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My latest report is now available from the American Enterprise Institute. It’s a look at the role of the culture of cities in economic dynamism and resiliency. I examine a few case studies, and from these try to draw out some cultural traits that seem to be relevant to success, notably an open social structure, invested leadership and institution building by civic elites, and a high value placed on education.
Here is an excerpt:
If the culture of a place is important to economic and civic success, yet is rooted in the past, perhaps even in the character of the founding of a place, is it possible to change it? The writers above offer a qualified yes.
First, local leaders should seek to understand their local culture. Because culture is in some ways the air we breathe, we do not always see or understand it. Much of culture is tacit and unwritten, complicating understanding. While corporate leaders often see culture as a source of competitive advantage and are highly intentional toward their corporate culture as a result, few political or civic leaders seem to do the same.
The first step then is for local leaders to gain an understanding of their own place and its culture. As with the case studies above, this is often simplified by the comparative historical case-study method. Leaders seeking to understand the culture of, for example, Columbus, Ohio, might contrast their city’s founding and historic development with that of Nashville, Tennessee. Or perhaps conduct a comparison of the three major cities of Ohio—Cincinnati, Cleveland, and Columbus, sometimes referred to as the “3C’s” inside the state.
Because of the outsized role of the founding generations in determining the long-term trajectory of a place’s culture, particular attention should be paid to them and their cultural origins. As Saxenian said of Route 128, “To be sure, regional institutions and culture are difficult to change. An industrial system is the product of historical processes that are not easily imitated or altered. However, the first step toward the regeneration of the Route 128 economy is self-understanding.”
Click over to read the whole thing.
Cover image photo credit: Jean-Christophe Benoist CC BY 3.0
I’ll take a little credit for inspiring Aaron to write this article. I’m glad he did. Economics and politics really are downstream from culture. Culture’s power is so deep and broad that, like gravity, we not conscious of it most of the time. Americans, in particular, don’t to like talk about culture in this way because it sounds like fatalism with a lack of ‘actionable’ recommendations. As Aaron suggests, that’s not true. It just requires historical and geographic understandings. I currently live in an intensely ‘closed’ culture in The City That Shall Not Be Named. Led by a singularly dominate and cohesive local elite committed exclusively to it’s self-preservation, the city they rule continues to drift lower and lower in the hierarchy of American metros. Art and cultural events receive almost all elite support in Cincinnati while economic and political initiatives to prepare it for new investment go nowhere. That’s happening because it’s elite has complete local control and doesn’t feel the needs to worry about new people, ideas, or businesses challenging their power locally. This is all built on a local culture which simply does not contain any source of disagreement or space for alternative action. Internal opposition to the city’s elite simply doesn’t have the room to emerge because they is no cultural basis for it. The city expels it’s ‘malcontents’ and breathes a sigh of relief that the city’s social structure has been defended against yet another source of potential change (read threat). No amount of start ups, venture capital, or local government reorganization can overcome such a cultural structure. Locals don’t see this because they can’t see it. They have no experience of anything else against which they might compare it. Culture is the real level at which power and meaning are created. Politics and economics are simply where that power and meaning is expressed. Every place has the economic and politics that it wants, or at least that it thinks that it wants. Every place has itself to blame, or congratulate, for it’s economic fortunes. It’s that ‘agency’ that excites some and scares others as they look at it through the cultural lenses they wear.
Great report, Aaron. I’ve always felt that it’s the elite’s job to reach down and empower people in their community to solve problems. I think the cities that do this tend to do better over time. But it has to be collaborative. Many places have the Town Vs Gown issue (from my hometown of New Haven) where they battle each other. They think they are helping but talk past each other.
I like that this article also focuses on civic institutional investment by elites. I agree, that’s a great way to “devolve” the structure a bit but also keep a hand on the steering wheel. It has to be a balance-go too far one way or the other and you get a local Oligarchy or a local Commune-neither work well.
If culture is about elites, then the failure of cultures to adapt is the failure of elites to adapt…or the collapse of elites altogether as in Detroit. The answer to economic and political stagnation becomes the reform of elites. Where does the will to reform an elite come from when it is so much easier just to leave a stagnating place? Why bother? Why not just let the declining local elite keep fighting to sustain their control of decaying bridges and undeveloped land while you start again somewhere else? Where is the incentive to invest in civic institutions if not within the local elite? Do we have examples of ‘reformed local elites”? Aaron mentions Boston. I’d argue that New York’s old elite was substantially reformed after the collapse of the 1970s. Any others? Is a fundamental break with the past necessary for reforming elites that powerfully resist a loosening of their control?
