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Tuesday, May 22nd, 2012

Can Liverpool Win a Place Back on the Global Stage? by Tim Clark

[ I write a lot about Rust Belt type cities in the US, but America is hardly alone in being home to former industrial towns that are struggling to reinvent themselves. Tim Clark takes a brief look at Liverpool and what it is up to - Aaron. ]

Mayors, city planners, and business leaders from around the world were joined by a surprise last-minute delegate at the New Cities Summit in Paris last week. The delegates, who had gathered to tackle some of the greatest challenges of modern times, were joined by the UK’s newest city mayor – Liverpool’s Joe Anderson.

With the election papers barely counted Labour Mayor Anderson was whisked to France to join Conservative Cities Minister Greg Clark at the summit. Key to Anderson’s trip has been to learn how to help regenerate Liverpool into the thriving city which it was once known.

For this reason Anderson cuts a strange figure at a summit which focuses on global mega-cities of China or the gleaming science parks being built in Russia or India. He has however attracted the attention of the world’s media in Paris, all keen to ask Anderson about his new role as a regional city mayor, and met with fellow world leaders including the Deputy Mayor of Paris.

“It has been interesting to compare what they [Paris] are doing and what we are doing, and how to get through austere times.” Anderson said. “In a way we are very similar, though Paris is on a different scale to what we are doing in Liverpool.”

Paris, like Liverpool, has areas which have suffered from neglect, however the problem in Paris is particularly acute. The French capital’s famous ‘red belt’ of suburbs has been confined to the edges of popular French culture and imagination since the impressionists scorned it in the 1900s. Yet however much maligned the suburbs are, they are now home to over one in every nine of the French population.

Paris is now looking to turn these forgotten districts into clusters for industries and attract global businesses. Though Liverpool may not have the same global clout as Paris, the ideas have had an impact on Anderson.

“Being here [at the World Cities Summit] is two fold, one is to raise Liverpool’s profile as a major city in the UK, and the other is to pick up and share some good practices.

“We’re looking to learn from Paris what we can do to build on what Liverpool naturally has,” Anderson says. “Paris setting up areas of specific opportunities for growth, such as the creative industries and bio-sciences.

“We’ve negotiated with the government to have an enterprise zone and five mayoral development zones. Liverpool is currently the only city outside London to have these powers. It looks like we will develop a relationship with Paris which is mutually beneficial about sharing good practice, so we can learn from what they’ve done and what we’ve done.”

The devolution of power from central government has been key to Cities Minister Greg Clark’s policy of allowing cities to both borrow to build infrastructure to attract businesses and also keep the extra income they generate.

It has been muted that Liverpool will gain extra powers including running key transport services if the city can make the economic case.

“We want to grow the city again, Liverpool has just under 450,000 people, but at one time it was over 800,000 and the infrastructure to cope with that size population is still there. That is a challenge alone, how to maintain infrastructure built for a large metropolis in the face of dwindling income from taxes and a smaller population.

“It’s not just a case of growing and strengthening the city economically, but growing the population as well and sustaining it, and that is why we’ve got to create opportunities to convince people to stay.

Among the gleaming visions on the future on offer at the New Cities Summit it is difficult to imagine Liverpool’s place among them. Liverpool is a city which lives on the glories of it’s past. As Second city of the Empire the port grew to become one of the world’s biggest trade centres, handling over 40 per cent of world trade. It was the Shanghai of Victorian Britain, but it has long since been left bereft of civic pride and the steep decline in fortunes since the Second World War has meant it’s place on the world stage has similarly suffered.

“We have 18,000 people on the housing waiting list and that is a problem. I’ve pledged to build 5,000 houses a year. We need quality affordable homes for sale and in the rental sector, and we have to do that if we want to halt the fact that people are leaving to places where they can find accommodation and jobs.”

One of the plans which is central to job creation is the Peel Holdings Liverpool Waters Development. With an estimated £5.5 billion in investment it is according to Anderson key to bringing Liverpool back to the level of it’s industrial past.

The project has been controversial, with Unesco delegation report stating that the scheme could cause ‘irreversible damage’ to the city’s heritage-listed waterfront. This is something

“It can be as good as Canary Wharf in my view,” Anderson says. “It will bring in businesses, especially in the financial sector. What we want to offer is a brand which is world renowned and that comes down to leadership, so I am ready for that.”

Tim Clark is a freelance journalist based in the U.K. He splits his time between writing about comedy for his website Such Small Portions and writing about travel, architecture and education.

Tuesday, May 8th, 2012

Re-Branding Indianapolis Through Humanitarian Efforts by Kelly Campbell

[ One of the traps of smaller cities is thinking that because the talent pool is smaller and very well connected, once you are plugged in, you must know everybody cool in town. But the reality for me in places like Indianapolis is that I am constantly amazed by how many cool and interesting people I've never even heard of, much less met.

Well, I recently came across a blog post by Kelly Campbell, one of those cool people I'd never heard of, that presented her passionate case for pursuing global humanitarian efforts in Indy, using her grass roots example to show how. Kelly previously worked in the fashion industry in New York, and now runs The Village Experience and writes for the Blue Vine Collective (She was also one of the IBJ's 40 Under 40 last year, and you can read more about her over at the IBJ). Kelly not only sees humanitarian efforts as a whitespace opportunity to exploit, they are a personal passion of hers. This shows it as an area that not only has good strategic relevance, but also fits with the cultural ethos of the city. Which is exactly what cities should be looking for. She graciously gave me permission to republish her post - Aaron. ]

Indianapolis has long been known as the “Crossroads of America” and one of the “Sports Capitals of the World.” We host large-scale conventions, international races, and very soon…the Super Bowl. Huge corporations including Eli Lilly, Cummins, and Rolls Royce call Indianapolis home. We are a relatively small city, but we’re on the map.

What I envision, though, is being on the map for something more meaningful… something more impactful. I see Indianapolis becoming a model for other cities to follow in regards to our local to global connections and our humanitarian efforts. Why couldn’t Indianapolis become known as the “humanitarian hub” of the country or even the world?

Many conversations in the community have been taking place around this topic. Indianapolis is now hosting monthly networking events through the Indianapolis Intercultural Network to connect young professionals with an interest in the international world – you walk into one of these events and the topics of conversation range from discussing shipping methods in Togo to recent adventures on the pirate infested beaches of the Kenyan Coast to improving the quality of water in Haiti to debating the image of the U.S. around the world. There is no shortage of interesting people or interesting and thoroughly exciting conversations taking place – all while supporting locally owned and operated businesses around town. This has really proven to be a catalyst to connect the right people to each other and jumpstart the move towards Indianapolis becoming a true international player in the humanitarian sector.

For years, several grassroots organizations have been leading the way in connecting Indianapolis to the rest of the world. The Village Experience has been working with artisans in over 30 countries and operating socially responsible trips to multiple countries in the developing world. Building Tomorrow has been constructing schools and making a huge impact on education in Uganda. Timmy Global Health has changed the face of healthcare in the developing world. The International Center has been bringing in foreign delegates and connecting them to local Indianapolis citizens and businesses. Exodus Refugee Center has been helping refugees make Indianapolis a home for many years. Provocate and Provocate Haiti have been centralizing international efforts and bringing awareness to social justice issues around the world and more specifically building community among all of those involved in Haiti. Without much media attention, these groups have been at the forefront of working in the international arena. What a great base from which to start this move forward.

