Saturday, December 31, 2011

Migration Year In Review: Brain Drain Economic Development

People develop, not places. That's my mantra heading into 2012. My plan for the new year is to work out the details of the theory and then figure out what that means for economic development projects. A corollary to that slogan is move to improve:

“The shifting balance of global economic growth is bring global migration flows with it,” says Madeleine Sumption, policy analyst at the Washington-based Migration Policy Institute. “We're seeing lower migration to crisis nations, whereas most of the growth is towards developing nations.”

People are still seeking work in traditional markets, like Germany or Canada. But new, surprising flows are taking place in this post-recession, rocky recovery era -- Mexican Americans are returning home, for example, and Spanish graduates are emigrating to Chile and Chinese scientists in the U.K. are leaving to return home. The shift promises to create new types of diasporas, change remittance flows and alter labour markets.

We live in interesting times. The above Globe and Mail story about migration includes an interactive map detailing the most important flows of 2011. (The Brazil-Japan connection is news to me.) Immigrants to the United States are heading back to China, India, and Mexico. I'm seeing more evidence of native-born Americans heading off to boom economies such as Brazil's. The United States, like Pittsburgh, is becoming a major exporter of talent.

That brain drain is a great opportunity, which will benefit both places linked by relocation. Brain drain can and does fuel economic development:

A 2009 study of 127 developing countries found that overall, the loss of skills to migration is outweighed by the extra skills acquired by people contemplating it. That study's authors, however, found in an earlier study that you can have too much of a good thing: Once countries start to lose more than 20 percent of their college graduates, they reckon, brain drain starts to act as a drag on economic growth. In other words, China and India, which export only a small share of their skilled citizens, would benefit from exporting a lot more. By contrast, war-scorched disaster zones such as the Democratic Republic of the Congo, whose most talented people have fled in droves, probably wouldn't.

Polemics aside, there is such a beast as too much brain drain. I argue that most US communities suffer from too little brain drain, a la China and India. Regardless, talent retention policies are horrid and destructive. Migration is economic development.

Friday, December 30, 2011

Pittsburgh Office Boom

Tech and energy. Energy and tech. To have both is a metro embarrassment of riches. Welcome to Pittsburgh:


The markets that have a high concentration of technology and energy firms might see a different picture next year. Because technology and energy sectors have been experiencing strong growth lately, leasing demand in such cities should begin to fall in line with supply. The outperformers will likely include San Francisco, Seattle, Houston, Oklahoma City and Pittsburgh.

Pittsburgh is an employment hub. People who are looking for work are moving to Pittsburgh. Young adults looking for somewhere cool to hang out are showing up in Pittsburgh.

2012 is shaping up to be a very good year for Southwestern Pennsylvania. Leave the "smart decline" to Phoenix and other Sun Belt bust towns. Come find out why so many other cities are studying Pittsburgh's success story.

Thursday, December 29, 2011

Keep Pittsburgh Weird

I can't ignore it. I didn't want to blog about it. I figure I've done enough Pittsburgh-boosting for one year. Out with the old and in with the new for The Washington Post:

OUT: Portland. IN: Pittsburgh. (Put a bird on it? Get lost.)

For those of you who don't understand the "put a bird on it" reference. Portland is so 2011, so ... over. All the cool kids are moving to Pittsburgh. Why? Jobs:

Portland came in at No. 60 in a ranking of metro area job growth over the past decade. ...

... Austin topped the list, which was based on U.S. Bureau of Labor Statistics data, followed by Texas neighbors El Paso, Houston and McAllen-Edinburg. Pittsburgh rounded out the top five.

Emphasis added. Put a bird on it.

Wednesday, December 28, 2011

Value Knowledge Over Space

Without migration, there are no cities. An urban landscape is more than a draw for talent. Metros thrive on churn, both the influx and egress of people. Edward Glaeser takes a different view with density at the heart of any vibrant downtown:

"They value knowledge over space—that's what the modern city is all about," he said. Successful cities "increase the returns to being smart" by enabling people to learn from one another. In cities with higher average education, even the uneducated earn higher wages; that's evidence of "human capital spillover."

The geography of knowledge exchange is one of intimacy. When I think of the urban experience, the word "intimate" doesn't spring to mind. City living is often lonely, an isolated existence. In fact, a city strength is anonymity. Everyone is from somewhere else. Reinventing yourself is easy.

The big issue with Glaeser's model of urban prosperity concerns density, residential or employment? I can imagine how employment density would catalyze human capital spillover. But residential density? I doubt it matters, at all. Residential density receives most of the attention because city boosters want everyone to love urban living like they do. It's a fetish, confusing correlation and causation. I don't buy the density dividend.

Migration, particularly immigration, is what the modern city is all about. The key word is "cosmopolitan", not "density". Give me suburban county where everyone is from somewhere else (e.g. Fairfax County, VA) and I'll show you an economic powerhouse. Migration is what makes Northern Virginia so special, so dynamic. You can see the world at one strip mall. Different cultures slosh together in unexpected ways.

The very act of moving, particularly to the top tier of global cities, is entrepreneurial. You are surrounded by risk-takers and innovation. The competition is fierce. The cream of the crop is seeking any edge, looking for any opening. Just so happens that this cauldron is usually located in a dense built environment. Migration is what matters.

Tuesday, December 27, 2011

Innovation Backwaters

Edward Glaeser hearts Benjamin Chinitz. Why does one city fail (i.e. Pittsburgh) while another thrives (i.e. New York City)? Chinitz has a theory:

Mr. Chinitz argued that the abundance of small, independent companies in New York created a culture of entrepreneurship. Banks came to specialize in financing start-ups. There were lots of independent suppliers that catered to new companies. A poor kid, like the great Abraham E. Lefcourt, could start out shining shoes, then rise in a small clothing company, take it over, and then become Manhattan’s greatest skyscraper builder in the years before the Great Depression.

By contrast, Pittsburgh had large, fully integrated steel companies that sucked up the financing, labor and practically the air itself in the city. Who, in those days, would want to compete with U.S. Steel?

In the almost 50 years since Mr. Chinitz wrote his paper, his insights been regularly affirmed. Pittsburgh has continued to decline; New York has survived. Few now doubt that entrepreneurship is an important ingredient in local success. AnnaLee Saxenian’s now-classic comparison of the technology clusters in Silicon Valley and Boston’s Route 128 took a page from Mr. Chinitz and argued that Silicon Valley’s success owed much to its abundance of smaller, non-integrated firms. Statistical work confirms that diversity and competition predict urban success; there is a strong connection between abundant, independent suppliers and the level of local entrepreneurship.

Emphasis added. AnnaLee Saxenian also wrote about brain circulation and how internationally mobile talent fueled growth in Silicon Valley. There is a strong link between migration and entrepreneurship. New York does better than Pittsburgh because not enough talent is moving to the latter city.

As I've chronicled, Rust Belt cities struggle with too little inmigration. The outmigration is an indicator of success. Better educated are more likely to leave the region. The Wall Street Journal (and Edward Glaeser) doesn't consider talent migration when writing about the ghost of Chinitz haunting Rochester, NY:

The city's boosters like to say Rochester is reclaiming its entrepreneurial past. The western New York city on the Erie Canal got on the map because of business-builders such as George Eastman, who founded Kodak in 1880. It was Rochester native Joe Wilson who transformed Haloid, a small paper company, into Xerox Corp.

As these businesses flourished, the spirit of small-scale entrepreneurship faded, local residents say. In the 1980s, more than half the Rochester-area work force was employed by the big corporations or their suppliers, says Mark Peterson, chief executive of Greater Rochester Enterprise, a nonprofit founded in 2002 to attract multinationals and start-ups to the area. As of 2010, the same corporations employed less than 10% of the local work force, Mr. Peterson says.

Alex Zapesochny, co-founder of Rochester-based medical start-up iCardiac Technologies Inc., says area residents ignored his booth at job fairs as recently as 2006. "They worked at large companies, and it made them risk averse," he says. Now, the company, which measures cardiac side effects of prescription drugs, has grown to 50 employees and receives a steady stream of resumes during these times of high unemployment nationwide, many from current and former Kodak employees.

