Geographic Immobility

Why not stay where you are and invest in your hometown as it has invested in you? Let's stop the rural brain drain one educated person at a time. The benefits of stemming the tide are obvious. Educational attainment equals prosperity. In Northeast Ohio, that message is loud and clear:

Better education translates into better jobs, and ultimately, a better economy, added Barb Ewing, economic development director for U.S. Rep. Tim Ryan, D-17 Ohio.

“When companies look to locate or relocate, one of the first things they want to know is how high the level of educational attainment is in the community,” she said. “If we can’t provide that, then they’re not going to come here.”

The region will invest more resources into the education of its citizens. No child, even those on the wrong side of the tracks, will be left behind. Youngstown is a good example of the problem in terms of economic geography:

The researcher also noted that population has actually trended upward in the city -- rising from 60,000 according to the 2000 Census to about 65,000 in 2008, she said. At the same time, there has been a “continued decline” in the area’s suburban population in the later years of the decade, due possible to factors including out-migration of people with higher incomes. “So the number of poor just continues to go up as a percentage of the total population,” she said.

Tom Humphries, president and CEO of the Youngstown/Warren Regional Chamber, said the Brookings report really didn’t show anything that was surprising. “If we look at the economy and you read that article, you realize that you’re not alone,” he said.

The chamber has attempted to take a regional approach to issues such as education, a key element for attaining higher per capita incomes, over the past several years, Humphries said.

Better education results in higher per capita incomes. And higher incomes allow more people to flee the suburbs, yielding a greater concentration of poverty. It is an ironic outcome to a noble policy goal.

Getting high-flyers to stay put is a tall order. Working against any economic migration flow (e.g. Mexico-to-US) is usually an exercise in futility. The World Bank report I've been touting over the last few months recommends leveraging the trends instead of fighting them. The epiphany comes after decades of trying to plug the brain drain while bolstering educational attainment in the most impoverished countries.

Revisiting Brian O'Neill's article about the lukewarm reaction to the Pittsburgh Promise, the call for an attitude adjustment seems to fly in the face of an awful lot of evidence to the contrary:

"I think that, for at least a generation, parents have consigned themselves to the supposed inevitability that their children must leave the city for college and life," said Ms. Heidelbaugh, a lawyer. ...

... That doesn't just happen here. It happens everywhere. There is plenty of data that suggests we in Pittsburgh don't lose our young people to a degree greater than most places. We just don't attract the migrants, native and foreign, to replace our departing youth the way other metro areas do.

But it is the attitude and the expectation that Ms. Heidelbaugh says are different here. In her native St. Louis -- a city that has lost even more population than Pittsburgh, going from its 1950 peak of 857,000 to an estimated 371,000 today -- people don't resign themselves to the necessity of children leaving, she said.

In terms of out-migration, St. Louis isn't all that different from Pittsburgh. In many respects, the two cities are long lost cousins. Perhaps the attitude is different, but the results are similar. The problem is one of attraction, not retention. Some research published in 2003:

Policies designed to keep rural area college graduates "home" when they would be better off someplace else are clearly inefficient from society's point of view. However, strategies to attract experienced college-educated workers may not be. The current debate over brain drain overlooks the possibility that individuals' reasons for moving and their preferences for certain locations may change with age. Younger people move to take advantage of school and job opportunities. However, as people marry, have children, and acquire job experience, they may choose to relocate for "quality of life" reasons. There is little information about the motivations and choices of "reverse" migrants opting to relocate in mid-life. Policy makers should be concerned about the supply of all educated workers not just young educated workers.

I would welcome this kind of attitude adjustment. I would also hope that the afflicted communities would become more aware of what has been tried. Considering funding a bigger and better internship program to retain talent? Speak with representatives of the Scottish government first:

The business community is furious about the decision and careers officers at universities are outraged by the scrapping of Graduates for Business (GFB), which had a high success rate over the last decade helping graduates find a career, for a saving of just £1 million over three years. Some fear it could lead to a brain-drain of Scottish talent to England or abroad.

Scottish Enterprise (SE) mounted a strong defence of its decision on the basis that the internship scheme was not delivering the expected benefits in terms of turnover and job creation, and the Scottish Government said it was a decision for it.

There appears to be more to the story than SE is publicly stating. But to claim that GFB stemmed brain drain is disingenuous. This business community should be more forthcoming about why it is "furious". I doubt that we would find that a double or triple bottom line is in peril as some have claimed.

Trying to encourage young talent to stay is in no one's best interest.

Rural Return

"Hollowing Out the Middle" is a book about rural brain drain in the United States. However, a good number of those who leave do return. Not all "returners" are the same. In fact, the authors claim that only a fraction would qualify as "high-flyers". This demographic is part of the coveted creative class and some do leave big city for the comforts of home, even small town Iowa.

I'm not sure if this assertion would hold up to scrutiny. I've learned that our population expectations are often out of whack with the realities of migration. I'm seeing more and more stories about the return of natives to forsaken regions. The backward talent flow isn't putting an appreciable dent in the decline, at least for now. The reason for this may be a lack of imagination or inability to leverage the brain gain:

Last week I had an interesting conversation on Twitter concerning a ReImagine Rural blog post I wrote titled “Should we banish ‘brain drain’ from our vocabulary.” The post focuses on Ben Winchester’s research suggesting much of rural Minnesota is experiencing an in migration of college educated adults age 30-45.

The Twitter conversation emerged when Joe O’Sullivan (@jaosullivanx) a reporter from Watertown, SD, sent me a tweet saying, “I see people here who grew up rural return 15 years later w/ degrees. Positive development, but can you bank on it?”

My response was, “B Winchester tells us that there are more who move back than we realize. But that’s also why we need (to) intentionally work at it.” Later I sent him a second tweet with a link to a report that highlights the importance of rural communities being intentional about developing people attraction strategies.

Joe responded writing, “I like. But it seems that communities have either a lack of vision, or resources, or both. How do you get around that?”

Good question. We haven't nearly exhausted the possibilities of attraction. That's not to dismiss the call of investing in the human capital left behind. (The main policy conclusion in "Hollowing Out the Middle") My gripe is that the recommendation is more about social justice than plugging the brain drain. Going after more high-flyers doesn't have to come at the expense of the rest of the community.

Latent in this discussion is class warfare. The world described in "Hollowing Out the Middle" is deeply segregated along those lines. This is the rural America we need to preserve? The entrenched parochial attitudes drive out many high-flyers while all but ignoring the lower classes stuck in place. Whatever the solution, small towns will change. They must change.

Throughout the book, I felt as if I was being beat over the head with an anthropological directive. We mustn't pollute the cultural ecosystem, just observe it. Exogenous forces are something to be abhorred. Yet the ultimate blame for the brain drain is put at the feet of the community. I doubt we can simply cherry pick what we want to save and what should be thrown away. The economic structure, with its inherent faults, exists at all scales. (Dusting off Neo-Marxist theory)

To think that "stayers" won't bolt for the bright lights after receiving the same educational opportunities as "achievers" is naive. Yes, it is the right thing to do. But the initiative won't save rural America unless these communities figure out how to derive a dividend from that investment in their young people.

Using Natural Gas Markets To Model Migration

Migrants, just like investors, can overvalue and undervalue places for a variety of reasons. Aaron Renn's recent article in The Oregonian suggests that Portland is an overvalued destination as a result of progressive urban planning but poor job creation. (Via Chris Briem) I see a striking parallel with the US natural gas market:

In Pennsylvania, landowners are at a disadvantage because gas companies here can provide only sketchy information about production in the Marcellus, a mile-deep formation that lies under much of the state. Here, production information remains confidential for five years - property owners, investors, and competitors must rely on company press releases for incomplete details.

"In most producing states, the public record on initial well tests is available fairly quickly, within, say, weeks or six months," said Leslie Haines, editor-in-chief of Oil and Gas Investor, a trade journal based in Houston.

Said an industry source, who declined to be identified because his business depends on not offending gas operators: "Not having to report production is damn well hurting the lease prices. Your state government up there is leaving so much money on the table, it's not funny."

