Growth, Decline, and Regeneration in Large Cities

A Case Study Approach

Steven G. Koven, Andrea C. Koven

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138703803
• eBook ISBN: 9781351784238
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Growth, Decline, and Regeneration in Large Cities sheds light on why some cities prosper, others implode, and still others are able to reverse their downward trajectories. The book focuses on four major case studies of American metropolitan areas: Detroit, Boston, Minneapolis, and Austin. It explores how distinctive political and cultural forces in these cities affected economic growth or decline. Theoretical frameworks to explain economic development in urban areas are identified. The book addresses important subjects such as response to deindustrialization, disruption caused by gentrification, globalization, and the importance of human capital for economic development.

1

Introduction

Influences on Economic Growth and Decline

Throughout history, economies have advanced and declined. Some places have reinvented themselves, overcoming great obstacles; others have neglected their inherent advantage and stagnated. Nations such as Germany and Japan rebuilt after the destruction of World War II. China once considered itself the center of civilization; later it became synonymous with poverty and starvation. In recent years, China has grown to become the second-largest economy in the world. Nations of East Asia, such as Taiwan and South Korea, also greatly altered their growth trajectories. Whereas some Asian nations rapidly grew their economies, other nations (such as many in Latin America and Africa) stagnated. Why some polities grow rapidly, decline, or revitalize is a subject of great concern.

The issue of economic growth is relevant at all levels: regional, national, state, city, or even neighborhood. History indicates that places do not follow a linear pattern of growth or decline. Place-based economies may seemingly surge or implode. Wealthy empires of the past are no longer so. New places begin to generate enormous prosperity. Migrations of large numbers of people and economic activity are a familiar pattern in the United States. In recent decades, the population of the West and South grew relative to that of the Midwest and Northeast. Since 1950, U.S. cities such as St. Louis, Detroit, Baltimore, Philadelphia, Milwaukee, Cleveland, Pittsburg, and Buffalo have lost large proportions of their population. Other cities such as Phoenix, San Antonio, Austin, Fort Worth, Charlotte, Raleigh, Las Vegas, and Denver have expanded robustly.

Both external threats to places (exogenous forces) and internal dynamics of places (endogenous forces) play a role in the economic health of polities and the migratory pattern of populations. Endogenous influences such as strength of institutions, quality of leadership, reaction to demographic changes (white flight), and cultural environment affect the desirability of places. Exogenous factors such as globalization and deindustrialization also influence growth and decline. In addition, the image of a place can either exacerbate implosion or fuel further growth. What people think of a place reinforces impressions that are already entrenched. People do not create images that are detached from some realities. Images are a function of both internal proclivities (endogenous influences) and external perceptions of places. This book examines endogenous and exogenous forces that influence images in an effort to explain growth, decline, and revitalization. The book attempts to shed light on why some places are unable to revitalize, why some grow spectacularly, and others continually create new sources of economic vitality.

Familiar explanations for economic growth or decline are varied. These explanations include, but are not limited to, factors such as a vital location on a trade route, access to natural resources, a great harbor, beautiful climate, creative people, tolerance of others, great universities, visionary public officials, access to capital, local risk takers, and a favorable business climate. Commonly cited culprits for decline include poor institutions (evident in higher levels of corruption, crime, moral decay, and social injustice), oppressive taxation, ethnic or racial intolerance, fear of change, failure to adapt technology, alteration in trade routes, ossified political structures, and other factors.

Today’s prospering places have adapted well to new economic realities. Other, once affluent, areas languish as their drivers of economic growth wither and they fail to develop a viable replacement economic base. Historically, entrepreneurs became wealthy through new inventions and increases in productivity. Individuals conceived and marketed new products; they reinvested profits and hired many workers. As a result, some jurisdictions became “winners” in the highly competitive economic race for development and growth. Other jurisdictions failed to innovate, failed to retain or attract businesses, and found themselves in a downward economic cycle, unable to extricate themselves from their plight.

