The Urbanist Musings of Pete Saunders

Envisioning a Rust Belt Future

A little bit of ruin porn to make your day.  The abandoned Packard auto plant in Detroit.  Parts of the complex were in use as recently as 2010, but Packard left the vast majority of the complex in 1959.  Source: BBC.com
What started as a comment to an article yesterday morning later became a tweetstorm yesterday afternoon, and generated lots of Twitter discussion.  But hey, I have this wonderful forum, and it gives me a chance to elaborate on my points here.

It all started after reading an article by Aaron Renn entitled Looking Back from the Future.  In his article, Renn says that there are few clear and easy answers for struggling post-industrial cities (aka Rust Belt cities, both large and small), but he recognizes that the factors of their future success may now be unknowable.  Aaron notes New York’s transformation from its near-default in the 70’s to its position today:

“Let’s look back at a place once left for dead: New York City. In the 1970s, it was failing and nearly went bankrupt. Films like Death Wish and Taxi Driver portrayed an urban dystopia. The city’s population was falling, and some argued that there was nothing left to do but implement a strategy of planned shrinkage.

How could such an unexpected transformation have occurred? New York certainly benefited over the past two decades from the fantastic leadership of two mayors, Rudolph Giuliani and Michael Bloomberg. But this can obscure larger forces that played a major role in the city’s transformation.Yet today New York is a gleaming, booming city at all-time population and job highs, one where public angst often focuses not on civic failure but on problems brought on by success, such as high rents and overcrowded subways.

How could such an unexpected transformation have occurred? New York certainly benefited over the past two decades from the fantastic leadership of two mayors, Rudolph Giuliani and Michael Bloomberg. But this can obscure larger forces that played a major role in the city’s transformation.

The reality is that many cities around the world — Boston, London, Seattle, Tokyo, Washington, D.C. — have radically transformed themselves for the better over the same period. This suggests that common factors have been at work.”

Those “common factors”?  We all know them to be now to be the factors that enabled the global economic shift from manufacturing to knowledge — global networks and access to highly skilled talent, ultimately leading to the exponential growth of knowledge industries.

Aaron attributes at least part of the revival in the knowledge cities to leadership, saying that in New York’s case, the administrations of Rudolph Giuliani and Michael Bloomberg set the tone for the rebound.  He even notes how my hometown of Detroit, long left for dead, is making a comeback by utilizing many of the same assets other global cities utilized, and how a smaller city like Flint, MI can’t expect to plot the same course for itself:

“We can see this play out in the differences between Detroit, which is seeing something of a central city revival post-bankruptcy, and Flint, Mich. Detroit is the center of a large region with a thick labor market, has a big pool of engineering and other educated talent, is home to several major corporations, and still dominates the North American auto industry. It has true big-city amenities and a major international airport, and it is the biggest trade gateway to Canada.

Flint lacks all of these. Does that mean that the future is hopeless for Flint or for other similarly struggling cities and regions? No. Just as we didn’t know that New York City could turn around, we also don’t know what the future holds for Flint — and that could be a good thing. What we can say is that, as with New York, macroeconomic and other changes will need to occur to bring Flint and places like it back into favor before they will really be able to transform.”

Aaron ends by saying that political leadership must do the difficult job of dealing with its legacy challenges, from underfunded public pensions to inadequate infrastructure, work to pave the way for private growth that might be presently unknowable, and to avoid the kinds of government boondoggles that seek to stimulate growth, but actually hamper it.

All in all, a good piece.  But it reminded me that other factors come into play when it came to how the knowledge economy selected its winners and losers.  And struggling post-industrial cities were certainly losers.

My comment to his article and the subsequent tweetstorm pointed out that cities like New York, Boston, DC and the Bay Area were well positioned with certain assets as the economy turned in their favor, even as they were at their lowest moments.  Late 70’s New York still had Wall Street, even if financiers commuted in from Westchester County or Connecticut then, instead of living on the Upper East or West sides now.  It was still the nation’s media capital.  It was still a fashion capital, and it still had the eye of the entire world as the home of the United Nations.  Harvard, MIT and other universities make Boston a deep reservoir of elite talent; the same goes for Stanford and Berkeley in the Bay Area.  DC naturally attracts the nation’s best and brightest as our capital.  Each of these cities managed to leverage these assets for their growth.