Stephen W. Rhoads, outgoing president of the Pennsylvania Oil & Gas Association who now works for operator East Resources Inc., said Pennsylvania authorities don't have as much current information about Marcellus production because the shale play is in its infancy.

"It's not a question of having the information that we're hiding, it's a question of having the information at all," he said.

It is a transparency issue, a knowledge problem. Greater uncertainty drives down the bidding. This provides a tremendous opportunity for those who can successfully navigate such murky waters. On the other hand, a sure thing can overheat the market:

In the Barnett Shale around Fort Worth, where leases fetched $150 an acre in 2003, a bidding war between Chesapeake and XTO Energy Inc. sent prices over $25,000 an acre two years ago, said Michael E. "Gene" Powell Jr., an industry veteran who publishes the Powell Barnett Shale Newsletter.

In the Haynesville Shale in Louisiana and Texas, prices exceeded $30,000 an acre in 2008, when natural-gas prices peaked at rates above $13 per thousand cubic feet. They're less than half that now.

"Nothing will ever compare to the Haynesville frenzy that occurred in 2008 - it got way out of hand, and some companies paid a lot," said Haines. "Now, that has died back down to more reasonable levels."

Migrants make similar real estate bids with their feet. Better to go where you know than to roll the dice on an emerging community with a short track record. Thus, geographic arbitrage opportunities in the Rust Belt go unnoticed and Portland essentially turns away top talent. A question Renn posed today, (paraphrasing) why did Nikki Sutton give up on Portland only to try her hand at being an entrepreneur in Indianapolis? She was unable to find even the most menial employment in Portland. But she didn't run through that wall and create her own job so she could stay in "the misty evergreen Shangri-La for the young".

Sutton may be an exceptional case, but she may also represent a growing trend. In "Hollowing Out the Middle", Sutton would be the prodigal daughter who returned home defeated. These "Returners" are failures who are doomed to the same fate as those who never left. Sutton is a square peg for that round hole. Or, she embodies the undervalued talent that rural towns ignore. To me, Sutton personifies the Rust Belt city: A diamond that stays hidden in the rough unless chance reveals its true value.

Pittsburgh: Model Of Success

If I read nothing but Pittsburgh blogs and publications, then I would be missing a great success story. At least, there must be some truth to the celebration of Pittsburgh's transformation. Louisville and Lexington (Kentucky) are the latest cities studying the model:

In visiting Pittsburgh, the group will examine advances the city has made in education, tax policy, talent attraction, civic amenities, community branding and entrepreneurship. Pittsburgh was recently named the No. 1 Most Livable City in America, and has harnessed the power its affordable standard of living and world-class facilities to become a leader in the technology, research, and robotics industries. Pittsburgh is home to more than 100 global companies.

The "Most Livable City" designation is not a big deal. But the laundry list of categories that merit attention from other regions is something to consider. No one is making Louisville and Lexington go to Pittsburgh. Why do these communities think they can learn something about talent attraction from one of America's most prominent shrinking cities?

Again, the obsession with the population numbers is absurd. Many successful global cities (e.g. Chicago) are domestic migration losers. Thanks to immigration, we don't hear about how these places are failing. That an increase in immigration to Pittsburgh would dramatically change the image of how Pittsburgh is doing demonstrates the folly of the population hype.

A good example of how immigrants gloss over urban struggles is London:

Inner London is on course to have by 2030 the lowest proportion of over 65-year-olds of any region in the European Union, say official projections.

The UK capital will largely escape the EU’s ageing population trends, according to a report by Eurostat, the European Union’s statistical office, and will take over from Flevoland, part of the Netherlands, as the region with the fewest pensioners.

In contrast, Germany faces increasing strains on its welfare system as eastern regions of the country see the proportion of over 65s rising to almost 40 per cent over the next two decades.

The trends highlight the effects of London’s above-average birth rate and of international migration patterns – as well as its appeal to younger people. By 2030, almost a fifth of the population of Flevoland, built on reclaimed land north of Amsterdam, will be older than 65. But in the same year, just 10.4 per cent of the population of inner London will be over that age.

“Large metropolitan areas tend to be younger: living in very big cities is expensive, it’s something young people do at the start of their career. Cities are also attractive to students,” said Ralf Jacob, a demographics expert at the European Commission “Older people, who are retired, no longer have to live close to job-rich urban areas.”

Alpha global cities export the older demographic cohorts. It becomes another region's problem. Aging Germany isn't a result of bad urban policy. And the boom in Florida wasn't the result of smart urban or state policies.

Back to London:

A team of urban experts, as part of a routine exercise in 1974, forecast the size of the world’s most populous cities in 2000. Kinshasa, the Democratic Republic of Congo’s capital, would grow to 9 million, more than London today. Pakistan’s Karachi would expand to 16 million, almost as large as New York City. The forecasts were way off (see fi gure 7.1). Kinshasa’s population is about half of London’s today, Karachi’s about half of New York City’s. Why were the experts, generally good at forecasting national populations, so wrong in predicting city sizes?

London was one of the cities the experts grossly underestimated the population growth. They didn't foresee the global economic forces that would make the city such a hot destination for talent. In other words, London got lucky. As for Pittsburgh, suffice to say that the city was extremely unlucky.

The numerous benefits of immigration amount to smoke and mirrors concerning urban health. We've already seen the migration mirage that was Las Vegas and Phoenix. Pittsburgh has made its gains without the windfall of either, making the increasing concentration of talent located there all the more remarkable. That's why so many other cities see it as a model of successful urban policy.

Broken Pittsburgh Promise

In his book "The Paris of Appalachia", Brian O'Neill makes no bones about the importance of the Pittsburgh Promise to the health of the city. Short of devising another strategy to get at suburban money (see Mike Madison's latest post) and consolidating redundant government entities, a lot is riding on the Promise.

The problem is population decline and the shrinking tax base. Ideally, the Promise incentivizes more people to live within the city proper. What's not to like about free college education for all of your children? According to O'Neill, the region is yawning:

That's potentially 80 grand if a Pittsburgh family sends two children to college. Yet you don't hear people talking about it much. We just aren't used to news that good in Pittsburgh. Many just hear it and throw it in our massive too-good-to-be-true pile.

O'Neill then explores Pittsburgh's ambivalence and the need to change the culture. That's not going to happen. In fact, O'Neill interviewed two "outsiders" for his piece. Non-natives are much more ready to embrace the Promise.

Retention initiatives are doomed to failure. Cultural inertia is very powerful. Concerning migration modeling, we tend to underestimate these residuals. We provide one rational choice opportunity after another for a very irrational community. If the opposite were true, then young talent wouldn't continue to try to cram into Cool Portland (Oregon) or more software companies would take advantage of geographic arbitrage in Youngstown (Ohio).

The culture of migration is something to leverage, not re-engineer. O'Neill's book does work with this flow. He provides tacit knowledge of the advantages of urban living in a Pittsburgh North Side neighborhood. But his stories would better appeal to outsiders than locals (who have already made up their minds and are set in their ways).

With the right demographic identified, how do O'Neill and the Pittsburgh Promise reach a critical mass of prospective city residents?

I think the answer is locked up in the social media community.

My wife is a Pittsburgh native, raised in the North Allegheny school district. She has a geographically independent occupation in software sales. We have two preschool aged children and would love to raise them in my wife's hometown. The Pittsburgh Promise is an attractive offer, but the relocation logistics are daunting.

Where to look for the right neighborhood within city limits? Which school or schools might be a good fit? As you might imagine, my suburban raised wife has a host of concerns about city living. All these anxieties erode the advantages of the Promise. And while O'Neill's book is a good start for addressing the fears, a full court press is needed to cinch the deal.

The northern suburbs are the known commodity. We already know how to find a good neighborhood. We can easily compare the schools to the ones we attended. But the city is terra incognita. The Promise provides the necessary financial incentive. Missing is the intimacy of place that can help us feel like we are making a good decision.

