan, saying in part that cheap energy would flood the market and thwart attempts to advance wind and solar projects. That halted the whole effort.

Here we see the clear tradeoff in action. Reducing carbon emissions has a clear human and economic cost. High electricity costs wallop household budgets in a region with many communities that are struggling or even outright impoverished (as recently as last year, for example, a third of the residents of Woonsocket, RI were on food stamps). This particularly harms poor and minority residents. What’s more, it helps contribute to the region’s low ranking as a place to do business and its anemic job creation.

Given that gas itself is dirt cheap and will be for the foreseeable future thanks to fracking, hurting residents through high electricity prices designed to drive energy transition is clearly a deliberate policy choice.

Fair enough if you believe reducing carbon requires subordinating other public goals like more money in poor people’s pockets. But how often is this forthrightly stated by advocates? Almost never.

Instead we’re treated to article after article in various urbanist publications talking about some awesome green project that’s being implemented somewhere, and how other places ought to do the same thing. There’s lots of doom and gloom about the increased potential for future disasters if the policies aren’t followed. But there’s seldom much about the immediate negative consequences that almost certainly will follow if they are.

I like energy efficiency. I’m glad we have more fuel efficient cars. I’m very glad I don’t own a car anymore. I’m not so excited about light bulb mandates and other “feel bad” policies that don’t materially affect emissions. But there’s definitely a lot we can do on the energy front.

But I also care about things like poor people’s electricity bills and economic growth. And I’m not willing to make unlimited sacrifices (including imposing sacrifices on other people) in the name of conservation. I can appreciate that others might make different tradeoffs and want more conservation than I do. But at least they ought to be honest about the costs and harm they are imposing on people in the name of their preferred policy matrix.

Instead there’s disingenuous talk about the “green economy” powering local economies when there’s no such thing as green industry. Or claiming, as many did in response to my article earlier this year, that Rhode Island’s government is actually conservative, so its problems can’t be laid at the foot of excessively progressive policies imported from places with vastly more economic leverage than most of New England. I guess I did not know that killing gas pipelines in the name of promoting renewable energy via high prices was a Tea Party idea.

Actually, not even the places that do have huge economic leverage are behaving like this. New York City has more economic leverage than just about anybody. But it also, as the chart above shows, has cheaper gas. One reason is that, as City Lab reported, NYC recently just opened a new gas pipeline into the city:

A really important thing happened last month to New York City and the rest of the mid-Atlantic. This event will change the daily lives of millions of people, especially during the coldest months of winter. And, despite some protesters, it all went down with less fanfare than Jay Z and Beyonce going vegan for a month.

An $856-million pipeline expansion began ramping up service, allowing more natural gas to get to New York City consumers. The New York-New Jersey expansion project moves more gas the last few miles from Jersey, which is the terminus for much of the Marcellus Shale gas flowing out of Pennsylvania, into Manhattan. The Energy Information Administration called it “one of the biggest… expansions in the Northeast during the past two decades.” It will bring an additional 800 billion British thermal units (BTU) of gas to the area per day.

Maybe New England wants to out do New York City when it comes to driving a green energy transition. (NYC seems to be focusing more on climate change adaptation, aka “resiliency,” these days). That’s a valid policy choice to make. But it’s one with consequences.

Unfortunately, the consequences of these policy choices are seldom presented by their advocates. People only discover them when the costs show up in a way that can be tangible traced back to those policies. Maybe in the case of New England and energy costs, people are starting to wake up to the matter, possibly in a way similar to how sky high housing costs in so many cities woke people up to the actual trade-offs being made in housing policy.

Advocates are there to advocate of course. So perhaps it’s unrealistic to expect advocates of any stripe to give you the full story. But that’s why we should always pay attention to what the critics of particularly policies have to say. That will give us a more complete picture of the tradeoffs any particular policy set will require.