Emphasis added. Large companies dominate regional workforce development. Talent is cultivated locally. There is a pipeline from colleges and universities to the firms at the core of the urban economy. Both Pittsburgh and Rochester did a great job of supplying graduates. There wasn't a need to import workers.

The risk-takers, the entrepreneurs, left Rochester as they would any hometown. Without immigrants, who would replace them? Rochester had to organically grow a startup culture. That takes time, a long time. The entire structure of workforce development needs to change.

Today, that change is apparent in Rust Belt cities such as Rochester, Pittsburgh, and Akron. As these small companies proliferate, the demand for talent will increase, drawing "outsiders" to the region. Expatriates, the risk-takers, will move back to take advantage of the opportunities. The urban alumni network is a deep pool of dynamic talent, people who are undaunted by a shrinking city's lousy reputation. Future prosperity will be a function of migration (talent churn) and fundamentally sound workforce development.

Monday, December 26, 2011

Local Talent

People are leaving in droves. People aren't leaving in droves. Both are true in "stuck" states:

If you're home for the holidays, chances are you didn't have to go far to get there.

About 70 percent of Alabama's population was born in the state, according to figures recently released by the U.S. Census Bureau. ...

... "I'm not too surprised," University of Alabama geography professor Bobby Wilson said when he saw the numbers. Alabama in general and Birmingham in particular have trailed the economic and population growth rates of neighbors in the Sun Belt. New migrants follow jobs.

"It basically reflects mobility and migration," he said.

At the same time that economic factors aren't pulling non-natives in, natives may have a greater tendency to stay, more of a sense of roots,Wilson said.

Most of Stuck America can be found in the Brain Drain Belt. Turns out that places struggling with population decline tend to have the highest percentage of natives. But that doesn't mean there isn't exodus. Huh?

The native statistics say more about inmigration than outmigration. 90% of the population could leave and there would still be a high percentage of residents who were born there. No outsiders, no Nevada-like demographics. Leaving home doesn't matter. There may be no more stuck people in Stuck America than in the rest of the country. The issue is that no one is moving to Stuck America.

Sunday, December 25, 2011

Secondary Immigration To Pittsburgh

Better to be in Pittsburgh than anywhere in Texas. Bhutanese are bolting immigrant gateway Oakland for the Rust Belt. Word is getting around that there are jobs aplenty:

The rumors circulated for months: Pennsylvania is a better place to live than Oakland for newly arrived Bhutanese refugees.

"All the Bhutanese are migrating to Pennsylvania," Benu Mainali said. "They say it's better. It's easier to find a job." ...

... Family reunification may be the biggest tug. One extended family disperses around the country, then relatives share stories about which location offers the best opportunities. For the Mainalis, the spot was the Great Lakes corridor.

They were not alone: In recent months, Pennsylvania surpassed Texas as the top destination for Bhutanese refugees, and upstate New York is not far behind, according to data from the International Organization for Migration, the group tasked to resettle them.

Reading the first few paragraphs of the article, I figured "Pennsylvania" meant "Philadelphia". Pittsburgh is an unlikely home for any immigrant while Philadelphia's foreign born population has taken off in recent years. I am surprised as anyone that Pittsburgh is the more specific destination:

Leela Mainali was the first to broach the idea of leaving Oakland, whispering the names of eastern cities in nighttime conversations with her husband. She heard the stories of roomier, less expensive apartments, more plentiful work and less crime. She missed her relatives who were moving to the East Coast. Her older sister's family landed in northern Florida but could not find work there, so they moved to Pittsburgh this fall and found employment immediately despite their limited English.

"In Pennsylvania, it makes no difference," Benu Mainali said. "Even the people who don't speak a word, they're getting a job and making good money." ...

... The younger Mainalis stuffed their belongings -- clothes, a pressure cooker and some other kitchen equipment -- in the trunk of their Toyota and had the car towed to Pittsburgh for $850. They spent hundreds more on airfare and have about $5,000 left in savings.

They have car payments and are paying back the International Organization for Migration in monthly installments for the flight that brought them to the United States.

If jobs are hard to find, they could be in financial trouble. But the frugal, plucky family has been through much worse and remains optimistic.

Pittsburgh "may be better than here," Leela Mainali said hours before she left Oakland on Dec. 15.

How did Pittsburgh get on the Bhutanese radar? Buffalo, Akron, and even Erie (PA) have substantial populations. People in those cities would have a good idea about opportunities in Pittsburgh. The good news travels through the network to Oakland, spurring secondary migration from struggling California.

Your community may be more tolerant and welcoming. But migrants will deal with tremendous adversity if jobs are at stake. As more outsiders cluster in Pittsburgh, the more tolerant the city will seem. And yes, this change in attitude will attract more talent. Don't put the cart before the horse and think that tolerance in and of itself will attract immigrants.

Pittsburgh is emerging from the recession as a migration hot spot. The anecdotes are adding up. The numbers have been trending the right way for a few years. Time for boomtown.

Saturday, December 24, 2011

Rust Belt Legacy Benefits

Shrinking cities are withering under the weight of crushing legacy costs. The municipal debt from a more prosperous time is now split among a much smaller number of people. I don't mean to sweep this problem under the rug. I tend to see legacy costs as the Rust Belt's greatest asset:

Like theaters in Cleveland and Sacramento, Shea’s in Buffalo has become important because of its reliable subscribers — 13,100 for each of its six one-week Broadway tours this year. An impressive 85 percent renew annually; the subscriber base insures that 55 percent of seats are bought even before tickets go on general sale.

“The industry has noticed how good it is to play Buffalo,” said Stuart Oken, a lead producer of “The Addams Family,” who pointed out that the show made more money per performance here than in Toronto, Miami or any other city since the tour began in September. He predicted that the tour would make a profit because of moneymakers like Buffalo and return some of the money lost on Broadway to investors.

Jeffrey Seller, a Tony Award-winning producer whose musicals “Rent,” “Avenue Q” and “In the Heights” all played Shea’s, described the theater as a “miracle of the Rust Belt,” given that the Buffalo economy has struggled mightily through both good times and bad.

Theater would seem to be in Buffalo's blood. World class culture finds a welcome home in Rust Belt cities thanks to those bygone days. Once exposed, residents develop a taste. Going to Shea's is a tradition and a matter of civic pride. Buffalo does a better job of supporting the arts than Toronto, a vastly larger metro.

As far as urban experiences go, Buffalo offers a lot of bang for your buck. You don't need to have big time population to have big time culture. At least, that's true in the Rust Belt. That's the density dividend, quality over quantity.

A good metaphor for the Rise of the Rust Belt Class is manufacturing. Production remains constant or even grows despite the shrinking labor numbers. One brain replaces the brawn of ten. The minus nine finds service jobs in Charlotte and Joel Kotkin makes a big deal about migration to the Sun Belt.

The worm has turned and now people are moving to Pittsburgh because prospects are better than Chicago:

Times are tough in Michigan. He had spent his adult life bartending and managing restaurants, mostly in his home state and some in suburban Chicago, but hadn't worked in over a year.

He and Mattie have been together nine years and have two children, Brenden, 8, and Samantha, 1. They'd often talked of moving to Pittsburgh; Mr. Sunie has been an avid fan of the city's teams since he was 8, and the couple had visited for a Penguins game in 2005.

So he suggested to Mattie one day that he move to Pittsburgh and find a job, and that they reunite the family once he's settled. Mattie wasn't keen on the idea at first, but after talking with her parents and realizing they were spinning their wheels in Michigan, they went all in.

The move isn't quite a blind (i.e. pioneer) migration. It's still a big roll of the dice to go to Pittsburgh without a job in hand. Thanks to all the legacy benefits, Pittsburgh is booming. The city can absorb job seekers appearing on its doorstep.

