New Geography

Author: Aaron M. Renn

  • The Silicon Valley Mindset

    The tech industry is one of the most powerful entities affecting our world. But who are these people? And what do they believe and how do they think about the world? A couple of recent articles provide a window into this.

    Rationalist Demographics

    The first is a set of demographics from the reader survey (unscientific, but with 5500 respondents) of the popular blog Slate Star Codex. SSC is the web site of Scott Alexander, pen name of a Midwest psychiatrist. It’s explicitly associated with the Rationalist movement and especially the Less Wrong community. If you’d like to get a feel for the Rationalist way of life, see the New York Times Magazine profile of them. One site says of them:

    …typical rationalist philosophical positions include reductionism, materialism, moral non-realism, utilitarianism, anti-deathism and transhumanism. Rationalists across all three groups tend to have high opinions of the Sequences and Slate Star Codex and cite both in arguments; rationalist discourse norms were shaped by How To Actually Change Your Mind and 37 Ways Words Can Be Wrong, among others.

    They analyze the world in terms of Bayesianism, game theory, trying to become aware of personal biases, etc. They are trying to improve themselves and the world through a clearer sense of reality as informed by their philosophical worldview above. Their heartland is Silicon Valley, though there’s a group of them NYC too of course.

    Alexander is a psychiatrist, but this community, and the Rationalists generally, is highly tech centric. Alexander himself is a defender of Silicon Valley. His readership is predominantly in computer science and other related tech professions, and overlaps heavily with Silicon Valley.

    His readers are 90% male, 89% white (Asians under-represented vs the Valley), and 81% atheist or agnostic. They skew significantly left in their politics. 55% of them are explicitly politically left, with another 24% libertarian. A higher percentage actually describe themselves as neoreactionary or alt-right (6.3%) than conservative (5.7%).

    The following table shows their responses on various topics:

    Item Left/Globalist Position Right/Populist Positions
    Immigration 55.8% more permissive 20.3% more restrictive
    Feminism 48.1% favorable 28.4% unfavorable
    Donald Trump 82.3% unfavorable 6.6% favorable
    Basic Income 60.1% favor 18.6% oppose
    Global Warming 72.8% requires action 13.7% does not require action
    Weightlifting 64.4% no/rarely 22.5% yes/often

    Silicon Valley Founders Survey

    A second source comes from a recent City Journal article by former Tech Crunch reporter Gregory Ferenstein. He used the Crunchbase database to survey 147 tech founders, including a few billionaires and other influentials, to get a sense of their belief system.

    One of his core findings is that Silicon Valley founders are strong believers in income inequality.

    The most common answer I received in Silicon Valley was this: over the (very) long run, an increasingly greater share of economic wealth will be generated by a smaller slice of very talented or original people. Everyone else will increasingly subsist on some combination of part-time entrepreneurial “gig work” and government aid. The way the Valley elite see it, everyone can try to be an entrepreneur; some small percentage will achieve wild success and create enough wealth that others can live comfortably. Many tech leaders appear optimistic that this type of economy will provide the vast majority of people with unprecedented prosperity and leisure, though no one quite knows when.

    The founders he surveyed (a tiny subset so beware of error margins) 2/3 believed that the top 10% of people would collect 50% or more of all the income in a meritocracy (the system they endorse).

    Y Combinator Paul Graham got in trouble for openly talking about inequality as inevitable. Not because other Valley execs thought he was wrong, but because the optics are bad. It’s similar to Uber CEO Travis Kalanick. His real crime was being so gauche as to put a picture of Ayn Rand as his Twitter avatar. He should have known that he was supposed to spout politically palatable bromides while running his company in a Rand-like mode, which seems to be how many of these firms in fact operate.

    Speaking of which, the politics of Silicon Valley are an odd mix of leftism and hyper-market economics. Overwhelmingly, Silicon Valley donates money to the Democrats and to progressive causes. (They also largely hate Donald Trump with a passion). What’s more, they have a communitarian streak and don’t think of themselves as hard core individualists:

    Indeed, in my survey, founders displayed a strong orientation toward collectivism. Fifty-nine percent believed in a health-care mandate, compared with just 21 percent of self-identified libertarians. They also believed that the government should coerce people into making wise personal decisions, such as whether to eat healthier foods. Sixty-two percent said that individual decisions had an impact on many other people, justifying government intervention.

    But they also support a neoliberal vision of the economy.

    Silicon Valley’s reputation as a haven for small-government activists isn’t entirely off base: the Valley does support some staunchly libertarian ideas, and the tech elite are not typical Democrats. They don’t like regulations or labor unions. For instance, Bill Gates and Mark Zuckerberg have both given hundreds of millions of dollars to charter schools and supported policies that would allow public schools to fire teachers more readily and dodge union membership. Big tech lobbyists are also strong supporters of free trade. According to Maplight, several telecommunications companies have lobbied for the Trans-Pacific Partnership (TPP) trade deal that union groups and many Democrats oppose.

    …

    Theirs is a move to make public schools more like charters—a different focus from a libertarian vision of simply privatizing the education system. The tech elite want to bring the essence of free markets to all things public and private. Using traditional American political categories, this would land them in the Republican camp.

