Friday, December 26, 2014

The Mythology of Uniqueness

Don't blame individual Rust Belt cities for their economic decline.

Theme: Geographic stereotypes.

Even in 1961, the divergence between the paths of New York and Pittsburgh was clear. Between 1940 and 1960, New York City’s population grew by 4.3 percent. The New York metropolitan area expanded far more robustly. Pittsburgh’s population had shrunk by 11 percent over the same two decades. Mr. Chinitz’s article tried to make sense of the Steel City’s slowdown, even before the full extent of the city’s decline was made manifest.
Mr. Chinitz emphasized the importance of industrial diversity and competition. He noted that “Pittsburgh is much more specialized” than any large metropolitan area except Detroit. Moreover, Pittsburgh’s dominant industry, primary metals, was dominated by a small number of large companies. By contrast, New York was a diverse place whose dominant sector, the garment industry, had long been marked by small, independent operators. As Mr. Chinitz wrote, “The average establishment in the apparel industry, for example, has one-sixth as many employees as the average establishment in primary metals.”

I'm taking an academic approach to this passage. Glaeser, via Benjamin Chinitz, is making a case for regional agency in economic development. If Pittsburgh listened to Chinitz (or Glaeser), then its economy wouldn't suck. Such a perspective denies the influence of structural forces, which would seem to have the upper hand given the ubiquity of Rust Belt malaise. In the social sciences, structure vs. agency is an old debate. I'm a structuralist, contending that global forces matter more than local policies. Glaeser is a fan of agency. The right set of policies would beget a strong Pittsburgh economy, and thus a growing population.

Which is more to blame for dying Rust Belt cities, structure or agency?

Monday, December 15, 2014

Where Innovation Thrives

There is no geography of innovation at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "What Still Makes Silicon Valley So Special."

Other Links: 1. "The Urban Tech Revolution."
2. "The Question is Moot."
3. "How Competition Saved New York."
4. "Searching for Silicon Valley in the Rust Belt: The Evolution of Knowledge Networks in Akron and Rochester."
5. "Cultural diversity and entrepreneurship: Evidence from England and Wales."
6. "Diversity Cult."

Postscript: Dense cities are not innately more innovative geographies. New ideas don't necessarily love old buildings. A lot of folklore out there dressed up as academic analysis resulting in lazy and lousy economic development policy.

Friday, December 05, 2014

Why Attracting Young, College-Educated Migrants Hurts Sun Belt Cities

At Pacific Standard magazine, how attracting and retaining college-educated young adults exacerbates economic inequality.

Theme: Economic development and migration.

Subject Article: "Jobs for young Southerners: Thanks for nothing."

Other Links: 1. "Burgh Diaspora."
2. "Migration as a Measure of Economic Health."
3. "We Got More Educated, We Are Better Off... Right? An Analysis of Regional Conversion of Bachelors Degree Attainment into Positive Labor Market Outcomes."
4. "Why It's So Hard for Millennials to Find a Place to Live and Work."
5. "Voting with Your Feet: Aaron Renn's New Donut."

Postscript: Over the past few months, I've been researching Pittsburgh's economic turnaround. What caused it? One important lesson is the difference between consuming human capital and putting human capital to work. Attracting college-educated migrants in and of itself seems to have a negative impact on a region. Jobs don't follow people. But where people follow jobs that require higher education, positive labor market incomes tend to appear. The zero-sum game of amassing the most educated workforce doesn't promote economic development. What does is research and development activities at universities and colleges.

Wednesday, December 03, 2014

Migration as a Measure of Economic Health

Asheville, North Carolina cursed with attracting young, college-educated migrants at Pacific Standard magazine.

Theme: Economic development and migration.

Subject Article: "Striking out with college grads."

Other Links: 1. "Dallas Losing at the Competition of Cities."
2. "Estimating the social return to higher education:evidence from longitudinal and repeated cross-sectional data."
3. "The Effect of College Location on Migration of College-Educated Labor."
4. "Do Colleges and Universities Increase Their Region's Human Capital?"
5. "We Got More Educated, We Are Better Off...Right?"
6. "An Exploration of Factors Influencing the Conversion of Bachelor’s Degree Attainment into a Better Labor Market."

Postscript: Why this analysis matters:

In 2008, Louisville set out to boost its college-educated workforce — setting the goal for half its working-age adults to hold associate or bachelor's degrees by 2020. ...

... "Louisville is not gaining enough ground toward the bachelor's degree goal," according to the latest progress report, which comes amid rising tuition costs, an improving economy and population growth that pushes the total degrees needed to 59,000.

Although high-school graduation and college-readiness rates are improving, enrollments at local colleges and universities have fallen by 11 percent since 2010, the report found, particularly among adults and African Americans.

Louisville wants to raise the college educational attainment rate of its workforce. The region is going about the task in the wrong way. First, increasing the number of local college graduates does not appear to be an effective way to give the rate a boost. Second, even if the effort was successful, Louisville probably wouldn't see positive labor market outcomes.

Wednesday, November 26, 2014

The Geography of Real Estate Markets Is Shifting Under Our Feet

Real estate markets where occupancy is optional at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "New Era estate scandal: families at the mercy of international speculators. Homes across the capital have turned into international assets and their residents now merely live in financial instruments."

