A Metro 'Revolution': Cities, Suburbs Do What Washington Can't

Transcript

TERRY GROSS, HOST:

This is FRESH AIR. I'm Terry Gross. When the city of Detroit filed for federal bankruptcy protection last week, news accounts were filled with troubling stories of urban decay in the city, vast areas of vacant lots and abandoned houses, shuttered parks, non-working street lights and police response times close to an hour. But our guest Bruce Katz writes that in many American cities, there are promising signs of renewal.

Katz is a vice president of the Brookings Institution in Washington, and he's written a book with Brookings fellow Jennifer Bradley called "The Metropolitan Revolution: How Cities and Metros are Fixing Our Broken Politics and Fragile Economy." The book argues that metro areas, cities and suburbs together, and powerful economic engines with considerable political power, and that local leaders are more likely to take on the nation's big challenges than politicians in Washington.

Bruce Katz is a former Senate staffer, and was chief of staff for Secretary of Housing and Urban Development Henry Cisneros in the Clinton administration. He spoke with FRESH AIR contributor Dave Davies.

DAVE DAVIES, HOST:

Well, Bruce Katz, welcome to FRESH AIR. We've had cities and suburbs for decades. What exactly is the metropolitan revolution?

BRUCE KATZ: Well, there's no secret that the United States faces some major competitive and social challenges in the aftermath of the recession, and there's no secret that the federal government, for all intents and purposes, has left the building. It's mired in partisan rancor.

So what the metropolitan revolution is, cities and metropolitan areas and the networks of leaders who co-govern them, they're stepping up, and they're doing the hard work to grow jobs and make their economies more prosperous. They're investing in infrastructure. They're making manufacturing a priority again. They're equipping workers with the skills they need to compete in the global economy.

Our sense, Jennifer Bradley and myself, is that for the next decade, change is going to happen where people live. This is a wave of innovation, and we think it can really sweep across the country.

DAVIES: Now, you're not talking just about government leaders, like mayors and county commissioners, right?

KATZ: No. When I think about cities and metropolitan areas, I think about networks of leaders, mayors for sure, county elected officials for sure, but also the heads of universities, major employers, business associations, labor unions, civic and community and environmental organizations. The federal government is a government. States are governments. But cities and metropolitan areas are really networks of leaders and institutions. They're very powerful on their own, but when they come together and they collaborate to compete, they can do grand things together.

DAVIES: And philanthropic foundations are a piece of the puzzle.

KATZ: Philanthropic foundations are a major piece of the puzzle. In many places, they really provide the glue that pulls these different groups together. We have a great story in the book about northeast Ohio, a group of philanthropic organizations coming together, helping to finance and support and steward a set of intermediaries and institutions that are really focusing on helping small and medium-sized manufacturers get back into the production game.

For a whole bunch of reasons, the U.S. has the potential to compete in manufacturing again, and it's philanthropy in northeast Ohio that's been leading this.

DAVIES: If you look at what cities have been doing over the past 20 years, a lot of it, it seems to me a lot of the economic development initiatives have focused on, you know, tourism and hospitality, new convention centers, loans to start new hotels, stadiums, performing arts venues. Good ideas?

KATZ: Well, I think over the last 25 years, cities and metropolitan areas got caught up in the national growth model, which frankly, mostly focused on making the United States a consumer economy, a consumption economy. So in many cities and metropolitan areas, economic development essentially was what I would call Starbucks and stadia and stealing businesses, right.

And that, in many places, has made cities and metropolitan areas more quality places to live. But in the post-recession environment, given that the recession was a wake-up call, what I see cities and metropolitan areas doing now is beginning to focus on the fundamentals. What do you make? What services do you provide? What do you trade to either other parts of the United States, to other parts of the world? And who do you trade with? And do you have the skilled workers and the collaboration between universities and companies and entrepreneurs and labor unions so that you can really compete and prosper, but also build on your distinctive assets and advantages?

So there is a post-recession growth model that cities and metropolitan areas are embracing in the United States that I think will set a platform for much more productive, innovative, sustainable and inclusive growth over the next 25 to 30 years.

DAVIES: Give us an example of some transformative change in, you know, one of these really challenged areas, say in the East or the Industrial Midwest, where, you know, manufacturing jobs once, you know, drove the economy and have largely disappeared.

KATZ: So let's travel to northeast Ohio - not just Cleveland, but also the Cleveland metropolis, plus Youngstown, plus Canton plus Akron - very challenged because of the de-industrialization over several decades. The major innovation that happened was that philanthropy and business came together and said: We have unbelievable assets here, small manufacturing firms that are really good at what they do in the manufacture of quality products.

We need to help them in this global environment sharpen their business plans, attract private capital, retool their facilities, retrain their workers so they can produce new products for new markets. And that's exactly what's happened in the past 10 years: a fund for economic future, a set of intermediaries that work really, really closely with these small and medium-sized firms. In less than 10 years, we've seen the growth of about 10,500 jobs, over $300 million in payroll, $2 billion in private capital.

