Sunday, January 31, 2010

Emerging Brain Drain Narratives

Globally, the paradigmatic policy shift in workforce development is aptly summed up in the reframing of brain drain as brain circulation. Domestically, greater demographic detail complicates the usual hyperbole about a talent exodus. The debunking of rural brain drain continues to disseminate:

“Rural America needs to rethink its description of gains and losses,” Winchester said. “If rural America is losing high-school educated youth (the brain drain) and replacing them with those (who) at least have a bachelor’s (degree), isn’t this a brain gain?”

The new arrivals have other advantages, according to the University of Nebraska researchers: “The majority of the newcomers are in their prime earning years, so they are increasing the labor force in the region. Many new residents possess professional occupation skills. … Many were also involved in their previous community (and) bring volunteer and leadership experience.”

Winchester said his own findings “remind us that the changes we witness across rural Minnesota are complex and reflect not just challenges, but significant opportunities.”

The counter-intuitive findings deserve further scrutiny. They help to challenge our dominant assumptions. Attempts to plug the brain drain tend to be knee-jerk reactions. We could do a much better job of defining the problem.

At first blush, an article in today's Worcester Telegram & Gazette reads like a talent retention success story. Other shrinking communities would do well to take a closer look. However, I see evidence of a poorly defined baseline:

As with those elsewhere in the state, Central Massachusetts residents are most likely to stay close to home if they grew up here. A 2005 survey conducted by The Research Bureau of Worcester found that about 40 percent of area college graduates planned to stay in Central Massachusetts after graduation, roughly the same share who lived here in the first place.

The journalism employed is impressive, the analysis surprisingly sophisticated. The perception of "exodus" is challenged at every turn. The result is something Worcester can use to craft better policy. I didn't expect anything of the kind after digesting the title of the piece, "‘Brain drain' exodus wanes: Education, foreigners shore up talent pool". My impression is that all the concern is either overwrought or misplaced.

The focus seems to have been on population, not educational attainment. On the latter score, Massachusetts continues to excel. The investment in human capital is generating dividends even if the number of people living in the Worcester region fails to scream boomtown. Back to the article:

Yet recent data suggest the state's pool of young talent is far from evaporating — in fact, it is bigger than ever.

“It's sort of a positive message because a lot of the discussion before … was why are people leaving, and what's making them move away?” said Heather Brome, a senior policy analyst at the Federal Reserve Bank of Boston's New England Public Policy Center. Instead, policy makers “should be thinking broadly about how to expand the skilled labor pool.”

Like much of the rest of the country, Massachusetts is still aging as the baby boomer generation retires and fewer young people take their parents' places, Ms. Brome said. Between 1990 and 2007, the population in Massachusetts of young adults — 25- to 39-year-olds — shrunk by 19.4 percent to 1.28 million.

The Federal Reserve Bank system is at the forefront of researching talent migration in the United States. For reasons beyond my grasp, this wealth of information is rarely referenced. Instead, consultants from a variety of backgrounds have rushed into the void and retarded the development of ideas that would better revitalize our shrinking cities. The result? Sean Safford is screaming for the head of Richard Florida.

In that regard, I think the backlash against the creative class cult is useful. I wouldn't dismiss Safford as representative of the rabble with nothing more than an ax to grind. The criticism aimed at Florida and his evangelists is warranted. Florida is directly influencing economic development policy in Ontario. The 3Ts narrative is popular thanks to the aggressive selling of the ideas. At the rotten core of this entire enterprise is the flight of young talent from Pittsburgh, a gross mischaracterization of the challenges facing that region. That's why CEOs for Cities boosters are still clamoring for more effective retention of local graduates.

That dog won't hunt and we have gobs of data at our disposal to prove it. Yet we insist on ignoring the work of the Fed and repeat the same mistakes ad nauseam. At this point, I don't trust anyone spewing forth net-migration statistics because I know better numbers are readily available. I'm increasingly convinced that the deceit is intentional.

