Sunday, August 24th, 2014

Fixing Corrupt Cities

This is the second installment in my series on corruption. You can also see last week’s post on the city as a decline machine.

This week I’m taking a look at a book Richard Layman turned me onto. It’s called “Corrupt Cities: A Practical Guide to Cure and Prevention.” Written by Robert Klitgaard with assistance from former La Paz Mayor Rondal Maclean-Abaroa and H. Lindsey Parris, and published under the auspices of the World Bank, this book is a must-read on the topic of corruption even if, sadly, many of the recommendations are not directly applicable to the type of corruption many US cities experience today. It’s only 150 pages and highly readable.

The book talks about the nature of corruption and how and why it is often so resistant to efforts at reform. We can easily see this in the US, where, for example, despite former federal prosecutor Patrick Fitzgerald sending Illinois politicians in prison at a fearsome rate (including the previous two governors), the drumbeat of scandals in the state continues unabated.

The authors’ basic formula for corruption is simple: C = M + D – A. That is Corruption = Monopoly power + Discretion by officials – Accountability. Resultingly, as they put it:

A strategy against corruption, therefore, should not begin or end with fulmination about ethics or the need for a new set of attitudes. Instead, it should look cold-bloodedly at ways to reduce monopoly power, limit and clarify discretion, and increase transparency, all the while taking account of the costs, both direct and indirect, of these ways.

There is another crucial point in designing an anti-corruption strategy: Corruption is a crime of calculation, not of passion. People will tend to engage in corruption when the risks are low, the penalties mild, and the rewards great. This insight overlaps the formula just mentioned because the rewards will be greater as monopoly power increases. But it adds the idea that incentives at the margin are what determine the calculations of corrupt and potentially corrupt official and citizens. Change information and incentives, and you change corruption.

Much of the book consists of practical steps cities can take in this direction, using two principal case studies: La Paz, Bolivia, and Hong Kong. They also briefly discuss New York City’s successful efforts to root corruption out of a school construction program. Some of this gets quite detailed, such as their description of anti-corruption workshops the authors have run.

The book is also notable for being against what would appear to be one of the most popular responses to incidents of corruption, namely adding more rules. This often just makes it easier for corruption to flourish. As they put it, “Corruption loves multiple and complex regulations.” We also see in the US that more regulation increase the rent seeking returns to corruption and leads to regulatory capture, either by regulated industries or activists (or some combination of both).

They also say that corruption shouldn’t be looked at in isolation or as the sole aim, but rather that anti-corruption efforts should be seen as a tool for reinventing and improving the delivery of public services:

We do not recommend an approach to corruption that emphasizes more controls, more rules, and more bureaucracy. These can simply paralyze administration, and in some cases they can foster new and more deeply embedded varieties of corruption. Instead, especially in cases of systematic corruption, we advocate both restructuring city services and making institutional reforms that improve information and create new and more power incentives and disincentives. A major theme of this book is that fighting corruption in the right ways can become a lever to achieve much broader ends, not only financial survival but also remaking the relationship between the citizen and local government….Fighting corruption should not be considered an end in itself but an orienting principle for reforming urban administration. [emphasis in original]

Among their recommended approaches in the fight against corruption are having a point person with a high profile and public accountability for delivering results, creating an independent anti-corruption office (such as an inspector general type organization), starting by picking low-hanging fruit, eliminating the perception of impunity by “frying big fish” via prosecuting senior officials , working with and not against the bureaucracy, and many other things. They also spend time talking about the downsides of potential reforms.

As one example, they talk about how in some cases a single bidder taking over a contract can obtain so much proprietary information as a result of running a service that they de facto have a lock on future rebids since no one else has enough information to effective compete. Dual source contracting is one possible approach to maintaining long term competition, but has its own limitations such as potential added costs as well as incentives to collusion.

I’d be remiss if I didn’t highlight a few weaknesses. One is that because they used largely foreign examples, some of the solutions aren’t applicable to the US. For example, some countries have so-called “unjust enrichment” statutes by which public officials who appear to have wealth far beyond what their salary would enable them to have obtained legitimately have to prove that they obtained it legally. This doesn’t appear to be a big problem in the US, and that sort of “prove you are innocent” approach wouldn’t fly here in any case.

In another case, La Paz actually implemented a property tax reform with a lot of superficial appeal: self-assessment. My old boss in Indy has long been an advocate for this. The idea is that you declare the value of your own property for tax purposes, but that value constitutes a binding offer to sell at a premium of 10-15%. I get the appeal of this, but it’s easy to see the problems it introduces. La Paz used the soft threat of the state acquiring the property, but never actually followed through, and the courts declared the scheme illegal in any case.

The more important problem is that the book focuses on traditional type corruption of the bureaucracy. It assumes that in fighting corruption there’s a senior leader such as a mayor or governor who is motivated to eliminate it, and their recommendations are pitched at that person. For example, the mayor of La Paz obviously had a passion for ending corruption in his city. The governor of Hong Kong was motivated to clean up corruption in the police department by unfavorable press causing embarrassment back in the UK.

In America today I’d argue that situation is inverted. Local level government employees are by and large honest – you can’t easily bribe your way out of a speeding ticket these days, for example – but the political leadership is corrupt. And the corruption is right out in the open and takes the form of transactions that aren’t illegal.

For example, a transaction to shove millions of dollars into the pockets of a crony is often done completely in the open. It’s championed by the political leadership and often the press as well. (Molotch showed how local newspapers and such were part of the growth machine, and in general these days daily papers often continue to give off the impression of being corrupt institutions themselves who are in cahoots with the politicians). It’s duly voted on by the city council. There was no quid pro quo transaction involved, only campaign contributions, hope for future employment, or various personal connections, thus nothing illegal was done. It’s the same with some (though certainly not all) privatization contracts, various laws and ordinances prompted by lobbyists, etc.

