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Q & A with Bruce Katz: Building a new economy from the bottom up

PressPhoto-BKBruce Katz is vice-president of the Brookings Institution and co-author of The Metropolitan Revolution, which chronicles how cities and metro areas in the US are fixing their economies from the bottom up. He spoke to New Start about the shift of power from central government to local networks doing it for themselves.

Can you give some examples of the ‘metropolitan revolution’? Ten years ago places like New York City thought that subsidising sports stadia was the smart thing to do. Now they are shifting to a radically different kind of economic model. In New York City they’ve just attracted two world-class universities to the heart of Manhattan. They’re setting up an institutional platform for innovative growth as opposed to fuelling consumption or real estate growth. Elsewhere, in north- east Ohio, they have created a network of philanthropists and business leaders to help small and medium sized manufacturers toughen up their business plans and retrain their workforce for the twenty-first century. Portland has focused on its expertise in sustainability solutions and on exports. It sees the world as a network of trading cities and is creating new connections with other metropolitan areas around the world. Houston is building a network of 21st century settlement houses to integrate immigrants into the mainstream. The great recession was a wake up call. Smart metro leaders are going back to basics, restructuring our economy from one based on consumption, debt, house-building and financial engineering to one fuelled by innovation and production, powered by low carbon, driven by exports, foreign direct investment and immigration. They are helping workers get the skills they need for an economy based on production and innovation. This is a completely different model and it’s cities and metros that are creating it.

So the knowledge economy is over? National government tried to convince us that we were on the path to a post-industrial economy where we would just generate the brilliant ideas and the Chinese would manufacture them. This is nonsense. Ninety per cent of our patents come from manufacturing and if you give up on production you might as well give up on your economy because innovation is so swept up in production. Cars are computers on wheels, aeroplanes are computers in the sky, Silicon Valley and Detroit are totally synergistic. The idea that we were post-industrial economies took both the US and UK off track. This is a great back to basics moment that just happens to be happening in cities.

What role is the national government playing in this revolution? The federal government in the US has left the building. In fact a few weeks ago it quite literally left the building! Our government is mired in gridlock and ideological polarisation. There is also a structural issue coming down the line due to the ageing of our society. Over the next decade federal government spend on health care and retirement benefits will go from 42% to 52% of the budget and will squeeze down and crowd out all other government spend. You could say in the next decade the US government will essentially become a big healthcare company with an army. So there is a de facto signal being sent to everyone else in the country – not just local government but the whole of civil society and all the networks that co-produce the economy. The message is that ‘you now run the country and you need to make the principle transformative investments in what drives the economy and makes us an inclusive society’.

Should national government leave local areas to forge their own futures? In the US central government is part of the picture in places but has never been as intimately involved in all aspects of life as it is in the UK. The health and vitality of our nation is not dependent on 537 elected officials to make smart strategic decisions. The health and vitality resides in our cities and metros because they are the economy. Should a country this large be run by such a small set of people? When the national government spits out a programme it’s like spreading peanut butter across a slice of bread. They want to have equity rather than a high return. They need to treat everyone the same. But if you have to spend your own money locally you prioritise, and decide to do something more aligned with who you are. You can make things much more efficient. In the UK you bundle up income generated at the local level, send it to national government, have a bunch of legislators make decisions that will be political rather than market-oriented and then send it back down to the local level. That’s a crazy circuitry to me and to most Americans.

You talk about local networks rather than local governments driving the metropolitan revolution. Can you explain? In the US we don’t think of cities as governments but as networks of institutions and leaders – from government, business, philanthropy, technology, civic society – who co-produce and co-govern the economy. The power of mayors is not to run the economy but to bring people to the table and problem-solve tough issues. It’s an interesting crowdsourced role. The problem in the UK is a highly centralised government so that the orientation of local leaders is up to central government pleading for resources. In the US the orientation is horizontal: cities compete with each other and are looking at their neighbours to see what they can plagiarise and adapt.

You’re been appointed as a member on the UK’s city growth commission. How can national government and local city leaders start a revolution in the UK? I’d have radical devolution and flexible resources and I’d let people at the local level decide. We generally put trust in people closer to the ground. Mayor Daley, the former mayor of Chicago, said that our federal officials are political servants and our local officials are public servants, one is about party ideology and the other is about citizenry. Taxing powers in particular need to be devolved. The city deals are interesting and Manchester is a good example of a smart use of national power but you need to be raising more taxes locally. It’s highly imbalanced. This is a city century and you’re leaving off the table all the leveraging potential when you don’t empower localities. I’d tell local leaders to understand their starting point and focus on the assets of their place rather than deficits. That could be advanced institutions, companies, trading relationships that may have been built over centuries. Because of the Empire and commonwealth you have connections into large portions of world. It’s about understanding who you are as a place, forgetting about the money flowing, and setting some unbiased objectives based on who you are and how you improve and leverage it. Then you can look at the money and see what you need. As the great Dolly Parton said: ‘Find out who you are and do it on purpose’.

To find out more about The Metropolitan Revolution: http://metrorevolution.org/

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Fernando Centeno
Fernando Centeno
10 years ago

Newgeography.com – Economic, demographic, and political commentary about places
Link to Newgeography.com – Economic, demographic, and political commentary about places

You Say You Want A (Metropolitan) Revolution?

Posted: 04 Oct 2013 10:38 PM PDT

I am attaching this book review for your readers:

[Book Review] The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy, by Bruce Katz and Jennifer Bradley. 2013, Brookings Focus Book

It’s now decades after deindustrialization, and several years since the Great Recession supposedly ended. Yet too many American cities are still struggling to recover from the losses of jobs, population, taxes, and identities. Detroit’s declaration of bankruptcy in July drew new attention to the problem, and it helped fuel the extensive marketing campaign for The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy by Bruce Katz and Jennifer Bradley of the Brookings Institution, published just a few weeks earlier. The book quickly became a cause célèbre garnering high praise from various media outlets.

