New Geography

Tag: Chicago

  • Chicago: The Cost of Clout

    The Chicago Tribune has been running a series on the challenges facing the next mayor. One entry was about the Chicago economy. It described the sad reality of how Chicago’s economy is in the tank, and has been underperforming the nation for the last few years. I’ll highlight the part about challenges building an innovation and tech economy in Chicago:

    The region also has lagged in innovation, firm creation and growth in productivity and gross metropolitan product over the past decade, according to economic development consultant Robert Weissbourd, president of RW Ventures LLC. Daley’s two long-held dreams of Chicago emerging as a high-tech center and a global business center remain just out of reach… “We haven’t made the real global jump yet, and we have not made the tech jump either, but we are finally poised,” said Paul O’Connor, who for many years ran World Business Chicago, the city’s economic development affiliate. “We are still a major contender, but, yeah, we can blow it.” Or, as [Chicago Fed Economist William] Testa put it, “Given the poor performance of this decade, we need to rethink the challenges for Chicago.”
    …

    “If I could wave a magic wand, I would get government to start thinking differently about … what are the levers that we need to push, away from the traditional (tax increment finance district) thinking and away from the traditional thinking of, ‘Let’s just get a big company to move here,’ and toward thinking about how to foster innovation and creativity,” Christie Hefner, former chairman and chief executive of Playboy Enterprises Inc., said at a recent economic forum.

    It has been extremely rare to see people with establishment positions ever say a discouraging word about the city. Most honest observers would have to rate Daley highly has a leader, but certainly not perfect. Yet any criticism at all of him (directly or implicitly by that of the city he runs) has been studiously avoided by most. They are terrified of being excommunicated or broken on the wheel if they deviate from the script. To have corporate executives asking tough questions is unusual, and hopefully an example of a forthcoming “Great Thaw” we need to have here in the wake of Daley’s retirement.

    Chicago’s inability to build an innovation/tech economy is pretty remarkable if you think about it. Here’s third largest city in the country, one with enormous human capital, tremendous wealth, incredible academic institutions, and above all an ability to execute that far outclasses virtually any city I know. How is it then that Chicago has been unable to execute on this?

    Believe it or not, a lot of it goes back to that bane of Chicago politics: Clout. People in Chicago tend to write off clout and political corruption in Chicago with a shrug, as a unique or even amusing local affectation, or just part of the character of purely political life of the city, but one that doesn’t fundamentally change its status as the “City That Works.” But nothing could be further from the truth. Chicago’s culture of clout is a key, perhaps the key, factor holding the city back economically.

    Chicago’s Ambition: Clout

    In Paul Graham’s essay Cities and Ambition, he writes about the subtle messages cities send about what you should try to achieve, and how that shapes their fortunes:

    “Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder. The surprising thing is how different these messages can be. New York tells you, above all: you should make more money. There are other messages too, of course. You should be hipper. You should be better looking. But the clearest message is that you should be richer.

    What I like about Boston (or rather Cambridge) is that the message there is: you should be smarter. You really should get around to reading all those books you’ve been meaning to. When you ask what message a city sends, you sometimes get surprising answers. As much as they respect brains in Silicon Valley, the message the Valley sends is: you should be more powerful.
    …
    How much does it matter what message a city sends? Empirically, the answer seems to be: a lot. You might think that if you had enough strength of mind to do great things, you’d be able to transcend your environment. Where you live should make at most a couple percent difference. But if you look at the historical evidence, it seems to matter more than that.

    Chicago’s ambition, the message it sends is: “You should have more clout.” Does that matter? You bet it does.

    What Is Clout?

    Clout is a term of art in Chicago that normally refers to the ability to use connections to obtain jobs, contracts, subsidies or other favors from government. But more broadly, we can think of clout as the ability to influence organizational action within the context of a particular power structure.

    But if that’s the definition, isn’t saying you should have clout the same thing as saying you should have power like Graham said of Silicon Valley? No. Having power, like that held by Mark Zuckerberg or Larry Page and Sergey Brin, is about being autocephalous. It’s about have an independent base of authority or ability to act others are forced to respect. Clout, by contrast is all about petty privileges. Clout can be given, but it can also be taken away. That’s what makes it so corrupting. Tellingly, no one ever talks about Mayor Daley as having clout. That’s because he has real power instead. Having power is like being a king or a duke or a baron. Clout is all about being a courtier.

    To see this in action, just contrast Jesse Jackson with Al Sharpton. Both are prominent national civil rights leaders and black ministers. But Jackson rarely goes hard after anyone in Chicago, at least not anymore. Jackson has clout. One son is a congressman. Another somehow managed to acquire ownership of a lucrative beer distributorship. Jackson bought into the system in Chicago.

    By contrast, Sharpton wants to be a power player in New York, to be someone to whom even a would-be mayor has to come visit and, as they say, kiss the ring. He’s not interested in being bought off. Sure, he’ll make alliances. But he’ll never give up his independent base of power that makes him someone to be reckoned with. That’s the difference between power and clout.

    The Chicago Nexus

    John Kass likes to talk about clout in terms of the “the Combine,” or the bi-partisan system in Illinois in which the Democrats and Republicans have often proven less rivals than partners in crime, sometimes literally. But I prefer to think of “the Nexus” – a unitary social structure that pretty much everyone who’s anyone in Chicago is part of, one that goes far beyond the world of politics.

    Ramsin Canon had a good illustration of the Nexus in a piece he wrote over at Gapers Block:

    With big city economies cratering all around him, the Mayor was able to raise in the neighborhood of $70 million dollars to fund the Olympic Bid. At the same time he was able to get everybody that mattered–everybody–on board behind the push for the Olympics. Nobody, from the largest, most conservative institutions to the most active progressive advocacy group, was willing to step out against him on that issue.
    …
    The list of big donors to the Chicago 2016 bid committee is a comprehensive list of powerful Chicago institutions. I mean, it’s exhaustive. Economy be damned, when the Mayor called, they listened. Why? What did those conversations sound like? And do we believe that the Mayor is so powerful–or that their relationship with him is so close–that they must obey him? Or–more likely–is it a mutual back-scratching club with an incentive to protect the status quo? Chicago’s political infrastructure isn’t about the Democratic Party or “the Machine” or special interest groups or labor unions. Those are elements of varying importance. It’s real power lives in the networks that tie that list together.

    …
    Replace the man on the Fifth Floor–Bureaucracy Man, the superhero who keeps our alleys clear–and will these networks evaporate? Will they just disappear? How long would it take them to reorganize around the new personalities that moved in there?

    All cities have elite networks, but I have never seen a city that has a unitary power nexus to the extent Chicago does. I believe the Nexus resulted from the culture of clout combined with the fact that, with the exception of the interregnum between Daley pere and fils, power has been centralized on the 5th floor of city hall for decades. The Nexus may have come into being around the mayor, but now it has become a feature of civic life, one that practically longs for what Greg Hinz has labeled a “Big Daddy” style leader to sustain the system.

    Clout’s Effect on the Culture of Chicago

    The emergence of the Nexus is one of the key cultural impacts of clout in Chicago. If clout is only effective within a given power structure, then clearly the clouted want to see their power structure expand. The ultimate dream of the clout seeker is a centralized unitary state like Louis XIV’s France. In Chicago, we’ve come amazingly close to achieving it. It’s not that there’s no conflict, but it is all of the palace intrigue variety, not true conflicts between rival power centers. Without centralized political power and a tradition of clout, the Nexus would never have come into being.

    There are many other cultural impacts as well. As Douglas and Wildavsky note in Risk and Culture, “An individual who passes his life exclusively in one or another such social environment internalizes its values and bears its marks on his personality.”

    People are bought into and defend the system. They mapped these social environments along the axes of “grid” and “group” – the degree of hierarchy in the system and the degree of group cohesion. The Chicago Nexus is a high-grid, high-group structure, or collective hierarchy, with centralized decision making and a high cost of defection. Even groups that in other cities tend to be more oppositional to government will say something like, “Decisions get made in the mayor’s office here, so we have to play that game” and buy into the system. I’ve lost track of the number of times I’ve heard, “That’s just how it works here.” Of course, this means the basis of their own ability to make things happen then becomes influence – clout – within the Nexus. Thus they defend the system, because if it went away, so would their ability to make things happen because they’ve cultivated no alternative vectors for action. Also, the Council Wars period of the 1980’s still looms large in many leaders’ minds. Chicago remains heavily segregated and racially balkanized, as the recent quest for a single black mayoral candidate illustrates. There’s a lot of worry about what might happen if the current system breaks down.

