Third World Rust Belt

To label a place "Third World" carries the weight of negative connotations. It is a powerful geographic abstraction. Those trying to defeat the stereotype are misguided. Being Third World can be a good thing. That's the case the Economist makes and I see many parallels with the Rust Belt:

In one sense Mr Zoellick is right to say the third world is finished—if 20 years late. The poor world is usually thought of as coming “third” after the first, capitalist West, and the second, communist East. Since the second one imploded in 1989, it seems past time to put to rest the nebulous and sometimes toxic third-world concept.

But the term third world did not originally refer to geopolitics. The first to use it in its modern sense was Alfred Sauvy, a French demographer who drew a parallel with the “third estate” (the people) during the French revolution. In 1952 Sauvy wrote that “this ignored, exploited, scorned Third World, like the Third Estate, wants to become something, too.” He was paraphrasing a remark by Emmanuel-Joseph Sieyès, a delegate to the Estates-General of 1789, who said the third estate is everything, has nothing but wants to be something. The salient feature of the third world was that it wanted economic and political clout.

It is getting both. Cold-war terminology implied that third-world countries had limited room for independent manoeuvre. They aligned themselves with one side, or got ground between millstones. That is changing. Walter Russell Mead, an American foreign-policy analyst, argues that Brazil and Turkey are both countries once within America’s circle of influence where new leaders have challenged longstanding domestic elites and are trying to shake off their reliance upon America. In both cases their ambitions are global.

Shrinking cities (as well as rural towns) in the United States are "ignored, exploited, and scorned". They are also ascendant in the wake of the Great Recession. We haven't noticed because such a turnaround shouldn't be possible in the Rust Belt. Few likely believe that Pittsburgh is a model for urban redevelopment. How could a city losing population be doing well economically?

One of the most prominent Rust Belt clichés is brain drain. People are supposed to be fleeing the cold and high unemployment for the sunny boomtowns dotting the South. Bruce Katz and Jennifer Bradley relate a different story:

But in a recent report on older industrial cities for the Brookings Institution and the London School of Economics, researchers Bruce Katz and Jennifer Bradley describe a new spirit of rebirth in Detroit.

“The city is attracting social entrepreneurs who are excited by the challenge of fundamentally remaking a city,” the co-authors write. “Philanthropies are pouring in money and imagination – the rail system on the Woodward Corridor is partially funded by tens of millions of dollars from two major foundations, and other philanthropies are trying to develop a comprehensive educational plan.”

There’s a saying that urban planners have for comeback towns: “The industry might leave, but the talent doesn’t.” Detroit is the oldest of the world’s mass-production vehicle-making centres. Detroit’s tycoon philanthropists left a legacy of world-class colleges and medical institutions, and an art gallery and symphony ranked among the nation’s best. And Detroit is still home to three Fortune 500 manufacturing enterprises. (Philadelphia has none.)

I circled back to that quote from a few weeks ago thanks to an article in yesterday's Detroit Free Press. In March, Katz was a panelist at a London School of Economics event speaking to the film "Requiem for Detroit". You can watch the entire movie and discussion at the above website. It is over two hours and, in my opinion, not all that interesting. Katz does make a pitch at the end, appealing to the members of Generation Y in the audience to seek out the Rust Belt for its unique opportunities. Katz is selling the urban frontier.

I am more intrigued by the described talent legacies found in cities such as Detroit. The talent that made the Midwest "the Silicon Valley of the industrial revolution" is still there. At least, much of the Creative Class graduates from Rust Belt universities and colleges, the engines driving the redevelopment of cities such as Akron and Rochester. Akron is where Joe Cortright rather clumsily tried to paint a picture of the talent landscape, falling back on the negative stereotypes of the region. The Third World-like brain drain is yesterday's news.

There is a dramatic contrast between the images in "Requiem for Detroit" and the complex reality on the ground. In general, economic development experts embrace the former, not the latter. Katz is trying to deconstruct the geographic propaganda (e.g. ruin porn). For the most part, the facts are on his side. But the myths dominate the policy narrative.

Today, our most troubled cities had the biggest real estate bubbles. Our most stable cities have restructured their economic portfolios away from an over-reliance on manufacturing. Just as the Third World will lead the next round of globalization, so the Rust Belt will be the hearth of America's Great Reset.