New Geography

Category: Urban Issues

  • The Zero at Ground Zero

    The terrorists who attacked the World Trade Center on 9-11-01 were striking a blow—a devastating one they hoped–at what they saw as the heart of capitalism and free markets in the United States. But in the aftermath of the attack, what the rest of the world saw was a wounded but game city that quickly pulled itself up off the mat–from the rapid return of the New York Stock Exchange, located just a few blocks from Ground Zero, to the speedy work of putting the city’s essential systems back on line and getting companies back to business.

    But even as New York rebounded, a strange, parallel storyline emerged in the planning to rebuild on Ground Zero. Less inspiring, the themes of that story were resignation, a lack of faith in free markets, and a perplexing willingness to capitulate to those who would destroy the institutions that are at the heart of our democratic capitalism. There are many players in this parallel storyline, from urban planners who saw the wholesale destruction as an unprecedented opportunity to shape 16 acres of prime city real estate into their version of the 21st century city, which didn’t include a return of commerce, to advocacy groups who viewed the site (and the promise of billions of dollars in federal aid) as an opportunity to advance agendas for everything from subsidized housing to a kind of super urban arts community.

    Unfortunately, too many political and business leaders lent credibility to this parallel story line. “America’s Mayor,” Rudy Giuliani, whose own actions had been so heroic on 9-11, seemed so consumed by the grief that, quoting from Lincoln’s Gettysburg address, he called for the entire site to become “hallowed ground” free from commerce. His successor, the businessman mayor Michael Bloomberg, displaying a pessimism about the future of the city’s economy that was astonishing in an elected official, argued that Lower Manhattan’s days as a commercial venue were numbered and the site should be given over to residential building. John Whitehead, the respected former chairman of Goldman Sachs tapped by New York Gov. George Pataki to head the rebuilding effort, seemed seduced by the far-fetched schemes of planners and wound up advocating that the site become the center of a tourism district revolving around 9-11–a proposal that smacked of turning Ground Zero into a Disneyland of Death.

    All of these voices, and others, have conspired to give us what we have now, which is a site where, approaching seven years after the attack, all one can see for the most part are a bunch of cranes and other machinery moving around dirt. On Monday, the latest report on “progress” at Ground Zero (and one can only use that word in parentheses when referring to the WTC site) noted that virtually all of the work there is behind schedule and billions of dollars over budget.

    The mismanagement of the site has produced a design for a new transit station that is so expensive and impractical to build that even with a $2 billion budget, it can’t be constructed, and probably never will. Meanwhile, the so-called “iconic” Freedom Tower, conceived with no practical commercial purpose in mind so that it will be occupied mostly by government agencies, is a year behind schedule. The construction of the 9-11 memorial dubbed Reflecting Absence–an elaborate but vapid design that commemorates nothing except the absence of those who died that day (with barely even a special nod to the police and fire officers who gave their lives to save others)–is also behind schedule after cost estimates doubled beyond the original $500 million projections. It’s now nearly certain that the memorial, reengineered to be on budget, will not open by the 10th anniversary of the attacks, while memorials at the Pentagon and in Shanksville, Pa., are already completed. One component of the Ground Zero memorial, an accompanying museum dubbed the International Freedom Center, won’t ever open. The redevelopment team shelved it because its content was so controversial.

    At this point, the only commerce taking place on the former site of the World Trade Center is in the rebuilt 7 World Trade, which sat to the north of the twin towers and also collapsed that day. Owned by the developer Larry Silverstein, 7 World Trade was never part of the original 16-acre Ground Zero site controlled by the Lower Manhattan Development Corp., and so Silverstein was free to move quickly to rebuild without government intrusion. Shovels hit the ground in May of 2002, and the new, 52-story tower opened in spring of 2006. It boasts more than 1 million square feet of leased space to blue-chip tenants like ABN AMRO, Ameriprise Financial, and Moody’s Corp.

    Silverstein should be something of a champion of Ground Zero. Through all of the talk about abandoning commerce at the site and all of the political infighting and pie-in-the-sky planning, he was crucial in fighting to ensure that the 16-acre site didn’t simply become parkland, or housing. A year ago he told me, “The financial center’s locomotive was the World Trade Center, and for the sustenance of the city and the region, we need to get those jobs back.” In addition to 7 World Trade, Silverstein has the right to develop three other towers on Ground Zero, although he’s had to wait for the agency controlling redevelopment to design a site plan and do the foundation work for the towers.

    For his efforts, Silverstein hasn’t been celebrated, but demonized. The Vice Chairman of the Port Authority of New York and New Jersey, which controls the site, called him “greedy” for his tough negotiations with potential tenants of 7 World Trade, which dragged out the announcement of some leases. Mayor Bloomberg accused him of asking too much to lease up 7 World Trade—as if our politicians should be setting office leasing rates. One of the city’s tabloids, the Daily News, responded to Silverstein’s defense of himself with the headline Butt Out, Larry.

    Yet in the end, Silverstein has given us the only real progress at Ground Zero. And he’s constructing the real memorial down there, the return of the marketplace on the site where the terrorists eradicated it. To achieve that, it isn’t Silverstein or the free market that should be butting out.