This is the kind of smart, post-recession economic development we need to participate in. And most importantly, because of the shale gas revolution, because of other global dynamics, rising wages in China, we can make things again in the United States. We can participate in an advanced industry economy, rather than just an economy of consumption.

DAVIES: You know, the typical kind of expansion of industry that we're used to seeing is a state or a region sees a chance to lure a manufacturer - you know, Toyota or Nissan. And so it becomes a competition of offering tax breaks and other economic incentives: We'll give you the best deal, and you come. It ends up being expensive for taxpayers. How is what happened in northeast Ohio different?

KATZ: Because I think what happened in northeast Ohio was they took a look at themselves, and they said: What do we have here? What are we really good at? Well, they have advanced research institutions, like the Cleveland Clinic, like universities in Akron and elsewhere that basically are very smart about either health care or about sectors of manufacturing, like polymers that they were involved in in prior generations.

They then have networks of small and medium-sized manufacturing firms that, again, have skilled workers manufacturing quality products. They're good at what they do. And then we have investors, other institutions that are supportive of these firms, because they can provide the skilled workers these firms need as they expand. Think community college. Think even high schools - with what we used to call vocational education - geared to the needs of firms.

So northeast Ohio did an assessment of themselves, and said: What are - what are our distinctive assets and advantages? Before we go outside of our metropolis of our region, why don't we try to buttress and leverage the assets and advantages we already have, and then perhaps maybe a German firm or a Japanese firm or a Korean firm will look to locate here, because they want to be part of this ecosystem, this interconnected web, intricate web of firms and entrepreneurs and research universities and skilled workers.

That's how the economy works. You know, if you're really focusing on just stealing businesses and throwing a lot of subsidy at them, well, then five years later, they may get a better deal. Why not build from your base, build from your foundation, build from the infrastructure you already have?

DAVIES: We're speaking with Bruce Katz. He is a vice president at the Brookings Institution. He is the author, with Jennifer Bradley, of the new book "The Metropolitan Revolution." We'll talk more after a quick break. This is FRESH AIR.

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DAVIES: This is FRESH AIR, and if you're just joining us, our guest is Bruce Katz. He is a vice president at the Brookings Institution. He has a new book with Jennifer Bradley called "The Metropolitan Revolution."

You've offered us some, you know, encouraging developments in an industrial area, but Detroit made national news last week when it filed for bankruptcy. Of course, that's being challenged in court, but the situation painted in the news reports is pretty dire, I mean, both in terms of the city's financial difficulties and in the quality of life: closed parks, street lights that don't work, neighborhoods that are blighted.

Your book actually cites Detroit as one place where some encouraging things are happening. What's your take on what's in store for Detroit?

KATZ: There's no doubt that the city of Detroit faces super-sized challenges, because the city has shrunk from two million people in the 1950s to less than 700,000 today. There are tens of thousands of vacant properties. There are serious crime issues, school and educational performance. But we should not let those challenges overwhelm or crowd out what is some real economic potential in the core of the city.

So what our book talks about is a relatively small portion of the city, about 3 percent of the land mass, which has close to 40 percent of the jobs. I'm talking about the downtown of the city, good bones, solid bones, old historic buildings near the riverfront, and then up the Woodward Corridor to Midtown,Mhe Woodward Corrdirword

What we're seeing in Detroit is a network of business and philanthropic and civic leaders really building off these - this good platform, this solid foundation, grow businesses, attract residents. There's going to be a new transit line up the old Woodward Corridor, mostly financed with local resources.

We think that Detroit, through this reset, can revive from the core. And over the next several years and on into the next decade, we can see the growth of tens of thousands of jobs and, more importantly, a revival of the tax base for the broader city. So we don't want to be Pollyannaish about Detroit - hard, tough challenges, the toughest in the country, but we shouldn't overlook the assets and advantages that city has.

DAVIES: You know, when you look at Detroit, I mean, you see this terrible imbalance that's, you know, decades old now of a declining population and an increasingly impoverished city, which has a weaker tax base and more demands on - you know, for services for those folks. And that's just put it in a terrible position.

And when I look at some of the developments that you describe in Detroit, as encouraging as they may be, my sense is that they are on a relatively limited scale in comparison to the size of the city, and also don't really involve manufacturing jobs. There seem to be essentially service jobs. I mean, is that enough of a catalyst?

KATZ: Well, there's some small-batch manufacturing happening. It's actually happening near the College for Creative Studies, because that's an advanced industrial design college, and that's really a part of the future of manufacturing. But you're right. I mean, what we're talking about at this point is still small scale, relative to the challenge.

But we've seen an enormous amount of market momentum in a relatively short period of time, large private investment coming from Quicken Loans, Dan Gilbert, other companies that are relocating into the downtown, and then sort of a pooled resources of philanthropies investing really in this core of the city.