Francis Fukuyama describes this very phenomenon at the federal level in an article in the current issue of Foreign Affairs called “America In Decay:”

The trading of political influence for money has come in through the backdoor, in a form that is perfectly legal and much harder to eradicate. Criminalized bribery is narrowly defined in U.S. law as a transaction in which a politician and a private party explicitly agree on a specific quid pro quo. What is not covered by the law is what biologists call reciprocal altruism, or what an anthropologist might label a gift exchange. In a relationship of reciprocal altruism, one person confers a benefit on another with no explicit expectation that it will buy a return favor. Indeed, if one gives someone a gift and then immediately demands a gift in return, the recipient is likely to feel offended and refuse what is offered. In a gift exchange, the receiver incurs not a legal obligation to provide some specific good or service but rather a moral obligation to return the favor in some way later on. It is this sort of transaction that the U.S. lobbying industry is built around.

Reciprocal altruism, meanwhile, is rampant in Washington and is the primary channel through which interest groups have succeeded in corrupting government. As the legal scholar Lawrence Lessig points out, interest groups are able to influence members of Congress legally simply by making donations and waiting for unspecified return favors. And sometimes, the legislator is the one initiating the gift exchange, favoring an interest group in the expectation that he will get some sort of benefit from it after leaving office.

Rules blocking nepotism are still strong enough to prevent overt favoritism from being a common political feature in contemporary U.S. politics (although it is interesting to note how strong the urge to form political dynasties is, with all of the Kennedys, Bushes, Clintons, and the like). Politicians do not typically reward family members with jobs; what they do is engage in bad behavior on behalf of their families, taking money from interest groups and favors from lobbyists in order to make sure that their children are able to attend elite schools and colleges, for example.

We see the same at the local level. In fact, today you almost have to be an idiot to engage in old school bribery. (It’s a mystery to me why it seems to remain so popular in places like Illinois and Rhode Island). You simply write campaign checks and at the appropriate time taxpayer money will come your way. Or you’re a journalist carrying water for the power brokers (or a candidate) who expects to be taken care of later. Or you’re on the government side of a privatization deal and later on take a job with the contractor via the revolving door. Or you run a non-profit that collects bigtime government grants with the unstated expectation that you won’t cause trouble. (I know multiple personal examples of non-profits who had grants revoked or threatened to be revoked by governments in retaliation for having the temerity to tell the truth about some boondoggle). None of these are illegal. They are generally done right out in the open. And the top power brokers and politicians are generally involved and hence have zero interest in reform.

This produces a much more challenging environment for change to say the least. I won’t pretend I’ve cracked the code on it, but will post further thoughts next week on how I might approach the problem.

Thursday, August 21st, 2014

A Look At College Degree Migration

Net domestic migration of adults age 25+ with a bachelor’s degree or higher by metropolitan area. Source: 2007-2011 ACS with rollups and mapping via Telestrian

Many of you know I’ve got the best place to place migration data from the IRS in my Telestrian system. Well, the Census Bureau also releases migration data as part of its American Community Survey. This has a lot of limitations and quirks, but one thing it lets you do is track migration, both overall and place to place, by demographic characteristics such as age, sex, race, educational attainment, and income.

I’ve now added this data to Telestrian. As with the IRS data, I’ve aggregated it to the metro area level (not just county) so you can look at things like where you are getting college grads from and where you are sending them to. As with the IRS data, this is so painful to work with, I’ve seen next to nothing done with it. I’ve solved that problem for you, so be sure to check it out.

I’m just starting to explore this data myself, but it’s a gold mine of information. I just took a first quick look at net migration of people with college degrees over at New Geography.

You won’t be surprised to hear that fast-growing Austin, Texas is #1 in attracting migrants. Or that the 90s dreamland of Portland is #5. But not everything is exactly what you’d expect, so click over to see how your city fares.

Thursday, August 21st, 2014

The Changing Face of the Global City

I want to highlight a couple of recent studies by Joel Kotkin for which I provided some research support. The first is a report on global cities from the Singapore Civil Service College called “Size Is Not the Answer: The Changing Face of the Global City.” As the name implies, it suggests that size is not necessarily correlated with global heft.

There are a lot of different ways of looking at cities. For example, the Economist just released its 2014 Global Liveability Index. But this study tries to focus in on specifically global economic power and influence. Thus it is somewhat like Loughborough University’s well-known survey, but looks at more than just producer services.

In particular, it looks significantly at industrial influence, or being a “necessary city” in the global economy that you just can’t help but deal with. For example, the San Francisco Bay Area often gets short shrift in most global city surveys even though it is the overwhelmingly dominant location of the technology industry, a key enabler of globalization and arguably the most powerful economic force at work today. By contrast, some traditional measures like total GDP that may indicate more domestic rather than global influence were not included.

Maybe the biggest surprise to me was the stability of the top ranks of cities, despite using different criteria from other studies. London and New York easily crushed everyone else. I’d expected that cities I thought of as more “domestic champions” like Tokyo, Paris, and Chicago might not fare as well. As it turns out, while Chicago is a bit lower in this survey, Paris is actually #3 and Tokyo #5. Both cities’ rankings are actually slightly higher than in Loughborough’s survey.

The Problem With Megacities

You also know that I’ve written skeptically of megacities in the developing world in terms of their ability to fulfill the aspirations of their citizens.