    This article is courtesy of RealClearMarkets.com

    Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

  • Is Narcissus also a success story?

    In sharp contrast with its arch-rival, Los Angeles, San Francisco historically has won plaudits from easterners. Writing in his 1946 landmark work, Inside USA, John Gunther compared “tranquil and mature” San Francisco with LA, a city he loathed as “the home par excellence of the dissatisfied.” The City by the Bay, he wrote, “possesses a incomparable quality of charm” unsurpassed by any American city.

    But no group extols San Francisco’s virtues more than San Franciscans. Indeed when journalist Neil Morgan wrote about the place he labeled it “Narcissus of the West.” Perhaps nothing exemplified this self-reflecting modality than the old tendency to refer to the place simply as “The City,” as if, in real terms, there was no other.

    Over the past few decades, this combination of urban charm and narcissism has transformed San Francisco. The city I got to know as a young journalist in the early 1970s working for the alternative weekly San Francisco Bay Guardian was already changing. Areas once habituated by old-fashioned bohemians (i.e., those without trust funds) – North Beach, Union Street – already were being displaced by new age enthusiasts, investment bankers and young corporate executives.

    But still, in the 1970s, San Francisco remained very much a city of neighborhoods, each one very much a world unto itself. If the east face of the city – North Beach, Russian Hill, Downtown, Chinatown, Fisherman’s Wharf – was being transformed into a kind of high-end theme park, much of the western ends of the city, as well as places such as the Mission and Potrero Hill, remained bastions of ethnic diversity, middle and working class families.

    As our articles editor Andy Sywak, who is also editor of the Castro Courier neighborhood newspaper, points out in his first rate analysis, this San Francisco still exists, although it may be holding on for its life. Demographically, San Francisco has changed in ways that may well signal the future for at least a series of American urban geographies – Portland, Seattle, Boston, DC and even Manhattan come to mind – that although quick to celebrate diversity are in many ways becoming increasingly less so.

    In some ways, this may be the curse of too-good looks. Ever since Haight-Ashbury caught on as the epicenter of the 1960s hippy movement, San Francisco has lured ever more affluent and well-educated people. In the process, the price of real estate has skyrocketed, making the city virtually unaffordable for almost everyone outside the upper middle class. Once known as a rough, brawling union town, San Francisco likely now boasts the highest percentage of people living off wealth – rents, dividends, interest – of any major American city.

    A recent study by the Public Policy Institute of California showed that virtually every income group from households making $50,000 to $150,000 a year dropped between 2002 and 2006. In contrast, households making between $150,000 and $200,000 surged 52 percent and those earning even more expanded by 40 percent. Housing prices, although slightly off last, have more than doubled since 2002 to nearly $800,000; it takes an income near $200,000 to afford a median priced home.

    This upper class shift has fostered, indeed encouraged, a strange form of ultra-liberal politics. Perhaps no major American city wears its leftism on its sleeve more than San Francisco. When it comes to imposing “green” controls and standards, as well as any embracing gender and cultural liberalism, The City is not to be outdone.

    But such lifestyle liberalism should not be confused with traditional urban reform, which focused on how to expand the benefits of urban life and economy to broad sections of the population. To maintain and even expand this largely childless city – San Francisco has the lowest percentage of children per capita of any major American city – major reform of city institutions, notably schools, no longer commands priority. Instead, efforts can be concentrated in consolidating what University of Chicago urban theorist Saskia Sassen calls “the urban glamour zone.”

    In this sense, San Francisco is a place that combines the characteristics of an exclusive resort, with extremely expensive real estate and concentrations of high-end amenities, with an exclusive economy based on elite services fields such as finance, media and design. Even in hard times, its real estate economy can be propped up by purchases by the wealthy, both full and part-timers, who wish to imbibe The City’s urban charms.

    Increasingly – and likely more the case in the future – these wealthy people (and their progeny) will settle in San Francisco more for lifestyle than purely economic reasons. Instead of nurturing the traditional middle class, the city can depend on the kind of young temporary sojourners (remarked upon by our Adam Mayer, who recently moved back to the Bay Area) to provide relatively low-cost skilled labor as well as the legions of waiters, toenail painters, dog walkers, performance artists and the like.

    Such an urban economy, of course, also requires people willing to do very hard labor – busboys, janitors, cleaning ladies, gardeners – many of whom will have to commute from distant locales to service the “needs” of the cognitive elites. The one impoverished constituency tolerated in the new order, the homeless, will incongruously now share the glamour city with the glitterati. This is why, notes the great California historian and San Francisco native Kevin Starr, The City has become “a cross between Carmel and Calcutta.”

    Can such a society work, and, if so, is its model applicable elsewhere? Certainly you must be a place with inherent attractions to the wayward and affluent. Seattle, Portland, Boston as well as Manhattan could also evolve in this direction, and may already being doing so. It’s difficult, however, to see such an economy working out so well in other less powerfully attractive urban centers, particularly those with large concentrations of poverty.

