January 6, 2000 - From the January, 2000 issue

The Future Of Our Urban Centers: A Joel Kotkin Essay

Following is an excerpt from Joel Kotkin's new report titled "The Future of the Center: The Core City in the New Economy" for the Reason Public Policy Institute, where he is a Research Fellow. Kotkin provides interesting prescriptions for policy makers as they grapple with city governance in the Information Age.


Joel Kotkin

"Residents of Los Angeles [and other cities] must seek first and foremost to revive the ancient civic spirit . They can do this only by fostering a sense of connectivity-in human bonds, not just electronic links . More than anything, this reclaimed sense of civic spirit, not technology or government intervention, will determine how central cities can secure their place in the geography of the digital age." - Joel Kotkin

By Joel Kotkin

Executive Summary

After decades of decline, the urban center is showing signs of a surprising resurgence. Once thought to be doomed in an era of increasing sprawl and decentralization, city cores around the nation are attracting new investment, business, and residents at a healthy clip.

Yet these positive trends do not suggest that we are about to witness the wholesale return of mid-century downtowns or bustling central-city commercial and manufacturing districts. Even under the best of circumstances, center cities are unlikely to ever emerge as the geographically dominant centers of their metropolitan regions as they were in the industrial era. Instead, the new urban core resembles more that of the renaissance city-relatively smaller, and built around classical urban functions such as the arts, cross-cultural trade, and highly specialized small-scale production.

Symbolically, the new center city is not so much defined by high-rise corporate headquarters as by revived warehouses or former manufacturing districts, where older buildings have been brought back to full use as offices for information and fashion-related businesses. Its economy is not so much dominated by the presence of a few looming giants, as by scores of smaller, often highly networked firms.

The new role of the center cities-including both downtown central business districts and adjacent "close in" industrial and warehouse areas-in metropolitan geography stems from both geographic and demographic trends. No longer a lure to the vast majority of middle-class families, the cities have been revived by the emergence of what may be called the new urbanites. These are predominantly drawn from two groups: immigrants from other countries and a growing cadre of native-born migrants, largely young, single, educated, and childless.

Although most often written about in reference to a traditional center city such as Manhattan and Lakeside, Chicago, this urban revival actually extends to other, more dispersed places as well. Downtown development is growing both in smaller, suburban communities and in subregional centers, particularly in the large, dispersed metropolitan regions such as Los Angeles and Houston. In this sense even the definition of "central cities" must be reappraised to included many central points that are not within the historic boundaries of the central business district; they also can be found in smaller, more dispersed urban centers, including some, such as Pasadena in Los Angeles County, that also serve their own well defined hinterland.

Ultimately, the revival of the urban core stems from a search for a sense of place and history amidst a society in which the barriers of time and space are under constant assault. As centers of arts and culture, repositories of our past history and architecture, the core retains a powerful tug on the consciousness of Americans.

Yet, the future of the center city is far from assured. Any downturn in the economy could undermine this trend, just as occurred in the late 1980s and early 1990s, unless steps are taken to maintain the viability of these places. The first order of business is for cities to understand their new role in the emerging metropolitan geography and economy.

Economic, political, and social leaders need to recognize the importance of dispersed, small-scale industries and firms; they must allow for the natural market-driven evolution of neighborhoods and commercial districts resulting form shifts in the technological, demographic, and economic environment. Attempts-through subsidy or federal policy-to bring the urban core back to its mid-century status are likely to fail, as they have in the past, since they will be driven by political concerns, as opposed to responding to new economic, technological, and demographic realities. Instead, the core's revival depends on adjusting to the great opportunities that lie before it in the information economy of the 21st century.

Learning from Reality:

Guidelines for Policymakers,

Investors, and Entrepreneurs

To survive in the new century, cities will have to secure a new place in the nation's geography. They will not be able to rely on advantages-concentration of large firms, location near ports, cheap labor, or raw materials-that helped propel their growth during the previous century. Instead they must refocus on those functions carried out by cities for the past three millennia, such as cross-cultural trade, the arts, and making of highly specialized goods. The previous analysis suggests four lessons for local policymakers, investors, and urban entrepreneurs.

Lesson One: Emphasize Qualitative over Quantitative Values

The primacy of qualitative over quantitative values represents the key to this renaissance. The city of the 21st century is unlikely to thrive, like its industrial-age antecedent, by simply feeding off ever-greater population growth or economies of scale. In the past decade, most urban areas have actually "thinned out," becoming half as densely populated as in the immediate post-World War II era; only 11 of the 30 largest have more people than they did in 1950. Even in L.A., a city long synonymous with explosive growth, increases in population grew by only 2% between 1990 and ‘96. Indeed, much growth that has taken place, even in western or southern cities, has been more the result of annexation than greater density in the historic space.