Because Pittsburgh's economy is booming, don't expect the population to boom. In fact, all Rust Belt cities need to put such aspirations for a return of the 1950s aside. Focus on better educating the workforce already living there. Invest in the most troubled neighborhoods. Stop spending so much on arresting brain drain and the latest place branding campaign. It's a good time be in Buffalo.

Friday, December 23, 2011

Ironic Urbanity Of Iowa

Iowa is urban, not rural. But the dominant geographic stereotype won't go away. The tale of the tape:

More than 70 per cent of Iowans live in urban areas, according to the most recent census, and farming represents less than 6 per cent of the state’s gross domestic product – small compared to the 17 per cent accounted for by manufacturing or the 14 per cent produced by the financial and insurance sectors.

In the book "Hollowing Out the Middle", the outmigration from small town Iowa is conflated with statewide brain drain. The most substantial threat to rural Iowa is urban Iowa, not Chicago. The most substantial threat to urban Pittsburgh is suburban Pittsburgh, not the Sun Belt. The book reinforces the dominant rural stereotype. It hurts Iowa, both rural and urban.

Iowa is undergoing noteworthy urban renewal. The small towns might be struggling. That's not the big story:

Davenport, the largest of the “Quad Cities” that straddle the Mississippi River marking the Illinois-Iowa border, about 175 miles west of Chicago, is a good vantage point from which to survey the state’s economy. Urban and industrial, it is representative of the reality behind the state’s cornfield image. ...

... Bill Gluba, Davenport’s Democratic mayor, says the city also learnt from the 1980s crisis the need to diversify its economy: other big local employers include Genesis, a healthcare provider, and Kraft, which has a meat-processing plant in the city.

These factors have helped Davenport escape the brunt of the recession. Its unemployment rate is 6.7 per cent. By contrast, the unemployment rate in nearby Rockford, Illinois – another former manufacturing hub – is 11.9 per cent.

Urban Iowa is thriving and it exerts a strong pull on the surrounding hinterlands. The state needs more talent and would like to draw from a deeper pool. But Iowa is rural and no one wants to live there.

Thursday, December 22, 2011

More Pittsburgh Real Estate Boom

South Florida be illing and young talent is leaving in droves. On the other hand, Pittsburgh is booming. The numbers from Zillow:

South Florida homes and condominiums are expected to lose an astonishing $6.5 billion in value this year, real estate website said Thursday. ...

... Just nine of 128 markets showed gains in home values during 2011, Zillow said. Metro New Orleans led the way with $3.5 billion in gains. Pittsburgh was second ($2.7 billion).

Let's review. Pittsburgh is one of five metros out of 100 sporting peak employment for the last decade. Urban Pittsburgh is one of the most vibrant commercial real estate markets in the entire country. Pittsburgh's 25-34 demographic is growing and is among the top metros for educational attainment. And now we see Pittsburgh as one of nine out of 128 residential real estate markets gaining value for 2011. But all that matters is decades of shrinking population. The recent run of good news must be a mirage.

Move To Improve

Migrating to another country is akin to getting a college education. In fact, emigrating may be more valuable in terms of personal economic development. Increasing geographic mobility is one way to invest in human capital. That's missing from the following equation about why talent matters:

In 1928, the English economist Arthur Pigou coined the term “human capital” to describe investments in the acquisition and application of knowledge, asserting that these investments, just like traditional physical capital, were essential ingredients of economic production. Today, we might divide human capital into three major components. Education plays an important role in developing human capital, of course. Equally important is whether a society’s farms, factories, offices, and shops take advantage of its workers’ abilities through efficient management and the latest technology. And welcoming foreigners infuses a country’s stock of human capital with fresh energy and initiative.

One doesn't need to cross international boundaries to supply "fresh energy and initiative". Domestic migration provides a similar dividend. The tremendous talent churn in Chicago is a testament to that global city's vitality. Never mind the negative net migration numbers. Brain circulation, like increasing global trade, fuels tremendous growth:

I once asked the boss of Tata Consulting Services, a gigantic Indian IT firm, how many of his top executives had worked or studied abroad. He replied: "All of them."

The world's most talented people are exceptionally mobile. When they move to America, they make it smarter, and that's not just because they are smart. It is also because migration creates connections.

Those connections are transaction pathways, lines of trust. Trade follows migrants. Long distance knowledge transfer occurs more easily between nationals and expatriates. Exporting talent spurs innovation in the homeland. Talent migration isn't a zero-sum game.

Wednesday, December 21, 2011

Peak Employment Pittsburgh

Update: You can look at the decade employment data for the top 100 major metropolitan areas here.

Via Chris Briem (Null Space) on Twitter, some news that deserves to be repeated:

The Pittsburgh region is in select company, one of only five of the top 100 major metropolitan areas in the United States to hit their highest employment levels in a decade in October 2011.

Pittsburgh and four metro regions in Texas -- Austin, El Paso, Houston and McAllen-Edinburg --were the only ones in October 2011 to do so, according to an On Numbers analysis of U.S. Bureau of Labor Statistics data.

Pittsburgh didn't bust because the region didn't boom. Employment has long been in the toilet. What's the big deal about a peak in Pittsburgh? Well, you could say the same things about a host of other lousy cities. How come none of them are also listed?

Secondary Migration Of Foreign Born Talent

Does your shrinking city want more immigrants? Good luck competing with established gateways. How Saskatoon hacks migration:

“My friends live here, they said it’s a good place – for living, for job opportunities. …That’s why I chose Saskatoon,” said Mr. Ahmed, who arrived three weeks ago. “So far, so good.” ...

... “All the Bengalis I meet here,” said Mr. Ahmed in Saskatoon, “they either come from Toronto or Montreal.”

You go where you know. Toronto or Montreal is on the map internationally. Saskatoon is now on the map domestically. The game changer is that Bengali pioneer migration from Toronto to Saskatoon. A network is born, a chain between the two immigrant communities forged. The result is immigration without any national policy reform.

The Saskatoon strategy can work for the likes of Pittsburgh and Cleveland if this urban tier below global cities leverages its connectivity profile. Let New York and DC do the heavy lifting and then poach those immigrants. Talent is leaving global cities in droves seeking geographic arbitrage opportunities. Pittsburgh offers DC networking at Rust Belt prices. Domestic migration from DC to Pittsburgh is well established. Foreign born talent can and will follow the same path.

Tuesday, December 20, 2011

Urban Economic Development

The metro economy is the national economy. Whenever I see a map with state-level data, I think about the cities driving the numbers. I don't care how Georgia is doing. Tell me more about Atlanta. Thus, I find this story about "urban-development legends" disconcerting:

The [Richard] Florida approach has also led to a renewed emphasis on education, on the assumption that an educated population will probably have much in common with a creative one. But improving local schools, while important in its own right, isn’t a proven economic-development tool, at least for struggling cities. After all, an educated population is an asset that can be lost. A city with poor development prospects is doing the right thing in educating its young effectively, of course, but it is also increasing the chances that they will leave, which is good for the students but makes the city even poorer. Indeed, the fact that education in America is usually financed locally means that richer cities are essentially free riders, importers of labor educated elsewhere.

Mario Polèse is reminding us that there are no silver bullets, but only economic development fads that usually fail to deliver. Florida or Michael Porter (Mr. Clusters) are flavors of the month peddling the same hubris as Robert Moses did in New York City. Warning heeded.

People develop, not places. Education is seen as a problem because of place-centrism in economic development. We may blunder when trying to improve the development of cities, but we succeed at developing people. We are very good at the latter. We needn't write about people-development legends. Educate girls, improve a nation.

If concern about brain drain is helping to drive policy, then the suggested approach to urban economic development will surely fail. How can cities better align with what is "good for the students"? The problem is that no one is asking such a question. Instead, we have to grapple with our limited capacity to improve the metro economy.

In the short term, labour mobility is an important tool for a prosperous national economy. In the long term, it can lead to permanently weakened regional economies requiring billions of dollars in annual transfer payments from more prosperous regions.

