New Geography

Author: Jason Sibert

  • The Limits of Portland’s Craft Economy

    Charles Heying, the author of Brews to Bikes: Portland’s Artisan Economy, covers Portland’s indie fashion, book and music sector, its recycling/reuse businesses, craft businesses, bike sector, technology businesses and non-profits.

    His thesis is that Portland represents a return to the craftsmanship that defined the pre-industrial age. Heying mostly denies that the artisan economy produces high-end goods for a limited market, and sees it as a broader shift in our society away from mass production. A critic of Richard Florida’s theories, he denies that cities should make cosmetic changes to attract well educated professionals. Instead, he sees the artisan economy as something that emerges from below, rather than imposed from above by local officials.

    But there are some problems with this thesis. Portland has many coffee roasters, but it also has many Starbucks. Silicon Forest, Portland’s tech hub, includes IBM, Intel and Techtronics. None of these firms are small, artisan firms. There are indie designers in Portland but Nike and Columbia Sportswear and Adidas also call Portland home. Sure, twelve percent of people in Portland bike, but that means a lot rely on the car as a primary mode of transportation. And only twelve percent of the beer consumed in Portland is craft beer. If ‘small is beautiful’ really defines this city, then why are there so many big companies lurking around?

    Artisanal enterprises come along with the advancement of information technology, but will in no way replace mass production. I don’t think there will be many small-scale train, airline or automobile companies. The mini-economy represents a side of us that doesn’t want the creative impulse to die, and wants a more socially responsible model, but it won’t shove aside the big model anytime soon.

  • Reforming Higher Education

    For years, some justified high pay for college educated professionals because they served as a data base for certain types of knowledge – medicine, dentistry, pharmacy, law, accounting or any number of other disciplines taught at the college level. But with the advances in information technology and robotics, those salaries might not be justified in the near future. Information technology is currently forcing downsizing in the law sector, as fewer lawyers are needed to research cases or produce wills, trusts and divorce decrees. And robots will eventually do the jobs of dentists and surgeons and pharmacists.

    But technology encroaching on the jobs of college educated professionals doesn’t mean an end to the relevance of institutions of higher learning. Our country’s technology hubs are based around universities, as they provide the necessary research and development for the formation of such companies. However, it must be added that military research and procurement also play a role in our technology sector. In addition, academics in the humanities produce knowledge that enhances our communities, cities and country.

    We must also look at the burden that student loan debt on our economy, as the more young people owe on student loans the less they spend on the consumer economy. Cities and suburban municipalities could and should charter universities for city residents, and a university education should be free to all residents. This would help combat the problem.

    Reform could help our country build on its past. Doctors, lawyers and college professors didn’t always spend years in school to learn their trade. A Midwestern lawyer named Abraham Lincoln studied for the bar on his own before becoming a successful railroad lawyer and President of the United States. And in the late 1800s, the country was dotted with medical schools that would train doctors. In fact, there were more medical students back then than today, and this put the downward pressure on prices for the consumer.

  • Addressing Housing Affordability Using Cooperatives

    Our country is six years into the Great Recession, the biggest economic downturn since the Great Depression. It’s been replete with reports of home foreclosures, collapsing commuter towns, and young people struggling to become home owners. The term “generation rent” is often used in the media to describe the struggles of aspiring young people.  

    This is really a problem of upward mobility, and  how little the political system has responded to this problems of “generation rent” and those who have lost their homes. The current lack of action can be contrasted with the two very different periods in our economic history – the Roaring Twenties and the Great Depression.

    When discussing home ownership, many often bring up the efforts of Franklin Delano Roosevelt during the Great Depression. FDR called a nation of homeowners “unconquerable.”  But his administration really built on the ideas of previous administrations. Herbert Hoover, while serving as Warren Harding and Calvin Coolidge’s Secretary of Commerce, lent his support the “Own Your Own Home Campaign” of the Federal National Mortgage Association. This campaign touted the benefits of home ownership to the American people. And when Hoover became president, he created the Federal Home Loan Bank Board which chartered and supervised federal savings and loan institutions and created Federal Home Loan Banks to lend money to finance home mortgages. The purpose of this bank was to make homeownership cheaper for lower income people. It also represented a portion of Hoover’s efforts to fight the depression, and those efforts often went unrecognized by the American people both then and now. Hoover said home ownership could "change the very physical, mental and moral fiber of one’s own children." 

    After being elected president, Roosevelt created the Federal Housing Administration which insured homes made by banks and other lenders. The agency made it possible for people to pay for homes over three decades, before this period most homes were paid for through a three to five year loans. This program, followed up by Harry Truman’s support of veteran’s home loans and the home mortgage interest deduction, helped turn a nation of urban tenement dwellers into a nation of suburban home owners. Today, the federal government spends billions in subsides to ensure people have the opportunity to own their own homes. 

