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  • Santa Fe-ing of the World, Bridging the Digital Divide

    This is the second of a two-part piece. Read part one.

    If we accept that many rich people are going to find attractive this scenario of dramatically different settlement patterns that feature new aggregation – widely dispersed – the question then becomes whether information technology will ever become a global influence on the built environment, shaping the way the middle class and even the working class live, the way railroads, jets, and automobiles did.

    I would argue that the answer is yes. “Jet set” used to refer to the wealthy. Horseless carriages were once a luxury. But none of this is any longer true. In fact, this “Santa-Fe-ing” pattern of dispersion plus aggregation looks a lot like the behavior of corporations over the last half century. The only difference is that now, due to Moore’s Law’s continuing precipitous drop in the price of information technology, the benefits have become affordable to a burgeoning number of individuals.

    For half a century, corporations have put each piece of their puzzle wherever they find comparative advantage. They figured out that with enough mainframes and toll-free telephone lines, they could put their headquarters one place, their research and development a second place, their factories a third place, their back-shop paper-shuffling a fourth place, their call centers a fifth place, and their salesmen all over the place. This information-technology-driven dispersion contributed hugely to the rise of aggregations we see in the edge cities of places like the Route 128 corridor around Boston, the birthplace of high technology.

    Talk to corporate location specialists and they will happily tell you that of the top 100 things their clients look for, the first 99 is qualified workforce. If the facility in question is a sneaker factory, that means people who will work for pennies an hour, and the answer may be Malaysia. If this means advanced innovation, the answer is places where smart people are willing to cluster, like Silicon Valley – and Bangalore, India.

    The core premise of the Santa-Fe-ing hypothesis is that this sort of choice is now available to millions, and soon billions. Because of the ability of Moore’s Law to bring technology to the masses at an accelerating rate, similar choices are now available to individuals, who can look to live, work, play, pray, shop and die wherever they see comparable advantage. They are no longer inextricably tethered to huge, centrally located organizations.

    At the time of the American Revolution, in the Agrarian Age, more than 95 percent of all people lived outside what then passed for cities, because wresting profit from the land through farming, trapping, forestry and the like was how wealth was created. Today, however, technology has allowed a tiny number of people to farm thousands of acres, and the number of people in these occupations in the U.S. has dropped to less than 2 percent.

    Similarly, half a century ago, at the height of the Industrial Age, the majority of all Americans were in blue-collar manufacturing jobs. Today it’s 19 percent and dropping while the number of people in “service occupations” exceed 78 percent. This is not all about a decline in industrial competitiveness. The U.S. steel industry is the most productive in the world. That’s because it has lowered the number of man-hours per ton of steel to very low rates, by the increasing use of Information Age cleverness to make its product. Even automobile manufacturing has used information technology to redraw the map of where it builds cars. Who, a generation ago, would have expected Mercedes to locate its U.S. assembly plant in Alabama?

    There’s no reason to think the rest of the developing world is not following the pattern of Santa Fe-ization. But as the cost of enabling technology drops precipitously, this effect is already transforming the built environment worldwide – including in such unlikely places as Croatia and Ecuador that are usually not the favorite subjects of futuristic speculation.

    There are already 30 African nations with more cell phones than landlines. If you look at the billboards in a megacity like Lagos, you will be convinced that the three biggest industries in Nigeria are evangelical churches, health food supplements, and cell phones. At this writing, it’s already almost a decade since Filipinos ousted a tyrant for the first time using cell phone text messaging to mobilize hundreds of thousands of people for street demonstrations in under an hour. In developing countries the proportion of people with access to a phone grew an astonishing 25 percent in the 1990s, according to the Worldwatch Institute, an organization devoted to “an environmentally sustainable and socially just society.” One in five of the world’s population had used a mobile phone by 2002—up from 1 in 237 in 1992. This remarkable pattern fueled connections to the internet. In 1992, just 1 in 7,788 of the world’s population had used the internet. In 2002, 1 in 10 had.

    To be sure, these patterns are not distributed uniformly. In places capable of great technological sophistication, such as China and Russia, governments who fear their own dissidents – and thus try to control information – have attempted to intentionally slow the revolution. Some Middle Eastern societies recoil at dissemination of Western ideas in general, and pornography in particular. Latin America is hampered by low literacy rates. There are some failed places on earth marked by such outrageous politics, pathetic infrastructure, abysmal annual incomes and few cities that it’s hard to imagine how they will achieve any significant development any time soon. Singapore researchers examining internet uptake in Asia pointed to a familiar list of failed suspects: Bangladesh, Cambodia, Kazakhstan, Laos and Myanmar.

    Nonetheless, the gap between the haves and have-nots has hardly proven to be hopelessly rigid, as the migration of software-writing jobs to India has demonstrated. The International Telecommunication Union, tallying broad measures of connectedness worldwide, including affordability, found Slovenia tied with France. Korea, Hong Kong and Taiwan were ahead of the United States. In the Caribbean basin, access for the Bahamas, St. Kitts and Nevis, Antigua and Barbuda, Barbados, Dominica, Trinidad and Tobago, Jamaica, Costa Rica, St. Lucia and Grenada were ahead of Russia. The Eastern European nations of Estonia, the Czech Republic, Hungary, Poland, the Slovak Republic, Croatia, Lithuania, Latvia, Bulgaria, Belarus and Romania were ahead of China. The Singapore researchers found that a lack of English-speakers did not necessarily correlate with poor technology pickup. In a post-literate world – in which the internet increasingly becomes something you watch and listen to, rather than read – low literacy rates were less a barrier than one might expect, at least in Asia. The digital divide seems to be narrowing, a University of Toronto study says. The demographic lag between those who use the Internet in developing countries and those who use it in the United States was about five years, the Canadian researchers reported. This technology is getting to the masses a lot faster than did electricity, radio, washing machines, refrigerators, television, air conditioners and automobiles.

    The big difference between information technologies and others separating the haves from the have-nots is price. Because The Curve rules, costs drop dramatically. The transformative stuff quickly becomes affordable and ubiquitous, even in developing countries. How can this not have consequences for our material world?

