Tuesday, April 30, 2013

Burgh Diaspora Migrating To Pacific Standard

Almost seven-years after I started, the Burgh Diaspora blog is at an end. I'm migrating from this virtual Little Pittsburgh to Santa Barbara, home of Pacific Standard magazine. My preoccupation with Pittsburgh brain drain has expanded to the more generic pursuit of economic development via migration. I spend more time thinking about San Antonio or Spain than Southwestern Pennsylvania.

I see the world through a Steel City lens, black and yellow-colored glasses. I will bring this perspective to Pacific Standard. You can follow my new blog here. I'm also on Twitter. I intend to keep posting here about the writing I am doing for the magazine. I will maintain this blog as an archive of my intellectual journey, an annotated bibliography of hyperlinks and thematic interests.

What I value most from this experience is my dialog with other bloggers. The conversations I've had in the realm of social media are much richer than any exchange I enjoyed as a graduate student. I hope this will continue at Pacific Standard. I start tomorrow (May 1st). See you on the Left Coast.

Monday, April 29, 2013

Chinese Rust Belt Chic In The San Gabriel Valley

This New York Times article starts out with a now familiar story line of ironic migration. A new group of immigrants is showing up in unexpected places. The world will never be the same. About halfway through, the narrative course changes, sharply:

Andrew and David Fung, who grew up in Seattle, were surprised to see the pervasiveness of Chinese and Taiwanese culture in the San Gabriel Valley.

After moving to the area a couple of years ago to try to break into the entertainment industry, the Fung brothers created several hip-hop videos celebrating what they termed the “boba life,” to embrace the area where, as their lyrics explain, “kids drink more milk tea than liquor.” The videos became so wildly popular on the Internet that local leaders began showing them in official meetings.

People here think it’s normal, hanging out to drink boba all day long, but this culture doesn’t exist everywhere, and we’re trying to tell them to embrace it, to own it,” said David Fung, 26. “We’ve got to teach ourselves to be proud of who we are and tell others about it.”

The Fung brothers have helped create a local ethnic pride that would have been unimaginable a generation ago, said Oliver Wang, a professor of sociology at California State University, Long Beach, who grew up in San Marino in the 1980s and returned to the area three years ago. The area could become central to Asian-American identity in the region in the way East Los Angeles is to Latinos or South Los Angeles is to African-Americans, he said.

“It wasn’t cool to be Chinese or cool to be Asian,” he said. “The idea that the San Gabriel Valley could be the locus of some kind of cultural movement or identity is fascinating. They are asserting cultural capital to create Asian-American identity that wasn’t there before, and one that is homegrown, not imported from Taiwan or Hong Kong.”

The sentence I boldfaced is the most overt connection to Rust Belt Chic and rasquache. Replace the boba tradition with cookie table. This culture doesn't exist everywhere. It wasn't cool to be Rust Belt or Chicano. Like San Marino, San Antonio and Cleveland are the loci of some kind of cultural movement or identity.

Choosing between assimilation and multiculturalism is a false dichotomy. The Youngstown cookie table is a mash-up, something you won't find anywhere else. From whence it came doesn't matter. Drinking boba all day long isn't American or Chinese, or Chinese-American. It's 100% San Gabriel Valley. Embrace it. Own it.

Sunday, April 28, 2013

Decline Of Suburban North Jersey

Migration is an optimistic undertaking. Wherever you are headed, it must be better than this place. For a few decades, that meant leaving the dreadful city for the bucolic suburbs. The geographic pattern of sprawl was the picture of aspirations realized. At the very least, your kids would have a much better life than you did. This world upside down in North Jersey:

In a small sign that the tide could be reversing today, the newest generation of the Weinstein family has found a new value in the old Canarsie.

There, Alex Gomberg, 25, Phil Weinstein’s grandson, has staked his future on creating an offshoot of the family business, Gomberg Seltzer Works, which, for decades, refilled seltzer bottles for old-fashioned distributors.

After Gomberg graduated from the University of Massachusetts, Amherst, though, he convinced his father and uncle to expand the operation, under the name Brooklyn Seltzer Boys, delivering seltzer in vintage glass bottles to newly chic neighborhoods like Park Slope and Williamsburg, where rapid redevelopment has created an appetite for nostalgia.

“Everything old is new again, and we’re as old as it gets,” said Alex’s father and business partner, Ken Gomberg.

The endeavor has already earned a splashy headline in the New York Post, calling Alex, “The Prince of Pop,” and a potential feature in publicity material for the new Barclay’s Center — another monument to the borough’s improved fortunes.

The Canarsie neighborhood is also on the verge of another transition. The Carribbean immigrants who bought the two-story brick homes from the Weinsteins and their Italian and Jewish neighbors have raised their families and are now moving out. They are being replaced by young families looking for a more affordable version of gentrified neighborhoods like Park Slope and Williamsburg, said Vernasta Whyte, who described herself as one of the first black people in the neighborhood to buy a home in 1976.

“We’re getting old now,” she said. “We’ll move on also. There’ll be another shift here.”

In a previous era, those new residents might have gone to North Jersey.

A story or two, anecdotes, belie the larger forces at work. The agglomeration of globalization is pulling young adults back to the places their parents or grandparents left behind in search of a better life. They grew up in the suburbs. Anywhere must be better than this place.

Even for young families, the aspirational geography is Lena Dunham's Brooklyn. But that's only half of the migration. The suburbs are dying:

Between 1950 and 2004, New Jersey’s employment base grew from less than half the size of New York City’s to 13 percent larger, according to the 2012 Rutgers report on the region’s economy.

But the bursting of the housing bubble and the 2008 recession unraveled most of that advantage, leaving it at just 2 percent larger.

“Maybe we were suburban saturated,” said James Hughes, the dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers and one of the authors of the report.

Statistics indicate that the number of young families leaving for the suburbs is shrinking.

The number of children under the age of 5 has dropped 12 percent across Bergen and Passaic counties since 2000, according to U.S. Census Bureau data. At the same time, middle- and upper-income areas of Manhattan and Brooklyn have seen virtually the opposite shift in both the number of young adults as well as preschool children.

The 2008 recession changed everything. I noticed roughly the same break in San Antonio's talent migration. The urban core brain gain is recent. The flipping fortunes of North Jersey and NYC are a national trend. It may be a global trend.

Another way to look at the ironic migration is the trading places of immigrants and suburban brats. For the foreign born, the greenfield American dream is still alive. For the Geography of Nowhere generation, taking out your toddler for some free range pooping in Park Slope is the new utopia.

Spanish As A Second Language In Mexico

When a prodigal daughter or son returns home, there isn't a celebration. Reverse migrants are not welcome. Transnationals don't belong anywhere. The liminal experience of the Mexican borderlands:

Lamberto Hernández School principal Hugo Efrén Molina says his hope is to turn the school into a magnet for those students arriving from the US. In addition to offering professional development to teachers, plans are underway to extend school hours and build a cafeteria, which students who attended US campuses sorely miss. The school only has a snack bar. ...

... Now, new migration patterns are returning Mexican nationals to their homeland years after they settled in the US, married there, and had children. Back in their native country, many of these families are unappreciated, Molina says.

On the wall behind the principal, a hand-written sign describing Mexico's migrants reads: "They are the same as us, and they have the same rights."

I've seen the same pattern in the United States. Return migrants are unappreciated. Some experience antipathy. Xenophobia is the rule, not an exception.

I think the biggest urban issue of our time is the tension between the mobile and the stuck. The stuck tend to be isolated. Globalization works against them. The mobile are surfing macroeconomic waves. Move, or die.

Saturday, April 27, 2013

Migration As Economic Stimulus

Migration, international or domestic, is economic development. However, we can debate how greater geographic mobility enhances growth. Atlantic Canada is dying:

It turns out that 80% of more of the employment in a local community is actually based on the economic activity (and population) in that community – nurses, electricians, hairdressers, waiters, plumbers, taxi drivers, teachers, etc.

Therefore, if we reduce the population by 11,000, we reduce the overall local economy by a significant amount leading to widespread losses in the 80% of the economy that was hurt by the loss of those 11,000. ...

... The other deeply flawed assumption regarding the ‘rightsizing’ of communities is the linearity of public services and public infrastructure costs. If you drop the population by 20%, the theory goes, you will reduce the cost of these services by 20%. This turns out not to be the case. In fact, you could argue that public spending goes up – particularly in the area of income transfers – where EI, social assistance and even workers’ compensation costs rise. The insurance firms will quietly tell you the number of homes that burn down also rises as economic prospects fall.

Shrinking New Brunswick gets hit with a double whammy. The demand for local services wanes with net outmigration. The smaller local population is still on the hook for legacy costs meant for a larger number of people. It looks like a death spiral for the community.

