Place-making and Networks

One idea from The New Localism by Bruce Katz and Jeremy Nowak is that states and cities should not be looking to attract companies simply by offering tax breaks and by promising to streamline permitting. Bringing companies that can be enticed by these types of handouts is a good way to generate short-term positive headlines, but it is unlikely (especially on its own) to attract the kinds of companies that will help develop a city or metropolitan region into an attractive hub for other companies. For Katz and Nowak, what is more important than just getting a few companies to move in with tax breaks is engaging the business community that already exists, and working with civic and private sector leaders to invest in place-making.

 

A general problem we have faced in the United States over time is sustained disinvestment in localities. This has taken different forms at different times and has had serious conflicts for people living in disinvested places. For years, urban centers were ignored as people moved to outlying suburbs, and the result was a crack epidemic and a hollowing-out of many great American cities. Today, we are disinvesting in our suburban small towns and in former manufacturing hubs in the Midwest. The result has been an opioid epidemic and a spike in suicides. Simply convincing a company to move to an area that has been disinvested with some tax breaks won’t help solve our underlying problems and won’t help cities and people adapt to a dynamic globalized economy. What we are more likely to see in this strategy is the attraction of companies who are able to implement exploitative labor strategies that burn-out the people who have faced disinvestment and desperately need jobs.

 

“Networks must now ensure that their education and workforce development systems produce locally grown talent with the specialized skills that align with local advantages,” write Katz and Nowak. On its own, this advice is not very helpful. But when you think about what a network is and how cities can invest in existing networks within a region, you see that this advice is actually quite practical and represents a shift from the traditional thoughts of attracting companies to a region to produce jobs. Cities have to consider their advantages, such as ports, transportation lines, physical space, or educational institutions, and find ways to connect local business leaders, engaged civic actors, and other organizations in a way to get stuff done. Engaging to talk about problems and starting action for just a few months is insufficient – leaders need to be engaged in long term place-making – a committed effort to improve the region in a “rising tide lifts all boats” type of approach.

 

Katz and Nowak continue, “And they must also create quality places that not only attract and retain workers and companies with a rich set of amenities, but also provide a platform for the seamless and collaborative exchange of ideas.” The organizations and groups brought together in these networks cannot remain in individual silos. They need to be connected through new co-governing institutions that have the power and authority to make real decisions that generate meaningful investments in the places where businesses operate and where workers live. Without such long-term and permanent planning that gets stuff done, cities will meander along with incremental changes, or worse, will continue on a path of disinvestment that leaves their citizens vulnerable to despair and exploitation.

City Growth – The Sports Play

I’m a fan of the research and work that comes out of the Brookings Institute, a generally center-left think-tank in Washington DC that I believe does a good job at looking at politics and policy holistically, and is able to get beyond the partisan rhetoric that dominates most of our political landscape. An area of interest for many of the writers and policy experts at Brookings is the area of economic development in metropolitan areas, particularly as related to sports and business retention. Two Brookings experts, Bruce Katz and Jeremy Nowak look at how Indianapolis used sports to help jump-start the city’s economy, but present the information in a way that shows that reliance on sports alone is not sufficient to develop a thriving middle class and robust regional economy.

 

“A sports-based development strategy,” they write, “can take a city only so far. Sports attract tourism and visitors. Game time enhances demand for lodging and restaurants. Name teams may have an intangible effect on the attraction and retention of innovative firms and talented workers. But in the end, the sports industry thrives on low-wage jobs and does not represent a model of economic growth for a city or metropolis. Beer and hot dogs are not the stuff of a sustainable middle class.”

 

In their book The New Localism, the authors talk about the efforts that Indianapolis took to attract and retain an NFL football franchise and also to attract the NCAA headquarters. They go on to further explain how Indianapolis was not content to simply rest on being a sports headquarters and reinvested the energy and revenue from sports to drive and build new sectors. Sports teams can help be a support for a local economy, but they will never be a major driver, and on their own don’t appear to be worth the enormous tax breaks and stadium construction assistance that many cities and states seem eager to provide.

 

As Katz and Nowak stated, sports can have intangible benefits for communities like city pride and can serve as a hub for local events. But cities need to provide other attractions and benefits for their citizens. The people need additional higher paying jobs than can be found in a stadium and need real innovation to keep pace in our globalized world. If cities and states over-invest on the sports side, they may miss out on developing and investing in the factors that can make cities dynamic and competitive in the long run. Ultimately, sports teams can be a good attraction and can serve as a spark for energy and investment in making a city a good place to live and do business.