One specific example of how Indianapolis is becoming more known for it’s international efforts is the East Africa Fundraiser hosted in September 2011.

Organizations and individual citizens approached the Village Experience with grandiose ideas of making a difference in this overwhelming disaster on the other side of the world…the only problem, not one of the organizations on its own had the ability to mobilize resources at the level desired. The solution…work together and make a bigger impact. Organizations such as Bluevine Collective, Indianapolis Intercultural Network, w/purpose, Provocate, Indego Global, and IUPUI joined forces, created a committee of members with large social media followings, and got to work planning a citywide event centered on bringing awareness to the East African famine and raising funds to help alleviate it. We used The Village Experience as our planning hub and as the venue for the event. We contacted the food trucks, local beer vendors, and our friends at Five Star Catering to join in and help us. We created facebook pages, blanketed cafes and coffee shops with flyers, sent out personal invitations, and promoted to all of our customers both in the store and through outside events. We reached out to Nuvo… and they responded by making it the featured event of the week. The pieces of the puzzle were coming together. The last piece of the puzzle… to which organization were we going to donate the money?

After weeks of research, we decided to donate any funds raised to the Global Enrichment Foundation. We didn’t want our efforts to be a drop in the bucket and go mostly to administrative costs at large organizations. We wanted our efforts and our funds to really make a difference. Global Enrichment Foundation became the perfect partner. They were a young, grassroots organization based in a small city in Canada. They maintained low administrative costs. Their founder was energetic and believed in sustainable development and helping people regardless of religious beliefs. And most importantly, they had a very personal connection to the people of Somalia and were working where no one else dared to go. They were on the ground in Kenya and Somalia trucking in life-saving food and water to those effected by the famine… and at the same time, they were developing programs to educate and empower women. It was the perfect fit.

We set a date for our fundraiser, and in the meantime, The Bluevine Collective reached out to followers in the weeks preceding the event and were successful in raising a great deal of funding. The day of the event, we had a huge turnout and were extremely excited to see so many new faces that showed up to do their part in ending the famine in East Africa. We raised $10,000! Not bad for our first attempt at hosting a community based event in collaboration with local partners to tackle a social justice issue.

But, we didn’t stop there. We wanted Indianapolis to be different. We wanted to follow our money to East Africa and really connect to the cause. So, The Village Experience took a group to Kenya in November to hand carry over the funds and meet with reps from The Global Enrichment Foundation. The group volunteered throughout the country for two weeks and gained a better understanding of why events like this happen and why the world seems to turn a blind eye. The world, except Indianapolis, that is. We returned energized to strengthen this newfound partnership and were thrilled when Global Enrichment Founder, Amanda Lindhout, sent over photographs from the Convoy of Hope in December, which was funded in part by our efforts. I still get a little emotional when I look at these photographs and see The Village Experience and The Bluevine Collective logos on the trucks and at the food distribution sites in Somalia. Indianapolis was making a name for itself – and on the humanitarian level at that.

If we can do something like this, there is no reason we can’t do more. I challenge Indianapolis to take the next step. In October 2012, The Village Experience will be hosting Somaly Mam – human trafficking advocate from Cambodia and CNN Hero – for a night of networking and raising awareness. With 9 months to plan a citywide event, I am betting that Indianapolis will prove to be the best stop on her international advocacy tour. This is a woman who is changing the lives of young boys and girls by rescuing them from brutal human traffickers and challenging governments to do more to protect their children. Indianapolis has its own human trafficking task force and deals with this issue on a daily basis. Let’s all join forces and put an end to human trafficking… once and for all.

This post originally appeared in the Blue Vine Collective on January 17, 2012.

Sunday, May 6th, 2012

The OECD Reviews Chicago

Update 5/20/12: This post has been edited to reflect a correction. Please see here for details.

The Organization for Economic Cooperation and Development (OECD) is an international organization that has its roots in the administration of Marshall Plan aid to rebuild Europe after World War II. The OECD was invited by the Chicagoland Chamber of Commerce* to perform a “territorial review” of Chicago’s regional economy. I believe this is the first such review the OECD has ever undertaken in the United States. The results were released a couple months ago. The Chicagoland Chamber graciously sent me a copy. (The report is available online here – thx Jim Russell for the link). I did a read through of this inch-thick, 332-page report and wanted to share a few observations about it. As the quote at the top might indicate, this report, like Rahm Emanuel’s economic strategy, was fairly gloomy. My points will be topical and not an integrated narrative as I did not get to undertake as thorough a review as I might like.

Interesting Statistics

The OECD review amassed quite a bit of interesting statistical data on Chicago and puts them in the context of other major cities in the 34 countries that comprise in the OECD. I think that by itself made the review worth doing. I might suggest other cities take a look at this to determine if such a study would be relevant to them, particularly as international comparisons can be difficult to pull off.

This report is a goldmine of stats and there’s way too much to list here, but a few things that jumped out at me:

• The OECD report benchmarked labor productivity, which is less commonly looked at in economic studies. Chicago’s is above average but growing more slowly than average.
• Chicago has trailed the nation in job growth. Had Chicago simply matched the national average in job growth since 1990, the region would have 600,000 more jobs than it does today.
• There was quite a bit of sectoral analysis of Chicago’s economy. In fact, they actually normalize the sectoral composition of Chicago’s economy when looking at job growth to see if its under performance in job growth was due to concentration in slow growing sectors – but it was not.
• Chicago is known for having America’s second largest business district, but it ranks only fifth out of the top ten regions in America for the percentage of its jobs in the core city. Between 1960 and 1990, over 96% of new regional jobs were created outside downtown.
• There were many other interesting statistics around labor force participation, mobility of educated labor, elderly dependency ratios, educational attainment, poverty, patents, the structure of governments, taxation, etc.

Excess High End Talent

According to the OECD, Chicago suffers from a skills mismatch in its workforce. This is not just true at the bottom end of the economy as might be expected, but also at the top end, where there is a surplus of highly skilled labor:

At the high end, there is a large pool of high-skilled, highly educated workers, in principle more than sufficient to fill the jobs available at that level … at the high-skill end, data for the tri-state region points to an apparent oversupply.

To some extent this shouldn’t be a surprise. Chicago is a desirable city for people to live in, particularly for educated workers inside its heartland catchment area. As with other big city talent magnets, the economy doesn’t always supply the right employment for all the people who want to live there. The many articles about unemployment in Portland, for example, illustrates this, and Chicago is similar. In that regard, you might see the skills surplus as a sign of local strength.

However, the skill concentration in Chicago isn’t producing the type of high end innovation economy seen elsewhere. As the OECD notes, “Indicators suggest that the Chicago Tri-State metro-region does not rank as highly among the US knowledge hubs as one might expect, given the size of its economy and population and its concentration of world-class research universities.”