In fairness to Rust Belt cities such as Cleveland, the obsession with demographic decline is rational. Mayor Frank Jackson's "bold prediction":

"I will guarantee you that, with a good education system and the policies that we have in place, when they take the next census, we will have population growth."

Net inmigration benefits the city, a place. Simply growing the population (more births than deaths) will do the trick. More people demanding goods and services will act as a stimulus.

The more efficient allocation of labor is also part of conventional wisdom. Move to where the jobs are located. On a larger scale (national instead of local), economic migration spurs growth. Again, the framework of analysis is place-centric.

A different framework of analysis for economic development is focusing on talent instead of place. For some reason, US immigrants tend to be more entrepreneurial than the general population. It stands to reason that more immigrants will spur job creation. Attracting migrants isn't about growing the population. The goal is to prime the pump of the regional economy. The quality of the migrants matters more than the quantity.

Well, why are immigrants more entrepreneurial? When a person moves, that individual economically develops. People develop, not places:

What if there was a program that would cost nothing, improve the lives of millions of people from poorer nations, and double world GDP? At least one economist says that increased mobility of people is by far the biggest missed opportunity in development. And an informally aligned group of advocates is doing its best to make the world aware of the "open borders" movement, which suggests that individuals should be able to move between countries at will.

Vipul Naik is the face, or at least the voice, of open borders on the Internet. In March 2012, he launched Open Borders: The Case, a website dedicated to the idea. Naik, a Ph.D. candidate in mathematics at the University of Chicago, is striving for "a world where there is a strong presumption in favor of allowing people to migrate and where this presumption can be overridden or curtailed only under exceptional circumstances." Naik and his two primary co-writers, Nathan Smith and John Lee, parse research into immigration impacts, answering claims by those they call "restrictionists"--people who argue against open borders--and deconstructing writings on migration by economists, politicians, journalists, and philosophers. ...

... To prove the economic power of open borders, supporters often turn to the work of Michael Clemens, a development economist and one of the strongest voices for loosening border restrictions. Clemens is not an open borders advocate, but his research and writings make it very clear that movement of people across international borders should be a much higher priority than it is now. He is, he told me, "in favor of a vastly more sensible way of regulating movement," if not "a utopia of completely free movement." Based out of the Center for Global Development, a think tank in D.C., he has spent much of the past half-decade compiling international labor mobility statistics that are, as he says, "gasp-inducing."

Barriers to emigration may--according to Clemens's paper--"place one of the fattest of all wedges between humankind's current welfare and its potential welfare." Though he affirms that the research on migration's effects is far from complete, what Clemens has found "suggests that the gains from reducing emigration restrictions are likely to be enormous, measured in tens of trillions of dollars." Remove all remaining barriers to trade, says Clemens, and all remaining barriers to capital flow, and it still wouldn't compensate for the inefficiencies created by current global labor mobility restrictions. His research indicates that allowing free movement of all people across international borders could double world GDP.

According to Clemens, we are all victims of an epic intuition fail. "Development is about people, not places," he has said many times over, and often the best way to make a person richer is by allowing them to move to another place. We don't really care about helping poverty-stricken Liberia, we care about helping poverty-stricken Liberians. It sounds almost too simple at first: A very large percentage of people who have gone from extreme poverty to relative financial stability have done so by moving across borders. So why don't we just let more people move?

To plug the brain drain, even if doing so bolsters the population numbers, undermines economic development. Talent retention is a drag on growth. We are more concerned about place than people.

"What about state sovereignty," you might ask.

What about prosperity?

Migration is an entrepreneurial act. Moving from one place to another is an economic stimulus. People leaving Cleveland promotes growth.

As more of the world demographically converges, the focus on talent is of greater importance. Winners and losers won't be defined by population, but by connectivity and churn. Those in Cleveland clamoring for a better Census result are barking up the wrong tree.

Friday, April 26, 2013

Move Or Die

Greater density isn't helping low-income, native-born New Yorkers. The Center for an Urban Future unwittingly devised a natural experiment to test my migration hypothesis. I contend that talent churn, not greater density, drives city creativity and prosperity. The surprising findings:

New York City appears to be in a new golden age of entrepreneurship. In recent years, mid-career investment bankers, lawyers and media professionals have forged out on their own, opening everything from food trucks and restaurants to digital marketing agencies. Twenty-something college grads facing the worst job market in decades have turned to entrepreneurship in droves, establishing Internet start-ups, design firms and countless other new ventures. And immigrants from Washington Heights to Sheepshead Bay have continued to open food carts, franchises and other businesses at a rapid clip.

But amid the veritable start-up boom, some groups have fared better than others. Among those disproportionately left out of the new-economy bonanza are low-income, native-born New Yorkers, research released today by my organization, the Center for an Urban Future, shows.

Analyzing U.S. Census data, our researchers found that all 10 ZIP codes in the city with the lowest rates of self-employment have median incomes below $33,000, and in all but one the share of the native-born population exceeds the city average.

Emphasis added. Move or die. Immigrants are disproportionately entrepreneurial. Those who are stuck in a neighborhood tend to risk averse.

The neighborhoods with more churn (i.e. less native-born New Yorkers) are the places where the start-up magic happens.It is not a matter of financial capital or greater density. The issue is geographic mobility. Migrants are better problem solvers. They are more creative. Migration is economic development.

Thursday, April 25, 2013

Demographic Mesofacts

Why is population such an important metric to economic development? I argue that the obsession with shrinking cities and brain drain are a relic of the Manufacturing Economy. The conceptual framework is a century old. A lot has changed since 1910. Apparently, our understanding of demography has yet to catch up:

Here’s an economic indicator you may not have thought about: population growth. All things being equal, population and economic growth move in tandem. That tells you why no one should be particularly surprised to find that in 2012, Spain’s population dipped for the first time since the 1940s.

Population rises and falls with economic fortunes for good reasons. When the economy is weak, people tend to put off having children, while in good times larger families flourish – hence the reason that family size declined in most of the developed world during the 1930s, and shot up during the buoyant economic boom of the 1950s. As well, there is some evidence that health deteriorates when an economy weakens, and death rates rise. The most direct way that the business cycle affects population, however, is through migration – basically the people in and out of an area. If an economy is thriving (think Alberta during any oil boom), people flood in. When times are tough (Alberta when oil prices plunge), people head elsewhere to look for work.

Spain these days is very clearly a “bust” rather than a “boom” economy. The economy has been in recession, more or less, for something like five years. The official unemployment rate was 26 per cent during the final quarter of 2012, and the youth unemployment rate was more like 55 per cent. To cap off the misery, the inflation rate is a relatively high 2.3 per cent. The standard of living in the country, accordingly, has been falling quickly. So it is not surprising that those who can are streaming out of the country in search of better prospects.

Emphasis added. Now a bit about the author of this opinion piece:

Prior to joining BNN, Linda was a Senior Economist with CIBC, where she spent ten years honing her analytic skills and becoming a sought-after speaker and media commentator. Earlier in her career she was an economist with the federal government where she specialized in demographic and labor market forecasting.

Ms. Nazareth has some pretty serious chops, including an advanced degree in economics from the University of Toronto. For someone who "specialized in demographic and labor market forecasting", the above passage is odd. Consider Japan:

Fukao has calculated that the shift toward part-time workers in the 1990s alone reduced Japan’s human capital—its collective store of workforce knowledge and competencies—by 2 percent. This may not sound like much, but modern economies run on human capital, and any decline in this precious resource has an outsize impact on growth.

In 1992, 80 percent of young Japanese workers had regular jobs. By 2006, half were temps. (Over the same period, the portion of young Americans working as temps stayed put at one-third.) Only 2 percent of nonregular workers transition to regular work each year in Japan. Most of today’s young temps will probably never hold regular jobs.

We do not know for certain that Japan’s lost generations, once a symptom of economic decline, now perpetuate that country’s malaise; the evidence for a feedback loop is only circumstantial. But the marked deterioration in Japan’s job market began in 1993. It is perhaps not a coincidence that Japan’s economy today is smaller than it was in 1992.

Japan is dying. A lot of countries are dying. You see, prosperity and birth rates move in tandem. Better education and more wealth positively correlate with less children:

In a recent book, "Whither the Child?" (Paradigm press, available here) Mr Lutz and two co-authors argue that if you take improving educational standards properly into account, the optimum fertility rate is lower than the replacement rate – 1.8 not 2.1. This happens because, they say, education is expensive (hence having slightly fewer children is rational) and also because better-educated people earn more and can therefore support more children and retired people through their labour.

Emphasis added. Having slightly fewer children during good times is rational. Ms. Nazareth appeals to our general sense about the way the world works. Mesofacts. 1930s bust. 1950s boom. Many economic development practitioners use the same logic and ignore the changing demographics. A lot of economic development policies are in dire need of an update.