Other Links: 1. "Vancouver housing prices tied to China’s economic growth: No real estate downturn in sight, Conference Board economist says."
2. "The brave world of super-commuters."
3. "Why New Yorkers Are Moving to Philly and What It Means for Our City."

Postscript: Greater Greater NYC is pulling up a bunch of cities in its orbit. The same can't be said for Greater Greater London:

Britain’s cities are falling either side of a divide. A few—mainly the big ones—are growing at the core and faltering towards the edge. London’s highest levels of unemployment used to be in the inner city borough of Tower Hamlets, now they’re in the suburbs of Greater London: Barking and Dagenham and Newham. Between 1998 and 2008, Birmingham’s private sector job numbers stayed flat but moved inward (they grew 27% at the centre). But most of Britain’s towns and cities—places like Luton, Wakefield, Sunderland—are doing precisely the opposite: the action is on the outskirts, the centres ever more deserted. Fully 22% of Sheffield’s central business units stand empty; in 2011 McDonald’s left Rochdale centre (though not its edges). If London is getting more like Paris, these towns increasingly resemble America’s sprawling cities, such as Cleveland and Houston.

What gives? Just spitballing, the NYC effect on Philly might be the equivalent of the London effect on European cities outside of the UK. Paris is like a suburb of London given the very functional commute. Thus, UK cities further down the urban hierarchy don't see any trickle down from London's powerful agglomeration economy.

Tuesday, November 25, 2014

The Geography of Innovation, or, Why Almost All Japanese People Hate Root Beer

For innovation, migration trumps density at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Downtown and out? The truth about Tony Hsieh’s $350m Las Vegas project."

Other Links: 1. "Why almost all Japanese people hate root beer."
2. "Our Japanese reporter visits an American sushi restaurant in Japan."

Postscript: The folly of engineering serendipity:

Between 1997 and 2012, Jussieu’s campus in Paris’s Left Bank reshuffled its labs’ locations five times due to ongoing asbestos removal, giving the faculty no control and little warning of where they would end up. An MIT professor named Christian Catalini later catalogued the 55,000 scientific papers they published during this time and mapped the authors’ locations across more than a hundred labs. Instead of having their life’s work disrupted, Jussieu’s researchers were three to five times more likely to collaborate with their new odd-couple neighbors than their old colleagues, did so nearly four to six times more often, and produced better work because of it (as measured by citations).

Forced to be nomads, the researchers did better work. The magic of cities are new odd-couple neighbors, not great density.

Thursday, November 20, 2014

Brain Drain Is Economic Development

What I mean when I write "brain drain is economic development" at Pacific Standard magazine.

Theme: Migration and economic development.

Subject Article: "A Cuban Brain Drain, Courtesy of the U.S."

Other Links: 1. "Big cities are dominating the recovery, leaving the rest of America behind."
2. "Cuba’s Talent Export Strategy."
3. "Dublin: the tiger’s roaring tech hub."
4. "Ireland to phase out tax break used by technology firms."
5. "Innovation nation: Show us the money before it's too late."
6. "A Global Role for Universities: Helping Firms Boost Exports."
7. "Era of Dying Places."

Postscript: Brain drain is a firm concern. For example, consider workforce development:

Ireland has been ranked in 6th place among 60 countries in terms of its ability to develop, attract and retain talent for companies. It is also placed in 13th spot in a separate poll on the best places in the world to do business. ... 
... “The best-ranked countries have a balanced approach between their commitment to education, investment in developing local talent, and their ability to attract overseas talent,” said Prof Arturo Bris, director of the IMD World Competitiveness Center. “Countries with smart talent strategies are also highly agile in developing policies that improve their talent pipeline.”

For talent, migration is brain gain. For companies, migration is a loss of intellectual property. Workforce development programs share the view of companies. Talent is developed for the benefit of local companies. In this sense, the interests of business are at odds with the interests of talent. Countries that are pro-business are necessarily anti-talent. Workforce development is nothing more than a public subsidy for private businesses. That's a rotten policy.

Tuesday, November 18, 2014

The Economic Geography of Workforce Development

Brain drain is economic development at Pacific Standard magazine.

Theme: Brain drain boondoggles.

Subject Article: "Retaining Recent College Graduates in Boston: Is There a Brain Drain?"

Other Links: 1. "Location, location, location! Why space matters in demography and why we should care."
2. "Keeping the best minds local."
3. "Income per Natural: Measuring Development as if People Mattered More Than Places."

Postscript: Economist Edward Glaeser wrote, "Retaining talent requires us to fight the regulations that make entrepreneurship too rare and housing too expensive." He's wrong. If you disagree, then read this. I accept Glaeser's conclusion that land use regulation drives up real estate prices. But when Glaeser infers migration patterns from his analysis, he looks foolish. He's over-interpreting his results. I wouldn't care save that others take such statements as policy gospel. Where's the proof that fighting regulation that makes housing too expensive retains talent? The evidence (you know, actual migration research) says otherwise. If you find evidence linking zoning regulations to migration, please share. That would be useful regarding gentrification. Citing Glaeser or other similar work as proof that zoning deregulation would help mitigate gentrification is ignorant.