Many Rust Belt cities have similar assets — Chicago, definitely so; Detroit, Cleveland, Pittsburgh and St. Louis, moderately so.  The problem for them, however, is two-fold: one, after relying so much on manufacturing for so long, the transition to utilizing other assets still moves at a glacial pace.  And two, much like Flint lacks the assets that Detroit does, limiting its prospects, Rust Belt city assets don’t carry the same weight as those on the coasts, therefore limiting their own prospects.

That brings me to my next point: the Rust Belt’s post-industrial transition remains an existential one, and that was echoed in the 2016 presidential election.  I maintain that Rust Belt cities are in a position not unlike where Southern cities were in the eight-decade span between the end of the Civil War and the end of World War II.  After losing their economy (the slave-driven plantation agriculture economy), enduring automation challenges that further reduced agriculture employment, and falling behind Northern cities in participating in the manufacturing economy, Southern cities struggled for nearly a century to figure out what to do.

After World War II, the economic winds shifted in the direction of Southern and Western cities, now together marketed as the Sunbelt.  They could market lower land, labor and construction costs to woo businesses.  The construction of the interstate highway system meant that the rail disadvantage of the South could be negated.  The spread of air conditioning made hot Southern and Southwest summers tolerable.

The Sunbelt perfected the practice of nibbling away at the Rust Belt’s economy to serve as a new economic foundation for them.  Once established, they took it and ran with it.

As for a Rust Belt future, I see Rust Belt cities eventually engaging in similar practices, but with their target being coastal cities.  Many Rust Belt cities have (to the surprise of many, I found out in my tweetstorm) strong urban bones with an abundance of walkable urbanism.  And it’s well known that this asset comes at an affordability that coastal cities can’t match.  While YIMBYs are doing everything they can to increase housing in coastal cities and push prices downward, we may find that businesses elect to move to other cities with similar assets at a lesser price, and hope to bring more people with them.  At some point a new economic foundation is established, and the process will accelerate.

Chicago has already reached this point, even if it hasn’t experienced the same success as the coastal cities.  Pittsburgh, Cleveland, Detroit, Milwaukee and St. Louis sit behind Chicago, at varying levels.  Sadly, I don’t know if the Flints or Akrons or Rockfords of the Rust Belt will ever see the same change, at least under our current economy.  But hey — in 1920, Charlotte was a small cotton processing center and minor rail hub with 46,000 people, while the prosperous auto industry was attracting enough people to Detroit to push it just shy of one million people.  Today, Charlotte is a major banking and financial center, the economic capital of two states, and has over 800,000 residents, while Detroit has fallen below 700,000.  The script was flipped.

Am I saying this will be a conscious Rust Belt strategy?  Not at all.  Even 40 years after reaching peak manufacturing employment nationwide, Rust Belt cities are still trying to figure out how to operate in an environment where manufacturing simply doesn’t dominate anymore.  Eventually each city will conduct its own evaluation of its assets and determine the appropriate way to market them.  This, however, is just my own understanding of how the broad macroeconomic cycle plays out and takes place into account.

4 Responses to “Envisioning a Rust Belt Future”

  1. BCollinsSignMan

    Spot on. Your insights about how formerly great Southern cities like Charleston, Richmond, Galveston, Norfolk, etc. struggled from the collapse of the cotton-slave economy in 1865 until the World War II build-up should be an important part of this national dialogue, but is never talked about. I grew up in a Southern manufacturing town that prospered as it ate away at the furniture manufacturing base that previously had been concentrated in places like Gardner, Mass., Philadephia and Grand Rapids, Michigan. So, I know what this Southern rebound started with the WW II build-up looked like. I've also spent time in older Southern cities on the coasts — the kind of towns like Wilmington, North Carolina, Savannah, Georgia and Mobile, Alabama — that faded away for the 7.5 decades from 1865 until 1942. These historic patterns are important, and I agree with you that they DO provide some insights into what could be in store for the so-called \”Rust Belt\” cities such as Cincinnati where I live. Keep it up. A lot of the bi-coastal media elite cannot talk about these things comfortably because not only are they simply ignorant of the history of the South and the Midwest, but also having to talk about the South means that they have to talk about the slave-based economy of the USA prior to 1865, they have to talk about racism, and they are not comfortable with that. Keep it up. This is important stuff.