Many of the American cities that now find themselves in a cycle of decline were at one time at the forefront of growth. The great era of industrialization that spawned production in autos, steel, tires, and other products enriched cities such as Detroit, Cleveland, and Pittsburgh. Cities of the industrial Midwest at the turn of the twentieth century adapted innovations that were at the cutting edge for their time. Henry Ford’s automobile assembly line and the Bessemer process of steel production were innovative for their time. Costs to consumers declined. Entrepreneurs such as Henry Ford made automobiles accessible to the masses. Andrew Carnegie drove down the price of steel. These innovators aided in the economic development in the industrial Midwest, and industrial cities there enjoyed great prosperity.

Today, however, many of the leading American industries of the early 1900s have receded. Production of standardized manufactured goods increasingly occurs outside the United States; cities struggle to survive as they attempt to confront the realities of offshoring and deindustrialization. Globalization exposes American workers to competition from workers in other nations who are willing to work for a fraction of U.S. salaries. On the other hand, globalization also allows U.S. producers of high-demand goods (such as entertainment, computers, and smart phones) to sell their products to larger numbers of consumers (Alderson, 1999; Bluestone & Harrison, 1982; Harrison & Bluestone, 1988).

The impact of deindustrialization has reverberated throughout the industrialized world. The so-called hollowing out of manufacturing devastated workers and places in the United States, the United Kingdom, and elsewhere (Stopford & Turner, 1985). However, some polities have recovered from the loss of their major employers while others have not. Scholars even declare cities such as Detroit to be in the throes of a death cycle (Eisinger, 2014, p. 1). Other cities such as Minneapolis and Boston found new sources of tax revenue and growth (Gordon, 2010; Florida, 2012; Rappaport, 2003). Austin, Texas, and other “newer” cities completely skipped the cycle of industrial “hollowing out.” They became the modern “winners” experiencing exponential growth in recent decades.

Adaptation or failure to adapt appears to play a role in growth, decline, and revitalization. The culture, politics, and history of places no doubt also influence outcomes. Uneven patterns of economic development increasingly describe current realities. “Spiky” or uneven development is a harsh truth for the economic losers and a spectacular boon to the winners. Education, political leadership, and cultural norms each played a role in determining winners and losers. Economic engines of the future (such as education) supplant the old drivers of economic development. In many cities, declining industry has disappeared; new sources of business activity have arisen. The idea of the old replacing the new is not novel yet remains highly relevant.

Creative Destruction and the Rise and Fall of Cities

The construct of creative destruction relates to impermanence of economies. Areas and businesses that were once thriving can lose their economic reason for being, their raison dêtre; other places prosper enormously by attracting mobile capital. Joseph Schumpeter (1976, p. 82) in his famous conception of “creative destruction” observed that the economic system of capitalism is by nature a form of economic change that is never stationary. Schumpeter identified turmoil as a progenitor of progress; the new always poses a threat to the old. Novel products attract consumers; they acquire larger shares of disposable income; buyers flee from other products that lose appeal. Businesses that rely upon products that fall out of favor fail; other businesses thrive. The environment of place has an effect. There is pressure to create favorable business climates, amenities, good-quality services, or other inducements to people and businesses. Because businesses and people are free to relocate to areas that offer highly favorable mixes of taxes and service, some places will blossom while others will waste away. This is consistent with public choice theory and Tiebout’s (1956) famous assertion that people will “vote with their feet” in migrations away from less efficient polities (in terms of taxes and services) toward the more efficient.

Schumpeter’s recognition of “the perennial gale of creative destruction” (p. 84) has become a centerpiece for thinking about how economies evolve. For Schumpeter, economies are in a constant state of flux. Schumpeter viewed attempts to soften the harsher aspects of creative destruction as leading to stagnation and curtailing a march of progress. He asserts that progress inevitably leads to some job losses. Technology dislocates some, yet the march of progress can increase overall productivity and produce aggregate employment gains.

The Schumpeterian concept is applicable to all geographical areas, census tracts, towns, cities, metropolitan areas, states, and nations. The data over the past decades are clear in that population and economic growth in the United States has been uneven. In short, a great many “winners” and “losers” have materialized. According to the U.S. Census, from 2000 to 2010, regional growth was much faster for the South and West (14.3% and 13.8%, respectively) than for the Midwest (3.9%) and Northeast (3.2%). At the state level, Nevada grew by 35.1% between 2000 and 2010, followed by Arizona (24.6%), Utah (23.8%), Idaho (21.1%), and Texas (20.6%). In contrast, Rhode Island, Louisiana, and Ohio all grew by less than 2% while the state of Michigan lost 0.6% of its population.

