Monday, October 16, 2017

Why Small, Struggling Cities Don’t Need “Talent”

Photo Credit: CT Senate Democrats, CC BY-NC-ND 2.0

I recently recorded a podcast with my colleague Steve Eide in which he argued against the idea that attracting high talented people into government is what was needed for smaller, post-industrial cities.

I enjoy jousting with Steve on a variety of topics. He favors more aggressive state oversight of cities. As a rule I’m less sanguine about that.  Because we come at the world from different perspectives, I’m often challenged by his provocative contrarian ideas.

To wit, he took his “against talent” thesis and wrote it up for the American Conservative. Some of this is standard conservative takes on things like public sector unions, but there are a number of ideas sure to get people arguing:

Any unbiased observer of our cities can see that mediocrity is the salient characteristic of the typical local American politician. Another important problem in small and mid-sized cities is that they are poor and in need of revitalization, especially in Rust Belt areas. A natural conclusion to draw from the coincidence of inept leadership and socioeconomic decay is that better leaders are needed. But in the poorest, most troubled cities, talented leadership is not much of an asset, and it can be a liability. Talent does real harm by raising false expectations of a revival—distracting from mundane yet essential operational matters, and forestalling state intervention at critical junctures.


When public-spirited reformers call for better leadership for cities, they typically have in mind a collection of qualities that are more likely to be possessed by an outsider. They are not sounding the call for everyone to get behind this or that city councilmember, someone who got his start as a campaign worker to some local hack and has patiently waited his turn. Instead, they want someone with experience and/or education that most of the local crowd does not have, derived perhaps from service in the private sector or government at the federal or state level. This is likely to be someone who did not come up through the ranks and can thus apply a novel approach to longstanding challenges; who admires innovation; who can envision a solution to every problem, instead of a problem with every solution.


But there’s no such thing as a right to revitalization. City reformers call for inspired leadership because they see it as a condition of revitalization, but what if that’s impossible? Our conception of urban renaissance is unduly influenced by the experience of a small handful of large cities. If you look past New York, San Francisco and Boston, and survey their dozens of small and mid-sized Rust Belt peers, it is very difficult to find an example of true revitalization. In a forthcoming research report, I survey 96 major poor cities in the Rust Belt and find that every single one has seen its poverty rate increase since 1970.


Perhaps the biggest problem with the talented-outsider mayor is that he is apt to get ideas. He may be more educated than the local doofuses, but that does not mean he is fully enlightened. It’s a case where a little knowledge can become a dangerous thing. State and local politicians who are known as big thinkers will always be strong candidates for a “public official of the year” award from Governing magazine or singled out as one of “America’s 11 Most Interesting Mayors” by Politico. New York and DC-based reporters from national publications are naturally attracted to mayors who can speak the language of urbanism.

But too much of urbanists’ advice for small and mid-sized cities consists of trying to impose lessons from successful top tier cities such as New York, Washington, San Francisco and Boston. Poor small and mid-sized cities should spend more time comparing themselves to other poor, small, and mid-sized cities. If you’ve lost half your population since 1950, you probably don’t have an affordable housing crisis; you’re not grappling with the challenges of density but rather a lack of density. If you have no wealth to redistribute in the first place, then Bill de Blasio can teach you little about the joys of redistribution.


“Flexibility,” like “innovation,” may be a core value in Silicon Valley, but it’s frequently a bad thing in the world of municipal finance. Remember all the encomiums to “boring banking” in the wake of the 2008 financial crisis? Often enough, the same principle applies for how to run a city.

Click through to read the whole thing.

from Aaron M. Renn

Friday, October 13, 2017

When Brain Drain Is a Good Thing

My latest piece is online over at City Lab and is a case study in brain circulation. You may recall my brief post on how Cardinal Spirits in Bloomington, Indiana has the best Made in Indiana logo ever. Today I tell their story through the lens one one of their founders, Adam Quirk, an Indiana native who move to New York City:

In some of these cases, brain drain appears to be real and a loss. But in other cases, brain drain is more like brain circulation: Well-educated young professionals leave town, gain experience, and then return to the sending community.

Quirk is a great example of how a short-term loss can turn into a long-term gain. He left Indiana for the big city. There, he obtained great professional experience and built his networks. He was also changed by the experience—not just be being exposed to and falling in love with the micro-distillery concept, but by also having New York City imprinted into his mental world.

When he returned to Indiana, he brought all that back with him. His improved digital media skills contribute to Bloomington’s local economy, and his microdistillery is enhancing the quality of place on offer in the city and its surrounding areas. But perhaps more importantly, Quirk’s New York City orientation helped him score a press coup for his company and his hometown. Whether strategically or by accident, he sought out a partnership for his spice blend in America’s top global city.