    But for a lovely place like San Francisco the trajectory is not entirely negative. As the country’s population expands to 400 million in 2050, there will be a growing, albeit small niche, for high-cost places that appeal to those with requisite high-end skills or at least the right heredity.

    We can see this with the economy. Even as it has lost corporate headquarters, manufacturing and other generators of middle-class jobs, San Francisco’s appeal to high-end workers and as an entertainment center – Dr. Starr dubs his hometown “a theme park for restaurants” – has helped secure its position as kind of PR office, party town and alternative hip location for the far less charming, if more productive, nerdistan further south.

    San Francisco already has twice successfully hitched itself to the Valley’s surge, first in the late 90s dotcom surge and more recently in the Google-centric 2.0 boom. The city’s total jobs likely have not recovered their 2000 levels, but there has been a notable improvement over the last two years.

    The future progress, however, may prove more difficult. Although the administration of Mayor Gavin Newsom has trumpeted what it claims as a major economic as well as demographic turnaround, the inevitable popping of the 2.0 bubble could wreak some damage. Already layoffs in the hard-hit financial sector – some of it tied to the venture capital industry – last quarter saw tenants give up almost a Transamerica Pyramid’s worth of space.

    The picture is at least murky on the demographic side. Yet although state population numbers record a return to population growth, the census numbers, which we rely on at NG, are less impressive, recording a loss of roughly four percent since 2000.

    These competing claims will not be fully resolved until after the 2010 census. But population growth may be somewhat beside the point. San Francisco’s emerging identity is not as a bustling, growing city that attracts middle class families. Instead, its destiny – or karma as locals may prefer to see it – may be to lure the wealthy, the well-educated and talented to the communal self-celebration that long has stood the trademark of the place they call The City.

  • Community and a Sense of Place in San Francisco

    On any given weeknight in San Francisco, some professional, political or social association throws a cocktail hour. From black-tie galas in the latest hip restaurant to arts fundraisers held at dingy watering holes, these mixers are a staple of young professional life where people go to network, flirt and unwind.

    A recent event was packed with young, clean-cut white and Asian office workers. Everybody was affable, ambitious, smartly dressed and beaming with apparent confidence. In conversation, I learned that almost nobody was from here; some had only been here a few months. We talked about our careers, the coming summer’s travels and, being a largely twenty-something crowd, the best places to get fall down drunk. It was not an unpleasant way to pass the evening.

    Yet, as I walked back to my car through the cool streets, an emptiness lingered: the déjà vu of too many jaunty conversations at other cocktail hours. They reminded me of the breezy talks had in youth hostels the world over; and like any youth hostel, it seemed obvious that if I were to go to the same place a year later it would be an entirely different group of people. The exuberance would remain the same, but the faces would not.

    Undoubtedly, San Francisco is one of the great American cities – and perhaps its most beautiful. The thick fog that charges into the city at all times of year and the colorful Victorian homes that line the streets like dominoes create a charm few other cities anywhere can match. Certainly, it is not the cleanest American city, but it feels among our most loved judging by the stream of visitors and the upkeep of its buildings.

    Of course, many cities are beautiful, but what makes the town truly unique is its sense of place. Take a snapshot of a street in Los Angeles and it could pass as Denver, Dallas or Orlando, but when I walk on Irving, Hayes, Mission or Grant streets, I know without doubt that I am in San Francisco and no other place. The large stone edifices and doormen of Nob Hill recall Manhattan, but the ring of the cable car and the sudden, unexpected views of the Bay remind me that I am nowhere but here.

    And yet, there lies the great paradox of “the City” as locals like to call it: it is a place at once very personal and impersonal. Its geography, architecture and quirky culture are truly unique, and yet much of the City’s population consists of a revolving door of restless youth who stay for a few years before leaving.

    The concentration of entertainment, great cuisine, culture, and educated people give the city a verve and zest that few can match, but this lifestyle does not translate as well to young families: the City has the lowest percentage of its population under the age of 18 of any U.S. city. The City’s famously high cost of living makes it difficult to buy a home within city limits for under $700,000. Lots of condominiums cost more than that. Faced with this unpleasant economic reality, it is no wonder that many people move on after a couple of years.

    It is very tempting to want to place a value judgment on all this, to say that a city with as restless a population and few families offers only fleeting moments of adult enjoyments to a rotating list of players; certainly the more sublime satisfactions of being firmly rooted in one community, owning property and raising a family are increasingly out of reach for many residents.

    Besides the cost of living , the uber-liberal climate may also eventually nudge many people and business from San Francisco. But perhaps it’s OK — in a nation of 300 million headed towards 400 million — for a city to thrive as a “one-industry town, strictly in the pleasure dome business,” to quote Tom Wolfe’s description of Manhattan a few years ago. Few towns exhibit the urban high-life as well as San Francisco while retaining a close proximity to mountains, beaches and pristine forests.

    The real question then becomes: how much meaningful community can one find in cities like this, where people move in and out with great frequency, where transience is a norm rather than an exception? What sort of lives do we lead when we move on every few years and when friendships that we’ve invested time into do the same?