The second study I contributed to is called The Problem of Megacities and takes a look at the growth of megacities – a very new phenomenon in human history – and the problems that face them. An excerpt:

The megacity is increasingly a phenomena of countries that are struggling to find their way in the modern world economy. Size used to be more correlated with economic and political success and dominance on a global scale. Today, some of the largest cities are disproportionately poor, and seem likely to remain that way for the foreseeable future. Such problems are often ignored or minimized by those who inhabit what commentator Rajiv Desai has described as “the VIP zone of cities”, where there is “reliable electric power, adequate water supply and any sanitation at all”. Outside the zone, Mr. Desai notes, even much of the middle class have to “endure inhuman conditions” of congested, cratered roads, unreliable energy and undrinkable water.

These conditions reflect the inabil- ity of such megacities to handle rapid growth. Places like Dhaka, which gains as many as 400,000 new migrants from the villages annually, grows mainly in its slum, whose residents move to the megacity not for the bright lights, but to escape hopeless poverty, and even the threat of starvation, in their village.

Wednesday, August 20th, 2014

J’adore Paris

This week back to a time lapse one can actually enjoy, this a new one of Paris by Paul Richardson, which seems to be everyone’s favorite city for time lapses. One thing I like about this one is that it actually includes some scenes from La Défense, which is usually not included in Paris timelapses. This is great for full screen high definition. If the video doesn’t display for you, click over to Vimeo.

As a bonus this week, the Urban Cincy podcast recently took at look at Seoul. Site founder Randy Simes is currently on assignment there, and he and a Korean-American friend share some thoughts about that city and it’s development. If the embedded player doesn’t display for you, click over to UrbanCincy to listen.

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Cities: Paris

Sunday, August 17th, 2014

The City As a Decline Machine, or How the Loss of Hometown Banks Paved the Way For Corruption

Today I’m kicking off what’s probably a three part mini-series on corruption. In my view, whatever the structural problems resulting from suburbanization or globalization or whatnot, an overwhelming and under-examined barrier to success in our cities, and especially to reviving the fortunes of the urban cores of post-industrial cities, is corruption.

When we think of corruption we tend to think of a shady character passing an envelope full of cash under the table to a crooked politician in exchange for a a zoning variance or something. But that’s just one form of corruption, and arguably one of the least important. Much more important is systemic corruption, including many practices that are actually legal.

The book Corrupt Cities, which I’ll look at in depth in a future installment, defines corruption this way:

Corruption means the misuse of office for personal gain…Corruption means charging an illicit price for a service or using the power of office to further illicit aims. Corruption can entail acts of omission or commission. It can involve legal activities or illegal ones. It can be internal to the organization (for example, embezzlement) or external to it (for example, extortion). The effects of various kinds of corruption vary widely. Although corrupt acts may sometimes result in net social benefit, corruption usually leads to inefficiency, injustice, and inequity.

And regarding systemic corruption, the authors say:

Systematic corruption generates economic costs by distorting incentives, political costs by undermining institutions, and social costs by redistributing wealth and power towards the undeserving. When corruption undermines property rights, the rule of law, and incentives to invest, economic and political development are crippled. Corruption exists in all countries. But corruption tends to be more damaging to poor countries.

And, one might add, poor or struggling cities.

America has been experiencing problems with corruption at all levels of government. I want to focus on the local level, however.

Cities have long been known as hotbeds of corruption and political machines. They were certainly much more corrupt in the past than they are now. However, because the scope and control of government was so much less in those days – for example, there was no zoning in Gilded Age America – the impact was arguably less than now where the impact of government is pervasive. The Progressive Era brought reforms that cleaned up government to a certain extent, but we’ve seen in the contemporary era an uptick in government corruption. This is not necessarily in the form of petty corruption, but rather the corruption of the instrumentality and aims of government itself.

Even in my own lifetime I’ve seen a tremendous increase in corrupt activities. Sure, cities were always “growth machines” and had “urban regimes”. Some level of corruption may even be necessary for political life to function. It’s generally necessary to build coalitions to get things done, and the types of horsetrading that enables this is often distasteful. I don’t want to pretend that we can ever have squeaky clean politics. And of course cronies of the party in power have long benefited from patronage.

But there’s a big difference between logrolling, or even some crony getting his beak wet through a somewhat inflated price tag for something that more or less needed to be done anyway, and the types of things we see today, in which the levers of powers are used in ways that are often obviously manifestly contrary to the public interest.

I won’t fully support it in this post, but my belief is that increasingly the urban power structures have exchanged traditional growth machine policies for a system of extraction in which crooks, cronies, and criminals are enriched under the guise of the “revitalization” of a community in decline. The principal vehicles for this are a) publicly subsidized real estate boondoggles, b) corrupt privatization and professional services contracts, and c) public employee union featherbedding.*

This looting of our cities in the name of revitalization has been made possible by a severing of the historic link between the economic fortunes of a community’s elite and broader community prosperity. I’m going to show today how that link got severed, and why that has led to subsidized real estate boondoggles as the preferred form of civic “revitalization”, by revisiting and updating a post I originally ran in 2009.

Ed Morrison once wrote that “Cleveland’s leadership has no apparent theory of change. Overwhelmingly, the strategy is now driven by individual projects. These projects, pushed by the real estate interests that dominate the board of the Greater Cleveland Partnership, confuse real estate development with economic development. This leads to the ‘Big Thing Theory’ of economic development: Prosperity results from building one more big thing.”

Morrison could have been describing any number of other cities here. Why is it that so many cities have turned to large subsidized real estate projects to attempt to restart growth, , turning away from strategies that previously made them successful?