Also, Chicago may not be as attractive a talent hub as its aggregate numbers indicate. Again per the OECD:

To be sure, the Chicago Tri-State metro-region remains an attractive place for many migrants, but it is less attractive than many of its US metro-region peers. Moreover, if the analysis is confined to highly educated people of prime working age (25+, with at least a bachelor’s degree), then the picture is even more problematic. During 2005-09, more such people moved into the area than left it, but the net gain was relatively small compared with other large US metro-regions. Los Angeles, for example, benefited from a net gain of nearly 80,000 highly educated people in 2009, compared with 3,500 for the Chicago Tri-State metro-region.

When you under-perform as a talent magnet and still can’t put high skilled labor to good use, that’s a definite sign of trouble. This was one thing that was eye opening for me in the study as I’d previously assumed the high end of the market was in pretty good shape and that skill mismatch problems were the result of a large under-educated population vs. open jobs requiring mid-tier skills.

Policy Prescriptions

The OECD’s recommendations were not nearly as strong as its assessment of the region’s conditions. This shouldn’t be surprising as it is easy to look at data and see what may be wrong, but it is not always obvious what to do about it. The recommendations fall into five broad categories:

• Better Skills Matching
• Improving Innovation and Entrepreneurship
• Investments in Transportation and Logistics
• More Green Industry Growth
• More Effective Institutional Arrangements

First off, including “green growth” as one of only five major chapter headings is a joke. The aggregate number of jobs identified as specifically green is small. And as I’ve noted many times, there’s no such thing as green industry. Pretty soon there will just be industry again – it will all be green. So if Chicago and the US aren’t doing well at today’s industries, why would we think they would do any better at tomorrow’s? “Green” isn’t some sort of fairy dust you can sprinkle on and work wonders with. If anything, the acceleration of transition to more green practices will only drive more manufacturing offshore, exactly as it did with light bulbs. The track record of trying to create “green jobs” almost everywhere has been poor and has failed to live up to the hype, so I can’t believe the OECD is doubling down on this snake oil.

For the other areas, the OECD doesn’t break much new ground, though does highlight some interesting international case studies of regions getting it right. The sections more or less regurgitate the laundry list of organizations and initiatives already in place, then tag on “do more and coordinate better.” Examples include, “create region-wide capacity to match skills supply with demand” and “broaden the innovation focus [to include] non-science-and-technology-based innovation.”

By contrast, there was little focus on what counterproductive initiatives might be trimmed. While, for example, the report notes that many of the excessive numbers of local governmental units probably should be eliminated or merged, it doesn’t really look at how many of the alphabet soup of various non-governmental civic development groups might likewise be better off euthanized. Given the unified civic leadership nexus of Chicago, this should in theory be much easier than killing off governments, which are famously resistant to elimination. It’s hard for civic sector leadership to scold state legislatures about the need to consolidate when they can’t even do it themselves. This shows that the OECD had to deal with local political reality, so it probably pulled a lot punches in the recommendations. Statements of raw flattery such as “All key public and private stakeholders are keenly aware of what needs to be done to address these issues effectively” show the extent to which the OECD wanted to avoid ruffling feathers and challenging the Chicagoland status quo, which is disappointing.

I might also take issue with the way the problems were attributed to these structural factors without addressing at any great length many of the clear drivers of Chicago’s under-performance. For example, Chicago is the regional capital of a greater Midwest that has been struggling as a whole. It’s tough to swim upstream against that. (I’ll have more to say on other underlying factors in a subsequent analysis of my own).

In short, this report got it half right in giving us a very good look at the current conditions, strengths, challenges, and international comparisons. Where it lagged was in fully articulating the structural landscape driving the under-performance and developing compelling strategies for turning the ship around. Still, if I were a region out there looking for a good snapshot of where I stood in the marketplace, the OECD would be on my list of people to call.

* Disclosure: I won a competition sponsored by the Chicagoland Chamber in 2009.

Sunday, April 1st, 2012

More Thoughts on the Urban Hierarchy

Few topics get the urbanist blood stirring like the perennial debate over ranking cities. My latest piece on the reordering of the urban hierarchy spawned yet another rekindling of that debate. Among those weighting in were Richard Florida at the Atlantic Cities (whose ideas shaped my original post), Kenan Fikri of the Brookings Institution over at the New Republic and Jim Russell at Burgh Diaspora. There is also a lively comment thread here at the Urbanophile. I wanted to respond to some of the points raised.

The first is the idea that globalization is not a zero sum game and that one city’s gain doesn’t have to come at another city’s expense. This is true. A rising tide can lift all boats. Also, as people like Saskia Sassen have noted, global cities typically don’t compete because they specialize in different things.

However, global cities themselves are a relatively recent phenomenon. Not every city of prominence in the past has yet successfully made the transition to the global age. Early in the industrial age there were cities like Cincinnati that emerged as titans only to fall back as new upstarts arose. It seems axomatic that creative destruction is not going to leave the current system of global cities locked in the current network positions and relative hierarchies that they are in today. And just because cities can in effect “win” in an absolute sense from globalization, they can clearly end up falling back on a relative basis.

I again particularly believe this is a risk for cities that are not the premier city in their country and which are located in the already developed world. As Florida noted, the top of the pecking order is incredibly stable over time. How many times has a #2 or lower city passed up a #1 city in the modern age? Not many. Only two cases come to mind right now, both from extraordinary events. Toronto supplanted Montreal after the latter decided to re-embrace its Francophone heritage at the expense of English speakers, and I believe Rio was once the first city of Brazil and lost out to Sao Paulo after the capital was moved to Brasilia. (Other examples? India perhaps? How many that don’t involve the capital moving?) But there’s much more churn the further down you go.

There is also the question of whether or not I’ve changed my mind about Chicago, particularly in relation to previous posts like this one. I don’t think so. In fact, I think that 2009 piece holds up rather well. Probably to some extent I have come to realize the weaknesses of Chicago’s story though as I dig into the numbers and see what’s going on elsewhere. Also, I think it’s a city that has been (at least until Rahm took over) singularly oblivious to the challenges it faces (though in fairness I guess LA gives it a run for the money), so I work to highlight those rather than the good news which already gets plenty of press. For example, the major national media fawned all over Chicago when Rahm announced his infrastructure plan. I could run ten negative stories and not counter that press, but I feel it’s my job here in this blog to tell the story that’s not being told.

I still clearly believe Chicago has experienced a huge and remarkable transformation. I witnessed most of it personally. I’ve seen a hundred buildings added to the skyline, vast tracts of the central city rejuvenated, a major transformation of the physical face of the city, and more. It would not surprise me at all to discover that it is Chicago that leads the nation in repatriation of jobs from the suburbs to downtown. It has a food scene that holds its own with anybody. And it continues to grow and improve in many ways despite obvious challenges like pensions. I continue to believe the Chicago story is real.

Yet in a sense it was the 90s that was really Chicago’s decade. I’ve got some forthcoming writings on this topic that will explore this in more detail, but just as one teaser, I can tell you that on a metro area basis, Chicago actually added more jobs than Houston in the 90s. But the 2000s were a tough decade for Chicago. What’s more, I don’t think Chicago fully grasps the extent to which other cities have moved even further forward, though you’ll occasionally see someone who gets it, such as in a recent Reader article on competitive cocktailing. So I think Chicago has done well and continues to only get better in many ways, though it has hit a rough patch and I think clearly has suffered a relative decline in standing and importance.