    As Robert Putnam writes in his seminal work Bowling Alone, “Communities with higher rates of residential turnover are less well integrated… Mobility undermines civic engagement and community-based social capital.” Not suprisingly social capital indexes generally ranks cities like San Francisco rather poorly.

    Thinking back to the cocktail party, I wish I could put tags on the people I met that night and see where they would be in five years. I think if I walked into the same place then, I would be greeted by a fresh group of well-manicured and confident peers talking about the newest excitements to be experienced in this land of high cosmopolitania.

    But where would be the people I saw? My guess is not in San Francisco. In Redwood City or Benecia, perhaps, or in the Midwestern or East Coast towns they grew up in, watching their toddlers run through their backyard talking about the time in their youth when they did “the San Francisco thing.” And man, it was a blast.

  • Letter from the Ephemeral City

    “How is it living in a real city now?” friends and family ask with smug earnestness now that I reside in much coveted San Francisco. The response ranges from a straightforward ‘nice’ to a heated diatribe against their assumption that the city to the south I resided in for the previous seven years was not a ‘real’ city. The defense of Los Angeles is futile to those who won’t listen – those who judge it based on what has been projected through television and movies: unrelenting smog, apocalyptic fires, drug addicted actresses, road rage wars and the like.

    Yet there is never any need to defend my recent move to San Francisco – a supposed paragon of progressiveness loved by people from all corners of the globe (aside from the right wing media who will use any opportunity to poke fun at the political lunacy that often takes place here). Even the critics of San Francisco cannot deny the sheer beauty of the city’s geography: at the tip of a peninsula bounded by San Francisco Bay and the Pacific Ocean. Taking its georgraphy into account, it becomes readily apparent that San Francisco is what it is because of the Bay and ocean around it – the inhabitants and architecture are secondary. The city as we know it is merely an homage to the forces of nature.

    Beyond the spectacle of the Bay and the favorable weather, what impressions come to mind when San Francisco is mentioned? Aside from icons such as the Golden Gate Bridge, Alcatraz, and cable cars, most people remember the city for its historically liberal political climate.Who can forget about the Beat Generation, the Summer of Love and the Gay Rights Movement? There is no doubt that these social benchmarks have had positive reverberations throughout the world –leading to broader acceptance of a diversity of cultures and lifestyles and the elevation of the peace movement.

    Unfortunately, because of these successes, the city is currently suffering from an identity crisis in an attempt to live up to its past glory. The city is not unlike a child prodigy, who at a very early age garnered a lot clout but burned out before it was able to fully mature.

    It is a tragic observation that liberal politics has become a parody of itself within San Francisco. Just recently, when the Olympic torch for the 2008 Beijing Games arrived in the city, Mayor Gavin Newsom was forced to abruptly reroute the path of travel in order to avoid violent protests from disrupting the event. Even though the good Mayor was looking out for the reputation of his city, the majority of people who waited hours to witness the historic event ended the day in bitter disappointment.

    Also in the headlines recently, Barack Obama was chastised for making a disparaging remark about the people of rural Pennsylvania – a key voting block for that state’s primary election – at a dinner party in a donor’s mansion. Of course, the media subsequently put every effort into emphasizing the fact that Mr. Obama’s blunder was made in none other than San Francisco, the poster child of leftist elitism. Even pop culture outlets like the television show South Park and the stand-up comic Dave Chapelle have notably poked fun at the city and its hypocrisy.

    There is nothing wrong with liberal political viewpoints. After all, the United States is a country where individuals can freely express their voice for what they believe is fair and just. The breakdown occurs at the point in which the residents and politicians of San Francisco fail to realize that we have entered an era that has superseded identity politics. Instead of focusing on critical issues facing the city, being identified as part of the ‘left’ or any number of ‘special interest groups,’ is actually more important; hence, nothing gets done and real progress is hindered. In other words, the city no longer has a can-do attitude.

    Part of the reason for this has to do with the fact that for those who can actually afford to live comfortably in San Francisco, the quality of life is really good. It is not difficult for one to become complacent with the numerous cultural venues and fine dining and drinking establishment in this small city.

    It is also easy to forget about what actually makes a city function – like maintaining basic infrastructure, keeping the streets safe and clean, and making sure that the service workers, who are so critical to the prominent San Francisco tourist industry, are treated justly. These issues are not as glamorous to someone more focused on saving the world by ‘going green.’ For someone with a higher than average income, purchasing a sustainable good from a trendy yet over-priced ‘green’ boutique is sufficient for self-satisfaction – there is no need to face more urgent issues head-on.

    Like the fog that oftentimes comes in and shrouds the city in a white mist blurring the landscape, so is the ephemeral quality of the city itself. Only 760,000 residents strong and 47 square miles in area, the city can seem provincial. Trumped both in area and population by San Jose, just 50 miles to the south, the Silicon Valley has for the last 30 years or so become the business center of the Bay Area. Many outside the area are not aware that companies like Apple, Google, and Yahoo are headquartered in no-name suburbs with names like Cupertino, Mountain View, and Sunnyvale – a good 45-minute to an hour drive outside San Francisco.