The answer lies in structural economic changes resulting from the nationalization and globalization of industry. Up until the 1990’s, many businesses, such as retailing, utilities, some manufacturing, and especially banking operated on a regional or local basis. The meant that the civic leadership of a community was heavily dominated by businessmen, again, especially bankers, whose success was dependent on the overall macroeconomic health of the particular city or region they were located in.

For example, up until the 1980s or so, most states severely restricted banking such that every city pretty much had its three major locally owned banks whose CEOs were the major power players in town.

Because these banks were limited to their own region, often only their home county, they could only increase their profits by seeing their hometown grow with more people and businesses, and thus more depositors and borrowers. If the CEOs of those banks decided to loot the city at the expense of overall civic prosperity – or let anyone else get away with so looting it – it would undermine their own businesses. Hence they had an alignment between corporate (and thus personal interest) and the civic interest. They could only prosper to the extent that the community prospered.

It was the same in many industries. The Public Utility Holding Company Act more or less led to every major city having its own electric utility. That utility could only make more money to the extent that more people and businesses moved to town and thus generated new demand for power. The interests of the company and its CEO were aligned with that of the city as a whole. If the city sickened, the company’s business would sicken with it. Many if not most cities also had their own department stores, drugstores and other retail establishments.

This created what Harvey Molotch called a “land based elite” and underpinned a model he called “The City As a Growth Machine.” He saw the “land” in question as physical land and thus also talked to the primacy of real restate development, but I see “land” as much more representing the constrained operating geography of a wide variety of industries that are not necessarily related to land per se. While growth as a strategy has its problems, you can certainly be stuck with worse.

With banking and utility deregulation, we saw large numbers of hometown banks merged out of existence. Industry after industry has been subjected to national or international level roll-ups as changes in the economy and regulatory environment gave increasing returns to scale. So today we have a handful of major national banks like JP Morgan Chase, major utility conglomerates like Duke Energy, and dominant national retailers like Macy’s, Walgreens, Wal-Mart, and Home Depot, often part of a “two towers” type rollup.

Why is it that “real estate interests” dominate in a local economy like Cleveland? Because, to a great extent, they are among the only ones left. Consider the local industries that have not been as subject to roll-ups. Principal among these are real estate development, construction, and law (though we are starting to see rollups in these industries too).

This means the local leadership of a community is now made up of executives in those industries, and they bring a very different world view versus the previous generation. There are two major differences between these types of firms and the previous types of firms that generated community leaders: the nature of the businesses themselves, and the fact that their profits are not dependent on the success of the community.

Consider the difference between a banker and a lawyer. Banks make money on the spread between what they pay for deposits or wholesale funding, and what they charge for loans. This means the CEO of a bank is making money while he plays golf at 3. He’s got a cash register back at the office that never stops ringing.

By contrast, lawyers get paid by the hour for work on specific matters and transactions. The law partner is only making money on the golf course if he is closing a deal. It’s similar between many other “operational” businesses that were previously prominent in communities, and the “transactional” businesses that are now often dominant.

Not only has the drying up of local and regional operating businesses led to a business leadership community unbalanced in favor of transactionally oriented firms, the loss of those local and regional operating businesses robbed many of the transactional companies such as law and architecture firms of their principal local client base. Large national businesses employ national firms for advertising, law, architecture, etc. If they use local firms, it is in a subsidiary role. (Or, if a smaller firm is fortunate enough to land a contract, it is servicing a client on a national, not local basis).

Richard Florida described this in his Atlantic Monthly article on the financial crash:

As the manufacturing industry has shrunk, the local high-end services—finance, law, consulting—that it once supported have diminished as well, absorbed by bigger regional hubs and globally connected cities. In Chicago, for instance, the country’s 50 biggest law firms grew by 2,130 lawyers from 1984 to 2006, according to William Henderson and Arthur Alderson of Indiana University. Throughout the rest of the Midwest, these firms added a total of just 169 attorneys. Jones Day, founded in 1893 and today one of the country’s largest law firms, no longer considers its Cleveland office ‘headquarters’—that’s in Washington, D.C.—but rather its ‘founding office.’

Where then is the source of transactions these firms can turn to in order to sustain their business? The public sector, of course.

I would hypothesize that many local transactionally oriented services companies have seen the public sector take on a greater share of billings than in the past. With the old school bankers and industrialists mostly out of the picture, the leadership in our communities consists increasingly of the political class and a business community dominated by transactional interests.

When you look at the composition of this group, it should come as no surprise that the publicly subsidized real estate development is the preferred civic strategy. Politicians get to cut ribbons. Cranes always look good on the skyline. Local architects, engineers, developers, and construction companies love it. And there is plenty of legal work to go around.

This is not to say these people are necessarily acting nefariously. And nor were old school bankers and industrialists always acting purely altruistically. But there’s a very different world view between people steeped in operational businesses and those in transactionally oriented one.

On the other hand, that’s not to say that they aren’t acting nefariously, either. Which brings us to the second difference. These newly dominant firms and their leaders no longer have fortunes tied to the overall health of the community. Unlike an old-school banker or utility executive, these transactional companies like law firms can exist on a narrow client base. Thus they can continue to thrive if the community is struggling or even impoverished. If the driving force of the business is government, which can extract significant tax revenues during both good times and bad, this can go on indefinitely, so we see that even in bankrupt Detroit the state stepped in to pump $400 million in subsidies into a new hockey arena for a development backed by a local billionaire.

In fact, what we see is that these firms and their hangers on can even profit from community decline. Why is this? Well, when the community is struggling, that means Something Must Be Done. And it just so happens that this group of people has Something in mind – namely shoving taxpayer cash into their pockets so that they can “invest” in “saving” the city. Somewhat perversely, to the extent that a community is thriving and doing well, the justifications for all those subsidies become harder to make. Thus The Powers That Be actually have a stake in civic failure.