We need to break down barriers to labour mobility across Canada but at the same time we need to foster policies that promote economic growth in all regions of the country.

Atlantic Canada is unable to figure out how to make increased labor mobility (positive for Canada and its citizens) work for the region. Talent is a zero-sum game. Meanwhile, there is a great deal of literature in the arena of international economic development about how the source country can benefit from the outmigration of talent. Like education, the very act of migration economically develops a person. Encouraging someone to stay is analogous to pulling a student out of school.

Friday, December 16, 2011

The Cities Of Rural Iowa

Apparently, Iowa is part of Appalachia. I'm not referring to hillbilly migration. Iowa has no real cities. From New Geography:

Expectedly, Bloom’s portrayal of Iowans hasn’t exactly had a warm reception. On Tuesday, the Daily Iowan’s front page had perhaps the most outrageous quote that Bloom’s article included, labeling rural Iowans as nothing more than “the elderly waiting to die, those too timid (or lacking in educated [sic]) to peer around the bend for better opportunities, an assortment of waste-toids and meth addicts with pale skin and rotted teeth, or those who quixotically believe, like Little Orphan Annie, that ‘The sun'll come out tomorrow.’”

Yesterday, Sally Mason, the president of the University of Iowa, sent out a campus-wide letter reminding the students that she “disagrees strongly with and was offended by Professor Bloom’s portrayal of Iowa and Iowans”. She reminds us of the generosity that Iowans famously possess and of our “pragmatic and balanced” lifestyles. She also goes on to speak about Dubuque’s recent revitalization, the kinds of companies Iowa has attracted (namely Rockwell Collins in Cedar Rapids and Google in Council Bluffs), and the fact that Iowa City, at times called the “Athens of the Midwest”, is designated as the only “City of Literature” in the United States. It seems like Bloom forgot to take any of this into account.

He even goes so far as to berate and categorize Iowa’s Mississippi River cities as “some of the skuzziest cities” that he’s ever visited. Cities such as Burlington, Keokuk, Muscatine, and Davenport all seem to be more degraded, violent, and worse-off than some of the cities he’s used to having seen growing up in New Jersey, a place with cities that are labeled time and time again for their overall “skuzziness.” Has he ever driven to Newark?

Emphasis added. I do love place smack. Pop geographic abstractions are caricatures. Iowa is "rural", which means not "cosmopolitan". Newark is urban and dangerous. Has the New Geography author been to Newark lately? The rebound:

Newark’s problems extend beyond people fleeing its borders, and it could be decades before it’s known if the 2010 Census was a turning point. But stanching the bleeding provides hope. The city is attracting immigrants, has seen new public and private investment in development and may be benefiting from renewed interest in city living.

"What you are seeing is a common pattern in certain metropolitan areas — those that host a diverse urban economy and are well-positioned in the global economy," said Douglas Massey, director of the office of population research at Princeton University. "Newark has the distinct advantage of being in the New York metropolitan area, and much of its comparative advantage stems from that fact, and from the fact that land and housing are relatively cheap and Newark is an easy commute into Manhattan."

Massey said similar growth is taking place in cities like Chicago, Pittsburgh and Boston, while metro areas like Buffalo, Cleveland and Youngstown, Ohio, more concentrated on single industries, have languished.

Camden would have been a more biting rejoinder to Professor Bloom's sweeping dismal of rural and urban Iowa. Iowa is poor. Brain drain is acute. No one would want to live there.

All of the above is nothing more than sticks and stones until you consider the migration angle. Would you move to Professor Bloom's Iowa? I wouldn't. When it comes to relocation decisions, reputation matters more than metrics, mesofacts über alles. Keep that in mind if you are trying to engineer migration to your shrinking city or dying county.

Thursday, December 15, 2011

Hillbilly Urbanism

Despite Brian O'Neill's best efforts, Pittsburgh isn't part of Appalachia. However, Pittsburgh is located in Appalachia. Confused? Don't be:

Hardly any part of the U.S. typifies the concept of rural like Appalachia. Even the most outdated historical stereotypes persist: hillside shacks, impoverished children with no shoes, moonshine. While the region certainly had a rural past, its present is actually much more urban. To explore this side of the region, two Appalachians have just launched a news website, The Hillville, to cover an increasingly urbanized Appalachia.

“A lot of it has to do with media perceptions and what the media covers,” says co-founder Beth Newberry. She says the stereotypes mainly arise from high-profile news coverage of the area’s poverty problems in the 1960s, stemming from a visit by President John F. Kennedy. “That was the first time when we got a lot of those images on TV. And what we saw were hungry people in hollows and coal miners and people walking on the side of the road to get to town. And those images stick.”

Newberry and Hillville co-founder Niki King are quick to say that these images are undeniably a part of Appalachian heritage. But they feel the dominance of these images and stereotypes has skewed the idea of what Appalachia is.

When fans of the Cleveland Browns call Steeler fans "hilljacks", they mean that Pittsburgh isn't a city. There isn't anything urbane about Yinzers. (There isn't anything urbane about Browns fans, either.) Anyplace outside of cosmopolitan Cleveland is hillbilly country. To the extent that Pittsburgh is rural, it is part of Appalachia.

That's what I meant by the post "Redefining Rural". Rural landscapes can look urban. Pittsburgh can be part of Appalachia as a city. Appalachia has cities. More from The Hillville:

Maybe it’s because we’re all attached to our region’s rural past, so imprinted are we with our grandparents stories, we can’t stop thinking or writing about it. Or, the issues that dominate conversation happen to be in our rural quarters, like mining, mountain top removal and ameliorating poverty. Maybe it’s because there are few universities that offer urban studies. Virginia Tech’s Department of Urban Affairs and Planning is the only one I’m aware of.

Whatever the reason, it’s a fact Emily Satterwhite bemoans in her essay “Seeing Appalachian Cities” in the journal Southern Changes. “Appalachian Studies literature has seldom discussed what it means to be city and mountain, or what it feels to inherit or embrace contradictory sets of values. Only in the past few years have some Appalachianists begun to address the need to better understand the presence of cities in the region.”

Emphasis added. Hillbilly urbanism is the expression of a paradox, the rural city. North or South, I feel at home in any Appalachian city. Perhaps it's the cozy confines of the surrounding hills and the blue collar traditions that still dominate the culture. There's also that diaspora thing. It isn't universal:

In addition to the cities located within the region, the [Hillville] site is also going to focus on cities outside the region heavily influenced by migration of Appalachian residents. Cincinnati, for example, has a large Appalachian community. One in four residents is of Appalachian descent.

“It had such a large outmigration of Appalachians for jobs that they carried their culture with them, as happens with a lot of migrants,” says Newberry. “For the past 40 years there’s been an urban Appalachian center, there’s neighborhoods centers, there’s whole neighborhoods that family units basically picked up and moved to and recreated the connections they had in the hills.”

We hilljacks like to take over foreign cities (and opposing stadiums). Thus, Cincinnati is now a shining example of hillbilly urbanism. You can see the cultural diffusion in the landscape. In Detroit:

They showed up in droves, seeking work and settling together in older Detroit neighborhoods or in growing suburbs such as Taylor and Hazel Park, which sometimes still gets called “Hazeltucky” — a nickname that’s no compliment.

The new arrivals were looked down upon, often considered backward. Their homes were called eyesores. Landlords sometimes refused to rent to them, fearful that dozens more would follow into the neighborhood. A survey conducted by Wayne State University in 1951 asked Detroiters to identify “undesirable people” in the city. “Poor Southern whites” and “hillbillies” were in a near tie with “criminals and gangsters” at the top of the list, well ahead of “transients,” “Negroes” and “drifters.”

When people look down on you for how you look and talk, you stay with your own. So the new arrivals stuck together and formed tight-knit groups. Their neighborhoods were so insular that many of their children, born and raised in Detroit, still speak with accents nearly as thick as those of their parents.

Detroit is part of Appalachia, too. But it isn't located in Appalachia, hear?