Also, while I pivoted off a Chicago article, I don’t think Chicago is alone. Los Angeles is clearly a “sick man” city in many ways, though a lot of its problems are self-inflicted. I also think Boston is suffering on a relative basis as NYC-DC becomes the premier northeast axis instead of NYC-BOS. This is perhaps why Philadelphia is showing signs of revival.

As for Fikri saying that Washington’s media exports were puny in comparison to NYC and LA, this is true if you look at things like movies and TV shows. But what I had in mind was the huge base DC is becoming for political and other media and reportage. Washington has a huge number of foreign correspondents. Fully 56% of full-time foreign journalists live in DC. Another 34% are in New York. 8% are in California, presumably mostly to cover Hollywood, with perhaps the odd Silicon Valley correspondent. Only 2% are based elsewhere in America. (If you look at part time foreign journalists as well, NYC is the #1 market). I don’t have much at my fingertips right now, but I’ve also read many stories about more media, particularly the politically oriented variety, relocating from NYC to DC. This gives a place like Washington a huge media footprint and platform for which to get its word out to the world in addition to its status as the most important political capital in the world. There’s a reason that those foreigners Phil Rosenthal wrote about in the Chicago Tribune think there are only three US cities: New York, LA, and DC. Combine that with the wonkish atmosphere and the highly educated population, and it’s also no surprise that something like Greater Greater Washington is the most successful city blog in America.

Someone commented that Washington had nothing on Chicago in his estimation. As far as the central city goes, I’d probably agree with that. But it’s not just what you have, it’s where you are headed, and Washington is clearly headed up, in terms of its global and national importance, its economy, its population, its education levels, and its urban environment. When the Burnham Plan came out, Chicago was arguably not a very attractive place either. It was the Houston of its day in a way. But it was a city on the rise. So too with Washington today. It is America’s next great metropolis, at least as long as the federal government’s money and ever increasing control over American life hold up.

Thursday, March 29th, 2012

The Great Reordering of the Urban Hierarchy

My latest blog post is online over at New Geography. It is called “The Great Reordering of the Urban Hierarchy.” In it, I look at how the relentless expansion of the US federal government and the “spiky world” forces of globalizations are revamping the urban hierarchy of the top tier cities in the United States. While not a definitive view, it seems that New York is going from strength to strength, while Washington, DC emerges as America’s new “Second City.” This has been to the detriment of Los Angeles, Chicago, and Boston. It’s controversial to be sure, but I hope you’ll enjoy it. Comments definitely encouraged on this one.

Update: Richard Florida has more to say on this topic over at The Atlantic Cities..

Thursday, January 26th, 2012

The Case for Quality of Space

Last November I was privileged to be able to speak at a community conversation event in Franklin, Indiana – a town of about 25,000 people south of Indianapolis that is an old county seat on the edge of suburban expansion – sponsored by Indiana Humanities and Ball State University’s Bowen Center for Public Affairs.

The topic of the evening was quality of space and what, if anything, Franklin should do in this area. There had recently been some big disputes over downtown redevelopment projects I believe.

I gave a talk that set the stage for this conversation. In it I make the case for why high quality of place is of importance to a community. I root it in a business case analysis based on globalization and structural changes in the economy, the impact of that on Indiana’s competitive positioning, and a real life example of the potential payoff. I then talk a little bit ways to actually make quality of space happen.

Before the video though, I should mention that I am for hire to speak at your event. For details, arenn@urbanophile.com. As you’ll see from this, I work to create something custom and compelling for your audience, not a canned talk. And I basically treat it as a mini-consulting engagement to drive more value for you.

The video is below, followed by an outline of the talk. I hope you enjoy. (If the video doesn’t display for you, click here).

I. The Case for Quality of Space

A. History of Globalization and Structural Economic Changes: Indiana has gone from competitively advantaged to competitively disadvantaged.

B. The Impact of Economic Change: Indiana has trailed the country in jobs and incomes

C. Implications of the Situation:

1. If nothing changes, expect more of the same poor results. This means real change, not just tweaks.
2. Indiana cannot be competitive purely on a cost basis ever again. Even domestically, there are cheaper locations like Texas, and overseas competitors are much cheaper. Cost control and quality regulations are still very important, but cost cannot be the sole basis of competition.
3. Indiana must compete today at least in part by creating a civic product people want to buy on its own merits, not just because it’s the cheapest thing on the market – because it isn’t.

D. But Doesn’t Franklin Already Have High Quality of Space/Place?: Yes. Yet consider:

1. Much of what makes the high quality of a community like Franklin is the people who live there and their shared history. Newcomers can’t judge a community by this yet.
2. Much of what makes our communities physically great was built a long time ago. The question is how we build on that legacy to meet the challenge of the 21st century.

II. The Benefits of Quality of Space: Columbus, Indiana Case Study

A. Why a Case Study of Columbus? It’s nearby for locals to check out themselves, it has a strong and comprehensive commitment to quality of space, and is closer to a typical blue collar community than say a Big Ten college town.

B. Columbus Economic Performance: Outperforms all non-Big Ten college town Indiana peers and also has outperformed the nation as a whole on jobs and income.

C. How Much Did Columbus Pay for Its Quality of Space Plan?

1. Columbus tax expenditures per person are higher than most peers. They did spend money on this. Not free.
2. But Columbus tax rates are among the lowest of its peers.
3. How is this? Columbus has the largest tax base.

D. Two Fallacies of Government

1. Democrat Fallacy: The only thing that determines government revenue is the tax rate.
2. Republican Fallacy: The only thing that determines tax bills is government spending.
3. Both claims are based on short term thinking. Need to evaluate the life cycle implications of policy choices. Columbus spent more but pays less now because they understand total cost of ownership.

III. Bringing Quality of Space to Life

A. Four Planks in a Quality of Space Program

1. First Class Public Buildings: We used to build them this way, so doing it today is following an old tradition, not doing something different.
2. Focus on Value per Dollar: It’s not always about more money. A bit part of it is making sure the money you do spend gets the full value per dollar.
3. Find Low Cost, Fast, High Impact Items
4. Build on Unique Qualities: In Franklin’s case, Franklin College

B. Closing Caveats

1. Quality of space is a long term game. You don’t see immediate results from a trail. Columbus took 60 years to get where it is today. Indy’s downtown sports strategy started 40 years ago, but it is just now getting to host the Superbowl.
2. Make sure that whatever you do is specific to your community. Don’t let somebody else sell you an off the shelf solution that merely copies what others are doing.

Tuesday, December 20th, 2011

Chicago: What’s Changed? What Hasn’t? by Richard C. Longworth

[ After reading this blog post on Richard Longworth's own blog I went out and bought Global Chicago, which I think is still relevant today, even if some of the chapters that are mere compilations of Chicago's global assets won't excite out of towners. I wanted to share his post with you, which takes a look at where Global Chicago stands today - Aaron. ]

A few years ago, The Chicago Council published a book called Global Chicago, with two goals in mind. The first was a wake-up call to Chicagoans that their old industrial City of the Big Shoulders was gone, replaced by a global city with new strengths and challenges. The second was an attempt — probably the first anywhere — to study globalization's impact on cities by looking hard at one of those cities.