Collaborative Governance

In The New Localism, Bruce Katz and Jeremy Nowak discuss the elements needed for cities to continue to grow as economic engines of modern economies. The United States currently has a handful of dynamic cities across the country which are powering the national economy. San Francisco (really the Bay Area as a whole and Silicon Valley) is powered by tech companies, Houston is powered by oil giants, Boston is driving medical and biotech engineering, and New York City continues to be a powerful financial hub. While each of these metro regions is a model for the resto the country, they must adapt to globalized economies moving forward and must find ways to embrace new innovations to keep diversify and strengthen their own economies.

 

Katz and Nowak write, “the critical element is collaborate governance across networks of public, private, civic, and university institutions and leadership. No one sector can alone power a city and metropolis forward in today’s complex and competitive economy.” A single sector is not enough to reliably and consistently sustain an entire city or region. New innovations in diverse fields that share common foundations is required for economic well-being today. In order for cities to diversify and develop new industries in new sectors, a confluence of public institutions, private businesses, involved philanthropies, and cutting edge research universities is key.

 

The public sector has to be able to adapt and adjust laws, rules, regulations, and oversight in a world where every competitive advantage matters. Government must continue to protect the public interest and safety, but needs to allow for the organization of structures that can make real decisions timely. Private sector leaders also need to be involved and commit to place-making, developing the cities where they are located and bringing something beyond “jobs” to a region. Civic organizations and groups can fill the gaps between these actors and help provide funding and leadership initiatives to related to place-making and oversight.

 

None of these efforts will succeed if an intelligent and motivated workforce is not available to connect with the agencies and organizations involved. Research universities play a role in new economies by connecting students with relevant research and helping to get innovation out of the lab and into the private sector. Connecting students with real companies that are taking real steps to make their communities better will build the energy and excitement necessary for an educated and motivated workforce to make economic growth, innovation, and development possible. Some of this I recognize is “pie in the sky” thinking, but it is necessary for future growth. Pushing companies to become Public Benefits Corporations and rewarding more civic minded and responsible organizations is a small and necessary step to move in the direction I described, otherwise, there is nothing to convince companies to make greater investments in place-making rather than just finding a nice place to move to.

Think Like a System – Act Like an Entrepreneur

In The New Localism authors Bruce Katz and Jeremy Nowak quote Matthew Taylor of the U.K.’s Royal Society for the encouragement of Arts, Manufactures, and Commerce by writing, “it’s necessary for a city to think like a system and act like an entrepreneur. Thinking like a system requires taking a long and broad view of the regional economy.”

 

Cities cannot just assume that people will move to them, that current businesses will stay, and that a market will pop up on its own to make the city thrive. Cities need to consider all of the elements, from education and workforce development to infrastructure development, that are necessary to create regions where people want to live and work. They need to look at their regional economy and identify the areas (not just a single area) where they can be competitive and have unique advantages from institutional capital like universities to geologic benefits like attractive rivers or easily accessible ports. Cities have to figure out what it is that they can maximize and offer to people, and work with local groups and organizations to rebuild and promote the things that make them so attractive.

 

Acting like an entrepreneur requires that cities think about innovations and opportunities to invest. This is a challenge for cities because investments with public dollars that go south can be a reason to vote leaders out of office and can draw criticism from local residents who view their tax payer dollars as going to waste. With that in mind, cities, like any entrepreneur, must be able to cultivate multiple streams of funding for the plans they adopt and projects they take on. This requires working with organizations outside the formal city government to co-invest in projects that benefit the entire city. It also requires networking and building support systems with groups that can lead and groups that can provide the necessary assistance to get things done.

 

When cities adequately assess their economic prospects and develop networks to share risk and coordinate progress, real problem solving and real action can be taken. Cities can help provide the infrastructure and social capital needed for firms to move in and for organizations to feel connected to the places where they are located. This benefits the cities and provides a reason for companies to stay and invest locally by further developing the institutions that make the city an attractive and competitive place.

