Greece Revolts, DOW Jones Plummets; Make Sense?

Greece Passes Austerity Measure

What I’m about to write is probably all screamingly obvious and simplistic, but nevertheless  I would argue the complexity of our system is what’s leading to so much trouble recently (unless you’re someone who appreciates the volatility as something akin to a natural weather system–whereas I would prefer our system worked more predictably like man-made things ought).  It’s funny how irrational our international political economy has become–a small nation like Greece has budget issues, and the DOW Industrials plummets a thousand points. I fully understand all the intervening concerns about a cooling European economy, frozen credit, and the rest, but sometimes you need to look at the larger picture. How removed has the DOW become from the performance of American industry? Europe is a huge market, but this panic underscores how American competitiveness relies on quantity of product and not quality. And how removed is financial investment from productivity? How sound is the political basis of the EU?

It all sort of reminds me of how Archduke Ferdinand is shot in Sarajevo, and suddenly the whole complicated peace in Europe between the great powers collapsed. If the stability (peace) of our economic system can depend so heavily on small events in southeastern Europe, how overly complex is this financial system? It doesn’t have enough redundancy, and the abstractions of dependencies, sort of like the ententes and alliances in pre-WWI Europe, has become over-wrought and prone to failure. If the EU really does collapse, will it ever be possible to stack the pieces of Europe together again, or is the concept fundamentally unsound?

China next to collapse after real estate bubble bursts?

Steel Factories into Art Factories: Limitless Potential?

Photo Courtesy Arch Daily Link to Project: http://www.artsquest.org/about/about.asp

Elbphilharmonie: three concert halls, a hotel, apartments, and a public square elevated 37 metres above the river.

It seems, at least as far back as the construction Mass MoCa in North Adams, Mass, or famously with the Tate Modern in London, there’s been a formula for turning old industrial buildings, whenever possible, into lofts or art spaces (or both or into the thing of art itself, as in the Rhur region). Economic globalization and its ballyhooed homogenizing, is rather creating strong incentives for preservation of unique places as comparatively advantageous, and the steel factories to art factories phenomenon should be seen as part of that dynamic. Pittsburgh has made this industrial to arts economic development strategy a centerpiece of its contemporary claim to fame. And I’m a fan of the project renderings shown above, and generally support the concepts behind creating the ArtsQuest campus on the former Bethlehem Steel Factory lands (although the “creativity commons” rendering gives me pause about the whole venture with its unintended parodying of a food court.)  By comparison to my old stomping grounds, scores of equally impressive 19th century industrial buildings in the Naugatuck Valley, CT met their fates prematurely due to neglect and wrecking balls. They were torn down before these kinds of adaptive reuses became popularized. In fact, many continue to be torn down. Meanwhile, it seems nearly every rust belt city or defunct industrial neighborhood from  NYC’s meatpacking district to Vancouver’s Yaletown or Portland’s Pearl District, have found new uses for their old warehouse areas. Cities as diverse as Minneapolis, Richmond, Cleveland,  Hamburg, Manchester NH and Manchester, UK are all pursuing similar residential/arts development strategies in the adaptive reuse of their former industrial buildings. The descriptive animus of this phenomenon I would loosely describe as place-making for the creative class. It has become observably cliche(check out this beautiful example in Brooklyn). They always seem astonishingly successful, and indeed for the most part the strategy of arts-led economic development, coupled with historic preservation place-making, has proven itself in remaking beautiful, vibrant places that have challenged people’s perceptions of urban living. They are showcases of winning efforts in many American cities to staunch the tidal exodus to the suburbs. At their best, these adapted areas reminded people of the enjoyment, variety, and interest of urban spaces. Forgotten, however, are all the smaller places that either pursued the same strategies and found them inadequate, or those that never mustered the means or the political will to pursue them in the first place. An artist-led strategy for economic development has been honed with its own pat phrases and truisms for a couple decades now, with analogies to artists being the pioneer species of burnt over urban wastelands, etc, and with these, mythic, cure-all characteristics have barnacled upon the more modest proposals that underwrite the strategy.