Thursday, January 28, 2010

Post-Recession Migration

Some demographic news out of Virginia may indicate that geographic mobility in the United States is ready to increase. Typically, migration is a lagging indicator. The exception to this rule is acute crisis (e.g. Michigan). The Great Reset will take shape during 2010. We should find out relatively soon if Pittsburgh will be among the new winners emerging from the economic shakedown. I'm betting it will, but I'm guessing like everyone else.

More certain is a populist backlash against immigration. About two weeks ago, GSP Consulting wrote about economic supercycles. Most people would agree that we're emerging from the nadir. I would argue that we are entering a period of stagnation, also known as the "B-phase". GSP sees an "A-phase" scenario. From where I sit, I don't see a geopolitical context that would support such an assertion. Regardless, the initial period of economic recovery is the most politically unstable. A good example of the growing populist sentiment is the Massachusetts election of Republican Scott Brown to the US Senate or the current mood in Davos.

Labor market protectionism is on the upswing and will frame the debate about US immigration reform. Concern about this direction is already apparent:

Several months ago, James Sherk, Bradley Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation, and Diem Nguyen, a Research Assistant at the Heritage Foundation made a compelling argument against adding regulations to the H-1B program, stating in their belief, this would represent a serious setback to U.S. Other thought leaders, academics and captains of industry here in the U.S. have echoed that sentiment. While their point of view is that America's loss is the world's gain, I politely disagree with that assertion because I think it represents only half the argument. I believe that any form of protectionism is dangerous and this age of globalization, the proposal to abolish or dramatically reduce H1-B visas hurts our global economy, not just America's.

There are indications that the bunker mentality is hurting US innovation and business. Canada couldn't be happier about the frontal assault on H-1B visas. I predict an exacerbation of existing talent shortages. Ironically, this should benefit Pittsburgh. Silicon Valley is much more dependent upon foreign-born entrepreneurs. This is one of the reasons why I'm bullish on Pittsburgh as the global economy improves.

I'm not in favor of greater restrictions on immigration. But the best supporters of policy liberalization are going to do is moderate the protectionist sentiment. The result will be tremendous stress on workforce development programs. This will help inform a sluggish recovery and draw out the B-phase.

Wednesday, January 27, 2010

State Of The Disunion Address

Richard Longworth beat me to the punch with his speech about Rust Belt discord. President Obama's national pep talk is just a few hours away and I'm thinking about a literal "state of the union". Dominating my Google "rust belt" query is Ohio's State of the State. How does Ohio separate itself from its underperforming neighbors?

The question itself is indicative of the parochial demon Longworth exorcises. Political legacy costs are killing the Midwest and all Gov. Ted Strickland does is reinforce his state as a cul-de-sac of globalization. Ohio is surrounded with economic redevelopment:

Recently, this typical American ingenuity and entrepreneurial energy has been demonstrated in the growth of knowledge-based industries, such as Genentech and Google. Today unheralded individual communities are taking charge of their own futures through a variety of exciting initiatives that are emblematic of the spirited capacity of Americans to reinvent themselves.

Take Pittsburgh for example, where the combination of Carnegie Mellon University’s pioneering robotics program and remnants from the city’s once strong industrial base is fueling the development of the next generation of robotics, giving the city bragging rights to becoming the Silicon Valley of “droid design.”

Meanwhile, in Warsaw, Ind., local companies account for approximately one-third of the world’s orthopedic device market. In Michigan, $1 billion in federal grants are being used to accelerate the development of next-generation batteries and electric vehicles. In an effort to further fuel the green movement, Midland, Mich.-based Dow Chemical Co. is investing $500 million through its own venture fund in public health, clean technology, and water products.

San Diego witnessed this organic phenomenon with the growth of both wireless information technology and the life sciences clusters that sprang up adjacent to UC San Diego. Our region continues to grow innovative clusters in new and converging technologies such as clean technology, health care IT and biofuels. Oil giant Exxon Mobil Corp., as part of its $600 million investment in renewable energy, has teamed with the San Diego biotech firm Synthetic Genomics Inc., to research and develop next-generation biofuels produced from sunlight, water and waste carbon dioxide by photosynthetic pond scum.

