Wednesday, November 30, 2011

Rust Belt Development Paradigm

Pejorative or emblem of pride? The term "Rust Belt" cuts both ways. Art as a medium for the debate:

Upon entering the Out of Fashion exhibit currently on display at the Southeastern Center for Contem- porary Art, the first set of objects that catches the viewer’s eye is Gabrielle Duggan’s “Spectrum,” a commentary on “the ideals and values embedded in one’s sense of fashion,” according to exhibit curator Steven Matijcio.

Duggan, a Buffalo native who now resides in Raleigh, pays homage to her experience growing up in the Rust Belt of upstate New York by arranging mannequins wearing garments comprised of various combinations of alpaca, wool, cotton, hemp, and Tussah silk.

The eight garments reflect degrees of protection and vulnerability and challenge the viewer to decide if Duggan’s arrangement reflects progress or regress.

“Playing upon our inherent tendency to rank the individual components of a line-up, Duggan creates a multi-dimensional spectrum of materials, techniques and utility that remains open to interpretation,” Matijcio states. “Which direction represents upgrade is left for the viewer to decide.”

Emphasis added. Blight or opportunity? Ruin porn or art? Shrinking or developing? The Rust Belt is a paradox.

We may cling to and valorize a blue collar ethos. In that sense, Rust Belt is a pejorative. The progressive Rust Belt mentality is one of seeing the benefits of brain drain. Brownfields are the new greenfields. Rank away, Newsweek.

Rust Belt Chic: Whiskey Rebellion

Over the weekend before Thanksgiving, I was in the Laurel Highlands of Southwestern Pennsylvania. The conversation around the fire turned to moonshine. Apparently, the up and coming country generation is rediscovering its distillery heritage. Rust Belt culture is cool.

If you were to drive America's Whiskey Trail, you would spend part of your trip in Southwestern Pennsylvania. Distilling spirits is one way to foster a deep connection with the region. The trend is taking root in Pittsburgh:

Wigle Whiskey celebrates a grand opening this Friday, offering the public a chance to taste the first Pittsburgh-distilled spirit since prohibition.

Eric Meyer, co-owner of Wigle Whiskey, says the celebration will include a three-in-one tour: a walk through the production space and the entire whiskey process, from grain to bottle; a history of the Whiskey Rebellion, as told through the distillery’s namesake Philip Wigle; and a tasting room primer on how to drink whiskey.

The unshaven face of Wigle, Eric has hailed the micro-alcohol flag from all corners of the world--including working for a microbrewery in Kyrgyzstan and imbibing at many microdistilleries while working in the Pacific Northwest. In summer 2010, Eric heeded the call to start his own micro-operation and spent 6 weeks traveling back by train to his hometown Pittsburgh, visiting distilleries on his way. He arrived home in July 2010 and has had a bottle in his hand ever since.

One more quoted passage, from an interview with Meyer:

Why do you choose Pittsburgh as your home?
I grew up here, left, lived in a bunch of other cities, realized none of them were as unique as Pittsburgh, and moved back.

Part of what makes Pittsburgh unique is the whiskey tradition. It's an attractive quality that not only calls expatriates home, but brings in newcomers. The power of place is a great Rust Belt asset, one that has been ignored for too long. Outside the Rust Belt, there are just a bunch of other cities.

Tuesday, November 29, 2011

Trendy Un-Trendy Rust Belt

Boston is dying. Residents are intolerant, despite what Richard Florida claims. But it's the high price of housing driving talent to the Rust Belt:

People aren't welcoming when you come here and they always say if you don't like it- then leave when you address the serious issues of the area.

And housing is one of them. All my friends and family think the prices for the subpar housing stock here are laughable.

If there's one thing I have learned in my travels- its that the un-trendy and "depressing" places are much more livable, affordable and welcoming than any of our better, more cool areas.

I know people who live in Ohio, Pennsylvania, Michigan, Tennessee, Georgia, Upstate New York and Wisconsin who are all infinitely happy and better off financially than those of us who live in the "better places" like Boston, NYC, DC or California. I want to cry when I go visit friends in Pittsburgh who earn much less than what we bring in but have a quality of life probably double that of ares because there housing is affordable, daycare is affordable, taxes are affordable, etc.

Emphasis added. Oh to be uncool Pittsburgh. The Creative Class is fleeing Boston in search of geographic arbitrage. All the hip urban amenities are failing to stop the brain drain.

Instead of investing in a contemporary opera house in order to attract talent, put your money down on people. The allure is personal opportunity, not a vibrant nightlife. Pittsburgh is better than Boston.

Monday, November 28, 2011

Sun Belt Zombie Sprawl

Nowhere is American decline as evident as it is in the Sun Belt. Neo-Marxists keep trotting out Detroit to demonstrate the folly of global capitalism. Instead, they should look at Phoenix:

In the West, a comparison between Detroit and Phoenix is a hard sell.

"I tend to assume that we will grow again," said Jim Holway, from the Tucson-based Sonoran Institute, a group that promotes sustainable development in the Rocky Mountain region.

"Is it possible the forces that drove the growth in the West really have come to an end, and we’re going to face decline? I think it’s unlikely, but I can’t say it’s impossible," said Holway, a longtime planner in the region. "Certainly this is a time for creative thinking."

If mobility was once considered to be a quintessentially American attribute, it is now one that only an elite sliver of the population can lay claim to. It is both a significant shift and a sobering one.

All that is left is boutique migration. Population growth is almost meaningless in such a climate. But don't expect the Sun Belt boomtowns to embrace the paradigm shift. Steel will come back. American's need to make things again. Just buy local. The migrants will return.

The "creative thinking" is nothing more than wishful thinking. We've seen it all before in the Rust Belt. I'm having a hard time finding a Pittsburgh in all the greenfield mess. Which city might emerge in 40-years as successfully reinventing itself?

As for brownfield cities, even those located in the Sunburn Belt, the future looks bright. These regions have figured out how to grow the economy without robust inmigration. The revenge of the uncool city is coming to fruition.