Saint Louis Brain Gain

Every US city is in the market for young adults aged 25-34. I'm not a fan of the focus. But good news is good news. Looking up in St. Louis:

From 2005 to 2007 — the peak of the housing bubble — the most popular destinations for footloose young adults were places such as Phoenix; Atlanta; and Riverside, Calif., where homes were cheap and construction and real estate drove a lot of job growth. When the housing market crashed, those jobs dried up, and places with more balanced economies, such as Denver and Seattle, now top the migration charts. While St. Louis has certainly suffered in the recession, it has fared better than many places and is one of a handful of cities — such as Pittsburgh, Baltimore and Boston — to flip from negative migration to positive.

Changing fortunes? Keep in mind that not every Rust Belt city is sporting a brighter side to the migration story. I know from firsthand experience that Saint Louis has a wealth of urban charm that appeals to the geographically fickle.

The Midland would not hold much interest to a person searching out accents were it not for three enclaves that have retained unique speech: St. Louis, Cincinnati and, in particular, Pittsburgh, which seems to be the Galapagos Islands of American dialect.

I didn't realize just how quirky the cuisine is in St. Louis until I worked with someone from the region. You've likely heard of New York and Chicago-style pizzas. How about St. Louis-style? A good history of St. Louis food history can be found here. If you want to try some St. Louis pizza, Imo's will ship some to you. Nothing says diaspora demand quite like using Fed Ex to get some comfort food.

Tuesday, December 13, 2011

Miami Is Dying

Nothing says "brain drain" quite like the exodus of the 25-34 demographic cohort. Take a look at this map. Surely the end is nigh for Miami. The dire situation:

When Christina Caldwell moved back to her native Miami after living out west for six years, she planned to remain. But after two years of dead-end jobs as a bartender and receptionist, she left for California — for good. She now makes more than $100,000 a year at a post-production company in Venice Beach.

“I would never, ever move back to Miami,” she says.

Christina is not alone: South Florida is losing young people in droves, according to recent national and local studies. The area’s high unemployment rate, lack of innovative jobs and huge income gaps have created a perfect storm that many young people are unwilling to wait out.

You know it's bad when someone leaves Florida for the economic apocalypse of California. Migration data don't lie. People vote with their feet. Something is horribly wrong with Miami. Richard Florida explains:

“Miami does very well on diversity, amenity and lifestyle, but it doesn’t have the tech economy or business base to create the kind of job activity that will draw or retain young people,” said Florida, who resides in Miami Beach half the year.

Miami is tolerant (hold your snark), but lacks tech and talent. Given the strong urban amenities and lifestyle, the missing two T's are mystifying. We all know that tolerance + cool = Austin tech boom. What gives? Shrinking cities want to know.

Monday, December 12, 2011

Pittsburgh Retains Young Talent

Financial Times has video about the Pittsburgh turnaround:

In the narrative of the American rust belt, Pittsburgh offers the opening monologue. In less than a decade, the city and surrounding region lost more than 150,000 manufacturing jobs, including nearly 70,000 in steel alone. But now, more than 30 years after the collapse of this former manufacturing titan, the city has emerged as one of the country's most dynamic and robust economies.

Emphasis added. The almost 4-minute clip isn't quite as glowing as that last sentence. If you are interested in a plugging the brain drain success story, then give the video a whirl. I feel nauseated.

Pittsburgh Commercial Real Estate Boom

You want a piece of Pittsburgh's revitalization? Invest in the Golden Triangle:

“The city of Pittsburgh has gone through a major renaissance and become a very attractive market for real estate investors worldwide,” says Alexander Joerg, director at ING Real Estate Finance (USA), in a statement.

ING secured a $43 million loan for Westinghouse Tower "capital expenditures". I got the story backwards. ING is the lender. Munich-based GLL Real Estate Partners owns the building and secured the loan. According to the above article, the money comes on the heels of $25 million spent improvements to the building. That's a lot of money for a dying downtown bleeding population.

Sunday, December 11, 2011

Pittsburgh Connectivity

I draw your attention to a Chris Briem (Null Space) post about Cleveburgh airports. The issue is connectivity with Europe. Status symbol or economic necessity? I'll use Charlotte versus Cincinnati to make the latter case:

Chiquita’s move to the Southeast is not simply about better weather in the North Carolina. Other economic factors in Cincinnati played into the company’s decision. Delta Airlines has greatly scaled back its flights in and out of Cincinnati, as it was once a major hub for the company. Travel to international locations and the West Coast became harder without access to direct flights. Charlotte, however, is the busiest hub for U.S. Airways, making it a prime location for a major operation like Chiquita.

So, Cleveland and Pittsburgh should subsidize flights to Europe in order to retain and attract corporations. I appreciate the value of direct flight options. I'm not convinced that supporting nonstop to Paris is a good idea. Cleveburgh needs to update its understanding of economic geography.

Pittsburgh has some surprising connectivity strengths. Number one is the link with DC:

Current federal rules will force JetBlue to use the slots it won at auction "for destinations within 1,500 miles of LaGuardia and 1,250 miles of Reagan," according to the Wall Street Journal. That's silly. America should—as Matthew Yglesias, a blogger, has argued—"let airports be airports." You could—and, I think, should, if it actually existed—take high-speed rail between Washington and New York, Washington and Pittsburgh, or Washington and Boston. But building a high-speed rail link between Washington and Los Angeles wouldn't be a very good use of resources, and taking a train between those two cities would take far longer than flying.

Emphasis added. I was curious about the inclusion of Pittsburgh in the discussion. The Yglesias post provides the answer:

The DC metro area, for example, is served by three airports. One of them, DCA, is much more centrally located than the other two but it’s also smaller and because it’s centrally located it can’t really be expanded. That airport features six daily flights to Pittsburgh, 245 miles away. There are also four flights per day from Dulles, and three flights per day from BWI. Clearly, there’s a lot of demand for going to Pittsburgh. Were there a high-quality DC-Pittsburg rail connection, many of these air trips would instead be done by train.

Emphasis added. I'm well aware of the substantial churn between Pittsburgh and DC. But the demand is greater than I expected. Pittsburgh is well connected to Washington. That makes a direct flight to Paris or London or Frankfurt redundant. Pittsburgh should be selling its ties to DC, not a direct flight to Paris.

Given the excellent connectivity to DC, why is a direct flight to Paris redundant? Saskia Sassen in the most recent issue of Foreign Policy:

Our geopolitical future is not going to be determined by the G-2 combo of the United States and China. It will run through about 20 emerging strategic urban centers, working as networks rather than conventional hierarchies. Topping the list?

1. Washington/New York/Chicago. These cities are becoming more important geopolitically than the United States is as a country, partly due to war fatigue and the rise of the global economy. Chicago is rising fast as a geopolitical actor; think of the state visit by Chinese President Hu Jintao in January, when he stopped not just in Washington but also in Chicago.

Both Sassen and Edward Glaesser were asked to list "16 global cities to watch." DC makes the cut. Cities that can't (won't) get on the A-list of global importance should be concerned about links to those that are. Indianapolis and Milwaukee don't need to become Chicago. They need to better leverage the proximity and connectivity to Chicago.

In a global urban hierarchy, the A-list cities are going to have strong connectivity with each other. You move to one of them, you get better access to all of them. If you want better access to Washington but can't/won't move to the DC region, then move to Pittsburgh.

As for Cleveland, I recommend leveraging the connectivity to New York City. Some may argue for Chicago. Fine, but choose one and make it a centerpiece of the regional economic development strategy. Forget the golden hub years. The world has changed a great deal from that time period. Don't try to out-Charlotte, Charlotte.

Saturday, December 10, 2011

Moneyball And Community Redevelopment

David versus Goliath. Backwater versus global city. Small market versus big market. Moneyball speaks to it all:

The Moneyball thesis is simple: Using statistical analysis, small-market teams can compete by buying assets that are undervalued by other teams and selling ones that are overvalued by other teams.