But even in collaborative regions like these there is no platform that regularly brings together the four key players: the research community, which is developing the technologies that will shape the businesses and jobs of the future; the entrepreneurs and investors, who can turn a promising technology into a business; the economic developers, who focus on and use resource allocation and business policies that can assure economic prosperity, and the educators and workforce training organizations, which focus on the general and specialized skills needed in globally competitive industries and services.

Balkanization is the rule, even in the most successful regions. However, the Rust Belt is king of zero sum thinking. Mexico can only boom if Michigan busts. Brain drain Detroit informs brain gain Houston. This is the dominant economic paradigm:

Realistically, income tax response gets more elastic as the tax region gets smaller. Oregon borders two states with attractive migration possibilities. California's taxes are no bargain--but Oregon's relatively lower tax rates may have attracted wealthy individuals and businesses that will now find it not so attractive.

Zero sum scenarios follow a distance decay model, a simple way to understand the benefits of regional consolidation. Work with your neighbor and eliminate the most vexing economic tug-of-war. Cleveland is waging a death struggle with Pittsburgh, not Shenzhen.

The US Constitution isn't a drag on the TechBelt. Don't blame neoliberalism, either. The popular scapegoat is globalization.

Luring Expatriates Back Home

Last week, I had an email exchange with a journalist who writes for a major Midwestern newspaper. He expressed interest in boomerang initiatives and applying best practices in his own city. He is looking for success stories and I'm not aware of any in the United States. Some promising news in the Great White North:

Despite a lacklustre economy, 25 British Columbia technology companies with an average revenue growth of 75 per cent were named to this year's Ready to Rocket list. ...

... [Reg Nordman (founder and managing partner of the Vancouver-based Rocket Builders)] said the list, which has a global following, was instrumental in convincing British Columbians who had moved elsewhere to return to the province. He said tracking the success of B.C. companies and sharing it helped attract people back.

"We were able to repatriate some extremely qualified people back to B.C.; we were able to reverse the brain drain a bit," he said.

A bold claim that I can't substantiate, but I've been tracking a similar talent migration to Youngstown. The success of the Youngstown Business Incubator (YBI) has garnered the attention of the Mahoning Valley Diaspora. National publicity, such as this positive recognition in Entrepreneur, is resulting in talented expatriates contacting YBI CEO Jim Cossler.

There is considerable latent interest in returning home. The lack of knowledge about opportunities (and how to best pursue them) is a big barrier to this talent flow. What kind of labor shortages are forcing local companies to go outside the region in search of employees? The news of Google's relocation and expanding footprint in Pittsburgh sparked at least one of my readers to inquire about the tech job market. Google hiring sends a strong signal to the most geographically mobile because the company has a globally recognized brand.

I'm inclined to buy Nordman's hype about luring brains back to British Columbia. It is probably a very modest number. That doesn't matter to the talent starved tech companies Nordman's business promotes. The fast growing have pressing needs and highly skilled expatriates are only too glad to fill them.

Tuesday, January 26, 2010

Foreclosure Pittsburgh

The best place for home foreclosure bargain hunting is Pittsburgh, according to Zillow:

Of the 16 markets we analyzed (using data from the end of the third quarter), the Pittsburgh metropolitan statistical area (MSA) showed the biggest discount for foreclosed homes, with buyers currently paying 59 percent less for foreclosures than they would for similar non-foreclosures.

However, there aren’t as many foreclosures to choose from in Pittsburgh as there are in some other markets. Ten percent of all sales in September were sales of previously foreclosed homes. That’s decreased even more, with 8 percent of sales in November being foreclosure re-sales.

The numbers might speak to the resilience of the Pittsburgh real estate market. There is such a bizarre confluence of factors in the region. Zillow provides a white paper detailing the methodology. I'm not that intrigued, more hoping someone wiser in such matters will comment.

Talent Attraction Expert Joe Cortright

The talent dividend bandwagon made a recent stop in Akron. Economist Joe Cortright presented his City Vitals work and you can view his talk here. I watched the entire event last night and I didn't note anything groundbreaking. In fact, I'd argue that the policy narrative is flawed. The recommendation for Akron:

''I'm a talent-attraction expert,'' said Cortright. ''I know that the quality of life in a city is very important in [the ability] to anchor talent to that city.'' ...