Let me take a moment to say when I refer to the cities pursuing these strategies, or simply use “they”, I am generalizing about the nebulous confluence of real estate developers, government policy makers (who might adopt tax breaks or relax building codes for adaptive reuse), and the historic preservation organizations, art councils, and economic development departments who advocated for these arts-led revitalization of older neighborhoods.

Who or what begins the virtuous cycle of building recycling is not what I’m questioning. Unknown is how universally applicable the strategy of introducing artists to brownfields or other blighted areas is, and if there is a competitive limit to how many places can develop the same artist economic driver “niche” for their economically depressed neighborhoods, or as supplement to lost manufacturing work. Also, unknown to me is how the west coast obsession with the ‘authentic’ just makes this good real estate development.

I think the preponderance of successful art clusters are not beholden to the discretionary spending of their regions. The cities and places with formally creative arts sectors and access to worldwide markets, are places like: London, Paris, Milan, Chicago, Los Angeles, NYC, where the arts communities meet and merge with designers and big industries from furniture to advertising and media. Towns like Pittsburgh, Montreal, or Austin are, if I’m not mistaken, able to sustain their own creative, arts rooted clusters by a mixture of local market capture, linkages to larger industries (education, software, furniture design, etc.) and modest, albeit growing, appeal to tourists and regions beyond. These places and their arts led strategies must be distinguished from, let’s say, a West Hampton or Westport artist community that relies upon the patronage of wealthy residents, or a college town like Madison or Grinnell, IA that has an interested, educated class that is unusually supportive and attracts similar interest as part of a college town arts circuit.  For instance, the arts community of the Berkshires is really a suburbanized section of Boston’s education/arts market. But for other towns/cities, I think the artist/creative sector (that I define more narrowly than, let’s say, Richard Florida’s creative class) has a ceiling. It’s not just any place that can adopt certain credos, put a for-sale sign on its dingiest industrial neighborhood, and sit back and wait for the famed artistic pollinator, moneybees to colonize. Expectations must be curbed, and greater recognition given to one of the main draws for artist communities: the presence of other artists in the region.

Real Estate Developers Know How-To Sum Things Up Neatly Sometimes

The ability of the internet to market products and services at low cost from nearly everywhere still has not changed the fundamentals of urban agglomerations–the presence of graphic, silkscreen, T-shirt companies scattered nationwide notwithstanding. Usually, in those cases where adaptive reuse of industrial areas is planned for new arts sectors, there are added catalysts like youthful demographics, an inherited legacy as a capitol of a culturally distinct region, or an educational institution (think RISD in Providence). But even with those factors, things can peter out far from the full city transformation to robust economic growth. There needs to be kindling to catch the creative sparks of an artists community–feathering a cheap, grungy, plenty caffeinated, industrial-themed nest for the creative types to roost in is not enough. Planners need to start thinking one step ahead, to creating linkages with local educational and financing institutions and to their other local industries, to see how artists and designers might work together with local industries to improve and enhance their  global competitiveness. I believe this is done more effectively in other nations, whether its the way in which Italian regional governments market traditional, artisanal products into international brands and products, or how South Korean corporations/government are adamant in sponsoring excellence in broad categories beyond the technological, understanding how creativity in different fields form positive feedback loops. For instance, in much the same way Silicon Valley computing power and human capital can help the affect the animation businesses of Hollywood, or the publishing and television industries in NYC benefit from the presence of so many local actors and models, so can the smallest American communities be able to build places that make obvious its talented, creative people’s usefulness to other businesses, even if done on more modest scales of arts fairs and local restaurants. Adaptive reuse of lost industrial buildings and places is important, not because artists and designers are going to create the quantity of middle-income jobs manufacturing has lost, but because they often involve the concerted planning efforts of many different stakeholders in order to find complementarity between disparate industries and demographics of a city or region. In essence, they can make a splash.