    Every urban African I’ve ever talked to would prefer to be living in his or her village. They say they came to the city for economic opportunity, not out of preference. They return to their villages every chance they get.

    If, as the price of information technology approaches zero – transforming everything from transportation to markets – at the same time that the problems of megacities become more and more intractable, the value of being someplace that is great for reasons that can’t be digitized will broaden.

    If this puts a cap on the growth of megacities by spreading the benefits of urbanity more broadly – the way the automobile drained immigrant ghettos like the Lower East Side of Manhattan into the former cow pastures and potato farms of New Jersey and Long Island during the middle 20th century – I’m not sure that’s so bad.

    What started in Santa Fe could transform the world.

    Joel Garreau is Lincoln Professor of Law, Culture and Values at the Sandra Day O’Connor College of Law and the Lincoln Center for Applied Ethics at Arizona State University. He is a fellow at The New America Foundation in Washington, D.C., and author of several best-selling books including Radical Evolution, Edge City and The Nine Nations of North America.

  • Santa Fe-ing of the World

    This is part one of a two-part piece. Read Part two.

    Human settlements are always shaped by whatever is the state of the art transportation device of the time. Shoe-leather and donkeys enabled the Jerusalem known by Jesus. Sixteen centuries later, when critical transportation has become horse-drawn wagons and ocean-going sail, you get places like Boston. Railroads yield Chicago – both the area around the “L” (intraurban rail) and the area that processed wealth from the hinterlands (the stockyards). The automobile results in places with multiple urban cores like Los Angeles. The jet passenger plane allows more places with such “edge cities” to rise in such hitherto inconvenient locations as Dallas, Houston, Seattle and Atlanta and now Sydney, Lagos, Cairo, Bangkok, Djakarta, and Kuala Lumpur.

    The dominant forms of transportation today are the automobile, the jet plane, and the networked computer. What does adding the networked computer get you? I think the answer is “the Santa-Fe-ing of the World.” This means the rise of places where the entire point of which is face-to-face contact. These places are concentrated and walkable, like villages. Some are embedded in the old downtowns – such as Adams Morgan in Washington, or The Left Bank of Paris, or the charming portions of what in London is referred to, somewhat narcissistically, as “The City.” Some are part of what have traditionally been regarded as suburbs or edge cities, such as Reston, Virginia, or Emeryville/Berkeley, California.

    Santa Fe, New Mexico, is a remarkable example of this trend. Home to a world-renowned opera, charming architecture, distinguished restaurants, great places to buy used boots, quirky bookstores, sensational desert and mountain vistas and major diversity, it is also little more than a village of 62,000, far from the nearest major metropolis.

    This “Santa-Fe-ing” means urbane well beyond the current definition of urban. It means aggregation and dispersal. As with all innovation, its impact is first seen among people with enough money to have choices.

    The logic of this hypothesis starts with the question: “In the 21st century, is there any future for cities of any kind?”

    After all, some would have us believe that with enough bandwidth, each of us can wind up on his or her own personal mountaintop in Montana, being lured down into the flatlands only to breed.

    That’s a preposterous view of human nature, of course. There’s a reason solitary confinement is a punishment. We are social animals. But still, many of the historic reasons for human concentration are gone. It’s been a century since you’ve had to live within walking distance of your factory. Today, you often don’t even need be within driving distance of your office – as anyone with a cell phone knows. You certainly don’t need a metropolis to acquire anything a dot-com is willing to sell – which is a very big deal now and growing exponentially.

    Absent a cataclysm of biblical proportions, I think this means the one and only reason for congregation in the near future is face-to-face contact. Period. Full stop. The places that are good at providing this will thrive – think Oxford, England. The ones that are not will die. Cities are not forever. You have not heard much lately from the Babylon chamber of commerce.

    There are nearly 100 classes of real estate out of which you build cities, according to William J. Mitchell, the former head of the architecture and planning department at MIT. They are all being transfigured. The classic example is bookstores. If all you want to do is exchange money for a commodity, the path with least friction is often Amazon. In backwaters where, just ten years ago, buying or even borrowing a non-best-seller was a chore that took weeks, hundreds of thousands of titles are now within one click. Does this mean bookstores have disappeared? Of course not. The half of them that have survived and even grown since the ‘90s, however, have morphed. The critical elements are no longer the shelves. They are the couches, cappuccino machines, and cafes. Bookstores have become places to loiter, face-to-face, among like-minded people.

    What about grocery stores? What happens when it becomes cheaper for the supermarket to deliver your toilet paper to you than it is to heat, light and pay rent and taxes on its store? Under what circumstances would you ever again get in your car to drive to market again? For me, the answer is that I want to have face-to-face contact with my tomatoes – or anything else you might find in a social setting like a farmers’ market. I’m not sure I’d trust the kid at the dot com to pick out my spare ribs. If the grocer wants to ship me my barbecue sauce, however, I won’t mind. Ninety-five percent of everything one finds in a supermarket is flash-frozen, shrink-wrapped, and nationally advertised. We are in the midst of a burgeoning freight revolution, in which the stuff is coming to us, rather than us going to the stuff – as anybody who has Christmas shopped lately may have noted. In fact, I can’t think of anything in an entire Wal-Mart that I would regret having delivered to me in a big brown van. Visiting a Wal-Mart doesn’t give me enough of a psychic boost to justify a drive now. Of course, if big-box retail migrates into the digital ether tomorrow, we’ll have an enormous challenge figuring out the adaptive re-use of their buildings. What will we make of them? Roller skating rinks? Greenhouses? Non-denominational evangelical churches? Artists lofts? Whatever the answer, I doubt their passing will be mourned.

    What about college campuses? Is there any future for those? After all, the University of Phoenix, the online learning establishment, became one of the hottest growth stocks of the early 21st century. Internet MBAs abound from some of the world’s most distinguished schools. Why bother ever getting out of your pajamas to learn?