Saturday, November 26, 2011

Brain Drain Belt

Talent is stuck in the Rust Belt. The headlines cry "brain drain" but the real problem is that too few people are leaving. Richard Florida on the crisis:

There is a distinctive “stuck belt” across the middle of the country running from Pennsylvania, Ohio, Michigan, Wisconsin, and Iowa, down through West Virginia and into the Sunbelt states of Kentucky, Alabama, Mississippi and Louisiana. Mobility is largely a bi-coastal—plus Rocky Mountain state—phenomenon.

America can be divided into two distinct classes, the stuck and the mobile. The mobile possess the resources and the inclination to seek out and move to locations where they pursue economic opportunity. Too many Americans are stuck in places with limited resources and opportunities. This geography of the stuck and mobile is a key axis of cleavage in the United States.

Emphasis added. The mobile are able to move to places where one can best explore personal economic development. There is a glut of underutilized talent in the Rust Belt. That's good news for industry. Captive labor is cheap.

Being stuck highlights the problem with retention strategies. It's a poor use of valuable talent. Shrinking cities are struggling because of too little brain drain and not enough attraction of the mobile class.

Wednesday, November 23, 2011

US Talent Exports Growing

The United States is very good at importing talent. Exporting talent? Not so good. That's changing:

I can't say I was surprised when I heard that Indian startup entrepreneur Kunal Bahl was touring U.S. colleges on a hunt for MBA talent for his New Delhi-based digital commerce company. ...

... Some might fret over a U.S. brain drain and see the trend of graduates leaving the U.S. as another black mark against globalization. But the fact is the U.S. economy could benefit from the global seasoning that future business leaders are gaining by working abroad. "These guys may come back and probably will come back," said Bahl, who visited Stanford, Wharton, Columbia University and Northwestern University. "They'll add value to companies here."

As this trend snowballs, I expect hysteria to follow. Instead, we should be helping native graduates find their way to India or other rapidly developing countries. Working abroad is a wonderful way to develop personally.

It stands to reason that talent isn't relocating to India because US cities aren't cool enough or tolerant enough. Please, no more sticky place boondoggles. We move to improve. International migrants make great entrepreneurs. Exporting talent will spur innovation in the United States.

Tuesday, November 22, 2011

Cleveland Return Migration

You can go home again. This Thursday, over 35 million Americans will do exactly that. The crowded airports and jammed highways demonstrate the power of the link between two places. Co-location is normal and good for the economy.

Thanksgiving is an appropriate time to celebrate return migration. The long homecoming weekend is indicative of much more than US geographic mobility. Fittingly, Global Cleveland has seized the moment:

Potential "boomerangs'' are the target of a talent attraction effort under the aegis of the Cleveland Leadership Center. This Saturday, the group is sponsoring a networking event aimed at college students and recent graduates at the Corner Alley downtown -- intersection of East 4th Street and Euclid Avenue -- from 3 to 5 p.m. Those who attend can meet with corporate recruiters and civic leaders to learn more about opportunities in Cleveland -- and they'll be only a couple of blocks away from the Christmas lighting celebration on Public Square. If that sounds like something for you -- or for your children who'll be home for the holiday -- go to for more information or to buy tickets.

Emphasis added. Networking return migrants (and encouraging more return migration) is the hot new trend in talent economics. If you are still pouring money into sticky places, then you have missed the boat. You are at least a decade behind the curve. I recommend selling your Richard Florida library at the next flea market and using the proceeds to buy "The Great Brain Race" by Ben Wildavsky. People develop, not places.

Monday, November 21, 2011

Take Two: Rust Belt Equals Brain Drain

Whatever you want to call the current economic and financial mess we are in, the dramatic reshuffling has favored the Rust Belt. Such faint praise reads like a backhanded compliment. Making the rounds last week:

Reversing the Brain Drain
During the high-flying years of the 1990s and early-2000s, the highly educated were pouring into tech hubs (San Jose and Boston), quality-of-life capitals (Portland and Austin), and centers of rapid growth (Las Vegas and Phoenix). Rust Belt cities were bleeding brainpower.

Then the housing bubble burst. Suddenly, those with newly minted diplomas weren't so eager to fly the coop. A report released this year by William Frey of the Brookings Institution documents the change – Pittsburgh, Columbus, and Baltimore all saw gains in migration of college-educated adults between 2007 and 2009, while Buffalo and Cleveland stemmed the outward migration. The shift, Richard Florida observed in The Atlantic, “put older Rust Belt metros back on the talent map.”

Rust Belt cities weren't really bleeding brain power. For Pittsburgh, the shock came in the early 1980s. Long after the exodus ended, the demographic hole continued to echo. Population loss equals brain drain.

The recession comes around and talent is reluctant to leave. If there is no boom, there is no bust. The Rust Belt is saved by greater misery everywhere else. Eventually, order will be restored and the flight of the Creative Class will pick up where it left off. Let's sweep the following under the rug:

The country's metropolitan economies overall saw GDP growth of 2.5 percent last year, according to the Bureau of Economic Statistics. But Pittsburgh's GDP grew 4.1 percent, Buffalo's 3 percent, Baltimore's 3.3 percent, and Indianapolis' 3.6 percent. And while job growth has been dismal nationwide, it is better than average in many of the Rust Belt cities.

The sweeping geographic generalization is troubling. The relatively strong economic growth coupled with lower unemployment than the national average isn't ubiquitous throughout the Rust Belt. There are a few very bright spots. Rust Belt stereotypes give birth to poorly done stories.

Cities like Detroit, Cleveland, and my current hometown of Pittsburgh were at the forefront of the organizational age. The cultural and attitudinal norms of that age became so powerfully ingrained in these places that they did not allow the new norms and attitudes associated with the creative age to grow up, diffuse and become generally accepted. This process, in turn, stamped out much of the creative impulse, causing talented and creative people to seek out new places where they could more readily plug in and make a go of it.

Go right ahead and lump all of them into together. Rust Belt cities are pushing out talent, "bleeding brainpower". It was nonsense then and even less true now.

Saturday, November 19, 2011

Rust Belt Equals Brain Drain

Shale gas boosters are literally banking on the durability of Rust Belt mesofacts. The economy is chronically depressed and young adults are leaving in droves. If you want to score political points, then shout "brain drain!" Pennsylvania Lt. Gov. Jim Cawley stoking those very fires:

"Pennsylvania has a challenge to continue to be good stewards of Penn's Woods, but we also have an obligation to the truth, and that we put terms like 'Rust Belt' and 'Brain Drain' onto the ash heap of history," said Cawley.