Great piece, Aaron. The community cultural element is quite significant. Having worked all over suburban metro Chicago, I can tell you that local cultures vary widely even in a single MSA. Maybe one of the local area’s strengths is actually the large number of cultures that are always experiencing churn, change and transformation. I can’t say these transformations are always beneficial but they are dynamic. There are a variety of strong institutions in metro Chicago through which leaders of communities large and small can connect, and the consultant network is one of them. Here’s a fun assignment for all Aaron Renn fans – design your local culture.
Part of Aaron’s argument is that “strong institutions’ can be part of the problem, if those institutions are controlled by a culturally unified local elite. A degree of internal competition can be an advantage for a place in creating space for new people, ideas, and investments. His point is that culture isn’t an “element” but that it’s a foundation…a unifying structural force that contains everything else. Institutions that facilitate meaningfully different interests and agendas are important, but institutions that attempt to encompass all interests and agendas in an area become incestuous and stifle innovation and adaptation.
Many cities experience reinvention or decline completely by accident. Microsoft was founded in Albuquerque. It moved to Seattle because that’s where Bill Gates grew up. Jeff Bezos moved from New York to Seattle to found Amazon because Microsoft was there.
Silicon Valley, or any other successful economy, isn’t a Ponzi scheme. Economic development is not a con game. Unsuccessful economies are not hapless victims of rapacious capitalism. Each place has the economy that serves its cultural interests. That’s Aaron’s point. Microsoft didn’t create Seattle, Seattle created Microsoft. Albuquerque would never have been able to support the development of a global corporation. Silicon Valley would never have invested in a company operating in a small poor New Mexico city with low levels of education and poor public services. It would have been unable to attract tech talent, provide the infrastructure, or sustain the development of the company over time without Seattle’s many advantages…advantages that predate Microsoft. Yes, Microsoft was trying to carve out a base of operations in Seattle because Silicon Valley was already too competitive for tech talent and investment. But, tech talent and investors, sometimes one in the same, were willing to spend time in Seattle. They saw one of American’s least corrupt political cultures, well-funded schools, a large research university, and the willingness to innovate and grow. Places create their institutions, not the other way around. They create their institutions to serve their cultures. That’s Aaron’s argument.
Bentonville, AK has worked just fine for Wal-Mart. It’s a bit smaller than Albuquerque.
Also, it’s possible to make a point, good or bad, with 1-2 sentences. For whatever reason everything you post is massive, which is why everyone ignores your posts.
I agree. Leadership, and policy matters but, sometimes, it really does just come down to luck and natural geography. I understand such a fatalistic view cannot be the foundation of sound policy but I do think it’s important to be realistic.
General Electric just opened a new office in the-city-that-shall-not-be-named because their CEO, Jeffrey Immelt, was born and raised in the-city-that-shall-not-be-named. Yet we are told endlessly by “Matt” that the-city-that-shall-not-be-named sees zero outside investment. http://thebankscincy.com/attractions/ge-global-operations-center-cincinnati/
How are leaders created? What guides the creation of policy? What does natural environment have to do with the success of Silicon Valley, for example?
Is that why Walmart’s Innovation Labs are all in California and it’s losing ecommerce to a company based in Seattle? The ‘Superstar Cities” dynamic is real. It’s at work in all sorts of ways in the modern economy.
How do you know who’s reading my comments? Personalizing everything may work in you know where but it won’t work in the real world.
Is everything Amazon does in Seattle? We just had a giant publicity stunt called HQ2. The new Amazon Prime Air hub is being built in the city-that-shall-not-be-named. https://www.cvgairport.com/about/next/amazon-and-cvg/amazonatcvg
No one is immune from the forces concentrating capital in certain cities and not others. The various degress of success of those cities is built on cultural patterns as Aaron describes. The recent moves of important corporate operations from The City That Shall Not Be Named were decided by people in Toronto and New York. A lot of low-wage warehouse work and a modest GE back-office operation don’t make up for the loss of important corporate decision makers. This is the fault of the political and economic elite in the City That Shall Not Be Named, not people in Toronto, New York, or anywhere else.
A significant part of what’s left of GE is its jet engine business, a big chunk of which has been located for decades in Evendale, an industrial suburb of the-city-that-shall-not-be-named. Those aren’t “back office” jobs.
