Resurging cities, resurging metros, the impoverished and the Metropolitan Revolution (continued)

1.  Urbanophile (mentioned in the book whereas this blog was not) has just run a review of The Metropolitan Revolution, and Aaron Renn makes many good points that I didn't necessarily raise or emphasize.  Three points that stand out for me are:

•  In a globally connected and competitive economy, even thriving cities (like New York City) cannot rely on their ability to attract talent, they have to secure the means of production and produce it too.  From his review:

The most notable thing here in my view is that New York believes it has to be in the tech talent production business. NYC has traditionally been the ultimate talent attractor. They didn’t need to worry about producing the world’s top talent because it would seek them out. Silicon Valley and most tech hubs rely on this kind of talent attraction for their supply. By setting up a tech talent factory in town, however, NYC is saying that they don’t think they can meet their tech industry ambitions solely through hoovering up outsiders. They need to be in the production business as well. I’m not sure what Jim Russell thinks of this, but he’s often claimed that the era of prosperity on an attraction model is waning in a more convergent world (i.e., where tech & talent are becoming more decentralized). NYC seems to be responding to this reality.

• The difference between a stagnant and a growing metropolitan economy is a focus on  export markets.

I acknowledged this in my piece. Aaron indicates (what globalization means to non-global cities) that there is a greater role for government and NGO involvement in shaping this reality than I did.

Of course, Germany's mittelstand companies are a different example of the same concept of small companies being globally significant producers. (See "Extreme Focus and the Success of Germany's Mittelstand" from the Harvard Business Review and "Engines of Growth" from the Wall Street Journal.)  And it's why I think it comes down to business-to-business interaction.

What is interesting and I didn't mention it in my review is how this is counter to older themes of how to foster regional and national economic development.  Jane Jacobs, in Economy of Cities, and my remembrance of the concept of "import-substitution industrialization" from political science studies of Latin America, focused on fostering industrial growth by producing those items that had been purchased from foreign sources.

And this touches on something that was in the discussion thread of my review, how I have a difficult time with the arguments of economist Robert Fogel, over whether or not railroads were a significant driver of US economic development.

Fogel argued that wagons and barges were substitutes so railroads didn't contribute all that much to economic growth, while I counter that railroads were essential to the creation of one large, national, and integrated market economy in the US, which could not have developed otherwise.  It was certainly a lot easier and cheaper (as difficult and as expensive as it was) to build a railroad network than it was to build an integrated network of rivers and canals.

During what Henry Luce called "The American Century," US companies could be very successful focusing only on the US market.  In other countries, to be successful, companies had to be export focused (like the Mittelstand) because their markets were comparatively small, and this positioned those companies to be more successful when the field of economic activity is global rather than national.

In short, for some time, at least the largest US companies have been playing catch up, and many smaller companies too have begun to refocus their efforts on export markets.  E.g., I came across this article while I was traveling, "Exports mean jobs, in any language" from the Minneapolis Star-Tribune, which illustrates the point, as does this piece also from the MST, "Minnesota to open trade office in Germany," not that the latter is particularly unique anymore.

• And while I emphasized it a lot, you can't emphasize enough how cities for the most part are screwed (I mean constrained) by state action and the actions of other communities within a metropolitan area.  An example in the DC region is how the State of Virginia's politics foster anti-metropolitan policies vis-a-vis Northern Virginia (see )

Frankly, it's the source of the reservation I have with the argument that going forward, "Metropolitan Areas are coming together".

It's easier to do when the suburbs feel superior, it's harder when the center city becomes more competitive.

And suburbs are no longer able to take their economic superiority for granted, as various trends that favor cities have begun to achieve critical mass and have become not just noticeable but un-ignorable ("The Future of the American City" from the Financial Times), such as

- city population growth vis-a-vis suburbs ("Population Growth Accelerates in Large Cities from Governing Magazine)
- location of successful businesses in city locations ("Google exploring move to West Loop" from Crain's Chicago Business)
- and relocation to the center city of business operations formerly located in the suburbs ("Mortgage lender Quicken bets on downtown Detroit's revival" from Reuters)
- the rise of suburban poverty ("Poverty finds the suburbs" from the Boston Globe").