We aren't looking to be urban pioneers. A community with other reformed suburbanites would be ideal. The Promise hasn't been in place long enough for one to take hold, but journalists such as O'Neill might bring to light a few of these seed residents. If he can't find them, then perhaps Pittsburgh needs to sweeten the deal and help mitigate the risk of being one of the pioneers.

I have to believe that the right neighborhoods already exist, particularly as far as expatriates are concerned. I'd bet there are cost effective options if you know where to look. The first step is creating the online environment where such knowledge can be effectively brokered. Partner the site with the Pittsburgh Promise with the stated intention to lure families to the city. Might some existing local nonprofit be in a good position to spearhead the initiative?

Most importantly, forget the city's surrounding suburbs. Bring in the people who will bring a cultural change with them. That's the only way to transform the regional mentality. Encouraging the young to stay will have the opposite effect. This will reproduce the parochial attitudes, the suburbs continuing to benefit at the expense of the inner city.

Michigan Diaspora

I've got some great blog fodder in the queue. But with the latest issue of the Economist now available online, I'll hit one of the highlights. Doom and gloom in Michigan is one of the more interesting stories, ending with (as far as I am concerned) a perfect twist:

Given this climate many young educated workers are fleeing the state. About 40% of Michigan-born graduates leave each year, according to a two-year-old survey. It is not through lack of local pride. On any Saturday during football season, graduates from the University of Michigan cram into Duffy’s bar to cheer on their beloved Wolverines. Duffy’s, though, is in Chicago.

In the wake of my reading of "Hollowing Out the Middle", I'm trying to take to heart all the failed brain drain initiatives and book's policy prescription. I've gone back through my own blog and tried to critique my own ideas. After all, Iowa's tried just about everything to address the population decline problem.

Despite the humbling review, I still see opportunity in the Duffy's dynamic. The "high-flyers" cheering on the Wolverines in a Chicago bar are the perfect entrepreneurs to reinvent Michigan. I'm not talking about trying to get them to return home. Empower them to lead Michigan's transformation from afar.

The idea that talent that moves somewhere else is no longer a state asset is parochial thinking. Iowa's small towns are efficient exporters of the highly-skilled. Universities and colleges have figured out how to benefit from talent production, but the hosts of these institutions have not. That's not to say it can't be done. There are plenty of international examples that offer a model of best practices.

To offer one, consider the "New Argonauts". Talent that leaves India for Silicon Valley mutually benefits both places. When the arrow points in the other direction, there is still a dividend in Silicon Valley. But can that work on a sub-national scale?

Matt Harbaugh (CIO of Innovation Works in Pittsburgh) unwittingly described a potential scenario of success:

At this point, Pittsburgh’s remaining gap seems to be an insufficient supply of traditional venture capital from VC firms and active angel investors to support the companies that are being spawned. Unfortunately, as long as the managers of pension funds and endowments (and the investment advisors of high net worth families) believe the conventional wisdom that the best ideas and “safest” VC investment opportunities are located in Silicon Valley, the money will continue to be concentrated in the brand-name VC firms, and those firms will continue to invest in their own backyard.

The New Argonauts demonstrate how venture capital can escape Silicon Valley and travel around the world, finding valuable new markets of investment. Via diaspora networks, "safe" ideas can be found. Whatever is lacking, surely it could be found among expatriates.

Moving back is all well and good (and I still think there are a few stones left unturned), but provide your diaspora with other avenues to express their pride. Many don't want to return, but that doesn't mean they don't care. Ironically, the authors of "Hollowing Out the Middle" limit the policy choices by focusing on residence. If you no longer live in a rural small town, then you are part of the problem and not the solution. That kind of zero-sum thinking is doomed to failure.

Reinventing Charlotte

The news that continues to come out of Charlotte (North Carolina) should stoke the fires of Schadenfreude in Pittsburgh. The Southern boomtown-gone-bust might consider studying its Rust Belt doppelgänger. Charlotte has fallen on hard times:

Today, that banktown identity has been shaken by a high-flying financial system that discovered gravity the hard way. The crash exported one of our hometown banks to San Francisco, put the CEO of the other in a house in Boston, and sent legions of talented local white-collar strivers into the ranks of the unemployed. Add to that shuttered companies, large and small, and a population of other out-of-work transplants who followed rainbows of pixie dust from as nearby as Gaffney and as far away as Guadalupe and you've got something of an economic meltdown. Three years ago, some 54,000 people in Mecklenburg County were in finance jobs. Today, that has sunk to 2003 levels, at around 48,000.

That's from an introduction to an on-going column that might best be described as a regional pep talk. Charlotte is desperately seeking reinvention. Can the city escape the past?

Charlotte's recovery will be one to watch. I'm curious to see if browning greenfields matter or not. My guess is that it won't be able to successfully economically diversify quickly enough to recapture some of that lost magic. I'm trying to imagine a New Charlotte and I can't make it out.

Burgh Energy Report: 2010 Projections

Like Pittsburgh's regional economy, drilling in the Marcellus Shale is bucking national trends. As long as the well yields high volumes of natural gas, drilling remains profitable in a climate of over-supply. Talisman Energy is particularly bullish:

The company says its main priority in 2010 will be to ramp up development of its shale gas proprieties while maintaining stable cash generation from the North Sea. ...

... Talisman has been bulking up its shale land holdings, and increasing its focus on unconventional natural gas development. Last year, it announced plans to open an office in Pittsburgh to handle its increased presence in Pennsylvania.

On Monday, Talisman said it aims to double its development drilling in Pennsylvania, a shale gas exploration region that stretches into New York state and Quebec.

In Quebec, the company plans to test its first horizontal pilot well, with plans for another two horizontal wells later this year. Overall, Talisman plans to spend $270 million on core conventional properties in Canada, it said.

I suspect that this rush will keep pressure on the Pennsylvania government to delay tax increases, at least until the market recovers a bit. Furthermore, there is still a great deal of uncertainty about the environmental viability of the hydrofracking drilling process. The threat of a changing regulatory regime might help explain some of the current bump in activity despite very small margins.

Another looming problem is infrastructure. In Britain, the cold winter has dramatically boosted demand for natural gas. Supply isn't the problem. The issue is delivery. (Via Aaron Renn's Twitter feed) All that energy has no place to go. With all the drilling going on in Pennsylvania, will we soon see a boom in activity increasing the capacity to consume natural gas?

Hollowing Out America

After reading Richard Longworth's thoughts about the book "Hollowing Out the Middle", I figured that I needed to digest the entire book. Carr and Kefalas (authors) do more than detail rural brain drain or even Midwestern brain drain. The policy review offered just about covers every type of initiative employed in the United States to deal with demographic issues shrinking so many communities.

In this regard, Iowa provided the perfect case study. The state has tried everything, or so one might think. Carr and Kefalas note the lack of investment in the people who, for one reason or another, manage to live out their lives in these small towns. Rural Iowa overlooks those who stay or quickly move back. The authors of the study essentially advocate taking advantage of established migration patterns. Besides, who could argue with improving the educational attainment of the current residents?

I'd recommend "Hollowing Out the Middle" to anyone concerned about out-migration. It is a humbling read and a great vehicle for sharing ideas. On the other hand, I don't think Carr and Kefalas make a convincing argument about why this crisis matters to other Americans who don't live in the Heartland. The list of places benefiting from agglomeration economies is much smaller than the list of those who don't. The acolytes of Richard Florida are coming to grips with the harsh realities of this economic geography.

However, I think the recommendations in the book can work. They already have in Pittsburgh. There still exists a shrinking city problem, but the long-term prospects of the city look pretty good. All small town rural Iowa has to do is weather a lost generation like what occurred in Southwestern Pennsylvania during the early 80s. I'd guess the fate of Brownsville or other Mon Valley factory towns is what awaits "Ellis", Iowa even if all the policy suggestions were implemented. A few will benefit, but most will die.

Power of 32 Update

This is getting comical:

This blog is open to invited readers only

http://powerof32.blogspot.com/

It doesn't look like you have been invited to read this blog. If you think this is a mistake, you might want to contact the blog author and request an invitation.