When Disciplines Collide

One of the case studies presented by Bruce Katz and Jeremy Nowak in their book The New Localism is Pittsburgh, PA, which has merged academic research institutions with business industry and supportive public policy. Pittsburgh has two major research universities within a block of each other, The University of Pittsburgh and Carnegie Mellon University. Experiences from Carnegie Mellon in the past are fueling the city’s reinvention and powering new industry as research is getting out of the institutions and into new businesses to drive the economic engine of the city.

 

What Pittsburgh does so well, explained by Katz and Nowak, is merge diverse industries and fields to create new innovation. They write, “A convergence economy emerged: a fusion of academia and industry with electrical and mechanical engineering, computer science, and multiple other fields. When disciplines collide, magic happens.” The idea of a convergence economy is crucial to New Localism. Academic institutions have been learning valuable lessons by creating more crossover between their divisions and fields. Bringing together academics who would otherwise rarely communicate is driving fields that previously had stagnated. With two leading institutions in the city, Pittsburgh has taken this lesson out of the academic fields into private industry.

 

Academics on their own don’t have a lot of great business sense or experience, but do have a good sense of where innovation is heading and what might be possible with new technology. Combining their expertise and knowledge with people who understand business and have connections with funding agencies can help lead to scale and commercialization of innovations. This cannot happen without something that creates a convergence between disparate entities.

 

Hospitals today are creating incubator labs to help get new medical advances out of the research lab and into industry. Universities are beginning to merge with private industry to find ways to get innovation out of the academic hallways and journal articles into factories and business. Governments are helping back quasi-governmental networks to share the risk of new innovation and find new ways to fund local developments in technological innovation. Pittsburgh is leading in this field, and cities across the United States are following by finding new ways to engage their academic institutions and industries.

Competing in a Global Economy

“While competing in this global economy requires new thinking, many cities continue to pursue zero-sum economic development strategies that subsidize stadia and steal businesses rather than incent innovation,” write Bruce Katz and Jeremy Nowak in The New Localism. Our world’s globalized economy scares a lot of people. Add to globalization new technological innovations and the automation of a lot of jobs, and we find threatened people, threatened cities, and threatened industries. The proper response to such threats is adaptation and change, but a more common human reaction is fearful recalcitrance. Rather than go through reinvention, rather than develope new skills, and rather than embrace new changes, cities, states, countries, and the people within them double down on the familiar and the known, using policy to entrench themselves in the familiar jobs of yesterday.

 

Katz and Nowak continue, “These strategies are rarely aligned with smart education and workforce strategies that give workers the technical skills they need to succeed in growing occupations. And reinvestment in neighborhoods, downtowns, and water-fronts still has a long way to go to make up for decades of disinvestment, depopulation, and decentralization.” 

 

Stealing jobs, offering tax incentives to get companies/sports teams to move, and passing policy which prevents companies from automating away common jobs is not a strategy built for success in a globalized world of changing technology. To be competitive in a world where companies can move easily, where ideas can take root anyplace, and where jobs and technology are changing the way we work, cities and governments need to find new ways to build human capital and new ways to get innovative ideas into the economy quickly. Approaching the world and the economy as a zero-sum competition prevents innovation and encourages the short term thinking that leads to the poor strategies mentioned above.

 

The only way to truly adapt to the changing globalized world is to innovate. Protectionism leads to eventual disruption and greater anger on the part of the people whose industry and jobs are being disrupted. Those who lose out to automation without any training or skill development to help them adapt are understandably frustrated, but the proper response is not to dig our heels into the dirt to pull back on innovation and change. The proper response is to embrace change and help people innovate and learn alongside new technology, new jobs/industries, and new institutions.

Policy Innovation and Diffusion at the City Level

During my Masters in Public Administration, I had a seminar class about theories of the policy process. One of the theories that I enjoyed was policy innovation and diffusion theory in which a policy introduced in one jurisdiction gained traction and was subsequently introduced and adopted within another jurisdiction. Networks, physical proximity, and other characteristics of jurisdictions influence whether or not a policy is likely to diffuse to a new jurisdiction. Policy can diffuse vertically, moving up from counties to states to the national government (or backward) and can diffuse horizontally across cities in a state or sates in a nation or across nations on Earth.

 

In the book The New Localism, Bruce Katz and Jeremy Nowak discuss diffusion at the city level. They argue that, “New Localism reflects a new horizontal rather than vertical mechanism for societies to solve hard problems.” Most innovation and diffusion research that I studied in the United States was related to states. The question is usually, if a state adopts a new law to address an issue, what factors make it likely that other states will or will not adopt a similar law? And how many states need to adopt a regulation before the federal government institutes the regulation nationwide? States have historically been the main laboratories of democracy, but Katz and Nowak suggest that in the future they will not be. Rather than having a state adopt policy and filter that policy down to the counties, cities, and local governments for implementation, it is cities that are now the ones experimenting with new policy.

