Wednesday, September 24th, 2014

Neighborhood Poverty Dynamics

Carol Coletta is now with the Knight Foundation, where she’s started up a podcast series called “Knight Cities.”

Her most recent episode is an interview with economist Joe Cortright about a study he did about the evolution of poor neighborhoods in America. This is an important, if depressing, study in which he looked at how poverty changed in city neighborhoods at the census tract level from 1970 to 2000.

I’ll use the cover art embed so you can put the face to the voice. If the embed doesn’t display for you, click over to Soundcloud.

By the way, Cortright also posted a rebuttal to the NYT Magazine piece on Portland.

Tuesday, September 23rd, 2014

Midsize Midwest Cities — Where Do They Go Now? by Pete Saunders

[ Here’s another piece of analytical insight from Pete Saunders, who originally posted it over at his site Corner Side Yard – Aaron. ]

There are some things I posted in the early days of this blog that probably enjoyed very little attention and received little followup on my part.  This piece on midsize Midwestern cities definitely fits that bill.  Since I started this blog nearly two years ago, the attention given to the Rust Belt seems to have grown exponentially — Detroit’s bankruptcy, Chicago’s crime, and Pittsburgh’s revitalization have occupied center stage at various times.  Unconventional ideas are emerging on how to turn around major Rust Belt cities, but smaller ones seem to escape inclusion.  So rather than repost my original post without further comment, I’ve decided to revisit and do some followup commentary.

First, the research.  Looking at 2010 U.S. Census data, I found there are 74 cities in the Midwest as I’ve described it with a population between 50,000 and 300,000.  I eliminated primary cities that fit the population threshold but were part of metro areas that had more than one million people (i.e., St. Paul, MN; Cincinnati, OH; Buffalo, NY), leaving me with 71 midsize Midwest cities.  The largest is Toledo, OH (287,208 residents) and the smallest is Elkhart, IN (50,949).  In between are cities that have become the icons of American Heartland – see the table below.


Midsize Midwest Cities 2010 City Population 2010 Metro Area Population
Toledo, OH 287,208 651,429
Lincoln, NE 258,379 302,157
Ft. Wayne, IN 253,691 416,257
Madison, WI 233,209 568,593
Des Moines, IA 203,433 569,633
Akron, OH 199,110 703,200
Aurora, IL 197,899 9,461,105
Grand Rapids, MI 188,040 774,160
Sioux Falls, SD 153,888 228,261
Rockford, IL 152,871 349,431
Joliet, IL 147,433 9,461,105
Kansas City, KS 145,786 2,035,334
Dayton, OH 141,527 841,502
Topeka, KS 127,473 233,870
Cedar Rapids, IA 126,326 257,940
Evansville, IN 117,429 358,676
Independence, MO 116,830 2,035,334
Springfield, IL 116,250 210,170
Peoria, IL 115,007 379,186
Lansing, MI 114,297 464,036
Ann Arbor, MI 113,934 344,791
Elgin, IL 108,188 9,461,105
Rochester, MN 160,769 186,011
Fargo, ND 105,549 208,777
Green Bay, WI 104,057 306,241
Flint, MI 102,434 425,790
Erie, PA 101,786 280,566
South Bend, IN 101,168 319,224
Davenport, IA 99,685 379,690
Kenosha, WI 99,218 9,461,105
Waukegan, IL 89,078 9,461,105
Lawrence, KS 87,643 110,826
Duluth, MN 86,265 279,771
Sioux City, IA 82,684 143,577
Champaign, IL 81,055 231,891
Bloomington, IN 80,405 192,714
Gary, IN 80,294 9,461,105
Racine, WI 78,860 195,408
Appleton, WI 78,086 225,666
St. Joseph, MO 76,780 127,379
Bloomington, IL 76,610 169,572
Decatur, IL 76,122 110,768
Kalamazoo, MI 74,262 326,589
Canton, OH 73,007 404,422
Muncie, IN 70,085 117,671
Waterloo, IA 68,426 167,819
Iowa City, IA 67,862 152,586
Lafayette, IN 67,140 201,789
Youngstown, OH 66,982 565,773
Oshkosh, WI 66,083 166,994
Eau Claire, WI 65,883 161,151
St. Cloud, MN 65,842 189,093
Lorain, OH 64,097 2,077,240
Janesville, WI 62,948 160,331
Hamilton, OH 62,477 2,130,151
Council Bluffs, IA 62,230 865,350
Bismarck, ND 61,272 108,779
Terre Haute, IN 60,785 172,425
Springfield, OH 60,608 138,333
Pontiac, MI 59,515 4,296,250
Ames, IA 58,965 89,542
Dubuque, IA 57,637 93,653
Owensboro, KY 57,265 114,752
Anderson, IN 56,129 131,636
Grand Forks, ND 52,838 98,461
Normal, IL 52,497 169,572
LaCrosse, WI 52,485 133,665
Manhattan, KS 52,281 127,081
Battle Creek, MI 52,347 136,146
Saginaw, MI 51,508 200,169
Elkhart, IN 50,949 197,559


