In the first of two articles, Alan Mallach, a senior fellow at the US non-profit Center for Community Progress, asks: What does it mean for a city to be economically resilient?
Urban resilience is the ability to respond to physical, social and economic challenges; not only shocks, such as hurricanes or earthquakes, but to the stresses that weaken a city’s fabric, such as high unemployment or endemic violence.
In an increasingly uncertain global economic environment, economic resilience has become increasingly important. But, as cities become increasingly polarized – spatially, economically and racially – I fear that this is not only impeding their ability to respond to their challenges, but has become in itself a challenge to future urban economic resilience. In this article, I will try to lay out a framework for looking at this issue, and in the next one, I will try to drill down and assess what it means for American cities.
I’ll start with two economic resilience stories, one fairly well known and one less so.
In 1965, Singapore split off from the newly established nation of Malaysia to become an independent nation. At the time, its prospects did not look inviting. It had no natural resources, little industry and no domestic market, it was, in fact, little more than a sleepy port widely seen as in decline from its days as a bastion of the British Empire. At that time, as one writer has since written, it was “poverty-stricken, disease-riddled little entrepôt.”
Within a few decades, though, it had been transformed into a model of growth and prosperity – the smallest, and in some respects the most consistently successful, of the so-called “Asian Tigers”.
The second is closer to home. In the late 19th century, Scranton, Pennsylvania was a major center of iron and steelmaking, with its economy dominated by the massive Lackawanna Steel Works. To the city’s shock, in 1902 Lackawanna announced that it would move its entire operation to Buffalo, New York. The city barely skipped a beat. The population kept growing, fuelled by new industries and the steady demand for the region’s anthracite coal. In many respects, the years between 1900 and 1950 were the high point of Scranton’s history.
How cities bounce back
While the sometimes quasi-authoritarian rule of Singapore’s long-serving former president Lee Kwan Yew has legitimately been criticised, that should not detract from the remarkable nature of his and his nation’s achievement. While their economic strategies were brilliantly opportunistic, the two critical underlying themes that drove Singapore’s growth were first, a determination to provide honest, transparent and competent government based on the rule of law; and second, an intense focus on education, to maximise the value of the nation’s human capital.
The fact that Singapore was a relatively cohesive society, in which its leaders operated with a high level of legitimacy, was important – but that would have mattered little without those leaders’ systematic, long-term, laser-like focus on those two themes.
Scranton's rail yards, in the town's 1890s heyday. Image: Library of Congress.
Scranton’s task was easier. Coal mining helped propel its economic revival, while local entrepreneurs did the rest. A local button maker realized that his equipment could be adapted to make the newfangled phonograph records, and went on to become one of the nation’s premier suppliers to that growing industry. Human capital and transparency were less of an issue in the early 1900s, as government by elites was little questioned, and a steady flow of immigrants provided the brawn for the mines, factories and workshops.
Both Singapore and Scranton offer useful lessons. What Singapore shows is that, in the absence of natural resources, the principal resources a city, region or country can bring to bear for economic growth are its human capital, the competence and transparency of its government, and a determined focus to maximise the value of whatever locational or institutional assets it may possess. These are assets that should withstand future economic shocks. Despite the many differences between Singapore and cities in the United States, the lessons are equally relevant in today’s American context.
While Scranton’s strengths enabled it to be resilient in its particular early 20th century context, those strengths were – unlike Singapore’s – limited to that context. When coal mining declined and deindustrialisation spread after World War II, Scranton had little to fall back on, and entered into a long-term economic and demographic decline.
Gentrification and resilience
When we look at the revival of American cities since the 1990s, that story too can be told as one of resilience: cities like Pittsburgh or Baltimore, thrown by the loss of the manufacturing industry that fuelled their growth, roaring back to become post-industrial cities, driven by world-class medical centres and universities.
Today, neither city has much of an industrial base; roughly one out of every six Pittsburgh residents is a college student, and the University of Pittsburgh Medical Center is the largest employer in the state of Pennsylvania. More than one of every three jobs in both cities is either in education, health care or social services; if you plug in a reasonable multiplier, one can estimate that two thirds or more of the local economy in both Pittsburgh and Baltimore is driven by education and health care, including the billions in medical research dollars that flow to places like Johns Hopkins and UPMC.
Crime is down in most parts of these cities, and thousands of highly-educated millennials are flocking to them, turning areas like Baltimore’s Hampden into hip destinations.
But is this resilience, or something else? Large parts of these cities are still impoverished and disinvested, and many neighborhoods that were vital 10 or 20 years ago are losing ground. These cities are becoming more and more polarised, spatially, economically and racially.
The new jobs are mostly filled by suburban commuters; fewer and fewer city residents have jobs, and most of them commute long distances to the suburbs. Baltimore’ unemployment rate in 2014 was 12 per cent, and 16 per cen for the city’s African-American population. Crime may be down in the Inner Harbor, but is still endemic in many parts of the city.
Are Baltimore – or Pittsburgh, St. Louis or Seattle – resilient cities? Or are they simply riding a wave of economic and demographic change, fuelled by the pure dumb luck of having institutions like Johns Hopkins and Carnegie-Mellon, or entrepreneurs like Bill Gates and Paul Allen, in their midst?
I suspect it’s the latter. In the next installment, I’ll look more closely at why these cities’ growing polarisation and their failure to address critical issues of governance and human capital are actually making them less resilient, and less likely to respond effectively if and when they no longer find themselves at the crest of the economic wave.
Alan Mallach is a senior fellow at the Center for Community Progress, a US non-profit organisation which focuses on urban America.