    Again, the answer is face-to-face contact. After all, distance learning is nothing new. Benjamin Franklin engaged in correspondence classes. The United States military is awash in senior officers with advanced degrees from the University of Maryland, which has pioneered its outreach programs to people in remote locations.

    However, distance learning will always be everyone’s second choice. It works best for people who do not have the time or money for the conventional academic experience. First choice remains the traditional universities. Getting into them has become insanely competitive and expensive. Why are they so desirable? Because sitting in class absorbing information from a lecturer is only a tiny part of the college experience. College is where many people meet their first spouse. It’s where they develop a network of friends that they’ll likely maintain for life. It’s an entertainment center and an athletic center. Oh, and as for learning – most of the stuff that has stuck with me came out of dorm sessions at one in the morning, engaging in face-to-face contact with smart people.

    As we shall see, the impact of face-to-face on urban calculations includes office space, and even home locations. But why is this transformation occurring now?

    It all starts with Moore’s Law, first stated by Intel co-founder Gordon Moore As the core faith of the entire global computer industry, it has come to be stated this way: The power of a dollar’s worth of information technology will double every 18 months, for as far as the eye can see. Sure enough, in 2002, with a billion-transistor chip, the 27th doubling occurred right on schedule. The 30 consecutive doublings of anything man-made that we have achieved at this writing – an increase of well over 500 million times in so short a time — is unprecedented in human history. This is exponential change. It’s a curve that goes straight up.

    For sure, railroads also changed everything they touched. They transformed Europe. North America was converted from being a struggling, backward, rural civilization mostly hugging the East Coast into a continent-spanning, world-challenging, urban behemoth. New York went from a collection of villages to a world capital. Chicago went from a frontier outpost to a brawny goliath. The trip to San Francisco went from four months to six days. Distance was marked in minutes. Suddenly, every farm boy needed a pocket watch. For many of them, catching the train meant riding the crest of a new era that was mobile and national. A voyage to a new life cost 25 cents.

    Of course, as railroad expansion ran out of critical fuel – including money and demand for the services – things leveled off, and society tried to adjust to the astounding changes seen during the rise of this curve. The last transcontinental railroad completed in the United States was the Milwaukee Road in 1909. In part, that was because of the rise of a new transformative technology: The one millionth Model T rolled off the assembly line in 1915.

    In contrast, the curve predicted by Moore’s Law did not stop. The computer industry still regularly beats its clockwork-like 18-month schedule for price-performance doubling.

    The effect of Moore’s Law on the built environment is and will become ever more profound.

    For example, will we ever need offices outside our homes? After all, haven’t we all heard plenty about telecommuting?

    Sure, but how many of us have discovered with some chagrin that the most productive five minutes of our work day has occurred around the shared printer? Somebody asks what we’re working on. Conversations ensue. “Oh really? Did you know that Jane was working on something like that?” “There’s this guy you’ve got to talk to; I’ll send you his phone number as soon as I get back to my desk.” “I was just reading about that very subject; I’ll ship you the name of the book.”

    This kind of casual face-to-face contact is irreplaceable no matter how cheap or immersive video technology gets. Humans always default to the highest available bandwidth that does the job, and face-to-face is the gold standard. Some tasks require maximum connection to all senses. When you’re trying to build trust, or engage in high-stress, high-value negotiation, or determine intent, or fall in love, or even have fun, face-to-face is hard to beat.

    This would seem to argue that some old patterns endure, and that’s true. But think of the twists suggested by this new premium on human basics. Suppose you decided that you could get all the face-to-face you needed two days a week. Would that influence where you lived? Would the mountains or the shore start looking good to you? Suppose you decided that you could get all the face-to-face you needed three days a month. Would the Caribbean start looking good to you?

    Residential real estate is being transformed for these reasons. In the U.S., the explosive growth is in places far beyond any metropolitan area, like the Big Sky Country of Montana, the Gold Country of the California Sierras, the Piedmont of Virginia and the mountains and coasts of New England. For eons, when we’ve visited a nice place on vacation, we’ve asked ourselves, “Why am I going back?” Now, however, we have a new question: “Why am I going back?” Santa Fe is more than 800 miles from Los Angeles, yet it is only semi-jokingly referred to as L.A.’s easternmost suburb. To find out why, check out the nearest airport – in this case Albuquerque – any Monday morning.

    Joel Garreau is Lincoln Professor of Law, Culture and Values at the Sandra Day O’Connor College of Law and the Lincoln Center for Applied Ethics at Arizona State University. He is a fellow at The New America Foundation in Washington, D.C., and author of several best-selling books including Radical Evolution, Edge City and The Nine Nations of North America.

  • It’s the Jobs, Stupid: Infrastructure Matters

    It may surprise you to know that some policy makers and academics believe that “nothing matters” when it comes to infrastructure — the physical structures that make water, energy, broadband and transportation work — and economic prosperity. The thrust of the idea that infrastructure doesn’t matter may have started with Larry Summers, appointed by President Obama as Director of the National Economic Council in 2009. The New York Times says he is “the only top economic adviser with a West Wing office” – meaning he is very powerful in Washington terms.

    His most vocal critic in the matter of infrastructure is Representative Peter DeFazio (D-Oregon). DeFazio appeared on MSNBC’s Rachel Maddow, criticizing Summers, saying that Obama is “ill-advised by Larry Summers” in regards to using stimulus money to cut taxes for businesses. “Larry Summers hates infrastructure,” says DeFazio, who argues that more of the stimulus should have gone to infrastructure. Summers backed away from any earlier comments when he told the Financial Times last June that there may also be “a case for carefully designed support for infrastructure investment.”

    The question seems obvious. What good is it to stimulate business if they don’t have the tools they need to work with?

    Summers’s attitude could make it difficult to generate major new investments in things like roads, bridges, and the broadband communication access that businesses – small and large – need to get the job done. Companies choose to locate where infrastructure is better. Businesses will leave areas where infrastructure is missing or deteriorated – taking jobs with them.