Yet these demographic trends need not reflect a permanent decline for urban areas. Indeed, slowing or even reduced population can provide the basis for creating a more livable city that is more like its preindustrial antecedents. Florence in the 14th century numbered less than 100,000, yet profoundly influenced not only Italy, but also the entire European world.

In its physical aspect as well, the future city resembles increasingly its archaic predecessors. Unlike the mass-industrial city of recent memory, where development could be seen as a city's "basic industry," urban areas no longer can identify their futures through building ever taller buildings, or building ever more dense downtown office districts. Such massive development projects are more common today in cities within developing economies, such as Malaysia and China. None of the 100 tallest buildings built in the last five years has been built in America.

Lesson Two: Concentrate on Appropriate Niches

Whether in the form of a sprawling agglomeration like Los Angeles or Houston or a compact city such as Boston, Seattle, or Baltimore, the archetypical future city must see itself, first and foremost, as a collection of cosmopolitan, functional, and living neighborhoods. These communities, or urban villages, both separately and as part of a citywide archipelago, seek to offer residents a wide range of experiences, sights, and sounds not readily accessible through a computer console or in the suburban expanse.

To bolster this economy, cities must learn to do those things that young people care about-whether in terms of safety, tax policy, or a tolerant regulatory regime. Most of all, the economy and culture should be given free rein to express its spontaneity and diversity-without the deadening hand of government or city-sponsored "urban renewal."

The urban-renewal approach was lethal in the 1990s-leading to failed office projects, deserted inner-city malls, and underused transit projects. As a general rule, the city should be allowed to renew itself from the marketplace and the ground up; replacing a West Baltimore with a "mall in brick" undermines the very message of differentiation that cities need to convey.

Lesson Three: Nurture the Grassroots Economy

The promise of the knowledge-value economy will not be enough for most cities. Ultimately this depends on the ability of future cities not only to attract the young and adventurous but also to incorporate a large enough share of its population into its civic and economic web. The growth of knowledge-value industries and the migration of the new urbanites that service them represent a starting-point for an urban renaissance, but not an end in itself.

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Communities need to maintain a strong presence of specialized industrial, warehousing, and other blue-collar industries in addition to the postindustrial sectors.

In the late 20th century, the consequences of [the] decline [in the artisanal economy]-as occurred earlier in Venice, Amsterdam, and other cities-was to pull up one of the traditional vital leaders of upward mobility for the urban poor. Even with the trend towards lower pay and less unionization in manufacturing, industrial jobs generally still pay higher than service positions; overall industrial workers remain half as likely to earn incomes below the poverty line than their service counterparts.

This decline has been exacerbated by the tendency in many cities to ignore industrial firms while lavishing tax breaks and other incentives on favored sectors such as financial services or larger firms. Today most business, professional, and political elites see the future of their cities as connected almost exclusively to the growth of a few coveted high-end sectors and name-brand companies. Attracting capital, corporations, and talent, from the rest of the country or abroad, often becomes the primary focus of their economic-development activities. Rather than obsess on large firms or symbolic projects like stadiums, center cities need to encourage grassroots entrepreneurship, which taps the skills and energies of their own people, both as entrepreneurs and workers.

Successful cities in their prime have often been driven by grasping "new men" from the countryside, abroad, or even in their own slums. Writing about New York in the 1950s, urbanologist Jane Jacobs observed: "A metropolitan economy, if it is working well, is constantly transforming many poor people into middle class people . Cities don't lure the middle class, they create it."

Creating this middle class means promoting the growth of smaller firms across a broad spectrum of industries. This notion is even more relevant in an economic geography where large companies are increasingly rootless and where most new job creation stems from smaller, upstart firms. A quarter century ago, for example, Fortune 500 companies provided one out of every five private-sector jobs; today that ratio is less than one in ten.

Like their counterparts in New York and elsewhere, small firms heavily reliant on close cooperation between suppliers, designers, and customers increasingly dominate the Los Angeles industrial economy. Los Angeles has surpassed longtime rival New York as a [garment] manufacturer. Since 1990, the number of garment and textile firms in the region has grown from slightly over 4,000 to near 5,700. Only eleven of these firms have over 500 employees; Los Angeles has only 5% of the nation's large garment firms but almost 20% of firms of less than one hundred.