    Conservatism and favoring of the establishment. Following on from that, the system fosters a sort of generalized conservatism, one dominated by a desire for institutional stability. It takes a heavy hitter to get the mayor’s attention or even access to the mayor, which reinforces establishment control, an inherently conservative model. This conservatism is even visible the realm of public design, as I’ve noted in discussion the retro-nostalgia design of the city’s streetlights and other streetscape elements. The evidence of clout-fed conservatism is literally graven in into the very streets of the city.

    Parochialism. Though fancying itself a cosmopolitan burg, I don’t see that Chicago is that much less parochial than most other Midwest cities. You see this in a thousand little ways. For example, in the way beloved long time personalities dominate the local airwaves. As the New York Times noted about turmoil at long time ratings leader WGN-AM, “Chicago tends to be unforgiving to newcomers. And with WGN pulling in the second- most radio revenue in the market behind WBBM, its moves are fraught with risk. ‘It was always difficult to bring someone in from out of town,’ said Bob Sirott, a longtime Chicago broadcaster.” (Longevity seems particularly prized here generally, as unless you are fortunately enough to be born to the right family or in the right parish, it takes time to accumulate clout). Or in the focus on local and hyper-local news in the local internet journalism community.

    Fear. As a high-group social structure, people are terrified of being kicked out of the club. Hence the unwillingness to cross the party line on almost any issue. As Tocqueville put it: “That which most vividly stirs the human heart is not the quiet possession of something precious, but rather the imperfectly satisfied desire to have it and the continual fear of losing it again.” People are even afraid of collateral damage if others near them cross the line. As Mike Doyle said, “In systems like Chicago’s, people don’t just refrain from rocking the boat, they do their best to keep anyone else from rocking it either.”

    Total Rejection of the Other. Anyone who exists outside the structure is a potential threat. Hence they are either co-opted or marginalized. The best illustration of this is the very title of that wonderful book on Chicago politics, We Don’t Want Nobody Nobody Sent. Or as Steve Rhodes said to me:

    One of the bartenders at the Beachwood says it took her awhile to figure this city out. In other cities you apply for a job with a resume, talk about your experience, etc. Here they just want to know who you know, who sent you – even at the bartender level….I’m not naive enough to believe this doesn’t happen elsewhere, but nowhere near as it does here, where it’s in the DNA. …Here, merit counts for next to nothing…In New York, everyone wants to know: “What do you do?” In Chicago, everyone wants to know: “Who do you know?”

    Why Clout Is Toxic to the Innovation Economy

    When you think about these cultural impacts of clout on Chicago, it becomes obvious why the city has failed to build an innovation economy. Innovation is fundamentally about new ideas, new ways of doing things, new players in the game, those from the outside, about merit, about dynamism. Clout is about what happened yesterday, the fruits of long years of efforts, and the same old – sometimes really old – players, about insiders, about connections, about stasis. As Jane Jacobs noted, “Economic development, no matter when or where it occurs, is profoundly subversive of the status quo.” Innovation driven economic development is fundamentally about disrupting the status quo. Clout is all about preserving it. Innovation welcomes the outsider, the clout-fueled Nexus abhors the Other. Innovation and clout are enemies.

    Think about the innovation hubs in America. They are all places that welcome the new. Not that it’s easy to make it in them. In fact, these place are often brutally competitive. And of course they have elite networks where the scions of the rich and powerful have a leg up and such. But the new is an important part of what makes them tick. In Silicon Valley, they are always looking for the tomorrow’s HP, Apple, Cisco, Google, Facebook, or Twitter, not just celebrating the past. They know that success today is ephemeral and, as Andy Grove put it, “only the paranoid survive.” DC loves its establishment, but the very nature of the place assures there will always be new players in the game. President Obama comes out of nowhere to gain the White House. But two years later it is the upstart Tea Party’s turn. Possibly because of their entertainment industry clusters, NYC and LA are always on the lookout for the fresh face and the next big thing.

    But Chicago? What do you think is going to happen when an ambitious 20-something with a great idea for a new business but no clout shows up in Chicago trying to make it happen and knocks on the door?

    I may not be 20 anymore, but at the risk of making this post sound like merely a bit of personal pique, I’ll share a true personal story to illustrate one example of how this plays out in real life in Chicago. In 2009 I received an award from the Chicagoland Chamber of Commerce for innovative thinking on public transit, winning first prize in a global competition they ran to solicit ideas for boosting public transit ridership in Chicago.

    I was thinking at the time that I might want to do something more entrepreneurial. I knew that the Chamber ran a sister organization called the Chicagoland Entrepreneurship Center chartered with boosting startups in Chicago. In the wake of my award I decided to check them out and see how they might be able to help me.

    There was just one problem: they wouldn’t return my phone calls. I made many attempts to get in touch with them by phone and email, and couldn’t even get them to give me a “No Thanks” or pawn me off on a peon. Now I’m a guy who a) had significant business experience, who b) built up one of America’s top urbanist sites from scratch, an inherently entrepreneurial act, and a successful one, if you think about it, and c) just got an award for innovation from the Chamber itself. Yet they wouldn’t even give me the time of day.

    What’s more, the Chamber mothership never showed any interest in engaging with me post-competition either. It was clearly just a PR exercise for them. Now don’t get me wrong, I’m delighted to report it was a very successful one. I got my picture on the front page of the Chicago Tribune above the fold. It exceeded my wildest expectations. I think the folks at the Chamber are nice people and I was extremely pleased with how it went. But clearly from their perspective, that’s where it ended. Actually uncovering innovators or something was not part of the agenda.

    From standpoint of the the Chicago system, this experience actually makes perfect sense, as I don’t have clout, nor can I bestow it on anyone. So why burn cycles on me?

    If you think about my profile and the treatment I got, can you imagine what a 23 year old armed with nothing but a crazy idea would get? A lot of ink has been dedicated to talking about how far Chicago and Illinois have come since they days when Mark Andreesen was actively harassed while trying to commercialize his web browser, then run out of town on a rail. But there is no doubt in my mind that if the next the next Andreesen showed up today, he’d get the exact same treatment. (I’m not familiar enough with Andrew Mason’s history to know how he was treated pre-Groupon, and pre-his association with the likes of big money Eric Lefkofsky. It would make an interesting case study to look at the history there – though he is a possible exception. I don’t know. In any case, his major local profile came after Groupon was already a huge success).

    This is what clout in Chicago hath wrought. The culture of the establishment Chicago is simply incompatible with an innovation economy. It’s not just about money or resources. It’s about respect. It’s about what this town respects, and more importantly what it doesn’t. It’s about what Chicago whispers to you about what you should aspire to achieve, what success means in this city, and the subtle – and not so subtle – messages about how you get ahead here.

    Until you’ve already made your millions or somehow wormed your way into connections or up through the hierarchy, establishment Chicago has no use for you in its economic plans, no matter what talent, ideas, or ambitions you might harbor. (Ironically, the biggest exception is Daley himself, who was famous for seeking out and rapidly promoting young talent like Ron Huberman and Richard Rodriguez. That’s another example of how he is head and shoulders above your average leader).

    By contrast, the local entrepreneurial tech community gets it, is energized, knows where the city is and where it needs to be, and is working hard to make progress with a sense of legitimate optimism backed up by recent good news. Grass roots and “by tech for tech” institutions ranging from Technori, to the Chicago Lean Startup Circle, to the folks at Groupon – which is a huge, inspirational success story, with people who get it and are committed to trying to build up Chicago’s tech scene – are hugely supportive of anyone trying to make a go at it no matter what stage they are in, and providing legitimately useful info and help along the way. Every single person in this group I’ve talked to has been more that willing to do anything to try to help me out, sometimes even more than I’d hoped or asked for – 100% of them. (Yes, this does mean I am starting an internet business myself – watch this space).

    I’ve long said Chicago isn’t going to be the next Silicon Valley and should seek only to get its “fair share” of tech. Having said that, as the third largest city in America, a fair share is still pretty big. If Chicago’s going to make it, this collaborative effort by the local tech community is what is going to get it there – not the Nexus.

    The Way Forward

    Pretty much every report out of officialdom – from Gov. Quinn’s Illinois Economic Recovery Commission Report to CMAP’s Go To 2040 Plan – suggests the public and quasi-public sectors need to do more to boost innovation. But what’s really needed is cultural change in the establishment. Until that happens, I’d suggest that what’s really needed is to take a page from the Getting Real playbook and for them to do less.