I listed them all in a spreadsheet that included their 2010 city population and their 2010 metro area population, and started to make some early observations.  For example, metro area population is likely a better indicator of the relative “imprint” of a city, rather than primary city population.  Saginaw, MI, with a population of 51,000 but a metro area of 200,000, seems bigger than Muncie, IN, with a city population of 70,000 but a metro area population of just 118,000. And of course, cities that were relatively close to large metro areas (having a population greater than one million) seem to share more characteristics with their bigger neighbors than their smaller ones, economically and socially.

That led me to ask a few questions that could shed some light on other city characteristics:

  • Is the city a county seat or a county’s largest city, yet not the primary city of a metro area?
  • Is the city a part of or adjacent to a large metro area (with a population of more than one million)?
  • Is the city less than 60 miles from a large metro area?
  • Is the city a state capital?
  • Is the city a college town?

And that exercise led to some interesting conclusions.  Using those questions I was able to identify seven different categories of midsize Midwest cities, and the categories provide a glimpse into each city’s economic history and strengths:

  1.  Captured Satellite City: A once independent midsize city that has been pulled into the “orbit” of a larger metro area. There are eleven in this category.
  1.  Emerging Satellite City: An independent midsize city that is in the process of or on the verge of being pulled into the orbit of a larger metro area.  There are six in this group.
  1. State Capital and College Town:  A city fortunate enough to be a government center and the home of a major university.  There are just three in this category.
  1. Emerging Satellite City and College Town: A combination of points 2 and 3, they retain some measure of independence from larger metros, and benefit from having large schools.  There are only two in this group.
  1. State Capital: Self-explanatory.  There are four here.
  1. College Town: I’m defining a college town as one with a school with an enrollment greater than about 15,000 students, making the school large enough to have a significant impact on the local economy (in case you’re wondering why Notre Dame and South Bend, for example, aren’t included).  There are ten in this group.
  1.  Independent Midsize City: Ah yes, the largest group, with 35 in this category.  Too far from major metros to bask in their glory, and no state capital or university to build from.

Here’s how the cities stack up in a table:


Midsize Midwest City Categories Cities By Category
Captured Satellite City Aurora, IL; Joliet, IL; Kansas City, KS; Independence, MO; Elgin, IL; Kenosha, WI; Waukegan, IL; Gary, IN; Lorain, OH; Hamilton, OH; Pontiac, MI
Emerging Satellite City Akron, OH; Dayton, OH; Flint, MI; Racine, WI; Springfield, OH; Anderson, IN
State Capital AND College Town Lincoln, NE, Madison, WI; Lansing, MI
Emerging Satellite City AND College Town Ann Arbor, MI; Bloomington, IN
State Capital Des Moines, IA; Topeka, KS; Springfield, IL; Bismarck, ND
College Town Lawrence, KS; Champaign, IL; Bloomington, IL; Kalamazoo, MI; Muncie, IN; Iowa City, IA; Lafayette, IN; Ames, IA, Normal, IL; Manhattan, KS
Independent Midsize City Toledo, OH; Ft. Wayne, IN; Grand Rapids, MI; Sioux Falls, SD; Rockford, IL; Cedar Rapids, IA; Evansville, IN; Peoria, IL; Rochester, MN; Fargo, ND; Green Bay, WI; Erie, PA; South Bend, IN; Davenport, IA; Duluth, MN; Sioux City, IA; Appleton, WI; St. Joseph, MO; Decatur, IL; Canton, OH; Waterloo, IA; Youngstown, OH; Oshkosh, WI; Eau Claire, WI; St. Cloud, MN; Janesville, WI; Council Bluffs, IA; Terre Haute, IN; Dubuque, IA; Owensboro, KY; Grand Forks, ND; La Crosse, WI; Battle Creek, MI; Saginaw, MI; Elkhart, IN


So what do the categories suggest about each midsize city’s present and future economic prospects?

Captured Satellite City: These cities have economic fortunes that are closely tied to the economic fortunes of the much larger metro area surrounding it.  Some cities seem to recognize this and have planned accordingly; others still have memories of their earlier independence and have struggled in the face of industrial restructuring.  Perhaps their future is better served by becoming low-cost urban options in otherwise suburban areas.

Emerging Satellite City: These are cities that sit on the periphery of major metro areas, and have yet to fully benefit from being “pulled” into the larger orbit.  They, too, have memories of earlier independence, and may struggle with adjusting to a more dependent future.