    This is most evident in their techno-utopianism and belief that unbridled creative destruction always brings long run benefits:

    On the capitalistic side, tech founders were extraordinarily optimistic about the nature of change, especially the kind of unpredictable “creative destruction” associated with free markets. Philosophically, most tech founders believe that “change over the long run is inherently positive.” Or, as Hillary Clinton supporter and billionaire Reid Hoffman told me: “I tend to believe that most Silicon Valley people are very much long-term optimists. . . . Could we have a bad 20 years? Absolutely. But if you’re working toward progress, your future will be better than your present.”

    They in part reconcile all these through a belief in high taxation and redistribution, especially in the form of a basic income. This policy idea, nowhere fully implemented, is probably completely unknown to most Americans, yet has strong majority support in Silicon Valley (60% of SSC’s readers).

    The Silicon Valley State of Mind

    Combining these, what we see is that Silicon Valley is made up overwhelmingly of men, who are highly intelligent and with extreme faith in their intelligence and rationality, largely atheist, and largely leftist in their thinking, but who believe in an aristocracy of talent.

    They exhibit extreme faith in the goodness of technical progress and seem to believe that human problems can be resolved almost entirely through the realm of technology and engineering. They believe in policy, but a technocratic vision of it in which their rationalist designs, powered by technology, inform government decisions.

    One might say they are naive, but their track record of success gives them reasons for confidence. Consider Uber. Uber is effectively a technological workaround to dysfunctional politics and regulation. It has revolutionized transportation in many cities were taxis were before almost not available. Where almost all other reform efforts failed, Uber was a spectacular success. Apple, Google, Amazon, Facebook, etc. have all been extremely successful at what they do. And in any case, Silicon Valley’s “fail false” mentality means that they don’t necessarily see their failures – say, Mark Zuckerberg’s $100 million schools fiasco in Newark – as a reflection on their capabilities. Many failures and a handful of grand slams is how their system is designed to function.

    What’s more, it’s not just them who thinks they can fix things. Much of the rest of society seems to believe it too. For example, Alon Levy just put up a post examining the composition of NY Gov. Cuomo’s “MTA Genius Grant” panel, and how it is heavily slanted towards tech people vs. transportation people. Of course, the politicians and transport people have failed with the MTA to date. So they lose credibility by failures as Silicon Valley gains it with successes.

    However, their techno-optimistic view perhaps leads them to underestimate second and third order consequences and overestimate their ability to deal with them. For example, perhaps more than anyone else, Mark Zuckerberg and Jack Dorsey made Donald Trump’s presidency possible. Without his social media impact, and the ability of his troll army to drive news cycles, I very much doubt he would have gotten over the top. That’s a second order effect they never anticipated.

    Also, Trump himself is a classic example of creative destruction. He disrupted the politics business in the same way Netflix disrupted the video rental one. Yet they despise him and don’t think this is a positive change. It seems that they only like disruption when they are the ones controlling it, and don’t really believe in creative destruction per se. Instead it’s just another term of art for their taking over one industry after another.

    They themselves have no problem at all radically reordering society with unproven policies at levels far beyond what almost any political figure would do. Their blasé acceptance of massive job destruction and embrace of a speculative basic income scheme to compensate illustrate that. It’s no surprise to me that Mencius Moldbug, the founder of neoreaction (one of the sub-tribes commonly grouped with the alt-right that believes in absolute monarchy or the state as a publicly traded sovereign corporation), is a Silicon Valley techie and startup founder who reportedly started out in the Rationalist movement.

    They are also comfortable with an almost feudal distribution of wealth, so long as it’s based on an aristocracy of talent rather than heredity. And it’s an aristocracy that believes it should rule as well as profit. When they talk about a communitarian ethos in which the government needs to compel people to act properly, it’s pretty clear who the determinant of that is. It will of course be intelligent “rationalists” like them, who know what is right, have the technology to bring it into being, and whose motivations are beyond question (at least in their own mind).

    It’s a stunningly grandiose vision. Much like the EU, I suspect the public’s tolerance for it will be directly proportional to benefits continuously delivered. To the extent that Silicon Valley is able to deliver benefits to the common good, few will stand in their way. If the benefits slow, or the costs (including second and third order costs) start exceeding the benefits, we’ll see how it turns out for them.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo by Maurizio Pesce via Flickr, using CC License.

  • Seattle Booms in Latest Census City-Level Estimates

    Seattle tops the growth charts among the top 25 cities in the Census Bureau’s latest release of 2016 city and town population estimates.

    Seattle, a land-locked (no annexation) city in the Pacific Northwest with a limited history of high density, managed to add 20,847 people last year, a growth rate of over 3% – tops among the 25 largest cities. Seattle has added about 94,000 people just since 2010. That’s over 15% growth. The total population growth in Seattle last year was about the same as that in New York City. Even if you rank by total change instead of percentage, Seattle would still be 5th out of the top 25 – ahead of some much larger places and some much sprawlier places.

    Seattle’s urban and regional population growth are strong. It is a national bright spot for transit growth. Its tech economy is nova hot. I haven’t been there in a while, but it seems to me that Seattle is a city undergoing a significant transformation to the next level.