Wednesday, April 24, 2013

Spain Doing The Fail

Ah, to pull a Pittsburgh. What caused the turnaround? A few years ago, Ben Schulman devised an intriguing hypothesis. "Pittsburgh, and the Magic of Failure":

The steel collapse decimated Pittsburgh and its region, taking with it nearly 1 out of every 10 jobs there. Entire towns surrounding the city became obsolete. But it is because of that failure, that absolute bottoming-out, that Pittsburgh has been able to cast aside its past and emerge as a unique showcase of what a small, bustling, connected American city can eventually become. The example of Pittsburgh is to fail on the failures and invest in the attributes- granted, of which the 'Burgh had many, in its beautiful architecture, old establishment money, intact communities and ethnic organizations, and cultural trusts and universities- that a place already has. It is a tale not so much for cities facing similar problems to the Pittsburgh of 30 years past, as it is for the country as a whole in this stage of national transmogrification.

Do the fail. For decades, Detroit staved off rapid decline. The city has finally imploded. It should have pulled a Pittsburgh long before the exodus from SW PA. As Schulman argues, fearing the fail only serves to kick the renewal can down the road.

In the magic of failure, I see an indicator of resounding success. Brain drain. Getting your shrink on. These days, one needs a lot of courage and a college degree to flee. The better educated your workforce, the more likely to leave. That's the Pittsburgh Paradox, the reason for this blog's being.

The grand irony, as I soon discovered after starting Burgh Diaspora, is that Rust Belt cities have unusually low outmigration rates. The population problem typically concerns anemic inmigration. The Great Lakes states suffer from lousy mesofacts. The best and brightest leave every community. However, none of them were moving to the Rust Belt. Thus, the Industrial Heartland was a prolific net exporter of world class talent.

Brain drain is a leading indicator of economic vitality. That's true internationally, as well as domestically. Spain doing the fail:

The National Statistic Institute (NSI) says the number of residents dropped by almost 206,000 to 47.1m - the decline entirely accounted for by foreigners.

Immigrants from Ecuador and Colombia showed the biggest fall.

The figures do not take into account many Spaniards who have left in search of work but are still on the census.

Note the collapse of migration inflow. At issue is the pull, not the push. To sum it up:

"Spain is less attractive because there are no jobs," Albert Esteve of the Barcelona Centre for Demographic Studies told Spain's National Radio.

The lack of draw is overlooked because of the hysteria about brain drain. Exodus! In Pittsburgh, the workforce numbers took about 10-years to recover. But the demographic fallout from the fail still haunts the region. Inmigration is, only recently, showing signs of returning. Using that as a guide, Spain has a long way to go before regaining talent destination status.

If Spain didn't do the fail, the country would still be less attractive. At least the prodigal sons and daughters wouldn't flee. Welcome to Detroit.

Tuesday, April 23, 2013

Economic Geography Of Innovation

The rent is too damn high? Now, hold on just one gosh-darn minute. The New York Times begs to differ:

Of course, not everything that wealthy New Yorkers spend money on is cheaper here. Housing, after all, is absurdly expensive, even for the rich. Complex zoning regulations and limited land make it all but impossible for supply to grow alongside demand. Still, it’s somewhat unfair to compare housing costs here to those in a place like Buffalo, or even Atlanta, since perks like access to amenities and unusually lucrative jobs are baked into the cost of New York real estate. Yet those higher rents all but ensure that tenants will appreciate an amazing bakery or a fancy shoe store — and that retailers will have to lower prices to compete for their business. Regardless, the rent burden isn’t actually as onerous as people assume: the typical resident here pays roughly the same share of her income in rent as does her counterpart in Los Angeles, Chicago, Philadelphia and Houston, according to N.Y.U.’s Furman Center for Real Estate and Urban Policy.

Okay, we're talking about the wealthy. The journalist goes on to discuss the flip side of the story. How push-factors are reshaping NYC demographics:

Between these competing forces of higher-paying jobs and high living costs, the high costs seem to be winning out. As I talked to Handbury, I began to realize why, in part, New York seems so wealthy. It’s not so much that the city has been colonized by hedge-fund millionaires (though it often feels that way) as it is losing its lower classes. The greater New York area now has the longest average commute in the country (35 minutes, compared to a national average of 25). Many of the less-educated are leaving the metro area altogether: from 1980 to 2010, the population of college-educated workers rose by 73 percent, while the population of workers without college degrees fell by 15 percent, according to Rebecca Diamond, an economics graduate student at Harvard.

Overall population loss associated with substantial gains in the number of college-educated are an indicator of intense, rapid economic development. Real estate refugees tend be in the lower classes and cannot benefit from the agglomeration spillovers of the Innovation Economy. The rent is too damn high.

Manhattan isn't the only place where top talent is clustering. The rent isn't too damn high for anyone in Cleveland or San Antonio. One doesn't have to go to NYC anymore to get a piece of the globalization action. For creative practices such as software development, the world is flat:

Lua’s international success was facilitated by Lua’s increasing ability to fill a particular niche. Lua is especially useful for providing end users with an easy way to program the behavior of a software product without getting too far into its innards. The number of projects around the world needing such functionality is quite significant. Their number, however, is quite small in Rio, where most software projects involve building web applications, a task for which Lua was poorly suited. Rodrigo’s company was seeking to mend this -- his project ultimately aimed to extend Lua to web development. Until he succeeded, though, Lua was a better fit for foreign projects.

Cutting local ties is not enough, however. Global ties must be formed and exercised. For Lua, its team’s integration into the international world of academic computer science provided an early start. In 1996, the team published a paper about Lua in a U.S. journal read widely by American software developers, including videogame engineers at LucasArts, who decided to integrate Lua into one their games. Thanks to LucasArts programmers, Lua soon had friends in the right places. In 1998, LucasArts engineers advocated for Lua at the Games Developer’s Conference, the world’s largest game development event, in San Jose, California. Quite soon, other companies were decided to incorporate the language into their products as well.

Lua’s relative isolation in its early life turned into an unexpected strength. JavaScript, although widely used, is often condemned as an “ugly” language. Such ugliness is the flip side of its popularity: The language bears battle scars of the so-called browser wars of the late 1990s, when Netscape and Microsoft fought for browser market share. Yet fixing JavaScript’s problems would be nearly impossible due to its ubiquity and would have required somehow correcting the myriad web browsers and websites that rely on older versions of JavaScript. Lua, in contrast, could turn its back on its past several times. In fact, seeing no commercial prospects for Lua early on, the team had decided to make the language free. It has since focused on elegance and usability.

The Rio innovation did nothing for the city and Brazil. Most of the positive externalities were bottled up in Silicon Valley, where the rent is too damn high. Knowledge flows are global. The benefits are not. You either live in Greater Greater New York, or you don't.

That worm seems to be turning. The talent is too damn dear. Why pay Silicon Valley wages when you can count on a glut of CMU graduates staying in Pittsburgh? Manhattan offers diminishing returns. More people can benefit from globalization in Houston.

Sunday, April 21, 2013

Art Of The Creative Class Boondoggle

A story of economic development gone wrong. Rhode Island was desperate. Like Detroit, the last recession was particularly grim for Providence. The governor at the time, Donald L. Carcieri, had an idea:

"38 Studios presents Rhode Island with a tremendous economic development opportunity. This investment creates 450 high-paying jobs, provides job opportunities for our college graduates in a fast growing industry, and will attract other interactive and entertainment companies to Rhode Island. Located in the heart of the capital city and surrounded by our universities and strong arts community, I am confident that 38 Studios will serve as a touchstone for growth in the interactive entertainment and digital media industry."

The former pitching superstar for the world champion Boston Red Sox, Curt Shilling, was the person behind 38 Studios. He was asking for a lot of money. Massachusetts wouldn't play ball. Rhode Island was game:

So when Curt Schilling came courting in the weeks after his encounter with Mr. Carcieri, it wasn’t just the promise of jobs that caught the attention of the state’s political establishment. Here was one of Boston’s greatest living legends, a proven winner who had sunk something like $50 million of his own fortune into his company, and he was looking to build it not in Kendall Square of Cambridge, but near the old Jewelry District of Providence. If ever there was a way to show up the Bay Staters next door, this had to be it.

“It just felt really good, when this all started, to have the sexy sports celebrity from Boston who seemed to like Rhode Island and showed up in Rhode Island, and who built this exotic new business, even though no one knew what it was,” says the historian Ted Widmer, who grew up in Providence and works at Brown. “It seemed like the digital economy, or biotech, or whatever. But then it turned out that it wasn’t the new digital economy. It was some 13-year-old’s medieval fantasy.” ...

... For years, state officials had been kicking around the intriguing idea of transforming the old jewelers’ neighborhood in Providence, not far from the Rhode Island School of Design, into a nationally competitive “knowledge district” — the kind of neighborhood to which hip, young graduates would flock to design software. So, right from the start, what Mr. Carcieri and his economic planners saw in 38 Studios was just the sort of high-tech start-up that could be the magnet to revive the area.