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Topics: Economic Development, Public Policy
Cities: Providence

Friday, December 12th, 2014

Talking Tuition With Mitch Daniels

This summer I sat down with Purdue University President Mitch Daniels to talk about his tuition freeze initative there for my City Journal article on the subject. Here’s the podcast of that conversation:

Here are some excerpted highlights. Daniels on what’s driving costs up:

Government has imposed a whole lot of this administrative cost on the colleges. Not all of it, but a lot of it. You know, administrative costs have soared in banks, too. And so there’s some validity in the response that many of the tasks being done on campuses now are simply trying to keep up with the avalanche of regulations and compliance that goes with it.

But when you shear all that away, it was just too easy for universities and colleges generally to decide what they wanted to do and what they wanted to spend – all the additional enthusiasms they might have had at a given time – and there was no elasticity in tuition payments, especially not when so much of it was being borrowed from third parties. And so they raised it. Purdue was hardly the worst offender. It’s more or less in the pack of what happened here, in fact, better than most. But when you roll it all together, it finally reached the place where I think the machine is going “Tilt,” and it should.

On whether the tuition freeze will be permanent:

We’re not promising to do it indefinitely, but I have said it wasn’t a one-time or even a three-time gesture. We do want to make a statement that Purdue cares about this subject. We’re a land grant school, remember. We were placed here in large part to open the doors of higher education beyond the elites, who were almost the only ones with access back when. And that’s still important. But this is not just a gesture. This will be a permanent policy, that is to say, affordability will be a permanent policy, and we’ll see how far we can press it.

On the potential impact of Massively Open Online Courses (MOOCs):

My sense is that there will be some sort of shake-out, you’re already seeing it. I think you’ll see some institutions that just can’t justify what they’re doing and what they’re charging. I think there will be others who adapt to it. And we are certainly using online education blended often with classroom instruction more and more aggressively here. We think we are ahead of every other university in the number of Purdue courses that have already been changed, such that, typically, the lecture is not in a hall with 300 other people. It’s on your handheld or it’s on your laptop. You watch it on your time, in your space. You watch it as many times as you need to to absorb it. When you go to class, you’re going to be either working on a project to see if you did learn it. In the best of cases, there will have been some interactivity, and the professor will know what Aaron got that Mitch didn’t, and vice versa. This is probably the right direction. So long answer, I’m sorry, but it is such a central question. But thank goodness for disruptive technologies. And whether they utterly rewrite the terms of trade in this sector, or simply force big changes, either way is positive. I’m betting it’s the latter.

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Topics: Education, Public Policy

Thursday, December 11th, 2014

Belt Tightening 101 at Purdue

My latest piece is online at City Journal. It’s called “Belt Tightening 101” and is about Purdue’s recent tuition freeze. Here’s an excerpt:

Erica Smith, a recent communications graduate from Michigan City, says that the tuition freeze was long overdue. She financed her education with loans she’ll be repaying for at least 25 years. “I feel hopeless almost,” she says. “But most of my friends have as much debt as I do. We joke about paying it till we die.” Smith says that cost hikes while she was a student added between $4,000 and $6,000 to her overall debt. “If tuition continues to rise, Purdue will be out of reach for middle-class people, like my niece,” whom she hopes will one day follow her to West Lafayette.

Daniels wants to reassure those who worry that controlling tuition will drive high-quality faculty away from Purdue. “Nobody ever cut their way to success,” he concedes. “The top line matters a lot.” And he agrees that fund-raising remains as vital to his job as cost-cutting. “I want to grow this university, at least at the margins. We’re teaching things the nation really needs.” But Daniels understands what many of his fellow university presidents seem more reluctant to grasp: the status quo is not sustainable. That may not fit on a billboard, but it’s the truth.

Click through to read the whole thing.

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Topics: Education, Public Policy

Wednesday, December 10th, 2014

The Future of the Urbanophile

In my very first post in this at first pseudonymously published site almost eight years ago, I laid out a high aspiration saying:

I’ve often said the measure of a newspaper column is, having seen the title and the author, whether or not you even need to read it. So often there’s no point. You already know what the person in question is going to say and there’s nothing new to be gained. I’m going to strive to be judged by that standard. Over time, you will no doubt come to know my opinions and principles, which will allow you to predict my opinion on a subject. But I hope you’ll always find the posts worth reading because there is something in there you didn’t know and didn’t expect.

