Thursday, September 3rd, 2015
My latest column is available in the September issue of Governing magazine. It’s about the challenges with a segment of our population that faces difficult prospects because of social problems in the working class such as dropping out, drugs, etc.
I wrote this in the wake of headlines in publications like the New York Times talking about the HIV epidemic in Southern Indiana, which is a couple counties over from where I grew up. This reality is not specific to Indiana, however. It’s basically the same story Robert Putnam told about his hometown of Port Clinton, Ohio in his book Our Kids: The American Dream in Crisis.
What’s happened to Southern Indiana is happening around the country. The problems defy easy solutions and there’s little agreement on even the causes. But it will take more than just jobs to deal with poverty or provide upward social mobility.
Here’s an excerpt:
While certainly the good old days of plentiful high-paid jobs at the auto plant are gone, it’s still possible to build a life in America if you graduate from high school, stay away from drugs and crime, wait until you’re married to have children, and show up to work every day. But if you slip on one of these points, say by dropping out of school, you are put into a deficit in life from which you may find it difficult to recover. Sadly this has affected a lot of people, who are now in a very difficult place.
To be clear, there are many who suffer from a bona fide skill deficit or geographic mismatch, especially older industrial workers who long ago demonstrated that they are able and willing to work a steady job but have struggled to find work after plant closures. Yet for a segment of our population, traditional workforce or economic development remedies will not help. Whatever their root cause, which is a source of dispute, there are baseline personal and social issues that need to be overcome.
Click through to read the whole thing.
Tuesday, September 1st, 2015
In addition to my City Journal article on the new NYU report about New York City’s “great reset,” I also was able to grab a few minutes with Richard Florida to get his take on the report. Listen below, or if the audio embed doesn’t display for you, click over to listen on Soundcloud.
Monday, August 31st, 2015
New York University recently issued a study called “New York City: The Great Reset” that took a look at changes in New York’s economy since the 9/11 attacks. As the name implies, Richard Florida, who holds a professorship at NYU, was a contributor to the city.
I wrote up a piece about the study, which is now posted over at City Journal. Here’s an excerpt:
It’s easy to take the safety and prosperity of present-day New York City for granted, but over the last 15 years, any number of events could have derailed its success. The dot-com recession of the early 2000s hit the city’s tech industry hard. The 9/11 attacks could have sent people and businesses fleeing permanently. Rudolph Giuliani could have been succeeded by a mayor who rolled back the city’s remarkable progress. The 2007 financial crash could have dealt a body blow to the city or triggered the kinds of budget crises and service cuts that affected many other cities. Hurricane Sandy could have been even worse than it was. And so on.
Despite these setbacks, New York has continued to boom.
Click through to read the whole thing.
Wednesday, July 29th, 2015
My latest piece is online in the Los Angeles Times. It’s about how environmental activists are trying to stop fracking and Alberta oil developments by obstructing the ability to export fossil fuels using local control over ports as a lever.
I am generally a strong proponent of local control, but disruption of global commerce, particularly when clearly motivated by non-local concerns, is not something localities should be doing. Interstate commerce, like immigration policy, is a clearly federal policy domain. Policy and regulation for it needs to be set at the federal level. People who don’t want oil drilling in Alaska should take that up with President Obama, who approved it, not the Port of Seattle.
Here’s an excerpt:
The Shell battle highlights a new tactic among environmental activists: Unhappy with policies made in Washington, they’re trying to use local regulations to set national policy. Pressuring cities and other local entities that control many of the nation’s ports, the greens hope to prevent fossil-fuel industries from obtaining permits and thus keep such energy from coming to market. And they’re having some success.
Under tremendous pressure from environmentalists, Portland, Ore., shot down a proposed propane-export terminal. Activist Daphne Wysham boasted that “residents of the Pacific Northwest have begun to mobilize in bold and successful resistance to these fossil fuel exports.”
Oregon greens are elsewhere trying to prevent the export of liquefied natural gas. As Stacey McLaughlin noted approvingly in an Oregonian op-ed, “If they cannot export natural gas, then they will need to cut back on fracking.” Similar battles are raging north of the border, in British Columbia, and on the East Coast. South Portland, Maine, for instance, banned the export of crude oil arriving there via pipeline.
Click through to read the whole thing.