... ''It's not enough to educate your young people; you also have to pay attention to talent,'' Cortright said. ''You must build a community that makes them want to stay. That's a big challenge in the region because the most mobile tend to be the most entrepreneurial.''

Cortright said ''close-in neighborhoods are the key to keeping young talent. Young people are much more likely to choose to live in close-in neighborhoods.''

Dr. Luis Proenza, president of the University of Akron, said he is proud of the region's ability to keep UA's products.

''We have 28,000 students each year at the University of Akron,'' he said, ''and 85 percent will stay in the region after they graduate.

''We realize with the young, educated people that location matters. So long as they stay in the region, because it's the region that defines our economy and will define the long-term economic vitality for us all.''

Cortright thinks that Akron has a talent retention problem. He's wrong, as Dr. Proenza makes clear. Cortright is peddling more of the same brain drain nonsense. Akron has seen this act before from Next Generation Consulting. I'd expect much more from a self-professed talent attraction expert.

This misunderstanding stems from the sloppy analysis of net migration data. Once again, negative numbers are communicated as out-migration, an exodus of talent. Name one US city that has posted gains among the college educated thanks to improved retention. Makes me wonder why Cortright didn't have any recommendations for Akron talent attraction. For a possible answer, see yesterday's post.

Monday, January 25, 2010

Beware Of Sea Serpents

Before I rip off other people's blog posts, I'll tell my own story. There is (at least there was) a consignment store in Johnson, Vermont that I used to frequent back in the day. I bought a t-shirt there that screamed "Locals Only" with a picture of a junkyard dog doing its best to protect the parochial boundary. I thought the violent image hilarious. As a wayward twentysomething, I was all too familiar with such warnings. I appropriated the iconic statement as a form of irony and garnered many compliments for my attire among my peer group.

Instead of "Beware of Dog", I titled this blog post "Beware of Sea Serpents". I'm referring to another great piece of cartographic history published at Strange Maps:

This [map] shows the next best thing: dissuasive cartography. Its actual title is Cautious Cartography, as it appeared in the August 1940 issue of the Irish satirical magazine Dublin Opinion. The map purports to portray Ireland in as unappealing a perspective as possible. The text accompanying the map explains how cartography may be at least partly to blame for Europe’s misfortune:

Feeling that the present unrest in Europe may have been largely caused by the well-intended, but highly mistaken policy pursued by countries of boasting about their natural advantages and attractions, a policy which has had the not unnatural result of exciting the cupidity of other countries, our Grangegorman Cartographer has designed the above map of Ireland, which is calculated to discourage the inhabitants, much less strangers. The trouble is, he feels, that, even as depicted, the country still looks more attractive than the rest of Europe.

Locals Only.

Keeping outsiders at bay is as easy as flip-flopping the appropriately named Greenland and Iceland. But what if your town wants to attract newcomers? As Politics and Place reminds us, not so easily done:

I've been able to convince myself that I could live in a lot of places that many people would run away from (Baltimore, Detroit, Cincinnati, etc.). But in all honesty, I'm really not sure I could take a position in Dayton. The city is in a very awkward place, both geographically (sure it's only an hour and a half drive, but if you want to go carless that's not a whole lot of help to you), and population-wise (at around 150k, it isn't really able to offer the critical mass that I think a lot of young people are drawn to.

I understand that Dayton has great quality of life measures, but so do plenty of larger places. The articles on the subject in the local paper are a healthy rational understanding at the issue, but they don't completely get it. Yes, Dayton has universities and Wright-Patterson and all of the other things that cities talk about in glossy brochures, but it wasn't enough. There is something apparently missing in Dayton, some X factor that every city wants to have.

Transportation costs were high, and flights to and from the airport often required “multiple hops” for customers and employees. And attracting top talent was a struggle, he said. “We had a very difficult time recruiting people to live and work in Dayton.”

Most (perhaps all) Rust Belt cities have Dayton's problem. Richard Florida terms it the "means migration". Brains are pooling in a few select places, which is radically different from the United States of the 1970s. Once this path dependency is established (i.e. beware of sea serpents), it's hard to shake the reputation. That's why Ann Arbor suffers in the shadow of Detroit:

And despite Ann Arbor's educated work force, employers here find Michigan's reputation as a failing manufacturing economy can deter potential hires from moving to the state.