Like many Rust Belt cities, Pittsburgh has a treasure trove of urban assets that have been long undervalued. That's because statistical analysis didn't go much further than an account of population. All you need to know is that people vote with their feet.

Fair enough, but how do those migrants make their decisions? Just how rational is that choice? Moneyball exploits conventional wisdom, looking at the "places" off of the common mental map. While you are trying to cram onto the crowded bus to Portland, Oregon, good jobs go unfilled in Fargo, North Dakota.

We move to New York City because it is the Yankees of the urban hierarchy. But that doesn't mean small markets can't compete with the alpha global cities. New York will throw gobs of money at trying to out-Silicon-Valley, Silicon Valley. Heading Upstate, Albany is carving out a world renown cluster in nanotech. There is plenty of undervalued talent available not living in NYC.

An example of overvalued talent might be in the financial sector. Right now, Portland is the best example I can think of as an overvalued destination. More sophisticated migrants can crunch the numbers and find a diamond in the rough. Welcome to Pittsburgh.

Pennsylvania Boom

I've written plenty about Pittsburgh's run of good fortune. And I don't pay much attention to state level data. But what about Philadelphia and Pennsylvania's East Coast? Goodbye, New Jersey:

“The commuting zones for New York, New Jersey, and Maryland are expanding into Pennsylvania,” said Gordon De Jong, professor of sociology and demography at Pennsylvania State University.

According to De Jong, the Pennsylvania counties most benefiting from state-to-state moves are: Pike and Monroe, within commuting distance of the New York metropolitan labor market; Northampton, Bucks, and Lehigh, with proximity to New Jersey’s labor market; and York, Adams, and Franklin, within the Baltimore/Hagerstown metropolitan market.

The migration pattern is geographic arbitrage, the proximity dividend. Talent is trying to maintain big city access at a fraction of the cost. Allentown is the next Brooklyn. Think gentrification on a much larger scale.

Philadelphia and Eastern Pennsylvania are benefiting from being near New York City and Baltimore/DC. Which makes the Pittsburgh boom all the more remarkable. Pittsburgh is the proximity dividend. Cleveland and even Columbus benefit from being near Pittsburgh. Pittsburgh is reinventing itself in the middle of nowhere. Philadelphia is functionally a cheaper New York City. Regardless, the twin engines of Pennsylvania are propelling the state to the forefront of regional prosperity.

Friday, December 09, 2011

Proximity And Migration: Pittsburgh Over Portland

Most moves are over short distances. For Pittsburgh, one expects a lot of churn with nearby metros. Generally, the data back up that law of migration. I'm interested in relocation that defies expectation. More migration analysis from Pitt's University Center for Social & Urban Research:

Here are a few additional maps that did not make it into the report itself. Below is a comparison of the pattern of regions in the US that were generating net migration into the Pittsburgh Metropolitan Statistical Area (MSA) over the period 2009-2010 and a comparable period 5 years earlier.

Click on the above link if you want to see the maps. The proximity effect is evident in both maps, particularly the one detailing inmigration to Pittsburgh for 2004-2005 (a peak of net outmigration for the Pittsburgh MSA). For 2009-2010, the striking feature is the substantial long-distance migration to Pittsburgh.

As a result of the relatively low rate of unemployment, Pittsburgh is attracting migrants on a national scale. Portland doesn't seem cooler than Pittsburgh at 8.4% (not seasonally adjusted). Portland is more Rust Belt than Pittsburgh.

Thursday, December 08, 2011

Pittsburgh-DC Connectivity

Let the noodling begin. You can read the latest Pittsburgh migration report here. The most common statistic cited is net migration. I prefer total migration and a poster at posts the Pittsburgh data for crowd-sourced analysis. The "churn" between Pittsburgh and NYC now exceeds that of Pittsburgh and DC. From where I sit, that makes NYC the most important city for the Burgh Diaspora. There is a tectonic shift in my world view.

I'll explain why I think total migration is more important than net migration. From Chris Briem via Twitter:

Biggest Pgh migration population loss is still to DC Metro. What about in the future? From Governing on DC economy:

There are some dark clouds on the DC metro area's horizon. By comparison, Pittsburgh looks great. People move from places of higher unemployment to places of lower unemployment. Massive job losses in NOVA could fuel an exodus to Pittsburgh.

The spread in unemployment rate is only part of the story. The employment picture is great in North Dakota, better than in Pennsylvania. Why won't the economically displaced go to Fargo instead of Pittsburgh? Chain migration. We go where we know.

Inmigration plus outmigration is a measure of the connectivity between two metros. If there is a reversal of fortune, you can predict where the new residents will come from by looking at the total migration picture. Net migration isn't predictive. It is a past performance metric. Furthermore, net migration is a lagging indicator (see mesofacts). I'd rather look at employment data.

Wednesday, December 07, 2011

Pittsburgh Reset

The migration numbers are finally in. The people have voted with their feet and ch-choose Pittsburgh! The telling graphic:

I think the meager positive inmigration looks much more impressive against the largely negative trend of the last 15 years. Migration tends to slow down during a recession and that effect appears to benefit Pittsburgh. This bolsters the less-people-are-leaving theory. However, as the economy picks up steam (still holding my breath about Europe) I expect the move to Pittsburgh to increase.

Exodus Pittsburgh will pick up, as well. The balance should remain positive. The tell will be 2011-12. (Assuming the EU doesn't melt into a full blown depression) That will be 7-years out from the last net outmigration peak. At that point, I'll be ready to claim that Pittsburgh migration is no longer countercyclical.

Tuesday, December 06, 2011

Redefining Rural

Rural means not metropolitan. Most of the migration data I look at puts counties into two categories, metro and nonmetro. Generally, rural means less people. That's a big perception problem. Consider the oxymoron of rural Taiwan:

That Taiwan is a mountainous island no doubt partially accounts for its teeming population. But so too does the humid, tropical climate of the lower elevations. Tropical ecosystems are the most productive in the world, in part due to their year-round growing season and generous precipitation. It’s why the majority of Taiwan’s population lives on the flat, western sliver, and why farmers there don’t need large land holdings. It’s also why the Taiwanese countryside is as populous as some American suburbs.

As we whizzed by parked cars, rice paddies, and murky fish farms, I had an epiphany. I was in the country. Sweeping aside my preconceptions, I realized that “countryside” is inherently interpretable term, one that depends more on how the land is used than it does on population density.

The link between population and rural informs bad economic development policy. A rural county could have a few towns and even cities with high density. It's still a rural county in terms of dominant land use.

Density along with education is way for a community to be more productive with less population. Just look at the agricultural industry. The same trend is apparent in manufacturing. Why aren't rural towns trying to become denser and more efficient? That's the best way to attract more people.

Monday, December 05, 2011

Rise Of The Rust Belt Class

Economic development is a lot like improving public schools. Moving the needle a little bit in the right direction takes a lot of time. The rate of change is that of mesofacts. After decades of nice, comfortable water, suddenly the frog is boiled and ready to serve. Tastes like chicken. City Chicken.

But for some some reason, these lists never seem to quite mesh with reality. Financial Times writer Edwin Heathcote pointed out recently that many of the places that top the “most livable cities” lists are places no one really wants to live — it’s always (no offense, guys) Provo, Utah, and Ann Arbor, Mich., and Manchester, N.H. “What, you might ask, no New York? No London? No L.A. or H.K.?” asked Heathcote. To reduce a city to metrics “is to strip out all the complexity, all the friction and buzz that make big cities what they are.”

I want to double down on that passage and link on through to other side. From the pen of Heathcote:

In fact, Vancouver’s boringly consistent topping of the polls underlines the fundamental fault that lies at the heart of the idea of measuring cities by their “liveability”. The most recent surveys, from Monocle magazine, Forbes, Mercer and The Economist, concur: Vancouver, Vienna, Zurich, Geneva, Copenhagen and Munich dominate the top. What, you might ask, no New York? No London? No LA or HK? None of the cities that people seem to actually want to emigrate to, to set up businesses in? To be in? None of the wealthiest, flashiest, fastest or most beautiful cities? Nope. Americans in particular seem to get wound up by the lack of US cities in the top tier. The one that does make it is Pittsburgh. Which winds them up even more.