Monday, July 20th, 2015
My latest post is online at New Geography and is called “LA’s Tale of Two Cities.” I was prompted to write it when I saw two articles within a month of each other, one declaring LA a paradise for creatives priced out of New York, the other about how creatives can’t afford to live in LA anymore. Here’s an excerpt:
It’s the best of times and the worst of times in Los Angeles.
Los Angeles is now attracting notice as a so-called “global city,” one of the world’s elite metropolises. It is ranked #6 in the world by AT Kearney and tied for 10th in a report by the Singapore Civil Service College that I contributed to. Yet it also has among the highest big city poverty rates in the nation, and was found to be one of the worst places in America for upward mobility among the poor. Newspaper columns are starting to refer to LA as a “third world city.”
Yet LA’s glitz factor remains potent. The fashion industry has gained considerable recognition. Tom Ford set up shop and brought his runway show to the city. Locally grown brands like Rodarte have a major following. LA also is increasingly a global center of gravity in the art world.
Yet behind the glitz, in the city of Los Angeles, aging water mains regularly erupt and the streets and sidewalks decay, with the city’s own report estimating it has an $8.1 billion infrastructure repair backlog.
One report chronicles the flight of cash-strapped New York creatives fleeing to sunny, liberating, and less expensive LA. Another how high prices and the Southern California grind are sending those same creatives packing.
Click through to read the whole thing.
Wednesday, July 1st, 2015
My latest column is available in this month’s issue of Governing magazine. It’s called “Big Aspirations Aren’t Just for Big Cities Anymore.” In it I talk about how smaller cities – which in my view are metro regions between roughly one and three million given my focus on major American cities – have dramatically upgraded their game in the last decade. That’s not to say that they are on the same level as places in San Francisco or New York. Or that they have even closed the gap with those places. Rather that objectively speaking they have raised their game and as a result now have a much greater “addressable market” in terms of upscale residents and business – at the same time those larger places are becoming progressively unaffordable.
Here’s an excerpt:
Back in 1992, as a fresh graduate of Indiana University looking for a job, I met with recruiters for a position in Chicago. They pitched me on the city by telling me that it had this hip, new, uber-cool coffee shop. They were talking about Starbucks. If you were around in the ’90s, you may remember that those magazine “coolest-cities” lists often used the number of Starbucks as a metric. A city that finally got Starbucks thought it had hit the big time.
Today, of course, you can get Starbucks between the gas station and Motel 6 on the interstate. But back then it was a different story. The difference between Chicago and a city like Indianapolis, where I also interviewed, was night and day. Compared to Chicago, moving to Indianapolis would have been like getting sent to Siberia. It was all but impossible to get good coffee or a decent meal in Indy back then. While the city had already made many improvements, it was still pretty bleak.
Click through to read the whole thing.
I can’t find it online, but a few years back Chicago Magazine did a retrospective on their top ten restaurants list from circa 1995. It was pretty hilarious. I don’t remember them all, but Cafe Ba-Ba-Reeba was one of them. How things change.
I think it’s pretty clear that for a whole slew of items, places like Nashville or Columbus now are at a higher level than even Chicago was a couple decades ago. That’s not true of everything, but it’s true for a lot of things.
I believe this change in the competitive landscape is one of the reasons Atlanta took a big hit in the 2000s. Atlanta used to be the only game in town for major corporations in the South. Now places like Nashville, Charlotte, and Raleigh are viable alternatives.
Monday, June 29th, 2015
Photo by Scott Beyer
With pending changes in US-Cuban relations, there’s been a flurry of attention turned towards Cuba and Havana. I want to highlight a few articles on the topic. Firstly, Scott Beyer posted a two-part series over at Market Urbanism. It’s part policy analysis, part travelogue, and his large numbers of photos are a must-see.
His first piece is “City of Scarcity.” Here’s an excerpt:
I found myself unable to buy basic things. For example, during my first night in Havana, I didn’t realize–until it was too late–that the B&B landlord had not provided toilet paper. In America, this would be a glaring oversight, but in Havana, I would discover, is normal. This forced me to navigate my neighborhood at 3am, offering pesos to the many teenage boys still standing outside, to bring out “papel higienico” from their houses. Every time I tried this, they would each explain, in rather comical fashion, that none was available. Finally I found a teenager who spoke passable English, and asked him how this could be. After sending his little brother in to find something, he explained that “in Havana, toilet paper is a delicacy–like chocolate,” and that most residents don’t just have any sitting around. So how did people cope?