    Certainly U.S. firms look for good infrastructure when they consider placing offices overseas, and foreign firms must do the same when they consider locating here. The idea that good infrastructure would enable economic specialization and lower costs – making U.S. businesses more efficient, more competitive, and therefore able to create more U.S. jobs – is clearly reflected in the way that businesses behave. Emerging market countries remain economically competitive, and are constantly building and rebuilding their infrastructure as their economies develop. Can the U.S. remain competitive if our infrastructure doesn’t keep up with them? It is becoming increasingly clear that deteriorating infrastructure in the United States may actually be contributing to increased costs (and decreased efficiency) of American businesses.

    Recently, the U. S. Chamber of Commerce initiated a project under the Let’s Rebuild America initiative to find a way to measure the performance of infrastructure and the role it plays in economic prosperity. Over the next year, a team of experts (of which I am a member) led by Michael Gallis & Associates will create an Infrastructure Index that can be used to explore the contribution infrastructure makes in keeping American businesses competitive in an increasingly global economy.

    What is innovative about the project team’s approach is that it measures the performance of infrastructure, and not just the size. Thirty years ago researchers on this subject limited their measurement of “infrastructure” to “government spending on public projects” to analyze the impact on economic growth and productivity. This approach is flawed for several reasons.

    First, not all money designated for infrastructure is spent the same way. Government inefficiencies and political corruption plus purchasing power in local economies contribute to inconsistency in quantity and quality of infrastructure based on money spent. Measuring infrastructure in terms of spending alone doesn’t cover the impact of growth on infrastructure. In other words, that a growing economy can afford more infrastructure is just as likely a cause of positive statistical results as the possibility that more infrastructure helps the economy grow. Further, where spending is used to measure infrastructure, the studies usually consider only public spending, ignoring the contribution of investments from private companies (e.g., the contribution of private satellites to communications infrastructure).

    Less than half of the statistical studies using expenditure-based infrastructure measures find that developing or maintaining infrastructure has significant positive effects on the economy. In contrast, over three-fourths of the studies using physical indicators – the number of phone lines, the miles of high-quality road — find a significant positive contribution from infrastructure to the economy.

    There is no dispute that economic growth is necessary as long as there is an increasing population, which will be the case over the next four decades in America as well as Canada and Australia. We need to address the question: is it possible for the economy to “hit a wall” because it runs out of usable infrastructure? In other words, the question is not if infrastructure helps the economy but rather can a lack of infrastructure impede the economy? Can the economy outgrow its infrastructure?

    As the economy changes, so will the demands for infrastructure. The four components of infrastructure – transportation, energy, water and broadband – need to be made relevant across decades, even as the role of one industry may change within the economy. For example, while it is obvious that information-workers, such as computer programmers and software developers who increasingly work from remote locations, require access to broadband infrastructure, they also alter the way that transportation infrastructure is used. Some knowledge-based activities relying on spatial agglomeration place greater importance on rail/subway and less importance on roads. Yet, that does not mean that a knowledge-based economy will need fewer roads – someone has to service those computers and that technician will likely travel to its customers on roads.

    We need to move away from the “one-size-fits-all” approach to infrastructure development toward better integration with the economic activity that uses it. Each region needs to assess its own needs and base their investment decisions on conditions that exist within their region.

    Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. She will be participating in an Infrastructure Index Project Workshop Series throughout 2010. Her training in finance and economics began with editing briefing documents for the Economic Research Department of the Federal Reserve Bank of San Francisco. She worked in operations at depository trust and clearing corporations in San Francisco and New York, including Depository Trust Company, a subsidiary of DTCC; formerly, she was a Senior Research Economist studying capital markets at the Milken Institute. Her PhD in economics is from New York University. In addition to teaching economics and finance at New York University and University of Southern California (Marshall School of Business), Trimbath is co-author of Beyond Junk Bonds: Expanding High Yield Markets.

  • Livable Communities and the DOT

    “Fostering livable communities…is a transformative policy shift for U.S. DOT,” announced grandiloquently the Draft U.S. DOT Strategic Plan released for public comment on April 15, 2010. But what exactly does the Administration mean by “livability” and how does it intend to translate this vague rhetorical abstraction into a practical reality?

    To get an understanding of the Administration’s intentions one must delve into the stilted language and bureaucratic jargon of its policy pronouncements, notably the “HUD-DOT-EPA Interagency Partnership for Sustainable Communities” and the above-mentioned Draft Strategic Plan. “Livable Communities,” says the latter, are “places where transportation, housing and commercial development investments have been coordinated so that people have access to adequate, affordable and environmentally sustainable travel options.” The Interagency Partnership Agreement speaks in similar vague generalities. It defines livability principles as including “more transportation choices,” “equitable, affordable housing” and “reliable access to employment centers, educational opportunities and services.” Give credit to Transportation Secretary Ray LaHood to reduce these abstract concepts to plain language. “Livability,” he said, “ means being able to take your kids to school, go to work, see a doctor, drop by the grocery or post office, go out to dinner and a movie, and play with your kids in a park, all without having to get in your car.” In other words, “livability” in the Secretary’s mind means living in a dense urban environment where walking, biking and transit are realistic alternatives to using the car.

    But this definition is too narrow for most Americans whose notion of “livability” may include living in suburban communities and enjoy such obvious amenities as a safe neighborhood, access to good schools, the privacy of one’s own backyard and the freedom, comfort, convenience and flexibility of personal transportation. If “livability” becomes a euphemism for a federal policy of favoring high density, transit-dependent living, then we are moving closely to “newspeak” when words mean whatever Big Brother intends them to mean.