State Capital and College Town: With only three in this category, Madison leads the way in terms of economic strength, with Lincoln not far behind.  Lansing, despite having the capital and college attributes, has historically relied on its industrial legacy as well, possibly diluting the government and education benefits.  If it can tap those strengths maybe it can duplicate the others’ success.

Emerging Satellite City and College Town: Ann Arbor and Bloomington are truly unique in that they are the flagship universities in their respective states and are in close proximity to each state’s largest city.  Ann Arbor seems to figure more prominently in metro Detroit’s future; Bloomington remains relatively disconnected from metro Indy.  My guess is that when these cities are fully brought into the larger metro’s orbit, they — and the entire metro — will greatly benefit.

State Capital: As long as the four cities here remain state capitals, they have a reason d’etre and economic catalyst that will support them.  They will continue to have strengths that will elude other similarly-sized cities.

College Town: In many respects the college towns are similar to the state capitals, with an existing reason d’etre and economic catalyst.  The difficulty, perhaps, lies in strengthening and reinforcing the college’s links to the rest of the city and metro.

Independent Midsize City: Here, I believe, are the midsize Midwest cities whose future is most tenuous.  When people wonder about the future of smaller post-industrial cities, these are generally the ones we think of.  What can Youngstown, OH do to forestall its decline?  What strengths does Decatur, IL have that can serve as a foundation for revitalization?  What lies ahead for Terre Haute, IN?  Wtih respect to the other midsize Midwest cities, which have more clear futures (whether or not they choose to accept them), I’ll start exploring what might happen with the independent, midsize, post-industrial Midwest city.

This post originally appeared in Corner Side Yard on November 9, 2013.

Monday, September 22nd, 2014

Diverging Fortunes

This weekend’s New York Times Magazine had a story on Portland that featured Yours Truly. I recapitulated a few observations I’ve had over the years, including that it’s truly remarkable how a small city like Portland has captured so many people’s imagination, and also that “people move to Portland to move to Portland.”

A Portland writer named Steve Duin appears to have had an aneurysm over the piece and, among other things, criticized my statement about why people move to Portland, saying:

She quotes Aaron Renn, an urban-affairs analyst, who insists that while Los Angeles attracts starlets and New York the financiers, “People move to Portland to move to Portland,” as if the city is a space between Pacific Avenue and Park Place on the Monopoly board, not a vibrant, creative, accessible and accommodating urban scene.

Which only proves that he completely missed the point. All I’m saying is what he’s saying in different words, namely that people move to Portland for its lifestyle and amenities. This is exactly what every Portland booster claims, namely that what they’ve created is attractional. I’m simply pointing out the obvious: people move to Portland primarily for lifestyle and leisure, not career or economic reasons. People move to Portland because they want to live there.

Portland’s economy has actually picked up of late. Its unemployment fell below the national average in 2013 after having been above it for 14 straight years. But I want to highlight a disconnect between a couple measures of economic performance.

I’ve written many times that Portland has done very well in terms of per capita GDP. In fact, from 2001 to 2013 (the maximum range of data available from the feds), Portland was #1 out of all 52 large metros in the US in its percentage increase in real per capita GDP.

On the other hand, looking at how much of that economic value ends up in people’s pockets tells a different story. From 2001 to 2012 (I don’t think 2013 has been released yet), Portland only ranked 40th out of 52 in its percentage increase on this metric. Portland declined from a per capita income of 104.9% of the US average in 2001 to 98.6% in 2012.

I threw this divergence into a quick chart:

portland-gdp-vs-persinc

It would be interesting to dig into these numbers. I would particularly be interested in seeing where the GDP growth is coming from, as unlike say San Jose, there’s no obvious driver I see.

Update 9/23/14: I did a quick back of the envelop calculation of total GDP growth by industry. Only a few industry totals are available, but the biggest gainer was Manufacturing, up 300%. Education, Health, and Social Assistance were #2, followed by Professional and Business Services. Natural Resources, Retail. Information, and FIRE were at the bottom.

Speaking of San Jose, I see an even more remarkable divergence there. It was #2 in per capita GDP growth over the 2001-2013 time frame. Looking at the overall Bay Area total real GDP, it increased by 30.1% from 2001 to 2013. Keep in mind I’m using the inflation adjusted figured here, so there’s no inflation in that metric. But at the same time the Bay Area lost 2.4% of its jobs.

The Bay Area grew its economy by almost a third while shedding over 75,000 jobs. Pretty remarkable.

Tuesday, September 9th, 2014

Brooklyn Is Getting Poorer by Daniel Hertz

[ Analyst Daniel Hertz found some interesting maps of Brooklyn back in May that tell a different tale about Brooklyn than the one you’ve probably heard – Aaron. ]

I’m trying to make more of an effort, whenever I write or talk about gentrification, to point out that the real issue is larger: that gentrification is only one aspect of income segregation – specifically, the part where the borders between rich and poor neighborhoods shift – and that the real problem is that we have such sharply defined rich and poor neighborhoods to begin with.