“Here in Havana, we have a saying,” he quipped. “We say, ‘Cubans have a good ass. Our asses work for all kinds of paper. Toilet paper, newspaper, book paper–any kind of paper’.”
Photo by Scott Beyer
His second piece is called “Stagnation Doesn’t Preserve Cities, Nor Does Wealth Destroy Them.” He uses the example of Havana as a counter-point to the anti-gentrification narrative in which investment in a city destroys is character.
Instead, she claims that these groups are “destroying” the city. She is thus spouting the same myth that is advanced about historic preservation by urban progressives, who seem to think that wealth and gentrification works against preservation. But a fair-minded look at U.S. cities demonstrates the opposite. If one looks at America’s most notable historic neighborhoods–the Back Bay in Boston; Capitol Hill in DC; the French Quarter in New Orleans; much of northern San Francisco; much of Manhattan and northern Brooklyn; downtown Savannah; and downtown Charleston–a unifying feature is that they have great residential wealth. Meanwhile, there are numerous cities—Baltimore, Philadelphia, Detroit, St. Louis, Cleveland—that have a similar number of historic structures. But many of them sit hollowed-out because of decline.
Image via the Guardian
Meanwhile, the Guardian also ran a take on the city, calling Havana “one of the world’s great cities on the brink of a fraught transition.” It’s very different to say the least.
Nowhere have these changes been more apparent than in Cuba’s capital, and Havana today can be a jarring collision of the antique and the nouveau. While I was there, the Havana Biennial was bringing in cutting-edge artists and art dealers from all over the world – yet turn the television to one of the state-sponsored channels and one is immediately transported back to the time of Soviet-era propaganda, of shrill declarations and low production values. In contrast, Venezuela’s TeleSUR (now accessible to Cubans), which generally maintains a line favourable to Venezuelan president Nicolás Maduro and his allies (of whom the Castros are two), is positively electric and full of flashy visuals and news from the outside world.
Photo by Scott Beyer
Last Spring, City Journal ran a piece on the city by Michael Totten called “The Last Communist City.”
Even employees inside the quasi-capitalist bubble don’t get paid more. The government contracts with Spanish companies such as Meliá International to manage Havana’s hotels. Before accepting its contract, Meliá said that it wanted to pay workers a decent wage. The Cuban government said fine, so the company pays $8–$10 an hour. But Meliá doesn’t pay its employees directly. Instead, the firm gives the compensation to the government, which then pays the workers—but only after pocketing most of the money. I asked several Cubans in my hotel if that arrangement is really true. All confirmed that it is. The workers don’t get $8–$10 an hour; they get 67 cents a day—a child’s allowance.
The maximum wage is just the beginning. Not only are most Cubans not allowed to have money; they’re hardly allowed to have things. The police expend extraordinary manpower ensuring that everyone required to live miserably at the bottom actually does live miserably at the bottom. Dissident blogger and author Yoani Sánchez describes the harassment sarcastically in her book Havana Real: “Buses are stopped in the middle of the street and bags inspected to see if we are carrying some cheese, a lobster, or some dangerous shrimp hidden among our personal belongings.” Perhaps the saddest symptom of Cuba’s state-enforced poverty is the prostitution epidemic—a problem the government officially denies and even forbids foreign journalists based in Havana to mention. Some Cuban prostitutes are professionals, but many are average women—wives, girlfriends, sisters, mothers—who solicit johns once or twice a year for a little extra money to make ends meet.
Monday, June 15th, 2015
In the last 25 years there has been a huge change in the level of competitiveness of smaller urban areas – by which I mean the small end of the major urban scale, or metro areas of about one to three million people – that has put them in the game for people in residents in way they never were before.
I recently gave the morning keynote at the Mayor’s Development Roundtable in Oklahoma City and talked a bit about this phenomenon, as well as how these generally younger and sprawling areas ought to be thinking about their future.
If the video doesn’t display for you, click over to watch on You Tube (my segment starts at 4:36).
Thursday, June 11th, 2015
Kay Hymowitz is the William E. Simon Fellow at the Manhattan Institute and probably best known for her work on family and gender issues such as the book Manning Up. But she does a lot more than that, including some great writing on her home borough of Brooklyn.