Call this the “City As a Decline Machine” model, as our once-proud urban cores have been strip-mined for subsidies by cronies as population and job levels have collapsed in the greater urban core.

This helps explain why, despite the endless talk about “talent, talent, talent” not many places actually do much that suggests they are serious about attracting it. Why might that be? Because, as I’ve noted before, outsiders are the natural constituency for the new and an inherently disruptive force. That’s the last thing cronies want. Instead what they actually want is to use the pretense of talent as a Christmas tree ornament to decorate arguments in favor of their latest subsidized boondoggle.

But regardless of intent, the personal interest and long term community health of the community elite are no longer strongly linked. Which is why where once local business/civic leaders put money into the community – such as when Melvin and Herb Simon bought the failing and money-losing Indiana Pacers back in the 1983 – today they are more likely to be taking it out via these types of projects.

You might object that some cities kept their banks or have other large companies that are still present. Perhaps. But even where the hometown bank or company did not get bought out, it likely escaped that fate by getting big itself and making large numbers of acquisitions or otherwise expanding. This means those institutions are less dependent on the health of the particular local market they happen to be headquartered in than they are overall macroeconomic conditions. While no doubt they want the headquarters town to be successful, they can afford to take a portfolio view of local markets.

It’s similar for many other companies, such as the tech startups every city seems to be focusing on. These are attractive to a great extent because they can thrive in downtowns of cities where the majority of the urban fabric is struggling because they don’t consume much in the way of services, have a live and let live ethos that has historically been disconnected from and indifferent to government (and so won’t upset the cronies’ apple cart), and sell to a national or global marketplace in most cases.

Interestingly, one place where it seems like the structure of local real estate helps the city is New York City. My understanding is that there are still quite a few local power players whose personal fortunes are deeply tied to the value of Manhattan real estate. Certainly local developers sometimes receive eminent domain assists and such, but the volume of activity necessary to support the real estate industry that is still very key to the city’s viability can only come from genuine market demand. When you combine this with the fact that there aren’t good substitutes for New York, this suggests at least a significant segment of its elite will be highly motivated to see it navigate the formidable fiscal and other challenges it faces.

Most other places aren’t so lucky. Once this type of system gets established it is difficult to uproot, and it acts like kryptonite to outside investors who know they will be operating at a severe disadvantage versus the cronies. That’s why out of town bidders have been taking a pass on bidding on the I-195 land in Providence, for example.

Commercial real-estate developer Richard Miller, of The Pegasus Group, visited Rhode Island in 2011 and again this spring; he liked what he saw enough to pick a potential parcel on the western side of the river near Chestnut Street. But in the end, his team chose not to submit a proposal to the Route 195 Redevelopment District Commission, which controls about 40 acres in the heart of the city, 20 of which are available for development … “I don’t want to get snookered in here where all of a sudden they start hitting you up with fees and you put a bid in and you start meeting with politicians, and the more you invest in the town, the more you’re in the game, and I didn’t get the sense that they want you to make a fair return in the town.” … In other cities, such as New York, he says that there “is a very clear policy about new development. And it’s not subject to a political process in order for you to make a project work. Either you abide by the rules and make a buck or you don’t.”

I’m sure you could tell a similar tale in many cities. As someone once told me, “Political risk is the only risk in real estate development, if you know what you are doing.” Many cities today are nothing but political risk for anybody but cronies, which is one why there’s so little market interest in developing there. But don’t worry. Your friendly local campaign donors and insiders will be there to help “prime the pump” – with a little assist from the taxpayer of course.

Pete Saunders once recounted his family’s prescient observation about Detroit that it “would not rebound until all value was extracted out of it.” This is the process we sadly see unfolding in many post-industrial cities.

* If you require evidence just ask how many urban core real estate projects in your city have been done without subsidies to political donors.

Thursday, August 14th, 2014

Metro Size and Job Growth

I’ve previously argued that it’s larger metro areas of greater than a million people that are competitively advantaged in the modern economy. Conveniently, someone from the Oregon Office of Economic Analysis took at look at job growth performance of metro areas by metro area size.

Here’s their chart of the Great Recession:

As you can see, large metro areas have outperformed coming out of the downturn. But it’s small < 250K metros that took less of a hit in the first place.

Over the longer term, things are less clear:

I’d like to see this plotted as an index so that we can see what this adds up to cumulatively over that time, but from eyeballing it I get the impression that larger metros are more prone to bigger swings up and down. In any event, it’s another set of data to consider. Thanks to Kyle Jackson for sending this my way.

Thursday, August 14th, 2014

Why Contemporary Protestant Church Architecture Is So Poor

New Life Church Worship Center, Colorado Springs, Colorado. Photo:

Visit a city in Europe or even an older American town and see that the church building is often one of the most prominent and architecturally distinguished buildings there. Yet today your typical new Protestant church building, say a suburban mega-church, is dreadful. Why is that?

When speaking at the conference where I talked about suburban sacred space, I ran into architect Duncan Stroik, a professor of architecture of Notre Dame and someone you turn to when you want to build a church that looks like a church. His book on the subject of church architecture is “The Church Building as a Sacred Place: Beauty, Transcendence, and the Eternal,” which you can learn more about in the review of it in City Journal.

Stroik is also the editor of a semi-annual magazine called Sacred Architecture. Unsurprisingly, its emphasis is on Roman Catholic architecture, but other traditions are included as well. After an invigorating discussion on the topic, I agreed to write an article about the Protestant church architecture question, which is now online in the most recent issue. Called “Erasing Distinctions,” it looks at eight theological trends in contemporary Evangelical Protestantism that tend towards placing a low value on architecture. Here is an excerpt:

1. Low view of the church and place. The Roman Catholic tradition emphasizes the big-C Church—the one, holy, catholic, and apostolic Church of the creeds—with the local church as a mostly standardized operating subsidiary. By contrast, most Protestants emphasize the small-c church, their local congregation. This is truer than ever, as demonstrated by the rise of non-denominational churches.