    All but three of the top 25 cities posted growth in population, showing that there’s definitely central city growth happening in many places, even if the preponderance of national growth is suburban. The older cores of NYC, SF, DC, Boston, and Philly are all growing. Even the cities of Dallas and Ft. Worth grew nicely. Only Chicago, Detroit, and Memphis lost population. Houston, a geographically gigantic central city, posted fairly weak growth compared to what one might have expected.

    In the Midwest, Columbus passed Indianapolis to become the 14th largest city in the country. Detroit, despite enormous population loss, is still about the same population as Boston and Washington, DC.

    Here are the 25 largest cities in the country in 2016, ranked by year over year population growth rate:

    Rank City 2015 2016 Total Change Pct Change
    1 Seattle city, WA 683,505 704,352 20,847 3.05%
    2 Fort Worth city, TX 834,171 854,113 19,942 2.39%
    3 Phoenix city, AZ 1,582,904 1,615,017 32,113 2.03%
    4 Denver city, CO 680,032 693,060 13,028 1.92%
    5 Austin city, TX 930,152 947,890 17,738 1.91%
    6 Charlotte city, NC 826,395 842,051 15,656 1.89%
    7 San Antonio city, TX 1,468,037 1,492,510 24,473 1.67%
    8 Washington city, DC 670,377 681,170 10,793 1.61%
    9 Dallas city, TX 1,297,327 1,317,929 20,602 1.59%
    10 Jacksonville city, FL 867,164 880,619 13,455 1.55%
    11 Columbus city, OH 850,044 860,090 10,046 1.18%
    12 San Diego city, CA 1,390,915 1,406,630 15,715 1.13%
    13 Boston city, MA 665,984 673,184 7,200 1.08%
    14 San Francisco city, CA 862,004 870,887 8,883 1.03%
    15 Nashville-Davidson metropolitan government (balance), TN 654,078 660,388 6,310 0.96%
    16 Houston city, TX 2,284,816 2,303,482 18,666 0.82%
    17 Los Angeles city, CA 3,949,149 3,976,322 27,173 0.69%
    18 El Paso city, TX 678,570 683,080 4,510 0.66%
    19 Indianapolis city (balance), IN 852,295 855,164 2,869 0.34%
    20 San Jose city, CA 1,022,627 1,025,350 2,723 0.27%
    21 New York city, NY 8,516,502 8,537,673 21,171 0.25%
    22 Philadelphia city, PA 1,564,964 1,567,872 2,908 0.19%
    23 Memphis city, TN 654,454 652,717 -1,737 -0.27%
    24 Chicago city, IL 2,713,596 2,704,958 -8,638 -0.32%
    25 Detroit city, MI 676,336 672,795 -3,541 -0.52%

    And here are the top 25 ranked by the 2010-2016 growth rate.

    Rank City 2010 2016 Total Change Pct Change
    1 Austin city, TX 815,587 947,890 132,303 16.22%
    2 Seattle city, WA 610,403 704,352 93,949 15.39%
    3 Denver city, CO 603,329 693,060 89,731 14.87%
    4 Fort Worth city, TX 748,719 854,113 105,394 14.08%
    5 Charlotte city, NC 738,561 842,051 103,490 14.01%
    6 Washington city, DC 605,183 681,170 75,987 12.56%
    7 San Antonio city, TX 1,333,952 1,492,510 158,558 11.89%
    8 Phoenix city, AZ 1,450,629 1,615,017 164,388 11.33%
    9 Dallas city, TX 1,200,711 1,317,929 117,218 9.76%
    10 Houston city, TX 2,105,625 2,303,482 197,857 9.40%
    11 Nashville-Davidson metropolitan government (balance), TN 604,893 660,388 55,495 9.17%
    12 Columbus city, OH 790,864 860,090 69,226 8.75%
    13 Boston city, MA 620,701 673,184 52,483 8.46%
    14 San Francisco city, CA 805,766 870,887 65,121 8.08%
    15 San Diego city, CA 1,306,153 1,406,630 100,477 7.69%
    16 San Jose city, CA 955,290 1,025,350 70,060 7.33%
    17 Jacksonville city, FL 823,318 880,619 57,301 6.96%
    18 El Paso city, TX 650,604 683,080 32,476 4.99%
    19 Los Angeles city, CA 3,796,292 3,976,322 180,030 4.74%
    20 New York city, NY 8,192,026 8,537,673 345,647 4.22%
    21 Indianapolis city (balance), IN 821,659 855,164 33,505 4.08%
    22 Philadelphia city, PA 1,528,427 1,567,872 39,445 2.58%
    23 Chicago city, IL 2,697,736 2,704,958 7,222 0.27%
    24 Memphis city, TN 652,456 652,717 261 0.04%
    25 Detroit city, MI 711,088 672,795 -38,293 -5.39%

    And the top 25 ranked by total 2016 population:

