Crises/Detroit

MPPA-DL 452Session 8

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Course Themes

• Dynamics: Globalization, Urbanization

• Circuits: Transnationals, Diasporas

• Centers: Agglomeration, Sprawl

• Margins: New Inequalities

• Ecologies: Sustainability

• Architectures: A Sense of Place

• Crises: Globalization in Reverse

• Frontiers: Looking Ahead2

1. The global crisis2. The advantage of

diversity3. Voting with their feet4. In crisis, opportunity?

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“deindustrialization”

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Source: Accessed at http://tipstrategies.com/posts/notebook/#recovery on 11/16/09

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“Never let a serious crisis go to waste.”

- Rahm Emanuel

If we measure the New Deal by the degree to which it reshaped the nature of American life and left institutional arrangements in place thereafter that made the terms of life different for millions of people, once the economy did re-float after World War II, then it's a tremendous success. And in fact, it's a success on a scale that relatively few, if any, other administrations in the whole course of American history have managed to accomplish.

What if, by some miraculous means, Roosevelt and the New Dealers had found the key to re-floating the economy in the Hundred Days, in the spring of 1933, so that by the end of that year or early the following year, 1934, the economy's back to 1928 levels of production, there's full employment again, and everything is going swimmingly? In that scenario, would there have been a New Deal as we know it? I think the answer is probably not. It took this continuing crisis atmosphere in order to give Roosevelt the political maneuvering room to persuade the country to undertake these quite novel initiatives - things like minimum wage legislation, regulation of the securities markets, new labor legislation, the Social Security Act. These are all the products of the sustained crisis of the 1930s.

David M. Kennedy, interviewed by PBS; accessed 11/16/09 at http://www.pbs.org/fmc/interviews/kennedy.htm

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1. The global crisis2. The advantage of

diversity3. Voting with their feet4. In crisis, opportunity?

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The more variety, the more diversity, the more growing and living things in an ecosystem, the more resilient it is to misfortune. It becomes much harder to kill everything off at once. It also produces much more biomass per acre and per the amount of sunlight falling on it than one crop can produce.

The same works for an economy, and I don't think it is coincidence. It has the same processes and principles behind it. It is easy to see in a natural ecosystem. But even a settlement or quite a large city like Detroit that specialized very much in one thing can serve as an example. Specialization for an economy is comparable to a one-crop ecosystem for the same reasons. It's vulnerable. And furthermore, it doesn't have the variety of generalities for further development of work. Detroit is an example of this too. Detroit used to be, during the 19th century, a city that was very, very good at developing new products for its own use and for its own people. And even more important than that, for its own industries to use and to export, because the same problems that Detroit or its industries had, other places had too. And if Detroit could solve them, there were automatically export markets for their solutions. If you solve problems and really do it successfully and economically, your exports take care of themselves.

Jane Jacobs, interviewed in Government Technology magazine (2003)

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Detroit, 1920

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Detroit, 2009

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Detroit city and suburban population1900-2000

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(Detroit) has lost the essential density required to support the economics of any new urban strategy.Jeb Brugmann, Welcome to the Urban Revolution, p. 152

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Detroit central city statistics

• 900,000 population (half of 1950 high of 1.8 million)• 82% African-American• 1/3 live in poverty• 14.8% infant mortality rate• 58.2% high school graduation rate• 25% of neighborhoods do not have a bank branch• 33% decrease in housing stock since 1960• Price of a typical Detroit home: $7,100• In 2008 there were 17,428 violent crimes (including 306

murders) and more than 53,000 property crimes

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The reason why services are so expensive in Detroit is because they're trying to serve a population that is half the size that it once was, but they still have the same land area that they have to cover. So police, for instance, or fire or sanitation, they might be traveling two or three times as far as they would in any other city to get the one or two remaining houses on a block in a devastated neighborhood.

The city has to shrink its footprint. It has to come down to half the size than it is now. This has never happened before in America - in American history. But the notion of saying to somebody, look, I know you love your house, I know you love living here - you're the only person on the block, we can't protect you anymore.

“Envisioning a Prosperous Future for Detroit,” Daniel Okrent, Talk of the Nation, National Public Radio, 10/1/09

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The point of “world class” does not seem to be the elimination of crisis or even the improvement in the city’s overall economic efficiency.

In the global City, success is often measured, tacitly, through indexes of the incremental advantage gained by one of the City’s major interest groups over numerous others.Jeb Brugmann, Welcome to the Urban Revolution, p. 155

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1. The global crisis2. The advantage of

diversity3. Voting with their feet4. In crisis, opportunity?

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Cities are spatial locations in a globally interdependent system of production and exchange. That global system is in crisis and transition. So the path a city follows in the future will depend upon the niche it comes to occupy in a changing international division of labor.Hill and Feagin, “Detroit and Houston: Two Cities in Global Perspective,” in The Global Cities Reader, p. 155

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Four “niches” for major U.S. cities

• Coastal giants

• Talent magnets

• Regional hubs

• Challenged cores

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Source: “Cities, Suburbs and Beyond,” Brookings Institution Center on Urban and Metropolitan Policy (2003)

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Source: “Cities, Suburbs and Beyond,” Brookings Institution Center on Urban and Metropolitan Policy (2003)