I might also throw in that income segregation used to be much less severe.

Anyway, one problem with our obsession with gentrification as the end-all of urban equity issues is that it discourages us from talking about other important things happening in our cities. In some instances, gentrification has become such a dominating narrative that it has completely erased broader trends that we really ought to be concerned about.

Case in point: Brooklyn is getting poorer.

Does that shock you? Were you under the impression that all of Brooklyn was in the process of becoming one giant pickle boutique? That would be forgivable, given that nearly every article filed from Brooklyn for a decade or so has been about gentrification. But no.

I recently ran across a post from data-crunching blog extraordinaire Xenocrypt, which noted that from 1999 to 2011, median household income in Brooklyn fell from $42,852 to $42,752. That’s not a huge drop, obviously. The national median income fell from $56,000 to $50,000, so Brooklyn is actually catching up, sort of, to the country as a whole. But it still got poorer in absolute terms.

Moreover, if you map (as Xenocrypt did) the borough’s neighborhoods by change in median income, you get a really striking picture:


Credit: Xenocrypt.blogspot.com

…which is that, indeed, a good three-fifths or so of Brooklyn is actually getting poorer. Have you read any articles about that? No, I will wager that you have not. Neither have I. I strongly suspect that is because they don’t exist – at least not in any outlet that might be considered mainstream.

And what about housing prices?

Brooklyn Gentrification Map: Increase, Decrease in Home Values 2004 vs. 2012
Credit: http://www.citylimits.org/

So in large parts of Brooklyn, real estate prices are falling.

I have nothing particularly intelligent to say about this – these maps were news to me – except that it’s maybe the most dramatic example I’ve seen yet of just how limiting our fixation on gentrification is. I mean that both in a sort of journalistic sense, in that we’re being deprived of an accurate sense of what is actually going on in our cities, as well as from an advocate’s perspective: how can we claim to be working for fairer, more equitable, etc., cities, if we’re ignorant of their most basic economic and demographic changes?

This post originally appeared in City Notes on May 3, 2014.

Friday, August 29th, 2014

Cutting To Invest In Kokomo, Indiana

fairy-tale
A whimsical fairy tale convenience store in Kokomo, Indiana

Bruce Katz at the Brookings Institution likes to talk about a paradigm called “cut to invest.” The idea is to cut spending on operations and lower priority items in order finance investments in higher priority infrastructure or other projects. Nice theory, but who is actually doing it?

One example is Kokomo, Indiana. It’s not the mythical tropical island paradise you may have heard about from the Beach Boys. Instead it’s a small industrial city of around 57,000 people about 45 miles north of Indianapolis. After I posted a piece from Eric McAfee about Kokomo’s intelligent rail trail design, someone from the city reached out and invited me to come for a visit. So that’s what I did this week.

What I discovered is that Kokomo has done a lot more than just build a trail. They’ve deconverted every one way street downtown back to two way, removed every stop light and parking meter in the core of downtown, are building a mixed use downtown parking garage with a new YMCA across the street, inaugurated transit service with a free bus circulator, have a pretty extensive program of pedestrian friendly street treatments like bumpouts, as well as landscaping and beautification, a new baseball stadium under construction, a few apartment developments in the works, and even a more urban feel to its public housing. Like Eric, however, I wasn’t just struck by the projects themselves, but they obvious attention to detail that went into their design. And especially by the fact that they’ve done it almost all by paying cash – no debt – in a city that went through an economic wringer during the recession.

A lot, though not all, of this has been pushed by Kokomo Mayor Greg Goodnight, who’s gone from factory worker to politician during his career. He also appears to be an urban planning geek, as the stack of books behind his desk shows.

books

I sat down with the mayor and chatted about how the city pulled off this program of investment. After the jump I’ll visually walk you through a number of the projects. If the audio player doesn’t display for you, click over to Soundcloud.

Now let’s take a look at what’s going on. I mentioned the pedestrian bumpouts. Here’s an example of one:

Pretty much every downtown intersection has a treatment like this, including landscaping. Taking a page from other cities’ playbook, Kokomo has invested in beautification, including not only landscaping of pedestrian bumpouts, but also hanging flower planters we’ll see later. These were actually put into place by Goodnight’s predecessor and were a huge source of controversy at the time, though seem to be well-accepted by now.

Here’s another example on a street heading out of downtown.

bumpouts2

I’m actually of two minds about bumpouts. They do facilitate pedestrian crossings, but also can force bicyclists out of the curb lane into traffic. I’ve generally found them obnoxious when bicycling. The street widths through the bumpouts look ok here, but I didn’t put it to the test. A number of streets have painted bicycle lanes, where this is definitely not a problem.