 

“Cities are constantly crafting new ways to address challenges that are urgent, immediate, and often highly visible. Solutions that are concrete imaginative, and tested on the ground do not stay local for long. Instead, they are adapted to other cities’ situations, tailored to the different economic and social starting points and the fiscal conditions of different cities.” 

 

A big piece of new localism is its non-partisan nature. Flood drainage, snow removal, and local zoning ordinances are not Republican or Democrat issues, they are local issues directly relating to the lives of citizens. This allows people who might otherwise disagree with each other to come together and cooperate to find solutions to the immediate problems of a locality. Focusing on local strengths, weaknesses, opportunities, and threats (SWOT) allows local stakeholders to develop long-term plans and to find innovations to novel problems. Once these solutions have been identified and implemented, city leaders, especially people in the business community, can share their insights and solutions with groups from other cities. These policy innovations diffuse horizontally from city or metropolitan region to other cities and metros. State governments are not the ones innovating. Cities are developing the new networks and innovations that diffuse across state lines, across the country, and even across national boarders. Each solution is adjusted and tailored where appropriate for local contexts and in line with local SWOT analysis. This local problem solving and horizontal city level diffusion is the best current answer to global challenges and problems and to improve the lives of people through new innovations.

A New Kind of Problem Solving

Bruce Katz and Jeremy Nowak’s third highlighted feature of New Localism in their book The New Localism is that it, “reflects a commitment to a new kind of problem solving that is distinct from the uniformity of policymaking.”  American cities and metropolitan regions are leaders in innovation, diffusion, and development in the United States. The networks formed between university researchers, students, business and industry, government agencies, and local non/not-for-profits or charities help new research translate into real-world applications and eventually into new innovations. Crucially, this is not just true of new technological innovations. In medicine, material science, and communications technology we see new devices entering the market to change the ways we live, but outside these areas we are also seeing cities and metropolitan regions innovate thanks to dynamic networks and united stakeholders. New Localism is helping to drive new forms of governance, new forms of funding for local projects, and even new ways of engaging communities.

 

Katz and Nowak continue, “It adapts the risk-taking and attitude of individual entrepreneurs and investors to the collective sphere. It is experimental and tolerant of failure. It is the twenty-first century embodiment of Franklin Roosevelt’s words in his famous 1932 speech: It is common sense to take a method and try it. If it fails, admit it frankly, and try another, but by all means, try something.”

 

Government is frequently criticized for being slow and unresponsive. Rules and regulations take over, and creativity, customer service, and improvements seem to disappear. Without a profit motive, it is hard to see why governments should feel a pressure to move quickly and why they should feel a pressure to be highly responsive to the public. Free markets on the other hand (and especially tech start-ups), seem to operate on a model of, “move fast and break things.” They feel pressured to always up the design and innovate, although they also face a pressure to provide gimmicks and overstate their level of innovation and fast-breakiness.  New Localism helps by finding a way to establish more of a common ground between these two extremes.

 

New forms of social and civic organization can help create quasi-governmental structures that provide the regulation and oversight necessary to protect citizens, but businesses can find profit and reward from working closely with those structures to innovate in a way that actually solves the local problem. Funding from associations and foundations help reduce the risk that government agencies would otherwise face, again providing a new avenue to help encourage innovation and development while avoiding typical roadblocks in a standard policy making process. These new ways to solve problems are a direct result of new networks and local action to address challenges in a cohesive manner.

City Power

Where does power and authority come from? I think this is an interesting question to ask ourselves. What is it that makes a nation, a state, a city, or an institution powerful and authoritative? Thousands to hundreds of years ago we solved this question by outsourcing – we decided that a divine being had vested power and authority in a single individual. Today, what creates authority for our mayor, the supreme court, and our nation is not divine, but public trust, cooperation, and economic prospects. Building society with these blocks isn’t always perfect, but it has managed to work for humans for a few hundred years now.