    How does the Administration intend to promote its vision of “livable communities?” Again, we must turn to the dense prose of its official policy statements. “To achieve our Livable Communities agenda,” states the Draft DOT Strategic Plan, “DOT will (1) Establish an office…to promote coordination and sustainability in Federal infrastructure policy; (2) Give communities the tools and technical assistance they need so that they can develop the capacity to assess their transportation systems…; (3) Work through the Partnership for Sustainable Communities to develop broad, universal performance measures that can be used to track livability across the Nation…; and (4) Advocate for more robust state and local planning efforts and create incentives for investments that demonstrate the greatest enhancement of community livability…”

    Note that all the intended actions are process-oriented. Nowhere in the Strategic Plan can one find any indication of programmatic objectives or implementation strategies. And no wonder. The power to shape local communities (and thus enhance their livability) resides not in the hands of federal agencies but those of local citizens and their elected officials. To assume that the federal government, despite the growing concentration of power in Washington, could coerce or persuade people across this vast land to abandon their preference for suburban amenities and the convenience of personal transportation for the “livability” norms preferred by federal officials is a notion that even the most dedicated progressives of our acquaintance find unpalatable and politically unrealistic.

    A portent of the political winds affecting the future of the Administration’s “livability” initiative may be gleaned from the recent Senate appropriations committee hearing on the U.S. DOT’s Fiscal Year 2011 budget. The Administration’s request for $527 million to support the Livable Communities Program – of which $200 million is proposed to be funded from the Highway Account of the Highway Trust Fund– met with skepticism from committee members of both parties. Committee Chairman Patty Murray (D-WA) said in her opening statement that she has “serious concerns” with the $200 million coming out of the highway program. Her Republican counterpart, Sen. Kit Bond (R-MO) challenged Secretary LaHood on the Administration’s ability or propriety to influence local development patterns. “I am not confident that trusting federal decision-makers in Washington to lead the process, to tell the communities how they should grow, is the right way to go,” Bond said. He observed that livability means different things to different communities: some communities may benefit from improved transit service, while others would benefit from improved roads and increased highway capacity.

    More criticism came from the House side. Said Rep. Adrian Smith (R-NE) ranking member of the House Subcommittee on Technology and Innovation at a hearing to examine the Administration’s R&D program: “At a minimum “livability” represents a concept difficult to define and measure progress toward. More troubling, however, key aspects of the livability agenda appear to involve significant Federal government intrusion into the manner in which Americans travel and live in general.” Rep. Tom Latham (R-IO), ranking Republican on the House Transportation Appropriations Subcommittee, expressed concern over the Transportation Department’s proposal to “skim off highway dollars…and take those dollars from cities and states to fund a boutique program.”

    The transportation community has been equally critical. The American Association of State Highway and Transportation Officials (AASHTO) has gently pointed out in its new report, The Road to Livability that “While some would suggest ‘livability’ means a life without cars, this definition really doesn’t work for the millions of Americans who have chosen the lifestyles that an automobile affords. … Equating ‘livability’ only to riding transit, walking and biking, limits its relevance and excludes a wide range of improvements and community needs.”

    Blunter criticism came from the blogosphere. “At a time of unprecedented global competition, the United States DOT is overwhelmingly focused on the neighborhood level,” wrote one respected transportation professional in commenting on the Draft Strategic Plan. “This vague term [“livability”] has become the new code word for ‘smart growth’ and diverting highway funds to transit,” wrote another. “Local elected officials are best equipped to decide how best to enhance their communities’ livability. A federally-imposed standard of livability, colored by some officials’ bias against the automobile would not do justice to the diversity of our suburban nation,” wrote yet another blogger. “An astounding claim accompanied by zero evidence,” wrote Robert Poole in commenting on the Strategic Plan’s claim that a “livability” strategy that promotes reduced demand for auto travel will lower the long-run costs of transportation for the taxpayers.

    At a May 11 Brookings symposium on the “State of Metropolitan America,” Brookings researchers noted the wide and growing disparities in demographic, cultural, transportation and educational attainment characteristics of America’s metropolitan areas, disparities that defy one-size-fits-all solutions. Increasingly, policy responses will have to be tailored to the needs of individual urban areas, the researchers concluded. The Brookings report reinforced the conclusions of many other urban observers, including some on this site. The Administration’s desire to impose its own vision of how Americans should live and travel represents an anachronistic and in the end a futile gesture. The gesture is futile for, as generations of political appointees before them have discovered, policies that do not resonate with the majority of Americans seldom survive after their authors have left office.

    Flckr Photo of the US Department of Transportation after dark from
    takomabibelot: http://www.flickr.com/photos/takomabibelot/3916809758/in/set-72157622361478452/

    Ken Orski has worked professionally in the field of transportation for over 30 years.

  • Immigration Is U.S.

    You can sing about sea to shining sea or amber waves of grain, but it’s immigration that provides America’s basic rhythm. Nothing distinguishes the American experience from that of other nations more than the mass migration of people from elsewhere to here. We are truly a nation of immigrants: Close to 90% of the population–excluding Native Americans and those who were forced here in shackles–moved here out of their own volition.

    Not that this has made things any easier for immigrants. In the 1850s the nativist Native American Party–reacting to a wave of Irish Catholic and German immigrants–declared that America faced “an imminent peril” from immigrants “of an ignorant and immoral character.” California in the late 19th century tried to ban Asian immigration and land ownership. In 1924 immigration from everywhere outside northern Europe was severely restricted.

    The current wave of immigration, largely from Asia and Latin America, has once again sparked nativist fears. (Witness Arizona’s recent, harsh immigration law.) Yet America needs immigrants now more than ever. The U.S., like virtually all advanced countries, produces insufficient native-born children to prevent it from becoming a granny nation-state by 2050.

    Only immigration can provide the labor force, the expanding domestic markets and, perhaps most important, the youthful energy to keep our society vital and growing. Many bustling sections of American cities–the revived communities along the number 7 train line in Queens, N.Y., Houston’s Harwin Corridor, Los Angeles’ San Gabriel Valley–are dominated by immigrant enterprise. In contrast, the cities without large-scale immigration, such as Cleveland, Pittsburgh and Cincinnati, have stagnant and even declining populations.