Boston, Chicago, Los Angeles, New York, San Diego, San Francisco, Washington

Examples

• Stable/Increasing Population

• Strong Immigration• Employment Centers• High Inequality - Income

and Educational Attainment• Very High Housing Costs

Dominant Census Characteristics

• Retain and Build Middle Class - Schools, Safety

• Promote Postsecondary Education, Entrepreneurship

• Preserve Affordable Housing

Key Challenges

Coastal Giants

Talent Magnets

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Atlanta, Austin, Denver, Minneapolis-St. Paul, Portland, Raleigh-Durham, San Jose, Seattle

Examples

• Increasing Population, but Significant Decentralization

• High Domestic Migration and Immigration

• “Two Economy” Workforce• Rapidly Escalating Housing

Costs

Dominant Census Characteristics

• Balanced Metropolitan Growth• Pathways to Colleges &

Universities for Workers• Metro-wide Affordable Housing

Strategies• Connect Residents to Income

Supports (Tax Credits, Health Insurance)

Key Challenges

Source: “Cities, Suburbs and Beyond,” Brookings Institution Center on Urban and Metropolitan Policy (2003)

Regional Hubs

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Columbus, Dallas, Indianapolis, Kansas City, Louisville, Oklahoma City, Nashville, San Antonio

Examples

• Moderate to High Growth • Significant Decentralization

Metro-Wide and Within City• Lower, but Growing Immigration• Strong Middle Class• High Levels of Work• More Affordable Housing

Dominant Census Characteristics

• Balanced Metropolitan Growth• Revitalization Beyond

Downtown• Regional Employment/Skills

Strategies for Low-Wage Workers

• Move Families Toward Asset-Building, Homeownership

Key Challenges

Source: “Cities, Suburbs and Beyond,” Brookings Institution Center on Urban and Metropolitan Policy (2003)

Challenged Cores

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Baltimore, Buffalo, Cleveland, Detroit, Hartford, Miami, Newark, New Orleans

Examples

• Significant Population Loss • Highly Segregated Metros• Little to No Immigration• Employment Suburbanized• Very Low Education Levels;

Mostly Low-Wage Workforce• Moderately-Priced Housing Out

of Reach for Residents

Dominant Census Characteristics

• Fix Basics – Safety, Vacant Land, Adult/Child Literacy

• Build on Assets – Location, Sectoral Strengths

• Create Quality Neighborhoods – Market Housing Affordability

• Balanced Metropolitan Growth

Key Challenges

Source: “Cities, Suburbs and Beyond,” Brookings Institution Center on Urban and Metropolitan Policy (2003)

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“It’s clear that the economic crisis is having uneven impacts on different types of workers and different kinds of communities. Highly educated people and highly educated places are holding up much better than others.

“But among the most stable places in the current downturn are college towns.

“Using data from the Bureau of Labor Statistics for March 2009, Martin Prosperity Institute researcher Patrick Adler put together a graph which plots the unemployment rate for various states, major commercial cities, and college towns.

Source: Accessed 11/16/09 at http://www.creativeclass.com/creative_class/tag/unemployment/page/2/

Unemployment Rates, March 2009

1. The global crisis2. The advantage of

diversity3. Voting with their feet4. In crisis, opportunity?

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The key thing is to realize that when you have a place that has a skilled workforce that is unemployed, that has more engineers than any other place but Silicon Valley unemployed, that has beautiful houses that can be bought for - as we did, we bought a six-bedroom, three-story house in a very nice neighborhood for $99,000 - when you get into that sort of a circumstance, you are in a position to really remake your economic world.

It's an opportunity for people who have entrepreneurial spirit to come in and reinvent Detroit.

“Envisioning a Prosperous Future for Detroit,” Daniel Okrent, Talk of the Nation, National Public Radio, 10/1/09

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36Source: Downtown Detroit in Focus, Brookings Institution Metropolitan Policy Program, October 2006

Downtown Detroit market study• $59,300 average household income in downtown Detroit.

• 83 percent of new downtown residents have a college degree or better, compared

with the national average of 26 percent. Additionally, one-third of new downtown

residents have a master's or other professional degree, compared with the

national average of 10 percent.

• Larger population base than currently understood. 6,500 downtown residents;

74,300 residents in downtown and neighborhoods oriented toward downtown.

• $1.4 billion in annual aggregate income for the residents of downtown and the

neighborhoods oriented toward downtown.

• 80,500 downtown workers, composing 21 percent of the city's total employment.

• 15 million annual downtown visitors

37Source: Downtown Detroit in Focus, Brookings Institution Metropolitan Policy Program, October 2006

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Warren Buffett describes his latest deal as “an all-in wager on the economic future of the United States”. On November 3rd his investment firm, Berkshire Hathaway, agreed to buy the 78% it did not already own of Burlington Northern Santa Fe, America’s second-biggest railway operator, in a deal valued at $44 billion.

Burlington Northern is well-placed to benefit from the boost that the forthcoming expansion of the Panama Canal is expected to give to the port of Houston, as a gateway for trade between China and America’s heartland. Wal-Mart, the world’s biggest retailer, has already built a huge facility there to manage the transfer from ships to trains of goods on their way to its superstores in Chicago and other cities in the centre of the country. This route will attract far more traffic once ships can take advantage of the expanded canal, which is due to open in 2014.

As for Mr. Buffett’s past worries that it is difficult to earn exciting returns in such a capital-intensive business, could he also be betting that America’s government will soon unveil big tax breaks or subsidies for infrastructure investments?

“Express from Omaha: America’s most famous investor buys a railway company,” The Economist, 11/5/09

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