    Think about it. If Joe Investor shoots you down, you know the odds were probably long in the first place. While you might not come away feeling good about him, you probably don’t feel any worse about Chicago. But if you approach an official or quasi-official organization chartered with promoting “innovation”, “entrepreneurship”, “clusters”, “technology” or whatever in Chicago and they shoot you down, it’s not just them but your city you feel has rejected you. It’s one thing to generate a negative interaction with a private entity, but with an official entities that hurts the very thing they’re trying to promote. If an official or quasi-official organization can’t say Yes, or at least make sure that well over 50% of the people it says No to feel good about the experience, it should be shut down, because it’s doing more harm than good.

    What’s more, these organizations and leaders glom on to these hot phrases du jour and, as someone put it, “suck the oxygen out of the room.” They hog the microphone and the real stories and the real discussion that need to happen out there don’t get told in the press because big names are the default easy answer for reporters. Just look at the number of big titled civic folks and such quoted in the Tribune piece, for example. Startup blog Technori has already told me more in two months about things that matter in tech than the Tribune and the Sun-Times combined did all last year. As Mike Madison said of Pittsburgh:

    Tech-based economic development is not something that can be conjured in  meetings of mayors and CEOs.   That’s top-down, old-school, clear-the-skies, ACCD thinking.  In fact, I would guess that the more that the Downtown Duquesne Club crew gets in the middle of this process, the more the real entrepreneurs and innovators and risk-capital investors get turned off.

    Or as Paul O’Connor put it in that Tribune piece I led off with:

    “What we have now, to some extent, is a stodgy Midwest establishment, and underneath them are the kids who moved here, some of them in their 30s now,” he said. “They get it; they know how to do it. … We either give them permission and invite them to the table, which the next mayor should do and which Mayor Daley has begun to do a little bit lately, or we let them do it themselves.”

    Blowing Up the Culture of Clout

    Clout is so persistent in Chicago not just because of the people who personally benefit from it, but because there’s little perception of the ways the culture of clout affects Chicago outside the political realm. Indeed, to the extent people regard the Chicago Way at all, it’s often positively, because it enabled the city to “get things done.” It’s the same thing that causes Thomas Friedman to have his schoolgirl crush on China.

    But unfortunately for Chicago (and likely China too down the road) it doesn’t just matter if you can get things done, it matters what it is you do. And it also matters how you do it and who is involved. Until people understand the linkage between clout and other parts of the city like its economic under-performance, and care enough to change it, the non-political members of the Chicago Nexus are not going to feel the need to change the way things are done here. It’s not that these folks are corrupt by any means. Far from it. I believe they are completely sincere in their desire to better the city. But they don’t perceive the issue at the level that will collectively move them to action, or else feel the status quo is better for their institutional interests.

    Changing the culture is mission critical to Chicago realizing its ambitions as a global city and a center of the innovation economy, and a lot of other things too. The notion that you can have a centralized, top-down, clout driven Nexus infusing your civic culture but that somehow you’ll have an innovation driven economic culture – that’s just impossible. The attempt to fix and transform Chicago’s economy with a bunch of behind the scenes maneuvering and initiatives by a few heavy hitters has failed. We need to try a different way. That doesn’t mean Chicago has to become paralyzed with dysfunction of in-fighting or civic anarchy. But there need to be multiple power centers and a receptivity to everything innovation is all about. And it will be a bit messier. I think that’s a good thing. There’s no doubt Chicago is a great city with incredible assets and capabilities. There’s no reason it can’t join the ranks of the innovation elite – if it’s willing to start jettisoning the culture of clout the so hobbles its ambitions and embracing a more dynamic future for the city. What will it be, Chicago?

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile, where this piece originally appeared.

    Photo by Bryce Edwards

  • The Next Urban Challenge — And Opportunity

    In the next two years, America’s large cities will face the greatest existential crisis in a generation. Municipal bonds are in the tank, having just suffered the worst quarterly performance in more than 16 years, a sign of flagging interest in urban debt.

    Things may get worse. The website Business Insider calculates that as many as 16 major cities — including New York, Los Angeles, Chicago and San Francisco — could face bankruptcy in the next year without major revenue increases or drastic budget cuts. JPMorgan Chase’s Jamie Dimon notes that there have already been six municipal bankruptcies and predicts that we “will see more.”

    Big cities face particularly steep challenges. Many, notes the Manhattan Institute’s Steve Malanga, have extraordinarily generous compensation systems for their public employees. New York City, for example, owes nearly $65 billion in municipal debt, as well as a remarkable $122 billion for unfunded pension obligations.  President Barack Obama’s hometown of Chicago has it even worse: Its total public pension liability adds up to roughly $42,000 per household.

    This all should give some pause to the relentless hoopla about the country’s supposed “urban renaissance.” The roots of the current economic crisis lie deep in urban economies, where employment growth that has lagged even in good times.  During the last economic expansion, urban job growth was roughly one-sixth that of suburbs and one-third that of smaller communities.

    Population flows are also less favorable than commonly perceived.  Even since the onset of the Great Recession, the vast majority of urban regions have seen population continue to grow more robustly in the suburbs than in the urban core. Similarly, the largest increases in the much-coveted educated population continue to be in smaller, less dense urban areas such as Raleigh-Durham, Austin and Nashville and away from the largest, densest regions such as New York or Los Angeles.

    True, many cities now boast more residential complexes, often built from abandoned office and industrial space, but there are few new office towers outside the public sector. Stadiums, convention centers, luxury hotels and other ephemera may gain public notoriety, but they have done little to boost the private sector economic base  as can be seen in the lack of growth in places like downtown Cleveland, Detroit and Baltimore. In contrast, job growth has flourished  in low-density regions in suburban rings, particularly in fast-growing metropolitan regions of the South , particularly in Texas and Intermountain West locales such as Salt Lake City.

    Initially, the Great Recession was widely held to have reversed this pattern. As private sector growth retrenched, companies pulled out of newer offices in suburbia, sometimes consolidating in downtown office. The Bush-Obama stimulus also bailed out the two sectors — finance and government — that drive employment in most inner cities. Meanwhile, suburbs, with their collections of small companies that have little political heft and depend more on home construction, suffered greater drops in occupancies.

    This urban tilt was, until recently, reinforced by political trends. After the 2008 election urban interests had secured a degree of political power unprecedented in recent history. The White House was occupied by a confirmed urbanite who found suburbs “boring” and had little connection with small town residents. The president stocked his EPA, Housing, Transportation and Education bureaucracies with pro-urban advocates who shared his vision to re-densify a country that has been steadily dispersing for half a century.

    At the start of the Obama presidency virtually every critical committee post in the House was controlled by urban Democrats led by Speaker Nancy Pelosi — such old lions as Henry Waxman, Barney Frank and Charles Rangel. In concert with an urban-focused White House, they constructed a stimulus tilted toward key urban interests: public employees, large universities, mass transit and high-speed rail systems.

    Now the cities’ political ascendency has come to an end. Suburban and small town voters, who represented a large majority of the electorate, shifted heavily the November toward the GOP. Unlike the city-focused old Congress, the new GOP dominated House’s primary loyalty is to the metropolitan periphery as well as smaller cities and towns.

    This shift will affect big cities across the country. Urban land speculators counting on a national  high-speed rail speed  and expanded rail transit networks to boost central cores now face a Congress more concerned with roads than ultra-expensive new trains. You can also forget the hundreds of millions ascribed for “smart growth” plans, which, in essence, seek to direct development and housing towards high-density urban areas.

    Even more serious for cities will be the fiscal fallout from the new order in Washington. Pushed by the Tea Party base, the GOP-led Congress will unlikely provide bailouts to fiscally challenged states and cities. This will hit those big cities — New York, Los Angeles, San Francisco and Chicago, –  located in heavily indebted states — New York, California and, arguably the worst of the pack, Illinois — the hardest.

    There is widespread concern, bordering on panic, about how potential cutbacks in state spending could further savage already strapped city budgets. In California, for example, Governor Jerry Brown’s proposed scaling back of state redevelopment funds was described in the Los Angeles Downtown News as a “budget bomb” for the city’s widely hyped but already tottering downtown renaissance.