The GE jet engine jobs in Evendale and West Chester are one of the few globally significant operations left in Cincinnati, but they have nothing to do with the GE administrative offices in Downtown the City That Shall Not Be Named… which ARE mid-level back office administrative jobs.
https://www.brookings.edu/research/tech-is-still-concentrating/?utm_campaign=Metropolitan%20Policy%20Program&utm_source=hs_email&utm_medium=email&utm_content=84334845
Distinctive local and regional cultures allow a handful of cities to dominate innovation in America today. If their success was due to cons, tricks, or personal whims, their achievements would have easily been copied and diffused widely. Renaissance Europe was much the same with a handful of towns creating new technologies and forms of economic activity that the rest of Europe struggled to copy..or aggressively worked to thwart. The early success of Venice, Florence, Antwerp, & Amsterdam remained isolated exceptions in Europe through the 16th and early 17th centuries. Only in the 18th century, did some English and Germanic cities start to figure out how to copy, and to subsequently take the place of, the cultures of centers of Renaissance innovation. Paris and Scandinavia only began to become important economic centers well into the 19th century. The diffusion of the practices of tech centers into the rest of America will not be easy because it’s not easy to change cultures.
Matt, where do you think “advanced manufacturing” is happening in the US? Where is it being designed and engineered? Why?
Matt, fracking was invented by a small Texas energy company in the late 1990s. None of those guys gave a damn about tech bro stuff. Their invention completely altered geopolitics by the 2010s – a way bigger deal than Facebook, Twitter, and the rest combined.
Many if not most of those innovative groundwater poisoners…errrr junk bond funded schemes…..errrrr fracking companies will be out of business soon. The capital is all drying up as the massive costs of fracking cannot compete with old school producers.
Bringing up fracking as some great feat of innovation just illustrates the major blindspot of Manhattan Institute/Ayn Randian/.Cancerous Eternal Growth Culture thinking in the economic development field. Yes, the natural environment DOES matter. Especially in the long run.
No they didn”t. Federal researchers did. https://www.washingtonpost.com/opinions/a-boom-in-shale-gas-credit-the-feds/2011/12/07/gIQAecFIzO_story.html. Fracking is a story of big public and private investment and technological innovation.
..the willingness to try and use it by smaller west Texas companies is where the culture part comes in. Much of the wealth produced is now under the control of executives in Dallas and Houston, contributing to metropolitan economies that include much more than energy today. Economic growth in a capitalist system is not magic. It’s not a vengeful or benevolent god punishing some and supporting others. It’s the result of a culture that allows capital to form and labor to find that capital. Silicon Valley and it’s many ‘colonies’ in Austin, Seattle, Portland, etc. today are not lucky. They are culturally different . Yes, capitalism can adapt into distinct forms…Houston and Seattle are culturally quite distinct despite their shared rates of economic growth. Still, they are 21st century versions of Renaissance Florence, Antwerp, and Amsterdam. It is from them that the new ideas and economic models will come. Sitting in the City That Shall Not Be Named and waiting for God to bless you with good fortunes is tragic.
and unknown environmental impacts. The poisons dompted into the ground are “trade secrets” and we don’t even know what these people, who were on the verge of insolvency BEFORE this crisis, have done to us.
But hey, it buys the sociopaths who run this society more time to preen and strut and posture about being the Big Guyz on the planet. That’s what matters.
What if there are a limited number of cities globally that can be “superstar” cities? It strikes me as telling that so many people talk about IT and Biotech as potential growth opportunities that will transform this or that metro’s place in the global economy, but very few people talk about finance, banking and insurance in the same manner.
My belief is that IT and Biotech are just like finance, banking, and corporate HQs, insofar as network effects and sheer number of experienced workers in a metro are the most important factor in deciding where to start a company or expand operations. Which means that it is monumentally difficult for metros without strong existing networks to ever gain the scale to compete with the established “superstars” or even second tier metros in those industries. The only exceptions I can really think of come from nations like China, where you have incredibly fast growth transforming a very poor country into a middle income country with a large middle class.
So, working to connect with those cities and learning from them is the best path for pursuing economic growth. Understanding and accepting your place in the new hierarchy of places is the only realistic foundation for economic development. Waiting for a ‘savior’ to choose your city is foolish and tragic. That sentiment will deeply offend some here.