At HandyLab, an Ann Arbor firm that makes a DNA-analysis device, Chief Executive Jeffrey Williams says he has had a hard time finding Ph.D.-level workers with highly specialized skills. His company, which has doubled to roughly 60 employees in the past year, has 10 job openings.

"It's definitely gotten much harder with all the stigma around Detroit," he says. "Somebody tries to pigeonhole us as Detroit, we say, 'No, it's Ann Arbor, it's a completely different environment.' "

I've discussed that anecdote before, but it deserves to be repeated. The Rust Belt is a victim of means migration. That's why I suggest the megaregion explore residual migration. If Ann Arbor is having trouble attracting talent, then what hope can we have for Dayton or Youngstown?

For most people, the mental map of the Rust Belt looks a lot like the Cautious Cartography of Ireland. I think this applies equally well to city living. Suburbanites imagine sea serpents swimming around in the urban core just as they might fear killer dogs on the loose along rural roads. Locals only, buyer beware.

Saturday, January 23, 2010

Brain Drain Report: Residual Migration

I was prepping for a phone conversation with Ohio State Senator Joe Schiavoni concerning his bill designed to help plug the brain drain. My blog is an archive of this kind of information and I searched for tax credit proposals in other states. As I expected, the idea isn't new. Someone needs to tell that to West Virginia. Better yet, voters and politicians would be wise to listen to a fellow resident:

Still, the state can’t focus solely on financial incentives to attract educated young people, said 26-year-old R.B. Seem, a Martinsburg banker who leads the Young Professionals of the Eastern Panhandle.

“If it’s just about money, I’m not sure the tax breaks are enough to make a difference for a lot of young graduates,” said Seem, vice president of lending at MVB Bank in Martinsburg. “If someone graduates with a teaching degree, and they can work here for $30,000 or earn $50,000 in Loudoun County [Virginia] and money is the big consideration, then a break on state taxes probably isn’t going to persuade someone to stay.”

But Seem said West Virginia’s appeal goes beyond money.

“I didn’t move back to West Virginia for the money,” said the Martinsburg native who lived in North Carolina and Washington, D.C., before returning to the Panhandle in 2007. “I know a lot of young people feel the same way: It’s about what West Virginia offers. I like my life here.”

Given the tremendous pull of agglomeration economies, states such as West Virginia should focus on residual migration. As Mr. Seem explains, a tax credit isn't going to discourage native talent from moving to Washington, DC. How do I know? Others have tried and failed.

At the Golden Gate club on the river Spree, Gerald Simpson, 45, is often to be found DJ-ing. The musician moved to Berlin as much to get away from the pressures of London as to soak up the charms of what Mayor Wowereit has referred to as a "young, unfinished city".

"I love the grunge, the lack of pretension and the simpler way of life," says the Manchester-born DJ and record producer, better known as A Guy Called Gerald, who helped to shape the acid house scene in the 1980s. "I love the fact that I have a studio in Tacheles (a former 1930s department store-turned artists' collective in the centre of Berlin) which would be totally impossible elsewhere, unless I was a friend of Donald Trump's."

For Alexine Good, a painter and printmaker from London, one of the attractions of the city is that one can get by on relatively little.

But she is reluctant to use the phrase "arm, aber sexy". "There's nothing sexy about being poor – but if you're going to be poor, there are far worst places to be so than Berlin."

Arm, aber sexy is a kind of geographic arbitrage. You can get your big city buzz at a fraction of the cost. This is gentrification on a global scale. Instead of moving to another undervalued part of London or New York, hipsters are pooling in Berlin.

London is still a major draw. But Berlin does a good job of sucking up the cost of living refugees. Residual migration is a feature of the city's brand. I think this would be an effective model for West Virginia to explore. How did word get out about the allure of Berlin?

Reviewing the article about the West Virginia tax credit, I see examples of promising residual migration flows:

John Connor, who left his native Pennsylvania for a VISTA assignment in West Virginia and then a full-time job with Almost Heaven Habitat for Humanity in Franklin, believes it’s possible for West Virginia to make itself more attractive to young college graduates born and raised out of state.