If not for the part of the passage I highlighted, I wouldn't have noticed the New York Times piece about the 38 Studios boondoggle. One sentence sums up the tragedy:

The state’s 95-page complaint against Mr. Schilling and his 13 co-defendants, most of whom have now filed motions with the court to dismiss the case, reads like the treatment for a modern remake of "The Music Man.”

The cool neighborhood with a creative enterprise such as 38 Studios is the snake oil. Talent will flock to Providence. College graduates will stick around. Rhode Island will be saved! All for the low, low price of $75 million. Back to the ribbon cutting:

"I am very excited about the commitment of 38 Studios to locate in downtown Providence. The clustering of creative and digital industries so close to internationally recognized schools such as RISD, Brown, JWU, and URI can be the trigger that propels Providence into its future,” said Umberto Crenca, Artistic Director of AS220, a non-profit art community in downtown Providence. “The city's diversity, historic architecture and strong arts and culture have helped it to create a high quality of life that is attractive to creative types. Richard Florida's predictions are coming to pass: Creative people are drawn to interesting, dynamic and diverse communities; creative industries are drawn to talent and a new economic model is born."

Emphasis added. Now fast forward to current governor, Lincoln Chafee:

This lesson isn’t lost on Mr. Chafee, who has been preaching a longer-term, more methodical kind of economic development centered on what he calls “the meds and the eds” — that is, hospital and universities, of which Rhode Island has plenty. Brown recently moved its medical school into the hoped-for knowledge district, and the state has just finished burying a highway under the neighborhood, clearing acres of real estate.

Even so, with unemployment in Rhode Island above 9 percent, Mr. Chafee is now a profoundly unpopular governor, and his chances for re-election at this point seem slim. His deliberate approach inspires little confidence.

“People don’t like it,” Mr. Chafee acknowledged, shaking his head. “They want the razzle-dazzle.” By which he meant something more like the shimmering kingdom of Amalur, twinkling just out of reach.

Cool cities are razzle-dazzle economic development. Build it and they will come ... and do nothing. That will be $75 million. Sign here.

Saturday, April 20, 2013

Ironic Migration: Invisible Inflows

Ironic migration is unexpected because the flows are hard to see or difficult to measure. When we get wind of the new narrative, we are noticing something that has been around for awhile. The undetected in Poland:

Official statistics show about 7,000 EU citizens moving to Poland in a given year, but the data are not very sound because migrants are not required to register with Polish authorities, said Krystyna Iglicka, a demographer with Warsaw’s Centre for International Relations, a think-tank.

This is an invisible flow based on anecdotal evidence, but there is no doubt that such a flow exists,” she said. “We can assume that the trend will strengthen, although of course it does not compare in size to the outflow of Poles.”

Emphasis added. These invisible flows, reverse migrations, are the hallmarks of the diverging Talent Economy. Still a major exporter of workers, Poland is the place to be. That's ironic.

Each main current of migration produces a compensating counter-current. - Ernest George Ravenstein: The Laws of Migration, 1885

More Evidence Of Innovation Economy Decline

The world is getting flatter. The Creative Class economy is dying. As agriculture and manufacturing before it, innovation is converging. In general, that's good news for most places. It's bad news for the winners of the last round of agglomeration. Case study number one, Brazil:

THE world is littered with would-be Silicon Valleys with catchy monikers, from Chilecon Valley (Santiago) to Silicon Wadi (Tel Aviv). Now Belo Horizonte, Brazil’s third-biggest city, wants to join the list. Dubbed “San Pedro Valley” in 2011 by a group of start-ups that formed a chance cluster in its São Pedro district, it is now home to nearly 50 young tech firms. (They switched the Portuguese “São” to the Spanish “San” for a cosmopolitan touch.)

The group now holds regular meetings and hack days, and two years ago set up a national association of start-ups. Gustavo Caetano, its president, acts as a mentor to many of San Pedro’s budding entrepreneurs—and an inspiration. His firm, Samba Tech, set up in Belo Horizonte in 2004, now has offices in São Paulo, Buenos Aires and Miami, and sells its online-video platform across Latin America.

That Belo Horizonte could pip bigger and richer São Paulo and Rio de Janeiro to the title of Brazil’s Silicon Valley may seem a stretch. But a big new middle class, fast-changing tastes and Brazilians’ voracious appetite for social media provide plenty of opportunities to challenge incumbents. Facebook overtook a local social-media site, Orkut, in Brazil in late 2011. It is now four times as popular. Only America has more tweeters than Brazil. A recent survey by Rakuten, a Japanese e-commerce firm, found that Brazilians are some of the world’s keenest “social shoppers”, swapping product tips with their friends and other online contacts.

By Brazilian standards Belo Horizonte boasts a well-educated workforce. Four of the universities ranked in the top ten nationally by the education ministry are in Minas Gerais, the state of which it is the capital. A lower cost of living helps—which is why Mr Caetano moved back from Rio to set up his firm. He stayed for a laid-back lifestyle he describes as “West Coast with added cowboy”. San Pedro firms that make it will need a sales team in São Paulo one day, he counsels, but their developers need not move.

Yuri Gitahy of Aceleradora, a “business accelerator” (ie, a firm which helps start-ups keep growing), prefers to work with entrepreneurs with experience in big companies, which usually means a spell in São Paulo. If San Pedro Valley takes off, he thinks, more of these will come home to found their firms. The state government plans to tempt them by offering up to 150 start-ups a year around 60,000 reais ($30,000) each, plus mentoring and shared working space.

Convergence of the Innovation Economy is good news for Belo Horizonte  It is bad news for São Paulo and Rio de Janeiro. Urban hierarchies aside, more places are competing for world class talent. I see talent production clusters such as San Pedro Valley having a competitive advantage in the diverging Talent Economy. Skate to where the puck is heading.

Next up, India:

Styloot.com, a fledgling ecommerce website, appears to be the classic Silicon Valley start-up – it has a business model that combines fashion, media and technology, it targets western consumers, and it has a small team of engineers developing proprietary technology. Except that Styloot’s engineers and fashion analysts are not based in California, but in an apartment in Pune, an Indian city with an increasingly global outlook.

“We chose Pune because the cost of living is low, and the quality of life is high,” says Samir Patil, one of Styloot’s co-founders, pointing to the tree-lined, residential street in Model Colony, in the heart of the city, where the company is located. “Mumbai was unviable because the costs of living for the developers would have been too high and we wouldn’t have found the technology talent. And had we been in the US, we would not have been able to create this depth of technology with seed funding.” ...

... Located 150km to the southeast of Mumbai, India’s financial capital, Pune was historically known as the “Oxford of the east” for its many engineering colleges. Its intellectual leanings are accentuated by a strong cultural tradition, especially in music, literature and theatre. A pleasant climate and proximity to Mumbai also make it a convenient location for a second home for many investors from other parts of the state of Maharashtra.

See the pattern? Innovation is seeking talent production centers that offer lower costs than alpha global cities. The rent is too damn high. Talent is too damn dear. A firm doesn't have to be in Mumbai in order to have a global impact.

However, not all companies are so forward thinking. Going old school:

We chose a city, Pittsburgh, to build the new organization. We advertised the role and conducted job interviews. But, I don’t think we are going to open an office in Pittsburgh. ...

... I spend a great deal of time on talent development at H.Bloom: interviewing, hiring and training our folks. And yet, here I was in Pittsburgh, interviewing people for a position that didn’t have a growth path. Our data analysis had uncovered an extraordinary close rate by our sales people when they have an in-person meeting, and it highlighted the fact that the activities employed to generate those in-person meetings were performed remotely. But the data did not take into consideration one of our three founding principles (drawn from John Quincy Adams’ quote): “Create an environment in which team members can dream more, learn more, do more and become more.”

How could we combine these two important goals: create more activities with a dedicated lead-generation force while also continuing to provide an environment in which people can learn and take on more responsibility?

It would be difficult in Pittsburgh. While the remote location would provide a dedicated work force and a lower cost of operations, it would not have the additional resources that exist in our headquarters, including access to the management team and current account executives. And it would not have the ability to see our operations in-person on a daily basis. The absence of these things would be fine if the new office were exclusively a lead-generation center. However, if it were to reflect the H.Bloom ethos of talent development, its remote location would be a real impediment.

To me, the decision to bail on Pittsburgh is smokestack chasing in a world shifting to knowledge production. In the Richard Florida universe (Innovation Economy diverging), Pittsburgh produces talent that is refined in New York. If I'm right about the Innovation Economy converging (see Brazil and India examples above), Pittsburgh is Belo Horizonte or Pune. These are the places where the Talent Economy is diverging. Pittsburgh's remote location is an asset (rent and talent aren't too expensive) instead of a liability (poor talent development).