Concerning the truth, Cawley can't resist tall tales. What that says to me is that he is incapable of making a strong case for shale gas. Cawley must lie in order to convince PA residents that drilling is in their best interests. An obligation to the truth doesn't apply to Cawley. It only applies the anti-fracking crowd.

Cawley is implying that any delay in drilling will exacerbate the brain drain and prolong the Rust Belt misery gripping cities such as Pittsburgh:

State or municipal intervention needs to be smart as well as properly resourced. Prof Glaeser is scathing about the efforts to rehabilitate Detroit, for example, where money was thrown at construction but achieved negligible results.

By contrast, Pittsburgh has transformed itself from a city decimated by the decline of the steel industry on which it was built into a contemporary metropolis of tech clusters and vibrant neighbourhoods. Its success seems to result from a lucky combination of careful, consistent investment and seed money for start-ups from the Pittsburgh Technology Council (established perceptively early in 1983), while it is an ethnically mixed city of lively and distinctive neighbourhoods defined by good restaurants and cafés and, critically, cheap property prices.

Marcellus Shale drilling has pulled Pittsburgh off of the slag heap. It's a jobs bonanza that has people from all over the nation rushing to Southwestern Pennsylvania. The sooty skies and chronic sense of dread that defined Pittsburgh in 2007 is gone. The talent exodus is over. Pittsburgh is an Appalachia boom town.

The rest of Pennsylvania pay heed. You must support drilling as the City of Pittsburgh has or the brain drain will continue. Do not damn your children to a Rust Belt fate. Frack, baby frack.

Friday, November 18, 2011

Glorious Pittsburgh

The following comment from the forum deserves a few more eyes:

This is Max from Scenic America. This thread came up in my Google Alerts so I thought I'd chime in.

We really enjoyed our time in Pittsburgh last weekend. The William Penn was one most spectacular hotels I've ever stayed in. The lobby is jaw-dropping and there is an astounding mural inside the Terrace Room restaurant depicting the battle of Fort Pitt.

We met at the Allegheny Harvard-Yale-Princeton Club down the block, which itself is a remarkable example of preserved tenement housing sandwiched in between a couple skyscrapers.

In regards to the comment from the article about the newspaper boxes: the reporter was pressing for "something we didn't like," and the boxes were an off-handed comment from one of the board members.

The proposal to digitize the Bayer sign atop Mt Washington is a real cause for concern. To look up at Mt Washington and see a glowing advertisement would be a real shame and would quite literally ruin the view.

For those interested in the billboard issue in Pittsburgh I urge you to join Scenic Pittsburgh. There is a proposal to ban digital billboards and reduce other billboard blight in the city that will be heard on Monday, Nov. 21: [url=]Scenic Pittsburgh - Community - Pittsburgh, PA | Facebook[/url]

Sorry I don't have more specifics on the legislation or hearing, but I'm sure if you contact Scenic Pittsburgh they can fill you in.

Normally, I would have cropped the comment. I like to emphasize the key part of the passage. I decided to leave it unmolested. I don't want to be accused of editorializing.

The bit about the William Penn Hotel is how I feel about Pittsburgh. I wasn't born in Pittsburgh. I didn't live in the region for any substantial amount of time, maybe 6-months. I've been a resident of Greater Denver and Greater DC for over the last 15-years. I'm attracted to the city because Pittsburgh is "jaw-dropping" beautiful.

Thursday, November 17, 2011

How The Talent Economy Works

Talent is the new oil. The latest issue of The Economist is out with immigrant networks gracing the cover. Digging deeper into the magazine reveals a useful abstraction of the emerging talent economy:

Such migrants do not merely benefit from all the new channels for communication that technology provides; they allow this technology to come into its own, fulfilling its potential to link the world together in a way that it never could if everyone stayed put behind the lines on maps. No other social networks offer the same global reach—or commercial opportunity.

This is because the diaspora networks have three lucrative virtues. First, they speed the flow of information across borders: a Chinese businessman in South Africa who sees a demand for plastic vuvuzelas will quickly inform his cousin who runs a factory in China.

Second, they foster trust. That Chinese factory-owner will believe what his cousin tells him, and act on it fast, perhaps sealing a deal worth millions with a single conversation on Skype.

Third, and most important, diasporas create connections that help people with good ideas collaborate with each other, both within and across ethnicities.

The global economy is being rebuilt on this network infrastructure. Face-to-face yields the stage to distance trust. Dysfunctional supply chains give way to faster and larger capital flows. Geographic arbitrage is practical, logistically possible. Diaspora networks have a huge competitive advantage.

China exports talent and, as a result, receives FDI from the destination country. That's a substantial return on investment in brain drain. Brain drain promotes economic development.

Wednesday, November 16, 2011

Rust Belt Chic Houston

I'm a big fan of old school sportswriting. Frank Deford was the one who converted me. In 1985, Deford wrote a story about boxer Billy Conn:

Billy is a city guy, a Pittsburgh guy. Billy says, "Pittsburgh is the town you can't wait to leave, and the town you can't wait to get back to."

Deford captured the Pittsburgh I never knew. But Conn's quote gets at an eternal essence. In that Deford tradition, ESPN's Wright Thompson takes aim at the Burgh Diaspora:

Their kids grew up hearing about blast furnaces, about the way dockworkers and millworkers ate Primanti Brothers sandwiches and, of course, about the Steelers. Many claim the fans at away games are more raucous than fans at games in Pittsburgh. For three decades, largely through this team, they've kept something alive in themselves and their children. Says Heidi, "They know that even though they live here, home is Pittsburgh."

Bret Tirlia is looking at Penn State and Pitt for college. When he and his dad, Tim, roll into the Fort Pitt Tunnel, they crank "Renegade," the Styx song played in the fourth quarter of Steelers games, accompanied by a black-and-white montage of crushing hits. The song has a long, eerie buildup, just singing and a kick drum -- "Oh, Mama, I'm in fear for my life from the long arm of the law" -- before it quickens and explodes with guitars.

Tim and Bret time their exit from the tunnel so the skyline appears as the full band takes off. The soundtrack allows them to see the city as it is today and as it once was.

Even in Houston, home is Pittsburgh.