My goal is no less than to change to course of history. Or failing that, to at least cause people with an open mind to at least think and ponder on points of view they may not have considered before.

I hope you feel that I’ve lived up to my goal of creating and curating original, thought-provoking, unique, and compelling content about the places we live.

As I’ve been saying, there are changes afoot. And I’m glad to be able to tell you about them today.

As of the new year I’m excited to be joining the Manhattan Institute as a Senior Fellow and as a Contributing Editor to City Journal, where as you know I’ve already been writing pieces.

Thanks so much for coming along on this journey with me. Without your readership, support, and in many cases active help over the years, I wouldn’t be here to tell you this news today. My heartfelt appreciation to all of you.

What does this mean? It means I’ll be able to do more and have a greater impact than before. However, there are going to be some changes here at urbanophile.com.

I’m not shutting down the site, but I do plan to scale back posting here considerably after the holidays. Keeping a site like this going is a huge undertaking as you can probably guess. The first question I usually get from people is, “How in the world do you find time to write so much stuff?” It’s a challenge to be sure. And honestly after keeping this up for years, I need a break from such an intense posting schedule.

What’s more, I think the platform in its current form has pretty much reached its potential, and so requires reinvention. So I’ll be thinking about how to do this and will no doubt seek your input, but for now I am planning to dial back a bit.

But I’m not dead yet. I hope you’ll continue reading here as there will be new content. And as always, I’ll keep linking to things I write elsewhere right here, so you won’t miss it.

But as I said earlier this week, I am also going to be providing some content on a free but exclusive basis by email. So once again I’ll ask you to sign up this week, and if you do I’ll send you a free PDF copy of my ebook The Urban State of Mind.

Email is also the best way to get every single post delivered right to your inbox as it rolls off the presses. No need to keep checking. So just set the radio button in the form below if you want that and sign up today.








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You can also follow me on Twitter. I tweet out links to the best articles in the urban internet that I come across, representing a cross-section of views. My Facebook page is now officially retired.

With that out of the way, I thought you might like to read the official announcement about my joining the Manhattan Institute, so here it is:

Aaron Renn Joins the Manhattan Institute

The Manhattan Institute is pleased to announce that urban affairs analyst Aaron Renn is joining the Institute as a senior fellow and contributing editor to the Institute’s quarterly magazine, City Journal, beginning January 2015.

“Aaron is constantly producing innovative ideas on cities and telling their stories in a compelling and accessible way,” remarked Manhattan Institute President Lawrence Mone. “His excellent pieces for City Journal are refreshing and thoughtful. We’re excited to put his great talents to work at the Institute.”

In 2006, Renn launched the urban policy website, The Urbanophile, where he created an effective outlet for his love of cities. Renn has spent his personal and professional life learning how cities work and searching for answers to the socioeconomic problems that have beset many of them since the latter half of the last century. Hailing from the Midwest, Renn has focused on metropolises dotting America’s heartland. His sharp insights on urban issues are regularly featured in such outlets as the New York Times, Time, Economist, Wall Street Journal, Bloomberg, Washington Post, and London’s Daily Telegraph. Aaron’s writings have appeared in publications such as the Guardian, Governing, Forbes, The Oregonian, Providence Journal, and City Journal.

“Aaron Renn is obsessed with cities” remarked City Journal editor Brian Anderson. “What helps them flourish or drains them of vitality, where they’re going and where they’ve come from, how they compare—these are the kind of questions he asks and answers in his illuminating work, rich in reporting and policy analysis, which we’ve been honored to feature in City Journal. Several of his pieces have been among our most talked-about of the last two years. I’m thrilled he’s joining our all-star team of urbanists.”

Joel Kotkin, author and nationally recognized expert on demographic trends and cities noted, “Aaron Renn is one of the keenest, and most impartial, observers of America’s urban scene.”

Renn, a graduate of Indiana University in Bloomington, worked for many years as a management and IT consultant at Accenture, where he served as partner. He is a native of Laconia, Indiana, a town of 29 people along the Ohio River. Renn grew up fascinated by those larger places known as cities, and made it his life’s preoccupation to learn what makes them tick.