Eric’s blog post was about the Industrial Heritage Trail. Here’s a shot of that through downtown:

I think this is really attractive. It reminds me of a red brick version of the Indy Cultural Trail. This section actually has a separate sidewalk from the biking trail, but that’s not the norm. Kokomo has really made a point to include some ped-bike protection wherever possible. So the landscape buffer is narrow, but effective and attractive. (It doesn’t use bioswale type green stormwater detention like the Indy Cultural Trail, though). There’s also ample street lighting and street furnishings.

As one nice touch, note the back side of the stop sign. It’s black to match the color of the other items, not just plain galvanized steel. This treatment is done throughout downtown and adds a bit of refinement.

Here’s another shot of a segment a bit south. Note the bespoke bike rack.

There aren’t people in these photos, you might have noticed. I was doing this walking tour on a Tuesday morning, and it wasn’t super-crowded but I did see multiple people out biking and walking on these trails.

On the south side of downtown, the IHT crosses and east-west path called the “Walk of Excellence.” I love the name because reminding Hoosiers that a focus on excellence is an absolute must to survive the brutal global competition. Here’s a shot:

woe3

Again, very attractive. And again, a narrow but nice buffer between the trail and the street, even though the roadway is little more than an alley or driveway. This is very consistently done, in another place even where the trail just passes through a parking lot. That’s what I mean by attention to detail. There’s a stream running to the left of the trail which adds to the pleasant effect of walking along it.

Here’s a street crossing:

woe-intersection

The trail has its own traffic control signs, as well as a street sign near bicycling eye level to tell users what street they are at. In my experience, that’s too rare in trail design. You can also see bumpouts here along with large concrete planters that add beauty and make the crosswalk and street narrowing very visible to drivers.

Here’s another crossing example, showing the different crosswalk shading as well:

woe-intersection3

Here’s a bike route sign, with the city seal on it. That’s another nice touch and one that shows a certain pride of place versus a generic sign.

bike-route-sign

Moving on, here’s a median treatment on a major street. This goes on quite a distance:

median3

Not only is this very nice, including more flowers, decorative street lights, etc, but the metal railings are especially unique. The railings were actually custom fabricated by the high school’s shop class. Not only was this great real world practice for the students, but the city paid for the railings and the students are all ending up with $1,000 scholarships to college out of it. I’m told this was the superintendent’s idea. (Kokomo’s superintendent grew up in Corydon in my county and his wife actually still works part time in Laconia, the tiny town where I grew up!)

Eric mentioned the school district’s International Baccalaureate program. But I don’t believe he mentioned that they also run an exchange student program. IIRC, students from 15 countries attend high school in Kokomo, and a number of them are actually housed in dormitories in downtown Kokomo. This injects life into downtown and creates a more international flavor in the city. I didn’t take pictures, but the school district is also renovating a 1914 vintage auditorium back to its original design that will be very cool (and also paid for without recourse to debt).

Trails and bumpouts have a fairly limited cost, but the city is also doing some bigger ticket items including two recently-constructed fire stations, a million dollar renovation of city hall, a parking garage, and a baseball stadium. Pictures of those in a moment but it’s worth ask how the city was able to pay for them without debt.

The first is that there was no legacy debt. I’m not anti-debt in all cases, but if a mature city like Kokomo is saddled with heavy debt repayments, that’s not good. By not having any legacy debt, the city’s tax base isn’t encumbered by repayments. A good part of our federal deficit these days is simply interest on our gargantuan debt load. That’s a dynamic Kokomo avoided. (The city does have some utility debt, but it’s revenue bond type stuff).

Secondly, the mayor says that he was able to reduce the city’s workforce by close to 20%, going from 521 employees just before he took office to only 415 today. That’s a significant reduction, especially given the fact that during that time the city annexed seven square miles and added 11,000 new residents (though some of them were already receiving some city services). Some of this was achieved through efficiencies. For example, the city went to single side garbage pickup, where all garbage is collected on one side of the street, eliminating the need for trucks to traverse each street twice. The mayor, council members, and department heads have also had a pay freeze during that time, with at least some time in there in which all city employees had their pay frozen during the recession. Keep in mind, the city experienced a severe revenue crunch during the auto bankruptcies, and Chrysler, the town’s largest employer, failed to pay its tax bill. This created an urgent need for cuts.

It’s possible the cuts and freezes have gone too far. I don’t know the full history of what has happened to services. But I speculate that having something like this can potentially act like a forest fire. It allows for longer term, healthier growth, whereas continuous growth in employees and compensation over time leads to serious fiscal problems.