Click through to read the whole thing. Adam has a great story. And his gin is good too.

from Aaron M. Renn

Thursday, October 12, 2017

The Small City Struggle

Eduardo Porter at the New York Times picks up on a theme I’ve hit repeatedly in this blog over the years, namely the challenges that smaller cities/regions face in trying to adapt to the post-industrial economy.

You don’t want to be hit by a recession in a city like Steubenville, Ohio.

Eight years into the economic recovery, there are thousands fewer jobs in the metropolitan area that joins Steubenville with Weirton, W.Va., than there were at the onset of the Great Recession. Hourly wages are lower than they were a decade ago. The labor force has shrunk by 14 percent.

The dismal performance is not surprising. Built on coal and steel, Steubenville and Weirton were ill suited to survive the transformations brought about by globalization and the information economy. They have been losing population since the 1980s.

But what made them such bad places to ride out a recession was not just their industrial mix. With only about 120,000 people, they were just too small to adapt to the shock. And they may be too small to survive.

Steubenville and Weirton are on the losing side of yet another cleavage dividing the haves from the have-nots across the United States: geographic inequality.

Some of the advantages of big-city living are not hard to find. For starters, big cities have a greater variety of employers and thus more job opportunities in a richer mix of industries than do small cities, whose fortunes are often tied to those of just a small number of employers.

Bigger cities are more productive. They are more innovative. They draw better-educated workers by offering them higher wages. They develop a richer variety of industries. It should not be surprising that they are growing faster.

You can see articles on a similar theme in the Wall Street Journal and the Economist.

Back in 2009 I laid out a heuristic I called the “Urbanophile Conjecture”: if you want to be a successful city in the Midwest, it helps to be a state capital with at least 500,000 people. This defined success based on above national average population growth. There were some exceptions but this was a useful rule of thumb.

In 2008 I talked about “minimum sufficient scale.” This is the idea that there are certain things, such as a major airport, for which a region has to have a minimum size scale to support on a viable basis. To the extent that these things are necessity to compete in the modern economy, if you’re too small to support them you’re in trouble, unless you’re a sufficiently short distance from a larger place that can.

In 2010 I laid out the concept of “shadow cities” – those that were always or rapidly reduced to branch plant status that lacked a strong indigenous based of export (from the local market) industries.

When you add all this together, in the Midwest and Northeastern Rust Belt it seems to be mostly metro areas of 1-1.5 million or more that are doing well. Smaller metros can thrive, but it generally takes a major special asset like a state capital, major university, or Fortune 500 HQ.

Those bigger cities have thicker labor markets, airports, amenities like pro-sports, lots of restaurants, a critical mass of talent, often major export businesses, and major institutional that give them a leg up in rebuilding. Smaller cities are often lacking in these

Contrast Detroit with Flint.

Detroit: 4+ million person region, one of nation’s foremost collections of engineering talent, many HQs and dominant North American location of the auto industry, major international airport, primary trade gateway to Canada, a full panoply of major metro assets (sports, arts, etc).

Flint: A sub-one million person region. Originally HQ of GM but reduced to branch plant status quickly. Much lower talent concentrations. Minor airport only. Far fewer major institutional or corporate assets. (There are some, but not enough).

This difference helps explain the divergent strategic conditions facing those environments. Flint is in a much higher degree of difficulty situation.

Thinking of the future of these smaller places is important to the future urban agenda. We’re not talking one or two minor places, but many cities the collectively still have many people – people who are our fellow citizens – living in them.

from Aaron M. Renn

Tuesday, October 10, 2017

Chicago’s $600 Million in Protein Bars

Crain’s Chicago reports that a local protein bar company called RxBar is being acquired by Kellogg’s for $600 million.

RxBar was started by some friends in their early 30s with $10,000 in funds. They initially built it out of their parent’s suburban kitchen, then into a commercial space in the city. They now have $120 million in revenue, employ 75, are hiring 40 more, and the owners (and any later investors they may have) are about to become spectacularly rich:

Four years ago, Peter Rahal was making protein bars in his parents’ Glen Ellyn kitchen. Today he agreed to sell his company, Chicago Bar Company, to Kellogg for $600 million.

“We couldn’t have dreamed of this opportunity,” says Rahal, 31, who co-founded the company that makes the RXBar—made from only eggs, dates and nuts—with his childhood friend, Jared Smith. “We started with $10,000 dollars. We didn’t go to investors. We just f—ing did it.”