Monday, November 17, 2014

Concerning Upward Mobility, Geography Is Destiny

At Pacific Standard magazine, the ability to choose one's neighborhood determines the economic destiny of your children.

Theme: Geography of upward mobility.

Subject Article: "The Neighborhood Effect: Localities and Upward Mobility."

Postscript: Migration (i.e. geographic mobility) begets upward mobility:

“My interpretation of these results leads to a focus on pupil aspiration, ambition and engagement. There is nothing inherently different in the ability of pupils from different ethnic backgrounds, but the children of relatively recent immigrants typically have greater hopes and expectations of education, and are, on average, more likely to be engaged with their school work.

“This is not by chance of course. A key point about London is its attraction to migrants and those aspiring to a better life.”

The good professor's interpretation is backed up by this research on birthplace diversity.

Thursday, November 13, 2014

France Is Dying

At Pacific Standard magazine, France can't be dying because France isn't real.

Theme: Brain drain.

Subject Article: "Émigré Matters: Re-Examining France's Brain Drain."

Other Links: 1. "Review: Graham Robb, 'The Discovery of France: A Historical Geography from the Revolution to the first World War'(New York: W. W. Norton and Co., 2007), 358pp. "
2. "Rulers of the territory: Andy Beckett finds out how modern America was built with lengths of metal chain in Andro Linklater's Measuring America."
3. "Bar Mleczny."
4. "Beyond 'Border Guard Bob': Marketing Pittsburgh means much more than just retaining 'knowledge workers,' writes Christopher Briem. We also have to attract them from other places."
5. "Theatre Bizarre casts dark, magical spell at Masonic."
6. "Critical Geopolitics: The Politics of Writing Global Space."

Postscript: Brain drain reconsidered:

“For a city like Philadelphia, which needs to raise the college attainment of its residents to remain competitive and fulfill employer demand, having so many college students in our own backyard is a great advantage and a great asset to leverage,” says Deborah Diamond, Campus Philly president. “At the same time, as the Boston paper accurately points out, the mission and goals of higher eds is to educate students for the world, not the just local labor market, and this is especially true in regions like Philadelphia and Boston where our higher eds draw students from around the world.”

Diamond states the university mission diplomatically. No place can lay claim to any talent. Places don't own people. As long as people develop, what happens to a place shouldn't matter.

Wednesday, November 12, 2014

When Increasing Housing Supply Won’t Lower Rent

The rents are too damn low, thus constraining new housing construction at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Low rents in rural Minnesota stymie new housing."

Other Links: 1. "Does Population Change Drive Demand for Housing?"
2. "5 takes on the rural housing problem in Minnesota."
3. "The Rent Gap."

Postscript: As I hope this post demonstrates, real estate markets are a lot more complicated than the usual platitudes about unleashing supply as a solution to housing affordability problems. Even within so-called rural markets, there is substantial heterogeneity. For example:

Rural counties with a large proportion of "creative-class" workers have tended to recover more quickly from the recession. But "amenity-rich" areas near national parks and other natural areas aren’t doing nearly as well, even though they boomed in the 1990s. ...

... “For the amenity creative class counties, the added human capital endowment provided by workers engaged in skilled, creative activities does not appear to have hastened job growth in recovery,” Wojan writes.

So what’s going on with the amenity-rich counties?

Creative-class counties that don’t have big natural amenities may have performed better because they tend to be located closer to metro areas and may be part of metro “commuting sheds,” the study says. Counties that are rich in natural amenities, on the other hand, tend to be located farther from metro areas – think of Park County, Wyoming (with Yellowstone National Park) or Flathead County, Montana (Glacier National Park).

Another factor is that creative-class counties that were not amenity rich also were more likely to be college or university towns, which can provide some insulation from economic cycles, the study said.

I've highlighted the part of the passage that resonates with my blog post about the rural housing shortage. Small towns and the like that can tap into global jobs (tradable and divergent industries) can afford the rents necessary for new housing construction. Small towns and the like with a jobs base of manufacturing (tradable but convergent industries) cannot. For people toiling in nontradable jobs or tradable convergent jobs, the ideological thrust of deregulating housing construction won't solve the rent is too damn high problem.

Monday, November 03, 2014

Does Population Change Drive Demand for Housing?

A better way to measure housing demand at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Affordable housing and the legit big-city whinge."

Other Links: 1. Brian Kelsey, principle and founder of Civic Analytics.
2. "78704 population didn't change much 2000-2012 but % w/ bachelor's degree or higher increased 37% to 50%. #atxaffordability"
3. "Congratulations, Your City Is Dying!"
4. "Understanding Population Change and Density in St. Louis (UIC & nextSTL @ PXSTL)."
5. "Democalypse 2014 - South by South Mess: Mex Tex."
6. "The Other Side of the Growing Disconnect Between Where You Live and Work."