    In the future successful immigration will distinguish America from most key competitors. Globally, resistance to immigration or any form of linguistic, religious or ethnic diversity has become more commonplace. Over the past few decades Iran, Egypt, Turkey, Russia, Indonesia and the nations of the former East Bloc have constricted their concept of national identity. In Malaysia, East Africa and even the province of Quebec preferential policies have led successful minorities such as Jews, Armenians, Coptic Christians Indians and Chinese to find homes in more welcoming places, often in the U.S.

    In recent decades Europe has received as many immigrants as the U.S., but it has proved far less able to absorb them. The roughly 20 million Muslims who live in Europe remain marginalized. In Europe, notably in France, unemployment among immigrants–particularly those from Muslim countries–is often at least twice that of the native born; in Britain as well Muslims are far more likely to be out of the workforce than either Christians or Hindus.

    But in the U.S. immigrant workers with lower educations are more likely to be in the workforce than their nonimmigrant counterparts. And most American Muslims are comfortably middle class, with income and education levels above the national average. The newly crowned Miss America is from a Detroit-area Shiite immigrant family from southern Lebanon.

    Our 21st-century economy will be shaped in large part by these immigrants and their descendants. Much is made of the movement of poor, largely uneducated immigrants from south of the border, but more than half of all skilled immigrants in the world come to the U.S., too. Even with its slow-growing population, Europe continues to be a major source of American immigrants, particularly skilled workers. By 2004 some 400,000 E.U. science and technology graduates were residing in the U.S. Barely one in seven, according to a European Commission poll, intends to return to their home continent.

    Of course, the majority of the nation’s immigrants, both undocumented and legal, come from developing countries: China, India, Mexico, the Philippines and the Middle East. Since roughly four in five immigrants come from nonwhite countries, by 2039, due largely to immigrants and their offspring, the majority of working-age Americans will be “minorities.”

    Even if immigration slows down dramatically, particularly with a weak economy, these groups will grow in significance as we approach mid-century. In 2000 one in five American children were already the progeny of immigrants; by 2015 they will make up as much as one-third of American kids. Many demographers predict that by 2050 non-Hispanic whites will be in the minority. America’s racial and ethnic dye is already cast, and permanently shaped, by immigration.

    By embracing, and being embraced by, immigrants, America follows the path of history’s most successful civilizations. The Roman civilization, which started in a tribal city-state, gradually opened citizenship to all Italians, and by the third century made citizenship available to free men throughout the “multi-nationed” empire; less than half the Senate came from Italy. “Rome,” wrote a Greek writer in the second century, “is a citadel which has all the peoples of the earth as its villagers.”

    In this sense the American model of immigration and ethnic integration, for all its many flaws, forms a critical pillar for the nation’s future global leadership. Even those who return home will retain strong familial and business ties to the U.S. They will confirm America’s unique status as the world’s one great global civilization.

    This article originally appeared in Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

    Photo by telwink

    May 21, 2010

  • Near-New Seattle Residential High-Rise Faces Demolition

    Seattle’s tony Belltown condo neighborhood hardly needs more bad news. Like many other similar areas in central city cores, the supply of new high rise condominiums has far outstripped the demand. Over the past year, the downtown area condominium market has experienced a median price decline of 35%. Units in at least three downtown buildings have been auctioned off at prices from 30% to 50% below the latest, already discounted prices.

    Yet things have gotten even worse. A 25 story apartment building, only 9 years old, will be demolished due to substandard construction. Owners of the McGuire Apartments (photo on web here), Carpenters Union Local 131 and the Multi-Employer Property Trust issued a letter recently announced saying that “Since the necessary repairs are impractical, the decision … is to dismantle the building.” The letter also indicated that tenants would be assisted in finding new housing.

    A local blogger (Hideous Belltown) has provided a more than one-year long chronicle of the building, since scaffolding was erected, and concluding with two “death-watch” entries.

    The Seattle tower may be the newest and tallest building to ever be demolished, especially in the United States.

  • Hello everyone

  • Houston: Model City

    Do cities have a future? Pessimists point to industrial-era holdovers like Detroit and Cleveland. Urban boosters point to dense, expensive cities like New York, Boston and San Francisco. Yet if you want to see successful 21st-century urbanism, hop on down to Houston and the Lone Star State.

    You won’t be alone: Last year Houston added 141,000 residents, more than any region in the U.S. save the city’s similarly sprawling rival, Dallas-Fort Worth. Over the past decade Houston’s population has grown by 24%–five times the rate of San Francisco, Boston and New York. In that time it has attracted 244,000 new residents from other parts of the U.S., while older cities experienced high rates of out-migration. It is even catching up on foreign immigration, enjoying a rate comparable with New York’s and roughly 50% higher than that of Boston or Chicago.

    So what does Houston have that these other cities lack? Opportunity. Between 2000 and 2009 Houston’s employment grew by 260,000. Greater New York City–with nearly three times the population of Houston–has added only 96,000 jobs. The Chicago area has lost 258,000 jobs, San Francisco 217,000, Los Angeles 168,000 and Boston 100,004.

    Politicians in big cities talk about jobs, but by keeping taxes, fees and regulatory barriers high they discourage the creation of jobs, at least in the private sector. A business in San Francisco or Los Angeles never knows what bizarre new cost will be imposed by city hall. In New York or Boston you can thrive as a nonprofit executive, high-end consultant or financier, but if you are the owner of a business that wants to grow you’re out of luck.

    Houston, however, has kept the cost of government low while investing in ports, airports, roads, transit and schools. A person or business moving there gets an immediate raise through lower taxes and cheaper real estate. Houston just works better at nurturing jobs.

    It’s not just smug coastal places getting smoked by Texas. Since the collapse of the housing bubble Houston has outperformed Sunbelt counterparts like Phoenix, Las Vegas and Los Angeles. A big factor has been that manufacturing, professional services, international trade and technology industries have been the primary drivers of the city’s economic growth–rather than construction and speculation. Ironically, this has increased home values. Since 2007 prices of homes in Houston have ticked slightly higher, while those in Las Vegas, Phoenix, Los Angeles and the Bay Area each are down by more than 35%.