    Actually, businesses have been leaving the city for some time now, yet many people who commute outside San Francisco still choose to live within the city limits, contributing to what is ironically called a ‘reverse commute.’ Lifestyle, in essence, is beating out commerce when it comes to the desirability of living in San Francisco. The implications are many for this observation due to the fact that in order for a city to continually be successful, it must promote the possibility of upward mobility and have an entrepreneurial spirit. In this regard, San Francisco is failing.

    Growing up in the Bay Area, my impressions of what a city is has been defined by my excursions with my family as a youngster to San Francisco. I would beg and plead my parents every weekend to take me to the city, just so I could be among the tall buildings, be in awe at the topography and views, and people watch in Union Square. Now I live here and the ephemeral feeling of being in a dream state is ever present. Yet, as I have grown older, I am savvy to the nuances of city life and complexities that go into making a place successful. I just hope that San Francisco can wake up out of its slumber, get out of its collective social hangover and take advantage of what cultural capital is left by once again becoming a place where change is possible and ordinary citizens have the opportunity to dream.

  • Perspective on Chicago: From City of Big Shoulders to Entertainment Machine?

    After decades of living in the shadows not only of New York, but such emergent regions as Los Angeles, the San Francisco Bay Area, Atlanta, Houston and Dallas, Chicago suddenly seems to be on a roll. It may be very close to placing its “favorite son” – Senator Barack Obama – as our next President, with all the enormous increase in prestige and patronage that entails. It could win the 2016 Olympics. And recently, Fast Company, the trendoid business magazine for the perennially hip and cool, named it America’s “city of the year.”

    How you view Chicago’s rise has much to do with who you are. For many working and middle class Chicagoans, the changes in recent years have been far from favorable, as our blogger Steve Bartin points out. Job growth has been slow, the schools have emptied out as many families have moved to the suburbs. But for those at the apex of society – notably condo developers, well-connected politicos, the cultural elite and a rising African-American upper class – this renewed Chicago represents truly a great city of opportunity.

    This shift in identity is quite a change for what was once seen as “the city of big shoulders.” Unlike patrician Boston or mercantile cosmopolitan New York, Chicago can be seen as the quintessential American city – a bit rough at the edges, productive and unpretentious. It emerged the biggest and fastest growing of the Midwestern boomtowns of the late 1800s. A settlement of barely 350 in 1835, it mushroomed to 100,000 at the time of Abraham Lincoln’s election in 1860, and housed over a million forty years later.

    Chicago was elemental – its industry bigger, its politicians more corrupt, its criminals seemingly more lethal and better organized. So, too were its business leaders. Chicago, one speculator wrote following the panic of 1837, “resounded with the groans of ruined men and the sobs of defrauded women who entrusted all to greedy speculators.” Undaunted, the city’s elites proved relentless in their ambition, lobbying Washington and Wall Street for dominant position in the burgeoning east-west trade. St. Louis businesspeople, noted the Chicago Tribune in 1868, “wore their pantaloons out sitting and waiting for trade to come to them” while Chicago’s “wore their shoes out running after it.”

    Our focus on Chicago shows that this spirit of opportunistic boosterism has not been lost. The excellent piece by Carol Eisenberg on Muckety.com – part of this package – reveals the remarkable unanimity among the city’s business, political and cultural elite under the regime of the second Mayor Richard Daley. The impressive recovery of the city’s central core, and surrounding waves of gentrification, have turned the city into a favorite role model for younger cities from Los Angeles to Miami looking to prove their urban bona fides.

    This marks a dramatic change in popular perceptions of Chicago. A Swedish visitor in 1850, described it as “one of the most miserable and ugly cities” in America. Later, it was known as an industrial powerhouse; when Berlin in the early 1870s developed as a major manufacturing center, it was christened “Chicago on the Spree.” Yet by then Chicago was also developing a softer side: it was home to the reform efforts of Jane Addams, whose focus on rough ghetto neighborhoods inspired others around the country. Rebuilding after the devastating fire of 1871, the city also embarked on an ambitious program of civic improvement, constructing over the next three decades a major library system, a new home for the Arts Institute, the Field Columbian Museum and a large expansion of the University of Chicago.

    It is this more gilded, elegant Chicago – home of arguably the nation’s and even the world’s greatest collection of 20th Century high-rise structures – that foreshadows the current city. The success of Millennium Park, the powerful if now fading condo boom, the city’s newfound celebratory culture (think Oprah Winfrey and Barack Obama), its growth in fine restaurants, nightclubs and other entertainments has persuaded some observers like the University of Chicago’s Terry Nichols Clark to declare that Chicago is indeed the model city of the future.

    Clark’s new urban vision sees a city that marries upper crust with proto-bohemian elements, providing a spectacle for the well-to-do and distracted. Such cities may no longer serve as a vehicle for class mobility, but as an “entertainment machine” for the privileged. For these elite residents, the lures are not economic opportunity, but rather “bicycle paths, beaches and softball fields,” and “up-to-the-date consumption opportunities in the hip restaurants, bars, shops, and boutiques abundant in restructured urban neighborhoods.”