This produces a system with no theology of place. Protestants feel a sense of duty to the place and community where they personally live. But if the majority of church members move, say, from the city to the suburbs, then a new church building can be constructed, the old building sold, and the duty transferred to the new place where the members now reside. The original building only served a pragmatic purpose as meetinghouse for the members.

The Roman Catholic Church views its remit as covering the entire globe. So when there is population change in a locale, the church is not relieved of responsibility for it. The church building is an outpost of Christianity in a particular place (the parish concept), not just to a group of people. In short, Protestants see place as ephemeral, while Roman Catholics see it as permanent.

You can click through to read the whole thing.

Wednesday, August 13th, 2014

Enter Pyongyang: The Timelapse As Communist Propaganda Video

It’s pretty clear that, in a sense, all of the time lapse videos I’ve featured here are marketing tools. They market both the film makers who created them, and the cities featured. Clearly the genre is all about making places just seem jaw-droppingly cool.

But at what point does marketing become propaganda? That is, at what point does the sales job cross the line from legitimate to illegitimate activity? I’m not sure where that line is, but a recent time lapse video of Pyongyang, North Korea by JT Singh and Rob Whitworth (who have produced other videos I’ve featured here) is on the wrong side of it.

I’m not going to embed this video on my site, but if you want to watch it you can click to Vimeo.

As you can see if you watch it, this video treats Pyongyang as just another cool emerging world global city, complete with lavish reclaimed waterfront parks, subway commuters, neon lit skyscrapers, a thriving bike culture, smiling happy kids, international brands (DHL), and more. It’s a consciously normalizing portrayal. But beyond that note elements designed deliberately to humanize the world’s most barbaric regime, ranging from using the official name of “Democratic People’s Republic of Korea” instead of North Korea in the title and splash screen to eliminate negative associations, to a preponderance of very non-threatening looking female (or androgynous) police officers who help mothers with strollers cross the street and such.

For the record, North Korea is a brutal communist dictatorship that’s likely the world’s most evil regime. You’ve no doubt seen the widely circulated satellite imagery of a completely dark North Korea at night:

Image via NBC News

Oddly enough, Singh and Whitlock didn’t show us any pictures of Pyongyang’s thriving nightlife scene…. (The lack of nighttime scenes is telling given they are a standard part of the genre and feature heavily in Singh and Whitlock’s previous work such as their Shanghai video that actually playfully shows all the lights of Shanghai going out! Apparently the real deal is too much for them).

But that doesn’t even scratch surface of the inhumanity of the North Korean regime. Famine is a recurring reality in the country in which an estimated million people died during the 1990s alone. The country also runs a network of concentration camps in which even children are brutalized. Consider this report from a former guard:

Children were savaged to death by guard dogs in a North Korea concentration camp, it was revealed today. Three youngsters died straight away under the snarling jaws of the prison camp dogs, defector and former prison guard Ahn Myong-Chol said. But two others were still breathing when guards buried them alive.

Myong-Chol,45, spent eight years as a prison guard in the gulag camps before he fled to South Korea in 1994. But he is still haunted by the dog-attack on the children as they left the camp school. “There were three dogs and they killed five children,” he recalled at a Geneva human rights hearing. “They killed three of the children right away. The two others were barely breathing and the guards buried them alive.”

But instead of the dogs being put down, their handlers petted them and gave them special food “as some kind of reward.”

A recent United Nations report described the horrors that exist in the country. As CNN reported:

A stunning catalog of torture and the widespread abuse of even the weakest of North Koreans reveal a portrait of a brutal state “that does not have any parallel in the contemporary world,” a United Nations panel reported Monday…North Korea is a state, it concluded, “that does not content itself with ensuring the authoritarian rule of a small group of people, but seeks to dominate every aspect of its citizens’ lives and terrorizes them from within.”

Why in the world would anyone want to have anything to do with making the North Korean regime look good? It isn’t like the filmmakers simply provided a portrayal that attempted to be nuanced and acknowledging complexities or something. Rather, this is a pure play work of propaganda.

They claim not to have been paid for their work. So what? That doesn’t change the reality of what it is. But even their own accompanying text raises troubling questions about the financing behind this. Their expenses were paid by a tour company that they claim is the market leader in North Korean tourism. Certainly at a minimum this company can’t be in that business without staying on Kim Jong-un’s good side, much less help the filmmakers “gain special access to locations.”

But that’s not even worth investigating since regardless of where the money came from, they created a video that serves the propaganda aims of the North Korean dictatorship. Without a doubt it’s “cool,” but that only makes their decision worse, not better. If in fact “Amazingly, we were given complete editorial control in the making of this piece,” that only adds to their shame in giving propaganda assistance to North Korea’s dictatorship of their own free will.

Sunday, August 10th, 2014

Replay: Suburbs and Sacred Space

[ I'm doing a three part mini-series this week on sacred space and architecture. I start off today with one I wrote last year based on remarks I have at a conference in Anaheim - Aaron. ]

This post originally appeared in New Geography on June 7, 2013.

Suburbs are often unfairly maligned as lacking the qualities that make cities great. But one place that criticism can be fair is in the area of sacred space. There most certainly is sacred space in the suburbs, but usually less of it than in the city both quantitatively and qualitatively. In fact, the comparative lack of sacred space is one of the distinguishing characteristics of the suburb that makes it “sub” urban, that is, in a sense lesser than the city.