    Rank City 2016
    1 New York city, NY 8,537,673
    2 Los Angeles city, CA 3,976,322
    3 Chicago city, IL 2,704,958
    4 Houston city, TX 2,303,482
    5 Phoenix city, AZ 1,615,017
    6 Philadelphia city, PA 1,567,872
    7 San Antonio city, TX 1,492,510
    8 San Diego city, CA 1,406,630
    9 Dallas city, TX 1,317,929
    10 San Jose city, CA 1,025,350
    11 Austin city, TX 947,890
    12 Jacksonville city, FL 880,619
    13 San Francisco city, CA 870,887
    14 Columbus city, OH 860,090
    15 Indianapolis city (balance), IN 855,164
    16 Fort Worth city, TX 854,113
    17 Charlotte city, NC 842,051
    18 Seattle city, WA 704,352
    19 Denver city, CO 693,060
    20 El Paso city, TX 683,080
    21 Washington city, DC 681,170
    22 Boston city, MA 673,184
    23 Detroit city, MI 672,795
    24 Nashville-Davidson metropolitan government (balance), TN 660,388
    25 Memphis city, TN 652,717

    This post originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo by Rattlhed at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons

  • Rebuilding America’s Infrastructure

    President Trump promised a $1 trillion infrastructure plan during his campaign. Spending more money on infrastructure is something that has broad support among people of all political persuasions.

    But as the case of Louisville’s $2.4 billion bridge debacle shows, not all infrastructure spending is good spending.

    And as a judge’s ruling halting the Maryland Purple Line project to require more environmental study shows, many of our infrastructure problems have nothing to do with money.

    I tackle these problems and more in a major essay on the rebuilding America’s infrastructure in the new issue of American Affairs. Some key themes include:

    • America’s infrastructure needs are overwhelmingly for maintenance, not expansion.
    • Infrastructure means much more than surface transport (highways, transit), but includes underfunded items like dams and sewers.
    • There is a mismatch between funding structures and infrastructure needs that must be fixed.
    • Politics and regulatory barriers are often a greater problem than money, and until we improve this, progress on fixing infrastructure will be limited.
    • Private capital alone will not solve the funding challenge and comes with big problems of its own. There’s no such thing as free money.
    • An initial sketch of what an infrastructure program should look like.

    Here is an excerpt:

    Yet there clearly are major infrastructure repair needs in America. We have not been properly maintaining the assets we have built. Levee failures notoriously caused much of the flooding in New Orleans after Hurricane Katrina, but America has yet to address the neglect of its dam and levee systems. For example, the recent possibility of an overflow or collapse at the Oroville Dam in California forced 180,000 people to be evacuated. Many dams, levees, and locks on our inland waterway system are in need of repair, often at significant cost. Examples include Locks 52 and 53 on the Ohio River. Built in 1929, their replacement cost is $2.9 billion. As the New York Times reported, this replacement has been botched, and it was originally supposed to cost only $775 million—still a lot of money.

    Tens of billions of dollars are also needed simply to renovate America’s legacy transit infrastructure. The District of Columbia’s own Metro subway system has suffered several accidents that require emergency repairs to improve safety. It lost 14 percent of its riders last year, as they lost faith in the system. San Francisco’s BART rail system needs at least $10 billion in repairs. Boston’s transit system needs over $7 billion in repairs. New York’s subway signals still mostly rely on 1930s-era technology.

    Similar maintenance backlogs affect other infrastructure types. America’s older urban regions need to spend vast sums of money on sewer system environmental retrofit—$2.7 billion in Cleveland and $4.7 billion in Saint Louis. The state of Rhode Island had to pay $163 million to replace its Sakonnet River Bridge because it had failed to perform routine maintenance on the old one. This is just a sampling of America’s infrastructure gaps.

    But the poster child for American infrastructure problems is Flint, Michigan, where a water treatment error caused lead to leach into the water supply, rendering it unfit for human consumption. This caused then candidate Trump to say, “It used to be cars were made in Flint, and you couldn’t drink the water in Mexico. Now, the cars are made in Mexico and you can’t drink the water in Flint.” To be clear, Flint’s water crisis was caused by human error, but that was only possible because of the city’s old lead-pipe infrastructure. America’s water lines, in many cases, haven’t been touched since they were originally installed many decades ago. Some cities still have wooden water pipes in service. Syracuse mayor Stephanie Miner once said that if her city received the same $1 billion commitment from the state that Buffalo did, she would spend three quarters of it just to fix the city’s water lines.

    While things are not uniformly dire, it is clear that there is a need to repair and upgrade America’s existing infrastructure. It is this rebuilding, not building—making America’s infrastructure great again—that the Trump administration should focus on.

    Click through to read the whole thing.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    By Pi.1415926535 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

  • Rail in Legacy Cities vs. Federal Funds to Poorer Markets

    Someone asked me to reconcile my recent paper on rail funding with my stance on Cal-Train electrification that the feds should prioritize funding towards poorer cities. Very good question because there is an apparent conflict there.

    My recent paper was positioned as a response to Trump’s plan to completely eliminate rail transit capital grants while retaining the basic structure of federal transport funding. I think these grants should be retained, but routed to repairs on the core legacy transit system which have a very strong rationale. (I might advocate a difference if we were talking about broader reform ideas like block grants to states or devolution).