I was talking recently with the editor of the book, Charles Madigan, then a writer and editor at the Chicago Tribune (as was I), now Presidential Writer in Residence at Roosevelt University in Chicago. We were exploring what's changed in Chicago since the book came out, and what is unchanged — or still undone.

Perhaps the biggest change is that the wake-up call no longer is needed. The educational job is done. Chicagoans get it. Maybe we can take some credit, but mostly, it's the daily evidence of globalization's effect on the city that has convinced Chicagoans that it's not their granddaddy's economy any more. "Global city" and "Global Chicago" are buzzwords now.

The book listed many problems that absolutely needed to be solved — crumbling infrastructure, an antiquated public transportation system, a school system that fails the majority of its students. The sad fact is that so many remain unresolved to this day. As The Chicago Council and other civic organizations have written since, all these issues are still at the top of the city's agenda.

But one item barely appeared at all: how to pay for all this. The book appeared after the recession of the early Bush years, just as the false boom of the past decade began. Money seemed plentiful. It was more of a matter of fixing civic priorities than of financing them. The keywords of today's headlines — "budget," "debt," "deficit," "employees," "pensions," "taxes," "fees" — appear nowhere in the book's index.

How times do change (and remember, this was less than a decade ago). Urban financing, almost a non-topic then, is the Big Issue now. Chicago still needs to fix its schools, roads, sewers, public transport. But mostly it has to figure out how to pay its bills in an era of big debts and big deficits.

The city is awash now in financing ideas, including the privatization of public services like Midway Airport and a plethora of user fees to raise money. Some of this has already happened, like the privatization of the Chicago Skyway, which seems to be working, and of the city's parking meters, which isn't. But none of these new ideas, including privatization, was even on the civic agenda when the book came out. 

Chicago also is toying now with proposals for a casino or other forms of gambling to raise money. Back then, some leaders wanted a casino, but it never came close to being built. 

When the book came out, Chicago was on an upswing, drawing in people and business from around the world, growing in jobs and output. But decline lay around the corner. Since then, as a new report by Metropolitan Strategies says, Chicago has lagged the national average in economic growth, job creation, population growth, patent output and other measures of economic vitality.

Global Chicago celebrated a global city on the make. I suspect a new edition, published now, would be a more somber book.

Since then, Chicago has tackled two huge projects and succeeded at one, failed at the other. The success was Millennium Park, the huge and glittering downtown park that has given Chicago what it always lacked, which was a Tuileries, a central meeting place where the divided and balkanized city could come together. It also has changed the face of the city by revitalizing the Loop, the tattered old business district south of the Chicago River.

The failure was the bid to get the 2016 Olympic Games to Chicago. The bid itself was anemic and inadequate, not a patch of the Olympics project that Barcelona, for instance, used to remake itself. Perhaps more than anything else, the Olympics bid was the work of a tired old guard that, after Millennium Park, had run out of ideas. It was Mayor Daley's swan song, the last big initiative before he retired.

His retirement and the election of Rahm Emanuel as mayor is the most obvious change since the book came out. The book talked about how Mayor Richard M. Daley had taken the Democratic Machine created by his father, Mayor Richard J. Daley, and adapted it to the new chores of a global city. That Machine still exists, but with new people in charge. No one knows whether they will simply pour new wine into the old bottle, as did Daley II, or will reform Chicago politics from the ground up.

The financial sector of the city suffered back then from the lack of a major locally-owned bank. That hasn't changed. But in 2004, the big LaSalle Street markets, like the Board of Trade and Chicago Mercantile Exchange, were permanent parts of the financial landscape. Now the Merc is threatening to leave town to a more tax-friendly haven.

One question not asked in the book: is it possible to have a first-class city without first-class newspapers? No need to ask the question then: Chicago had two fine papers. The papers still exist but are so crippled by job cuts, coverage restrictions and bankruptcies that no one would call them first-rate.

The book talked about the impact of immigrants on Chicago. Even then, demographic shifts were reshaping the city. Both blacks and whites have moved out of the city. Immigration into the city has slowed (possibly a blip, due to the recession), meaning that Chicago lost 200,000 people between 2000 and 2010: it's now down no less than 1 million persons, or 25 percent of its population, since its industrial peak in 1950.

But there's more to this shift than raw statistics. First, the Chicago region is sprawling, with exurban town and counties growing, mostly with whites. Latino growth is weakest in the city, strongest in the suburbs. White population is shrinking in the inner ring suburbs, but is growing strongly in the center of the city.

What's happening is something that wasn't seen when the book came out — the Europeanization of Chicago. As in many European cities, the center of Chicago is increasingly going upscale, becoming a province of wealthier white global citizens, while both blacks and Latinos are pushed out of the city into the suburbs.

One cause and result of this is improving public schools — for some Chicagoans. There is considerable anecdotal evidence of good public schools in more upscale city neighborhoods, plus private schools for those who can afford them. But all other evidence indicates that schools in less favored parts of the cities haven't improved at all, and still fail to graduate 40 or 50 percent of their students.

The book focused on continued economic vitality but seldom asked: vitality for whom? As urban financing moves front and center, Chicago has to ask itself what kind of a city it wants to be. It clearly wants to be a global city, drawing in the sort of people who can afford to live anywhere. But can it do this without pricing everyone else out of the city? Those census figures mentioned above don't give confidence.

Finally, the question of Chicago's relationship to its region is more vital now than then. This doesn't mean its relationship to the broader Midwest, although this is still important. But rather, in these straitened times, how can the city take its immediate economic region — from Milwaukee through northern Indiana and into western Michigan — and get it work together across state lines, to reinvent itself as a global megacity, as so many other cities and regions around the world are doing? 

Richard C. Longworth is a Senior Fellow at the Chicago Council on Global Affairs, author of the book Caught in the Middle: America’s Heartland in the Age of Globalism, and host of www.globalmidwest.org.

This post originally appeared in The Midwesterner blog of the Global Midwest Initiative of the Chicago Council of Global Affairs on October 25, 2011.

Thursday, December 15th, 2011

What Does Globalization Mean to Non-Global Cities?

To anyplace that considers itself a “global city” – New York, Chicago, etc – globalization and global competitive reality are the defining lens through which they see their present and future. I happen to think that with the exception of a handful of the most exceptional cities, this is to some extent unhealthy. These cities take too narrow a view. Yet clearly there is an aspect of this global city thing that’s very relevant to them.

But to those smaller places that aren’t global cities, globalization seems curiously absent from the radar. I would define a global city as a place that is a material producer of global city services – financial and producer services related to the global economy – for export. Secondarily we might consider cities that are globally important hubs of transport, culture, political/military power, or of a particular industry.

I notice this big time when I attend events in these two different classes of cities. A civic conference in a global city will be all about globalization, or at least globalization will be used at a unifying frame for everything discussed. A similar conference in a non-global, usually smaller city will be about lots of things, but globalization won’t be one of them. This seems to be true even in very successful non-global cities.