H.Bloom is stuck in the mesofactual past. Companies that know how to develop talent in the places where it is produced will have a huge edge. These days, every community has a talent attraction/retention strategy. Few, if any, have a talent export strategy.

Thursday, April 18, 2013

Ironic Migration: Exodus From Vancouver

The headline screams, "Hong Kong Chinese leaving Vancouver ‘by the thousands’." That sounds bad, really bad. The caption under the photo does little to rein in the sensationalism:

Mainland Chinese arrivals in Vancouver outstripped those from Hong Kong by 7,872 to 286 in 2012. Indeed, the data show the number of Hong Kong immigrants actually present in the city has been falling sharply. Many seem to be returning home to Hong Kong (above).

Vancouver isn't emptying out. As those from Hong Kong exit, the mainland Chinese arrive. The story is about the increasing cultural tensions between the two group in Richmond.

Why are people from Hong Kong fleeing Vancouver? While attending the Inaugural International Conference of Critical Geography (1997) in Vancouver, I learned about how Hong Kong residents snapping up real estate in British Columbia. At issue was the uncertainty surrounding the end of British rule. Hongcouver was a bizarre form of refugee urbanism. Many of the towers dominating the horizon were empty. The Hong Kong Chinese had no intention of sticking around:

With less than five months to go before the Union Jack is lowered for the last time in Hong Kong, what had seemed to be a vast and transforming settlement of new Canadians has turned out to be something altogether different.

For many Hong Kong Chinese, Vancouver is less a new home than a way station where they can safely keep their families and wealth while they wait to see what becomes of the island.

Of course, leaving Hong Kong was a one-way trip for many exiles, and they are happily settled in Vancouver.

But among the wealthiest immigrants, the only roots many have put down are in the billions of dollars they have pumped into the local economy. And the tentative nature of their residency here has led to friction and resentment.

''Plan A is that when our daughter gets a little older, we will let her go to boarding school and I will go back to Hong Kong,'' Betty said through an interpreter. ''Plan B is for my husband to sell the business and move here.'' But she clearly longed to go home. ''I'm still a Hong Kong lady,'' she said.

Simply put, returning to Hong Kong is now a practical reality. Some might see brain drain. The inward flow of mainland Chinese is a stark reminder of how migration connects two places. It isn't a zero-sum game. Vancouver and Hong Kong are closer.

The urban pairing of Hong Kong-Vancouver is one of the most lucrative in the world. New York-London (i.e. NYLON) is king. Peter Taylor lists other key "city-dyads" such as LA-CHI, HONG-SING, and PAR-FRANK. Taylor measures service industry connectivity. I am thinking in terms of talent exchange. How well might those two urban network geographies map onto each other?

Wednesday, April 17, 2013

Genealogy Of Rust Belt Chic

Some people don't like the term "Rust Belt". Others absolutely hate the word "chic". Please don't call the shifting mesofacts of dying Great Lakes cities "Rust Belt Chic". Given the reaction, a lot of it negative, I decided to blog about how I came up with Rust Belt Chic. Way back in 2006, Shittsburgh was associated with a kind of urban chic. The South Side Slopes celebrated in the New York Times:

"If Pittsburgh's market were on steroids like New York's, this would've happened a long time ago," said one developer, Ernie Sota, referring to the recent spark of interest here. "But Pittsburgh's kind of like an eddy. Things move slowly here."

Mr. Sota, 56, is a prolific local developer who is constructing a series of nine 'green' town houses, called Windom Hill Place, into a lush hillside here. He was drawn to the Slopes by the views and villagelike feel, which, for him, conjure memories of visits to Prague and Budapest.

"It's just kind of quirky, funky and real, more organic, built by Europeans and other immigrants," he explained. "The only other American cities that I find as geographically interesting are maybe San Francisco and Asheville, N.C."

Emphasis added. At the time, I thought of Sota's sense of Pittsburgh place as unique to the city. I'm not from Pittsburgh. I don't live in Pittsburgh. I didn't go to school there. I'm a geographer. Pittsburgh appeals to my sensibilities. Pittsburgh is my Paris.

The geographic scope of Pittsburgh urban chic became Rust Belt Chic upon meeting Phil Kidd and John Slanina in Erie, PA for a Rust Belt Bloggers summit. They introduced me to Youngstown. I was hooked.

Rust Belt Chic always will be ironic. People are attracted to shrinking city hellholes. However, the hellhole part is misunderstood. What I mean is seeing opportunity hiding in a community struggling with survival. There's just something about Youngstown that stirs passion in me. I'm not gawking at ruin porn or glossing over everything that is wrong. I love Rust Belt cities. I love Rust Belt culture. I'm proud to be from the Rust Belt. That's what Rust Belt Chic now means to me. It's personal. It's who I am.

For Pittsburgh, I could sense the tide turning. I see the same transformation taking place in other Rust Belt cities. A pejorative, Rust Belt-ness is an asset. It's a starting point for moving forward, not a finish line or a civic booster campaign. Rust Belt Chic is in the same vein as rasquache:

Rasquache sensibility that has become an important component of Chicana and Chicano art. The word, rasquache can be used in several senses. Its most common use is negative and relates to an attitude that is lower class, impoverished, slapdash and shallow. For this reason Tomás Ybarra Frausto who has written the cogent essay "Rasquachismo: A Chicano Sensibility" begins by stating, "One is never rasquache, it is always someone else, someone of a lower status, who is judged to be outside the demarcators of approved taste and decorum (in Richard Griswold del Castillo and others, Chicano Art: Resistance and Affirmation, 1965-1985. Los Angeles: Wight Gallery, UCLA, 1991, p. 155)

However, as the case of several other terms and concepts (most notably the term and concept Chicano itself, which traditionally had a negative sense), the Chicano movement has turned the traditional notion of rasquache on its head. This important Chicano cultural sensibility has been particularly used to address, by means of a stance of resistance that is humorous and ironic rather than confrontational or hard-edged, the harrassments of external authorities such as the police, the immigration service, government officials, social services bureaucrats, and others. Chicano art that is rasquache usually expresses an underdog, have-not sensibility that is also resourceful and adaptable and makes use of simple materials including found ones, such as Luján's cardboard, glue, and loose sand. 

Rust Belt Chic turns the traditional notion of Rust Belt on its head. The Rust Belt is lower class, impoverished, slapdash, and shallow. At least, that's how it looks from the coast, in New York City. Rust Belt Chic as a place to be is a form of resistance. It's also a hot new trend and a threat to those neighborhoods that make my heart beat faster. From San Antonio:

“I see a lot of progressiveness happening lightning quick now. When I came from Los Angeles as a visitor in 1992, I saw all these magic spaces you could rent for 300 or 400 a month. But I would laugh because there was little or nothing going on. I could get together some event with a friend or two and everybody thought it was so cool and innovative – I was just copping what I had seen in LA.

San Antonio has gotten a lot more popular with Austin and California types discovering what a jewel this town is. Eclectic little restaurants and coffee places and shops growing up along Broadway and throughout Southtown. We’re being seen by a lot more cutting edge people by being open to contemporary signage and logos and creative design. With that, unfortunately, comes more expensive retail spaces and taxes are going up.

There is a charm and real-ness to San Antonio I hope we don’t lose in the process. San Antonio is a non-materialistic town; people aren’t looking at your shoes or what kind of car you drive. When I leave San Antonio, it’s that real-ness that brings me back, every time. I left LA, and I left Austin because I got so tired of the trendy-ness. We’re growing fast, we’re drawing an eclectic market that will support artists. However, there will be a compromise. I don’t want to see it get too uptight.”

–Robert Tatum

Pittsburgh is Rust Belt Chic Paris. San Antonio is Rasquache Paris. When Richey Piiparinen and I were in San Antonio to do fieldwork, we were both struck by the Rust Belt Chic qualities of the city. At the time, we weren't familiar with rasquache. We are now. I see a lot of similarities between Pittsburgh and San Antonio, particularly the way both places are under-appreciated. They enjoy a cult following. Hopefully, neither one will become the next Austin or Portland.

Rasquache is further along, much further, than Rust Belt Chic. In fact, Rust Belt Chic is rasquache:

This called to mind a passage I’d read in Have You Seen Marie? It’s an unusual book for a writer whose work has been at turns bawdy, avant-garde, and politically trenchant. Entirely autobiographical, Marie is a short, illustrated story with a childlike tone about Cisneros searching the streets of King William for a friend’s lost cat while mourning the loss of her mother, who died in 2010. I read Cisneros the passage I’d thought of: “ ‘King William has the off-beat beauty of a rasquache, and this is what’s uniquely gorgeous about San Antonio as a whole.’ ”

She smiled. “Rasquache is when you make or repair things with whatever you have at hand. You don’t go to Home Depot. If you have a hole in your roof, you put a hubcap on there. Or you fix your fence with some rope. That’s rasquache. And then there’s ‘high rasquache,’ which is a term the art critic Tomás Ybarra-Frausto coined. He lives here. Danny Lozano knew high rasquache. He’d serve you Church’s fried chicken on beautiful porcelain and use Lalique crystal for flowers he’d cut from an empty lot.”