    More broadly, my belief is that the creative class has gotten a lot of love over the last 15 years. That’s understandable since cities who don’t capture at least some high income earners to help pay the bills are in trouble. But a lot of cities are well past that point. It’s time to shift into harvest mode on that and refocus our efforts on lower income residents (and cities with significant poverty challenges).

    Hence I want to see federal infrastructure funding routed to items like sewer and water system repairs.

    For transit, I would like to see a federal focus on sustaining a high quality basic bus network in places like Detroit. So I do support prioritizing funds to these regions for plain old bus service.

    I do think wealthy regions like the Bay Area should pay for their own expansion projects because they generate significant value that can be captured to pay for it. Caltrain electrification makes sense to me as a project. This is one that you can make an argument about whether it’s really an updating of a legacy line vs an expansion. But in general, state of good service repairs should be prioritized, so this is not where I’d spend my federal money. (Though again, it’s not an objectively bad project).

    It’s the same in DC, NYC, etc. Federal funds should go to repairs rather than expansion. Some projects like the Second Ave. Subway make sense from a demand perspective, so it’s not ridiculous if the feds funded them. But my preference would be to use federal funding for maintenance, with expansion projects funded locally.

    The one expansion project of federal significance is the Gateway Tunnel, which service a major interstate regional rail corridor (although it also has local transit benefits).

    In short, to the extent that we keep the same basic federal system, send rail capital grants to legacy city repair (potentially including systems in older cities like Cleveland that have a line or two that might need repairs). Cities should pay for their own rail expansion projects (at least until we significantly reduce our critical repair backlog). The feds should look at bus funding to figure out how to create better basic bus networks, focused on cities with significant poverty and fiscal stress. At a minimum, make sure they’ve got decent quality buses, depots, etc. There may be a limit to what the feds can accomplish here, but that’s my general view of where the priority should be: repairs to existing mission critical rail lines and helping distressed communities.

    This article originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo by Yuko Honda [CC BY-SA 2.0], via Wikimedia Commons

  • The Downside of Pragmatism

    ‘Pragmatism killed Michigan.”

    When my consultant friend Dwight Gibson said this about his home state, I was taken aback. I always thought pragmatism was a good thing, and I think of myself as a pragmatic person in many ways. My first response to hearing somebody present an intriguing but nebulous policy idea is usually to say, “Yes, but what exactly am I supposed to do to make this happen?”

    Pragmatism, which we like to identify as a quintessentially American trait, indeed is often a good thing. But as with many other good things, it comes with a dark side.

    In what Gibson, who heads the Exploration Group, calls the “maker” cities and states of the Midwest and Northeast, people historically worked primarily with their hands. They were factory workers, carpenters, plumbers, engineers. They could interact with the physical world to make it do what they wanted.

    That was powerful, but it brought negative baggage, such as the devaluing of other ways of interacting with the world. Political commentator David Frum once said of Detroit that a key reason it failed was a “defiant rejection of education and the arts.” To Frum, the statue of Joe Louis’ fist downtown is a powerful statement: “Here is a city ruled by brawn.” Manual workers often don’t really respect mental work (and vice versa). Hence the old refrain, “He might have book learning, but he doesn’t have any common sense.”

    But there’s more to it than that. We all see problems though the lens of our own occupational backgrounds and skill sets. I often see the world as a consultant would, for example. Rust Belt places, steeped in a culture of working with their hands, view the world in that pragmatic way. The manual worker or tinkering engineer says, “What can I do with the things that are in my hands?” They are often quite ingenious and creative in making use of these, but they tend to think only in those practical terms. The key question is, “Does it work?” From there it is, “Does it work efficiently?” These are the values of industrial management articulated by Frederick Taylor a century ago.

    The problem with this is that there’s no room for anything outside of the immediate and practical. In a pragmatic mindset, how do you make progress when you don’t see a practical path from point A to point B? You can’t, which is one reason why so many of these old industrial communities are stuck, even when you adjust for their legitimate structural challenges. Their world is limited to the possibilities that they hold, in a sense, in their hands. The people are gifted with their hands, but then end up being limited by them. The thinking goes something like, “If I can’t do it, it can’t be done.”

    By contrast, the coasts and creative centers have very different ways of seeing and interacting with the world. Creative people from the Rust Belt who move to Silicon Valley or Austin or New York often describe a sense of relief or even exhilaration. This isn’t because of the physical environment, but because of a culture that sees and values possibilities rather than only practicalities.

    We see this in the mantra of Steve Jobs, who thought that products needed to be “insanely great” and who built a company whose advertising slogan was “Think Different.” In Silicon Valley, people dream the impossible dream, one that is decidedly impractical, then sail off into the unknown to try to make it happen. This is very risky. It often flops badly. But the successes are what create the world we live in.

    On the other coast, it wasn’t a pragmatic decision for Donald Trump to ride down that escalator and announce that he was running for president. He already had a great business. He had a lot to lose by getting involved with politics. As commentators routinely asserted, he didn’t have “a path to victory.” And yet he won anyway.

    Trump is a lifelong New Yorker. His willingness to sail off on a difficult, audaciously ambitious journey without knowing if he could make it to the other side is a powerful, tangible example to the world of why New York has remained America’s and the world’s premier city for so long, even decades after its physical advantages, such as its port, have declined in value.