The current issue of City Journal has a great piece by her called “Made in Brooklyn, Again” that is a look at the manufacturing renaissance ongoing at the former Brooklyn Navy Yard. Here’s an excerpt:
The Yard is now home to 330 small to medium-size manufacturing firms employing 7,000 workers—double the total of 15 years ago. Many of the companies are traditional or “analog” in their approach, but firms emerging out of the local north Brooklyn design, crafts, and tech scene—or the “maker movement,” as it’s sometimes known—come to the Yard every day looking for vacancies that don’t exist. Local officials have their fingers crossed that the Yard’s rise from its smokestack ashes will reverse decades of manufacturing decline and make a real impact on the persistent joblessness that troubles nearby, mostly minority, parts of Brooklyn. But in part for reasons related to that 5 Axis router—as well as to New York’s costly regulatory climate—they should be careful not to hope for too much.
There’s more where this came from. Last spring she wrote a piece about the largely Fujianese immigrant community in Sunset Park called “Brooklyn’s Chinese Pioneers.” Everybody first thinks of Flushing, Queens when they think about the Chinese in New York. But Sunset Park is home to an even bigger Chinese community. This one is poorer than Flushing’s, and made up of many people from Fujian, a linguistically diverse and largely non-Mandarin speaking province in China. An excerpt:
What started with a few hundred Fujianese pioneers a few decades ago is now New York City’s most populous Chinatown—considerably larger than Manhattan’s and bigger even than Flushing’s. Sunset Park bustles with Chinese and Vietnamese restaurants and stores selling dried shrimp and scallops and a staggering variety of gnarly ginseng roots, medicinal herbs, oils, and powders. One rarely sees a non-Asian face there. Though official city numbers are considerably lower, Paul Mak, president of the Brooklyn Chinese American Association, estimates that Sunset Park and adjoining sections of Bay Ridge and Borough Park are home to at least 150,000 Chinese.
For all their gumption, the Fujianese don’t entirely conform to the model-minority image. Take, for instance, the way they come to the United States. Long-term visas are nearly impossible to get, at least for those without family already here. Among New York immigrant groups, the Chinese apply for the most asylum visas, many based on trumped-up complaints. Other Fujianese turn to smugglers, or “snakeheads,” to create fake papers and guide them through a nightmare journey that often involves dangerous weeks in the airless holds of barely seaworthy ships, long stretches in safe houses in Thailand or Guatemala, or treks across the Mexican desert. The grueling adventures can cost them $50,000 or more. (Patrick Radden Keefe’s 2010 book, The Snakehead, offers a powerful depiction of the multibillion-dollar Chinatown-based smuggling business.) A large number of Fujianese who come to New York these days do so through Canada, using the passports of relatives; they rely on border guards not being adept at distinguishing Chinese faces. There’s no precise number of the undocumented Fujianese who’ve arrived in New York City since the early eighties, but estimates run as high as half a million. Kenneth Guest, an associate professor of anthropology at Baruch College, says that as many as half the Fujianese in the city are here illegally.
In 2013 Kay took a look at “Bed-Stuy’s (Unfinished) Revival.” She observes:
Of all the changes that I’ve witnessed in Brooklyn since settling there 30 years ago, none has surprised me more than the blossoming reputation of Bedford-Stuyvesant, now the fastest-growing neighborhood in New York’s fastest-growing borough. For decades, Bed-Stuy’s nickname, “Do or Die,” perfectly captured the spirit of the place: it was a neighborhood of entrenched black poverty, mean streets, meaner housing projects, and a homicide rate that had reporters using war metaphors. Nowadays, Bed-Stuy has become the latest destination for young professionals and creative-class whites on the prowl for brownstones, tree-lined streets, and express subway lines to Manhattan. Artisanal coffee, prenatal yoga classes, and Danny Meyer–inspired restaurants (one, called Do or Dine, serves foie-gras doughnuts) have followed close behind.