Taxes And Brain Drain

I'll keep this post short and sweet, real simple. The claim:

At the heart of Ohio's fiscal problems is a tax system and business climate that has been driving people out of the state for more than 15 years, resulting in a shrinking economy and a smaller tax base.

Undermining the claim within the same article:

From a regional competitiveness standpoint, Ohio is surrounded by states that, generally speaking, have much lower tax burdens. Michigan, Indiana, Kentucky, and West Virginia are all clustered in the middle of the national rankings (27th, 28th, 25th and 29th respectively), while Pennsylvania's tax burden is 11th highest in the nation, but still lower than Ohio's.

What's the link between tax burden and out-migration again?

Can Cleveland Flower Again?

The post title is the caption for this photo of the urban blight surrounding University Circle. I don't get a lot of comments here, but the geographic triage issue is generating interest. The article about Cleveland in the latest issue of the Economist provides a good case study:

The recession has exacerbated the divide, as has the billion or more dollars poured into expansion projects in the University Circle area in recent years. Four cranes block out the skyline, but the foreground is row upon row of boarded-up houses and shuttered storefronts. The Cleveland Clinic, Case Western Reserve University and University Hospitals are powerhouses of economic activity, spending a combined $3 billion on goods and services annually. But little of that money stays local.

So what if some of that financial largesse could be deployed within the surrounding city blocks, creating assets and new wealth within the underclass? If it seeped out not via insecure low-wage jobs, but jobs offering living wages and benefits, even entrepreneurial businesses that workers could own? That is the idea behind the Evergreen Co-operative Initiative, an effort aimed at closing this wealth gap by creating 10 green, for-profit businesses that local residents will own and operate.

The development pattern is classic globalization. Wealth concentrates in a small area and stands in stark contrast to the rest of the struggling city. Cleveland would be better off forgoing projects such as the Evergreen Co-operative and keep pouring all the resources into one of the few success stories. That would be akin to what Chicago did during the 1980s. Invest in the winners and ignore the losers.

In a nutshell, that's the geographic triage approach. If you try to spread out your efforts with an eye towards economic justice, then Cleveland will not flower again. It sounds draconian because it is.

Sherry Linkon recently interviewed Youngstown Mayor Jay Williams, who commented on the urban triage program in his city:

Of course, I couldn't talk with Jay Williams at the start of 2010 without talking about 2010 -- the plan. As he acknowledges, the plan has succeeded in several unexpected ways, by bringing positive media attention to the city and by inspiring organizing efforts by non-governmental groups like the Mahoning Valley Organizing Collaborative. Indeed, the greatest measure of the success of 2010 might be the grants and significant donations that are helping to fund the new Youngstown Neighborhood Development Corporation -- a new non-profit that promotes local development and citizen engagement, reflecting the neighborhood-centered community organizing approach that started here with 2010. On the other hand, as Williams notes, some of the original plan's strategies have proven difficult. The idea that the city could move residents out of struggling blocks and stop providing services there has proven untenable. After all, a block that looks "not viable" to an urban planner because it only has 2 occupied structures looks like home to the people who own those houses and have lived there for 30 years or more. On the other hand, organizations like the MVOC, Grow Youngstown, and Lien Forward are working on strategies to turn vacant properties into productive land, so the green we see in the vacant properties survey map might not be quite as bad as it looks on first glance.

The two sentences in bold highlight the difficulties of the approach. The policy might make all the sense in the world, but carrying it out isn't easy. Can Youngstown prosper again without shutting these neighborhoods down?

Think about being on a committee charged with deciding which neighborhoods should be euthanized. What criteria would you use? Pondering that question pushes people in the other direction. Don't give up. Save the neighborhood. Revitalize our town. Urban (or rural) renaissance is still possible. But just supposing it isn't, do you invest in the neighborhoods surrounding University Circle despite knowing the bad results for the entire city?

There are a lot of questions and no good answers. That will define Richard Florida's career. He's forced us to face a grim reality. Optimists need not apply.

Unknown Pleasures

Speaking of China leaving for dead its high legacy cost cities:

Geographic Triage

Ryan Avent and Alec MacGillis continue to discuss the excoriation of Richard Florida published in The American Prospect. I'm not interested in the debate about the Creative Class brand and how cities bought into the ideas. The heart of the controversy is whether or not we should let some places die. To what extent do we engage in geographic triage?

I'm reading two books right now that deal expressly with this issue. I bought "Hollowing Out The Middle" after Richard Longworth made the following comment:

This gets to his big question: Why should we care? [Aaron Renn is right] that, in my book, I painted a bleak picture of small-town and rural life and its probable future. This was descriptive, not prescriptive. Small towns like "Ellis" have a lot of strikes against them in this global society. Perhaps they will simply die out. So what?

For one thing, all these places are little civilizations unto themselves. All have value, recognized by most of us who left and cherished by those who stay. This is a human problem and can no more be shrugged off than we shrug off the condition of lives in inner city ghettos.

If we lose these little towns, we lose part of our Midwestern culture. Perhaps we will lose them, but the preservation of this culture seems worth the struggle.

I would retort that the fate of these rural towns isn't so much a question of whether or not we should save them, but one of whether or not we can. Avent is pointing out Florida's concession that this is a lost cause and then explains why this is a reasonable conclusion. The discussion then turns to how to best manage the decline.

Which brings to the other book occupying my thoughts, "The Paris of Appalachia". Author Brian O'Neill writes about Pittsburgh's shrinking city problem and contends that many of the neighborhoods (particularly the North Side where he lives) are worth salvaging, out-migration be damned. O'Neill answers the "so what" question roughly in the same way Longworth does. Should we put aside geographic triage on these grounds?

I've grappled with urban triage before, starting with the neighborhood stabilization program in Youngstown. To be blunt, Youngstown is strategically letting some of its neighborhoods die. Should we be doing the same thing at the national level? I'm imagining community death panels.

In essence, that's how Chicago rose to global prominence. It invested in the urban core and left the rest of the city to fend for itself. By and large, that worked.

China washes its hands of the cities with the highest legacy costs. We might be wise to follow their lead. Sorry, but your hometown won't make the globalization cut.

Richard Florida is staring at the same decisions concerning Ontario. The province hinterlands understand all too well what the "World is Spiky" means for their towns and cities. There might be a middle ground, but some communities and neighborhoods will be left for dead. Keep that in mind the next time Collegia or Next Generation Consulting comes round to your neck of the woods peddling salvation.

Power Of 32 Blog

Pittsburgh has an amazing and talented social media community. Someone entice Justin Kownacki to move back (not to Erie) and fix this mess. Let's rename the regional initiative, "Something to be Desired".

Richard Florida's Pittsburgh

Reading Ryan Avent's reaction, I was expecting another one of the usual public floggings of the Richard Florida Creative Class brand. The article was hiding behind subscription, but I didn't have the sense I was missing anything all that important. One of my readers (the few, the proud, the hopelessly wonkish) sent to me the link for the story. Behold, it's now available for the world to read:

In Syracuse, New York, economic-development officials are declaring victory, saying the $250,000 study that consulting firm Catalytix co-authored in 2003 laid the groundwork for the arrival of an electric-car manufacturer. Wilmington, North Carolina, recently received some of the first recommendations from its $250,000 Catalytix investment, including such tips as "Consider hiring a blogger to create, stimulate and participate in virtual conservations [sic] about the Cape Fear Region." Providence ordered up a Catalytix report in 2003 that told it to "identify and amplify organically evolving nodes of creative energy"; seven years later, city officials are still holding events with college students to ask them what it would take to get them to stick around after graduation. Iowa, which hired Florida in 2005, is charging ahead with its "Great Places," 25 communities -- among them Coon Rapids, Council Bluffs, and Appanoose County -- that are getting several million in state dollars to attempt to become creative magnets. Phoenix is looking to revitalize its downtown with the help of a $100,000 report by Catalytix that declares: "Downtown Phoenix is the right place. Now, is the right time!" Tampa's "director of creative industries" was one of the first city jobs cut in the recession, but Creative Tampa Bay, a group of Richard Florida enthusiasts, is carrying on. In Naples, Florida, 400 people each paid $150 to hear Florida speak at a golf club in May. They learned to their dismay that Naples has few creative workers, says Beth Sterchi-Skotzke, an organizer of the event. "Obviously, with a lower amount of the creative class, we're not as tolerant as we believe we are."