I was talking with someone about this the other day. He spends more time than me in smaller towns and small industrial cities, and notes that globalization is a big discussion point in those places. His take was that for smaller places that have gotten chewed up by the global economy, the menace of globalization was clear, whereas for America’s tier 2/tier 3 type cities, which often tend to be quite successful, globalization hasn’t forced itself onto the radar. That’s not to say that there aren’t people in almost any city thinking about it, but it isn’t core to the civic discourse.

It seems intuitive to me that one of the most powerful economic forces in the world should be front and center for any city thinking about its future. How will they carve out a successful economic niche for themselves over the course of the 21st century?

On the other hand, for these non-global cities, it isn’t exactly clear even to me what globalization means or how they’d react to it. I mean for NYC, it’s instantly clear, but not for these places. Their networks are primarily national and regional, not global. Their economies aren’t based on trading sophisticated financial and producer services. Even though global trade, etc. mean something to them, it’s easy to view it through a traditional civic and economic development lens.

I’m talking about cities like Nashville, Indianapolis, Austin, Charlotte, Columbus, Kansas City, Providence, etc. here.

So I wanted to throw it open and ask the question: what does globalization mean to these cities and how should they be thinking about it?

Sunday, December 11th, 2011

Replay: Migration – Geographies in Conflict

It’s an interesting puzzle. The “cool cities”, the ones that are supposedly doing the best, the ones with the hottest downtowns, the biggest buzz, leading-edge new companies, smart shops, swank restaurants and hip hotels – the ones that are supposed to be magnets for talent – are often among those with the highest levels of net domestic outmigration. New York City, Los Angeles, San Francisco, Boston, Miami and Chicago – all were big losers in the 2000s. Seattle, Denver, and Minneapolis more or less broke even. Portland is the only proverbially cool city with a regional population over two million that gained any significant number of migrants.

Those who find this an occasion for a schadenfreude moment attribute it to tax and regulatory climates. Clearly, things like cost of doing business are clearly very important. And indeed this is often under-rated by cool city proponents. And other things equal, people do prefer low tax jurisdictions. Still, is this the only answer, or is there another explanation? Could it be that rather than high costs driving migration, both costs and migration are being driven by other underlying factors?

Perhaps the root problem is structural change in the economy in the age of globalization. As business became more globalized and more virtualized, this created demand for new types of financial products and producer services – notably in the law, accounting, consultancy, and marketing areas – to help businesses service and control their far flung networks. Unlike many activities, financial and producer services are subject to clustering economics, and have ended up concentrated in a relatively small number of cities around the world.

These so-called “global cities” serve as control nodes for various global networks and key production sites for these services, along with other specialized niches they long had. In effect, more distributed economic activities requires increasing centralization of select functions, particularly the most highly value-added functions. Yet these activities are not set in stone; for example, areas that were once centers for global business, like Cleveland or Detroit, are fading; others like Houston and Dallas are rising.

Yet unlike the Texas cities, which retain a strong middle-class and middle-echelon economy, many of the more elite, established urban centers – for example New York and London – increasingly create parallel economies and labor markets in those cities. These cities now generally contain two kinds of people and firms: those who are part of the global city functions and those who are not. Those who are engaged in global city functions operate in a world of very high value-added activities; specialized, niche skill markets; and rising demand conditions. Those skills are not readily acquired outside of global cities. Often, they are sub-specialized to particular places as different global cities specialize in different niches.

In many cases, these functions have not yet migrated to India or China or often even another global city. This tends to inflate salaries significantly for these specialized, niche skill jobs.

On the other hand, many people who once thrived in these cities have not benefited from these economic forces. They often are in occupations where labor arbitrage is feasible, and their jobs can either be off-shored, or readily transferred to lower cost locales in the US. This includes manufacturing work, but also important but less specialized white collar occupations like basic accounting, loan officers, corporate IT, and HR. In short, the routine side of the traditional monolithic corporate headquarters and services firm.

In effect, in these global cities, two economic geographies share the same physical geography – and those economic geographies are in conflict. One set requires catering to high skill, highly paid workers and firms where cost is a secondary concern. The other involves occupations and industries where cost is very much a concern. The occupants of these two geographies have very different public policy priorities. Which of them will win out?

In a global city, particularly a mature and expensive one, the elite geography wins. It is generating the most money, and with money comes power and influence. Additionally, the high wage workers in these industries are simply able to pay more for real estate and other items. Their mere paychecks are driving up costs in the city they live in. They are re-ordering the city in their own high income image, aided and abetted by a speculative financial fueled housing bubble.

The prestige of these industries burnishes the civic brand, making them attractive to civic boosters. What’s more, leaders in global cities feel that these are their businesses of their future. For them the attractiveness of concentrating in areas where you think you can create a “wide moat” advantage makes sense.

This is why cities like Portland, Minneapolis, Denver, and Seattle haven’t fared nearly so badly – they aren’t really full metal global cities and thus, while not always cheap, have remained relatively affordable versus places like San Francisco and New York.

At the same time it is not easy for these more expensive cities to adopt a low tax, low cost approach. For many reasons, places like San Francisco, New York, and London will never, no matter what they do, be able to match Atlanta, Houston, or Dallas, or even Chicago in a war on costs. That would be a suicide mission. Their logical strategy is to follow the law of comparative advantage, and specialize where you have the best competitive position in the market, and that’s global city functions.

Many other cities have followed this strategy, but with differing success. Fearing to end up like the next Michigan and Detroit pair, many states and cities have invested heavily to build up urban amenities to cater to the global city firms and their workers: transit systems, showplace public buildings, art and culture events, bike lanes, and beautification. Cost fell by the wayside as a concern, as did investments in priorities of the traditional middle class.

This explains why, for example, not only have taxes gone up, but things like schools and other basic services have declined so badly in places like California. Traditional primary and secondary education is not important to industries where California is betting its future. Silicon Valley, Hollywood, and biotech draw their workers from the best and brightest of the world. They source globally, not locally. Their labor force is largely educated elsewhere. Basic education and investments in poorer neighborhoods has no ROI for those industries. With the decline of high tech manufacturing in Silicon Valley, even previously critical institutions such as community colleges are no longer as needed.

The same goes for growth and sprawl. They are playing a game of quality over quantity. They specialize in elite urban areas and elite suburbs or exurbs. For example, San Francisco also has Marin, Palo Alto and Los Altos Hills. New York has, in addition to Manhattan, Greenwich and northern Westchester. The only thing they need size for is sheer scale in certain urban functions, and they already have it. Growth is unnecessary for them and only brings problems.

It also explains the highly pro-immigration stance of these cities, as a large service class is needed for globalization’s new aristocrats. Immigrants are needed as low cost labor in the burgeoning restaurant and hotel business. In America’s global cities immigrant housekeepers, landscapers, and nannies are common. They may not dress like His Lordship’s butler, but that doesn’t make them any less servants.

Lastly, it explains why we have seen the same polarizing class pattern so consistently despite broad geographic and socio-political differences between places like Los Angeles, Boston, and Chicago, to say nothing of overseas locales like London. A common global phenomenon probably has a common underlying cause.

The traditional middle class, feeling the squeeze, is simply moving to where its own kind is king and its own priorities are catered to. In a battle of conflicting economic geographies, the one with higher value added wins, displacing others in what Jane Jacobs termed the “self-destruction of diversity”. First, an attractive environment draws diverse uses, then one becomes economically dominant and, through superior purchasing power, displaces other uses over time. The story ends when that dominant economic activity exhausts itself – the true danger facing global cities, though fortunately they are generally not dependent on just one small niche. It’s basic comparative advantage.