“And that was one of the qualities that drew you to King William?”

“Not just King William but San Antonio. A kind of elegance of found things. San Antonio has that soul. It’s not, ‘We gotta copy what we saw in New York.’ No! It’s going to come out of our own idea of what we think is beautiful.” She stared at me as if to make sure I understood. “But that’s also what’s getting lost. People feel like the city’s got to look like someplace else. Our mayor needs a stylist. He thinks he has to dress like a Republican. Pues, he’s Chicano! He’s got this gorgeous indigenous look, and he would look so cool if Agosto Cuellar, one of our local designers, dressed him, or someone like Franco, or Danny, or John Phillip Santos—he dresses totally San Antonio cool. He should do a style column for Texas Monthly.”

I allowed that Santos, who is a regular contributor to this magazine, does have singular style (the last time I saw him, in December, he was wearing a horsehair charro tie and ringneck python boots) but joked that there might be a preponderance of leather pants in his fashion advice. Cisneros waved the joke aside.

“Our problem is that we can’t recognize or celebrate what we have. We have this inferiority complex in Texas that we have to look elsewhere. Well, who knows more about inferiority than Chicanos? We grew up being ashamed because the history that is taught to us makes us ashamed. The whole colonial experience surrounding the Alamo is meant to make you feel ashamed.”

In writer Sandra Cisneros, I sense a kindred spirit. As a Rust Belt native, Erie no less, I felt ashamed. I come from failure. I have no culture worth celebrating. Anywhere else must be better. That's why we leave. Brain drain.

I, too, was drawn to King William while in San Antonio. It is New Orleans (creole) and Pittsburgh (parochial). It's like nothing I've experienced before. I get that boom town vibe of a place that is cool before anyone knows it is cool:

Russell has seen what’s coming before. “When the buzz starts – when San Antonio embraces the brain gain, goes in the right direction on the talent economy and hipsters start to get wise to the neighborhood assets that are here – once the hipsters get wind of it – you’ll have to beat them away with a stick,” he said.
I think that's the concern of Robert Tatum. About a year ago, such a notion was unfathomable to Cleveland. What will the compromise with gentrification look like in Ohio City? Will somebody utter the words, "He dresses totally Cleveland cool"?

Danny Lozano knew high rasquache. He’d serve you Church’s fried chicken on beautiful porcelain and use Lalique crystal for flowers he’d cut from an empty lot.

Rust Belt Chic is served.

Monday, April 15, 2013

Demographic Decline And Immigration

The Rust Belt is dying. Immigrants are the silver bullet. The Portland malaise spreads. Brazil with the anecdote:

“In a globalized world, we need not only the flow of goods and services but also the flow of minds,” Secretary of Strategic Affairs Ricardo Paes de Barros said. “We’re not after population; we’re after talent and human capital.”

In a globalized world, reciprocity rules. The balance of trade isn't as important as the total exchange. Cleveland wants immigrants to bolster population. Cleveland should want immigrants for economic development. Cleveland should want to export talent:

Swedish Foreign Affairs Minister Carl Bildt believes it’s essential to embrace globalization. “I want to have more of the world in Sweden and more of Sweden in the world,” he told me. Sweden isn’t afraid of brain drain, he said. Instead, “we encourage our young people to study abroad and to work abroad.” Many return, but even those who don’t help to connect Sweden to what Mr. Bildt calls “the global flow of ideas.”

There's that word again, "flow". Flow of ideas. Flow of minds. Flow of capital. These flows are generally seen as the cause of Rust Belt demographic decline. As the global economy flowed away from the Industrial Heartland, so did the people. If you don't believe me, then just look at the population numbers.

The Rust Belt is afraid of global flows, globalization. The majority of efforts work against these flows. The desire for more immigrants is an exception, sort of. Like wishing for Big Steel to make a comeback, the Rust Belt remembers being a destination for the foreign born. Immigrants brought both entrepreneurial spirit and a tradition of having a lot of babies. Demographic convergence is putting the kibosh on the latter boom. Birth rates aren't what they used to be.

Population isn't the metric that it used to be, way back in 1910. Migration isn't what it used be. The wealthier and better educated dominate the transnational flows. Quality trumps quantity. Immigrants can bring an economic development spark, if you know how to leverage the flow. Toronto doesn't know how to leverage immigration:

Out of 24 major world cities, from London to New York, Paris to Tokyo, Toronto’s population has the highest proportion of immigrants – 46 per cent of residents are foreign born. But not enough new arrivals are highly skilled, and those that are tend to be underappreciated, according to the 2013 Scorecard on Prosperity.

Among Toronto’s new immigrant population, 55 per cent have a university degree, good for just seventh place among a dozen North American cities, and behind Calgary, Vancouver, Montreal and Halifax. Making matters worse, Toronto fails to maximize its new immigrants’ skills, with 40 per cent making “a downward shift in their career” when they arrive. The cost to Toronto’s economy is between $1.5-billion and $2-billion each year, the report says. At the same time, Canada is accepting near-record levels of temporary foreign workers for jobs that employers say they cannot fill with local talent, with much of the growth in lower-skill jobs.

“When you have that kind of competition at the bottom of a wage pool, it actually has a downward effect on wages just above it,” said Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives. “So it will affect those economic immigrants.

Immigrants in and of themselves aren't a panacea. Talent has to be put to good use. Any sort of push for more immigration best keep Toronto and Portland in mind.

Sunday, April 14, 2013

Decoupling Density From Innovation

First, a review of the claims that Tony Hsieh and Zappos make about density:


When people live closely with one another, the opportunities to interact serendipitously increase which increases the sharing of knowledge, ideas, and improves productivity.


Urban residential density of at least 100 people per acre combined with ground-level gathering places such as cafes, interesting small businesses, and public spaces increases economic output and happiness. ...


Inspired by the book Triumph of the City and thinkers like Richard Florida, we aim to create a dense urban core with residential density of at least 100 people per acre and ample ground level spaces to gather. Interlaced in every project we envision is a respect for the environment, opportunities to connect with nature, and connectivity infrastructure that reduces the need to use a car.

Our primary goal is to help to create an environment that encourages serendipity…the opportunity to unexpectedly collide with people from different backgrounds. Serendipity encourages people to connect with each other, exchange ideas, and accelerates learning. This means that a community must remain accessible to people from all economic backgrounds.

A truly great city must not only be financially sustainable, but also environmentally sustainable. With that in mind, we’re planning green roofs, urban gardens and parks to enrich the lives of the passionate people who call Downtown home.

Connectivity is key to sustaining a vibrant community, so we’re partnering with the Regional Transportation Commission and others to make it easier to walk, bike, and take public transit—building a community where people can live, work, and play without needing a car.

Emphasis added. Greater density will improve productivity and enhance innovation. Thus, Las Vegas will be financially sustainable. As for the issue of environmental sustainability, there are placemaking and transit oriented development. Note the disconnect between greater density and environmental sustainability.

Now turn from Las Vegas to San Francisco:

A visit to San Francisco over the past few days really crystalized in my head the important distinction between increased efficiency in the allocation of resources and fundamental innovation. Either can produce economic growth, but in the long-term it's the latter that matters most of all. But while conventional economics has a lot to teach us about efficiency I don't think economists really know much about innovation and they end up doing the world a disservice—and ultimately discrediting their own mastery of the subject they really do know—by confusing the two.

San Francisco is a hotbed of inefficiency and what any economically literate person would recognize as bad public policy. In the Tenderloin District, for example, you have huge swathes of what's got to be some of the most valuable land in the country occupied by low-income individuals living in dilapidated structures. A more sensible policy paradigm would allow the replacement of those structures by bigger, nicer, more modern, denser structures and by doing so would unleash a quantity of financial wealth that's more than adequate to pay off the beneficiaries of current rent control policies. The much bigger and denser San Francisco of the future would make California in particular and the United States in general a much more prosperous place by using market forces to better allocate scarce land.

That said, while San Francisco is a hotbed of inefficiency it's also a hotbed of real innovation. The corridor that starts in San Francisco and runs down to San Jose is the premiere cluster of technological innovation in the world and has been for some time. Digital technology has given us tools that are impressive in their own right, and its influence is spreading wide day by day. And in the long run, this is where prosperity comes from. New technologies are developed and diffused and they create high living standards wherever they go.