    Some traditional urbanists will concede these facts but then try to shift the focus to “qualitative” factors: the best-educated residents, the highest salaries, the most expensive real estate. Although it also attracts a large number of low-skill migrants, Houston has considerably expanded its white-collar workforce. According to the Praxis Strategy Group, Houston’s ranks of college-educated residents grew 13% between 2005 and 2008. That’s about on par with “creative class” capital Portland, Ore. and well more than twice the rate for New York, San Francisco or Los Angeles.

    But Houston’s biggest advantage cannot be reduced to numbers. Ultimately it is ambition, not style, that sets Houston apart. Texas urbanites are busy constructing new suburban town centers, reviving inner-city neighborhoods and expanding museums, recreational areas and other amenities. In contrast with recession-battered places like Phoenix, Houston remains remarkably open to migrants from the rest of America and abroad.

    Houston, perhaps more than any city in the advanced industrial world, epitomizes the René Descartes ideal–applied to the 17th-century entrepreneurial hotbed of Amsterdam–of a great city offering “an inventory of the possible” to longtime residents and newcomers alike. This, more than anything, promises to give Houstonians the future.

    This article originally appeared in Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

    Photo by telwink

  • $300,000-$400,000 for a Levittowner?

    An article in The Wall Street Journal details the difficulties that were faced by home owners caught in the Goldman Sachs/John Paulson finance scheme (“The Busted Homes Behind a Big Bet“). The article calls the situation a “dizzyingly complex transaction, involving 90 bonds and a 65-page deal sheet. But it all boiled down to whether people … could pay their mortgages.” There is plenty of blame to go around, but surely there were both big winners and big losers is these deals. The big winners were Goldman Sachs and John Paulson. The big losers were the homeowners, though they were not without blame, since they were not forced to take out the excessively large mortgages.

    The striking thing about this story, however, is the photograph of a Levittown style house in Aberdeen township, New Jersey, a distant suburb nearly 40 miles from New York City. The picture in the article cannot be directly linked, and the best view is on an interactive slide show linked to the article. We have provided a photograph of a near somewhat smaller house in Levittown (see photo).

    In 2006, the owner had refinanced the house with a $308,750 loan, indicating a value more than triple that of comparable housing in much of metropolitan America.

    Levittown, of course, was the late 1940s housing development on Long Island that set the stage for the automobile oriented suburban expansion that did so much to create the largest and most affluent middle class in the world. The Levittown houses were very small, starting at about 750 square feet, though many have been expanded. It was not long before suburban housing became larger, eventually rising to the present 2,250 square foot median. The Wall Street Journal’s Aberdeen township house is under 1,500 square feet, according to Zillow and was built in 1953.

    The Wall Street Journal article misses a significant point. How could such a modest (and doubtless comfortable) house have become so valuable that it could justify refinancing for more than $300,000? The answer is simple. During the real estate bubble, house prices in New Jersey exploded. The state’s restrictive land use regulation largely prohibit new housing on the suburban fringe, leaving prices nowhere to go but up and up strongly. Between 2000 and 2006, the median house value in Monmouth County, where Aberdeen Township is located, rose 125% (according to US Bureau of the Census data). 2006 data for Aberdeen township is not readily available.

    By the peak of the bubble, the median value house in Monmouth County was 5.8 times the median household income, up from 3.0 times in 2000. In 2000, prices were even lower in Aberdeen township, at 2.3 times incomes – well within the 3.0 standard that defined housing affordability for at least one-half century.

    While owners were borrowing $300,000 or more on their modest early 1950s houses in Aberdeen township, households were buying brand new houses of the same size for under $120,000 in Dallas-Fort Worth, Atlanta, Houston, Indianapolis and a host of other metropolitan areas where the American Dream had not been outlawed. Expansion of the housing supply was allowed, and prices stayed within historic norms. For example, in Indianapolis, house prices were less than one-half that of Monmouth County, after adjusting for income levels.

    Meanwhile, a judgment of $370,000 has been entered against the owner of the Aberdeen township Levittowner. The auction in late April by the Monmouth County Sheriff for a price that is probably closer to its real value if it had been in a rationally regulated jurisdiction: $100.

  • Is It Game Over for Atlanta?

    With growth slowing, a lack of infrastructure investment catching up with it, and rising competition in the neighborhood, the Capital of the New South is looking vulnerable.

    Atlanta is arguably the greatest American urban growth story of the 20th century. In 1950, it was a sleepy state capital in a region of about a million people, not much different from Indianapolis or Columbus, Ohio. Today, it’s a teeming region of 5.5 million, the 9th largest in America, home to the world’s busiest airport, a major subway system, and numerous corporations. Critically, it also has established itself as the country’s premier African American hub at a time of black empowerment.

    Though famous for its sprawl, Atlanta has also quietly become one of America’s top urban success stories. The city of Atlanta has added nearly 120,000 new residents since 2000, a population increase of 28% representing fully 10% of the region’s growth during that period. None of America’s traditional premier urban centers can make that claim. As a Chicago city-dweller who did multiple consulting stints in Atlanta, I can tell you the city is much better than its reputation in urbanists circles suggests, and it is a place I could happily live.

    Yet the Great Recession has exposed some troubling cracks in the foundations of Atlanta’s success. Though perhaps it is too early to declare “game over” for Atlanta, converging trends point to a possible plateauing of Atlanta remarkable rise, and the end of its great growth phase.

    Growth Is Slowing

    As with many other boomtowns, in Atlanta growth itself has been among the biggest industries. Construction particularly played a big role in its economy. The housing crisis cut the legs from under Atlanta’s real estate machine. Though prices didn’t collapse, new home building did. From 2005 to 2009 Atlanta’s number of annual building permits fell by 66,352, the biggest decline of any metro area.