Much of this growth has generated largely low-wage employment, yet immigrants, the primary working population in Los Angeles, generally enjoy higher wages in cities such as New York, in part because of the proliferation of such small factories. Ultimately, these firms cannot survive simply by paying lower wages, but by becoming more specialized, and artisanal in their approach. This model of production- "flexible specialization"-which stresses co-operation between networks of small firms already has become widely credited with boosting wages and opportunities in other urbanized parts of the world .

Lesson Four: Decentralize Government

Across [much of the world] , there has been a similar flowering of "global regionalism," where various regions jockey with rivals both domestically and abroad for capital, skilled labor, and markets. At some level the devolutionary pressures could serve to weaken, and even eliminate, some national governments around the world.

Changes in information technology promote this "reverse flow of sovereignty." As news, currency, and technologies now flow seamlessly and ever more cheaply across national borders, particularly with the advent of the Internet, states and localities and even small towns must struggle to position themselves within global competition.

This new competitive reality has also expressed itself in negative terms-such as with moves to break up existing cities like L.A. and New York-by those who feel that these municipal leviathans have become too bureaucratic and self-absorbed. Some observers have denounced some of these movements as "secessions of the successful," yet they reflect a healthy debate about the proper scale for conducting public policy.

Whatever its final form, America's existing federal form of government and the nation's historic affection for decentralized structures makes it ideal for reanimating local government. Critically this appeals not only to conservatives, who traditionally have favored smaller government, but also many progressives.

[T]he most effective practitioners of devolutionary principles include not only Republicans such as Indianapolis' Mayor Steven Goldsmith and San Diego's Susan Golding, but Democrats like Milwaukee Mayor John Norquist and Cleveland's Michael White. At the same time opposition to the idea comes from within both parties-Republicans, who seek a conservative "American Imperium" directed from Washington and those left-liberals still wedded to an expansionist central state. These ideological disparate elements often share a common dismay over the development of technology, the Internet, or the breakdown in the unitary nation-state.

Notably, in the current environment, the U.S. Conference of Mayors asks not if an agenda is liberal and conservative, but whether it is in tune with the new economic, technological, and social challenges facing each community.

Given the devolutionary realities of these times, a reinvigorated public policy debate will also, by necessity, focus far more on local concerns. This is particularly necessary given the demographic and cultural differences between different regions of the country. Many urban centers, including Los Angeles, have as much as three to four times the percentage of foreign-born residents as other cities, much less small towns and suburbs. At the same time patterns of demographic and economic growth are also shifting, away from the northeast, where the governmental and public policy apparatus is concentrated, and towards the southern and western parts of the country.

Conclusion

The fate of the center city, indeed that of all communities, turns on recovering their economic and political sense of uniqueness. In the emerging digital age, where cities hold a diminishing share of the population and where economic function can take place increasingly in a variety of locations, cities must instead seek their salvation not from outside, but within. The role of civic elites-business people, labor leaders, educators, media-will prove increasingly critical. If the elites do not believe in the city and its unique role for the future, it is unlikely that the bulk of urban residents will do so.

The lack of assertive elites, perhaps more than anything else, is what distinguishes the classical, Renaissance, and early modern city from its contemporary successors.

In recent debates this web of loyalties has begun to gray as ever more sophisticated telecommunications technologies have made it easier for companies and elites to ignore their responsibility to a particular city or place. In the new century, some believe this rootlessness will be further exacerbated by the development of virtual communities that will replace communities built of brick and mortar. The "cities of the future," argues William Mitchell, are by nature antispatial.

To some enthusiasts, these "virtual communities" represent the ultimate solution to urban, indeed all human, problems. [However, while] technology changes reality, and the geography of cities and communities, [it] ultimately does not solve the essential problems of human relations.

In this sense, perhaps more than any other, the great cities of the past, and their cultures, loom most impressively as models for those communities seeking to secure their place in the geography of the future. The leading citizens of the ancient Greek polis, the Italian city-state, early-modern Amsterdam and London all shared a peculiar passion for the mythology, history, sites, sounds, and smells of their cities. This remains the critical intangible element in urban culture. Cities, indeed all communities, need to survive as something more than soulless zip codes of brick and glass interconnected by fiber-optic cables.

Residents of Los Angeles [and other cities] must seek first and foremost to revive the ancient civic spirit . They can do this only by fostering a sense of connectivity-in human bonds, not just electronic links . More than anything, this reclaimed sense of civic spirit, not technology or government intervention, will determine how central cities can secure their place in the geography of the digital age.

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