    Sailing off into the dangerous unknown is what the explorers of old did. Gibson named his firm the Exploration Group to make the point that it is still possible for organizations and places to get to destinations when they aren’t sure how to get there or what they’ll find when they do. This is ultimately what the people in creative capitals do. They explore unknown territories without a map, even if they don’t think about it that way.

    Rust Belt regions shouldn’t try to jettison their history and culture. That’s neither realistic nor desirable. Pragmatism itself is a powerful and necessary tool. It just can’t be the only one in the tool chest. If these communities want to bend the growth curve, they need to expand their repertoire of capabilities to include what appears to be the impractical and the decidedly non-pragmatic. That would do much more for their entrepreneurial ecosystems than any amount of gigabit fiber or venture capital funding ever will.

    *For more on this topic from Aaron M. Renn, listen to this episode of his podcast.

    This article originally appeared on Governing.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo: Mike Boening Photography, CC License.

  • The Great Non-Profit Die Off

    Marc Lapides wrote an op-ed in Crain’s Chicago Business calling for an 1871 accelerator for creating new non-profits.

    Most cities could actually use the opposite. What they need is an infrastructure for euthanizing non-profits that are past their expiration date.

    When I look around older cities, I frequently see that they’ve got a veritable armada of non-profits. Rarely do I see these making a huge difference in the trajectory of the city.

    The usual complaint about too many non-profits is that they aren’t coordinated, and so often overlap or don’t work well together on whatever cause it is they are trying to advance.

    This actually doesn’t bother me. The temptation to try to create a single uber-structure for everything is always there, but distributed systems have their own virtues. And where there are legitimate problems, the organizations generally come up with a solution. An example is the various “clearing house” organizations that charitable orgs use to prevent double-dipping.

    The bigger problem is that all these non-profits are basically sand in the gears that make it harder to get anything done. While the Lapides talks about innovation, from what I’ve seen non-profits seem to be among the biggest advocates for the status quo.

    Ironically, Lapides implicitly makes this point when he acknowledges funders prefer big, established organization.

    Try to do anything in a city and you’ll be told to meet with all these “stakeholders”, a large percentage of whom are non-profit leaders who claim to speak in the name of some constituency or cause but too often represent their own personal fief.

    Anyone wanting to do things in a city has to run this gauntlet of non-profits and find a way to placate them.

    Sean Safford’s famous study “Why the Garden Club Couldn’t Save Youngstown” is a perfect example of this. The Garden Club – a non-profit – was basically a vehicle for reinforcing existing social networks, creating excess social capital that made change difficult.

    Too many cities are like Safford’s Youngstown. They could use a culling of non-profits more than the creation of new ones.

    Killing unneeded stuff off is hard almost everywhere. For example, eliminating an obsolete app or even a report can be very difficult, as I can tell you from my IT experience. But I can also tell you a lot of them do very little. One time I replaced a legacy system with over a thousand reports. We went live with less than 15 initially critical reports, and the lack of the other 1000+ made no difference. In cities, the Pareto principle likely applies to non-profits as it does everywhere else: the top 20% most effective non-profits deliver 80% of the public benefits.

    But just because eliminating organizations is hard doesn’t mean it’s not worthwhile. In cities that are having trouble changing or dealing with problems, leaders should be looking harder at getting rid of a bunch of non-profits than they are at starting new ones.

    This piece was originally published on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Image via Crain’s Chicago Business.

  • America the Cheap

    America is a price dominant culture, and we need to take responsibility for that when we complain about bad customer service, poor infrastructure, etc. Certainly American business and political leadership could be better, but they aren’t the ones who decided to shop at Wal-Mart instead of the local store (favoring short term financial gain over long term community loss). Nor are they the ones who force us to vote for politicians promising something for nothing.

    This is the subject of my latest City Journal piece, “America the Cheap“:

    American politicians understand this. That’s why they frequently promise voters something for nothing, or free stuff with other people’s money. Republicans promise to “eliminate fraud and waste” or to increase government revenues somehow by slashing taxes, or through some other cost-free method. Democrats say that they are going to tax “the rich,” such as when New York City mayoral candidate Bill de Blasio said that he would give all New Yorkers free pre-K education, funded by a special surtax on high-income households (i.e., somebody else).

    European social democracies offer extensive government services and generously funded safety-net programs. But these come with high taxes for the average citizen. Few American politicians are willing to advocate explicitly for that. They keep promising citizens a free lunch. And why not? It seems to be what we want to hear: there’s some magic elixir that can transmute lead into gold.

    The populists are right that corporate, governmental, and cultural elites have too often let America down, and even sometimes acted disgracefully. But that doesn’t mean that the man on the street is off the hook. Just because someone else is guilty doesn’t mean that we’re all innocent. If populism takes a high view of the ordinary citizen, then it should also recognize the importance of these citizens’ decisions in shaping the world we live in.

