Monday, July 13, 2009

The Cleveland Kleptocracy

Aaron Renn (The Urbanophile) spins an impressive yarn out of an Ed Morrison contribution to New Geography. The rub is "real estate interests" and Cleveland's stillborn comeback. Old ways of thinking are no match for today's economic globalization. But that doesn't stop Cleveland powerbrokers from trying another gambit that will, inevitably, fail. Aaron's excavation of the Kleptocracy Diaspora also reveals the thinking behind the failure of so many workforce development policies:

Why is it that "real estate interests" dominate in a local economy like Cleveland? Because, to a great extent, they are among the only ones left. Consider the local industries that were not as subject to roll-ups. Principal among these are real estate development, construction, and law. This means the local leadership of a community is now made up of executives in those industries, and they bring a very different world view versus the previous generation.

I've written about the connection between real estate and brain drain boondoggles on a number of occasions. I think I do the best job of revealing the shadow play here. However, Aaron provides a rationale where I've only offered speculation.

It isn't about condemning the corrupt behavior you can find in any Rust Belt city. It is about why such practices are so common. This localism, or parochialism, is the crux of brain drain hysteria. You'll have trouble selling a house if everyone is leaving town at the same time. And graduates from your schools should staff regional businesses. To quote Aaron one more time:

When you look at the composition of this group, it should come as no surprise that the publicly subsidized real estate development is the preferred civic strategy. Politicians get to cut ribbons. Cranes always look good on the skyline. Local architects, engineers, developers, and construction companies love it. And there is plenty of legal work to go around.

In a nutshell, that's the "look good" (and feel good) part of the Pittsburgh Promise. You get the public to buy in by talking about the locals you keep from leaving. Before reading Aaron's post, I thought real estate developers invoking the brain drain plug was simply a convenient rhetorical ploy. But boondoggles and fear of geographic mobility are cut from the same cloth, a way of conducting civic business.


Stephen Gross said...

Another way to think about it: there are a number of industries that drink at the public trough regularly. Large scale construction is a major one. You can expect developers, then, to make active use of whatever boogymen exist in the public discourse to sell their goods. Right now rust belt cities are freaking out about brain drain. Thus developers try to recast their product as a solution to brain drain. From their point of view they are making the most expedient argument to support their business.

Teri L said...

It's interesting to me. You are the first to look at my site as a shining example of either localized real estate industry corruption or brain drain hysteria.

Perhaps it would surprise you to know that I agree with you about the way the real estate industry has negatively influenced policy makers. Nor am I any fan of the "Creatives" movement.

Boogymen exist to many of us apparently, and the real estate industry has certainly created their fair share of reviled characters in both real life and fiction, no doubt. But your using my post about a simple idea (borrowed from a global city) that would support a neighborhood grocery on occasion, as an example of both real estate corruption and hysterics, is reaching.

However, if that is the impression you've been given, as opposed to assumed, then I will increase my efforts to speak out more clearly about these issues.

Jim Russell said...

You are the first to look at my site as a shining example of either localized real estate industry corruption or brain drain hysteria.

I'm not looking at your site through either of the lenses you suggest. I'm stereotyping it as a form of localism, the economic development lens that understands market leakage as a liability. I don't think this framework is effective.

I'm aiming to take a policy position, not point out nefarious actions or entities. But I can understand your read of my post. Terms such as "boondoggle" and "hysteria" are provocative.

Teri L said...

>the economic development lens that understands market leakage as a liability. I don't think this framework is effective.

Thanks for clarifying, but I've still got a communication problem, because I don't look at it as a liability either, which apparently isn't clear. I support independent businesses- hence the ShiftMob idea appeals. And I work in real estate, so I'm on the ground dealing with the changes of less bodies, more vacancies.

It doesn't have to be a liability to a region, but it does require an adjustment in thinking, and the real estate industry does not change easily. Its job is to represent its members, not consumers, so it lobbies hard for policy that creates false markets, which brings more problems.

I have been an outspoken critic of this elsewhere, but only vaguely on my own site. Guess it's time to amend that.

Jim Russell said...

I see you as characterizing market leakage as a liability when you write the following:

... but I’m game to keep some cold hard money in the Dayton area.

Supporting local vendors looks good and feels good (a la the brain drain plug initiative), but it's not particularly effective for economic development.

It's up to local vendors to figure out their competitive advantage and exploit it. Otherwise, everyone will continue to fight over a piece of a shrinking pie.

Teri L said...

Yeah, Jim, Thanks. I knew exactly why you see what you saw.

Jim Russell said...

Okay, I think I understand your position better. Thanks for taking the time to disabuse me of my interpretation of your post.