The Working File

In my entry on the MTA and labor costs, I stated that I feared that New York would become too much like New Orleans and Detroit — once thriving cities that choked their productive class out of existence, left with taxeaters and — at least in New Orleans, a concentrated professional class and tourist section. Detroit doesn’t even really have that.

So I was interested when I saw a post at Charlie O’Donnel’s blog, This Is Going to be Big, a post titled Will NYC Be Pittsburgh or Detroit?, which asks that very question, with reference to another blog post that is based on a New York Times article. The blog post reads in part:

Last week, the NY Times profiled Pittsburgh. While the nation slides deeper into the economic abyss, Pittsburgh thrives in comparison.

The paper reports: “Unemployment is 5.5 percent, far below the national average. While housing prices sank nearly everywhere in the last year, they rose here. Wages are also up. Foreclosures are comparatively uncommon.”

Times haven’t always been this rosy in the city with three rivers. After the steel industry imploded, unemployment was rampant and many feared Pittsburgh would crumble. Before the collapse of the steel industry, steel workers made up 10 percent of the Pittsburgh work force. Today, the number is less than 1 percent.

Sound familiar? Just look 285 miles away. Detroit’s unemployment rate is soaring, its housing market is crumbling and the auto industry as we’ve known it for years has ended. It’s a city in transition, fighting for its very existence.

Detroit should take a page out of Pittsburgh’s playbook. In the 1980s, the state used local universities to pour funds into technology research. What blossomed was a thriving entrepreneurial community. The largest industries? Computer software, biotechnology, education and health care, all of which have held up well of late.

L A Z E R O W . COM: Will you be Pittsburgh or will you be Detroit?.

I was surprised to read this, because I previously understood two things to be true: (1) Pittsburgh is, if anything, dying, with both a shrinking population and economy, and (2) the sort of hip, trendy urbanism these articles are proposing has been tried for 20 years in a variety of cities with basically no success. They add a few trendy shops, but keep taxes high and have poor schools, so nobody with a family wants to live there. The young professionals graduate, then live, work, and play there for a few years, and move out.

So I was not surprised to read that these articles are blowing smoke. First I saw the weekend WSJ, with the article: Sports Mania Is a Poor Substitute for Economic Success, which points out that, yes, Pittsburgh is losing population. In fact, it was just surpassed in that category by Toledo:

If there ever was a time to crow about the wonders of rebuilding a city around a professional sports team, this would be it. Three of the four teams remaining in the play-offs hail from cities — Baltimore, Philadelphia and Pittsburgh — that in recent years spent billions rebuilding their downtowns around pro sports facilities and other community “anchors.”
Except that there’s a problem. The teams might be competitive, but the cities definitely are not. All three continue to shrink in population, and have stagnant job markets and crumbling public schools.
Baltimore, Philadelphia and Pittsburgh were prototypes of the economic development fad of the 1990s: government-financed “investments” in economic development. They all practiced what was called “tin cup urbanism” — the belief that the rest of society owed large taxpayer transfers to the urban cores from which most of us have fled. They all supped from the same cup: center city stadia, aquaria and subsidized retailia.

The article’s focus is on sports-related spending, but also makes a broader point, “Maybe America should take a look at Baltimore, Philadelphia and Pittsburgh before getting behind Mr. Obama’s plan to use public-works projects to lead us out of economic morass.”

Then I found Joel Kotkin’s site, with its recent article Rust Belt Realities. Kotkin asks:

Who seeks their “main chance” in Pittsburgh? Certainly not foreign immigrants, who are staying away in droves. Metropolitan Pittsburgh has one of the lowest percentages of foreign-born residents in the nation. Even Detroit, with its sizable Arab population, has some sort of ethnic vibe.

Kotkin’s site also reprints a Commentary by Colin McNickle, Progress Through Delusion, that specifically and completely eviscerates the pro-Pittsburgh blather peddled by the Times and swallowed whole by some bloggers:

Fewer taxpayers, more pensions, more extravagant spending; a base made up of nontaxable “businesses,” like universities and hospitals, Kotkin notes. “Is this financially sustainable?” Of course not. Jake Haulk, president of the Allegheny Institute for Public Reality, was just as incensed. “The truly amazing deception is to skip over the facts that for seven years the region had no net jobs increase, far below normal national average home price escalation and new home construction, the loss of retail jobs, airline jobs, etc., ad nauseam,” he said in an e-mail.

Cities that lose population are not thriving. the choice is not Pittsburgh or Detroit. New York thrived for years on the outsized pay and performance of a single industry that paid similarly outsized taxes to support a bloated public sector with pensions and benefits that are way too generous. The way out is to reduce the bloat, reduce taxes and other burdens on entrepreneurs, and allow the productive class to grow once again.