I could make a blog post around each and every paragraph of the article, but I chose that one. Why? Because of the bottom line wasted on useless brain drain initiatives that didn't work. Not any of them.

I've struggled to pin down the Richard Florida enterprise as among the many brain drain boondoggles such as those served up by the likes of Collegia and Next Generation Consulting. Maybe Catalytix should be the target of my invective. But between all the harping on talent attraction (something I support), is a program claiming to retain:

The region needs to build on its wonderful natural assets and use them to attract and retain talent. I am a cyclist and our natural topography makes for a wonderful cycling center -- if you dodge the cars. Our rivers are a spectacular place for canoeing and kayaking, but there is virtually no place to put a boat in the water. There are few places to play ultimate frisbee in the city. In the words of one area high-tech executive: "My people want a rock climbing wall on Mount Washington." We have a built environment that is ready made for all sorts of climbing walls -- along the sides of old buildings or on bridges and railroad trestles. The region may not have the sun and warmth of the Bay Area and Austin, but, contrary to urban myth, it has no more rain than Seattle and is warmer than Boston. ...

... But Oakland is a tired neighborhood that has been neglected for years. In the words of a young University of Pittsburgh student who was my waitress recently: "I love the university, but Oakland is a hole." After spending four years in Oakland, it is little wonder that students want to leave when they graduate.

The focus groups surveyed weren't those who might move to Pittsburgh. The ideas solicited come from people who might stay in Pittsburgh. This would be replicated in Tampa, Providence, and Wilmington. (To list some of the cities who paid through the nose to learn the wisdom) Just to tip my hat to my previous post, notice some of the cities seeking advice are located in Sun Belt states.

Richard Florida himself has noted how Pittsburgh has turned it around. All the reasons for the about face were in place before he told the city how to perform the resurrection. The concern about brain drain was based upon erroneous assumptions. Florida was trying to solve a problem that no longer existed. The riddle Pittsburgh should solve is how to attract more to the region, not keep them from leaving a la Border Guard Bob.

Truth be told, the migration story today doesn't look that much better than it did in 2000 when Florida told Pittsburgh to "wake up and play". Pittsburgh was as uncool then as it is now. But the economic outlook is a whole lot different. That's not a result of the region minding its 3 Ts.

Greenfields And Brownfields

Perhaps I'm wrong, but I think too much fuss is made over state tax regimes and labor costs. These variables do a lousy job of explaining the rise of the Sun Belt and the decline of the Rust Belt. Fueling the predominant wisdom is a poor understanding of history. The struggles of manufacturing centers began long before Southern states crafted more favorable terms to lure industry. Globalization was also late to the party transforming American economic geography. But that doesn't absolve high taxes and unionization of playing a major role in accelerating the demise of manufacturing.

The sticky wicket to this grand narrative of better state policy are the crumbling cities and towns throughout the Sun Belt:

A holiday week spent in my hometown, Monroeville, Ala., gave me a close-up view of those problems, brought on by globalization. Like many Southern towns, Monroeville, never wealthy, survived on textile manufacturing. Now, most of those jobs have shut down or shipped out. And they're not coming back.

Some of my high school classmates who used to work in textiles exist on low-wage jobs such as elder care, waiting for their Social Security eligibility. (They would have been better off with the option to buy into Medicare, a proposal Sen. Joe Lieberman killed off in the health-care reform debate.) Others have tried to upgrade their skills by taking courses at the local community college, but the job landscape still looks bleak, even after they've learned word-processing.

Workers like those in Monroeville - bypassed by the information revolution, washed up on the shoals of globalization - languish all over the country, whether in big cities like Detroit or rural outposts. Getting them back on their feet will take imagination and resolve - the willingness of the political class to take some risks and to concentrate on more than the needs of the moneyed interests that back their campaigns.

Bankrupt Birmingham is located in Alabama, a right-to-work state. Tennessee also has this distinction and is home to recovering industrial-dependent Chattanooga. Both the South and the North experienced an implosion of the manufacturing sector. Supposedly better state policies in the Sun Belt didn't save any of those places from this fate. Why would it work magic in Pennsylvania for Erie?

In the face of globalization, states seem increasingly impotent. I suspect that most people, including the politicians, don't understand the forces at work. I see a number of parallels with the brain drain issue. There is a poor accounting of the current situation. Ideological thinking dominates political discourse and policy suffers as a result.

During the 1980s, deregulation was the economic dogma of choice. The states with the least rules and lowest taxes should win. That's not how it played out. If your city was saddled with high legacy costs, then state policy didn't matter. Just so happens that the Rust Belt had (still has) a lot more of those cities than the Sun Belt did.

You can find the same economic geography within regions concerning the urban core and suburban periphery. Essentially, Americans have moved from brownfields to greenfields. When the unit of analysis is state, that trend gets lost in the data noise. Yet despite these residential relocations, wealth is increasingly concentrated in the city center where taxes and labor costs are often highest.

Other than win the climate lottery (we'll see how long that lasts, Florida), I don't know what Sun Belt states did that was so great as to earn the fortune that moved south over the last few decades.

Migration And Risk

Richard Herman keeps trying to encourage Northeast Ohio to embrace immigrant-fueled economic development. He links geographic mobility and productivity. Via Growthology, there is also an important positive correlation between migration and entrepreneurship:

One insistent question at the start of a new decade involves the lingering effects of the old: What scars will the Great Recession leave? We are already seeing some. Americans are moving less than at any time since World War II, reports demographer William Frey of the Brookings Institution. People are tied to existing homes, can't get loans for new ones and won't move without job commitments, Frey says. Only 1.6 percent of Americans are now moving across state lines, half the rate of a decade ago. ...

... "Younger people . . . tend to be more innovative, more willing to take risks, more willing to do things differently," Stanford University economist Paul Romer says in an interview for the book "From Poverty to Prosperity" by Arnold Kling and Nick Schulz. As noted, today's turmoil could make even the young more risk-averse. Or older and middle-aged people could increasingly dominate corporate hierarchies and university research grants, as Romer worries. An aging society could become a stand-pat society, protective of the status quo and resistant to change.

I emphasized what I consider to be the key phrase. When young adults pick up and move to a cool city, they often just go and figure out the details later. I've cited many examples of this phenomenon. During my vagabond 20s, I never had a job waiting for me in Asheville, San Diego, Seattle, Minneapolis, and the other places that popped up on my radar. Eventually, one gets practiced at landing in a city where you don't know anyone and do a better job than the locals of prying open a tight labor market. Doing so demands considerable nerve, energy, and innovation. Singing daily for my soup sharpened my competitive edge.

Most Rust Belt cities lack a substantial number of these kind of migrants. Forget critical mass. Few, if any, are going to roll the dice and head to Pittsburgh without a serious job offer in hand. But lots of people leave Pittsburgh seeking sunshine and opportunity with little thought about how this scheme will work. This is brain drain of a different kind. These risk-takers aren't being replaced with similar in-migrants. The region continues to age, all the while getting more risk averse. The talent pond begins to stagnate.

Richard Herman evangelizes how immigrants can reinvigorate entrepreneurship in shrinking cities. Northeast Ohio would be wise to listen to him. (Via this Youngstown Renaissance blog post) Tyler and Jaci Clark represent another solution to this problem of growing risk-aversion:

Throughout the years that Tyler and Jaci Clark lived away from Youngstown, everything they talked about was here.

“All of our best friends, all of our best memories were here,” Jaci said in their home in the city’s historic district.