In any case, these reductions freed up cash flow as the city recovered, letting Kokomo allocate a decent chunk of its revenues to capital investment. This is running at about 5% of the overall budget, plus an additional sizable sum (for a city of that size) from an economic development tax. This is an example of the cut to invest strategy in action. Without the cuts and tight budget management, there would be no money to invest. Indeed, some other Indiana community have found themselves asking questions like “what fire station should we close?” as they feel the sting of decline and tax caps.

Here are a few more photos, then some additional observations. Here’s that parking garage I mentioned. (This was originally debt financed, but the city paid off the bonds early when it decided to borrow for the baseball stadium).

parking-garage

This supposedly has some all day free parking, designed to attract downtown employees. There’s also going to be apartments on the top floor. It looks like there’s no ground floor retail, however, which will create a bit of a dead zone.

Here’s the YMCA construction site across the street. You can see the old Y in the background:

ymca

A painted railroad viaduct on Sycamore St. heading into downtown:

viaduct

An alley treatment:

alley

The baseball stadium under construction:

baseball-stadium

Here’s a picture of an older style public housing building. There’s nothing wrong with it, but it’s done in a traditional duplex style reminiscent of early suburbia.

public-housing-old

Here’s a new development in a more urban form next door:

public-housing-new

I think the fenestration is poor which gives the design a public housing look. Nevertheless, I appreciate that the city is even thinking about the design of public housing downtown as part of its strategy. After all, why shouldn’t public housing residents get to take advantage of high quality urbanism downtown like everyone else?

Overall, I think they’ve done a number of good things, and I especially appreciate the attention to detail that went into them. You clearly get the feel of them walking downtown streets. I would say the commercial and residential development lags the infrastructure, however. That’s to be expected. They do have an Irish Pub, a coffee shop, a few restaurants, and other assorted downtown type of businesses. This will be an area to watch as some of these investments mature.

When I talked to the mayor about this he took the long view, saying that Columbus, Indiana has been at its architecture program for decades, that Indy’s sports strategy is 40 years old, etc. Substantive change takes time. For example, Mayor Goodnight says it isn’t realistic to think that older workers who commute in to Kokomo will uproot themselves out of their established lives in other communities and relocate. But he’s more hopeful that as workers retire and are replaced, he’ll capture the “next generation” labor force.

That’s obviously a more realistic ambition. But will an impatient public buy it? We’ll see. Clearly Goodnight has his critics. More than one of them has dubbed him the “King of Kokomo.” A newspaper article fretted about gentrification (level of realistic concern about that: zero). I didn’t do a deep dive into the other side, so keep that in mind reading this. But the baseball stadium would appear to be the most controversial item as near as I detect.

Regardless of any controversy, when you look at the downward trajectory of most small Indiana industrial cities, the status quo is not viable option. Kokomo deserves a lot credit for trying something different. And regardless of any development payoffs, things like trails and safer and more welcoming streets are already paying a quality of life dividend to the people who live there right now. It’s an improvement anyone can experience today just by walking around.

Historic buildings on Kokomo’s courthouse square. The tenants testify to the industrial heritage of the community.
union-storefronts

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.

Tuesday, August 19th, 2014

A Typology of Gentrification by Pete Saunders

[ Pete Saunders has been on fire lately. His latest is a framework for examining gentrification. A couple of informative comments on the original post on Pete’s blog are worth clicking over to read – Aaron. ]


Cities by gentrification type. Special thanks to Adam Carstens for producing this map.

Patterns of gentrification vary by city, and the spread of gentrified areas is partly determined by the city’s predominant development form and the historic levels of African-American populations within them. Gentrification is a nuanced phenomenon along these characteristics, but most people engaged in any gentrification fail to acknowledge the nuances.

Spurred on by the recent debate on the impact of limited housing supply on home prices and rents, thereby “capping” gentrification, (taken on fantastically by geographer Jim Russell in posts like this), I decided to do a quick analysis of large cities and see how things added up. The analysis was premised on a couple observations of gentrification, one often spoken and one not. One, gentrification seems to be occurring most and most quickly in cities that have an older development form, offering the walkable orientation that is growing in favor. Two, gentrification seems to be occurring most and most quickly in areas that have lower levels of historic black populations. This less noted observation was the thrust of a study by Harvard sociology professor Robert Sampson and doctoral student Jackelyn Hwang, recently described here. Here’s what they said, after conducting an exhaustive study of gentrification patterns in Chicago:

After controlling for a host of other factors, they found that neighborhoods an earlier study had identified as showing early signs of gentrification continued the process only if they were at least 35 percent white. In neighborhoods that were 40 percent or more black, the process slowed or stopped altogether.