Thompson interviewed me for the piece. I didn't let on that I love his work. I'm giddy that one statement I gave him made the final cut:

"The ethnic enclaves of Little Pittsburgh exist most poignantly in tailgate parking lots of away games," says Jim Russell, a Western Pennsylvania-born geographer who studies geopolitics and the relationship between migration and economic development. "That's where you see people doing the performances of culture. The blue-collar Pittsburgh that you see flashed on the screen during games exists only in Steeler bars and in the visitors' parking lot."

Really, my big contribution was helping with the copious amounts of information about the exodus from Pittsburgh. The ESPN fact checker who contacted me is from Pittsburgh and she, too, expressed her desire to move back home one day. She was also exasperated with all the details in the story that had to be triangulated. I hope I didn't steer her down any blind alleys.

I consider Wright Thompson to be a purveyor of Rust Belt Chic. I tried to talk to him about the trend. He didn't seem to cotton to the term. However, he understands the concept:

A recent story I wrote on Cleveland came out of a conversation at dinner with John Walsh about disappearing America, another subject that really fascinates me. I’ve come back to it again and again: Nazareth, Texas; Yankee Stadium; even Vince Lombardi’s house.

"Believeland" is the best articulation of Rust Belt Chic I've seen in print. Disappearing America lives on in shrinking cities. Hipsters such as Anthony Bourdain literally eat it up. Thompson on the expanding cult of the pierogi:

A woman and her son, both in Pittsburgh gear, stop to gawk. "We're making Primanti Brothers sandwiches," Lucas says proudly.

"What's that?" Joan Roach drawls.

Sara and Lucas think the same thing. "Are you from Pittsburgh?" she asks.

"My dad lived there all his life," Joan replies.

"You ever tried a pierogi?" Lucas asks. Joan shakes her head. She's from south Houston. She's never even heard of a pierogi. Lucas spears a potato-and-cheese. Joan studies it carefully before taking a bite. In the moaning revelation of a new taste, she wheels around to find her friends. Her drawl turns short words into long ones. "Oh my god," she screams, "Ka-ren. You got to taste these. Oh my god."

She returns a few minutes later. "Pirollis?"

"Pierogies," Lucas says.

Working class food as nouveau cuisine. You want authentic Pittsburgh? You will have to travel to an away game for the Pittsburgh Steelers to get it. For one Sunday, Rust Belt Chic Pittsburgh was centered in Houston, Texas.

Knowledge And Migration

You go where you know. Money follows lines of trust. Proximity matters. All springs to my mind while reading the latest from Pop City:

Pitt Law Innovation Practice Institute's Justine Kasznica moved to Pittsburgh enticed by what she heard from BeatBots founder Marek Michalowski, a friend she had met during her undergrad years. He instilled in her an appreciation of the region's strong ties to innovation and commitment to economic development.
"I kept hearing how Pittsburgh was such an authentic city," says Kasznica, a former Philadelphia attorney who arrived in 2008 to work as a clerk in the federal court and later for CMU's Robotics Institute. Today she is the executive director of IPI, bringing fresh thinking about law and innovation to job.

Emphasis added. The mesofacts of Pittsburgh have evolved from Rust Belt to Rust Belt Chic. The pejorative is now a selling point. Of course, none of that matters if Pittsburgh can't get the word out.

Knowledge exchange is tricky business. You might hear that Pittsburgh is an authentic city. Do you believe everything you hear? Repetition helps. The clincher is usually a trusted confidant. In that case, outmigration is a shrinking city's best friend.

Sunday, November 13, 2011

Failed Return Migration

You miss Pittsburgh. You've talked about the greatness of your hometown, annoying neighbors and coworkers. People in your adopted community would get in line to shove that Terrible Towel down your throat just to shut you up. So why haven't you moved back? Like all those Buffalo expats, you are stuck in Oblomov's Dream:

The longer you're away from Buffalo, the more cherished (and distorted) your idea of it can become. It can become as romanticized as your past, with details and descriptions changing to suit whatever feeling you want to have about it. If you're from the Southtowns, you'll talk about Blasdell Pizza like it's a panacea for depression; if you're from the Northtowns, you'll talk the same way about La Nova. You'll remember Buffalo winters as ivory mosaics, and summers as yellow-hued embraces. You'll reminisce about the Bills dominance in AFC championship games, then find some optimistic angle to explain away their four crippling Super Bowl losses. And, the longer you're away from this city or region, the more likely it is that this idea you've created will become so comforting that you'll never dare shatter it by ambitiously merging the idea with the risk-filled reality of returning.

I've spent a good deal of my own time wondering why patrons of Steelers bars across the country remain so far from home. The above passage is from an essay designed to shake you out of your comfortable nostalgic apathy. Return to Buffalo and fix it now.

In any breakup, there is this moment when a person who was a part of you just an instant ago becomes a surrealistically familiar stranger. After that moment, inertia and denial can only delay the inevitable.

On my last night in Bangalore I drank an egregious amount of my favorite takeout Chinese hot-and-sour vegetable soup, and I cried; I knew this second goodbye was final. When I first left India in 1996, I left for the U.S. When I left India in 2009, I left India.

In the three focus groups I conducted in Cleveland, I heard similar frustration from a number of repats. Ironically, the Buffalo Siren does a good job of listing the common sources of the dissatisfaction that will inspire repats to leave again:

There are absolutely no jobs; the politicians are corrupt; downtown crime is rampant; the city schools are terrible; the winters are unbearable; economic development is lagging; there's just not enough exciting things to do in the dilapidated region.

Everything you fear about your Rust Belt hometown is true. For some of you, that will be your experience. You will be driven to greener pastures, this time for good. Others, however, will find a new city of great possibility. I also heard that from focus group participants. The return migration was a resounding success. Other people should try it, too.

I don't think Buffalo, Pittsburgh, or Cleveland needs more return migration. Rust Belt repats should network with each other and impact the regional landscape. I suspect most repats would be surprised how many returnees are already in town. There are enough numbers to fix Buffalo now or revitalize Garfield. Don't worry about engaging the diaspora. Expatriates will seek you out as news of your efforts spread.