    Clark and other observers give much of the credit to the political regime of Mayor Richard J. Daley, under whose auspices Senator Obama has enjoyed his meteoric rise. But this is not a partisan issue. Conservative author Joseph Epstein, a usually restrained observer, also is in the Daley cheering section,

    Looking behind this celebratory consensus, long-time Chicago observer Steve Bartin sees a far less pretty picture. Corruption, he notes, has not diminished under the younger Daley – new revelations are certain to tarnish Senator Obama’s clean image. Nor can the economic performance of the city be seen as widely successful as it appears to luxury real estate developers. Jobs have languished, Bartin points out, and many others are threatened by technology and the shift of employment to the suburbs as well as more affordable Sunbelt cities.

    Of course, as in other large American cities, Chicago’s real estate market has provided a boon for developers and the high-wage earning elites, including a rising African-American professional class. But many observers, including Bartin, point out that it has not been so good for the poor, who have been often displaced and economically marginalized. At the same time, the middle class, particularly those with children, continue to flee to the suburbs, keeping population growth stagnant or even negative. Roughly half of all white families (as of 2005) leave when their children reach school age.

    The editors at Newgeography.com welcome Chicagoans and other observers to post their comments on this collection – or just their comments – to our new site. We invite controversy, but require politeness and respect among combatants.

    Joel Kotkin is the Executive Editor of Newgeography.com.

  • The Decline of Chicago: The City that Doesn’t Work

    Recently, Crain’s Chicago Business reported on Chicago winning an award from Fast Company magazine. “Chicago stood out in our reporting for its creativity and vitality,” Editor and Managing Director Bob Safian said at a press conference here. “Chicago offers something distinctive.”

    Fast Company Magazine is representative of much of the media: not much on hard facts about Chicago. The Windy City has distinctions but not positive ones. Chicago’s retail sales tax is the highest in the nation at 10.25 percent. Unions, high taxes, and political corruption have made Chicago one of the leaders in big city decline.

    One of the great modern myths of big city America is that Chicago is some sort of successful town and a role model for others. By any traditional performance standards Chicago has failed. Like many old, big industrial cities, Chicago peaked in the 1950 Census with a population of 3,620,962. In the 1950s over two percent of the entire U.S. population lived within Chicago city limits. Over a half century later, while America’s population doubled, Chicago’s population declined. The 1960, 1970, 1980, and 1990 Census numbers showed Chicago losing population.

    Mayor Daley and Chicago residents were quite excited about the 2000 Census showing Chicago gaining over 112,000 people (a growth rate at half the national average for the 1990s). It appears the 1990s were an anomaly for Chicago. Since the year 2000, according to Census estimates, Chicago again continued its population decline with a loss of 63,000 from 2000 to 2006 leaving a total of 2,833,321.

    Recently, the Web site Real Clear Politics listed two Chicago area Congressional districts among the country’s ten fastest-shrinking districts, in terms of percentage of population lost between 2000 and 2005. Jan Schakowsky’s district lost 7.9 percent of its population. Congressman Rahm Emanuel’s district lost 5.1 percent.

    Though 2000 was a somewhat positive year, that year’s Census numbers mask some rather disturbing trends. The white flight out of Chicago continued with 150,000 non- Hispanic white people leaving Chicago from 1990 to 2,000. African-Americans, for the first time, began leaving Chicago with a net loss of 5,000. The population gain in Chicago during the 1990s was due to Hispanics.

    One of the great fables urban lovers of Chicago like to talk about is some comeback of the city. The comeback, according to this urban legend, involves white families staying in Chicago to raise their children. With Chicago’s 150,000 white population decline from 1990 to 2000: Chicago was only 31.3 percent non-Hispanic white.

    What is even more pronounced is the lack of white children in the public school system. The entire Chicago Public School System is only 9 percent white. Not a single public high school has a population that is majority white. Not one.

    Recently, the stubborn facts of Chicago’s population decline made news. As CBS TV Chicago reported in January of 2008:

    Half-empty schools are ‘unacceptable’ because they don’t serve their students or the communities they’re supposed to anchor, Mayor Richard M. Daley said Thursday, setting the stage for the biggest wave of school closings in decades.

    Officials contend 147 of 417 neighborhood elementary schools are from half to more than two-thirds empty because enrollment has declined by 41,000 students in the last seven years. A tentative CPS plan calls for up to 50 under-used schools to close, consolidate with other schools or phase out over the next five years.

    Most of the underused schools are on the South and West Sides, often where the student population is largely African-American, and in lakefront neighborhoods that include Lincoln Park, Lake View, Uptown and North Center.”

    The situation isn’t any better in Chicago’s Catholic School System. The Chicago Tribune reported on February 27, 2007:

    Nicholas Wolsonovich, superintendent of schools for the archdiocese, called the exodus from Chicago’s Catholic schools ‘mind-boggling.’ In 1964, he said, some 500 schools were spread across the diocese, with about 366,000 students. Now, the system has 257 schools and fewer than 100,000 students. Over the last decade statewide, the number of Catholic schools has dropped from 592 in 1997 to 510 this year, according to figures released at the conference.