Emphasis added. Well said, Matthew Yglesias. Greater density promotes the more efficient allocation of urban land. The result is more prosperity. Along those lines, an economist such as Matthew Kahn might highlight how greater density promotes environmental sustainability. Without a doubt, there are all kinds of benefits from greater density.

We confuse efficiency and innovation, thus confusing the discussion about density and sprawl. While economists may struggle to understand innovation, geographers do not. How does knowledge diffuse across space? From a geographic perspective, density doesn't have a lot to say on that score. Migration does. See, "Networking Regionalised Innovative Labour Markets (Regions and Cities)."

Innovation is spiky. Geography matters. From economists at the World Intellectual Property Organization:

The American advantage is even greater when only migrants from countries outside the Organization for Economic Cooperation and Development are accounted for, reflecting sizeable inflows into America by skilled Indian and Chinese inventors, the report said.

The findings help dilute concerns expressed by such economists as Robert Gordon of Northwestern University that the U.S. is approaching a period of weak economic growth that requires immigration of high-skilled workers to avoid.

At a time when American universities have warned it’s getting harder for students to secure visas, the study says in its conclusion that “restrictive immigration policies may have some negative effects on the inflows of skilled workers.”

The pool of talent is probably growing too. Data from the United Nations shows the estimated migrant population worldwide was 213 million in 2010, a 58 percent increase from 1990. The migration rate of inventors reached as much as 9 percent in the 2000s, the economists said.

That shows migration is a “critical pillar of the ongoing process of globalization,” they said.

Emphasis added. Migration connects two places, two cities. That network is how "new technologies are developed and diffused and they create high living standards wherever they go." One doesn't encourage greater density in South Asian cities to address poverty. One seeks better connectivity between cities.

Concerning innovation, Downtown Las Vegas doesn't need greater density. It needs better connectivity with innovative labor markets. San Francisco ("a hotbed of inefficiency") has that, in spades. The obsession with the sprawl problem is informing bad urban policy.

Saturday, April 13, 2013

Toronto’s Portland Problem

Portland's well-educated workforce is an economic under-performer. Your region may do a better job of attracting/retaining people with college degrees. However, an employee with a bachelor's is not necessarily more productive and innovative. The Talent Dividend is a myth. Trouble in Toronto:

With so many people already underemployed, it is far from clear where a new wave of talent would fit. The government funding infusions that drove a postsecondary enrollment boom for the last decade are drying up quickly, and education leaders increasingly acknowledge that simply flooding the job market with graduates without helping steer them to opportunities is no recipe for success.

I don’t believe in just saying that more degrees equals more productivity,” said Robert Luke, assistant vice-president of research and innovation at George Brown College. “Education must be linked to the economy, right?” ...

... Many people still think talk of growing Toronto’s degree-holding class is putting the cart before the horse.

“If you’re hiring someone with a BA or a master’s degree or a PhD, they need to have the plant and equipment, they need the computers to make them productive. And it’s not clear that Canadian firms are investing,” Dr. Sweetman said. That’s where industry clusters might help steer the way. Boston’s booming productivity revolves around an education cluster with a vast number of universities, colleges and R&D enterprises that helped nurture a concentration of innovative business, information and medical technology ventures paying wages well ahead of U.S. averages.

Closer to home, Mr. Drummond suggests it is entirely reasonable to suggest “Toronto should be the world centre for the study and practice of financial sector risk,” or a number of other finance niches, but is missing the collective vision to make it a reality. “There’s a lack of confidence, as usual, in Canada, there’s a lack of ambition,” he said. “And yeah, there would be, then, a lack of skilled talent to fill that. But having 10,000 people with PhDs in financial sector risk walking around Bay Street is not going to do an awful lot on its own.”

Emphasis added. The Portland Problem is thinking that more degrees do equal more productivity. All a city has to do is attract/retain talent. Then, sit back and watch economic development happen. Toronto fell hard for this hollow strategy. Buyer's remorse is settling in.

"[S]imply flooding the job market with graduates without helping steer them to opportunities is no recipe for success." Yet this is the logic behind plugging the brain drain. In and of itself, retaining talent fixes nothing. If anything, it makes the economy worse. The Talent Dividend is a boondoggle.

Friday, April 12, 2013

Pittsburgh And Migration Mesofacts

I stumbled over the term "mesofacts" about two-years ago. Samuel Arbesman is the person behind the concept. He wrote a book about it, "The Half-Life of Facts." The intersection between mesofacts and Pittsburgh:

Or, imagine you are considering relocating to another city. Not recognizing the slow change in the economic fortunes of various metropolitan areas, you immediately dismiss certain cities. For example, Pittsburgh, a city in the core of the historic Rust Belt of the United States, was for a long time considered to be something of a city to avoid. But recently, its economic fortunes have changed, swapping steel mills for technology, with its job growth ranked sixth in the entire United States.

These slow-changing facts are what I term “mesofacts.” Mesofacts are the facts that change neither too quickly nor too slowly, that lie in this difficult-to-comprehend middle, or meso-, scale. Often, we learn these in school when young and hold onto them, even after they change. For example, if, as a baby boomer, you learned high school chemistry in 1970, and then, as we all are apt to do, did not take care to brush up on your chemistry periodically, you would not realize that there are 12 new elements in the Periodic Table. Over a tenth of the elements have been discovered since you graduated high school! While this might not affect your daily life, it is astonishing and a bit humbling.

Emphasis added. No one wants to move to Shittsburgh. It's a shrinking city in the dying Rust Belt. Southwestern PA is a region of inbred hilljacks who have been unemployed for three decades. Those are the mesofacts. Mesofacts impact migration. See Ann Arbor and the long shadow of Detroit.

The concept of mesofacts is useful. I used it to coin the term "ironic migration" as an indicator of things to come. Migration numbers are a notoriously lagging indicator. Frans Willekens:

Why is it not possible to do long-term [migration] forecasts?

The data from statistical offices are not suitable for long-term migration forecasts. The reason is that these data document the outcome of migration flows – not the reasons behind them. Predictions on the basis of past behaviour are reliable when the system is stable, i.e. when conditions do not change and people respond to these conditions in the same way as people in the past. But conditions change, for instance when regulatory measures are taken to prevent migration flows, or events occur, like political changes in the country or natural disasters.

When we read a story about the exodus from 1980s Shittsburgh, we project that past into Pittsburgh's future. The caricature on our mental maps screams, "Beware of sea serpents!"


U-Haul National Migration Trend Report that reflects the nation’s top growth areas for families that moved during 2012. The U-Haul 2012 Top U.S. Growth Cities Report indicates that for cities with more than 5,000 families moving, Pittsburgh takes the No. 1 spot with the highest percentage of growth, at 9.04 percent.

“The report, reflective of growth patterns in the United States during 2012, was compiled based on nationwide trends in cities of all sizes and reflects communities with more than 5,000 families moving in or out of the area,” stated John “J.T.” Taylor, president, U-Haul International, Inc. “Growth cities were then determined by calculating the percentage of inbound moves vs. outbound moves for each area.”

The U-Haul 2012 Top U.S. Growth Cities Report was compiled from more than 1.6 million U-Haul one-way truck transactions occurring during a recent 12-month period.

Emphasis added. Because of mesofacts, Pittsburgh as the market with the highest percentage of growth for inmigration is ironic. People aren't fleeing Pittsburgh. They are moving there in droves. That last sentence is hyperbole. But you get the point.

Pittsburgh has undergone a mesofact makeover. The old story is so 1980s, legwarmers, and Cold War. The U-Haul press release will reinforce the trend, a virtuous circle. Migration will beget more migration, current economic picture be damned. See Portland.

Thursday, April 11, 2013

Talent Migration And Placemaking

This post is in response to a Jon Geeting post at Keystone Politics. In general, my musings about density are misunderstood. Talent is agglomerating in cities. More precisely, talent is agglomerating in urban places of employment. The workers benefiting from Manhattan density can and do reside in a Connecticut neighborhood. When discussing the positive externalities from greater density, the matter is where the jobs are located. Talent density is rather beside the point.

I go even further than the conventional thinking about the relationship between economic geography of employment and greater density. I argue that migration matters more. The magic is migration. Without migration, knowledge doesn't diffuse. If you pack in one million people who all know the same things, then density won't do much of anything save cause problems.

Density is an effect, not a cause. Density needs to managed. The assimilation of outsiders (i.e. migrants) should be facilitated  That's where planners and placemaking come in. Employing placemaking to attract talent and achieve greater densities has the cause and effect backwards.

As Peter Taylor exclaims, cities are extraordinary. "Urbanism and human development" are positively linked. That's an about face from the 1960s and 1970s when urbanism and human development were at odds. See my post from yesterday, which Geeting references. Now that cities are seen as solutions instead of problems, how do we best deal with that attraction? The demand to be a part of an urban economy comes with great costs as well as benefits. "Pro-density land use planning" might be one of the solutions to the problems associated with an increasingly urban world.