Friday, November 11, 2011

Research Talent Stream Migration

Sticking with yesterday's talent economy theme, there are a number of different streams that define the globalization of talent. Academic researchers comprise one important stream. UK brain circulation:

What’s especially intriguing in [the BIS report] is a new analysis of how researchers flow into and out of the country, done by tracking individual researchers’ publication records. Gone is the old concept of ‘brain drain’ – rather, the emphasis is on ‘brain circulation’. Though 37% of the UK’s 210,923 researchers tracked never seem to have published anything outside the country, a small group of researchers (2.6%) moved out of the UK between 1996-2010 and also returned. What’s more, this group were senior and highly productive, in terms of their research impact.

"Far from implying the UK ‘loses the best and brightest’ to the US and other countries, this analysis suggests that returnee inflow brings comparatively productive researchers back into the UK (presumably with an extended international network, diverse skills and knowledge) and that returnee outflow (representing the most productive group identified) is high, which may also serve to strengthen the position of the UK abroad through international network-building,” the report says. It also points to the importance of international collaborations: collaborative research is more highly cited, it shows; and in particular, research between the UK and another country always has more impact than the UK’s average.

Emphasis added. This study indicates that migration and greater productivity are positively correlated (holding education constant). In effect, brain drain catalyzes economic development. The UK exports talent and reaps a benefit. This is global talent trade. There is reciprocity for outmigration.

Communities fighting brain drain are chasing smokestacks, waiting for steel to return. Talent retention retards economic development. It undermines the investment in education. Instead of discouraging geographic mobility, the goal should be to increase outmigration and forge stronger links with the talent economy.

Thursday, November 10, 2011

Talent Economy

With the era of the knowledge economy winding down, what comes next? The talent economy. Using migration as a lens makes the emerging epoch easier to understand. More from the "stream migration" discussion:

There’s a stream motivated by the Canadian domination of speculative mining finance. There are three vortex cities that are fairly tightly connected: Vancouver, Calgary, Toronto. The gyres involve all of Latin America but especially Santiago Chile, Lima Peru, and Mexico City.

Mining industry people (entrepreneurs, consultants, engineers, geologists, anthropologists) are bilingual and either live stints in various countries or split their lives between Canada and a Latin American country. Many have dual citizenships. Many think of their home turf as the Western Hemisphere excluding the USA.

The part of the stream that meets the relative poverty criterion consists of upstart geologists looking for mineral deposits and the consultants in peripheral areas like community relations/development. There is also a substream of rural development NGO types that often merges with this mainstream. A sub-stream of academics (esp. grad students) studying globalization, development, and resource industries is starting to emerge as well.

The stream size is probably around ten thousand. There are several mining and oil industry conventions that bring a substantial percentage of the members together annually. I believe the Australians have a similar stream in the mining industry with all the nations of the South Pacific (Indonesia, Philippines, Papua New Guinea, etc).

This mining stream reminds me of patterns in shale gas investment. Countries outside of the United States are seeking access to the knowledge of hydrofracking, which is still developing. Drilling crews trained in Pennsylvania may find themselves working in Poland, establishing a new stream. Polish Hill in Pittsburgh is reconnected with its homeland in an unexpected way. But it isn't a story of immigration, emigration, or even the return of the prodigal sons and daughters. Instead, knowledge is exchanged along the lines of an ephemeral but repeating migration (i.e. brain circulation).

Knowledge isn't exchanged or traded. Talent is loaned or traded. In today's Wall Street Journal, a different way of thinking about the US export economy:

Of particular interest here are businesses that don’t need face-to-face contact, such as management consulting, engineering, law, and scientific research. Private business services are included in the “other private services” section of the monthly trade data, which accounts for half of the total U.S. surplus in services.

Jensen found jobs in these industries tend to pay more than positions in manufacturing and construction, which isn’t surprising since most require college educations and even advanced degrees.

“Precisely because they require a high degree of skill, they are jobs that the U.S. is likely to retain–and that can support exports,” Jensen argues in his book. The skill requirements also mean fewer of these high-wage jobs are likely to be lost to emerging markets.

Emphasis added. The bold part of the passage presents a conundrum. If the trade doesn't require face-to-face contact, then is only knowledge exchanged (as opposed to talent)? I think the answer is no. The knowledge is still locked in talent, hence the claim that "these high-wage jobs are likely to be lost to emerging markets." Talent, not knowledge, is the commodity traded. The business is selling expertise.

I'm more interested in businesses that do require face-to-face contact and thus the physical transfer of talent to another country. That migration is the map of the talent economy. Also, there is the migration of business to the location of the production of esoteric talent, such as found in Albany and that particular nanotech cluster.

Wednesday, November 09, 2011

Demography Exaggerated

Imagine a train wreck in slow motion. Really slow motion, stretched out over half of a century. That is the best way to describe the plight of the Rust Belt. City-regions deny the inevitable. Steel will come back, some day. Blame NAFTA. Bust the unions. Scapegoats and silver bullets abound. People develop, not places:

Unlike an earthquake, a demographic disaster does not strike without warning. Japan’s population of 127m is predicted to fall to 90m by 2050. As recently as 1990, working-age Japanese outnumbered children and the elderly by seven to three. By 2050 the ratio will be one to one. As Japan grows old and feeble, where will its companies find dynamic, energetic workers?

For a company president pondering this question over a laboriously prepared breakfast of steamed rice, broiled salmon, miso soup and artistically presented pickles, the answer is literally staring him in the face. Half the talent in Japan is female. Outside the kitchen, those talents are woefully underemployed, as Sylvia Ann Hewlett and Laura Sherbin of the Centre for Work-Life Policy, an American think-tank, show in a new study called “Off-Ramps and On-Ramps: Japan”.

The usual answer to the shrinking city or country brain drain is to seek more immigration and/or encourage more births. Meanwhile, structural unemployment is increasing and the people who do have jobs are becoming more efficient. Add to that robotics and other forms of automation. There's a dramatic policy disconnect.

As Hewlett and Sherbin suggest, we would do well to better develop the talent already in place. Yes, graduates leave and the result is brain drain. As "Hollowing Out the Middle" reminds us, what about the townies left behind?