    Chicago’s political elite love to give speeches about the importance of public education, but not for their children. Mayor Daley sent his children to private schools. Deborah Lynch, the former head of the Chicago Teacher’s Union, sent her kids to private schools. America’s newest political superstar, Barack Obama, sends his kids to private schools. With the exodus of the rich from Chicago’s public schools, 69 percent of the children in the Chicago Public School system are poor.

    The horrible public schools, high taxes, and crime have driven families out of Chicago. The city’s job base cannot compete with anti-union places like Houston and Phoenix.

    Chicago used to be the number one convention town in America but Las Vegas and Orlando now lead the pack. Chicago has lost its top spot as busiest airport to Atlanta. Chicago’s high priced unions and restrictive work rules have driven business elsewhere. For decades, Chicago was a major banking center with two major banking headquarters located on LaSalle Street. Continental Bank and First National Bank of Chicago were always among the top ten largest banks for much of the twentieth century.

    No longer. Continental was purchased by Bank of America while First National Bank of Chicago was purchased by JP Morgan. Not a single bank in the top 25 largest banks in America is headquartered in Chicago. While Chicago’s financial district declines Charlotte, North Carolina has emerged as a bigger banking town. Charlotte has the headquarters of two of the four largest banks in America: Wachovia and Bank of America.

    Other elements of Chicago’s financial district also show major weaknesses. Chicago doesn’t have one major mutual fund company headquarters. Chicago’s mutual fund job base is smaller than Denver, Indianapolis, or Baltimore. Chicago has a few major hedge funds but nothing like New York City or London. Chicago is the futures capital of America with the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade but even here the news isn’t all positive. Computers have shed tens of thousands of jobs in the futures industry. Futures trading floors are headed for extinction within the next three to seven years, eliminating even more jobs.

    Chicago’s high tax life style has driven businesses and jobs to the suburbs. Chicago is one ofthe only towns in America with an employee head tax on employment. Companies with over 50 employees must pay $4 a month per employee to the city. Most of the major corporate headquarters in the Chicago area are located in Chicago’s suburbs. Motorola, Walgreens, All State, Kraft, Anixter, Illinois Tool Works, McDonald’s, Alberta-Culver, and Abbott Labs all have their corporate headquarters outside city limits.

    Recently, Chicago got its first Wal-Mart. In most places in America, politicians allow consumers to decide whether a business should fail or succeed. In Chicago, with the power of the unions, Chicago’s city council has made it difficult for Wal-Mart to open up any more stores. Chicago’s poor are relegated to paying higher retail prices and have less access to entry-level jobs. The adjacent suburb of Niles has the unusual distinction of being the only town in America (with less than 45,000 people) with two Wal-Marts. One of the Niles Wal-Marts is located right across the street from Chicago.

    The largest employer in the city of Chicago is the Federal government. Followed by the City of Chicago Public School system. Other major employers are the city of Chicago, the Chicago Transit Authority, the Cook County government, and the Chicago Park District. These thousands of government workers provide the backbone of the coalition for higher taxes, generous pensions and “political stability”.

    Chicago’s political system is inefficient and costly. There are no term limits in Chicago. The Democratic Party has controlled the Mayor’s office since 1931(a big city record). There’s no opposition: Democrat’s control 49 out of 50 seats on the city council. Corruption is everywhere. Barely a month can go by without a major scandal. The FBI has the largest public corruption squad in the United States located in Chicago . Chicago voters don’t seem to care. Those who care about high taxes, good public schools, and low crime are a small minority in Chicago.

    In conclusion, Chicago’s long decline continues. In the coming years, public pension commitments will test even the high tax tolerant Chicago residents. Look for low regulation, low tax Houston to overtake Chicago in population in the next eight to 15 years.

  • Political foreclosure

    Ever since his election in 2005, Mayor Antonio Villaraigosa has been portrayed as a political comer with a future that possibly included the governorship. As soon as he entered office, he launched an impressive succession of “bold” initiatives — among them, to make the Los Angeles Police Department a 10,000-cop force, to “green” the port of Los Angeles, to improve the academic scores of some of L.A. Unified’s worst-performing schools. Until the real estate bubble burst, he oversaw a building boom downtown and elsewhere, casting himself as a visionary re-creating L.A. as a model of “elegant density.”

    But when it came to that part of the city’s economy not connected to real estate, Villaraigosa might be compared to Emperor Nero. As the city has continued to lose thousands of middle-class jobs in aerospace, manufacturing and high-end business services since 2005, Villaraigosa has basically stood by and fiddled. From February 2007 to February 2008, the county suffered the biggest percentage of job losses– 0.7% — of the 10 largest metropolitan areas in the country, according to the U.S. Bureau of Labor Statistics’ most recent report.