Lewis Mumford put it this way:

Behind the wall of the city life rested on a common foundation, set as deep as the universe itself: the city was nothing less than the home of a powerful god. The architectural and sculptural symbols that made this fact visible lifted the city far above the village or country town….To be a resident of the city was to have a place in man’s true home, the great cosmos itself.

Mumford was onto something here in positing how great temples and such distinguished the city as unique.

What Is Sacred Space?

Mumford also hints at what makes something truly sacred space. We should clearly distinguish between what is merely public space and truly sacred space. The key to sacred space is the linkage to the transcendent. That is, sacred space connects us to something beyond or bigger than our surroundings, our present existence, and even ourselves.

Here are three ways sacred space can do that. It can:

  1. Connect us to a larger spiritual or religious reality, as in our Mumford example. This is the most obvious case.
  2. Serve as a locus or repository of the culture and traditions of a people.
  3. Be a temporal connection between the present and the past and/or the future.

As one example, consider the Indiana World War Memorial in downtown Indianapolis.

This building is of course a symbol of the bedrock American values of that community and the willingness of its people to die to defend them yesterday, today, and tomorrow. Thus it is both a cultural repository and a temporal linkage.

Also note the use of neoclassicism. The use of neoclassical architecture anchors Indianapolis and Indiana firmly within the 2,500 year history of Western Civilization, as a link in a chain of peoples connected by shared, timeless values and extending backwards and forward throughout time, thus achieving a sort of immortality. This building is a statement of the permanence of this community, its people, and their values.

We can also think of a radically different space such as Times Square, and how it has played host to so many civic celebrations and traditions over the years such that it has become not just a local but a national repository of our culture. The ball dropping on New Year’s Eve is an obvious example. But consider also this iconic photo.

This is one of the most famous pictures from the war era and I don’t think it’s any surprise it was taken Times Square.

How Suburbs Are Comparatively Lacking in Sacred Space

Let’s apply the definition of sacred space to the suburbs. Yes, suburbs do have war memorials and culture and traditions and churches, but in general these are qualitatively different from what is found in the city core. Here are three reasons why.

1. Suburban traditions and spaces are often ephemeral and generational. When I was in high school, everybody liked to go to a place called Down Home Pizza in Corydon on the weekends. And that was something kids from every high school in the area did, not just those from mine. Today that place is long gone. And the kids are doing something else, whatever that may be. In fact, it’s amazing how many of the places and traditions from my high school days are already gone after only 25 years because of physical and economic changes in the community such as restaurants and stores going out of business.

This happens in the city too, like when the department stores went under, taking their white-gloved tea rituals and the like with them. But to a much greater extent than the city, suburbs rely on commercial establishments as focal points of shared experience, and by their very nature those tend to come and go. And suburbs have not to nearly as a great a degree established truly trans-generation rituals and spaces.

2. Lack of transcendent scale. This is also something Mumford hints at. The “human scale” is a big buzzword in urbanism today. Contrary to what many say, the suburbs actually do a pretty good job of the human scale, especially from an automobile era perspective. But a unique essence of urbanity and often of transcendent experience itself is what we might call the “anti-human scale.” British writer Will Wiles put it this way:

The “human scale” only tells part of the story of the city – after all, this can be found in villages and small towns. All cities need sublimity, a touch of holy terror, a defiance of human scale that asserts connection to the greater urban whole.

The sheer scale of something like the Indiana War Memorial, which is a very imposing structure inside and out, renders it qualitatively different that your average small scale suburban memorial. This is true not just physically but also in terms of the humanity represented. That memorial stands for an entire state, not just a single town. Which is the same reason there may be more suburban school kids who have visited their state capital or the US Capitol than their local village hall. There’s a reason the US Capitol and Lincoln Memorial and such have such powerful resonance. They represent an entire nation and a vast sea of humanity. Cities also participate in this scale effect.

3. Low quality religious architecture. When it comes to the most obvious category of sacred space, the religious building, the suburbs also fall flat. That’s because Protestant Christianity, the largest suburban religious strain, has itself become unmoored from the transcendent. This is clear, for example, from the rise of what has been dubbed “Moralistic Therapeutic Deism” as a dominant worldview, especially among the young.

The average suburban megachurch is an architectural horror show. The best of them generally rise to the level of an upscale corporate conference center. The worst are like “That 70’s High School”.

Someone once said that all sin results from failing to believe one of the “4 G’s” about God, namely, God is great, God is good, God is gracious, and God is glorious. Applying that to religious life generally, in modern Evangelical churches, God may be very good and gracious, but He’s doesn’t seem all that great, and He’s certainly not very glorious. This is religion that can inspire good works, but not great ones. There’s no trace of the overwhelming glory of God in nearly any of these structures. There’s no longer a faith like the Lutheranism of Johann Sebastian Bach that can inspire the greatest works of human artistic achievement. Because modern suburban church architecture is so poor and so disposable, it diminishes the impact of sacredness in the space.

The recent stories about the sale of Orange County’s Crystal Cathedral, designed by Philip Johnson, brings to mind an exception that proves the rule.

Unsurprisingly it was the Catholic Church that bought it. Unlike Protestantism, Catholicism has always had a theology of place. And they’ve always used architecture and art as a way of telling the story of the gospel. Though obviously not in this case, they’ve also used Gothic sort of like neoclassical architecture as a way creating a sense of permanence and linkage to an everlasting, eternal church.