“The tax changes that are being talked about would have come in handy for me,” said Connor, who is the president of the newly formed Generation Pendleton, which officially launched this month as the newest regional group under the Generation West Virginia umbrella.

“West Virginia is so beautiful, such a great place to raise a family,” said the 33-year-old Connor, who is married and a new father. “If these incentives can get them (out-of-state grads) here, I feel sure many, many of them would get rooted here and want to stay. It’s hard not to fall in love with West Virginia.”

Connor, whose group held a town hall forum earlier this month and plans an informal networking event Jan. 25 at the Fireside Café in Franklin, said he’s delighted to see West Virginia lawmakers looking for ways to keep and attract young graduates to the state.

Mr. Conner moved to West Virginia without the promise of a tax credit. Unwittingly, he describes the real problem. It is hard to fall in love with a place from afar. How is this long distance intimacy cultivated? That's the code that needs to be cracked. Financial incentives are a dime-a-dozen and cannot compete with the gravity of a major global city.

But regional literature sort-of folds into itself anyway. Speaking as a bookseller, I don't think most Southern fiction sells well outside of the South. A novel taking place in the Midwest is going to sell best in that part of the country. The prominent exceptions to this rule are just that...exceptions. But my guess is that novels taking place in London or NY sell everywhere and the Londoners and New Yorkers are reading each other...hell, the two cities might as well be joined together at the hip...New London York City.

I crashed this year when two Western locale novels that I loved were virtually ignored by the NY press. This local isolation of writers is not a good thing for our national American literature. How can we get writers from different regions to be read elsewhere and get the attention they need from the big media centers? How does a writer take to the national stage? What themes would a writer have to address to make make our regional literatures national, presuming that's a good thing?

Most regional writers appeal only to a residual audience. Angling for a more global appeal is like offering a tax credit, fishing in the wrong pond. There's a niche market that is going under-serviced. Surely there are many readers residing in New York City who would appreciate parochial literature. The dominance of cosmopolitan tomes is curious since that so many urban dwellers are from somewhere else. This helps to reinforce various geographies of fear (my earliest images of the South were the movies "Deliverance" and "Easy Rider").

Such perceptions haunt West Virginia and all of Appalachia. Effectively conveying a sense of place to someone unfamiliar with a landscape is very difficult. The low hanging fruit are the people who share at least some common experience. That's the power of archetypes, something writers understand better than most.

A great practitioner of this art is Richard Linklater, who helped to make Austin a hot destination via his movie "Slacker". The college town quirkiness appealed to overeducated/underemployed Generation X and put the Texas city on the map for a number of nomads who had never been to the state. I'd love to see artists play demographer and figure out how this migration happened.

West Virginia could commission such work instead of offering the tax credit. The flight of the creative class is a residual migration. The flows of Generation Y might be even more esoteric. And Berlin booms.

Friday, January 22, 2010

Marcellus Shale Political Geography

Given that the Marcellus Shale Play stretches over a number of states, the location of natural gas drilling provides an opportunity to explore the differences in political geography within this region. The case of New York versus Pennsylvania:

Talisman holds about 250,000 hectares on the New York side of the Marcellus and 100,000 hectares in Pennsylvania, the company's chief financial officer told a CIBC investor conference Friday.

"To date we've focused all of our efforts on Pennsylvania because it's been a much more receptive place to drill in. And New York had actually banned horizontal drilling," Scott Thomson said.

New York is working on a framework to regulate energy development in the state, and Talisman has participated in the consulting process.

"For 2010 we're not putting any capital towards New York," Thomson said.

I read the article as communicating that Pennsylvania is more environmentally lax than New York. The issue of water supply for populous areas is raised, but there are parts of New York State where that shouldn't be a primary concern (e.g. Southern Tier).

As long as the margin for drilling remains paper thin, New York looks to be at a competitive disadvantage. In financial terms, that's $1 billion invested in Pennsylvania and $0 in New York for 2010. In other words:

Talisman has made the development of shale gas a key plank of its strategy. In addition to the Marcellus, it has holdings in promising northeastern British Columbia shale plays.