Tuesday, November 08, 2011

Return Return Migration

No, the post title is not a typo. The financial meltdown in Greece continues to generate fascinating migration patterns. Early last month, I looked at Greek outmigration. The emigrants followed old trails to familiar destinations. You go where you know:

Greek-Americans and their children began moving out of Astoria decades ago, abandoning the Queens neighborhood that once boasted the world's largest population of Hellenic immigrants for the suburbs or their homeland.

But amid the political and economic turmoil that has shaken Greece this year, that tide may again be shifting. The evidence—only anecdotal so far—can be seen in the clientele at Immigration Advocacy Services, an Astoria-based nonprofit where many "older clients are coming in with questions like, 'How can I get my nephew here from Greece?'" said director Debra Gilmore.

Chain migration rules. I think of relocation as a link between two communities, not a zero sum game. That's a defining feature of the globalization of talent era. The theoretical discussion of stream migration is a good example of avant-garde thinking on the subject. It puts brain drain in a different light.

Increasing geographic mobility enhances economic development. Migration is as important as education. We don't pay enough attention to the dividends of the former. Move to improve.

Keep Albany Weird

Albany is the new Austin. That's remarkable insofar as we are talking about a tech boom in the Rust Belt. I spent the bulk of my childhood in southern Saratoga County. I'm familiar with the blight and economic struggles of Schenectady and Troy, to name a few of the depressed cities in the New York's Capital District. Reading about the rise of Albany's globally renown nanotech cluster is a strong challenge to my memories of the region:

“There aren't going to be, out of the blue, five factories going up in the next five years,” said an Intel spokesman, Chuck Malloy.

To glimpse Albany's future, look south—to Texas. “Albany is the new Austin,” Mr. Malloy said.

Two decades ago, that city transformed itself into a poster child of the semiconductor industry, luring Sematech there in 1987. Since then, Texas' investments in manufacturing decreased as other high-tech sectors, like software, took off. Sematech traded Texas' capital for New York's.

“Albany is at a tipping point,” Sematech's Mr. Armbrust said. “The desire to work across company boundaries created Silicon Valley. And that's what's happening here.”

Industry is moving where the talent is produced. That's great news for the Rust Belt, which is rich in legacy institutions such as SUNY Albany. Native talent, too, is moving back to reap the rewards:

Layoffs in the early 1990s changed all that. IBM's vulnerability startled employees and signaled a crisis in the state's high-tech economy. Mr. Montgomery jumped ship, embarking on a nearly two-decade odyssey that has mirrored the volatile growth of global computing and New York's struggle to reclaim its perch in the nation's high-tech economy.

As jobs and skilled workers left the state, so did Mr. Montgomery—for Europe, then for Silicon Valley and, as chip manufacturing moved north, to Oregon's Silicon Forest.

Now, after more than $2 billion in state commitments, New York's tech sector is back—as is Mr. Montgomery. Improbably, the epicenter is Albany, known more for bureaucracy than innovation.

I expect such return migration to pick up as the national economy improves. Albany is poised for a boom. This part of Upstate New York is uniquely positioned for strong growth because the cluster is so esoteric on the global scale:

Two economists, Ricardo Hausmann of Harvard and Cesar Hidalgo of MIT, have just released their 364-page “Atlas of Economic Complexity,” which claims to be the best model yet for predicting how much nations will grow in the future. So what’s the secret?

As it turns out, the authors argue, the best way to tell how rich a country will get isn’t by looking at things like political institutions, or the rule of law, or even education levels. Nope, it’s far better to look at what they call a country’s “collective knowledge.” That means looking, primarily, at how many different products a country creates — and particularly how many unique products a country makes, things that no other countries are making (say, medical-imaging devices). For example, the authors note that Pakistan and Singapore both export a similar number of types of products. But Singapore’s exports tend to be relatively rarer on the world stage than Pakistan’s, and the country’s much richer as a result.

Emphasis added. Albany is not just a nanotech cluster. It is the nanotech cluster. Try as other metros might, there is no Next Albany.

Monday, November 07, 2011

Globalization Of Talent

There are a number of ways to define an economic epoch. I was trained to follow the hegemon. Which superpower controlled the age? A declining America and a rising China signal the world is at the end of an era and at the dawn of a new one. Another possible lens is globalization:

“This is the new wave, the new trend,” Wang Huiyao, founder and president of the Beijing-based Center for China and Globalization, told me. “We had the globalization of trade, we had the globalization of capital, and now we have the globalization of talent.”

The globalization of trade aligns with the industrial era and the second British hegemony. The globalization of capital fueled the knowledge economy under the stewardship of the American Century. The globalization of talent fittingly belongs to China:

“Increasingly, immigrants who live elsewhere are being viewed as assets,” Boyle said. “This is a paradigm shift; this is a seismic shift. The notion of brain drain is ridiculed — instead, it is ‘brain circulation.’ The notion is that people can return as tourists, that people can be ambassadors for their home countries, that people can serve as business agents.”

“It is no longer about brain drain, or even brain gain,” Wang agreed. “It is about global brain circulation.”

Emphasis added. India, as well as China, is lauded for its talent geopolitics. I think India has been slow to embrace its expatriate assets. China strategically exports talent to markets ripe for domestic exploitation. Brain drain is a tool for economic development.

Stuck In A Jobless Recovery

How can your region solve the brain drain paradox? That's the question that drives my blog, Burgh Diaspora. In terms of developing talent, migration functions in the same way as education. Furthermore, the two are positively correlated. The higher the level of education, the more likely someone is to leave for greener (i.e. richer) pastures:

There’s a perennial paradox of youth migration. To thrive, hometowns need the best and brightest to stay put. But yet, in many ways, we also encourage them to leave. Network associate members Maria Kefalas and Patrick Carr, in their book “Hollowing Out the Middle,” discovered this paradox in the small Iowa town they studied. In numerous ways, the town, which suffered from chronic brain drain, rallied behind the “best and the brightest,” boosting their ambitions and dreams—essentially encouraging them to seek those dreams elsewhere. Demographer Jim Russell on his blog Burgh Diaspora gets to the heart of it, asking: “Since education makes a person more likely to leave your region, how do you justify your investment in human capital?”

The heart of it is that the best way to stop brain drain is to deny people education. As for retaining graduates, a successful initiative hinders economic development. The move to improve is the missing ingredient to the American recovery:

Another reason for decreasing mobility is the aging of the population; older Americans are less likely to move than young ones.