"The Shirt Factory is a community of over 35 artists who thrive and collaborate in an environment devoted to the arts."

Indeed, I do not think the successful adaptive reuses in economically depressed regions, combined with this arts-led strategy, has ever been about the arts or historic preservation, but something deeper and more to do with high school civics class (those of us who had it). I think its productivity is sourced in bringing together people from diffuse disciplines and backgrounds to concentrate on the creation of new spaces. In this creative enterprise, they imagine their city as a productive locus to enact partnership possibilities. Opportunities are invented.

The use of the historic industrial buildings is key on two levels. Immediately, the efforts are symbolically part and parcel of the city and as keeping in continuity with local heritage, and start to change what might have been a longstanding negative narrative. Even so, there is still a real risk of backlash against the effort as either a gentrifying front, or as a foreign intruding presence meant to irritate or annoy, but ultimately impossible for their particular place (low self-esteem is common to cities plagued with brownfields.) Secondly, the results are tangible and generate positive momentum, buzz, and begin a trend that can cause further investments from previously hesitant or doubtful residents.

Using previously long disused buildings is difficult to object to (although sometimes done) and celebrating their appearance also works to soften gentrifying criticism, and often puts the new business or new residents deep in the heart of older neighborhoods where they cannot fail to be seen and where they will immediately start depending upon, and supporting, local services. They will believe themselves closely identified to the city, and in turn the city will eventually embrace them. This is to be contrasted with the way many light industry business parks were erected on the edges of cities, close to suburbs, as tax and subsidy havens that were devoid of any other compelling reasons to exist other than to retain the business nominally within city limits.

Mattress Factory Pittsburgh

Once located near the edge of town for the sake of tax breaks, those subsidies had to be constantly maintained or enriched. Once located on the edge, the impulse to just cross the line out of town or state to even cheaper conditions proved too strong, the reasons for physically clustering in the center exposed as no longer relevant, and the gravitational force of the city center irreversibly compromised and weakened. Therefore, money not spent on keeping the local workforce more educated and superior in order to retain manufacturing advantages, was, in the final analysis, wasted.

In contrast and superficial as it might seem, creative or so-called ‘human capital’ intensive operations, like those of artists or designers, are seen as irresistibly drawn to the unique attractions of an urban agglomeration and not reliant upon the erection of special tax haven business parks or the ‘right amount’ of government financing. Instead, cultural ‘things’ like music venues, coffee bars, museums, parks, other similarly aged or like-minded people, and even squishier terms like tolerance and heterogeneity, could be given as reasons for competitive advantage. This is a list that starts to sound suspiciously equivalent to a good tourist guidebook (of course artists also need art dealers, clients, and fellow artists in order to support themselves, although the links between popular tourist destinations and the arts is obvious), but the attractiveness of such a theoretical approach to many desperate communities is apparent. It is also a list with a lower threshold to meet than the hard work of institution building once large company sponsors and patrons had left. That’s the danger in the current economic development storyline of attracting creative class people and its strategies–it can build hope on flimsy premises and scattershot precious resources, while ignoring doing the heavy lifting of connecting employers to educators, enabling networking, and expanding the public realm and its concordant services so to make the place itself indispensable to many operations. Quality of life issues are important, connections between people is more important.

Map Courtesy http://www.CreativeClass.Com

Anyways, is this just the nature of comparing manufacturing versus creative sectors, or is the location and building types the key difference? In the past, manufacturing sectors in America were also considered ‘human intensive’, especially as was the case with the famed Yankee ingenuity of the Northeast in celebrated economic powerhouses like Bridgeport, CT. And we can observe in East Asia that manufacturing, especially advanced manufacturing, is not resource based but still very ‘human capital‘ intensive and still cluster at points where skills and know-how can layer and build. So, indeed, I think there is a portion to this that is straightforward bricks and mortars geography, where centrally-located historic buildings are being adaptively reused demonstrate city vitality and can create a self-fullfilling perception that the city is inventive and renewing itself, and when done so in localities near to their legacy infrastructure investments it can reassert the city’s regional centrality and optimize the whole system. One look at the historical tenacity with which the financial sector has clung to Lower Manhattan’s outmoded skyscrapers in-close to the Stock Exchange (after 9/11 being converted when feasible to residential buildings), and then to Midtown and NYC metropolitan area more generally, will support the view that labor markets exhibit a certain stickiness to one another and, importantly, to a geographic place. Corporations might list HQ in the Caribbean, but the executives and work is still done on the Gold Coasts of Long Island Sound and Lake Michigan. On any scale, location counts.