The punch line about Pittsburgh could cut both ways. PGH is no HK. Neither is the Steel City an antiseptic Emerald City like Vancouver. Detroit is the anti-Portland. The Creative Class craves Rust Belt Chic. Now serving City Chicken. Why are you paying so much for the real stuff? The cheaper rip off tastes much better.

The Rust Belt is finally boiling. The rankings will eventually catch up. Jane Jacobs would choose Pittsburgh over Austin. Somewhere, outside boring Toronto, Richard Florida weeps.

Pittsburgh Of Canada

Two of Hamilton's (Ontario) sister cities are Flint and Pittsburgh. In fact, Hamilton could be considered the Pittsburgh of the Great White North. After all, Hamilton is the “Steel Capital of Canada”. But Hamilton isn't the Pittsburgh of Canada. That distinction belongs to Waterloo:

Waterloo, like hundreds of other small North American cities, experienced a golden moment when its main street bustled, when its architecture was comforting brick, and its people were employed and churchgoing and filled with optimism. But this proved transitory; the city grew on the fringes, and the schools moved to the edges, followed by residential and commercial development. Big boxes stores sprouted on farmland, and the main street crumbled. Industry withered, jobs disappeared, and young people fled to the big city. ...

... One key to Waterloo’s success has been the integration — economic, geographic, and cultural — between the universities and the city. Like the engineering and computer faculties, the architecture school is integrated into the community. “We are involved in almost everything,” Rick Haldenby says, “every major committee in Cambridge, Kitchener, and Waterloo. We’ve advised on virtually every major development in the region.” Kuwabara suggests that the [University of Waterloo] architecture school is the best in the country.

Waterloo went from manufacturing center to talent production cluster. As a result, the urban core was dramatically revitalized. Waterloo is a Rust Belt exception.

The magic of failure is really a fluke of geography. A major research university is located in the heart of a city and becomes the engine of economic redevelopment. Put the University of Michigan at the center of Detroit, you get Pittsburgh.

Sunday, December 04, 2011

Staten Island Is Dying

There is plenty of urban frontier left in New York City. Patti Smith doesn't care. She suggests fleeing the Big Apple and heading to Poughkeepsie or Detroit. If twentysomethings heed her call, then Staten Island will turn to dust:

The truth is that people, or at least young people, have been leaving Staten Island over the past 20 or so years. A study released this year by the public policy organization the Center for an Urban Future showed that there were about 2,000 fewer people ages 20 to 34 living on Staten Island in 2009 than there were in 1990. In 1990, that demographic represented 25.3 percent of the population, while now it represents just less than 20 percent. At the same time, the number of people older than 65 has been rising. By 2030, Staten Island is expected to have the highest percentage of senior citizens of any of the five boroughs. ...

... That Staten Island is depleting itself of young people has been a source of concern to the city, Seth W. Pinsky, president of the New York City Economic Development Corporation, told me. The hope is that Homeport will be appealing enough and reasonable enough to retain and attract men and women in their 20s and 30s who might otherwise be inclined to move, especially to New Jersey.

Could the surrounding neighborhoods, Stapleton and Tompkinsville among them, become the next Williamsburg, as some residents have speculated? In some sense this seems as unlikely as the welcoming of a Wal-Mart on Madison Avenue. Despite Homeport’s proximity to the Staten Island Ferry Terminal, the neighborhood is still far away from well, Williamsburg, and the other neighborhoods in which the young and trend-setting congregate.

Perhaps even more relevant, Staten Island is not an incubator of preciousness; it seems allergic to preciousness. Before there were artisanal-cheese mongers in Williamsburg there were painters, performance artists, tattoos, eccentrics, an alternative-culture elite. Staten Island has a lower share of residents with bachelor’s degrees than any borough except the Bronx.

Emphasis added. Ah, to be an incubator of preciousness. Forget Williamsburg. Staten Island would kill to be the next Pittsburgh or Scranton. Those two cities are where suburban dreams find urban expression. As the life cycle turns, people are skipping Staten Island altogether and lighting out for the Rust Belt frontier.

More seriously, Staten Island is trying to capture market leakage. Regarding migration, this is a bad idea. Staten Island is competing with Cleveland for the economic refugees pushed out of Brooklyn. I doubt Staten Island stands a chance. You go where you know and Staten Island might as well be in Mongolia.

Saturday, December 03, 2011

Put People Before Boundaries

There are a variety of approaches to economic development. There are niche considerations, such as technology-based. When I encounter a story about economic development, I think about whether it is place-based or people-based. The more common and conventional thinking concerns territory. How do we improve Pittsburgh or the State of Pennsylvania? We can, in part, solve this problem by investing in people (e.g. education). A better workforce means a better Pittsburgh. That's still place-based.

For people-based approaches, a better Pittsburgh means a better workforce. Pittsburgh's raison d'etre is personal economic development. You would move to Pittsburgh in order to maximize your own potential. The attraction isn't the availability of jobs. Let me use the gentrification of Brooklyn to help me explain:

When I moved to Brooklyn, Fifth Avenue, only three blocks from my house, was a bleak expanse of brazen drug dealing, liquor bodegas with cashiers sitting inside Plexiglas cages, and Salvation Army outposts. By the mid-1990s, the dealers and robbers and worse had been moved along, either to upstate prisons or to less antisocial activities. The avenue is now the very image of gentrification, overflowing with hip boutiques and restaurants, many owned by young entrepreneurs. About a mile away from me is Myrtle Avenue, a long stretch that people once called “Murder Avenue.” These days, the street is safe enough to attract young businesses, much as Fifth Avenue did a decade ago. The same goes for parts of Red Hook, Bushwick, Gowanus, and beyond. Only 15 years ago, Bed-Stuy was about as inviting to white-collar home buyers as Islamabad. After the 81st Precinct, which encompasses the eastern half of the neighborhood, saw a 64 percent plunge in violent crime between 1993 and 2003, the lawyers, editors, artists, and nonprofit administrators started venturing in.

Emphasis added. Using the place-based paradigm, transform Murder Avenue to Myrtle Avenue and gentrification will follow. A cool place will attract talent. To some extent, that's true. But that's only part of the story, the most recent development. The Park Slope pioneers who moved to Murder Avenue saw personal potential in a tortured landscape:

This new workforce needed somewhere to live. A surprising number turned up their noses at New Rochelle and West Orange. Perhaps their college social-sciences courses had taught them to write off the suburbs as “alienating.” Perhaps the influence of Kennedy-era European sophistication led them to scorn the purportedly tacky conformity of the bridge-and-tunnel crowd and to grimace at the sterile white-brick apartment buildings rising in Manhattan to house their kind. Unlike their immigrant parents, who associated city life with poverty, teeming tenements, and foul streets, they saw in the old urban areas the “authenticity” and “community” that the suburbs and the high-rise city lacked. They looked across the Brooklyn Bridge and found walkable, human-scale, leafy, and historic streets with houses displaying the craftsmanship of a seemingly more gracious age. (In reality, the elaborate woodwork in my neighborhood, at any rate, was prefabbed by Victorian developers.)

As their numbers increased, the professionals crossed Brooklyn Heights and trekked deeper into the blue-collar borough. Osman refers to the settlers as “romantic urbanists”; they—or should I say “we”?—were looking for an organic connection to history and an echo of rural life. With the help of a surging real-estate industry, we gave our new enclaves bucolic names—Heights, Hills, Gardens—and settled in happily, though uneasily, next to our less privileged neighbors.

The people come before the place. Or, the people make the place. Richard Florida has always had it backwards. The same goes for place-based economic developers. If you fail to go far enough back in a community's history, then you won't see the folly in your field of dreams. People develop, not places.