In terms of absolute population gains between 2000 and 2010, Texas led, with an increase of 4.3 million people; California grew by 3.4 million; followed by Florida (2.8 million); Georgia (1.5 million); North Carolina (1.5 million); and Arizona (1.3 million). These six states accounted for 54% of the overall population increase for the entire United States. The robust 2000–2010 growth in the West and South continued earlier patterns of expansion in these regions (U.S. Census Bureau, 2011). States such as Texas, Florida, and Arizona continued to expand after 2010. Western states (North Dakota, Utah, Colorado, and Washington) also attracted large numbers of in-migrations after 2010 (U.S. Census Bureau, 2014).

The uneven growth is palpable as well at the metropolitan and city levels. In 1950, the Detroit metropolitan area ranked fifth in the nation; St. Louis, eighth; Cleveland, ninth; Pittsburgh, tenth; and Baltimore, twelfth. By 2010, each of these areas had fallen dramatically relative to other cities. In 2010, the Detroit metropolitan area ranked twelfth; Baltimore, eighteenth; and St. Louis, twentieth among major metropolitan areas. By 2010, the Cleveland and Pittsburgh areas had fallen from the list of the 20 largest metropolitan areas. The metro areas of Miami, Houston, Dallas, Atlanta, Phoenix, Seattle, San Diego, Denver, and Tampa increased in their relative prominence (Historical Metropolitan Populations of the United States, 2016).

According to a study by the Federal Reserve Bank of Kansas City, over the past 50 years most of the largest cities in the United States either declined continuously or grew without interruption. For example, between 1950 and 2000 the city of St. Louis lost 59% of its population, while the cities of Pittsburgh, Buffalo, Detroit, and Cleveland lost more than 45% of their residents. In contrast, the cumulative gain of some cities was huge. San Diego, Houston, Phoenix, and Jacksonville each more than tripled their 1950 populations. The populations of San Antonio, Dallas, Oklahoma City, and El Paso more than doubled during this time (Rappaport, 2003, p. 18).

Uneven economic growth is also evident. In recent years, the Austin metropolitan area has enjoyed high growth in its gross domestic product (GDP), and in the numbers of jobs, population, and birthrate. Other major metropolitan areas of Texas (such as San Antonio and Houston) also experienced elevated growth of GDP, jobs, and real median household income. A review of population, birth rate, in-migration, and educational attainment identifies significant improvements in each of these indicators. In contrast, the metro areas of Detroit, Providence, and Cleveland all continued to lose population and jobs. In the post-2008 recession period, virtually all the fastest-emerging economies were located in the Southeast, Texas, the Great Plains, or the Intermountain West. Of the top ten metro areas in terms of economic and demographic growth, only one metro area (San Jose) was located on the East or West Coast (Kotkin, 2013).

Uneven patterns of growth should come as no surprise. The bigger questions relate to: 1) why some cities continuously have declined, 2) why some cities continuously have grown, and 3) why some cities were able to reinvent themselves after a period of decline. Rust Belt cities are heavily represented in the continuously declining category, whereas cities of the South and West dominant the growth cohort (Rappaport, 2003, p. 16). A relatively small number of large cities of the Northeast and Midwest (such as Boston, New York, Chicago, Minneapolis, and Kansas City) successfully transitioned from decline to growth (p. 33). Increasingly, disparities are also the norm in terms of wealth accumulation and incomes of individuals. Huge inequalities between the top 1% and everyone else is widely noted in best-selling books (Hacker & Pierson, 2011; Piketty, 2014).

Case Studies of Decline, Growth, and Regeneration

Why do some cities grow and others decline? Why are some able to reverse downturns? Why do some cities appear to be masters of their destinies while others seem to be victims of forces beyond their control? This book addresses these questions, largely through detailed case studies of four cities. The strength of a polity’s institutions, their political leadership, cultural environment, image, and demographics all played roles. Notable scholars have explored some but not all of these indicators (Friedman & Friedman, 1979; North, 1990; Olson, 1982; Reese & Rosenfeld, 2002). Cases studies illuminate the diverse histories, environments, and development outcomes of four American cities. Austin illustrates spectacular growth and Detroit epitomizes dramatic decline, while Boston and Minneapolis are examples of successful revitalization.