    Yet these challenges also present an opportunity for cities. As one prominent urban booster, Brookings’ Chris Leinberger, has pointed out in a recent radio interview (KPCC-FM-NPR), many of the nation’s cities no longer require the assistance deemed necessary back in the ’60s and ’70s. As they have developed somewhat stronger downtown cores, lowered crime rates and reduced “white flight,” the stronger urban cores are better positioned now, though perhaps less so than the boosters believe,  to succeed on a market-oriented basis.

    Even setbacks, like the largely failed condo boom, can turn into an advantage. No longer commanding high prices from the never-quite-materialized hordes of affluent “empty nesters,” the new units could provide a stock of lower-cost housing for the younger, educated and childless demographic attracted to urban core. Although most millennials consider suburbs their ultimate destination, a sizable number, roughly one in five, rank an urban center as their “ideal” location.

    Cities need to break their reliance on outside help from a country that is, for the most part, not dense or urban. Future urban progress cannot rely on Washington’s largesse or diktats. Instead cities need to focus on how to create a greater competitive advantage in the demographic and employment marketplace. Rather than obsessing over government-driven employment, they have to create conditions that will lead to job creation in the private sector, particularly from the oft-neglected and usually politically impotent small business sector.  These include such things as relaxing some regulations, including taxes on home-based businesses, incubator centers and more consistent standards on building construction.

    City governments will need to shift their priorities away from ephemera and concentrate on such basics as improving schools, promoting entrepreneurial growth and nurturing sustainable middle class neighborhoods. The current shift in political power away from cities may be painful at first, but it could prove the elixir that will turn the urban renaissance fantasy into something closer to reality.

    This piece originally appeared in Forbes.

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

    Photo by asterix611

  • Chicago Magazine Asks Why Illinois is So Corrupt

    Chicago Magazine has an interesting article on the sore subject of Illinois corruption. The article was written by Shane Tritsch who interviews several experts on Illinois political history. There’s no “good old days” of clean government in the Land of Lincoln. Tritsch explains a major reason for Illinois’ historical graft:

    Owing to historical factors, Illinois developed a labyrinthine governmental structure that offered fertile ground in which corruption could sprout. The Illinois constitution of 1870, in effect until 1970, limited the amount of debt counties and municipalities could carry and taxes they could levy. When cities needed to fund improvements, they got around those constraints by creating new units of government with the capacity to borrow—a library district, for example, would be created to build and administer a new library. “The 1870 constitution almost forced you into multiple units of government if you were going to deliver services beyond your municipality or modernize your municipality,” says Redfield. Today the state contains almost 7,000 separate governmental fiefs—far more than any other state—ranging from counties, towns, and school and fire districts to water reclamation and mosquito abatement districts. Most have budgets to protect and authority to wield. “It’s very hard to stay on top of it all, and it creates many more opportunities for patronage,” says Cindi Canary. “It creates ways for small islands of graft and corruption to stay hidden.”

    It appears that Illinois’ luck is running out. According to Forbes, Illinois is number two on the list of states Americans are fleeing behind New York:

    at No. 2. Illinois is expected to lose 27,000 people this year, consistent with its average annual loss over the last five years. The losses are likely linked to the state’s economy and tax structure. Job losses in manufacturing and industrial machinery are likely pushing people out of the state

    The bond market has taken notice of Illinois’ debt problem. While Illinois can’t go legally bankrupt, creditors can refuse to extend credit. Illinois faces massive public pension crisis in the coming years. Unfunded liabilities will make Illinois a less desirable place to invest.

    The Illinois economic situation was born in Illinois’ history of corruption. Shane Tritsch’s article is a decent history on Barack Obama’s home state. The Chicago segment of Illinois corruption is certainly unique. Below is an excellent segment from a National Geographic TV special on how Chicago was taken over by the Mob.

  • The Other Chambers of Commerce

    The recent political conflict between the Obama Administration and the U.S. Chamber of Commerce has thrown a new spotlight on an old communication problem. Local chambers of commerce, although they predate the U.S. Chamber by nearly a century and a half, often are assumed to be part of the U.S. Chamber, or otherwise under its direction. They aren’t. They are independent.

    During the pre-election controversy this year, it was clear that many people, including many chamber members, did not know this fact. They believe that U.S. Chamber President Tom Donohue and his colleagues on H Street directly or indirectly control all that local chambers do. But Donohue and his staff don’t exercise such control, nor do they want to.

    Few people think about what chambers do locally. For example, who knows that Elliot Tiber, president of the Bethel, N.Y., Chamber of Commerce, secured the permit for Woodstock?

    It was also a local chamber – the Business Men’s League of Atlantic City – that came up in 1920 with the idea of a festival to keep tourists in town after Labor Day. Pretty women in beachwear would turn out to be the centerpiece of the annual event. We have that business group (now called the Greater Atlantic City Chamber) to thank for the Miss America Contest.

    Was Charles Lindbergh’s plane called The Spirit of Enterprise (the U.S. Chamber’s tag line)? No, the flying bucket of bolts was, of course, The Spirit of St. Louis. The president of the St. Louis Chamber came up with the name in order to promote the great river city. And why should Lindbergh object? The chamber president also raised most of the money for the aircraft.

    And who sent out the promotional brochure that enticed the first movie producer to southern California in 1907? It was the Los Angeles Chamber of Commerce. In nearby Hollywood a chamber was later active as well, helping re-fashion the famous Hollywood sign out of a decaying advertisement for a real estate development called “Hollywoodland.”

    Moreover, there’s a guy in a suit present next to the glamorous celebrities who get their photos taken when their stars are set in the Hollywood sidewalk. Who is that business man? It’s Leron Gubler, president of the Hollywood Chamber of Commerce, which invented and maintains the Walk of Fame.

    Most of the thousands of things that local chambers have done and do are far removed from the big national issues that embroil the U.S. Chamber. Sure, most of the chambers in the country agree with and support the lion’s share of the U.S. Chamber’s positions. Although the goals are often the same, the priorities, issues, methods, leadership and, importantly, ownership are not.

    Local chambers have shown themselves perfectly able to get into fights of their own, without orders from a non-existent chamber of commerce command center.

    Was it the national chamber’s president who financed the Florida and Alabama, the ships that terrorized Union merchants during the Civil War? No, it was George Trenholm, one of the most active members of the Charleston (SC) Chamber of Commerce. As president of the chamber, Trenholm had asked for a thorough federal charting of the waterways around the Charleston harbor. The survey provided valuable navigation information that became critical when Trenholm emerged a decade later not only as privateer king of the Confederacy but also as chief sponsor of blockade runners. (Some believe he was a model for Rhett Butler in Gone with the Wind.)

    But it wasn’t as if all chambers were Confederates. It was the New York Chamber of Commerce that furnished a cash reward of $25,000 to the captain and crew of the Kearsarge, which finally sank the Alabama.

    There have been other times when local chambers have performed roles worthy of national headlines. During Prohibition, a liquor wholesaler named Al Capone was seen as bad for business by the president of the Chicago Association of Commerce, Colonel Robert Isham Randolph. In an act of some courage, Randolph personally warned Capone and created a chamber subcommittee, popularly called the “Secret Six,” that engineered Capone’s downfall. The Six hired a consultant named Alexander Jamie to gather information, especially financial information, on Capone. Jamie brought in his brother-in-law, Eliot Ness, to help. Capone later credited the Secret Six with taking him down.

    Of course the local chambers have made their share of mistakes over the years. The St. Louis Chamber of Commerce once tried to stop the first railroad bridge across the Mississippi, but was stymied in court by the common sense and careful research of a folksy lawyer named Abraham Lincoln. And the New Orleans Chamber of Commerce successfully pushed for easing the quarantine regulations on ships in its harbor, after which a yellow fever-laden ship travelled up the Mississippi and nearly wiped out Memphis in 1878.

    But if you take some water and add a chamber, the result can be a megalopolis. Starting in 1840, the Houston Chamber with single-minded determination pushed for the removal of snags and mud from the Buffalo Bayou, which trickled on a circuitous 50-mile path to the sea. In the late 1800s, rain melted the salt on a barge on the bayou, and the Galveston News cackled that Houston finally had a salt-water port. But the laughing stopped on September 8, 1900, when a hurricane flattened Galveston.

    Houston overnight became a critical port for Texas, just in time for the Spindletop oil bonanza of January 10, 1901. The chamber would continue to push for improvements on what became the Houston Ship Channel, guaranteeing decades of future growth. Today, the chamber, now called the Greater Houston Partnership, is anticipating the shipping/economic impact of the opening of the second Panama Canal.