Katz and Bradley highlight the emergence of “trading metros” with “innovation districts,” clusters of universities and local businesses, hospitals, museums, and advanced technology and manufacturing industries held together regionally with housing, retail and transit networks that seem to promise a better economic future. The book’s strength lies in its attention to metros, rather than cities, as the unit of urban settlement and economics. The authors encourage planners and government officials to develop new strategies based on “Emergent Metros” rather than “Legacy Cities.”

This attention to metropolitan areas is welcome, but the book’s outline of the future is overly optimistic. Describing deindustrialization and disinvestment as part of an evolutionary process and a “revolution unleashed” is hyperbole reminiscent of Atlas Shrugged. More critically, The Metropolitan Revolution can be read as a neoliberal sales pitch. In fact, Katz and Bradley have “doubled down” on an approach that has not only dominated economic thought since the 1980s, but that has actually contributed to the urban crisis today.

Neoliberal theory hypothesizes that small government, deregulation, global production networks, free trade agreements, labor market flexibility, abandonment of full employment policy, cost shifting, and capital mobility improve corporate competitiveness and unleash the entrepreneurial spirit, and increase productivity. These ideas have been applied to corporate restructuring over the last 30 years, informing changes like downsizing, outsourcing, and rightsizing. In another example, neoliberals argued that the housing bubble and the subsequent Great Recession resulted from federal government intervention in the housing market, which encouraged home ownership for the unqualified, and from a national liberal monetary policy. Even when neoliberal economic policies have failed, proponents have continued their unwavering critique of “big government” and regulations.

Using the language of neoliberalism and corporate restructuring, Katz and Bradley write that the metropolitan revolution is “exploding the tired construct” about the role of the federal government. Now, they say, it is the cities and metro areas that “are becoming the leaders in the nation: experimenting, taking risks, making hard choices and asking for forgiveness not permission.” Their metropolitan revolution sees power relations being restructured, as metros and cities take greater responsibility for their economic growth, and as federal government power devolves: “The metropolitan revolution has only one logical conclusion: the inversion of the hierarchy of power in the US.” But, we should ask, inversion for whom? Their examples all seem to suggest shifts from elected government officials to unelected business and economic leaders and non-governmental organizations.

Katz and Bradley borrow heavily from neoliberal architects who claimed that, in the corporate world, restructuring would result in greater local and regional cooperation and in independence for the new businesses on which future growth would be based. But corporate restructuring promised more than it delivered, as corporations were downsized, outsourced, and resource starved. Instead of cooperation, restructuring often led to an increase in internal predatory activity and greater control by corporate headquarters, under the rubric of the ‘survival of the fittest’.

Much like the early supporters of corporate restructuring, Katz and Bradley make an overly optimistic case, citing cherry-picked metros that seem to have accepted current conditions and neoliberal strategies as part of the natural economic order. But, constrained by state and federal neoliberal defunding policy, cities that lie within metros, especially in the Rust Belt, are hoarding or fighting for resources in a zero sum game of economic and regional development. Just as in the corporate sector, local and regional collaborations are largely ineffective. As Harvard economist Stephan Marlin has suggested, it may be that thinking like an economist can undermine a real sense of community.

Rather than Katz and Bradley’s view of metro areas as collaborative communities on which future growth could be based, we might better see them as urban archipelagos, autonomous islands of self-interest, and rational calculators in a neoliberal sea.

Northeast Ohio, for example, is an area optimistically viewed by Katz and Bradley. It’s a place where community officials have historically ignored regional economic plans unless they were directly impacted by them. Instead, they pursued localized development efforts, often competing rather than cooperating within a metropolitan region. Greg LeRoy, director of the public policy group Good Jobs First, found that between 1996 and 2005 many small and medium sized firms received lucrative tax breaks to move to new locations… all within the Cleveland metro area. The average distance moved in this metro cannibalization was five miles. A new regional sustainability plan for Northeast Ohio has now been funded by a $4.25 million grant from the US Department of Housing and Urban Development and a consortium of regional foundations. But the plan has garnered only limited support among the 375 cities, townships, and regional agencies in the metro area. Most observers see little chance of the plan being adopted on any meaningful scale.

Katz and Bradley’s book may end up being more of a distraction than a revolution for many metros. It dilutes the distinctly urban crisis. Racial and class polarization, and growing inequities in education, housing, health care, and infrastructure mark this urban crisis. The book essentially offers platitudes about economic growth for cities and first rings suburbs that have suffered from the neoliberal crisis, rather than offering suggestions for how to rebuild and reclaim urban neighborhoods and schools and prevent further decline. While praising sympathetic NGOs, Katz and Bradley fail to acknowledge the populist revolt in many metros, cities, and neighborhoods. In fact, they are contemptuous of grass-roots efforts such as the Occupy Movement. Their census-defined metropolitan revolution is “reasoned rather than emotional, leader driven rather than leaderless, born of pragmatism and optimism rather than despair or anger.” Despite claims to the contrary, the book is another indicator the economic divergence between Main Street and Wall Street.

John Russo is a visiting research fellow at the Metropolitan Institute of Virginia Tech, a former co-director of the Center for Working-Class Studies, and professor (emeritus) in the Williamson College of Business Administration at Youngstown State University. He is a board member of the Mahoning Valley Organizing Collaborative (Youngstown-Warren), and the co-author, with Sherry Linkon, of .

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