    The combination of the housing meltdown and steady job losses in non-real estate sectors means that Los Angeles is now surpassed only by a handful of the bigger Rust Belt economic basket cases, like Detroit, for the title of worst big-city economy in the nation.

    To be sure, the falloff in jobs cannot be solely laid at the feet of City Hall because there have been declines in other parts of Southern California. But the trend reveals the shortcomings of Villaraigosa’s near-exclusive focus on real estate-related speculative growth and relative inattention to sectors more critical to the city’s long-term economic growth.

    The problem is that, as property values and real estate-related employment — most notably in the construction and mortgage sectors — have cratered, there is little, save for the tourism industry, to take up the economic slack. That fact has come home to roost in recent weeks as Villaraigosa searches for revenue to shore up the city’s out-of-balance budget. And, unfortunately, the pain may be around for a while because once the current wave of building — which was financed before today’s credit crunch — ends, there is little prospect of a pickup in construction in the immediate future.

    All this makes the erosion of jobs outside real estate even more troubling. Since 2006, employment in L.A. County has dropped by about 2% in the manufacturing, financial services, retail and information sectors, the latter of which includes the entertainment industry. Meanwhile, business expansions in the county in 2007 fell 22.5%, according to an April report from the Los Angeles County Economic Development Corp., a nonprofit organization.

    Apparently, Villaraigosa didn’t see the economic downturn coming; he has already conceded that he didn’t recognize how precarious the revenues from the real estate boom might be. Had he known in August what he knows now, the mayor has said, he would not have approved big raises for city workers.

    Last week, during a real estate conference at the Biltmore Hotel, City Planning Director Gail Goldberg told me how amazed she was that Los Angeles, unlike her former hometown of San Diego, still has no city department dedicated to economic development. Nor is there any single person in city government recognized as in charge of boosting local commerce.

    Los Angeles could certainly use such a department. The most recent Kosmont-Rose Institute “Cost of Doing Business Survey” reported that Los Angeles remains the second-most-expensive city for businesses, behind Santa Monica, in the county and third most in the state, behind San Francisco and Santa Monica. Any hope of reform in terms of tax or regulatory relief, suggests Larry Kosmont, the report’s author, is unlikely because of the city’s fiscal crisis.

    Ironically, among the biggest economic losers during the Villaraigosa administration may be working-class Latinos, who constitute a key element of his constituency. Traditionally, Latinos have relied on manufacturing for jobs, but, countywide, these jobs have declined 15% since 2002.

    Many of the employment losses have been concentrated in automotive, aerospace and heavy industry. In contrast, the garment industry, now the largest industrial employer in the city, has largely defied the slow erosion of jobs in the city. But that may be about to change.

    Uri Harkham, president of Jonathan Martin, a clothing manufacturer, has cut his workforce from 600 to 120 during the last few years. He blames City Hall for the cutback because it has not protected the area from immigration crackdowns and has not supported worker-training programs. Worse still, he says, has been the speculative pressures of developers seeking to build residential units in the garment district, which have driven up rents for manufacturers and wholesalers.

    Harkham, who has worked in the fashion industry for 35 years, believes that if this situation continues, the once-thriving garment district will eventually lose its primacy as the center of the West Coast rag trade.

    But it’s more than the garment industry that needs attention from City Hall. The city’s small-business sector, which remains the best hope for L.A.’s economic recovery, remains burdened by what many entrepreneurs claim is an onerous regulatory regime that favors the well-connected and big financial interests. “It’s extremely difficult to do business in Los Angeles,” Eastside retail developer Jose de Jesus Legaspi said. “The regulations are difficult to manage. … Everyone has to kiss the rings of the [City Hall politicians].”

    Yet despite the problems, businesspeople like Legaspi and Metchek believe that Los Angeles can find a way to restart its economy after the real estate bubble. After all, the city and region still possess many of the assets — concentrations of design genius in entertainment and fashion, a pool of skilled industrial workers and strong ties to the rapidly growing Pacific Rim economies — that drove recovery in the mid- and late-1990s.

    And there remains the considerable energy of the city’s immigrant community, which constitutes roughly half of L.A.’s total workforce, according to a recent study by the Migration Policy Institute. Between 1997 and 2007, according to statistics compiled by Praxis Strategy Group, a consulting firm with which I work, the number of Latino- and Asian-owned businesses grew far more rapidly — nearly 40% among Latinos and more than 22% among Asians, compared with 15% overall — than those of other ethnic groups. Today, foreign-born Angelenos are twice as likely to be self-employed than their native-born counterparts.

    Los Angeles needs to tap the entrepreneurial spirit of these immigrants to grow economically. But that means scaling back its infatuation with high-profile real estate development in favor of the mundane business of enhancing employment opportunities through training workers, reducing regulatory burdens and fostering more cooperation among our still-diverse industrial base. That’s not a politically sexy choice for the mayor, but it remains the best way to restore L.A.’s tarnished status as a city of opportunity.

    Joel Kotkin is Executive Editor of NewGeography.com is a presidential fellow at Chapman University and the author of “The City: A Global History.” He is writing a book on the American future.