As will become evident later in this paper, whatever the stated purpose of industrial policies the effect has been to recompense individuals for staying where the jobs have disappeared—rather than helping them to relocate to where the new economic opportunities are emerging. That is precisely the opposite of the strategy that takes best advantage of nationhood. Being a sovereign country means that both labour and capital are able to move freely to where they can be best utilized. There are no border controls and no exchange rate considerations.

Current strategies subsidize inefficiencies; create labour shortages and bid-up wage rates in growth regions; and inflate public sector employment. Often the chief beneficiaries are the multiplicity of local and regional development bureaucracies. The fundamental question to be addressed is whether individual Nova Scotians believe that they are better served by accepting 90 percent of the national income to remain in stagnating industries or whether they would prefer relocation assistance to move to growth centers and experience substantial income enhancement.

To put it somewhat differently—current strategies run a risk of putting geographic regions ahead of individual fulfillment.

Emphasis added. In the United States, I've noticed libertarian think tanks putting "geographic regions ahead of individual fulfillment" as a rule. State policy is paramount. There are migration winners and losers. Outmigration is a problem that libertarian policies can address. The think tank sponsoring the above paper also has a history of talking out of both sides of its mouth:

It must be nice to work for AIMS. On one day you can complain about the government for trying to do things that restrict out-migration and on the other you can hammer them because of the results of out-migration. Cake and eat it too. Where do I sign up?

AIMS refers to Atlantic Institute for Market Studies. I'm convinced that AIMS is only interested in stopping government from picking winners and losers. I can see a possible thread of logical coherence. I don't see any evidence of AIMS making such a case. In fact, the author of the AIMS paper makes a strong argument for government intervention. Government should assist people, not attract industry. That's a heavy, visible hand guiding the labor market:

The most constructive people-oriented strategy of government should be to help create an inclusive labour force with appropriate skills and the flexibility to locate to where their personal economic and social wellbeing is maximized. If that proves to be outside the province, it may be a loss to Nova Scotia—but to those individual Nova Scotians it would be a personal gain.

Championing free trade and all that, I figure one is familiar with the concept of reciprocity. I guess not. Modelling the talent trade as a zero sum game is a mistake. Amusingly, AIMS is wide of the mark. The paper fails to move beyond criticism of the status quo and point the region in a more constructive direction. I doubt AIMS gets much traction.

There are numerous reasons for the disappointing employment stats. For one thing, Brooklyn’s young companies often appeal only to niche markets, usually people like their owners. For another, they benefit from the technology-improved productivity of manufacturing throughout the United States; it takes fewer workers to produce beer or chocolate than it did in the past. And if the firms do grow and hire a lot more workers, chances are that they’ll relocate. It’s extremely expensive and endlessly aggravating to transport raw materials into, and finished products out of, a borough strangled by the Brooklyn-Queens Expressway. Young businessfolks also face the familiar hurdles of all New York City firms: high taxes and burdensome regulations. It’s enough to bum out even the most idealistic hippie-entrepreneur.

This is a great example of legacy thinking, stubborn mesofacts obscuring a geography of opportunity. Brooklyn's most important product is talent. The borough is a factory and the widget is people. The raw material is the well-educated, the value add result is a successful freelancer. From the Free Exchange blog:

What Mr Katz describes is a world where a good job is not lifetime employment, where your employer takes care of you from age 20 until death (with a very generous pension). He describes people responsible for their own economic destiny. That may seem unsettling, because the old regime appeared to offer more stability, though that stability may have been an illusion. Actually the new way may offer more certainty because people look out for themselves, rather than being vulnerable to changes that impact their employer. The nature of work constantly evolves. The company man was a post-war construct. The self-sufficient artisan is actually more consistent with historical labour markets.

I think this bodes well for the younger generation. Having spent most of the 1990s hearing that my generation was made up of lazy, slackers doomed to failure (we showed them!), I hate it when uniform characteristics are foisted on an entire generation. But I did enjoy Noreen Malone’s recent New York Magazine article chronicling her generation’s economic woes. Millennials get a lot of grief for allegedly being hard-working, yet entitled and self-involved. But in order to build your human capital and be that modern, competitive worker it seems you must believe you’re a little special. The company man was content to be a cog in the machine, the modern worker must take pride in his talents.

Emphasis added. A better Brooklyn means a better workforce. In order to build your human capital, you move from Paducah, KY to Williamsburg. You become a successful freelancer and then return home to raise a family, bringing your Brooklyn network with you. Those Brooklyn-born firms that do grow have to relocate somewhere.

Friday, December 02, 2011

Ruin Porn

Ruin porn, you know it when you see it. Using the term "Rust Belt" in the pejorative sense is ruin porn. To some extent, the idea of a Great Lakes megaregion is ruin porn. Broad brush strokes over Akron, Ohio:

Of course, the ad was not real. It was a lethal trap. At least three of the men who apparently answered it are now dead, their bodies buried in graves on the "farm" – which turned out to be land owned by a coal mine. Or hidden near the blighted city of Akron, deep in the heart of Ohio's Rust Belt – itself a grim icon of tough times and lost American glories.

Emphasis added. If I'm reaching for a grim icon of urban blight and faded glory, Akron doesn't spring to my mind. The above prose is artistic license, not journalism. It's a stock cliché, a conventional geographic stereotype. Sea serpents are swimming around in Flyover Country. Abandon hope all ye who enter here.

Ruin porn is powerful. Ann Arbor becomes a grim icon of tough times and lost American glories. Vibrant startups can't attract talent.

Politicians love ruin porn. If you want to get elected, then tell voters how you will plug the brain drain. Or, make wild claims about how fracking saved the Rust Belt and put the lid back on Hell.

Meanwhile, back in the land of eggheads, Allegheny County (Pittsburgh) reports an unemployment rate of 6.3%. The region is outperforming the likes of Denver, Minneapolis, and Charlotte. It's on par in terms of job growth with Boston. No matter, deep in the heart of Pennsylvania's Rust Belt is a cauldron of serial killers. Times are so desperate that the unemployed are moving to Pittsburgh:

But, seriously, you might think, who would pack up all their bags to live in an isolated trailer for a few hundred dollars a week? The answer, in the America of 2011, is depressingly simple: lots of people. Desperate people, jobless people, poor people, people with little to lose, single people, people with struggling families to support, people willing to ignore the warning signs and take a gamble.

How else do you explain it?

Thursday, December 01, 2011

Age Of Return Migration

The Rural Rebound is a dusty story that sounds like news. That's especially true when the weaver of discourse is researcher Ben Winchester. Watch "Rewriting the Rural Narrative" on Lakeland Public Television. The interviewer is visibly surprised by Winchester's findings. Not much has changed over the last 40 years. Winchester offers only a shift in framework. Brain drain becomes brain gain. The interviewer can hardly believe his ears.

Very quietly, until now, return migrants have been transforming the economy in the rural hinterlands and around the world. In Korea:

Kim was one of more than a dozen American entrepreneurs I met in Seoul. They were the founders of media start-ups, video-game start-ups, financial-services start-ups, manufacturing start-ups, education start-ups, and even a start-up dedicated to producing more start-ups. "It's a big trend here," says Henry Chung, managing director of DFJ Athena, a venture capital firm with offices in Seoul and Silicon Valley. "There's a growing number of students studying overseas and coming back."

Korea is like a rural community. The culture is adamantly risk averse. There isn't a significant influx of outsiders. The most entrepreneurial leave. Return migrants are the lifeblood of transformation and prosperity.

In September, Kim raised $500,000 from investors in South Korea. His goal is to raise enough to qualify for an American investor visa.

He isn't the only entrepreneur who talks about coming to the United States. "I know for sure that I want one more stint in the States," says Shin. He is curious to find out if he can replicate his success in America's larger, more competitive market; and even though he now speaks passable Korean, he has never stopped thinking of himself as an American. "I don't know when, and it's too early to think about ideas, but I know I'll probably end up going back and forth," he says. "I think it's possible to do stuff in both places."

The migrant's connection to two places is the missing part of rural narrative rewrite. Relocation isn't a zero sum game. The two communities both benefit from the talent trade.