Ironic Migration: Talent Gravity Of New York

I've spent a lot of time looking at the migration patterns for cities such as Pittsburgh, Cleveland, and San Antonio. The obsession with population numbers and net migration glosses over a lot of economic development. The standard metrics are outdated, not all that useful. Consider the contrast between Manhattan and the Bronx:

New migration patterns identified by the Census’s 2006-2010 American Community Survey offer revealing insights into the ebb and flow of New York’s population. In any given year during that period, more people settled in Manhattan from Africa than from Puerto Rico.

Brooklyn, the Bronx, Queens, Westchester, Fairfield and Los Angeles were among the counties that recorded a net gain in residents from Manhattan. Nassau; Suffolk; Bergen; Washington, D.C.; and Cook County, Ill., were among the losers.

The Bronx registered a net gain in population from every other borough, but exported more people to suburban Westchester, Orange, Dutchess, Rockland, Hudson and Bergen Counties. More people from the Bronx moved to Berks County in southeastern Pennsylvania than to either Fairfield or Suffolk.

In the zero-sum migration game, the Bronx is gaining Manhattan brains. In the globalization game, see yesterday's post, Manhattan is the clear winner. In terms of talent churn, the Bronx is local and Manhattan is global. The net migration numbers are irrelevant.

I'm in awe of New York's talent gravity. Looking at the migration through the lens of geography, I'm really in awe of Manhattan's talent gravity. That would likely hold true at an even smaller scale, the neighborhood. Neighborhoods are where you measure the impact of globalization and talent migration.

Wednesday, April 10, 2013

Sprawl And Density

Do you want more sprawl or greater density? If you are in the former camp, then Joel Kotkin is your champion. As for the latter, all hail Richard Florida. My recent run of posts critiquing the density cult means I want more sprawl. The blow-back from my screed about Vancouverism:

Embedded in the argument is also the assumption that not allowing densification would protect the vulnerable.   It’s all so much more complicated, dammit.

Suburban sprawl has its own income disparity issues. You have extremely rich and poor neighborhoods, sometimes side-by-side. As in the city, many people are stuck in poverty. Nowhere embedded in my argument is the assumption that sprawl would protect the vulnerable.

The problem, as I see it, is the normative embrace of certain land use patterns. Sprawl is bad. Density is good. You are either with Kotkin or Florida. Choose a side, now.

The move to suburbs was, still is for many in the lower income brackets, an aspirational relocation. The house with a yard was, still is, a symbol of success. On the other hand, the city was a shithole. You would do anything you could to get out. The result was sprawl and a host of issues to be managed.

If you think sprawl is the primary problem planners face today, then you need to read Peter Taylor's new book, "Extraordinary Cities." I dived in last night. One paragraph I want to share:

The six intellectual discoveries I detail below are all positive in nature: cities are found to be relevant and useful for the discoverers' wants or needs. But cities are not always seen in a positive light. In the late 1960s and 1970s the word most likely to be associated with cities was 'crisis', both political and economic. From the protests and riots of the 1960s to the difficult fiscal states of cities in the late 1970s, cities were where society's ills were most visible. Thus it is hardly surprising they were viewed negatively; cities equal problems. Go forward a couple of decades and it is all change; cities are seen as solutions. Thus the discoveries described below are recent and current celebrations of cities.

Emphasis added. In the late 1960s and 1970s, cities were shitholes. Today, the urban core is the new suburb. Brownfields are the new greenfields. Moving downtown is aspriational, a symbol of success. The result is greater densities and a host of issues to be managed. Gentrification, not sprawl, is the primary problem planners face today.

The paradigmatic shift that Taylor describes is obvious to any student of international political economy (IPE). When trying to understand a problem, seek out the macroeconomic forces shaping the urban geography. Taylor leans on Immanuel Wallerstein for his theoretical lens. I lean on Peter Taylor and Colin Flint. I wish more planners had a better understanding of IPE and globalization.

Both Kotkin and Florida are raising issues with densification. They are describing the same problem. The rent is too damn high and pricing people out of the city. Cities are wonderful, if you can afford it. That's the great challenge of our time, not sprawl.

Tuesday, April 09, 2013

Field Of Dreams Portland

As an undergraduate at the University of Vermont, I minored in Russian Studies. One of my lasting impressions from that experience is reading a short story, "Oblomov's Dream. An Episode from an Unfinished Novel." Oblomov was the prototypical slacker, albeit much too old to star opposite a mid-1990s  Winona Ryder. The oblomovshchina of Portland, Oregon:

The Portland metro area's young college-educated white men are slackers when it comes to logging hours on the job, and that's one reason people here collectively earn $2.8 billion less a year than the national average. ...

... The study seeks to explain why the metro area's per-capita income has fallen 5 percent below the national average as of 2010, down from 5 percent above it in 1997.

It finds that metro Portlanders tend to choose majors, careers and work hours that lead to low pay. It portrays greater Portland as populated by humanities majors, designers, artists and teachers who work and earn less than in the vast majority of metropolitan areas.

Thems fightin' words. The barbs aside, Portland does have a problem. The region attracts talent for the sake of attracting talent. All that clever placemaking isn't paying off in the realm of economic development. People will take less pay to live in a cool place.

Cool is not an economic development strategy. Portland is a beautiful city. It's lousy at developing people. The focus on urban amenities is great for real estate developers. That's about the extent of the benefits. In exchange, you get gentrification and depressed wages.See Brooklyn and 15 interns crammed into a closet, all dependent on one roommate's trust fund.

But New York City develops people, perhaps better than any place on earth. The labor market is thick. No such ROI for the oblomovshchina in Portland. Not that they care. Economic opportunity isn't the draw.

PDX doesn't have to be NYC in order to thrive economically. In fact, throngs of slackers may not be such a bad thing after all. Austin and the Goldilocks Hypothesis:

Lets create a different standard to measure our cities along a spectrum of intensity, because I think that’s where they key differences between Austin and SF are.

Start at one end with Portland, “the city where young people go to retire,” then place Austin somewhere right in the middle, and then have San Francisco be on the other end, the super intense end.

Portland is a city that I cannot spend more than a few days a time in. I can’t stay too long because I know if I stayed a day too long in Portland, I’d suddenly be happy to embrace the slow pace of the city and stop working my ass off. I’d end up getting sleeping real late every day, drink some coffee, maybe write some poetry on my porch (or not), and then find a part time job selling cigars like I had in college.

Emphasis added. Point taken. From now on, I'll distinguish between slackers and the oblomovshchina. Austin is a college town, a place of personal economic development. Portland is a dream. Build it and they will come ... and do nothing.

Monday, April 08, 2013

Talent Migration As Leading Indicator

Migration is a lagging indicator. A bad regional economy gets worse, pushing people out. As for the draw, mesofacts take over. You avoid the Rust Belt, minding a recession some 30-years in the past. Despite the high unemployment, Charlotte is attractive. You have many friends and family who have made the move. The entire relocation story is predictable, a cliché.

Ironic migration is a leading indicator. In a sea of shrinking population, one can see the early impact of economic globalization on Cleveland's urban core if you know where to look. The growth of the 25 to 34-year old cohort in the inner-ring neighborhoods is unexpected. Whole Foods is wise to this trend, opening stores in struggling neighborhoods as a signal for rapid gentrification. And boom goes East Liberty in Pittsburgh.

Ironic migration in the world of higher education internationalization:

Which European country sends more students to U.S. universities than any other? Is it Britain, which shares a common language and a reverence for ancient collegiate campuses? Or Germany, whose great research universities did so much to shape U.S. higher education?

The answer, it turns out, is neither. Though Britain sent more than 9,000 students to the United States last year — more than ever before — and Germany sent about 9,300, both lagged behind Turkey, which has been sending more than 10,000 students a year to the United States since 2000.

The numbers have fluctuated, with a sharp falloff after the Sept. 11, 2001, terrorist attacks, when the United States was seen as a less desirable destination, and when Turkey was mired in its own economic crisis. But according to Open Doors, a census of international student movement issued by the Institute for International Education in New York, Turkey has long been the only European country to figure regularly in the top 10 sending nations, behind mainstays like China, India, Canada and Mexico. In 2012, Turkey sent nearly 12,000 students to the United States.

Unexpected flow? Roger that. This talent migration links the economic fortunes of Turkey and the United States.Don't call it "brain drain" or even "brain circulation". It's migration, a form of economic development.

If you are looking for an emerging market to bet on, the wealth of Turkish talent studying in the United States makes Istanbul a smart play. This ironic migration is predictive of opportunities most people are overlooking. Boston is cornering the market on Brazil. Which US city dominates the Turkish talent trade? I'll have to take some time and peruse the Open Doors data.