This is the kind of company that’s a perfect Chicago entrepreneurship story. The city has an agro-industrial heritage, and as I’ve mentioned before that translates into a lot of food and consumer goods businesses today.

RxBar isn’t a Silicon Valley style tech company, but a food company. So it’s right in Chicago’s sweet spot. It isn’t a huge employer, but probably does disproportionately employ blue collar workers, assuming it still does its manufacturing in-house. And this will be a nice wealth injection into the city.

There’s nothing stopping folks in Chicago from doing a tech business, nor other cities from creating artisanal food companies, which are widespread in America. But with its base of expertise and deep history in food and consumer goods products, Chicago would seem to be a great base to launch these kinds of companies.

from Aaron M. Renn

Monday, October 9, 2017

Ed Glaeser on the Future of the American Heartland

Economist Ed Glaeser delivers the annual James Q. Wilson lecture on policy at the Manhattan Institute. This year he talked about the future of the American heartland. He has some interesting frameworks to help analyze the problems, including his east vs. west heartland distinction, and the “rules and schools” principle. If the video embed doesn’t display for you, click over to watch on You Tube. If you’d rather just listen, the lecture only (no Q&A) is available from my podcast feed.

from Aaron M. Renn

Friday, October 6, 2017

Puerto Rico Needs Debt Writedowns

In Puerto Rico this week President Trump made one of his patented off the cuff remarks, saying:

President Trump said Tuesday that the U.S. would have to “wipe out” Puerto Rico’s multi-billion dollar debt after Hurricane Maria.

“They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out,” Trump said during an interview with Fox News. “You can say goodbye to that.”

“I don’t know if it’s Goldman Sachs but you can wave goodbye to that.”

Puerto Rico had roughly $70 billion in debt before Maria hit.

His White House staff promptly backtracked on it:

The Trump administration on Wednesday walked back the president’s apparent vow to wipe out Puerto Rico’s debt, suggesting that the island would have to solve its own fiscal woes despite the catastrophic damage it has endured from two powerful hurricanes.

“I wouldn’t take it word for word with that,” Mick Mulvaney, director of the Office of Management and Budget, said on CNN in reference to President Trump’s suggestion that the United States might clear Puerto Rico’s debt.

Trump’s original remarks reflected a critical truth about Puerto Rico, albeit in his normal, overstated way. The island simply isn’t going to be able to repay its debts, and some form of restructuring seems inevitable. Unlike countries or US states, Puerto Rico is not a sovereign borrower. It can go through bankruptcy or a similar process, one that’s likely to get preference to local residents over out of town investors (cf: Detroit).

As someone who is familiar with the bankruptcy process, Trump knows what’s up here. Even Mulvaney doesn’t seem to be promising full repayment of debts.

The truth is, a lot of people loaned money to Puerto Rico long past the point where it became obvious it probably wouldn’t all be paid back. Just like they continue to loan money at favorable rates to jurisdictions like Illinois and Chicago. Yes, borrowers shouldn’t be borrowing to excess. But it’s also true that lenders have a responsibility to exercise good judgment of the risks of continuing to pour money into these deeply indebted governments and their affiliates.

from Aaron M. Renn

Thursday, October 5, 2017

Where Columbus Is Getting It Right on Marketing

Photo Credit: Wild Goose, CC BY-SA 3.0

I recently wrote a couple of articles dinging Columbus, Ohio for its branding and marketing. So today I want to highlight where they are getting it right: transport innovation.

You may have seen that Columbus recently became the first city in America to provide a free bus pass to every downtown worker, one that can be used anytime (not just for commuting) and is available to everyone regardless of who they work for. It appears to be funded by the local business improvement district equivalent.

This recently got a nice writeup in the Guardian, which is about as good as it gets in terms of press. The program was also written up in City Lab, Slate, Streetsblog, Next City, and Fast Company.

This is great for Columbus. Why did the city get such excellent press? As the Guardian put it, “Columbus is the first major US city…”  They were first.

Doing something new and different made Columbus stand out from the crowd and drew in national spotlight.

We saw the same thing with Columbus winning the DOT smart cities challenge grant. That was another big win in the transport space. (This free bus pass initiative appears to be separate).

These wins point at an opportunity space for Columbus: transport innovation. All of the focus on transport ideas comes from usual suspect cities on the coasts. But things like light rail are a bad fit for a low density, polycentric metropolis like Columbus that grew up in the automobile area. That’s much more then norm of American cities than San Francisco is.

If Columbus can continue to come up with new, different, and innovative ways to create 21st century transport solutions for its profile of city, that could be a way it sets itself apart in the marketplace. It’s already something that’s paying dividends for them.

from Aaron M. Renn