What Built This City?

This is a fascinating interview that touches on a number of interesting aspects.

You frame cities as labor markets. What do you mean by that?

Sometimes when I read the papers of my fellow urban planners, I get the sense that they think cities are Disneyland or Club Med. Cities are labor markets. People go to cities to find a good job. Firms move to cities, which are expensive, because they are more likely to find the staff and specialists that they need. If a city’s attractive, that’s a bonus. But basically, they come to get a job.

This is one of the lessons I learned when I worked in China in the early 1980s, when it was still very much a command economy. There were no labor markets. People would get a job in a state factory, and they would stay there for life. The factory would provide housing next door. Similarly, state factories were stuck where they were, with the workers they had. There was an enormous mismatch between employees and employers and everyone was worse off. {…}

Some of the most interesting stories you tell fall in these times of transition, as command economies like the Soviet Union, China, and Vietnam transitioned to market economies. What was it like working as an urban planner in those cities?

In a way, the dream of every urban planner or architect is to not be constrained by the market. You believe, as an architect or as a planner, that you alone could efficiently allocate land uses and densities, just like designing a house.

I quickly realized that if you do not have prices to guide you, you end up relying on arbitrary norms. For example, in China, the central government decided that every home must have one full hour of sunshine each day. So you would plug in the height, latitude, and angle of the sun at winter solstice for your site, and that would formulaically spit out the permitted density of housing.

This was not an entirely silly idea! If you don’t have prices to show how land should be used, you must fall back on strange heuristics like this. You try to find something that sounds scientific. The angle of the sun in Beijing at winter solstice is completely scientific. What’s not scientific is setting sunlight standards for the housing of an entire country.

Cities attract workers, workers create the culture, which then attracts more jobs. Richard Florida built a name trying to convince cities that they could short-circuit the process by creating the culture to attract the right workers, only admitting he was wrong after cities spent fortunes they didn’t have. My view is that cities should take a page from Bob Dylan, who desperately wanted to be Elvis but surveyed the market and found that he would instead be the best Woody Guthrie he could be. The markets only needs so many Seattles.

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41 thoughts on “What Built This City?

  1. I think the idea of cities as labor markets is broadly true but then it changes.

    Erik Loomis had a post on LGM ranting about how it was horrible that Apple was building new campuses in Culver City, Austin, and San Diego instead of in Cleveland, Buffalo, Detroit, etc because those areas could use the economic boost and jobs.

    The problem is that Apple is making strategic decisions as posters pointed out. They want to get into original content so Culver City is close to the talent. They have ongoing legal issues with Quallcomm so building a campus in Quallcomm’s backyard makes sense. Austin already has a tech scene, UT, and a cool-city vibe.

    Pittsburgh managed to become a bit of a tech scene because of Pitt and CMU plus they turned themselves into the Rust Belt’s meds and eds city. The question is whether there is enough of a demand in the Rust Belt for another meds and eds city.

    Lots of red-states seem to think that the best way to attract businesses is to slash spending, taxes, services, and regulations to the bone. This does not seem to be true. The best way to attract companies does seem to be from investing in education and infrastructure, things that cost money. NYC has plenty of problems and the subway is massively underfunded but it is still probably the best area to absorb an HQ2 for Amazon along with DC-metro. Maybe Boston could have competed as well. Then these cities just end up having the amenities that highly-skilled workers want and the cycle becomes unbreakable.

    Plus it seems like a no-win argument because if Apple moved to Buffalo, the argument would then be about evil techies gentrifying and turning the blue-collar dive bar into a hipster coffee shop.

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    • The best way to attract companies does seem to be from investing in education and infrastructure, things that cost money.

      That doesn’t really explain Texas, though. Which is not to say the low-state model is right either, as that doesn’t explain why so many attempts at that model have failed as much as the Richard Florida one has. Also, tax breaks were a component in Amazon’s decisions.

      I think Buffalo, Cleveland, and Detroit are pretty big asks. I am pretty sympathetic to putting government jobs in those places to help them along, but it’s asking too much of Amazon IMO. That said, from a national perspective there are a lot better places that Amazon could have chosen, and the circus they conducted makes them worthy of the criticism they got.

      On the one hand, you have a lot of Republicans trying to argue that California is doomed-doomed-doomed because of high taxes and regulations… but the statistics just don’t bear it out. Ont he other, you have a lot of Democrats arguing that places like Utah and Kansas won’t attract jobs unless they change, but they already are (as is Texas, of course).

      So really, no one knows. Or, more likely, government policy plays a relatively small part. If I’m drafting a list of California’s biggest strengths and weaknesses, politics plays a relatively small role on each side of the ledger compared to bigger things like weather, beaches, and real estate costs.

      And a lot of it seems to be tipping points. Texas and Arkansas can have the exact same policies and Texas will continue to attract people because they have cities while Arkansas has Little Rock. And then on the other side of the ledger there are cities with tipping points going in the opposite direction. Only Pittsburgh seems to have found its way out of it, and I’m not sure it’s a model that Cleveland can replicate (despite being pretty similar in some respects).