    Click through to read the whole thing.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo Credit: Mike Kalasnik, CC BY-SA 2.0

  • Seven Ways Life Has Gotten Better in Rural America

    Rural America is taking a beating in the news. Part of it is deserved. I grew up in rural Indiana and am shocked at some of what is going on there: severe hard drug problems, HIV outbreaks, serious crime, etc.

    Things are a long way from when I was a kid there in the 70s and 80s and people not only left their doors unlocked, they left their keys in the car.

    While I don’t want to minimize the challenges facing rural America, there’s a lot that has flat out gotten better since I first moved to Harrison County in first grade around 1976.

    The county where I grew up got a casino that spins off huge amounts of cash. So it’s not the norm. But even excluding everything that happened after the casino arrived, here are seven ways life has gotten better there.

    1. Water service. I laugh when urbanites brag about watering their flowers with runoff they caught in their “rain barrel.” That’s what we drank growing up. No city water service was available, so you had no choice but to dig a well or have a cistern. We had a cistern that was filled with rainwater from our roof. In your cistern raw low, there was an actual industry of people who would come refill it from a tanker truck. Today, people where I grew up have access to water service if they want it.

    2. Trash service. Similar to water service, there was no public or commercial trash pickup when I was a kid. You had to throw food scraps to animals and burn your trash in a 55 gallon drum. When it filled up with tin cans and the like, or if you needed to dispose of a larger item like a TV, lots of people had their own dumps on their property. Today you can get commercial trash pickup if you want it.

    3. Private telephone lines. Believe it or not, when I was a kid we had a party line. That means multiple families shared the same phone line. If you needed to make a call, you’d pick up the phone and find out if your neighbors where using the line before dialing. You couldn’t get a private line unless somebody who had one died first. Somewhere along the way, the phone company put in an upgrade and you could get a private phone line. (On the downside, it’s no longer possible to dial people in town using just four digits anymore).

    4. Paved roads. The road we lived on was gravel when I first moved there. Most roads in the county were paved, but quite a few were still gravel. Today the roads are all in amazing shape because of the casino, but even before then my road and others were paved using a technique called “chip and seal.” Basically this involves spraying some kind of tar on the road, then covering it in fine gravel, which is compacted into a paving surface. No more massive clouds of dust.

    5. Satellite TV. When I was in high school in the 80s, cable was starting to get big. People where I lived might have wanted their MTV, but they couldn’t get it. There was maybe cable TV in the county seat (I’m not sure). But most folks were stuck with 4-5 over the air channels showing I Love Lucy reruns. Today, thanks to satellite TV, people in rural America have access to every channel you can get in town.

    6. Internet Service. The web hadn’t even been invented back in the 70s and 80s. The internet was a small, government and academic network. Today, there’s pretty wide broadband availability through either some kind of DSL type service or satellite internet. My father has satellite internet and it works pretty good if you ask me.

    7. Amazon, Apple and Netflix. Speaking of the internet, this provided access to everything from designer clothing to pretty much every book ever published. The days of needing to be in a big city with a cool indie record store in order to get good tunes is over. You can now get access to products people in Chicago couldn’t dream of when I was a kid.

    Actually, I could list a whole bunch more things besides these, but I want to be sure not to include anything that might have come from casino money. And I see all kinds of interesting things that were probably never there before in other small towns I visit, such as good coffee shops.

    Not that long ago you were in a sense cut off from the world if you lived in a rural area. Today that’s not the case in many places. I’m not going to claim life is perfect in these areas. They have big, serious challenges. But in a number of ways life has just plain gotten better in rural America in the past two to three decades.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo: The house Aaron grew up in.

  • What Do We Do With Shrinking Cities?

    Shrinking Cities: Understanding Urban Decline in the United States
    By Russell Weaver, Sharmistha Bagchi-Sen, Jason Knight, and Amy E. Frazier
    Routledge (2017)

    Cities like Detroit, St. Louis, and Cleveland have lost stunning percentages of their peak population since 1950. Yet these are all in metro areas whose regional populations are much higher than in 1950, even if not at their all time peak high in all of them.

    Some cities like Youngstown have gone so far as to try to plan for shrinkage and a permanently reduced population future. Detroit did something similar with its Detroit Future City plan, though that has subsequently been scrapped.

    How do we think about shrinkage? How do we define a shrinking city? What should shrinking cities do? These are questions that have been swirling around for the decade I’ve been writing about cities here.

    The new academic book Shrinking Cities aims to put some rigor around those questions. The first half of the book is devoted to an examination of shrinkage in the United States. The authors note that any measure designed to identify shrinking cities has a note of the arbitrary about it. The measure they select is population decline of 25% or more over the 40 year period from 1970 to 2010. They look at both census tracts and cities. Surprisingly, they find the shrinking census tracts are very widespread in America, and are on the rise in the Sun Belt. Shrinkage in terms of population loss is not a Rust Belt only phenomenon, though shrinking municipalities as a whole are concentrated in that region.

    The authors look at economic decline separately, examining census tracts where there were increasing levels of concentrated disadvantage (which include include such measures as female headed household, unemployment rate, and low educational attainment as disadvantage indicators). Unsurprisingly, economic decline is more common and more severe in shrinking tracts, though there is not complete overlap. They find that social distress is more associated with economic decline whereas physical distress (e.g., vacant housing) is associated more with population decline.