Postscript: "No Need to Fear a Fall in Population":

But the rate of population does not affect the growth rate of per capita GDP. Here’s a scatter diagram (Graph A) for the OECD (Organisation for Economic Co-operation and Development) member countries over the last forty years showing the average growth rate of GDP per person and the average growth rate of population.  This reveals that and there’s absolutely no correlation between the two. For example, in Mexico, where the average annual growth rate of population was whopping 2%, the annual growth rate for the GDP per capita was only 2%. There is even a country with a negative population growth rate having a growth rate of per-capita GDP at more than 5%.

Population growth does not equal economic growth. Demographic decline does not equal economic decline. Population change does not take the temperature of a regional economy or real estate market.

Wednesday, October 29, 2014

Innovation Geography: The Beginning of the End for Silicon Valley

At Pacific Standard magazine, innovation is increasingly flat (not spiky).

Theme: Economic convergence.

Subject Article: "L.A. tech economy is underrated, venture capitalist Peter Thiel says."

Other Links: 1. "Bay Area growth crisis: 114,000 new jobs created and 7,000 new housing units."
2. "Big tech start-ups bypass Silicon Valley."

Postscript: Whatever you want to call the economic era after manufacturing (if you think there is a successor to manufacturing), I see evidence of convergence. Economic convergence is decline. In less normative terms, convergent economic activity diffuses geographically. Economic activity that used to concentrate in Silicon Valley now happens elsewhere. The world goes from, in Richard Florida parlance, spiky to flat. However, the world still looks spiky, but less so. I'm not interested in the false dichotomy (spiky vs. flat). I'm interested in the trend (spikier vs. flatter or divergent vs. convergent).

Monday, October 27, 2014

The Other Side of the Growing Disconnect Between Where You Live and Work

Importing cheap labor into high wage regions at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Workers paid $1.21 an hour to install Fremont tech company's computers."

Other Links: 1. "The Geography of Foreign Investment in Real Estate."
2. "Consumer City."

Postscript: Rents don't have to rise for gentrification to occur. "The Housing Crisis We Don’t Talk About":

Chester is what is known, in real estate industry jargon, as a “weak market city.” The phrase means what it sounds like. The city is poor and its economy stagnant. The median home sale price in Chester in 2012 was $20,000, compared to $69,350 in nearby Wilmington and $98,000 in Philadelphia. Fewer than half of Chester’s working-age adults are employed, and a third of the population is living at or below the poverty line. In a city where median rent is $790, 51.5 percent of households pay 35 percent or more of their income to their landlords.

I think economic dislocation should be defined as "gentrification". The focus on the one side of the housing affordability equation (i.e. rent) has informed some really bad policy recommendations.

Friday, October 24, 2014

Congratulations, Your City Is Dying!

Shrinking cities have stronger economies at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Low birth rates can actually pay off in the U.S. and other countries."

Postscript: Most people are well aware of the legacy costs stemming from an aging population. Less discussed are the costs of a young and growing population. That a growing population is better than demographic decline is just assumed. Once again, folk wisdom drives policy instead of analysis.

Friday, October 17, 2014

Seattle, the Incredible Shrinking City

The gentrification of your single family home at Pacific Standard magazine.

Theme: Gentrification and migration.

Subject Article: "Scrunched in Seattle: Is this hipster hovel the future of the American city?"

Other Links: 1. "Tech Company Wagons Ho! Geography of the Urban Land Rush."
2. "Overflowing Fairfax Homes Split Neighbors."

Postscript: Read the following this morning, thinking about the connection between concerns about gentrification and NIMBYism:

Your question posits whether there is a need for more housing in East Dallas, which I find somewhat off the mark. I suspect, rather, that developers are speculating on a potentially profitable market for people who want to live here. That said, I’m OK, in general, with some new apartment and condo development in East Dallas. My support depends entirely on what is being torn down and where, plus the size and appearance of what is to be built. If the wrecking ball and huge North Texas-style developments are headed for our older, traditional, single-family homes and neighborhoods, I object. A number of Dallas developers have been steadily decimating East Dallas since the 1950s. Once upon a time, Live Oak and Ross were known as Painted Lady Rows, a beautiful gateway to downtown … leveled for parking lots, gas stations and cheap, soon blighted, commercial buildings and apartments. We almost lost the incredible Swiss Avenue in the 1970s. Then the 1990s McMansion craze began its broken-tooth effect on previously charming streetscapes. If this is another wave of destruction headed for what’s left of historic East Dallas, please, let’s exercise caution before there’s little left. Guess what’ll happen once the developers have milked their short-term profits and the market for people willing to pay to live here disappears along with the old neighborhoods and the charm?

Passive residential displacement (is that gentrification?) can take two forms. The first, being priced out of a neighborhood, is the common understanding of the term "gentrification". Less common is the kind described above in the quoted passage. The quality of the neighborhood changes and no longer feels like home. The two forms of passive residential displacement weave together, but the common thread is a sense of place (how we define home).

Turning the concept on its head, consider preemptive gentrification. I want to move my family to a neighborhood where the schools are better and the streets safer. I can't because the rent is too damn high there. But I have no standing, no claim to that place because it isn't my home. I can't afford it. Tough luck.