    Some national change in the country’s economic model has sprung directly from the actions of chambers. The Chicago Board of Trade, a chamber founded in 1848, revolutionized how its members bought and sold farm commodities, becoming so successful that by 1859 it essentially left the traditional chamber business. Instead, the Board of Trade continued to plow the virgin soil of this new financial field, inventing futures contracts and modern commodities trading.

    And so it goes. The Birmingham (AL) Chamber of Commerce belatedly, but successfully, broke the power of segregationist Bull Connor and promoted integration of the downtown, while the Atlanta Chamber of Commerce president negotiated the accord that, in a celebrated speech, Martin Luther King defended by saying, “If anyone breaks this contract, let it be the white man.” Segregation, especially racial conflict and the resulting negative publicity, was bad for business, and chambers took the side of peaceful integration in many (although not all) cities throughout the South.

    So much of what we think of as America was facilitated or aided by those often forgotten, always resourceful groups known as local chambers of commerce. Whether it’s the Golden Gate Bridge, Great Smoky Mountains National Park, the statue of Vulcan over Birmingham, commission and city manager forms of government, United Way-style giving, Baltimore’s Inner Harbor, and so much more – it was local chambers that led the way. The U.S. Chamber was fighting for business and free enterprise principles in Washington, but it was local chambers working “on the ground” that helped plant so many of these seeds across the nation.

    Each of the local chambers is vastly smaller than the U.S. Chamber, but collectively they have had a large impact. As in so many things, it has been the local organizations, not merely the national ones, that have shaped this country’s enterprise culture.

    Chris Mead is senior vice president of the American Chamber of Commerce Executives. He is working on a history of local chambers of commerce in the United States.

    Photo by Rob Shenk

  • The Privatization-Industrial Complex

    “I think this is just the latest way for people to make money off state and local governments. This is the new way the investment banks, their lawyers, and consultants squeeze the taxpayers….They’re going around making these deals, and it’s very lucrative. It’s like a circus coming to town.” – Clint Krislov

    Privatization has long been advocated by many conservatives as a good government measure. Traditionally, privatization was used a tool that subjects government monopolies to competition from the marketplace, driving down costs and improving quality of service. Privatization pioneer Steve Goldsmith, former mayor of Indianapolis and now deputy mayor of New York City, used to apply what he called the “Yellow Pages test.” If he could open the Yellow Pages and find several companies providing a service, he wondered why government should be in that business.

    As Mayor, Goldsmith privatized dozens of city services in Indianapolis, saving the city an estimated $120 million the process. This ranged from contracting out services, to forming a public/private partnership to implement a $500 million infrastructure improvement plan to hiring private managers to run – but not own or lease – the airport and water utility.

    Today, sadly, privatization is less about Goldsmith style operational effectiveness and more about providing jackpots for financiers who stand at the core of a growing privatization-industrial complex. Cities and states salivate over ways to sell or lease off underperforming public asset for large payouts. With local governments cash-strapped and the public unwilling to pay more in taxes, it is politically difficult to even bring user fees to a market rate. Combined with the potential billions in payoffs – Indiana received $3.9 billion for its toll road and Chicago $1.1 billion for its parking meter system – the appeal is obvious.

    But these transactions differ markedly from the Goldsmith-style privatization. They are driven not by efficiencies but by an investment banker mindset focus on money and narrow parameters of the asset operations. They also provide enormous temptation to elected officials to grab the money now even at the expense of future generations. They are also rife with potential conflicts of interest and incentive problems.

    One major source of conflict comes with the professional advisors that drive the deals. Since long term leases involve so much money and are so complex, they require millions of dollars of services from investment banks, lawyers, financial advisors, etc. Unlike for typical government transactions such as issuing bonds or contracting out services like printing, building maintenance, or call centers, for which cities have some experience, the vast majority of cities have little in house expertise for complex financial transactions.

    Thus local officials are at the mercy of these out of town experts to give them the best advice they need to defend the public’s interest. But what advice can we expect from these firms, who have a stake on highly leveraged deals? The people in the firm may be technically competent and possess the highest levels of personal integrity, but still are prisoners of a structural conflict of interest in promoting privatization transactions.

    Consider Morgan Stanley. An arm of Morgan Stanley was the winning bidder on the Chicago parking meter lease. That deal is widely seen as a disaster, giving the idea privatizing meters a black eye, and engendering such headlines as “Morgan Stanley’s $11 billion makes Chicago taxpayers cry (Bloomberg) and “Company [Morgan Stanley] Piles Up Profits from City’s Parking Meter Deal” (NY Times).

    Now Morgan Stanley is back, this time advising Pittsburgh and Indianapolis on potential parking meter privatizations. Morgan Stanley has a huge structural incentive to want those deals to go through. It would restart the market for parking meter privatization, and position the firm as the preferred advisor to cities. Even where they were not the city’s advisor, a restarted parking meter market means they could potentially bid on many more assets.

    If you make money on privatization transactions, then no deals means no money. So obviously these firms have every reason in the world to promote privatization and see deals go through regardless of whether any particular deal is good or not. This doesn’t mean they are crooks, it’s just the reality. These firms now form of the core of the “privatization-industrial complex” with an incentive to cheerlead for leading public assets because that’s how they make their money. They need deal flow, the more transactions the better.

    This was picked up on by Harrisburg, PA. Facing bankruptcy, the state offered an $850K grant to hire Scott Balice Strategies of Chicago, one of the nation’s top privatization financial advisors. The city council turned it down. As one city councilor noted, “Their recommendation is always the same: ‘sell assets’”.

    Many of these investment banks, operators, financial advisers, and law firms also have tight links with each other, and participate on deals together, often as partners, other times as opponents. The Pittsburgh Post-Gazette noted how many of these firms have ties to Chicago’s earlier round of privatization. “When Pittsburgh proposed leasing its public parking facilities, the city became a magnet for a passel of firms – many of them connected to Chicago by blood, politics or business – that pursues similar deals around the country. The firms may be partners in one city, rivals or referees in the next.” The winning bidder on the Pittsburgh parking transaction is actually Morgan Stanley’s partner in the Chicago deal, for example.

    These potential conflicts make it very difficult for cities to know they are making a good deal, especially since they lack the experience necessary to independently judge it. Right now, they often are at the mercy of their advisors. And ask yourself this: when was the last time a city or state looked seriously at one of these deals and their advisors told them not to do it?

    This is frequently combined with traditional clout driven contracting. Many of the Chicago parking meter firms had tight links to the Daley administration. Similarly, in Indianapolis a city-paid chief advisor to the office of the mayor is conveniently also a registered lobbyist for the winning bidder. This combination is a recipe for disaster, resulting in very long term deals that could be very bad for the public.

    Long term lease deals can still make sense – if they are done right. The Chicago Skyway and Indiana Toll Road deals were both home runs, for example. But given the enormous risks if something goes wrong, governments must put into a place a robust process for protecting the public, with a full airing and mitigation plan for the bad incentives that populate so many areas of this field.

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

    Photo by ehfisher

  • Mayor Daley Calls it Quits

    Chicago’s Mayor Daley has decided to end his political career. Chicago’s Mayor since 1989, in December he will break his father’s record as Chicago’s longest serving Chief Executive. No one knows the real reason Daley chose to hang it up, whether it’s his wife’s health or his low polling numbers. Long time Chicago Sun-Times reporter Fran Spielman summarizes Daley’s current troubles:

    Chicago’s stunning first-round knock-out in the Olympic sweepstakes, political fall-out from his nephew’s pension fund deals and a budget crisis that forced him to deplete the city’s long-term reserves and demand furlough days and other cost-cutting concessions from city employees.

    Chicago is facing more of the same — and another painful round of service cuts — to erase a record $654.7 million shortfall in 2010.

    The city’s bond rating was dropped. Its homicide rate is on the rise, including the murder of three Chicago Police officers in recent months.

    More voters were increasingly viewing Chicago as a city that doesn’t work. Being known as a “union” town isn’t an asset in a competitive, global economy. Who will confront Chicago’s problems as the next Mayor?

    Several people are interested in being Chicago’s next Mayor. The most noteworthy is Obama’s Chief of Staff Rahm Emanuel. Whether Emanuel will leave the White House before the November election to start a campaign for February is anyone’s guess. Would President Obama get involved in local Chicago politics to endorse Emanuel?

    Emanuel will face scrutiny over his tenure as a board member of the failed GSE Freddie Mac. What exactly did Rahm Emanuel know about corrupt accounting there? But, Emanuel has other problems. Whether Emanuel can overcome hostility from the African-American and Hispanic community over comments made about issuing drivers licenses to high school dropouts is another issue. Both communities will look to run a candidate in February’s election.