And in 2011 she took a checkpoint on the Brooklynization of Brooklyn in “How Brooklyn Got Its Groove Back.” An excerpt:
Unlike their predecessors, however, these grads are not only artsy; they’re tech-savvy and entrepreneurial. Don’t confuse them with the earlier artists and bohemians who daringly smoked pot at Brooklyn Heights parties. These are beneficiaries of a technology-fueled design economy, people who have been able to harness their creativity to digital media. In a 2005 report, the Center for an Urban Future estimated that 22,000 “creative freelancers”—writers, artists, architects, producers, and interior, industrial, and graphic designers—lived in Brooklyn, an increase of more than 33 percent since 2000. The Brooklyn Economic Development Corporation has dubbed the area from Red Hook to Greenpoint the “Creative Crescent.”
The new gentrifiers have also, surprisingly, re-created Brooklyn’s identity as an industrial center, locating commercial kitchens, artists’ lofts, and crafts studios in retrofitted factories in Sunset Park, Gowanus, and downtown Brooklyn. If they have to commute to work, they want to ride their bicycles, which is easier to do if you don’t have to cross the East River. (Brooklyn may be one of the only places in the world that occasionally offers valet bike parking.) Many have started their own boutique firms. In its report, the Center for an Urban Future also noted that “freelance businesses have been a faster growing part of the Brooklyn economy than employer-based businesses.”
Tuesday, June 9th, 2015
This post originally appeared at New Geography on June 1, 2015.
Discouraging employment data have recently dampened optimism about America’s economic recovery. These challenges are nothing new for developed regions long beset by manufacturing decline amidst globalization. Exemplars of this trend, America’s rust belt cities have battled unemployment, decaying infrastructure, and social challenges since economic decline emerged in the 1960s. In response, some now cultivate service, knowledge, and tourism industries. Explaining these new growth models, analysts often espouse the virtues of diversification. However, legacy industrial systems and native constraints (e.g. geography and culture) can hinder this strategy. Chasing diversification for its own sake diverts policy attention from a more valid determinant of growth. Post-industrial urban policy should target structural flexibility, enabling diversification or specialization – neither deserving preeminent status – to occur naturally.
In exploring rival economic development strategies, two management theories are particularly relevant: Michael Porter’s competitive advantage and Harry Markowitz’s portfolio theory. Competitive advantage describes the strategic orientation of business operations and brand image to command an inimitable market position. Portfolio theory is the logic behind investment diversification to maximize returns for given risk preferences. In management, these are not rival theories. However, when applied to urban economic development they present a direct contrast. The former can be likened to specialization, and the latter to diversification.
In attempting to revive their economies, cities often reduce strategic options to the simple dichotomy of specialization versus diversification. Some compromise by favoring a primary industry and enabling the emergence of secondary industries. Economic orthodoxy generally argues that diversification is the wiser choice in volatile economies. This portfolio-style approach assumes that stability in one industry offsets decline in another. This argument is convincing: many “single-engine” economies have underperformed amidst globalization. Besides the usual cases, overlooked examples are Oakland, California (shipbuilding and automobiles), Birmingham, Alabama (steel), and upstate South Carolina (textiles). A similar fate befell the British Midlands and German Ruhr Valley, where recovery strategies have generated mixed results. Instability in single-industry dependence is not limited to manufacturing. Las Vegas, where the pro-cyclical tourism mirrors national economic trends, remains fairly irrelevant outside its casinos and related industries.
By contrast, many successful cities boast diversified economies. New York has a path-dependent advantage in finance, with recent volatility offset by tourism, business services, and the arts. The 1986 collapse in oil prices tested the resilience of Sunbelt boomtown Houston, whose shipping industry offset energy sector declines while banking, finance, and healthcare kept the city competitive. Large cities are naturally more diversified, but smaller cities can also exhibit diversification: examples are Austin, Texas (research, education, and technology), Nashville, Tennessee (entertainment, insurance, and health care), and Tampa, Florida (military, tourism, trade, and retirement services). Austin added jobs even during the 2008 recession, and has routinely been labelled the nation’s best-performing economy in recent years. These examples show that economic resilience is dependent more on diversified industrial portfolios than on size.
Nevertheless, a larger story underlies America’s revitalization champions. While the flag of diversification flies high, at the base of the pole stands structural flexibility, arguably a more durable, achievable, and powerful mechanism for growth. Cities prepared to re-orient towards emerging opportunities maintain development potential across economic cycles. Furthermore, flexibility gives cities of any size hope for transformative growth. Not every city has the native advantages to meaningfully diversify, but flexibility can be their wild-card strategy.