    Urbanist Richard Florida discusses the issue of home ownership in the 2010 book The Great Reset. In his interesting but misguided book, he correctly points out that too many people attained loans in the housing bubble and that high rates of homeownership hobble the labor market, as owning a home makes it harder for the job seeker to move. He also faults the Obama Administration for trying to do too much to prop up the mortgage market and recommends that the government quit supporting home ownership and start supporting renting to a greater extent. He said Fannie Mae has already taken steps in this direction by allowing people who experienced foreclosure to rent their houses. 

    But Florida is overstating the importance of renting in the lives of the American people, as we have a strong heritage as an upwardly mobile, ownership society that stretches back to the homesteading legislation pushed by Thomas Jefferson and Abraham Lincoln. But there’s no doubting that we’re a more mobile society than in the homesteading days. While FDR built on the work of his Republican predecessors, today’s leaders also have a template in the cooperative housing movement. According to the National Association of Housing Cooperatives, cooperative housing is defined as when “people join together on a democratic basis to own and control the housing or community facilities where they live.” Each month those who live in a housing cooperative pay their share of the expenses while sharing the benefits of the cooperative. According to the NAHC, 1.2 million families live in cooperative housing in the United States.

    What if we could create more forms of cooperative housing to make sure families have the opportunity to own a home and at the same time have a certain amount of mobility? Could a new Cooperative Housing Authority, with funding from Fannie Mae, buy up foreclosed houses and charge a monthly below market rate to a family? All such houses could be considered a part of the CHA and the family in the house would share in the profits of the authority. If and when the family moves, they’ll be entitled to those profits which could be used for rent or a down payment on a house. Such a program would help commuter towns who are suffering from high gas prices and foreclosures. 

    But a Cooperative Housing Authority would also be a conduit for affordable housing in America’s big cities and the surrounding suburbs, as the added supply of new housing forces the cost down. This would be an asset to certain cities where the supply of affordable housing is dwindling due to gentrification. Like most cooperative housing, the housing could take various forms: condos, townhomes and single family homes. I would suspect single family homes would be the most popular because they are the preference of most Americans. 

    A Federal Community Land Trust could be along with a CHA another way to deal with affordable  housing shortages. Like any land trust, it could add civic buildings, commercial spaces and community assets to the areas where the housing exits. This would ensure mixed/use type neighborhoods where residents would have access to shopping and civic life nearby. 

    Returning to FDR’s administration, during the 1930s the government constructed what was called garden suburbs outside of major cities: Greenbelt, Maryland; Greenhills, Ohio; and Greendale, Wisconsin. The garden suburbs were intended to house rural people who were migrating to the city as well as poor urban workers. The project was a two way street, as the government provided the road grid and cheap credit for the suburbs while aspiring families provided the mortgage payments.  These garden suburbs – designed to be suburban with some green (trees and parks) – provided a template for the mass automobile suburbanization that occurred in the 1950s.

    Of course, urbanists have never quit critiquing this suburban development model since it emerged. Like many in the city planning world, Lewis Mumford was horrified at the way suburbanization played out after World War II:
    "The planners of the New Towns seem to me to have over-reacted against nineteenth-century congestion and to have produced a sprawl that is not only wasteful but–what is more important–obstructive to social life."
    Mumford advocated the regional city – a city that included an urban core surrounded by well-planned suburbs, as he also rejected the densely packed cities of the decades before the war.     

    Could a FCLT and CHA work to create family friendly suburbs with mixed use development, and in turn save families money on energy and at the same time spare the environment more greenhouse gas pollution? I think that it could, and if these developments were to become a reality, Lewis Mumford’s vision of a regional city might look like a reality. 

    Jason Sibert is a freelance writer who has lived in the St. Louis Metro Area since the late 90s. He worked for the Suburban Journals for a decade and his work has appeared in various publications over the last four years.

    Chicago housing cooperative photo by Jennifer D. Ames.

  • Can Public Banks Help Fix Local Finance?

    Are public banks the answer for the recession-induced decline in municipal revenue and other ills that plague our cities? It’s a solution being discussed in more than one American city.  

    Mike Krauss, a founder of the Public Banking Institute and a chairmen of the Pennsylvania Pubic Bank Project, both non-profits that promote public banking, said this month an ad hoc committee made up of Philadelphia City Council members and civic groups started working on the adoption of language for a public bank in the city. He also said the measure is being adopted out of a need for “affordable and sustainable credit.” The PPBP is leading the effort for public banking in the city.

    The recession’s impact on municipal taxes and anger at Wall Street were factors in the push for a public bank. Krauss described the losses to Philadelphia’s school district, street, police and fire departments as “phenomenal.”  

    Krauss mentioned North Dakota’s public bank, founded in 1919 to promote agriculture, commerce and industry in the state, as a role model for cities. The North Dakota bank arose in reaction to farmers’ anger over the predatory practices of East Coast and Minneapolis banks. The bank’s revenues come from the state’s general revenue fund. Krauss cites the Bank of North Dakota’s 2.9 billion portfolio in a state with a population of roughly 600,000 as an example of its success. Philadelphia has a population of approximately 1.5 million. Krauss also said a public bank would be a job creator for cities and again used the BND as an example, as it produced a job for every 100,000 dollars it loaned.