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      • If we use the words “white flight”, does it explain why some cities are more attractive to corporations than others?

        (And I agree with you on the Amazon thing. You know what that reminds me of most? LeBron James’s “WILL HE PICK CLEVELAND OR MIAMI?!?” bullshit. It’s one thing if you pull that crap and then have the big reveal be “He’s a good guy!” But when the big reveal is “Team Evil”? You make that decision as quietly as possible. Same for Amazon picking Warshington DC and Wall Street.)

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      • Democrats were correct about Kansas for a while especially during the highest years of Brownback’s tax cuts. I don’t know the state on the ground now to be fair.

        You are probably right that the correct answer is that different forumlas work for different areas and what works for SF/NYC/Portland/Seattle/Boston might not work for SLC, Kansas City, Cleveland, or Buffalo.

        I’m not surprised that Amazon picked NYC and DC-metro. I am curious that so many cities continue to try and compete for corporate HQs or businesses in these competitions and they often seem to fall flat on their faces. IMO investing in education and infrastructure would go a long way before the kind of dog and pony shows that they do.

        The interesting thing here is that this is one of the big areas where there are vast differences between what the policy wonks say cities should do and what politicians actually do. I don’t know why this is.

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        • To be clear, I wasn’t referring to the Brownback tax cuts. Whatever good they did seem pretty outweighed by the harm. I’m just using them as an example of a state with an unlikely tech sector.

          Regarding HQ2… I reiterate that tax cuts were a part of the package that Amazon got. It doesn’t matter what your overall tax rates are when the big fish don’t have to pay them. (Not that NYC and DC aren’t otherwise successful – just that HQ2 is probably not the best gauge.)

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          • I don’t suppose the Denver model exports easily to other places. Some history… Way back when, Denver realized that it couldn’t afford the kind of museums and performing arts facilities that it wanted on its own. The answer was to create a separate cultural facilities district, with its own taxing authority (up to a statutory limit), that included the surrounding suburban counties. The suburban voters agreed to the idea — the biggest facilities would be in Denver for central location, but the suburban people realized they would still benefit from a better theater, better concert hall, improvements to the art museum and natural sciences museum, than they would get otherwise.

            When Denver got Major League Baseball in the 1990s, the same approach was taken: an independent stadium district, with its own taxing authority (up to a statutory limit) that included the surrounding suburban counties. The district owns the stadium, the Rockies are the leading tenant, and the lease requires the Rockies to pay for the capital costs to keep the facility up to standards. When it was time to replace the old Mile High Stadium — and it was time — the same idea was repeated. City and suburbs rather than the city versus suburbs stuff you read about in a lot of places.

            The Kroenkes own both the Nuggets and the Avalanche and built the Pepsi Center with their own money. I understand that both franchises and the venue are profitable, and the Kroenkes are happy with the modest sorts of tax evasion the arrangement offers. The suburbs have built some of their own venues, but have gone smaller. Eg, my suburb has a perfectly acceptable arts center, with one intimate theater and one somewhat bigger, but nothing like the Buell or the Opera House downtown. There are a couple of arena-style venues in the ‘burbs, but sized around 5K, that don’t compete directly with the facilities downtown. Phoenix’s arena has to compete with a slightly larger and decade newer venue 12 miles away in Glendale.

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      • That doesn’t really explain Texas, though. Which is not to say the low-state model is right either,….

        I think has the correct explanation down below.

        Most of Texas growth has been concentrated in two areas:

        1. Oil/Gas production and downstream thereof (and wind power generation), in essentially the same areas, and generating a similar type of jobs.

        2. High level/high paying jobs, and the ancillary services demanded by those working at these jobs. This growth has been concentrated in the Houston, Austin, Dallas/Ft. Worth, and, less, San Antonio.

        Category #1 is independent of the state policies. The resources are were they are. The jobs will follow those resources while they are there, and will leave once they are exhausted.

        The jobs in Category #2 are, as Michael Cain indicates, very insensitive to tax/regulations policies. They are looking for a wide pool of educated employees, and good colleges like UT and Texas A&M continuing to feed that pool.

        Some things, like mild winters, and low cost of living are pluses. The impact of negative things, like crappy K-12 public education, or hot summers, is taken care of by the high salaries these jobs command, which make private education and full blast central A/C something all my acquaintances enjoy.

        No one in the new Apple Austin campus will be concerned that Texas has the worst insured rate in the country (I think) and dismal access to Medicaid. Apple’s health insurance package will take care of that for them.