    Then there’s the problem Chicago may be reluctant to elect a Jewish Mayor. As Alderman Burke told Professor Milton Rakove’s in an interview:

    “There is a latent anti-Semitism in Chicago and a large population that will never vote for a Jew. They would vote for anybody before a Jew.”

    Whoever decides to run for Mayor will have to have the backing of powerful Alderman Ed Burke, who is Chairman of the Finance Committee. With $6 million in his campaign fund, Alderman Burke will be the kingmaker behind the scenes. After all, the business community “feels” it is good business to be on the good side of Alderman Burke. Chicago Sun-Times reporter Fran Spielman asked Alderman Burke if he would run:

    “Stay tuned,’’ he said, laughing. “It would be one of the farthest things from my mind. [But] in Chicago politics, people never close the door.”

    It’s not likely Alderman Burke is going to give up his lucrative legal business to take a pay cut as Chicago’s Mayor. Alderman Burke was handing out the money before Mayor Daley was elected and he will continue in that role no matter who is Chicago’s next Mayor.

    The “Chicago Way” is likely to continue whoever is the next Mayor.

  • Chicago Stimulus Program: A Family Affair

    Even though cities all over the United States are running large deficits, Chicago Mayor Richard Daley feels that an investment in one particular charity is an investment for the future. After School Matters, founded by Mayor Daley’s wife Maggie Daley, funds l youth programs and helps low-income youth obtain job skills. It has received more than $46 million from the city since 2005, with nearly one-third of that total coming in 2009 alone ($15 million). This is a 50% increase from 2008, when the charity received $9.36 million.

    The city has even given some of its federal stimulus package to fund After School Matter’s job program, which pays low-income 14 to 24 year-olds $9-$10 an hour for four and a half hours of work each workday. The contract, signed in 2009, has allotted $1.31 million to the charity for three years. However, Illinois lags behind its projected job growth, and Mayor Daley must find a way to create sustainable jobs for these new workers if he is going to justify this allotment of stimulus money.

    Aside from that, companies that have contracts with the city are donating money to the project as well. Mayor Daley may not be accepting money from city contractors for his campaign, it certainly does not hurt that these contractors are giving millions to his wife’s charity. The Mayor has encountered a lot of criticism for patronage in City Hall after his nephew was found to have used city pension money to buy union land. After School Matters may represent a much more righteous investment, but the Mayor’s seems determined to make Chicago’s budget a family affair.

    Hat tip to Steve Bartin’s Newsalert

  • Despite Transit’s 2008 Peak, Longer Term Market Trend is Down: A 25 Year Report on Transit Ridership

    In 2008, US transit posted its highest ridership since 1950, a development widely noted and celebrated in the media. Ridership had been increasing for about a decade, however, 2008 coincided with the highest gasoline prices in history, which gave transit a boost.

    Less reported was the fact that despite higher ridership, transit’s market share (of transit and motor vehicles) has fallen since the 1950s. In 1955, transit’s market share was over 10%. By 2005, transit’s share had dropped to 1.5%, but recovered only to 1.6% in 2008. Transit’s all time peak ridership was in 1945, driven up by World War II and gas rationing. It is thus not surprising that national transit ridership (boardings) declined 3.8% in 2009 as gasoline prices moderated.

    Market Share by Major Urban Area

    Demographia has released urban area roadway and transit market share estimates for 2008, based upon Federal Transit Administration and Federal Highway Administration data. The table below compares 2008 with 1983 market share data for 56 urban areas with a corresponding metropolitan area population of more than 900,000 (complete data).

    Urban Areas: Roadway & Transit Market Share: 2008
    Ranked by 2008 Transit Market Share
    With 25 Year (1983) Comparison
        2008 1983 Roadway Share % Change
    Rank Urban Area Roadway Share Transit Share:  Roadway Share Transit Share: 
    1 New York 89.0% 11.0% 87.7% 12.3% 1.5%
    2 San Francisco 95.0% 5.0% 93.7% 6.3% 1.4%
    3 Washington 95.5% 4.5% 96.1% 3.9% -0.6%
    4 Chicago 96.1% 3.9% 94.2% 5.8% 2.0%
    5 Honolulu 96.2% 3.8% 93.2% 6.8% 3.2%
    6 Boston 96.7% 3.3% 97.5% 2.5% -0.8%
    7 Seattle 97.2% 2.8% 97.6% 2.4% -0.4%
    8 Philadelphia 97.3% 2.7% 96.0% 4.0% 1.4%
    9 Portland 97.7% 2.3% 97.6% 2.4% 0.1%
    10 Salt Lake City 97.8% 2.2% 99.1% 0.9% -1.3%
    11 Los Angeles 98.1% 1.9% 98.1% 1.9% 0.0%
    12 Denver 98.2% 1.8% 98.5% 1.5% -0.3%
    13 Baltimore 98.3% 1.7% 97.7% 2.3% 0.6%
    14 Pittsburgh 98.6% 1.4% 97.3% 2.7% 1.3%
    15 Miami-West Palm Beach 98.7% 1.3% 98.8% 1.2% -0.1%
    16 Atlanta 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Cleveland 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Las Vegas 98.8% 1.2% 99.6% 0.4% -0.8%
    16 Minneapolis-St. Paul 98.8% 1.2% 98.8% 1.2% 0.0%
    16 San Diego 98.8% 1.2% 99.3% 0.7% -0.5%
    21 San Jose 99.0% 1.0% 99.0% 1.0% 0.0%
    22 Austin 99.1% 0.9% 99.7% 0.3% -0.6%
    22 Houston 99.1% 0.9% 99.0% 1.0% 0.1%
    22 Milwaukee 99.1% 0.9% 98.3% 1.7% 0.8%
    22 Sacramento 99.1% 0.9% 99.0% 1.0% 0.1%
    22 San Antonio 99.1% 0.9% 98.7% 1.3% 0.4%
    27 St. Louis 99.2% 0.8% 99.0% 1.0% 0.2%
    28 Buffalo 99.3% 0.7% 98.5% 1.5% 0.8%
    28 Providence 99.3% 0.7% 98.9% 1.1% 0.4%
    30 Charlotte 99.4% 0.6% 99.3% 0.7% 0.1%
    30 Cincinnati 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Dallas-Fort Worth 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Hartford 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Orlando 99.4% 0.6% 99.7% 0.3% -0.3%
    30 Phoenix 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Rochester 99.4% 0.6% 98.9% 1.1% 0.5%
    30 Tucson 99.4% 0.6% 98.9% 1.1% 0.5%
    38 Detroit 99.5% 0.5% 98.8% 1.2% 0.7%
    38 Fresno 99.5% 0.5% 99.3% 0.7% 0.2%
    38 New Orleans 99.5% 0.5% 97.4% 2.6% 2.2%
    38 Norfolk-Virginia Beach 99.5% 0.5% 99.2% 0.8% 0.3%
    38 Riverside-San Bernardino 99.5% 0.5% 99.6% 0.4% -0.1%
    43 Columbus 99.6% 0.4% 98.6% 1.4% 1.0%
    43 Louisville 99.6% 0.4% 98.9% 1.1% 0.7%
    43 Memphis 99.6% 0.4% 99.4% 0.6% 0.2%
    43 Tampa-St. Petersburg 99.6% 0.4% 99.5% 0.5% 0.1%
    47 Bridgeport 99.7% 0.3% 99.8% 0.2% -0.1%
    47 Jacksonville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Kansas City 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Nashville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Raleigh 99.7% 0.3% 99.9% 0.1% -0.2%
    47 Richmond 99.7% 0.3% 99.1% 0.9% 0.6%
    53 Indianapolis 99.8% 0.2% 99.3% 0.7% 0.5%
    54 Birmingham 99.9% 0.1% 99.5% 0.5% 0.4%
    54 Oklahoma City 99.9% 0.1% 99.9% 0.1% 0.0%
    54 Tulsa 99.9% 0.1% 99.6% 0.4% 0.3%
    Unweighted Average 98.7% 1.3% 98.3% 1.7% 0.4%
    All Urban Areas Combined 98.4% 1.6% 97.5% 2.5% 0.9%
    Based upon passenger miles
    Core urban areas in metropolitan areas with more than 900,000 population in 2009.
    Derived from Federal Transit Administration and Federal Highway Administration data
    Los Angeles and Mission Viejo urban areas combined
    San Francisco, Concord and Livermore urban areas combined
    Historic transit market share data at http://www.publicpurpose.com/ut-usptshare45.pdf
    Maryland commuter rail (MARC) assigned to Washington, DC

    In 1983, transit systems started receiving support from federal taxes on gasoline. This was also the first year that the National Transit Database reported on the same annual basis as it does today. One justification for using funds from road users was the hope of attracting people from cars to transit. The national data above and the urban area below show that the overwhelming share of new travel has, nonetheless, continued to be captured by motor vehicles rather than transit. Among the 56 urban areas, 13 experienced gains in transit market share from 1983 to the peak year of 2008, while 37 posted losses and six had no change. Transit was able to capture only 0.9% of new urban travel between 1983 and 2008, while roadways captured 99.1%. (Note 1).