Being priced out of a place is quite common. It would be more common if residents didn't go through extreme measures to stay put or move into the best school district. The main rub, outside of academic considerations, concerns quality of place and sense of home. But such changes could render a neighborhood more affordable. We balk because it no longer feels like home.

Wednesday, October 15, 2014

Tech Company Wagons Ho! Geography of the Urban Land Rush

Tech companies build suburban campuses in the urban core at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Space Shift: As Wealthiest Flock to Supertall Condos, Offices Go Horizontal."

Other Links: 1. "Are Millennials Willing to Spend Most of Their Income on Housing?"
2. "Why Technology Firms Are Moving Downtown."

Postscript: Millennial housing choices subsidize tech labor costs when firms locate downtown (while retaining a suburban-like footprint):

Seattle boasts the highest number of micro-dwellings in the country—3,000 at last count. It also permits the most audaciously minimal units, some as small as 90 square feet. That’s about the size of two prison cells put together.

It’s not for the claustrophobic, but it does come with perks—including the chance for millennials and those with modest incomes to settle in vibrant urban neighborhoods. Their presence, in turn, injects new energy to the heart of the city while tamping down suburban sprawl. Micro-housing reflects a growing zeitgeist—to stop accruing, go minimalist and reduce one’s footprint. Indeed, the name of Seattle’s leading micro-housing development company is called Footprint.

Tech companies, looking to employ well-educated millennials, are expanding their urban footprint. Millennials, looking for city-living and proximity to work, are actively shrinking their urban footprint to lower the cost of rent (or homeownership) forced up by in-migrating tech companies.

Monday, October 13, 2014

Solving the Hispanic Mortality Paradox

Place-based metrics make people seem poorer than they are at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Why Hispanic-Americans live longer: The mystery that has puzzled researchers for decades."

Postscript: I've told this tale before. How does one figure out if global cities undermine state sovereignty when the data are national and not urban? Geographer Peter Taylor grappled with this question. Geographic units of analysis are social constructs. The bias is built into the metrics. What we measure tells us more than the measurements. Scholars studying domestic poverty have fallen into this place-trap.

Thursday, October 09, 2014

A Global City of Eds and Meds

Putting "Flyover Country" on the global mental map at Pacific Standard magazine.

Theme: Globalization and urban redevelopment.

Subject Article: "Rochester downtown building sells for $10 million."

Other Links: 1. "The Geography of Foreign Investment in Real Estate."
2. "Are Millennials Willing to Spend Most of Their Income on Housing?"
3. "Urban Decline in Rust-Belt Cities."
4. "Increasing spatial and economic polarization in America’s older industrial cities."

Postscript: The problem with eds and meds global neighborhoods in Buffalo:

Henry L. Taylor Jr. has focused much of his work on reviving East Side neighborhoods, from the area around Futures Academy – in the shadow of the Medical Campus, but hardly benefiting from it – to the Commodore Perry neighborhood now being eyed for transformation.

Globalization will continue to pop up in the damnedest places. But the benefits won't trickle down to the poor located in isolate neighborhoods. Tremendous wealth will reside cheek by jowl with tremendous poverty. Looking at Rust Belt cities in aggregate washes out the few places where wages and rents look quite similar to those of thriving global cities, which is why gentrification in shrinking cities strikes many as ironic (or simply unbelievable).

Wednesday, October 08, 2014

The Urban Geography of Globalization: Global Neighborhoods

The rise of nano core neighborhoods at Pacific Standard magazine.

Theme: Globalization and urban geography.

Subject Article: "Growing clout of global cities offers property opportunities: Top urban centres will seek to attract talent with non-traditional business districts, and investors should be looking at these new zones."

Other Links: 1. "Housing in New York, London is attractive as an investment for outsiders because it's scarce!"
2. "What draws Chinese investment? It's simple, says foreign capital expert: Direct flights to China and a Top 25 university. @LuskCenter talk."
3. "The Politics of Anti-NIMBYism and Addressing Housing Affordability."
4. "Affordable Housing: Geography of Supply and Demand."
5. "Downtown Mountain View's 303 Bryant St. sells for record price."

Postscript: I'm attempting to pivot away from critiquing the supply-side model of housing affordability. I am mainly interested in how the migration of global labor (people toiling in diverging, tradable jobs) transform regional economies. Nano core neighborhoods are popping up in cities that no one confuses as global. Tradable eds and meds are driving real estate appreciation in Rust Belt cities such as Pittsburgh and Buffalo. Tracking the migration of this labor force cohort should be a leading indicator of globalization and the associated real estate dynamics detailed in my latest post.

Tuesday, October 07, 2014

Are Millennials Willing to Spend Most of Their Income on Housing?

At Pacific Standard magazine, Millennials prove to be the source of urban gentrification.

Theme: Globalization and gentrification.

Subject Article: "Panel: Lack of affordable housing hurts economic development."

Other Links: 1. "Arcade Fire, Spike Jonze Steal Youth In ‘The Suburbs’ Video: Canadian indie rockers' clip is a somber comment on adulthood."
2. "Transit struggles with North America's move downtown: Millennials' desire to live near their workplaces strains cities from Toronto to Los Angeles."
3. "Urban Development: Faster Greener Commutes Key to Sustained City Growth."