    Atlanta grew strongly in the 2000s, with growth of over 1.2 million people, a 29% rise that beat peer cities like Dallas and Houston. But look at the recent past and see a very different dynamic. Domestic in-migration has cratered, only reaching 17,479 last year, or 0.32%. While migration did slow nationally last year due to the economy, Dallas and Houston continued to power ahead. Dallas added 45,241 people (0.72%) and Houston added 49,662 (0.87%). Even Indianapolis added 7,034, but that’s 0.42% on a smaller base, meaning Atlanta is actually getting beat on net migration by a Midwest city; its in-migration rate is about on par with Columbus, Ohio, another healthy Midwest metropolis..

    The collapse in in-migration should be very worrying to Atlanta’s leadership. No new people, no new housing demand, thus no construction jobs. It should come as no surprise that Atlanta’s 10.8% unemployment rate is well ahead of the 9.7% national rate.

    The Infrastructure Brick Wall

    Last July, Judge Paul Magnuson ruled that Atlanta had been illegally taking water from Lake Lanier, the principal source of the region’s water supply. The ruling may not stick but it nevertheless has brought into focus the long term insufficiency of the water supply for Atlanta. Lake Lanier almost ran dry during a recent drought, but has since recovered in the recent wet years. The problem is more political than environmental. Atlanta has not appreciably expanded its water sources in 50 years despite all that growth.

    Atlanta has a myriad of infrastructure problems. It suffers some of the highest water and sewer rates in the nation, double those of New York City. And these are only going to get worse as the city embarks on a multi-billion dollar Clean Water Act Compliance program. This is an ominous sign for a city whose attractiveness is in large part due to its low costs. As Councilwoman Clair Muller put it, “I’m not sure being No. 1 in the country for water and sewer rates is a good selling feature for Atlanta.”

    But the biggest infrastructure issue for Atlanta is transportation. Atlanta is famous for its bad traffic and attendant pollution. Its freeways are among the world’s widest, but this disguises the extent to which the roadway infrastructure is woefully insufficient. Atlanta has a simple beltway and spoke system similar akin to Indianapolis and Columbus, much smaller cities. Other big cities like Houston, Dallas, Minneapolis, and Detroit have much more elaborate systems. In particular, rather than relying on a single ring road, these cities have webs of freeway with multiple “crosstown” routes.

    But Atlanta’s greatest road problem lies in the lack of arterial street capacity. Atlanta’s suburban arterial network is mostly former winding country roads, many of which have never been upgraded to handle the traffic demands on them. Most upgraded streets are radial routes, not crosstown ones, which forces even more traffic onto the overloaded freeway network.

    For those who prefer transit, Atlanta hasn’t invested there either. It built the MARTA heavy rail system as an extremely forward looking transportation investment, mostly in the 1970s and early 80s. This was built before Portland’s system and is far better than light rail to boot. But there has been almost no expansion of the network. The state of public transport has been largely frozen for some time. Meanwhile, Dallas, Houston, Phoenix, and others have invested billions.

    Competition Is Here

    Bad traffic congestion and other infrastructure ills didn’t matter much when Atlanta was the only game in town. For a long time, anyone who needed a presence in the Southeast found Atlanta the easy default answer. In many cases it was the only real possibility.

    That’s no longer true. Atlanta is now surrounded by upstart, much faster growing cities such as Charlotte and Raleigh-Durham in North Carolina, Nashville, Tennessee and Charleston, South Carolina – all in many ways now have the ambitions once characteristic of Atlanta.

    Atlanta’s problem lies in its insufficient differentiation from these other places. Other than the airport, a clear major asset to Atlanta, what do you actually lose by moving to Charlotte or Nashville? Your commute is likely to be less. Except for certain groups – African Americans or gays – the city seems to be losing allure.

    These other cities also have the talent to compete for a lot of the business Atlanta used to pick up without working for it. The new head of the Atlanta Regional Commission declared Atlanta’s love affair with the edge city high rises all but over. Planners always talk like this, but it is still a startling sentiment to hear in Atlanta, formerly the most boosterish of cities. That’s the sound of a city losing its mojo. Meanwhile, Charlotte chamber of commerce chief Bob Morgan says, “To understand Charlotte, you have to understand our ambition. We have a serious chip on our shoulder. We don’t want to be No. 2 to anybody.” That’s the way Atlanta used to talk.

    Caught in the Middle

    Atlanta does seem to realize it’s in a different competitive world. It must elevate its game and upgrade its product. Like Chicago and other growth stories before it, as Atlanta got big and rich, it decided it needed to get classier as well. To go for quality, not just quantity. And to embrace a more urban future for its core.

    But it might be too little, too late. Atlanta is urbanizing, but despite the huge influx of people into the city, it’s not there yet. Atlantic Station got built and attracted lots of press, but numerous other mixed use projects were killed by the poor economy. Ambitious projects like the Beltline park and transit project lack funding.

    Atlanta is left as a sort of “quarter way house” caught between its traditional sprawling self and a more upscale urban metropolis. It offers neither the low traffic quality of life of its upstart competition, nor the sophisticated urban living of a Chicago or Boston.

    Here too, Dallas and Houston continue to power ahead of Atlanta. Both are seeing significant urban infill and are also making major investments in cultural infrastructure that far outstrip those of Atlanta. For example, Dallas just opened a showplace performing arts complex, with buildings by the likes of Norman Foster and Rem Koolhaas. Houston has emerged as a dynamic multi-cultural city. Both have a long way to go, but are in a much stronger growth position to pull it off.

    Atlanta at Maturity

    Cities, like companies, go through a life cycle. There’s the youthful founding, the explosive growth phase, then maturity and, for some, decline. Chicago and Detroit were two of the huge growth stories of the industrial era, for example. Atlanta, Houston, and Dallas have been three of the boomtowns of the current age. Like other cities before them, that growth will come to an end one day. It is then that we’ll see if, like Chicago and New York, they will succeed as mature regions and truly take their place in the pantheon of great American cities, or, like Detroit or to a lesser extent Philadelphia, will decline or stagnate.

    Atlanta is far from dead, but it may be facing the beginning of the end of its growth cycle. If so, this will be the true test and measure of the greatness of that city. Will Atlanta make the grade? And how?

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

    Photo by james.rintamaki