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  2. Alon

    In New York and San Francisco, the 1970s were terrible for the central city, but not for the metro area as a whole. I'm using BEA statistics for per capita income from work (\”net earnings\”), excluding rental and interest income, scaled to the US average; all geographies refer to combined statistical areas.New York was at 122.5% in 1970, bottomed at 112.6% in 1978, and bounced back to 123.1% by 1983. By 1987 it was at 130.6%; since then the lowest level was 128.7%, in 1994. Current level is 135.9%. Put another way, New York did have a measurable decline in the mid-1970s, but the bounceback was rapid. Ed Glaeser's history of the city notes that New York only had that one bad period, comparing it with Boston, which went through multi-decade cycles of good and bad times. Even in the 1970s, the number of jobs in Manhattan was rising; it's just that anyone who could flee to the suburbs did.In Boston's case, the corresponding figures are 106.2% in 1970, 100.2% at the 1978 trough, 108.8% in 1982, and 132.9% today. Boston generally did not do well throughout the mid-20th century. The universities turned into major strength, but it took the rise of big science and venture capital to make economic use of them. The elite of Boston didn't get the moniker Boston Brahmins for the industrial benefits of university education.In the Bay Area and Washington, it goes further: there was simply no 1970s decline. Washington went from 123.8% in 1969 and 127.7% in 1970 to 124.4% in 1979 (the decadal low), and then crept up each business cycle, usually peaking during a recession or weak recovery. The Bay Area dipped from 125% in 1969 to 120.1% in 1973, then went back up to 125.7% in 1975, and finished the decade at 131.2% in 1980. It stayed in the 130s until the tech bubble, when it went from 133.3% in 1995 to 162.2% in 2000, crashed to 145.3% in 2003, and mostly stayed there until this decade, when it bounced again to 161% last year. This, again, is income from work, so it doesn't take into account the soaring income of the market-rate urban landlords.

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  3. D Holmes

    I think your comments are spot on. I think many rust belt cities are farther along with these transformation than most people realize. In Milwaukee, the public pensions are in better shape than any major city in the US. The highway system has for the most part been completely rebuilt over the past 10 years (and unlike the high growth sunbelt systems the system should be adequate to handle any increase in use likely to occur over the next 40 years). The water supply, wastewater treatment and stormwater management infrastructure are among the most advanced in the US. The legacy brownfields challenge has been overcome to the point where my expectation is that every former industrial site and every historic industrial building within a few miles of the downtown will be redeveloped or renovated over the next several decades. The future is already here. Its just that observers confuse inner city school, segregation and other challenges as something diagnostic of the rust belt rather than something shared throughout a much greater geographic area. I think the school solution is closer than people realize as well.Maybe i'm just an optimist.

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  4. D Holmes

    Regarding my brownfields comment, i was at a national conference on brownfields in Boston about 10 years ago and attended a presentation by the City's brownfields coordinator when he presented a graph for the past 20 or so yeara of the number of underutilized contaminated properties in the city. It still numbered over a thousand but the graph showed a straight declining line projected to reach 0 sites around 2025. I don't know where they're at now on that graph, but I realized at the time how from my rust belt vantage point it was almost unimaginable that development pressure and land values could be so high that there was essentially no brownfields problem. The contamination no matter how severe was essentially a non-factor in whether or not a particular property would be viable for redevelopment. I think were close to that point in Milwaukee (with a 46-acre former manufactured gas plant and active Superfund site in the inner harbor in need of about $15 million of cleanup in a neighborhood that is 80% Hispanic attracting multiple offers from developers in the $5 to $10 million range. The future is already here

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