That prompted my quick study. I wanted to categorize cities by old and new development forms, and low and high historic levels of black population. To do that I came up with an arbitrary proxy for the age of development form. Using decennial Census data, if a city reached 50 percent of its peak population by 1940, it was deemed to have an old development form; if a city reached 50 percent of its peak population in 1950 or later, it was deemed to have a new development form. Here’s a quick example of how this works. Baltimore, currently with a population of a little over 600,000, reached its peak of 949,000 in 1950. Baltimore reached half its peak, or about 475,000, by 1890, a time at which it could be said that Baltimore’s form as a city had been firmly established. Similarly, Austin reached its peak of 790,000 in 2010. The fast-growing Texas city was half that size in only 1990, a year in which it could be said that its development form was established and the city began to see itself as a major city. Imprecise, yes, but a decent proxy for examining old and new city development forms.

The second piece of analysis was gathering Census data on central city black populations in 1970. This decade was chosen largely because it represents the end of the Great Migration, when millions of African-Americans left the rural South for cities across the nation. By that time the cities which are generally recognized as having large black populations had already been identified, and it’s possible to explore the impact of the migration on them. I arbitrarily said cities with black populations lower than 25 percent of the total in 1970 had a low black population, and those above 25 percent had a high black population.

Using those two factors, I put together this table of the 64 primary cities over 250,000 in the U.S.:

There are more than a few cities that are exceptions, largely because recent consolidations or large-scale annexations have boosted them into more unfamiliar boxes. But some patterns are evident, and if you think of these in terms of gentrification, you might be able to make the following general assumptions:

Old Form + Low Black Population = Expansive Gentrification (OFLB)
Old Form + High Black Population = Concentrated Gentrification (OFHB)
New Form + Low Black Population = Limited Gentrification (NFLB)
New Form + High Black Population = Nascent Gentrification (NFHB)

Identifying the examples might be the best way to explain what I mean. New York, San Francisco and Boston are the prototypical OFLB cities, and gentrification has made its widest impact in these three cities. Chicago, Washington and Atlanta are the classic OFHB cities, where gentrification is concentrated in certain areas of the city (or region), and eludes the heavily African-American parts of the city. Phoenix, San Diego and Las Vegas might be the prototypical NFLB cities, all of which came of age with the car as the dominant mode of transport and with few African-Americans. NFLB cities may also be the leaders and innovators in seeking ways to catalyze their inner cities, with greater tangible investments in public transit and mixed use development. The relatively few NFHB cities are a distinctly Southern phenomenon, and by all appearances gentrification activity lags behind other cities, with sprawl still the dominant development engine.

Why would any of this matter? Nationally, the gentrification debate is defined by the experiences of the OFLB types like New York, San Francisco and Boston. There, the issues are rapidly growing unaffordability, concerns with displacement and growing inequality. But the gentrification debate is quite different in OFHB cities like Philadelphia and Atlanta, where seeking ways to more equitably spread the positive benefits of revitalization might lead such discussions.

In other words, it’s not exactly correct to look at what’s happening in Los Angeles or San Diego, or Baltimore or St. Louis, in the New York-San Francisco-Boston context. Different forces and different experiences are creating different outcomes in each city, and if we want to understand how to look at gentrification’s impact, we need to understand its foundations.

This post originally appeared in Corner Side Yard on August 15, 2014.

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, July 17th, 2014

Germany Also Having Big Problems Building Infrastructure

Der Spiegel had an interesting article this week called “Angry Germans: Big Projects Face Growing Resistance.” The article (linked version is English) talks about how it is increasingly difficult to get infrastructure projects built in Germany.

Wherever ambitious construction ventures loom on the horizon in Germany — from the cities to the countryside, from the coastlines in the north to the Black Forest in the south — opponents are taking to the streets…. As the public’s enthusiasm for constant innovation has lessened, so has the appeal of these sorts of projects, and, as a result, they now inevitably come accompanied by picketers. Germany’s graying society, it seems, is so cozy and settled that it resists anything threatening to upset the status quo. In the process, it has lost sight of the bigger picture.

There are a lot of key points in this article that immediately raised parallels to the United States, where infrastructure projects are also under increasing siege. In fact, some of this reminded me of elements of the Tea Party movement. The protestors are uninterested in compromise. They are devoted, full time activists who are unrelentingly opposed to the projects in question:

[Hartmut] Binner’s form of protest has a radical undercurrent: Well-informed, confrontational and devoid of respect for authority, he is typical of the new grassroots activism spreading across Germany.
….
Binner’s entire life revolves around the campaign. He monitors the routes of departing and landing planes. He plays his self-designed noise simulator on market squares. He kicks off his court appearances by singing the Bavarian national anthem. “If you want to be heard as a member of the public, you need to push the envelope,” he shrugs.

These days, he sees grassroots protests, activism and political responsibility from a different perspective. “The typical protesters are gray-haired, know-it-alls and very networked,” [Freiburg Mayor Dieter Salomon] says. “But they’re not remotely interested in consensus-building, political processes and pluralism.”