 

Bruce Katz and Jeremy Nowak look at the implications of the authority and power philosophy I described above in their book The New Localism. They write, “The power of cities and counties is not like the power of nations or states. It is grounded in markets and civics more than in constitutions or charters.” The authors make a split between the local and national in terms of how power and authority play out to create a social structure of trust. Nations and states tend to be based on written charters agreed to by relatively diverse populations. Cities and local counties tend to be based on shared values, experiences, and backgrounds with shared economic prospects and motives being the ultimate binding glue.

 

I think there are two things that we can understand about national versus local systems from the description provided by Katz and Nowak. Nations and states, with authority grounded in written constitutions and charters, have a more permanent and stable feel to them. changing something in a drastic manner requires a change to the written founding documents. This gives national and state governments more structure and a form that is more likely to endure longer into the future, but at the cost of making them rigid and hard to adapt to changes in the economy, in social preferences, and other trends.

 

As a contrast, city and local governments, which are based more on shared interests, engaged civic actors, and local economic contexts are more flexible and adaptable to trends, changing social preferences, and new economic developments. This gives local and state governments the flexibility that is needed to take advantage of new innovations and technologies. It allows the governments to solve problems through the power of collective action, but it also leave them vulnerable to wild swings in economic fortunes and broader sociopolitical forces.

 

While nations are able to define their populaces and establish binding rules for citizens across decades or centuries, cities often find it hard to create structures and institutions that are guaranteed to last as long. City populations are more prone to leave when things go south, and the strength of institutions can be greatly diminished when the population falls and a few actors exert undue influence in local decision making. Nevertheless, humans seem to be drawn toward cities and seem to be willing to reinvent cities on a continual basis. This creates the dynamic power that cities are exerting today to solve problems and address global challenges that seem to be paralyzing nations.

Institutional Reinvention

I have written a good amount about the importance and value of institutions. The systems and structures, both formal and informal, that create appropriate venues for discussion and help shape our norms and rules are crucial to our culture and to the development of society and knowledge. In The New Localism, Bruce Katz and Jeremy Nowak discuss ways in which rediscovering institutions within American cities is leading to a rebirth of metropolitan areas. Large cities are important because they pull people together, unite them around local problem solving, and produce benefits for the entire society to enjoy.  As people have begun moving back to cities and re-creating them to be more livable and social, they are discovering new institutions and new value in places that had been forgotten and previously experienced periods of disinvestment.

 

The authors write, “Placemaking uncovers the inherent value of a community and redefines its potential by integrating its historical identity with contemporary uses. As American cities lost population and dynamism, many of the grand institutions and buildings of the nineteenth and early twentieth centuries fell into decline or disrepair. Late twentieth-century place-making rediscovered what still existed and repurposed it for a new era.”

 

This quote provides encouraging notes about reinventing and returning to valuable institutions, and also a cautionary tale about deserting institutions. When we have physical structures in place and enough people to remember institutions from that past which had served us well, we can always return to those institutions and even find new ways to use them and incorporate them into our lives. However, if we chose not to support our institutions and allow them to decay, they can languish and sit in disregard, becoming more of a headache than a valuable tool.

 

I think this is true for any type of institution, be it a physical institution such as a library, or a non-tangible institution such as a value of equality. For various complex reasons (some sensible like finding clean playgrounds for children and some not so wholesome such as new forms of racial segregation) American cities experienced a period of declining populations as (primarily white middle and upper class) citizens abandoned city centers for outlying suburbs. Katz and Nowak argue that this weakened the institutions that had made cities thriving places and had originally helped them grow and develop. Negative stereotypes of city centers persisted and while they may have been economic engines, they were not the cultural and in many ways not the institutional centers they had once been. New Localism is in some ways a return to the institutions of cities that had been abandoned in the past. As cities gentrify (a challenge in itself that is still tinged by racial disparity) they are becoming more attractive places to live, and the institutions which had once served city populations are being reinvented and reinvigorated.

 

We should recognize the positive in this story and celebrate and strengthen those institutions which fuel progress, improve our lives, and help promote equality and democracy. We should look at the squalor that cities and their institutions were put through and avoid throwing many of our modern institutions through those same tortures. We should remember that our suburbs are valuable as well, and support the populations and institutions of suburbs as people begin to move from suburbs and rural areas back into dense cities. This creates a two (or maybe three) front situation in terms of protecting and strengthening institutions, and the lessons we learned from abandoning and rediscovering and reinventing city institutions can help us navigate this new challenge brought about by New Localism.