As a result, suburban communities will be less inclined to be willing to join in with center cities and develop and work on achieving a consensus agenda.  Aaron mentions some examples of this behavior from Greater Denver and Greater Cleveland.

This reminds me of my brief experience working for Baltimore County Government a couple years ago.  I thought Baltimore County wasn't striving--they are mostly content comparing themselves to Baltimore City, which has been on a downward spiral for 50+ years, and thereby judging as wildly successful most any of the County's economic initiatives.

But if local elites instead chose to reference and benchmark the County against the most successful counties in the Baltimore-Washington region and the US more generally, it would be found wanting.  Going forward, to be successful on a national basis, Baltimore County and many other communities need to reset their expectations, goals, and standards for achievement.

In Washington, where DC is no longer the metropolitan area's basket case (well, not in terms of government corruption, but that's another blog entry) it's almost impossible to get the suburbs to work with the city in substantive ways.

So while I want to believe in the metropolitan imperative, the jury's still out.

2.  Aaron also calls our attention to Kaid Benfield's review ("Two very different views of the condition of American cities"), which pairs a review of The Metropolitan Revolutions book with the discussion of a report, State of the City: 5 Trends Impacting America’s Cities, published by the Living Cities consortium.  From Kaid's review:

Here are the five trends detailed in the report:

• Fiscal strain is causing city governments to reduce services and scale back capital investment.
• Failing infrastructure is inhibiting economic growth, sustainability and overall mobility of goods, people, and information.
• Stagnant educational outcomes have implications for talent production, attraction and matching to jobs.
• The changing economic landscape is creating unemployment and shifting centers of job creation.
• The collapse of the housing market and the tightening of the rental market are creating material pressure on household economics and the health of communities.

In other words, where Katz and Bradley see excitement, innovation, leadership, and economic recovery, Living Cities sees declining city services, crumbling infrastructure, a failing educational system, unemployment, and struggling households. ...

The report observes that many of the challenges faced by cites and their lower-income residents are due to or profoundly influenced by large social and economic forces, and are so fundamental that new, more systemic approaches are needed to achieve reform.

They are both right. Recentralization (a la Belmont's Cities in Full) trends centered around quality of life and urban design, form and mobility network characteristics more typical of center cities favor cities, but long term favoring of suburban development and financial strictures on cities make it tough on cities.

Kaid's review and the Living City report definitely deserve our review and consideration.

Still, as far as addressing the need to integrate the impoverished into exchange networks and the market economy, again I will mention the Houston case study from TMR. The Neighborhood Centers Inc. organization is not bringing the city and suburbs together, but it does have an interesting approach to economic integration and capacity building for the economically disadvantaged, and this kind of approach is typically missing in local, regional, state, and national planning.  If you believe that in the global economy, we have to utilize all of our potential human capital, it's an example worthy of further consideration.

3.  And not every city/metropolitan area is well-positioned to take advantage of metropolitan trends either (Aaron says to focus on the top 50 Metros).  I argue that cities on the East and West Coast along with cities connected to extractive industries--for example, Houston as the center for the US oil and chemical industry, is well-positioned to be successful without many of the qualities of otherwise resurging "old cities" because as oil production increases and the cost and therefore the revenue rises, they will continue to benefit--are best positioned for these trends.

I think (although it's yet another book I need to read) that the argument in Meredith Whitney's new book Fate of the States, that coastal cities aren't well-positioned, and states between the coasts are, is based on the increasing importance of extractive industries in the global economy, but misses those elements of the knowledge and applied science-based economy that are favored by coastal location.  See "Mapping out the state of the future," from USA Today.  From the article:

In Fate of the States, Whitney argues that a "new map of prosperity'' is emerging in the wake of the bust, with jobs moving away from the coasts and toward 17 ''central corridor'' states in the Midwest and Mountain West.

Using statistics mostly covering years from 2007 to 2011, she argues these states are outperforming the U.S. because leaders elsewhere are hamstrung by public-employee pensions and other commitments that housing-boom states made in flush times.

Although there is no question, like the points raised by the Living City report, that cities have plenty of issues to address, and that success in the global economy going forward is hardly a cake walk.

And in the constrained economic environment faced by governments, we are going to have to be parsimonious and ensure that every dollar we spend accomplishes multiple objectives.