    Like North Dakota’s bank, the proposed public bank in Philadelphia wouldn’t be a commercial bank that offers checking and savings accounts. It would lend money for city projects and also partner with local commercial banks on loans. There are also efforts underway for public banks in San Francisco and Boston, according to Krauss. 

    Public Banking Institute Chairmen Marc Armstrong said that over a trillion dollars in revenue from states and municipalities are deposited in big Wall Street banks every year. Armstrong also said many of the deposits are used to provide loans for transnational corporations that don’t invest in their states and cities. Public banks can provide loans as low as one percent interest, and Wall Street banks consider their existence as a threat, said Armstrong.  When it comes to taxation and other issues that confront cities, a public bank could be used as a weapon against the rent-seeking – meaning using social and political circumstances to extract more money out of the public – activities by financiers. The public bank would instead invest in higher education, automotive and banking industries and as a tool for productive economic enterprises and individuals. This weapon could in turn create more vibrant activities in urban economies.  

    Krauss admitted the possibilities for the use of revenue generated by a public bank are endless, and he said investment in the school district, infrastructure and public safety would be positives. However, other job creating services and projects could be a reality – free wi-fi, the construction of affordable rental housing for retired people and low income residents, rent-to-own home ownership (or condo) programs, research and development to support public science, scientific innovation and high technology industries, childcare facilities, higher education for city residents, public media, new parks, free or reduced utilities for businesses and individuals, and also investments in energy efficiency, recycling, renewable energy and car sharing.  

    The positive impacts of the above mentioned investments go beyond public banking, as it is the starting point for a more vibrant urban economy, education system and ecology. With a new source of revenue, business taxes could be slashed to promote business formation in public banking inclined cities, and more businesses within city limits would mean even more revenue.    

    Similar to slashing taxes for business, free or reduced costs on wi-fi and utilities would also help local businesses and individuals by reducing their overhead costs and in turn create more jobs, as more money could be spent in the form of investment by businesses themselves and in increased individual purchasing power that works its way back into local businesses.  

    Recycling would have a similar effect, as it’s cheaper for a city to recycle, if the program is a well-run, than to pay for waste collection, land filling and incineration. By reducing the costs of waste, cities could again reduce business taxes and once again create more business formation, and at the same time reduce greenhouse gas emissions. Recycling reduces pollution not only by reducing the waste sent to landfills, but it also reduces the need for cutting down more trees and the inputs needed to manufacture a product.

    Urban and non-urban citizens all create waste and for that reason recycling is a bigger job creator than renewable energy which cannot produce all of our energy due to intermittency and also the cost, as it’s still more expensive than traditional forms. Despite these drawbacks, new revenue could be used to create jobs in solar energy by installing solar panels on public buildings – school district offices, schools, and city hall. Also worth thinking about is the possibility of constructing biogas plants that break down organic waste – which can come from the vast amount of sewage a city creates – to create another, perhaps more reliable form of renewable energy.       

    The additional revenue produced by the use of public banking and increased business formation could also be used to lift the burden of rent-seeking higher education institutions by offering lower interest loans to help young people attain a higher education, affordable rent and affordable home or condo ownership without acquiring crushing debt. Cities could offer a few years of free vocational, art, culinary and business education. The media is full of stories of urban residents burdened with student loan debt which benefits universities, colleges and the government and decreases the amount of money circulating into local businesses. Also, cities would benefit from this investment by creating a new generation of productive workers, chefs and artists and the businesses that are created along with them.

    Low interest loans could also be offered to local real estate interest for rent-to-own condo and house programs and affordable apartments could be constructed with low-interest loan portfolios. Of course, landlords would have to abide by low-rent policies if they are to take advantage of the policies, blunting the rent raising effects of gentrification while maintaining its’ positive side.

    Cities could also put public dollars behind a new innovation in transportation – car sharing – which has been pioneered by Zipcar. Cities could help expand the company’s business by offering it low tax rates and subsides to locate within their borders; those arguing they would wasteful should take a second look at what’s spent on sports stadiums. Or maybe cities could building their own car sharing industry with local business leaders. The expansion of car sharing would mean less impact on the infrastructure and reduce the amount spent on infrastructure. It would also reduce traffic congestion and make it possible for residents of surrounding suburbs to enjoy the city’s attractions.      

    Cities can and should be hubs for creative people and immigrants, as they see life in almost-dead neighborhoods and create gentrifying enterprises such as restaurants, cafes, music venues, art galleries, artisan manufacturing, coffee roasting, small boutique retailers and all sorts of internet and technology businesses. However, cities can’t and shouldn’t lose focus on what sustains critical functions such as public safety, infrastructure and education – revenue. The public bank offers an opportunity for cities to invest in themselves, not the profit portfolios of Wall Street.

    Jason Sibert is a freelance writer who has lived in the St. Louis Metro Area since the late 90’s. He worked for the Suburban Journals for a decade and his work has appeared in various publications over the last four years.

    Photo by David Shankbone.