Grassroots groups have become so livid, intransigent and single-minded that even the most respected politician in the country, Angela Merkel, is feeling their sting. In early May, hundreds of furious residents had gathered in central Ingolstadt to protest against the construction of a power line from Bad Lauchstädt in Sachsen-Anhalt to Meitingen in Bavaria.

This certainly reminds me of the no-compromises view of the Tea Party. Also, a number of early American Tea Party activists were unemployed, and thus able to basically be full time activists. Even the singing of national anthem has echoes of the Tea Party and their tricorn hats. I don’t want to claim there’s a philosophical or other link between the Tea Partiers and Germany, however.

Not everything lines up with the Tea Party, however. In Germany it seems to be disproportionately retirees who are the most engaged and militant:

Germany’s graying society, it seems, is so cozy and settled that it resists anything threatening to upset the status quo. In the process, it has lost sight of the bigger picture.

Many of the protestors are pensioners with no vested interest in Germany’s future. “It’s striking that the leader of the protests against the Munich runway is a 75-year-old and not someone in the middle of his working life,” [Munich Airport CEO Michael Kerkloh] points out.

Salomon’s nemesis is Gerlinde Schrempp, a determined and argumentative 67-year-old retired teacher with attitude to spare. She’s the leader of the Freiburg Lebenswert movement, which translates roughly to “make Freiburg worth living in. The movement just got elected on to the district council and is first and foremost opposed to any new building in the city.

There’s a stereotype out there of the average Republican voter as an old white guy. But the average Tea Party activist I’ve seen tends to be working age. I look at this one a bit differently. We need to see these types of controversies against the substrate of an aging population. Aging populations are not noted for dynamism, and older people’s self-interest is better served by starving investment for the future in order to save money and avoid uncomfortable change in the present. As a country whose population is projected to decline into the future thanks to this demographic inversion, we are seeing in Germany what’s likely a preview of coming attractions elsewhere around the world.

Indeed, I’m reminded of what one analyst friend of mine in Indiana has said about the property tax caps there. He sees the push to cap property taxes as driven by an aging population in a stagnant state. Old people generally aren’t earning a lot of taxable income nor are they buying huge amounts of stuff, so they are disproportionately less affected by income and sales tax hikes, whereas they often own homes and are hit hard by property taxes. Thus property tax caps serve as another income transfer mechanism from young to old, holding revenue constant. They are in part an artifact of an aging society. Disinvestment in infrastructure can be seen in the same light.

But there’s another part of this that shines a light on yet another group of opponents, namely the intelligentsia.

The term “Wutbürger” (“enraged citizen”) was coined during the Stuttgart 21 fiasco to describe people like Hartmut Binner, and much has been written about them since. They often aren’t the “common man.” According to the Göttingen Institute for Democracy Studies, they tend to be highly educated people with steady incomes and white collar jobs. And while protests movements of the past were often steered by sociologists, today their leaders are more likely to stem from the technical professions, the researchers found.

When we look at opposition to infrastructure in the United States, at least certain types of infrastructure, we see a similar profile of people (though not necessarily technical) behind it. It’s the leftist intelligentsia that oppose the Keystone Pipeline, suburban highway projects, fracking, and many other types of things, often with a militant unwillingness to compromise similar to the Tea Party.

As with Germany, this opposition is enabled by environmental reviews and public participation laws that, while they serve important public purposes, make it easy to delay projects for years through repeated objections and scorched earth litigation. Traditionally environmental lawsuits were associated with the left, but conservatives have started saying, why not us too? Hence litigation against San Francisco’s regional plan. The Hollywood densification plan was recently overturned by lawsuits, and lawsuits have plagued California’s proposed high speed rail line as well.

Whatever the project, it’s sure that somebody on the left and/or the right hates it, and thus will do everything in their power to kill it, which probably means years of delays and untold millions in increased costs.

Also as with the United States, German governments have shot themselves in the foot with a series of financial debacles:

Political and bureaucratic bodies are partly to blame for their own diminished authority. Every major venture seems to entail spiraling costs. Berlin’s new airport was supposed to cost €1.7 billion, a price tag that has shot up to well over €5 billion. Meanwhile, the €187 million earmarked for the Elbphilharmonie concert hall under construction in Hamburg is expected to exceed €865 million by the time the project is completed. Albig is well aware how bad this looks. “People see us as financially incompetent,” he says.

Until politicians can convince the public they have a handle on this, the taxpayer will remain rightly skeptical of many major megaprojects. This is doubly true since it’s very clear, as has been documented by folks like Oxford professor Bent Flyvbjerg, that in many of these cases the politicians were simply lying all along about the real costs.

I’m not sure what all the takeaways are, but there are clearly many forces operating on a global basis to inhibit the development of infrastructure in the West.

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