Moderna Museet, Malmo, Sweeden. Completed 2009, old electric plant.

The idea of artists as ‘pioneer species’ or ‘pump-primers’ who spearhead new imaginative undertakings and initiatives in the most blighted and oldest city areas, thus pouring revitalizing wine into old depreciating vessels, then whose efforts will in time attract wealthier suburban consumers to return like cultural vultures to downtown areas to shop and dine once more, which in order leads to more lucrative operations like developing real estate, and then through an increasingly vague and muddy process results in economic rebound for the whole of the city. Oddly enough, even when I put it in this mangled mishmash of metaphors and give misleading emphasis, I do not believe the approach is without merit; when we understand it as a method for communities to work together imaginatively on a new city-building project. Non-profit arts institutions working with government leaders and private developers to fund the rehabilitation of old structures involves organizing a very diverse and broad group of actors. Yet, the bringing of arts and artists to a town must be remembered not as an end unto itself in most cases, but as purely a cheap means for places that are resource poor to do something productive together. This confusion, however, of artists as economic development ends rather than means, can lead to the foolish funding of large performing arts spaces and the like often in small cash strapped places without any aforementioned criteria for successful arts clusters, which in the end is likely to have as much effect on the local economy as a new sports or ballpark.  Equally damned but perhaps far more heroic, is the quixotic pursuit of brave souls in a place like Butte, MT to make themselves the bohemian capital of the Old West, one funky bistro at a time. Artists, or their nerdy computer programmer cousins, who in the past almost legendarily have been recruited to live and work in ratty warehouse locations on the promise of open floor plates, lots of sunlight, and perhaps some dive bar, might have been a cicada-like boon once seen in a blue moon. Their future decision-making should not be over-thought or over-sought in economic development plans–their caprices are subject to sudden, unpredictable change from industrial buildings (as pointed out in the end of this interview).

There is also certainly an element of the trendy involved in the rediscovery of the city as a desirable place to live and that has had at least as much to do with dropping crime statistics as a new appreciation of factory aesthetics. Fostering complementarity and cooperation between creative professionals and the economy writ-large, rooted in well-designed places with strong continuity and respect for places’ formative heritage, should remain uppermost in the clear minds of policy makers. Building the same cooperation around urban agriculture, or a new credit union, or building apprenticeships between schools and artisan workshops might in many instances be more valuable than a big orange box.

That said, for many mid to small cities without bustling, commodified culture scenes, their factories are closed, their mines are closed, their timber mills are closed, but their imaginations should not be.

(this video, to me, is a reminder of the fleeting nature of things. and i’m not just talking about the decaying industry buildings.) Also, a plug. Please save Remington Arms Factory: http://www.archdaily.com/57093/help-save-remington-arms-factory/

Now, belatedly after all this opining and pontificating, I will read Alex Cuthbert’s “The Form of Cities: Political Economy and Urban Design” Anyone else already read it? Always a good thing to read about how planning history is a “moribund subject” and how planning is a ‘mongrel discipline, ritually bred from elementary particles derived from social science, economics, architecture, urban geography, law, engineering, etc.’ whose only ‘claim to be a profession is only by virtue of its legitimation by the state’.