Two former manufacturing cities have exhibited post-industrial flexibility: Pittsburgh and Bilbao. Once the pride of America’s post-WWII steel industry, Pittsburgh suffered a precipitous decline in the 1980s as manufacturing moved overseas. 200,000 jobs and nearly half the population were lost. However, Pittsburgh’s situational advantages provided a flexible platform for revival. Well-endowed cultural institutions and flourishing medical, education, and research sectors supported a lifestyle economy based on knowledge, services, and creative entrepreneurship. Pittsburgh’s economic performance was seventh best in the nation during the 2008 recession, an example of how flexible planning, private sector creativity, and situational advantages converged to make progress halting seemingly irreversible decline. Similarly, Bilbao, Spain, sharply declined after the withdrawal of manufacturing. Without its economic engine and facing crisis-level unemployment, it creatively turned to tourism and culture. The government’s stated commitment to collaborative policy making and quality-of-life now complements efforts to sustain post-industrial competitiveness. Like Pittsburgh, Bilbao has used flexible, opportunistic planning to pursue economic growth.
Despite their highly publicized transformations, however, these post-industrial success stories are not without challenges. The Pittsburgh metropolitan area has failed to gain population for years, and lost nearly 5,000 residents between mid-2013 and mid-2014. The city’s stagnant job growth has led some claim that Pittsburgh’s amenities, rather than employment opportunities, are a relocation magnet. Others claim that flat overall job growth conceals local economic restructuring, as manufacturing industries give way to the creative sector. Despite recent signs of a recovery, Spain’s persistent unemployment (23.8% in the first quarter of 2015) indicates that the nation, and particularly secondary cities such as Bilbao, continues to struggle in the stubborn wake of the 2010 euro crisis. Further, Bilbao’s top-down approach of museum-based revitalization has failed to generate vitality in the grassroots cultural scene, where artists have collectively mobilized but still struggle to obtain financial support.
Manchester has recently enjoyed consistent growth, and is now considered the UK’s healthiest economy outside of London. Like Pittsburgh and Bilbao, the city experienced rapid mid-century decline with the closure of its shipping port and loss of heavy manufacturing. The city’s economic revival has pivoted towards knowledge, services, and entertainment, a strategy attracting recognition for liveability and cultural vibrancy. Financial services now outsize manufacturing and engineering, with no single industry representing more than 16% of the economy. Poised to benefit further from devolutionary reforms and “northern powerhouse” status, Manchester has garnered recognition for its economic diversity and entrepreneurial spirit. The city exemplifies a flexible approach to post-industrial development, particularly for a hinterland region overshadowed by a dominant neighbour (London).
Other efforts at revitalization, however, have produced lesser results. Like Pittsburgh and Bilbao, Cleveland’s steel industry flourished in the mid-20th century before industrial decline gutted the city of jobs and population. In 1969 the emblematic Cuyahoga River fire brought national attention to Cleveland’s economic crisis. Since 1990 the city has caught fire once again – in a revival driven by services, tourism, and entertainment. Global connections in knowledge industries and education complement Cleveland’s flexible economic vision. However, the city still struggles with disinvested neighbourhoods, ageing infrastructure, and regional competition from Pittsburgh, where flexible strategies also target culture and technology.
Taken superficially, these revival cases support the concept of diversification. Cities focusing on a singular competitive advantage – geography, image, or path-dependent conditions – tend to specialize but often struggle to re-configure inflexible industrial infrastructure for new opportunities. Regardless, specialization versus diversification is a false choice. Beyond this continuum, the true survival instinct is structural flexibility. Diversification often correlates with overall growth but is more a lagging indicator of opportunistic preparedness. Flexible policy broadens structural capabilities and builds resilience into urban systems, in either a specialized or diversified economy. The outputs include infrastructure both hard (transport, technology and housing) and soft (education, culture, and institutions). In providing platforms for investment that adapt to global trends, this strategy transforms industrial determinism into flexible economic opportunism.
Kris Hartley is a visiting researcher at Seoul National University and PhD Candidate at the National University of Singapore, Lee Kuan Yew School of Public Policy. For more details about his argument, see his book Can Government Think? Flexible Economic Opportunism and the Pursuit of Global Competitiveness.