        And of course, once they are here, they actually vote for higher taxes, more regulations, and sending Beto to Congress. The people in the Category #2 growth figures actually do not like the TX policies, and are actively trying to undo them

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        • And of course, once they are here, they actually vote for higher taxes, more regulations, and sending Beto to Congress. The people in the Category #2 growth figures actually do not like the TX policies, and are actively trying to undo them

          I sometimes point out that the current Texas population is about the size of California’s population circa 1989. And also offer to bet that if Texas’s population catches up to California’s — that would be about 11M people today, only a couple million short of adding another DFW and Houston metro areas — that Texas will regulate air and water as heavily as California does today, that it will push massively for public transit, that there will be lots of land-use restrictions, etc, etc.

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        • “The people in the Category #2 growth figures actually do not like the TX policies, and are actively trying to undo them”

          A quick note about this – in the recent Beto/Cruz election, people who were actually born in Texas went to Beto by about three points, while those who moved to Texas went to Cruz.

          Which makes sense, for all the talk about Austin hipsters moving the state left or whatever, what’s actually moving the state left is the Texas GOP going from being ran by former Boll Weevil Democrat’s like Rick Perry to actual Tea Partiers.

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    • Lots of red-states seem to think that the best way to attract businesses is to slash spending, taxes, services, and regulations to the bone. This does not seem to be true.

      Which jobs do you want to attract? Back when I spent a bunch of time with the Colorado Governor’s Office of Economic Development — first contact for companies looking to relocate to Colorado — they told me that for companies with mostly high-wage jobs, taxes and regulations were far down the list. Their top five, in no particular order, were communications, transportation, higher ed, K-12 ed, and a broad range of quality of life factors. Companies with large numbers of near minimum wage jobs were very concerned about taxes and regulation.

      The people at the Governor’s Office told me that the latter usually got brushed off with, “We’ll send you our brochures.” No interest because in the worst cases any new workers that came to the state were likely to qualify for income assistance benefits and would be a net loss for the state government.

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      • What I wonder about is does a city like Columbus honestly feel like they have the kind of workers that Amazon wanted/needed or not?

        Though I suppose it would be a career-killing move for a politician to get up and say this about his or her own citizens.

        The problem I think for a lot of dying cities in the Western world is, like someone on LGM stated, that they were economic monocultures with a dominant industry. Sometimes a dominant employer. Everything in the city was designed for that employer/industry from education to infrastructure to services/amenities. Once that industry or employer goes belly-up, everything goes belly up with it. Or nearly so. Including the resources needed to expand and diversify.

        NYC, DC, LA, SF, Chicago, and some other star cities that everyone is jealous of in the United States were always diverse or diverse enough economies.

        The also-rans for these competitions (which should be banned) often seem to be former economic monocultures going for the too-little, too-late form of getting new jobs for their citizens.

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  2. I just watched a PBS news bit about Marfa, Texas – which is this small city in Nowheresville that has become an art mecca since the 70’s, mostly due to one artist taking up residence there. The takeaway was (based on several recent stories that were along the exact same lines, small towns and art…not just this one story) that all small towns should be like Marfa, which seemed very silly to my husband and I as small town folk. Were they really suggesting a world where every small town is an art mecca and then people just travel from town to town looking at art? Because it was what they seemed to be saying. And it didn’t make much sense to us that that would ever be a viable way to base an economy. There are only a few tourists (percentagewise) who want to go to Marfa or a place like Marfa and how many times are they going to do that in a lifetime?? Probably not that often.

    Yet you can drive through these little towns out here in the country and see lots of towns with a closed and shuttered art studio and/or wine shops and/or gourmet. Only a few places can ever become Marfa and it took decades and an artist community actually being there for that to happen.

    So I really like the Bob Dylan analogy here. Cities and towns all trying to do the same thing is a recipe for failure. They need to find their own niches.

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  3. I mainly but not entirely agree with this. Many cities have been partially or wholly shaped by political needs or the desire for glory etched in stone. St. Petersburg, Paris as we know it, Washington, D.C., and New Delhi are examples of this. In the pre-democratic era, the capital existed to provide glory to the rulers in part.

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  4. On March 14, 1876, the Colorado territorial legislature passed an amendment to the state constitution that provided money for the establishment of the University of Colorado in Boulder, the Colorado School of Mines in Golden, and the Colorado Agricultural College in Fort Collins.

    Two cities competed for the site of the University of Colorado: Boulder and Cañon City. The consolation prize for the losing city was to be home of the new Colorado State Prison. Cañon City was at a disadvantage as it was already the home of the Colorado Territorial Prison. (There are now six prisons in the Cañon City area.)

    And the rest, as they say, is history.

    My guess is that *most* people who’ve been to both Canyon City and Boulder think Canyon got the short end of that stick. (Both are located in equally beautiful places, btw.) Which isn’t to say that people don’t relocate to Canyon for employment opportunities, of course.

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  5. I guess the point is valid so far as it goes.

    People often move to cities because they get a job there, sure. On the other hand, people apply to jobs in one city and not another because that’s the one they want to move to. And employers, I suspect, do to some extent know that it’ll be easier to get a qualified person in this city than that, because in this one it’ll just be people who already live there applying, and in others there’ll be people from all over the country.

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