Don’t Wait for DOT to Build the High Speed Rail in the Northeast

I see that the NY Times is catching up to what’s been discussed on several blogs already. Maybe the “Infrastructurist” people took note of the discussions on that anti-HSR viral video on YouTube which relayed the information to the Times that this issue is still hot. People care about the HSR plans, which should be a tip to the government that indeed they are spending far too little on HSR. Unlike much of the stimulus, the HSR would produce a tangible product that is easy to explain and whose benefits could be felt by hundreds of millions. It can create public momentum if the government behaved in a way that showed it was serious about it, and did not lead people to believe it’s just another false start like in the 1970s.

However, reading this op-ed contribution in the Times this morning, you get the feeling that the author is naive about the Northeast Corridor’s congestion problems or thinks that those involved did not know“Money is needed to improve the overhead electric wires, straighten out curves and upgrade the track. And more trains are needed to increase trip frequency, reduce overcrowding and offer flexibility.” Before they do this, they had to replace 100 year old bridges. There just isn’t enough money, and there won’t ever be enough money, from the Federal government to get this accomplished. I’ve wanted HSR since I was in High School, I”m already past graduate school, have some grey hairs, and I don’t expect it completed in America until after I have children of my own who have graduated high school.

If the Northeast really understands that a European/East Asian HSR service is needed, they’re going to have to clear the right-of-way and find a majority of the money themselves. Heck, they didn’t even get the 2nd or 3rd most out of the stimulus bundle of money because they hadn’t put together any serious plans. There’s going to be a new governor in Connecticut, and hopefully no matter which party he or she is, they should promise to start organizing with the regions governors to get this built or it just will never happen.  If you think Obama and the Federal government is going to upgrade service in his political base’s swing house first, well, I got a bridge I think you’re going to love…

Mr. Friedman Needs to Pass the Microphone

http://www.nytimes.com/2010/03/03/opinion/03friedman.html?em

Tom Friedman can come across insufferably at times, like a man who, in his private moments, spends time sniffing all the socks in his drawer. He’s monomaniacal, repetitive, and unoriginal to the point of self-parody. However, he is useful in starting conversations …

Oh forget it. He’s just too hard to defend. We need someone new to do this pitch job. Where have you gone Billy Mays…

Rather than repeating all the things that I do believe he’s correct about in this editorial (the borrowing money to simply patch existing infrastructure rather invest in new infrastructure, the increasing innovation competitors abroad, the waning power of our institutions) let me say that we need someone other than him sucking up all the oxygen on the subject, because the issues are serious even if he himself long ago passed the point of ridiculousness. America’s declining competitiveness is, in the mainstream conversation right now, purely discussed in terms of our debt with little attention paid to the myriad of other structural issues that threaten prosperity. But since international political economy is in some ways a closed system with known players, debt isn’t the only thing to be talking about when discussing competitiveness. There is our competitors to think of.

I think it is impossible to overstate the significance that China’s growth rate is now independent if not yet immune to softness in America’s consumer market. Besides their increasing ability to be self-sufficient, it means that other developing or developed nations no longer have to purely concern themselves with the American market, but instead will continue to have a very strong alternative in China. Policy makers of the past twenty years have for all intents and purposes coasted on the notion that we need not worry about China’s rise, since China is dependent on American consumer markets so are equally concerned with our economic well-being. They are expected to accommodate our economic needs, just dispatch a Bush or Reagan to wrangle about tariffs or sell a few more treasuries and trade imbalances can just be papered over. Besides, the thinking goes, our innovative and creative capabilities are just too superior. Appalling hubris–disgusting really.

The counter-intuitive notion that America will still be able to dictate from the position of consumer and debtor (nota bene how American consumers are currently dictating terms to insurance companies and big banks) also reminds me a bit of Alexander Hamilton’s concept for a National Bank. Put most simply, in order to make the nation more stable allowing individual Americans to become financially invested in its success would in turn make it a success. I don’t think this concept will work when jumped up to the scale of nation-states; and since China has outgrown the need for any single market and has plenty of regional trading partners to play with there is not much incentive to continue playing nice. Meanwhile, it’s well reported how their influence as a commodities purchaser is spreading in central Asia, Africa, and South America. I think it’s being revealed that the central conceit of this analysis is counter-intuitive not because it is a brilliant, but simply because it’s wrong. What’s more, Chinese policy-makers are probably aware of this ballyhooed arrangement, and if I were they, would be set on preventing it.