The company is set to open up an office in Pittsburgh later this year, with activity in Pennsylvania set to ramp up significantly.

The rush is on.

Great Recession Geography

Unemployment is bad all over, but the following factoid surprised me:

[For the month of December,] South Carolina, Delaware, Florida, North Carolina and the District of Columbia were each at their highest jobless rates on record.

What's going on in those Sun Belt states?

Ruhr Valley Of The Rust Belt

Comparing Germany's Ruhr Valley to the Rust Belt is old hat. These two regions jump to the fore when we discuss industrial decline in Germany and the United States. However, the analogy is still instructive as we struggle to find a functional contiguous geography that might lend itself revitalization:

Germans often think of the region as a single entity, and taken together, it would in fact be the country's biggest city, with more than 5 million inhabitants. But the valley has less the feel of a city than a small, densely populated island: In some areas of the region, cities bleed into each other, while in other places there are wide stretches of agriculture that act as buffers between municipalities. Residents often have attachments to their local towns and develop rivalries against their neighbors. “When there's a soccer game between Dortmund and Bochum, you should probably stay off the local trains,” Willi Kaiser, a resident of Essen, said.

The homogeneity of the Rust Belt is a myth. Richard Longworth's struggles to delimit the Midwest for his book "Caught in the Middle" help to reveal the sub-regions of the US geography that globalization left behind. Plopping down the Ruhr Valley anywhere within Longworth's Midwest won't work. It fits best over the Metals axis of Cleveland and Pittsburgh.

Chris Briem has often compared Pittsburgh to Duisburg. But Americans don't think of "Cleveburgh" as a single entity. We should for the sake of economic redevelopment. The broad brush of the term "Rust Belt" belies the geographic diversity within the megaregion.

The Ruhr Valley is the TechBelt. I literally just noticed that the TechBelt website has been redone. It looks great! The history narrative could easily apply to the Ruhr Valley:

The TechBelt story over the past decade is one of profound economic reality on one hand and visionary leadership on the other. The region demonstrates a strong concentration of manufacturing employment that over the past few years has felt the continued transition of the U.S. economy. This transition has been painful to many of the communities throughout the region as anchor employers close their doors and jobs are lost.

There are still many however who view this transformation as an opportunity that through ingenuity and investment new opportunities are being created. For many years, this mega-region, has been working diligently to transition its economies toward more technology-based opportunities to ensure a bright future as it relates to job growth, per capita income and other measures.

Ohio and Pennsylvania governments have led the country with the creation of initiatives to support communities going through economic transformation. The Ohio Third Frontier initiative and Pennsylvania Ben Franklin Technology Development Authority have committed over $600 million to TBED activity in the region. These investments have created and continue to support programs, research, technology infrastructure and opportunities for the region to expand the strength and sheer number of technology based economic opportunities. The global economy is experiencing the most significant turbulence in a generation, which is likely to have profound impacts for regions throughout the U.S. The TechBelt region has survived this kind of turmoil in the past and now has the experience and the infrastructure to adapt to a changing economy. Regional leaders are optimistic that the investments that have been made, and the collaboration represented by TechBelt will enable the region to weather the storm and continue to transform. More must be done however to build on state and regional investments and attract federal and external capital to accelerate the pace of change.

The TechBelt Initiative unites the assets that have been created in the TechBelt communities and demonstrates the strength in numbers.

Perusing the committee members, I notice that the Power of 32 is conspicuously absent.

Thursday, January 21, 2010

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.

"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.

Wednesday, January 20, 2010

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.

Tuesday, January 19, 2010

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.

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.

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.

Sunday, January 17, 2010

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.

Thursday, January 14, 2010

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?

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.

Tuesday, January 12, 2010

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.

Monday, January 11, 2010

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?

Sunday, January 10, 2010

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.

Friday, January 08, 2010

Power of 32 Update

This is getting comical:

This blog is open to invited readers only

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?

Thursday, January 07, 2010

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.

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.

Wednesday, January 06, 2010

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.

Tuesday, January 05, 2010

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.