Dramatic Decline: Case Study of Detroit

With its declaration in 2013, the city of Detroit officially became the largest municipality in U.S. history to enter bankruptcy. Numerous factors contributed to the dramatic erosion of the city’s fiscal standing. External as well as internal forces drove the city to its financial demise. Political and other forces accelerated the fall of the once-great city of Detroit. Studies have already issued a postmortem on Detroit as its future appears to be bleak (Bomey & Gallagher, 2013; Eisinger, 2014; Leduff, 2013).

In general, Detroit represents a sorry narrative of a once-thriving metropolis in the throes of a death cycle. Eisinger (2014, p. 2) proclaimed that like a patient in extremis Detroit has few working vital functions. Evidence of near-total collapse is compelling. A state-appointed emergency manager assumed governing functions of the city in 2013 as the city discovered that it had $64 million in cash on hand and short-term obligations of $226 million. Long-term debt and pension obligations approximated $15 billion. With these revelations, the city’s bond rating sank to junk status, lower than any other major U.S. city. A report by the emergency manger was highly critical of basic service delivery and singled out the police department for special disparagement. Other agencies also failed. Appointed overseers noted that on any given day 12 of the city’s 52 fire department houses were out of commission because of staffing shortfalls or broken equipment. The emergency manager’s report also stated that in 2011 the city did not deliver reliable bus service (p. 2) and that roughly half the city’s street lights did not work as a result of the theft of copper wire, burned-out bulbs, vandalism, and a lack of repairs.

The demise of Detroit did not occur overnight but rather over decades. In the immediate post-World War II period, Detroit possessed 338,000 manufacturing jobs. The number of these well-paid manufacturing jobs declined to 153,000 by 1977 and 27,000 by 2011. The number of business establishments in the city fell from about 23,000 in 1972 to roughly 8,300 in 2002. Most of the city of Detroit had become relatively devoid of activity, with few supermarkets, hardware stores, clothing stores, movie theaters, jewelry stores, or even taverns (p. 3).

Migration to the suburbs contributed greatly to decline in the urban area. A 2013 Brookings Institution report stated that only 7.3% of the jobs in the metropolitan area were located within three miles of the central business district; 77% were beyond the ten-mile radius and therefore exempt from the city’s payroll tax. The primary and secondary school system deteriorated. Only 12.5% of adults in the city possessed a college or postgraduate degree (ranking ninety-fourth of the top 100 cities). Better-educated suburban residents captured the jobs in high-paying professions. City residents did not easily find new jobs after layoffs. The Bureau of Labor Statistics ranked Detroit dead last (fiftieth out of 50 cities) in 2010 in terms of unemployment; Detroit’s unemployment rate in 2015 was almost double the rate for the state of Michigan. It was also considerably higher than other Midwestern cities such as Chicago. A 2012 report by the city of Detroit indicated that there were only 27 jobs per 100 residents compared with 35 per 100 in Philadelphia and 73 per 100 in Atlanta (p. 3).

More than three-fourths of all the Detroit region’s jobs (in retail and wholesale trade, construction, finance, insurance and real estate, business and repair services, personal services, manufacturing and professional services) were located beyond the city’s limits (Galster, 2012, p. 51). The suburbs of Detroit enjoyed more than 400 first-run movie screens compared with ten in the city; 21 major indoor shopping malls compared with none in the city; 110 bowling alleys compared with two within the city limits. Despite this disparity between the city and the suburbs, the population of the Detroit metropolitan area also dropped (–2.4%) between 1980 and 1990. The metropolitan area grew by 4.8% between 1990 and 2000 but again declined by 3.5% between 2000 and 2010. The Detroit metropolitan area ranked ninety-second out of the 100 largest metro areas in terms of population growth between 2000 and 2010 (Frey, 2012). Residents abandoned the entire region in search of greater opportunity and greener pastures. This pattern differs from that of other c...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Preface
• 1 Introduction
• 2 The Narrative of Decline: Detroit
• 3 The Narrative of Revitalization: Boston
• 4 The Narrative of Revitalization: Minneapolis
• 5 The Narrative of Growth: Austin
• 6 Globalization and American Cities
• 7 Conclusions
• References
• Index