If you are just an average middle class guy, why live in one of those global cities anyway? Unless you have roots there that you value, take advantage of something you can’t get anywhere else such as by having a passion for world class opera, or are one of globalization’s courtiers – a hanger on like a high end chef, artist, or indie rocker, perhaps – why put up with the high cost and hassles? It makes no sense. You’re better off living in suburban Cincinnati than suburban Chicago.

And frankly, the folks on the global city side prefer it if you leave anyway. Immigrants are unlikely to start trouble, but a middle class facing an economic squeeze and threat to its way of life might raise a ruckus. That won’t happen if enough of them move to Dallas and rob the rest of critical mass and resulting political clout.

Many of those leaving are college educated, especially, when they get older, get married, and start having families. A relatively large number of these people could be replaced by a smaller number of elite bankers, biotech PhDs, and celebrity chefs. In that case, both “narratives” could hold simultaneously. One type of talent moves in, while a greater number of a different kind moves out. As with trade generally, this could even be viewed as a win-win in some regard.

Again, it is easy to blame the costs and public policy. Clearly there is room for improvement in governance such as reigning in out of control civil service pay and pensions in places like California and New York. But what is more pernicious is the rising income gap in America, and the likely outcomes it drives when a city acquires a small elite economic class with incomes that far outstrip the average, and lacks strong economic linkages to the rest of the city other than for personal services. It sets in motion economic logic that undermines the traditional middle class, which then starts leaving, exacerbating the gap.

For years we worried that a large, stable middle class with a permanent, largely minority underclass constituted an unjust order. As it turns out, the alternatives are sometimes worse. Ultimately some American cities have come to take on the cast of their third world brethren, a perhaps somewhat less extreme version of Mexico City or São Paulo, where vast wealth and glitter exist side by side with the favelas.

This explains why America’s global cities often feel more kinship with their international peers than with many of the places in their own country. The global cities, which now enjoy something of a political ascendency, are also sundering the American commonwealth. Taking steps to prevent a further widening of the income gap may be the only way to save these cities’ middle class – and maintain the solidarity of the country.

This post originally appeared in New Geography on November 23, 2009.

Sunday, October 2nd, 2011

Globalization and the Airport

I had originally planned to position this as a day late and dollar short review of Greg Lindsay’s book Aerotropolis: The Way We’ll Live Next. Yet I think in a way the title misleads. The word “aerotropolis” conjures up dull visions of depressing airport development, security lines, and power points at conferences.

But what Lindsay has done with this book is really something much bigger: He has told the story of globalization as seen through the lens of the airport. Because of that, the book isn’t entirely convincing. Air travel and shipping is naturally presented as the primal force driving globalization. Key advances such containerization play no role. Yet in my view this is one of the best overviews of globalization I’ve read, and I think deserves to be read by anyone who cares about and wants to understand the new world we live in. From China and India to Dubai, Amsterdam, Louisville, LA, Africa, and more locations, this books shows the fantastic speed of change in our world and what globalization is doing to it.

What is an aerotropolis? Lindsay discusses this at some depth in an interview with Geoff Manaugh that originally ran in BLDGBLOG. But the most well known view is that espoused by John Kasarda – a professor, consultant, and Lindsay’s nominal co-author – who serves as a sort of high priest for it. In Kasarda’s view, the aerotropolis is in effect two things: 1) a large master-planned airport city consisting of a gigantic hub airport linked to a nearby metro region by roads and rail, surrounded by segregated zones of airport related businesses such as warehouses, offices, hospitals, and even housing, and 2) a short hand for a new vision of the city in which the airport is the dominant shaper of economic life, similar to how ports and rivers previously shaped the cities that surrounded them.

If you are interested, Kasarda lays out a picture of the aerotropolis in a short video you can watch. (If the video doesn’t display, click here). Pay particular attention to the title slide as we’ll return to it later.

A few things jumped at me out of the book. One of them is the close linkage between the aerotropolis and its boosters with authoritarianism (and by extension, similarly for globalization and its boosters). The second is that, despite vast sums of money and authoritarian rule, I didn’t come away with a sense of anyplace in the world that had fully pulled off Kasarda’s vision. Indeed, there are as many or more failures than successes. And even those successes are far from perfect ones.

As Lindsay notes:

The aerotropolis and authoritarianism go hand in hand. The first is a city built from scratch to chase economies of speed; the second are the only ones in a position to sign off on a massive construction project before its too late. It’s no accident that Kasarda has found early adopters in the Middle East and China, followed close behind by Asian nations with a legacy of military rule.

Kasarda himself seems blissfully unconcerned with this. The book notes that “high-functioning dictatorships such as Dubai’s don’t faze [Kasarda]. If anything, they’re the only ones who move fast enough.” Kasarda is basically willing to consult with anyone, anywhere – as long as their money spends and they are interested in building an aerotropolis.

I think this is a great summation of perhaps how we got to where we are with globalization. Globalization is often portrayed as an inevitable, inexorable process that sort of came about as an emergent property of advances in transportation and communications technology. But as with the aerotropolis – a master-planned environment conceived and dictated from the top down – illustrates, globalization is in fact a man-made creation, one willfully brought into existence by the efforts of various parties.

Globalization was at least in part the product of human architects, and one of them is Kasarda. Globalization was also a product of elites, often unelected, who harnessed the market making power of government to shape the world to what they perceived as their advantages. Globalization has surely had many winners – but also many losers. But among the biggest winners have been architects themselves. When the globalization booster class profits from the very policies they recommend, we are perhaps entitled to view their prescriptions skeptically as we would anyone with a conflict of interest.

Now, I’m no anti-globalization luddite. Let the record show that I’m an unabashed free trader. And in addition to the top-down nexus, there are plenty of stories of bottom-up entrepreneurship as hustlers of all nations look for ways to take advantage of what this new world gives them. Globalization has dramatically lifted the incomes of hundreds of millions of people around the world. That is something to be celebrated.

But this isn’t a simple black and white “for” or “against” matter. We can support trade and an increase in global economic flows, while having serious reservations about the way it has been architected. In particular, the rise of authoritarian locales in this world order and the almost amoral embrace of them by Western boosters like Kasarda is something that concerns me.

In the last 30-40 years or so, we in the developed West buried business and local communities under an increasing mountain of regulations. In a sense this was rational. As we grew more prosperous, we were increasingly able to use our new found wealth to purchase a cleaner environment, safer products and workplaces, better health care, etc. and to ensure that our decisions considered a wide range of impacts before they were implemented. But this logic assumed that we forever would remain top dog in the world, and thus, while we might pay some dollar cost for this out of our own pocket, it wouldn’t fundamentally threaten our economy or upward social mobility.