Jaci, 40, is originally from Youngstown and grew up not far from where they live, while Tyler, 34, grew up in Texas. They both went to Youngstown State University and met here, then lived in Washington, DC, and Tucson, Arizona, where Tyler worked as a software developer.

After Jaci came back three years ago to visit a sick friend, they talked about moving here.

“When I brought it up to Tyler I wasn’t sure what to expect,” Jaci said. “But he said ‘why don’t we just move there.’”

“This is a great place to raise kids and we’re very happy to be back,” she added.

Tyler has continued working for clients in Arizona from home and has become the Chief Imagination Officer at the Youngstown Business Incubator, which has focused on bringing in business-to-business software companies to this former steel town.

Since the steel mills here started closing down in the late 1970s, the city’s population has plummeted to below 73,000, from 170,000 at its peak in 1930. In the decades that followed, young people left the city in their droves to seek work elsewhere.

“We have been exporting our young for 30 years,” said U.S. Congressman Tim Ryan, whose district includes Youngstown.

But now, thanks in part to the incubator and a city plan to adapt to and embrace Youngtown’s new size, there are signs former residents are beginning to move back as they see new opportunities to work and live here.

The Clarks and their two children – son Boston aged 8 and daughter Ridley aged 6 – are a living example of that change.

“There is great legacy of hard work and entrepreneurship here,” Tyler said. “And now there is a new sense of ‘can do’ here. We have new, younger leaders and there is a renewed sense of community, a sense of purpose.”

Tyler said that other former residents have found his blog on Youngtown and have contacted him about coming back. The couple hosts a monthly pot luck meal and new returnees have turned up to network and find out who else has come back.

He said the city has limited resources to tackle the decay that still blights Youngstown – there are 4,500 vacant homes here – but thanks to that new sense of community, local residents are taking up the slack.

“It has to come from each one of us,” he said. “We’re coming together to create change.”

I pasted the entire unpublished post here out of fear of it disappearing. The Clark's story is one that can be further catalyzed in Youngstown and replicated elsewhere in the Rust Belt. This is an emerging pattern, not an isolated anecdote.

As I was writing, NYCO's Blog references an appropriate opinion piece in the Syracuse Post-Standard:

A few years back, urban revivalist Richard Florida came to Syracuse and left a report detailing what the city should do to attract a “creative class.” There were some good ideas in the report, ideas our city leaders should implement. But the whole exercise fell victim to the same mentality that has kept Syracuse down in the doldrums: that the solution to reverse our city’s decline is somewhere “out there.” The solution instead is for locals and expatriates alike to stop denigrating life in Syracuse and present it for what it is: an adventure, a challenge, a new frontier. ...

... I am hopeful, because an increasing number of my generation are returning home, taking up the challenge to build lives and families in a city with a proud history and, if they stay, a bright future. I think of my sister, who has returned to start a theater company and live on the North Side, where, almost a century ago, my family got its start in America.

There is an untapped to desire to return to the Rust Belt and reinvent our hometowns. Obviously, I'm a part of this latent movement. So are Peter Panepento at Global Erie and Gordon Young at Flint Expatriates. This migration merits further study. We can do better than the currently existing boomerang initiatives. It's a risk worth taking.

New Urban Hierarchies

Think about a post-agglomeration economies world. Currently, Spiky World is the dominant urban geography. Long before we figure out how to win this game (or the fact that most of us can't win this game), the rules will change. If you read this Ryan Avent post a few days ago, then your city would likely welcome this paradigmatic shift. There isn't much you can do to turn around economic fortunes. Quite simply, you're screwed. More often than not, globalization is gutting your hometown or your place of current residence. Probably both.

Perhaps your city wins the macroeconomic lottery like Waterloo, Ontario did. For every Waterloo, there are hundreds or thousands of struggling communities such as Hamilton, Ontario. Will all these urban residuals shrink into oblivion?

No, they won't. Joel Kotkin explains why:

Despite all the "back to the city" hype, New York over the past decade suffered one of the highest rates of out-migration of any region in the country. Young singles may come to New York, but many leave as they get older and have families. An analysis by the city controller's office in 2005 found that people leaving the city were three times more likely to have children than those arriving.

With all due respect to the many immigration advocates (I count myself as one of you), NYC Mayor Bloomberg's plea for immigration reform serves an obvious end. The Big Apple is domestically unsustainable. Most global cities are.

Young adults and international migrants are adaptive. They have to be. How else can anyone explain why the going rate for human smuggling to New York from China is $10,000? How can a recent 23-year old graduate live in San Francisco as an intern during the day and busboy at night? People figure out a way to access the greatest opportunities.

As for young families, the best manage to live in the most exclusive suburbs with nationally renown schools. The motivation to leave the city is very strong, regardless of class. Kotkin points out, Manhattan is not for mothers.

New York City's failings spell opportunity for Pittsburgh (or any other backwater city looking for an opening). I'll use Mike Madison's 2010 projections to define the carrot:

6. Demographics: The Pittsburgh media will search for good news in Pittsburgh’s modest but growing Latino and Indian and South Asian communities. More often than not, they will miss the story. New grocery stores are interesting and colorful and fun for shopping; new professionals migrating to Pittsburgh have a greater bearing on the region’s prosperity. 2010 will be Pittsburgh’s year of the woman (women?) in leadership, across politics, business, and the nonprofit sector.

Ask Mike to explain his prediction. I interpret it as too much attention given to anemic immigration and not enough celebration of Pittsburgh's concentration of smart women. Pittsburgh could be, if it dreamed so, the city many families wish New York would become.

Global cities are anti-family. They also ignore certain industries. Again, Kotkin:

More than anything, the plain-vanilla neighborhoods that represent New York's real future will require policies that create a broad array of economic opportunities. Right now New York is so overregulated and highly taxed that only the most high-end business, such as big media and financial firms, can possibly thrive. The city has neglected its smaller firms, typically engaged in such activities as food processing, furniture making, and garment production. Traditionally these industries were run by Russian, German, Polish, and Italian immigrants; West Indians, Latinos, Koreans, Chinese, and South Asians do much of this work today. Over the past decade, the number of self-employed immigrants in New York has grown even as the number of self-employed among the native-born has dropped.

A good example of this kind of Global Squeeze, is Youngstown native Nanette Lepore's plea to save New York City's Garmet District:

When I was in high school, my parents decided to build their dream house, modern and expansive, in a rural area of Youngstown, Ohio. That summer, my brother and sister helped build the house with my father, his brothers, Raymond and Henry, Grandpa Lepore, Uncle Joe, and various relatives that would make an appearance to work their area of expertise. The house of cedar had as the centerpiece an amazingly beautiful brick wall of rustic, oversized bricks salvaged from an old steel refractory. They were all craftsmen at work with a legacy of pride in creating. Toward the end, when the house was roughed in, Grandpa McGarry and his son, Bob, installed beautiful oak cabinets that had been built at Grandpa's workshop. He even designed an intricate parquet for behind the cabinets, like the surprise of a beautiful lining in a coat.

That summer I didn't go to the building site very often, choosing instead to stay at home and sew. It was a form of rebellion against moving to what I perceived to be a backwater country school. Now as an adult I realize that all the heart and skill that went into building our home made it a place to be proud of!

I often think about the impact my family craftsmanship had on me. It gave me the tools I need to create and be fearless without limitations. Knowing that one has the potential to build something from a pile of raw materials is empowering. It's a gift that our children might not receive.

Eighty percent of my products are made in America in a 10 block radius from my office in New York City's Garment Center. They are assembled by skilled craftsmen who also immigrated here with a trade just like my family. I treasure being able to watch my product develop from a roll of fabric into a beautiful garment hanging in a shop. That garment was designed in my studio on 35th street, the pattern digitized on 38th street, then passed to a cutter around the corner, then bins of cut work trundled to a factory on 39th street, to then be sewn together. All the while each step being closely monitored by my staff.