The traditional second argument against overly fretting about China’s potential to supplant American economic dominance has been that its large population is working as a double-edged sword in terms of its economic development. While their increasingly affluent middle-class is expanding and dozens of massive new cities are cropping up employing millions of low skill laborers, that congestion costs, pollution, and a restless peasant class are bound to eventually undercut the stability of their undemocratic system, which would of course also lead to economic turmoil. There is no real reason I can tell that this is likely to occur because China is investing so heavily in education and infrastructure. Their country’s government is not so repressive that it fails to engender true loyalty in its population, or sufficient to scare off  every engineer and scientist who studies in America from returning to China. Quality of life in regions of China are already far surpassing regions in America. China also produces enough high tech workers in its universities that it has no trouble in attracting global companies for investment in R&D. Most developed countries were challenged by the same problems of class strife, congestion, and pollution  at various points in their history, and certainly not all succumbed to strife and self-annihilation. Even in those nations that developed fast and whose power and demographic-weight led irresistibly to militarism (let’s use poor Germany as an example), this did not spell the long term economic doom of the nation. For all its past faults, Germany still stands near the top of the economic heap. Why should we suppose that China will become militaristic or that it should fail to sustain growth, or that it will do anything other than what is doing right now (which is slowly surpassing the US in economic power)?

We cannot see the future, and in lieu of prophecy, we cannot just count on the past repeating itself. To me, this means we should not suppose that the economic freedoms will become political ones or that China’s economic development inequalities will lead to popular uprisings as in some historical Western European examples. We can, however, suppose what is possible from history. In a more cautious, humble tact, aware of the differences from historic precedent, we can recognize that congestion costs have been overcome through more efficient administration and technological advancements (if this was not true NYC would not be one of the most productive urban agglomerations on earth today), so it is possible if not likely to be overcome again. While we know that these problems of congestion and pollution threaten China’s health and therefore its competitiveness, the Chinese government is also aware and so again we cannot simply make our policy decisions based upon the supposition that they will fail. Counting on the incompetence or corruption of your competitor is a good path towards losing.

Making the necessary investments in infrastructure and education that will improve our efficiency as an economy, in order to match or surpass congestion challenged China (and other rapidly rising nations) is complicated by the fact that we must borrow from them in order to do so. IMF and World Bank, under American leadership, usually counseled austerity and restraint in similar circumstances we find ourselves now, with highly contested results. Certainly if there was ever a more pressing time to avoid waste and corruption, this would be it, but allowing our physical infrastructure to fade until America becomes a cheap place for foreign investment I feel is equivalent to pawning the family jewels. It may temporarily pay some bills but it won’t lead to expansion. Unfortunately, what we need is the politically impossible: large cuts in some areas and the raising of revenue from comfortable sectors to make equal, if not larger, expenditures in brand new programs that will cause American investors on the sidelines to rethink their positions and hop on board. Half-measures or half-met promises are only creating uncertainty that is prolonging pain. Our greying boomer demographics are also hurting us (time to loosen immigration policy–another really popular measure in an economic downturn).

The last question is, so what if China grows and surpasses America in economic power? Is this really a problem? You don’t think this is a zero-sum game to be won do you? To these questions I’m not sure I have an answer. While naturally suspicious of the Chinese government oligarchy, I am nothing but admiring for Chinese civilization and glad at the relief of poverty that have matched the economic rise. As an American, I only wish for our government and people to be committed to an economic competition with China. I think such competition will catalyze better performances in the realms of scientific excellence and provision of opportunities and services. My hope is that it will raise the quality of life for both countries, and for the globe as a whole. My wish is not for one nation to “be the best”, but to avoid a steep decline in American fortunes through a combination of arrogance and apathy.