    The Top 10: Still a New York Story

    #1: New York: The nation’s predominant urban area remains New York, with an 11.0% transit market share. In 2008, 41% of the national transit ridership (passenger miles) was in New York, with much of it either in or focused upon New York City. The New York City Transit Authority, and a host of local public and private systems, principally serve New York City destinations and account for a remarkable 38% of the nation’s transit ridership. Even so, transit’s market share dropped from 12.3% in 1983. As a result, the roadway market share in New York increased 1.5% between 1983 and 2008, the fourth largest gain in the nation. Transit attracted 8.7% of the new demand between 1983 and 2008, while roadways attracted 91.3%.

    #2: San Francisco: San Francisco had the nation’s second highest transit market share in 2008, at 5.0%. This is a decline from 6.3% in 1983. Nonetheless, San Francisco moved up from 6th place in 1983. This produced a 1.4% increase in the roadway market share between 1983 and 2008, the fifth largest gain in the nation. Transit accounted for 2.2% of the new demand, while roadways attracted 97.8%.

    #3: Washington: Washington placed third in transit market share in 2008, at 4.5%. This represents a gain from 3.9% in 1983 and an improvement from 6th place. Washington was the only urban area among the top five to experience an increase in transit market share. Much of Washington’s transit increase was on its expanding Metrorail system and the MARC commuter rail system (most of the ridership on this Maryland based system commutes to Washington. Overall, transit in Washington has attracted 5.1% of new travel over the past 25 years, while roadways attracted 94.9% of new demand.

    #4: Chicago: Chicago ranked fourth in transit market share, at 3.9%. In 1983, Chicago had ranked 3rd, with a market share of 5.8. The roadway market share in Chicago increased 2.0% from 1983 to 2008, the third largest road travel gain in the nation. Transit attracted 1.3% of new demand over the period in Chicago, while roadways attracted 98.7%.

    #5: Honolulu: Honolulu ranked fifth in transit market share, at 3.8%. This is a significant drop from 1983, when Honolulu ranked 2nd in the nation, with a transit market share of 6.8%. Honolulu’s roadway market share gain was the largest in the nation between 1983 and 2005, at 3.8%. Transit ridership also dropped in Honolulu from 1983 to 2008, so that roadways accounted for all new travel.

    #6: Boston: Boston ranked sixth in transit market share in 2008, at 3.3%. This is a gain from 2.5% in 1983, when Boston ranked 9th. Much of Boston’s increase is attributable to its commuter rail expansion. Transit captured 4.1% of new demand, while roadways attracted 95.9%.

    #7: Seattle: Seattle’s principally all bus transit system ranked 7th in 2008 with a market share of 2.8%. This is an increase from 2.4% in 1983, when Seattle ranked 10th. Transit captured 3.1% of new travel over the past 25 years, while roadways accounted for 96.9%.

    #8: Philadelphia: Philadelphia slipped from the 5th largest transit market share in 1983 (4.0%) to 8th in 2008, at 2.7%. Philadelphia’s transit system, one of the most comprehensive in the nation, captured just 1.4% of new travel over the last quarter century, while roadways captured 98.6%.

    #9: Portland: Portland ranked 9th in transit market share in 2008, at 2.3%. This is a decline from 2.4% in 1983 and occurred despite opening the most extensive new light rail system in the nation over the period. Transit attracted 2.2% of new travel over the period, while roadways attracted 97.8%.

    #10: Salt Lake City: Salt Lake City, at 10th, is a new entrant to the top 10 transit market share urban areas, with a share of 2.2%. In 1983, Salt Lake City ranked 34th, with a transit market share of 0.9%. Even with this increase, however, roadways captured the bulk of new travel, at 96.2%, while transit attracted 3.8%, due to transit’s small 1983 base.

    Other Urban Areas: There were also notable developments among the urban areas that did not place in the top 10 in 2008 transit market share.

    Las Vegas: Las Vegas improved its ranking more than any other urban area, moving from 49th in 1983 to 16th in 2008 (in a tie with Atlanta, San Diego, Cleveland and Minneapolis-St. Paul). In 1983, Las Vegas had a transit market share of 0.4%, which improved to 1.2% in 2008. This was an especially notable achievement, because Las Vegas experienced substantial population growth over the period. During the period, Las Vegas established a 100% competitively contracted transit system, the only such transit system in the nation and has seen ridership expand by more than 10 times. Nonetheless, as in other gaining urban areas, such as Salt Lake City and Washington, the transit ridership base was so small that roadways captured nearly all the new demand, at 98.6% (transit obtained 1.4%).

    Atlanta: Atlanta both (1) was the fastest growing larger urban area in the developed world between 1983 and 2008 and (2) built the second most new rail capacity in the nation, in its expansion of the MARTA Metro (trailing only Washington’s Metro). Yet, Atlanta’s transit market share fell from 2.0% to 1.2% between 1983 and 2008, with transit attracting only 0.9% of new travel.

    New Rail Urban Areas: Transit market shares generally failed to increase in urban areas opening new light rail or metro systems over the period (excludes urban areas with new rail systems that were not open at the beginning of fiscal year 2008).

    • Six urban areas with new rail systems experienced market share declines, including Portland, Baltimore, Houston, Sacramento, St. Louis and Buffalo.
    • Four urban areas with new rail systems had static transit market shares, including Los Angeles, Minneapolis-St. Paul, San Jose and Dallas-Fort Worth.
    • Three urban areas with new rail systems experienced transit market share increases. The largest increase was in Salt Lake City (and the largest of any urban area). Denver and Miami-West Palm Beach also experienced increases.

    Where from Here? It might have been expected that transit would have attracted far higher ridership numbers when gasoline prices achieved such heights. Yet, nationally, transit market share increase was only from 1.5% to 1.6%, even as roadway demand was declining modestly.

    Transit’s principal marketing problem lies in its problem serving destinations outside downtown. Downtowns typically account for only 10% of urban area employment. Some trips in an urban cannot even be made on transit. For example, Portland’s extensive transit system connects only about two-thirds of the jobs and residences within the (Tri-Met) service area (Note 2). Further Tri-Met’s award deserving internet trip planner shows that some trips to outside downtown destinations can require more than two hours, even when light rail is used.

    Note 1: This data relates only to passenger transportation. Urban roadways, unlike transit, also carry a substantial amount of local and intercity freight, which is not reflected in this data.

    Note 2: According to Metro’s 2004 Regional Transportation Plan, 78% of the residences and 86% of the jobs in the Tri-Met service area were within walking distance (1/4 mile) of a transit stop. This means that approximately 67% of residences and jobs are within 1/4 mile of a transit stop (0.78 * 0.86). Metro’s plans envision this figure dropping to 59% by 2020 (this data does not include Clark County in Washington, part of which is in the urban area).

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • A Spotlight on Chicago Machine Boss Alderman Burke

    With President Obama’s approval ratings headed downward, there’s a growing interest in the powerful Cook County politicians that pushed Obama. James Peterson has written a three part series on Chicago Machine boss, Alderman Ed Burke. The series was written for Andrew Breitbart’s Big Government website.

    The first installment of the series deals with Alderman Burke’s association with the Chicago Mob. Burke’s unapologetic relationship with Alderman Fred Roti, who was described by the FBI (in 1999) as one of only 47 made members of the Chicago Mob. Peterson quotes this resolution Burke entered into Chicago’s City Council glorifying Roti:

    Fred B. Roti, a committed public servant, a cherished friend of many and good neighbor to all, will be greatly missed and fondly remembered by his many family members, friends and associates.