Postscript: From Portland, Oregon to Brooklyn, NYC, a common theme emerges. Some people are willing to endure an irrational migration to a place where the return (i.e. wages) on living in the city doesn't justify the cost (i.e. rent). Ed Glaeser, Jed Kolko, and Albert Saiz looked at this "Consumer City" conundrum. In their model, certain amenities fill the deficit between wages and housing costs. In effect, a streetcar could subsidize lower wages in a cool city. Employers are happy. Real estate developers are happy. Apparently, Millennials are happy with the arrangement. Clearly unhappy are tenured residents who cannot afford the amenity dividend, as the research of Rebecca Diamond demonstrates.

Monday, October 06, 2014

Thursday, September 25, 2014

The Geography of Poverty and Migration

At Pacific Standard magazine, the people who most need to move tend to stay put.

Theme: Relationship between geographic mobility and poverty.

Subject Article: "Why People Move:  Exploring the March 2000 Current Population Survey."

Other Links: 1. "America’s coal heartland is in economic freefall — but only the most desperate are fleeing."
2. "Decade after being declared nation's poorest big city, 1-in-3 Clevelanders remain in poverty."
3. "Misunderstanding Residential Segregation."
4. "Retail Redlining Is Reshaping Communities."

Postscript: Why the poorest staying where the jobs aren't is ironic:

But since 2005, more people have been leaving Vermont than moving here from other states, an average of about 1,000 each year. When people vote with their feet, they are saying something about the desirability of a state.

Those people are saying that despite its many attractions, Vermont is not a popular place for people to live and work. If it was, net migration would be positive, not negative. ...

... The out-migration of people tells us something about opportunities, the attractiveness of the state to people, its desirability as a place to live, and its overall quality of life. As people weigh all those factors, more have decided to leave Vermont than to come live here.

The popular perception of why people move is at odds with who moves and where they go. Furthermore, net migration is a function of coming and going. Who is moving to Vermont and why? To me, that's the more pressing question. No one asks because we believe place-failure causes migration. It doesn't.

Tuesday, September 23, 2014

The Portlandia Paradox

Joe Cortright's "second paycheck" won't pay the rent in Portland at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Portland: Hardly 'A Retirement Community for the Young.' Hey, New York Times: Portland happens to outshine many U.S. cities in entrepreneurship, job growth, productivity—and the elusive 'second paycheck.'"

Other Links: 1. "Will Portland Always Be a Retirement Community for the Young?"
2. "The Young and Restless in a Knowledge Economy."
3. "City Dividends: Gains from Improving Metropolitan Performance."
4. "Is Portland Really the Place Where Young People Go To Retire? Analyzing Labor Market Outcomes for Portland’s Young and College-Educated."
5. "No Innovation Without Migration: Portlandia Is Dying."
6. "Metrics FAQ with Joe Cortright."
7. "Distilling Portland in a Glass."
8. "Keep Portland Weird (Or Forget About a Real Estate Boom)."

Postscript: Rising college educational attainment rates positively correlate with rising per capita income. Economist Joe Cortright implied a causal relationship between the two in crafting the "Talent Dividend" initiative. Concerning economic development, that's the Portland Way. Use cool amenities to attract/retain a college-educated workforce. Voila, per capita income will go up. In Portland, the talent dividend is yet to materialize. In Pittsburgh, it has:

"[David Albouy, an economics professor at the University of Illinois,] told me that he has always wondered why Portland doesn’t invest more in its institutions of higher education. If you took Portland’s quality of life and citizens, he said, and added Pittsburgh’s universities, you would come out with a world-class city."

That tells me that Albouy understands the causal relationship between college educational attainment rate and per capita income, while Cortright does not.

Wednesday, September 17, 2014

No Innovation Without Migration: Portlandia Is Dying

Creative collisions in Portlandia fail to produce innovation at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Will Portland Always Be a Retirement Community for the Young?"

Other Links: 1. "Field Of Dreams Portland."
2. "We Got More Educated, We Are Better Off... Right? An Analysis of Regional Conversion of Bachelors Degree Attainment into Positive Labor Market Outcomes."

Postscript: In reaction to the subject article, Alan Berube (Brookings) tweeted, "Portland is 'overeducated and underemployed but GDP per head up 50% since 2001? Doesn't add up." Consider manufacturing. employment goes down while production goes up. More efficient labor means less people benefit from gains in economic output. Welp, "You Can’t Feed a Family With G.D.P.":

Percent change indexed to 1993 level
Per Capita G.D.P.
Median household income

Tuesday, September 16, 2014

No Innovation Without Migration: The Harlem Renaissance

The Harlem Renaissance had little to with Harlem the place, at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "In Whose Garden Did the Harlem Renaissance Grow?"

Other Links: 1. "The Southern Diaspora: How the Great Migrations of Black and White Southerners Transformed America."

Postscript: All will tell the same story, of migration:

Alphabetically we can list a hundred names of blues and jazz greats from Perry Anderson to Muddy Waters and all will tell the same story: grew up in the South, honed their skills in the bordellos or clubs of a southern city, went on to fame, if rarely fortune, in one of the music capitals of the North or West.