My company alone keeps about 10 factories busy. Those factories make up about 300 jobs in New York City. However, the landlords, the restaurant and hotel union, and the developers want to annihilate our 100 year old Garment Center. Their vision is one sprawling, mall-type maze, from Time Square to Macy's. The homogenizing and "mall-i-fying" of our city continues. The landlords are pushing hard against the city to free up the New York City Garment Center zoning.

If Bloomberg won't listen to Ms. Lapore, then perhaps a Rust Belt city will. Pay attention to the shifting urban geography. Pittsburgh could be that agent of restructuring. There are diaspora connections to leverage. Thousands of talented people leave global cities every year. What is your city doing to attract them?

Las Vegas Migration Hangover

Las Vegas has a bad headache and feels nauseated. There is a sense that the city did something naughty over the last decade, but recollection of the deed is fuzzy. The sobering reality is that the boom has gone bust. What happened?

Like many Rust Belt communities, Las Vegas got drunk on one economic rocket:

Las Vegas may have more in common with Pittsburgh and Detroit than many people realize, says Mary Riddel, a UNLV economist and the interim director of the Center for Business and Economic Research.

Riddel, who helped prepare a report for Las Vegas’ 2010 economic outlook, says even with the deep recession Southern Nevada is in, it’s premature to compare the decline to that in Rust Belt cities that have suffered for decades. But Las Vegas is like one-industry cities such as Detroit is to autos and Pittsburgh was to steel manufacturing.

I don't agree with the comparison. The history of the Interior West is full of dramatic ups and downs. Las Vegas went wild with growth and the entire region just went along for the ride. Real estate refugees from California inflated the impact of a successful tourism economy. Las Vegas may have been the center of a nation living on borrowed time for the better part of the last decade.

Looking to the future, Denver would be a good model for Las Vegas to emulate. Denver was able to successfully diversify its economy. But there were already some assets in place that aided with the transition, such as the myriad of government laboratories in Boulder, Golden and Denver.

A closer look at how Pittsburgh did it would reveal a more daunting course. The focus is typically after the exodus of the early 1980s. But the move away from the monocrop of steel started well before then. That's the point I was trying to make to the Las Vegas reporter who asked me to weigh in on the woes there:

Jim Russell, a geographer and Colorado redevelopment consultant who writes about the struggles of Rust Belt cities on his blog Burgh Diaspora, says the lesson Las Vegas can learn from faded industrial cities is: “There isn’t any quick fix. There isn’t any way to recapture the glory. The sooner you put the past behind you, the better.” ...

... Russell, the geographer and Burgh Diaspora blogger, says rapid growth masks hidden problems.

“An influx of migrants makes policymakers lazy. If you screw up, the growing numbers of people will hide your mistake,” he says.

Unfortunately for Las Vegas, Pittsburgh's redevelopment is at least 50-years in the making. Perhaps Hunter Morrison puts it more eloquently than I did:

The proposed $600 million casino and a $475 million convention center/medical mart that are supposed to be built in Cleveland this decade get lots of attention, but they don't really matter much, Morrison said. "What we have is a longtime weakening that began 40 years ago and it's not subject to silver bullets," Morrison said. "Casinos and convention centers don't reverse the decline of population or attract immigrants to knowledge economy."

One can see "silver bullet" projects in Pittsburgh, such as the sports stadiums and the convention center. But I would argue that the investment in human capital is the source of the turnaround. All the other stuff works because of this foundation. Chris Briem indicates that the redevelopment strategy goes all the way back to 1947.

Both Las Vegas articles discuss education as a way forward. Back to Mary Riddel:

“Let’s be cautious in talking about Las Vegas,” Riddel says. “Our story hasn’t played out yet, but we are in decline. In my assessment, when we look at the data, we are at the crossroads. What we need is new industry.

“The idea is that we can learn from Detroit and Pittsburgh. We need to look at what resources we have that we can do better and cheaper than other places, and those are the industries we want to go after.”

One way is to start investing in people and higher education because cities and states with the lowest education levels have suffered the worst during the recession, Riddel says. Cities like Denver that are more highly educated have fared much better, she adds.

Denver didn't really invest in people and higher education. Pittsburgh did, but started decades ago. Denver has managed to attract a lot of well-educated people to the region, which is how many of the boomtowns look so brainy now. In a sense, Charlotte and other Sun Belt cities were built with Pittsburgh dollars. As long as these migrants keep coming, there is no reason to raid the public coffers. When the talent spigot turns off, then the hard choices begin and recovery is a long way into the future.

Decade Down The Brain Drain

I didn't intend to write a review of the last 10 years. I've been on the blog scene only since June 1st, 2006. I've been asked by members of the press to recall the highlights for Pittsburgh and, strangely enough, Las Vegas. I guess I'm more qualified to write the Decade in Brain Drain. Prepare to get flushed ...

The pinnacle of 2000 is easy enough to figure. Chris Briem's restrained dig at Border Guard Bob is still the best assessment of a brain dead approach to the shrinking city problem that I've read. The WWBGBD (What Would Border Guard Bob Do?) is the standard for lame brain drain policy. I've come to appreciate that Bob is a popular guy with a residence in just about every town and city around the country. 2000 seems like it was tomorrow.

In 2001, I was spending too much time working for a Pittsburgh Steelers fansite and not enough time researching my dissertation. That summer, I covered my first camp at St. Vincent. During the two weeks I was there (instead of in Colorado at the library), the analogy of Steeler Nation with a transnational diaspora community began to crystallize. More significantly, I felt a strong tug of obligation to my Rust Belt homeland that I left so long ago. Unaware of the Border Guard Bob fiasco, I dedicated myself to solving the Rust Belt brain drain problem.

2002 was the year of Richard Florida and his creative class migration theory. A fellow geography graduate student left a photocopy of this article on my desk. I didn't think much of the city rankings. But the lead anecdote resonated emotionally:

Over the years, I have seen the community try just about everything possible to remake itself so as to attract and retain talented young people, and I was personally involved in many of these efforts. Pittsburgh has launched a multitude of programs to diversify the region's economy away from heavy industry into high technology. It has rebuilt its downtown virtually from scratch, invested in a new airport, and developed a massive new sports complex for the Pirates and the Steelers. But nothing, it seemed, could stem the tide of people and new companies leaving the region.

What could be done about brain drain? I love difficult riddles. I was hooked.

I blogged about three reports from the Federal Reserve Bank of Minneapolis published in 2003. The Fed reviewed the brain drain problem and the policy reactions. The money passage:

Pennsylvania, for example, is spending $12 million on an initiative called “Stay Invent the Future” that's aimed at reversing outward migration of college-educated folks believed to be upwards of 10,000 annually. Part of the money went to a nationwide TV ad campaign to woo workers back home that featured a joe-six-pack “fairy job mother” wearing a tutu, wings and construction boots. ...

... The goal of these and other brain drain programs “is to keep the best and brightest from high school from leaving the state,” according to Tom Mortenson, head of Postsecondary Education Opportunity, a small policy firm in Oskaloosa, Iowa. “In a narrow sense, I understand what states are doing. They are proud of the talent raised there and they don't want to lose it.”

Whether any of these programs is effective at addressing brain drain is largely unknown because very little research has been done on the issue of brain drain itself, to say nothing about the efficacy of policy responses to the problem.

There's been considerably more work done on the scope of the brain drain problem since then, but most of it isn't worth noting. As for efficacy, nada. Which is why Border Guard Bob could come out of retirement tomorrow.

Poland joined the European Union in 2004, swelling the ranks of the Polish Diaspora in countries such as Ireland. This migration was of personal interest to me because I was in Frankfurt (Oder) for three weeks before the German-Poland border opened up studying transnational community and identity. I was consuming a lot of diaspora theory and literature in preparation for my upcoming comprehensive exams (migration was one of my subfields). I was introduced to a lot of ideas that summer and they inform my thinking about how to leverage brain drain for purposes of economic development.