And then there’s the oft-noted rise of dual-income families. If a sole earner loses a job, it’s relatively easy for a family to pack up and move to a place with more employment opportunities. But it requires a grand leap of faith to do so when one member of a two-income family loses a job; more likely, the family stays put and holds onto the remaining job for dear life.

There are job openings going unfilled. Ideally, talent moves from a place with less opportunity to a place with more opportunity. This reshuffling of the workforce speeds recovery. It is also why the more geographically mobile earn better wages. Most people are unwilling (or unable) to take the relocation risk.

The dual-income drag on geographic mobility is familiar to me. Return migration to Rust Belt cities (and rural communities) is hindered by the trailing spouse problem. What is the solution? Again, Time magazine:

But McKinsey does see hope for this increasingly static workforce in the changing nature of work, and in particular in the technologically driven development of ”anywhere, anytime” work that doesn’t require the employee to be located at a company facility. “Their ability to work with colleagues and customers continents away in ‘real time’ and perform almost any function remotely provides a whole new level of flexibility,” the report explains, adding that 26% of the execs surveyed plan to employ more people working at home in the next five years, compared to only 15% who said they plan to offshore more jobs.

Decoupling work from the demands of geography is how the labor market is restructuring in the wake of the Great Reset. I've written about the 1099 economy. Freelancing, the one employee start up, is a surrogate for geographic mobility. Jobs, instead of talent, are migrating. A region could do much more to encourage such a career transition. Rust Belt cities could dangle the 1099 carrot to catalyze more return migration. Labor mobility doesn't necessarily entail geographic mobility. One can move without ever leaving.

Sunday, November 06, 2011

Searching For Marcellus Shale Dividend

To be sure, shale gas has been a boon to the Pennsylvania economy. The debate is about how much of a boon. As one would expect, industry is prone to gross exaggeration. The numbers simply are not as impressive as the pro-fracking camp would like them to be. Along those lines, two posts from the blog Carpe Diem help me explain.

The latest numbers from Job Service North Dakota’s Labor Market Information Center report that Williams County has the lowest unemployment rate in the state, and perhaps the lowest in the entire United States September numbers, which are the most recent available, put Williams County at a staggeringly-low 0.9 percent.

Is there county anywhere in Pennsylvania that can boast similarly good news? Energy boosters are cherry picking the data. One county does not a national job recovery make.

"Resource-rich Alaska took in nearly $1.9 billion more than expected last fiscal year thanks largely to high oil prices and ended the fiscal year with an estimated $260 million surplus, an amount equal to nearly 4 percent of its general fund.

A handful of states — led by those that enjoy bountiful energy reserves such as West Virginia, Wyoming and North Dakota — have found themselves in similarly enviable positions, oases of optimism in an otherwise barren landscape of budget cuts and government layoffs. A few other states, including Massachusetts, South Carolina and Virginia, have combined slight increases in tax revenue with tight spending controls to produce modest surpluses.

In West Virginia, the surplus is going toward reserves, pension programs and debt. Wyoming put much of the extra money into savings after years of investing heavily in roads and schools.

Pennsylvania enjoys "bountiful energy reserves" such as shale gas. The state is noticeably absent from the story about the revenue boom. So much for the nonsense about public coffers overflowing from existing taxes on Marcellus Shale associated business.

A severance tax on drilling isn't even on the table for discussion in Pennsylvania. It should be. The jobs cup isn't overflowing. The state and its municipalities are still struggling with crushing public debt. The various proposed impact fees are a joke, an insult to PA residents. Industry is having a field day.

The debate is mostly about whether or not to frack shale. How much regulation will there be? How much financial remuneration for the drilling damage? Should local government make drilling regulation? I'm sure industry is happy the current lines in the sand. How can I be sure? Billions of dollars in investment keep streaming into the state.

Saturday, November 05, 2011

Mesofacts: Pittsburgh Steelers

More enduring than Pittsburgh's depressed, sooty image is the smashmouth persona of the professional football Steelers. The Marcellus Shale is helping Southwestern Pennsylvania shed the perception of chronic economic distress. What has to happen for fans to forget the reputation of a stone age team pounding the rock for chronic franchise success? The ironic facts:

The Steelers run the ball down your throat. The Patriots overwhelm you with defensive brilliance. Indianapolis is precise with the ball. Baltimore is impenetrable without it. ...

... For all its success and all its legacy as a pound-the-rock team, the Steelers have adapted as well as anyone to the NFL's current pass-first and pass-often mentality. Never was that more on display than in last Sunday's 25-17 victory over the Patriots, in which Ben Roethlisberger threw 50 times in 78 plays — as many passes as New England's total snaps.

The ideal way to beat the Patriots is to limit how often their prolific, clutch offence is on the field. That used to mean running the ball and eating the clock.

Pittsburgh found another way — a very effective way.

"I think it's great to have a team like this where we can run or pass," speedy wideout Mike Wallace said. "We adjust to the team we play against and hopefully some of these weeks we can come out and do what we want. We have guys around here like chameleons, just adapt to whatever the situation is."

More than ever, that situation is for Pittsburgh to pass. Roethlisberger has become so comfortable with Wallace and even younger receivers Antonio Brown and Emmanuel Sanders — not to mention standbys Hines Ward and tight end Heath Miller — that opening up the attack not only is an option, it's the best option.

Somewhere, Mike Madison (Pittsblog) is smiling. But mesofacts last long after the facts of the matters have changed. "Reputations die hard."

Once established, a brand is resilient. The brand matters more than the reality on the ground. The Pittsburgh Steelers are tough and blue collar, like the city. The team, like the region, is undergoing a mythological transformation. The world is waking up to a new set of mesofacts. Pittsburgh's team is finally catching up to its host city.

Friday, November 04, 2011

Marcellus Myths

The jobs geography of shale gas continues to elude news coverage. Typically, numbers from industry boosters are cited. These tall tales simply don't match up with the anecdotes showing up in Marcellus Country media:

By 2010, the previously struggling Gosai family hotels were routinely near full, said Gosai, who spoke Thursday during The Greater Cumberland Committee’s monthly meeting. In fact, the entire southwestern Pennsylvania hotel business is “saturated with Marcellus shale drillers,” he said.