Wherever the migrants ended up, a great music scene flourished. No innovation without migration.

Monday, September 15, 2014

No Innovation Without Migration: Do Places Make People?

People make places innovative, not places make people innovative at Pacific Standard magazine.

Theme: Innovation geography

Subject Article: "Scientific ties that bind?"

Other Links: 1. "Growth, innovation, scaling, and the pace of life in cities."
2. "Turning Buffalo from a Rust Belt City into a Start-up City."

Postscript: I'm spending a lot of time exploring theories about innovation geography because I'm trying to understand how universities can spur regional economic redevelopment. I hypothesize that migration is missing from the policy analysis and discussion. Could migration be driving Rust Belt urban redevelopment?

Tuesday, September 09, 2014

No Innovation Without Migration: ‘Most Migrants Only Proceed a Short Distance, and Toward Centers of Absorption’

Looks like agglomeration, but short distance migration drives innovation at Pacific Standard magazine.

Theme: Innovation geography

Subject Article: "Job Hopping, Information Technology Spillovers, and Productivity Growth."

Other Links: 1. "Ernest George Ravenstein: The Laws of Migration, 1885."
2. "Local and Global Networks of Immigrant Professionals in Silicon Valley."
3. "No Innovation Without Migration."
4. "Triumph of the Entrepreneurial City."
5. "No Innovation Without Migration: Breaking Convention."
6. "Silicon Valley fights order to pay bigger settlement in hiring case."
7. "Your Knowledge Is Nothing If No One Else Knows You Know It."

Postscript: The introduction of the subject article makes the point better than the passage I quoted in the blog post:

Because the mobility of these skilled technical workers tends to be local, geographic location may play a particularly important role in determining access to the specialized skills and know-how required for the installation of these new technologies, and may partly explain why firms locate in high-tech clusters despite facing higher factor costs for other inputs, such as land and labor (Saxenian, 1996). The primary goal of this study is to test the hypothesis that firms benefit from the IT investments of other firms through the skill content of the IT labor pool because the flow of specialized technical know-how among organizations facilitates the implementation of new IT innovations. Although a substantial literature has focused on estimating the impact of R&D spillovers, there has been little empirical work on IT spillovers, and no work on IT spillovers generated through the IT labor pool.

Mind you, this forthcoming publication is dated January 2013. So we forge ahead with innovation districts regardless of how little empirical research has been done on the matter. Instead, we give the benefit of the doubt to theorists such as Jane Jacobs. That's a lousy foundation for policy and wholly ignorant of legitimate competing explanations with actual empirical analysis.

Wednesday, September 03, 2014

No Innovation Without Migration: Breaking Convention

Michael Porter's cluster theory is modern-day snake oil at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Job Hopping: Driver of Regional Tech Growth?"

Other Links: 1. "No Innovation Without Migration."
2. "Industrial Organization Continued. The Concentration of Specialized Industries in Particular Localities."
3. "Clusters and the New Economics of Competition."
4. "The Pseudoscience of Jane Jacobs and Innovation Districts."
5. "Chile teaches the world a lesson about innovation."
6. "Job Hopping, Information Technology Spillovers, and Productivity Growth."

Postscript: Speaking of modern-day snake oil:

"The motor force of economic development is exactly what Jane Jacobs told us it was. It was the clustering of diverse groups of people in urban centers," [Richard Florida] said.

To be fair, Florida might be right about that. But we don't know for sure if he is. From the evidence I've weighed, I think he's wrong. Regardless, that's a big bet by New York City given the flimsy evidence in support of such an approach to spurring innovation.

Tuesday, September 02, 2014

No Innovation Without Migration

It's migration, stupid, at Pacific Standard magazine.

Theme: Innovation geography.

Subject Article: "Sure it's Pseudoscience if You Don't Read It Right: Jacobs, Knowledge, and Urban Growth."

Other Links: 1. "Exodus to the burbs: why diehard downtowners are giving up on the city."
2. "The Pseudoscience of Jane Jacobs and Innovation Districts."
3. "Poverty and Geography: The Myth of Racial Segregation."
4. "How Migration Makes the World Brainier."

Postscript: The more I spar with others over policy, the more I appreciate doctoral training. Generally, most people master one school of thought and go from there. In a quest for a Ph.D., one must master the debate between schools of thought. Debates I've had over housing affordability illustrate this. There's the Edward Glaeser school (rational research) and there's the Not Edward Glaeser school (irrational ranting). Within the Edward Glaeser school, we have debates over the quality of the models and how well they measure empirical reality. That's what you see when you read the literature review section of the peer reviewed academic publication. That's because the stated aspiration of such research is very limited in scope. Can we prove that land-use restrictions drive up real estate prices? That's a very modest goal that gets way overstated in the realm of policy. Establishing the connection between land-use restrictions and real estate prices isn't, in and of itself, a compelling reason to upzone an urban area and increase residential (or commercial) density. We have competing schools of thought that actually evaluate the efficacy of policies designed to make real estate more affordable. First step in policy evaluation: identify the controversy and each side's supporting research. There isn't a debate about whether or not deregulation can drive down housing costs.