Who could forget 2005? Even if you are a Seahawks fan, you are still griping about the officiating. Technically, the Steelers won the Super Bowl in 2006. But the 2005 season was one wild ride. My wife and I were expecting our first child, who almost came a bit early during the playoff game against the Indianapolis Colts. We were watching Pittsburgh dominate at a Steelers bar in Fort Collins, Colorado. The turn of events towards the end of the match up initiated some labor pains, which seemed to abate once Mike Vanderjagt missed that last second field goal attempt. Conveniently, our son was born between the AFC Championship victory in Denver and Super Bowl XL in Detroit. My wife is a Pittsburgh native and her father came all the way out West to watch the big game with us (and see his first grandchild). It was a perfect Burgh Diaspora moment.

As noted above, I started blogging in 2006. Within the first two months, I gave up on the idea of trying to keep talent in Pittsburgh. I was more interested in the potential of diaspora networking like the ones I had studied in Miami. That out-migration from Pittsburgh was relatively low surprised me. Brain drain wasn't really the problem, despite what Richard Florida wrote in his books.

The best book I read in 2007 was "The New Argonauts: Regional Advantage in a Global Economy" by AnnaLee Saxenian. Saxenian wrote a paper that describes the concept of brain circulation. I was excited by the idea that brain drain could be a good thing. I still think brain circulation could apply to Pittsburgh and other Rust Belt cities. International migration doesn't map onto domestic migration as neatly as I would like, but many of the policy proposals are promising. More importantly, discussions about international economic development were undergoing a dramatic transformation.

2008 was a great year. I put together the Rust Belt Bloggers Summit in Erie, which led to a proper introduction to Youngstown. In October, VisitPittsburgh and PodCamp Pittsburgh treated me like the social media rock star that I'm not. I headed into 2009 thinking that I was on the cusp of something big, that I could make a significant impact on brain drain policy. All the research seemed to support my approach.

As this year draws to a close, my feet are firmly back on the ground. Landing funding for Greater Youngstown 2.0 was the highlight of 2009. Now, I'm not sure where all of this is going. However, I'm more confident than ever that I am on the right track. The World Bank report "Reshaping Economic Geography" validates much of my intuition on geographic mobility as something to be encouraged. I've refined the boomerang migration idea to the point of being actionable. Remarkably, I'm still enthusiastic about studying brain drain and talent migration. I'm not the least bit bored. Brain gain Pittsburgh is a fascinating story that is still unfolding, challenging all the Chicken Littles decrying the exodus from an uncool Rust Belt city.

Happy New Year, Pittsburgh.

Great Recession Migration

I'm not the only one who takes exception to the Wendell Cox spin on domestic migration. Actually, the heart of the disagreement concerns the truly awful analysis offered up in the report, "Empire State Exodus". I've already weighed in on the matter, so I won't rehash that critique today. I'm more interested in Cox's assessment of Pennsylvania:

Pennsylvania has been the subject of more than one “what’s wrong with Pennsylvania” report as analysts inside and out decry its competitive position. In fact, by the ultimate measure of competitiveness, where people choose to move to or from, Pennsylvania has done relatively well in the 2000s. Pennsylvania’s modest loss of 33,000 domestic migrants pales by comparison to the net 2.5 million people who have moved away from neighboring New York, New Jersey, Maryland and Ohio. Like Texas, Georgia and many other states, Pennsylvania largely missed the housing bubble, which probably accounts for some of this surprising phenomenon.

Net-migration is not the "ultimate measure of competitiveness". But that metric helps Cox sell his preferred policy narrative. It's mostly nonsense, but I'm sure the libertarian choir likes what he says. The irony is that a stronger regulatory environment is likely what prevented the housing bubble in PA. But I've already covered that issue a few months ago.

More to the point is an article in the Economist detailing America's declining geographic mobility:

A few bright spots have managed to attract mobile Americans. Texas and Oklahoma weathered the downturn better than most, thanks to strong local energy industries and the absence of a housing boom and bust. The same is true for the Washington, DC, area, where an all-but-recession-proof economy based on the federal government has already managed a return to pre-downturn output levels.

I would quibble with the analysis regarding the same sloppy use of net-migration that Cox likes to employ. A lot of valuable information and geographic variation gets lost in the aggregate. Regardless, the attraction to Texas and Oklahoma rings true enough. In fact, one could say the same thing about Pennsylvania in general and Pittsburgh in particular.

With the above fresh in your mind, now throw in some Null Space:

But here we are. 7.9% unemployment. Not great.. But a far cry from 10.0 nationally. A few factoids of note. As I have talked about in the past, for things like migration trends the 'relative' unemployment rate is probably more important than the absolute level. By my count this now makes it 38 continuous months that the Pittsburgh region's unemployment rate has been below the nations. Still not a record, there was a 38 month period between starting in January 1990 and a 40 month period starting in 1973. But in the early 1990's, the local unemployment rate was very marginally below the nation.. averaging 4/10ths of a percent below the nation. Over the previous 12 months, the local unemployment rate has averaged 1.7 percentage points below the nation.

Sustained relatively low unemployment, stable housing market, and strong local energy industries equal ... ?

Decade In Review: Erie Versus Pittsburgh

Offering some contrast to the glowing review of the past decade for Pittsburgh, Peter Panepento paints a gloomy picture of my hometown Erie (Pennsylvania). He call it the "Lost Decade" and encourages his readers to push for better times over the next ten years. Gregg Easterbrook thinks things have already turned around:

But Mr. Easterbrook is not offering just another account of the shift in economic opportunity from the West to the East. Instead, he wants to show how a rapid reconfiguration of resources is benefitting all sorts of unexpected people and places.

Waltham, Mass., and Erie, Pa., are both archetypical American industrial towns that looked as if they were doomed a generation ago. But Waltham is now booming thanks to its proximity to the great idea factories of Cambridge and Boston. The city is home to dozens of high-tech and venture capital firms and houses the headquarters of Global Insight, a consultancy that sells a billion dollars of economic analysis a year to American companies, most notably Wal-Mart.

Erie may not be booming, but it is doing better than it has for decades, thanks to General Electric's willingness to ignore Wall Street analysts (who said that manufacturing was dead and the future lay in finance) and make a bet on renovating its locomotive plant. Today the plant is an important profit center, and trains are the apple of everybody's eye, including Warren Buffett's, while GE's financial-services division was the source of almost all the company's recent losses.

In short, Erie is one of globalization's winners. I'm sure that would come as a bit of a shock to Peter and the readers of his blog. Few people are bullish on Erie.

Easterbrook's positive tale offers a way forward. Erie should warmly embrace globalization instead of fighting it. The city isn't that far from an idea factory like Boston: Pittsburgh. Understandably, Erie feels overshadowed by the bigger city to the south. But one of Erie's greatest assets (besides the tremendous waterfront) is its proximity to three Rust Belt gems (Buffalo and Cleveland being the other two).

Erie needs a road map of how to better align itself with the forces of globalization. I'd recommend studying one of Richard Longworth's Midwestern darlings, Wooster (Ohio). Also, Erie institutions of higher education might consult with Marietta College:

According to Grant Callery, chairman of the board of trustees, looking toward the future means taking "an analysis of what kind of students will go to Marietta, where will they be from and what components of an education will be relevant."

Internationalization and how it fits in at Marietta College is one of the main points.

"The main topics of concern for Marietta College are globalization and the rise of China as a working power, environmental protection, health care and wellness and leadership," Scott said.

The college has been actively recruiting students in China for more than 25 years, and currently has about 130 Chinese students on campus. Scott believes the college's strong relationships with institutions in China are also a positive for U.S. students looking to study there.

"We are in a position to help students grow and learn about China," she said, adding that each year the number of Chinese exchange students has been increasing.

Callery hopes that in the future, Marietta makes its international affairs more of a "two-way street where it's more attractive to American students who want to learn more about the emerging world in China. China will be a force to be reckoned with in the next 20 to 30 years."

That kind of vision seems to be lacking in Erie. But it doesn't have to be that way. I've already written how the city could become a leader in domestic diaspora economic development. And now Easterbrook suggest Erie is a model for other struggling cities to emulate. Erie would do well to leverage these strengths. But the main message is that the past decade might have been better than most think.