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Monday, December 8th, 2014

London’s Global City Royal Flush

A recent article in the Economist about the Rosetta space probe reminded me again of the uniqueness of London on the global stage. The piece notes:

In a clean room at the Airbus Defence & Space (ADS) factory north of London, scientists are working on LISA Pathfinder (pictured), a hexagon-shaped satellite due to be launched next year. The aim of the ambitious space mission is to try, for the first time, to find and measure gravitational waves—ripples in space-time predicted by Einstein’s general theory of relativity.

About one-quarter of the world’s commercial communication satellites are built in Britain and 40% of the world’s small satellites…The whole space sector directly employs 35,000 people, and the supply-chain accounts for thousands more jobs. London-based Inmarsat is one of the world’s largest satellite operators, specialising in mobile telephony.

When you think of London, finance, media and creative industries tend to be top of mind. Aerospace and defense may not immediately register, but greater London is a key node in that global industry. Beyond the space related industries noted above, there’s also companies like defense contractor BAE Systems, and events such as the globally significant Farnborough Airshow.

In fact, in some of the research I contributed to a recent global cities survey found that London uniquely has some strength is every single globally important macroindustry I looked at. No other city – not even New York – was as simultaneously broad and deep.

London’s status as a global financial center is of course well known. It’s also hugely influential in global culture and entertainment. It is a global center of the music industry, with British acts predominantly from or drawn to London routinely becoming best sellers around the world. Warner Brothers has a major production studio there, creating such films as Harry Potter. The BBC, Economist, and Financial Times are news outlets of global reach and influence, even outside the English speaking world. The Daily Mail and the Guardian are the two largest newspaper web sites in the world. London is a major advertising and marketing hub, a major fashion hub, a major tourist destination, and is home to world-renowned cultural institutions.

London has also emerged as Europe’s stop tech hub. Not only are there tons of startups – it has the top ranked startup ecosystem that outranked any European city according to analysis of Startup Genome project data – companies like Google have opened huge offices there.

But there’s more to it than that. London is a center of the global pharmaceutical industry and is headquarters to GlaxoSmithKline and Astra Zeneca, plus is home to foreign HQ’d operations as well. BP is an energy major there and other big firms like Chevron maintain operations and regional HQs in the area. Oil services firm Petrofac is based there and its home to the European HQ Baker Hughes. Its weakest industry I found was automotive, but even here it’s home to Honda’s European HQ.

Not all of these companies are located in central London. But the Greater London area is home to a simply huge number of firms in all sorts of industries, making it a top to bottom global powerhouse. This isn’t just a global city built on finance and other services. It’s a global city built on everything.

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Topics: Economic Development, Globalization, Urban Culture
Cities: London

Thursday, December 4th, 2014

Urbanists Need to Face the Full Implications of Peak Car

My latest post is online over at New Geography and is called “Urbanists Need to Face the Full Implications of Peak Car.” Here’s the opening:

As traffic levels decline nationally in defiance of the usual state DOT forecasts projecting major increases, a number of commentators have claimed that we’ve reached “peak car” – the point at which the seemingly inexorable rise in vehicle miles traveled in America finally comes to an end. But while this has been celebrated, with some justification in the urbanist world as vitiating plans for more roads, the implications for public policy haven’t been fully faced up to.

Indeed, the “peak car” is antithetical to the reigning urbanist paradigm of highways known as “induced demand.” Induced demand is Say’s Law for roads: supply of lanes creates its own demand by drivers to fill them. Hence building more roads to reduce congestion is pointless. But if we’ve really reached peak car, maybe we really can build our way out of congestion after all.

Read the whole thing.

Wednesday, December 3rd, 2014

The New York Project

Here’s a fun timelapse of New York City. Nothing particularly unusual about it, but the city looks great. Awesome in full screen, high definition. If the video doesn’t display for you, click over to Vimeo. h/t Likecool

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Cities: New York
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The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

About the Urbanophile

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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