    After a presentation of the data, the book reviews various theories of what causes shrinkage and decline such as suburbanization. One that was particularly interesting was the social capital theory. Is low social capital associated with shrinkage and economic decline? It is. One of the indicators of social capital is homeownership. The book observes:

    In other words, relative to tracts that shrank and did not decline, tracts that experienced coupled shrinkage and decline witnessed a substantial drop in homeownership rates that cannot be explained by chance alone. If homeownership is a useful indicator of social capital, then his result implies that social capital may have decreased in these shrinking-declining tracts as well. Thus, tracts that are able to keep their homeownership rates steady during population shrinkage may be more resistant to decline via social capital.

    The second half of the book looks more at potential strategies for countering or adapting to change. These include various pro-growth policies, “rightsizing”, regional government, community development initiatives, etc. While some of these have had success in isolated cases, none of them have had systemic, replicable success. This makes for a bit of depressing reading. As one person told me about this aspect of the book, “Shrinking cities theory is at a dead end.”

    Because of its academic nature, and high price tag, this book is not for everyone. But policy developers in shrinking areas should certainly ground themselves in this summary of shrinking cities research and academic theories found in it.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo of Brush Park, Detroit by Stephen Harlan, CC BY-SA 2.0

  • The Quest for Food Freedom

    Mariza Ruelas currently faces up to two years in jail in California for the crime of selling ceviche through a Facebook food group. Welcome to the mad world of American food regulation. In Biting the Hands That Feed Us, Baylen Linnekin looks closely at a system that can take pride in a historically safe food supply but that also imposes too many rules that defy common sense.

    Linnekin traces the system’s origins to The Jungle, Upton Sinclair’s exposé of the appalling conditions in Chicago’s slaughterhouses, and to the New Deal’s hyper-regulation of agriculture. Such intrusiveness culminated in the case of Wickard v. Filburn, in which the Supreme Court ruled that Americans don’t even have the right to consume food they grow themselves, on their own land. Food regulation has marched steadily onward ever since.

    While working conditions and food safety improved dramatically thanks to these efforts, the move to regulate all food products according to uniform standards also produced a system with a host of strange rules—such as requiring organic skim milk that is free of additives to be labeled “Non-Grade ‘A’ Milk Product–Natural Milk Vitamins Removed.” Bans on urban agriculture have outlawed backyard chicken coops and front-yard gardens. Seemingly random changes in safety requirements force the shutdowns of businesses with no incidents of contamination or sickened customers. In some jurisdictions, it’s illegal to slice off a sample of cheese or cut the stalk off of lettuce at farmer’s markets. Microbreweries were threatened with having to register as pet-food manufacturers if they wanted to donate their spent grains for animal feed (a long-standard practice even for big breweries). In public parks, foraging of any sort—such as picking wild berries—is often banned.

    Mariza Ruelas made her ceviche at home, which is why she’s in trouble with the law: food-safety mandates have made home production of food for sale, even in small quantities, illegal. You might be in trouble, too, if, say, you contribute a pan of brownies to the bake sale at your child’s school. That’s probably illegal.

    States and localities are starting to push back at this regulatory insanity. Some states have instituted “cottage-food laws” allowing home preparation of small amounts of food for sale in limited venues, such as at farmer’s markets. Wyoming passed a comprehensive Food Freedom Act reducing regulation of food sales, so long as no middleman is involved. Some cities have legalized the raising of chickens or urban beekeeping. But there’s a long way to go.

    For Linnekin, a food-law professor, the goal is to make traditional and “sustainable” agricultural practices legal. Much of what he argues for makes good sense, but there’s another side to the issue. Because so many urban hipsters want to produce (or at least consume) artisanal food products, food law, along with zoning, often serves as their point of entry into the vast regulatory web that smothers so many American businesses. This awareness doesn’t necessarily turn urban epicures into liberty-minded activists, though. Many small-scale organic-food producers and their customers simply want to make their preferred practices legal and easier to practice—while saddling major corporate producers of food with added regulations. In general, food activists aren’t much interested in establishing better rules and then letting the market determine outcomes. Instead, they seek specific outcomes—more composting, for example—and deem any rule that fails to support such goals to be a bad one.

    Linnekin seems somewhat sympathetic to this small-is-better tendency. He wants to eliminate “ag-gag” laws that protect farmers from harassment by activists. He thinks that many food products carry antiquated grading standards and wants to see them changed. But many of these standards have solid rationales. Linnekin objects, for example, to the USDA’s “prime” grade for beef being determined by the level of fat marbling. But fat is the driver of taste, and many small producers of leaner, grass-fed beef sell products that often don’t taste very good. They don’t deserve a “prime” grading.

    While regulations hostile to industrial, mass-scale agriculture—which feeds a global population of 7 billion people—should be avoided, rationalizing archaic and protectionist regulations makes sense. So does exempting small-scale producers from many regulations and embracing a more general “food-freedom” philosophy. As Biting the Hands That Feed Us makes clear, our current food-regulatory approach is too often a theater of the absurd.

    This post original appeared in City Journal on March 15, 2017.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.