Alas, the world didn’t turn out that way. In this new era, the era of the internet, containerized shipping, and the aerotropolis, localities may not be able to pick up and move, but businesses can. And moved they have. Maybe not physically a plant relocation, but the choice of location for expansions. This hasn’t always been to places with perhaps a more moderate regime of regulation, but increasingly to dictatorships that operate under a wild west type model and are willing to do almost anything, including rewriting laws, to accommodate this new business. The aerotropolis is but one example of this. As Lindsay notes, Kasarda “proposes building cities by corporations for corporations, guaranteeing their survival by tailoring them to clients’ specifications—beginning with the airport.”

In effect, what we have done is delinked trade from any larger consideration, social or environmental. This enables not just cost arbitrage, but regulatory and even moral arbitrage. In the Cold War era the West was willing to do business and support a wide variety of unsavory regimes and practices – just as long as they didn’t go communist. That was a mindset that, perhaps in an unexamined way, continued after the Soviet Union’s collapse. But what might have been at least understandable in the context of the Cold War is less so today. The fact that we’ve basically said that, save for rules pertaining in a narrow sense to trade, we don’t care who you are or what you do in your country is a decision with consequences.

As for Kasarda, the impression I get from the book and various articles I’ve read about him is less of a man interested in getting rich than of someone who is looking for someone to implement his new vision of the aerotropolis city. In the video above, Kasarda quotes Le Corbusier in the title slide. Corbu famously proposed demolishing much of historic Paris in order to build a city of freestanding modernist towers. He was more than willing to sweep away the entire urban order in order to remake the city in accordance with what he thought was a better vision – his vision naturally.

Kasarda falls into this mode. There’s a new world coming, and the ones who will benefit most from it are those who are most prepared to reshape their urban geography to accommodate this new master planned form. The fact that Kasarda quotes Le Corbusier without any sense of irony is telling.

But a funny thing happened on the way to the aerotropolis. Even where the nominal ingredients were in place (including authoritarian government), there seem to be precious few places where the aerotropolis has been pulled off successfully. In fact, the book probably relates as many failed as successful ones, and at no point did I read a case study and come away going, “Wow – that’s it.”

But this should come as no surprise. Kasarda believes authoritarian rule makes things happen, then is shocked, shocked, to find that there is rampant cronyism, corruption, and clout seeking that compromises the vision.

Kasarda also bemoans the failure of planners to truly get the aerotropolis concept and that even when they do, they often fail to follow through on their planning concepts correctly. This too was as predictable as the sun coming up in the east. In the full aerotropolis vision, infrastructure and land around the airport is controlled by a single entity that is chartered with not only allocating space to various types of uses, but also deciding what is the highest and best use for the sites. This is nothing less than central economic planning, something we should know by now isn’t going to work. And even in the best of cases and with the best of intent, planning never survives intact in its original vision when making contact with reality. Another thing that struck me is that given the extremely high rate of change and creative destruction this new air enabled globalization is creating, the notion of “highest and best” use is ephemeral. The minute you build something, it’s legacy. To stay in top of your game then would require in effect stripping people of their property rights so that you can scrape and start over whenever the economic flows shift in a new direction.

Ultimately this is one thing that gives me hope. Back in the 70’s, people like John Kenneth Galbraith believed that the Soviet central planned model was a viable and competitive alternative to capitalism and that we’d have to respond in kind. Similarly the 80’s the Japanese way based on choosing favored industries, etc. was extolled. Neither model panned out in the long run.

Today we yet again see those like Tom Friedman who have a crush on authoritarian or centrally planned places that can get things done. But it doesn’t just matter if you can get things done, it matters what it is that you do and how you do it. Ultimately I think in the long run a market system, with strong property rights, civil rights, democracy, and the rule of law, is a better bet for the long term. We’ll see what happens.

In the meantime, we have to stop acting like we are the only game in town and make sensible changes to our own business climate and trade policies. I can’t lay out a vision of all what that is, but regulatory rollback and reform has to be a big part of the equation. The book brings that home. In the nation that once built the Hoover Dam in one year without even being sure when they started that it would be possible to build or exactly how they’d get it done, in the nation that put a man on the moon in less than a decade, we can’t even add a simple runway to an airport in a decade these days. In that amount of time, China can built 50 or so new airports from scratch. Unlike Friedman, I don’t suggest we imitate China, but imitating the can-do spirit of our own democratic past wouldn’t be such a bad thing. The fact that we built a high quality, award winning replacement for the I-35W bridge that collapsed in Minneapolis in only 18 months shows that we can still do it – if we choose to.

From a developed world perspective, the other thing that hit me from the book is that having an aerotropolis, even a successful one, doesn’t necessarily do much for you. Lindsay wrote extensively on Memphis (home to FedEx) and Louisville (home to UPS’s main air hub). Memphis likes to bill itself as “America’s Aerotropolis.” One of its local leaders recently said, “While other communities are striving to create an aerotropolis in their community or region, many of those efforts are aspirational, whereas in Memphis, the aerotropolis model is a reality.”

As my recent coverage noted, however, out of 51 US metro areas with greater than a million people, Memphis ranks #48 in college degree attainment. Its unemployment rate of 10.4% is higher than the nation as a whole. Between 2000 and 2010, Memphis lost nearly 6% of its jobs, a rate far worse than the US as a whole. It’s GDP per capita trails the US average, as does its per capita income. Fed Ex might be a great thing for Memphis, but it hasn’t changed the fact that Memphis is one of the most struggling cities economically in the US. (Louisville’s statistics are better, but it is still clearly an economic laggard). Meanwhile, aerotropolis-free Nashville is booming.

More passenger hub type airport cities have done better – Dallas, Atlanta, Denver, etc. – yet this was based mostly on a pre-existing pattern (e.g., Chicago) or came into being as an artifact of the hub and spoke system, airline mergers, etc. well before anyone had thought of the aerotropolis concept. They are also generally based more on domestic than global connectivity.

Even overseas, where airports have done better at building the fortunes of cities, particularly those that previously lacked good global connectivity, there are plenty of misses to go along with the hits.

The lesson I draw is that while good air connectivity is critical for a city in the global economy – indeed, I almost draw my threshold population for what constitutes a minimum viable city in the globalized world in terms of whether or not it is big enough to support a major airport – the airport is only one ingredient needed for success, not the entire recipe. Cities that pin their hopes too heavily on airport led transformation are bound to be disappointed. And even if you go in with the best of intentions trying to do airport development right, you are far from guaranteed to have success.

I should close with a few final words about Kasarda. I know I sound like I’m picking on him in this post, but that’s less from anything personally about him than it is about the trend he represents in globalization (much as one might say about the aerotropolis itself). I don’t get the impression he’s a nefarious or bad guy, but rather that he’s a technocrat in love with his idea of the master-planned aerotropolis. In fact, I give him a lot of credit for being willing to sign on to a book that actually highlights a number of places where he acknowledges he didn’t get it quite right, and projects that didn’t work where he was involved. He has certainly evolved his vision over time to take into account lessons from the past, but not yet the key lesson that there are limits to what we can plan.

The aerotroplis, inhumane as it may seem at times, has its merits as an abstract idea, but the reality is likely rarely to match up to Kasarda’s expectations. As Dietrich Dörner put it in his classic The Logic of Failure, “Because planning involves only imagining our actions, we are essentially free from the irksome conditions of reality, and nothing prevents us from simply ignoring the conditions necessary to carry out an operation.” Indeed.

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