    Peterson’s second article deals with top FBI informer Robert Cooley’s accusation that Alderman Burke attempted to fix a murder trial for the Chicago Mob. Even though Cooley repeated this accusation, Burke failed to sue him or the publisher of the book. Peterson also deals with the sensitive subject of Alderman Burke’s relationship with Chicago’s media. Peterson quotes a 2003 Chicago Sun-Times story:

    The curious public feud between City Council’s most powerful alderman and one of Chicago’s highest profile television reporters was turned up a notch Wednesday. Unable to persuade WLS-TV Channel 7 to pull reporter Andy Shaw off the City Hall beat because of the bed and breakfast Shaw and his wife run out of their Lincoln Park home, Finance Committee Chairman, Edward M. Burke (14th) did what he considers to be the next best thing. He introduced a legislative “order” directing six city departments—Fire, Revenue, Buildings, Streets and Sanitation, Zoning and Public Health—to enforce “any and all provisions” of the municipal code at only one address:607 West Deming. That happens to be the address of the Windy City Urban Inn, where the Shaws have continued to rent seven rooms at their three-story mansion…

    Part three deals with Alderman Burke and the legitimate world. Peterson delves into the relationship Burke has had with the law firm Jenner and Block. Peterson quotes an a 1997 Chicago Sun-Times story:

    Ald. Edward M. Burke (14th), whose decisions on hiring lawyers in the City Council ward remap case have funneled $7.5 million in city fees to the prominent Jenner and Block law firm, holds co-counsel status with that firm in two recent lawsuits, court records show. Burke’s links with the firm do not appear to violate any laws or regulations…

    Managing partner Jerold Solovy – who is the lead attorney in the remap case – was treasurer of the unopposed 1996 campaign for Illinois Appellate Court justice of Anne Burke, the alderman’s wife. And prominent [Jenner and Block] partner John Simon served as her campaign chairman. The firm provided $14,414.15 in services and money to the campaign.

    The firm hired Burke’s daughter Jennifer A. Burke in June, 1995, shortly after she graduated 173rd in a class of 385 from Chicago Kent College of Law. In making new hires, the firm usually draws top students from the nation’s leading law schools. Two weeks ago, Burke, whose name has been linked to the federal investigation of ghost payrolling at City Hall, hired Jenner and Block partner and former U.S. Attorney Anton Valukas to represent him in that inquiry.

    Anyone interested in the place President Obama came from should read all three articles in detail. Alderman Burke is one key people who fast tracked Obama’s career. You’ll also want to read about the Chicago Democrats and the Chicago Mob. When Rod Blagojevich’s trial starts on June 3, the names of Tony Rezko, Jesse Jackson Jr., Valerie Jarret, Rahm Emanuel, and David Axelrod, and Barack Obama are guaranteed to be mentioned. They are part of the Chicago Democratic Machine, a Machine with Alderman Burke at the top.

  • Don’t Mess With Texas

    One of the most ironic aspects of our putative “Age of Obama” is how little impact it has had on the nation’s urban geography. Although the administration remains dominated by boosters from traditional blue state cities–particularly the president’s political base of Chicago–the nation’s metropolitan growth continues to shift mostly toward a handful of Sunbelt red state metropolitan areas.

    Our Urbanist in Chief may sit in the Oval Office, but Americans continue to vote with their feet for the adopted hometown of widely disdained former President George W. Bush. According to the most recent Census estimates, the Dallas and Ft. Worth, Texas, region added 146,000 people between 2008 and 2009–the most of any region in the country–a healthy 2.3% increase.

    Other Texas cities also did well. Longtime rival Houston sat in second, with an additional 140,000 residents. Smaller Austin added 50,000–representing a remarkable 3% growth–while San Antonio grew by some 41,000 people.

    In contrast, most blue state mega cities–with the exception of Washington, D.C.–grew much more slowly. The New York City region’s rate of growth was just one-fifth that of Dallas or Houston, while Los Angeles barely reached one-third the level of the Texas cities.

    These trends should continue: According to Moody’s Economy.com, Texas’ big cities are entering economic recovery mode well ahead of almost all the major centers along the East or West Coasts. This represents a continuation of longer-term trends, both before and after the economic crisis. Between 2000 and 2009 New York gained 95,000 jobs while Chicago lost 257,000, Los Angeles over 167,000 and San Francisco some 216,000. Meanwhile, Dallas added nearly 150,000 positions and Houston a hefty 250,000.

    This leads me to believe that the most dynamic future for America urbanism–and I believe there is one–lies in Texas’ growing urban centers. To reshape a city in a sustainable way, you need to have a growing population, a solid and expanding job base and a relatively efficient city administration.

    None of these characteristics apply to places like President Obama’s hometown of Chicago, which continues to suffer from the downturn–but you would never know it based on media coverage of the Windy City.

    The New Yorker, for example, recently published a lavish tribute to the city and its mayor, Richard Daley. But as long-time Chicago observer Steve Bartin points out, the story missed–or simply ignored–many critical facts. Mistaking Daley’s multi-term tenure as proof of effectiveness, it failed to recognize the region’s continued loss of jobs, decaying infrastructure, rampant corruption and continued out-migration of the area’s beleaguered middle class.

    Generally speaking, as Urbanophile blogger Aaron Renn points out, the repeated reports of an urban renaissance in older northern cities should be viewed with skepticism. In the Midwest region over the past year the share of population growth enjoyed in core counties–an area usually much larger than the city boundary–actually declined in most major Midwestern metros, including Chicago.

    Yet urbanists generally have not embraced the remarkable growth in the major Texas metropolitan areas. Only Austin gets some recognition, since, with its hip music scene and more liberal leanings, it’s the kind of place high-end journalists might actually find tolerable. The three other big Texas cities have become the Rodney Dangerfields of urban America–largely disdained despite their prodigious growth and increasingly vibrant urban cores.

    Part of the problem stems from the fact that all Texas cities are sprawling, multi-polar regions, with many thriving employment centers. This seems to offend the tender sensibilities of urbanists who crave for the downtown-centric cities of yesteryear and reject the more dispersed model that has emerged in the past few decades.

    Yet despite planners’ prejudices, places like Houston and Dallas are more than collections of pesky suburban infestations. They are expanding their footprints to the periphery and densifying at the same time.

    Of course, like virtually all other regions, Houston and Dallas suffer excess capacity in both office buildings and urban lofts. But the real estate slowdown has not depressed Texans’ passion for inner city development. Indeed, over the past decade the central core of Houston–inside the boundaries of the 610 freeway loop–has experienced arguably the widest and most sustained densification in the country.

    An analysis of building permit trends by Houston blogger Tory Gattis, for example, found that before the real estate crash, the Texas city was producing more high-density projects on a per-capita basis than the urbanist mecca of Portland. Significantly, as Gattis points out, the impetus for this growth has largely resulted not from planning but from infrastructure investment, job growth and entrepreneurial venturing.

    This process is also evident in the Dallas area, which has experienced a surge in condo construction near its urban core and some very intriguing “town center” developments, such as the Legacy project in suburban Plano. In Big D, developers generally view densification not as an alternative to suburbia but another critical option needed in a growing region.

    It’s widely understood there that many people move to places like Dallas, whether in closer areas or exurbs, largely to purchase affordable single-family homes. But as the population grows, there remains a strong and growing niche for an intensifying urban core as well.

    Dallas and other Texas cities substitute the narrow notion of “or”–that is cities can grow only if the suburbs are sufficiently strangled–with a more inclusive notion of “and.” A bigger, wealthier, more important region will have room for all sorts of grand projects that will provide more density and urban amenities.

    This approach can be seen in remarkable plans for developing “an urban forest” along the Trinity River, which runs through much of Dallas. The extent of the project–which includes reforestation, white water rafting and restorations of large natural areas–would provide the Dallas region with 10,000 acres of parkland right in the heart of the region. In comparison, New York City’s Central Park, arguably the country’s most iconic urban reserve, covers some 800 acres.

    If it is completed within 10 years, as now planned, the Trinity River project will not only spawn a great recreational asset, but could revitalize many parts of the city that have languished over the past few decades. It could become a signature landmark in the urban development of 21st-century America.

    As we look at the coming decades, this Texan vision may help define a new urban future for a nation that will grow by roughly 100 million people by 2050. To get a glimpse of that future, urbanists and planners need to get beyond their nostalgic quest to recreate the highly centralized 19th-century city. Instead they should hop a plane down to Dallas or Houston, where the outlines of the 21st-century American city are already being created and exuberantly imagined.

    This article originally appeared at 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 Stuck in Customs