Thursday, August 28, 2014

Poverty and Geography: The Myth of Racial Segregation

Migration trumps race and place at Pacific Standard magazine.

Theme: Geography of income inequality.

Subject Article: "Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants."

Other Links: 1. "Wrong Way Nation."
2. "Graduate migration to cities displaces less well-educated."
3. "Density Boondoggles: Innovation Districts."
4. "Europe's brain drain in action: Incredible animation shows great cities emerging over the centuries as intellectuals and artists move across the world."
5. "What Can Hurricanes Teach Us About Socioeconomic Mobility?"
6. "People Develop, Not Places."

Postscript: Much of economic and community development practice takes conventional urban economic theory as a given. I was in that camp when I started blogging back in 2006. All of that changed when I read Robert Guest's book, "Borderless Economics: Chinese Sea Turtles, Indian Fridges, and the New Fruits of Global Capitalism." I can't put the genie back in the bottle. The problem with this line of thinking is that it undermines the rationale for a lot of redevelopment projects currently en vogue. It undermines the rationale for efforts to fight persistent poverty. I find myself embroiled in existential debates instead of a friendly exchange of constructive criticism. Migration is economic development. People develop, not places.

Monday, August 25, 2014

Concluding Remarks About Housing Affordability and Supply Restricitions

Forget supply issues. The wages are too damn low at Pacific Standard magazine.

Theme: Labor markets and housing affordability.

Subject Article: "The Affordable Housing Shortage: Considering the Problem, Causes and Solutions."

Other Links: 1. "Why Is the Rent Too Damn High in New York? Don’t Blame Housing Supply."
2. "Recent Owners’ Equivalent Rent Inflation Is Probably Not a Blip."
3. "Zoning and Market Pricing of Housing."
4. "Federal Reserve Bank of Minneapolis: Banking and Policy Working Paper 02-2."

Postscript: All roads take me back to the exceptional real estate demand case of Vancouver:

At the same time, there's a vein of thought that Vancouver's recent focus on rezoning land to provide places to live-especially a downtown condo forest that has become the city's defining feature-has left it with a dearth of office buildings and factory sites where all those new residents might actually be able to find work.

I rarely encounter a description of the tension between residents and businesses over dear urban land. Residents have to work somewhere in order to pay rent. In terms of housing affordability, the Minneapolis Fed study concludes that income (i.e. demand) matters more than supply restrictions. The considerable time I've spent studying this issue, that conclusion makes sense, in a fundamental supply-demand kind of way. To date, everyone who has taken issue with my position argues a point I have conceded. No one has taken aim at the demand side of the equation and the work of scholars such as David Ley (see above article about Vancouver's real estate market). Yes, less restrictive zoning makes land and homes less expensive. That's not a counter-argument to the many posts I've written on the subject.

Tuesday, August 12, 2014

Why Is the Rent Too Damn High in New York? Don’t Blame Housing Supply

Pulling the housing affordability debate out of the theoretical clouds at Pacific Standard magazine.

Theme: Housing affordability geography.

Subject Article: "Recent Owners’ Equivalent Rent Inflation Is Probably Not a Blip."

Other Links: 1. "Fleeing New York and San Francisco for ‘Cleveland’."
2. "Housing Affordability and Supply Side Economics."
3. "Demographics: 1; Gentrification Hysteria: 0."
4. "Gentrification: white people following white people."
5. "Where Have All of New York City’s Small Builders Gone?."
6. "Affordable Housing: Geography of Supply and Demand."
7. "Superstar Neighborhoods and the Concentration of Wealth."
8. "Turning Real Estate Market Fundamentals on Their Head."
9. "Superstar Cities."

Postscript: One of the conclusions from the Cleveland Fed analysis of Owners’ Equivalent Rent (OER) inflation, "High vacancy rates do not appear to slow OER inflation down appreciably". That's not a ringing endorsement for increasing housing supply in order to make rents more affordable. Theoretically, increasing supply makes sense. Practically, it may not work. The Fed's analysis is hardly definitive. It still beats the unfounded policy suggestions coming from supply-side ideologues.

Thursday, August 07, 2014

Housing Affordability and Supply Side Economics

Dr. Doom weighs in on the debate about housing supply versus demand at Pacific Standard magazine.

Theme: Housing affordability geography.

Subject Article: "San Pedro project illustrates a cause of limited housing affordability."

Other Links: 1. "Fleeing New York and San Francisco for ‘Cleveland’."
2. "Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again?"
3. "Nouriel Roubini: Professor of Economics and International Business Stern School of Business, New York University."

Postscript: Supply-side economics (e.g. Laffer curve) make intuitive sense, thus appealing to politicians who are pursuing some other agenda. Theoretically, everything is a go. Practically, when academic scrutiny is applied to practice, the suggested benefits disappear. The journey from abstraction to on-the-ground change is a perilous one. The main disconnect I see is taking Glaeser's work (which establishes a link between supply restrictions and housing prices) and assuming that the practice of upzoning (one of many supply-side avenues) will deliver affordable housing. Dr. Doom's cautionary tale teaches us to beware of such claims "about the magnitude of these effects". Glaeser is today's Laffer.