The bulk of the drilling jobs are still going to out of state workers. If Pennsylvania started producing more drillers, then that labor supply will ding the hotel business. Or, it might make more sense for the gas industry to ramp up operations elsewhere. Drilling is itinerant work. The result is the same. The hotel boom goes bust.

Nationally, the shale boom (both gas and oil) is going full throttle. Is energy leading this country out of its employment crisis? No. That should be obvious. Instead, David Brooks is passing along the industry hype:

Already shale gas has produced more than half a million new jobs, not only in traditional areas like Texas but also in economically wounded places like western Pennsylvania and, soon, Ohio. If current trends continue, there are hundreds of thousands of new jobs to come.

Sure, there are parts of Western Pennsylvania that are economically wounded (more about that in a subsequent post). Drilling in the Marcellus Shale has catalyzed some job creation. But the real lift for this region comes from Pittsburgh and its higher education industry. Once known for producing steel, Pittsburgh is now dominated by the production of talent.

As Brooks proves, a good mesofact is hard to kill. The promise of shale extraction jobs is full of such mesofacts. If we can only keep those wacko environmentalists from killing the goose laying the golden egg. The hyperbole on both sides of the debate is irritating. Brooks feeds this polarization with stock stereotypes and makes energy a much bigger election issue than it should be.

Wednesday, November 02, 2011

Rust Belt Chic Is Fatal

Does civic pride matter? Does it affect economic development? Those two questions still linger in my mind after reading about the burgeoning Rust Belt rap scene:

Now the reasons rap is overlooked as a legitimate Rust Belt renaissance tool are numerous and cannot be fully digested here. Lets just say that images of rhyming young black (and increasingly white) men with tattoos and whatever have not been traditionally associated with the health of a city identity.

This is unfortunate. For what is a reality in the most real of American conditions is a generation less ashamed about the decline of their industrial society than they are proud that what has grown from the rust is a resilience-driven honesty captured in the raw beauty of the region’s emerging creations. And rap is becoming an increasingly important part of this output, and the nation is listening.

Richey Piiparinen sees a strong link between Rust Belt renaissance and a healthy city identity. Rust Belt cities do seem afflicted with low self esteem. Hence the inability to embrace Rust Belt Chic. We're aren't any near as great as emerald cities such as Portland.

At the other end of the pendulum swing is too much civic pride. Pittsburgh is fine. Nothing is wrong. Life here is good enough. No one aspires to greatness. Rust Belt cities do seem afflicted with hubris or, at least, complacency.

Rust Belt Chic is enduring its "so what?" moment. Existential crisis in Buffalo:

City’s have distinctive flavors and cultures, even our over-homogenized America, and I find watching Buffalo transform itself an endlessly fascinating exercise. It’s messy, it’s argumentative, and the process is without rules, standards or easily identifiable goal posts; perhaps a reason this conference, as a distinct measurable event, drew so much interest. How do you remake a city? Who gets to decide what a city becomes? Pittsburgh is regularly lauded for transforming from a steel town into the first Eds & Meds Rust Belt success. Who got to decide Pittsburgh was throwing in with its hospitals and universities, and not another industry? Who sets the agenda?

Buffalo certainly used to be a hard working manufacturing mecca, and we still do make a lot of stuff. But white collar jobs have out numbered blue collar ones around here for quite a while, and that self-image is hard to shake. As we wallow in past identities, former glories, and a wishy washy future, how did architecture stick all the way down to our cab drivers? There have been other efforts, other successes, that could have captured our imaginations. [Dabkowski wants Buffalo to be known as a Rust Belt-chic funky arts town]. We have our own constantly under-appreciated Eds & Meds effort, one that has generated far more economic development than architectural tourism, but is largely overlooked in plain sight. Newell Nussbaumer has tried to get the College Town label to stick on Buffalo, but some student housing ventures failed to take off, his site morphed into Navigetter, and no matter how correct the statistics (70K+ total students), unfortunately the vibe never resonated.

Emphasis added. How can Buffalo cash in on its greatest Rust Belt Chic asset? People develop, not places. Apparently, no one has figured out how this wonderful architecture can develop people. Rust Belt Chic Buffalo is nostalgia. Can nostalgia fuel economic development?

The answer to that question is a resounding no. Via the editor-in-chief of The Cleveland Review, nostalgia as an anecdote for homesickness:

But the problem with homesickness isn’t just that it impedes ambition; it’s that the object of longing, home, is not as fixed as one might think. After the Civil War, for instance, “the transcontinental railroad and steam-powered ocean liners,” Matt writes, “made it easier to return to a physical home and thus, at least theoretically, easier to assuage homesickness. Upon traveling back, however, they found they had not arrived, and never could, for the same technologies that had brought them home had also disrupted traditional ways of life.” The schedules and even the clocks of hometowns had been recalibrated to train schedules and standard time; certain commodities, like ice, reshaped the diet. Traveling back revealed that “home” had been vanquished by time, and a word necessarily arose to define this longing for what was lost: nostalgia.

While homesickness was suppressed in America, nostalgia was allowed to flourish. In 1899 New Hampshire figured out a way to profit off of it, and began throwing annual “Old Home Weeks.” These festivals, wherein the town might display old photographs and antiquated town artifacts while concessionaires in old-timey clothes served up regional specialties, were conceived of as reunions, meant to draw former residents back to their birthplaces. By 1903, these weeks were attracting half a million people, and today quite a few New England towns still throw them—such as Freedom, New Hampshire, which hosts one every August. Neither early El Granada nor my El Granada of the 1980s and 1990s had enough of a community to justify an antiquarian street fair. But America’s comparative acceptance—embrace, even—of nostalgia makes sense to me. It’s safer than homesickness because it’s neutered; it can’t be realized and won’t get in the way of work; it asks you to long only for something that no longer exists.

While nostalgia may allow the wayward to remain productive, it can stifle development in the hometown. Buffalo's architectural treasures are holding the city back. Rust Belt Chic impedes ambition.

Brownfields are greener elsewhere in the Rust Belt. Nostalgia takes on a different hue when you adopt a city. I'm not from Pittsburgh. I chose the city. Pittsburgh is exotic, not stiflingly parochial. I am inspired by Rust Belt Chic Pittsburgh. Rust Belt Chic need not be fatal if you can stay away from your hometown.