So sacred space is one area where the suburbs really are deficient versus the city. But how important is this? Metropolitan areas today are mosaics. In an ever more complex and competitive global economy, every part of a region, city and suburb, needs to know its role on the team and bring it’s A-game. Just as there’s no need for every job to be located downtown, there’s no need for every major piece of sacred space in a region to be replicated in every suburb. Downtown does just nicely. However, this is one reason that while economically the core may no longer dominate a region, a healthy center still plays a key role in overall regional vitality. That’s because it remains home to things like the major pieces of sacred space such as war memorials and cathedrals that bind a region together and give it civilizational permanence, meaning, and purpose beyond the mundane.

This article was adapted from remarks at the No Place Like Home conference on June 3, 2013 in Anaheim, CA.

Thursday, July 31st, 2014

Summer Reading List

I’ll be on vacation for the next week or so. So I won’t be posting.

People often ask me for book recommendations, and I should probably put together an urbanism reading list. But until I do that I’ll share nine reccos today that are off the beaten path but very relevant to understanding urbanism and life in general. You don’t need me to tell you to read Jane Jacobs. These are some that may not have bubbled up to the top of your list. Not all of them are light reading, and some are written in an academic style, but they give important perspectives on the problems we face. And hey, this site is for the serious urbanist.

By the way, these are Amazon affiliate links so I get a few coins if you buy through them. Hopefully that will cover any parking meter fees while I’m in Chicago….

The Urban State of Mind: Meditations on the City
by Aaron M. Renn
I be remiss if I didn’t remind you of my own e-book collection of some of the best essays that have appeared here in the seven year history of the Urbanophile. It’s a great introduction to my work for those who are newer to the site. And even for long time readers, I’ve included some originals as well. If you haven’t bought it yet, now’s a great time.


Nature’s Metropolis: Chicago and the Great West
by William Cronon
This book tells the story of the rise of the Midwest and Chicago. Cronon shows how the Midwest hinterland, urban and rural, would not have existed without Chicago, and how Chicago would not have existed without its hinterland. It was an integrated system. It’s a fascinating read, and also explains how and why Chicago became the Midwest’s dominant city instead of say Cincinnati.


Regional Advantage: Culture and Competition in Silicon Valley and Route 128
by AnnaLee Saxenian
Although Boston’s Route 128 corridor started out ahead of Silicon Valley in the tech industry and arguably had greater assets, nevertheless Silicon Valley ended up becoming ascendant. Saxenian looks at the structures of the social systems in these cities to help explain why. You read read more in my post on this book.


The Structure of Scientific Revolutions
by Thomas S. Kuhn
This 1962 work is a landmark in the history and philosophy of science. It’s where the concept of “paradigm” gained wide currency, and Kuhn described what came to be known as a paradigm shift. All of our debates about urbanism take place within the confines of tacit or explicit paradigms, so it’s important to understand how they work. Kuhn might describe urbanism as a pre-scientific practice given the lack of a broadly shared paradigm in the field


Risk and Culture: An Essay on the Selection of Technological and Environmental Dangers
by Mary Douglas and Aaron Wildavsky
Alon Levy turned me on to this work and the Cultural Theory of Risk. Douglas and Wildavsky explore why the United States became fixated on environmental pollution versus other risks. But apart from that, this book talks a lot about societal dynamics, plotting them along the axes of grid (hierarchy) and group (cost of defection). Both authors have done great work elsewhere as well, such as Douglas’ seminal literary analysis of Leviticus.


Change: Principles of Problem Formation and Problem Resolution
by Paul Watzlawick, John H. Weakland, and Richard Fisch
This is also one I got via someone else, in this case Richard Layman. It’s actually a book about personal and family therapy, but the principles are relevant to changing organizations and cities as well. The authors distinguish between first order change, which is basically like a finite state machine in that you are in a closed system from which it is impossible to escape no matter what you do, and second order change in which the possibility space is truly expanded. Published in the 1970s but still relevant today.


The Logic of Failure
by Dietrich Dörner
Why do expert economists fail at even basic simulations of development programs in Africa, often with catastrophic results? It’s because human beings are terrible at solving so-called “complex” problems that include such characteristics as being multivariate, with action lags, intransparence (the full set of variables is unknown), and change happens even if we don’t take an action. Humans fall back on a set of well-worn default strategies in the face of these problems that inexorably leads to disaster. I previously posted a review of this book. It’s sure to instill a bit of humility about our ability to deal with our urban ills. Money quote: “Because planning involves only imagining our actions, we are essentially free from the irksome conditions of reality, and nothing prevents us from simply ignoring the conditions necessary to carry out an operation. Since we human being tend to think in the abstract anyway, ignoring those conditions comes quite easily.”


by Marcus Aurelius
I’ve written a bit lately about cities needing to know themselves as per the wisdom of the Greek oracle. This work, written by the Roman emperor Marcus Aurelius while he was leading a war against barbarian invaders, contains both self-analysis and a lifetime of accumulated wisdom from a man who considered his life and himself carefully. It’s also a great and readable entry point to the works of classical antiquity. Since it’s in the form of shorter observations and aphorisms, you can read and much or as little as you like at any one time, and put it down for as long as you’d like.


The Ordeal of Change (Kindle link)
by Eric Hoffer
This short work of essays by Eric Hoffer, the so-called Longshoreman Philosopher, is notable from an urbanism perspective because of how it makes the case for why the supposedly least of society are often business and social innovators and a key component of urban resiliency over the long term (though he didn’t phrase it that way). Hoffer is best known for “The True Believer,” a look at the nature of fanaticism and the fanatic, but all of his works I’ve read are profoundly insightful even where I don’t agree with all his conclusions.

Here are nine reccos to keep you occupied while I’m away, or for you to tuck inside your bag for your own vacation. Enjoy.

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.

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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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