So the question is: What's the possibility of this core of Detroit? How many jobs can be created? And then how do we match up residents in the city with very practical, customized, focused skills programs so they can work in the next generation of health care jobs, life sciences jobs, biotech, small-batch manufacturing, even some of the technical jobs that are developing in the core?

DAVIES: You know, one of the premises of the book is that metropolitan areas are powerful in the city and its suburban areas. Its surrounding areas, you know, find common cause and innovate together. What's Detroit's relationship like with its surrounding communities?

KATZ: Oh, I think this is part of the challenge in Southeast Michigan. I don't think you've seen the kind of city-suburban collaboratives - though recently we see it around transport, transportation and light rail. You haven't really seen this in Southeast Michigan to the extent you've seen it in Chicago, to the extent you've seen it in Minneapolis-St. Paul, or in Denver.

I think, going forward, given global dynamics, the rise of China, the rise of India, the rise of Brazil, American cities and their suburbs are going to need to collaborate to compete. And that really means reaching across these jurisdictional and sectoral and - to some extent - partisan divides in the country. But there are examples out there that Detroit can emulate.

And for those people living in suburban Detroit, or for those businesses located in suburban Detroit, they need to recognize that the world, when they think about Southeast Michigan, thinks about the fiscal distress in the core city and the other challenges facing the core city. And so nothing would benefit the broader metropolis more than the revival of the core of the city, and then ultimately the broader municipality.

So, cities and suburbs are completely intertwined, interdependent. They are one organic marketplace. And what we now need to do is get beyond administrative fragmentation and move towards this broader collaboration, which is happening in the country, and which the book shows.

DAVIES: You've said there are some good bones in the city, that's to say you know, interesting buildings and an infrastructure, and some initial efforts at creating and expanding jobs, which show some promise. But the bankruptcy highlights this tremendous burden of legacy costs. I mean, the city, it's hard to see how it could dig out of its financial hole, and there will be terrible questions to confront.

Do city pensioners take a loss? Do bond investors take a loss? And as this is worked out in political fights and legal fights, it'll be difficult, and it'll be wrenching, and it's hard to see how you get a solution which puts the city on a stable footing and doesn't tear it apart. What do you see happening in Detroit in the next year or two?

KATZ: Well, the next year or two is going to be, obviously, a lot of the legal wrangling that you talk about. I think the big question is whether we can see the market momentum in some portions of the city continue. And let's just go back several decades, right. Let's go back to the New York City situation in the '70s, or go back to the Washington, D.C. situation in the 1990s.

The promise of these kind of interventions is that it sets a new platform for sustainable growth that really benefits a broader segment of your residents. This is a reset moment now for Detroit. And what's positive in this, it's happening in a moment when the assets and the advantages of cities - the cores of cities - are being completely revalued by the marketplace, by companies that want to be in these open innovation areas and districts, as opposed to science parks 30, 40 miles away from the core, and for the new demographics, people who want to go to work, have transportation options, walk, bike, take transit and then leave their office and find themselves in a functioning community, right.

Something profound is happening in the broader dynamics that are revaluing cities and the urban cores of suburban communities. So if this was happening 30 years ago, we might be having a different conversation, frankly, right? But I think it's happening at a time where, as we go through the painful restructuring - and the complicated restructuring, given the legal battles ahead - we shouldn't lose sight of the role and function of cities in today's innovative economy, and particularly the role and function of the cores of cities, which really, I think, is the foundation on which a good portion of our economy will be built in this country.

DAVIES: Do you have an opinion about how the bills get paid? I mean, is it that bondholders don't get everything they're owed, and city pensions get cut, or federal or state tax dollars come in? Somehow, the books have to balance. I mean, do you have a sense of how that should go?

KATZ: Well, if you look at the prior interventions that happened in New York City and in Washington, D.C., there had to be more money put on the table, right. In both of those cases, actually, it was the federal government who came to the rescue, so to speak. I don't think that's happening anytime soon.

But I think we are at the beginning of a fairly long and elaborate story, here. I don't think we're at the end. And so, you know, history would teach us that there needs to be access to other resources, and now we have to really sort out which level, whether it's the state or the national government.

Obviously, private and civic investment will continue in those portions of the city that really have market potential and function, but these broader, hard, hard issues, you know, you've got to make the math work.

GROSS: Bruce Katz will continue his interview with FRESH AIR contributor Dave Davies in the second half of the show. Katz is the coauthor of "The Metropolitan Revolution: How Cities and Metros are Fixing Our Broken Politics and Fragile Economy." I'm Terry Gross, and this is FRESH AIR.

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GROSS: Let's get back to our interview with Bruce Katz, coauthor of "The Metropolitan Revolution: How Cities and Metros are Fixing Our Broken Politics and Fragile Economy." The book argues that metro areas - cities and suburbs together - are powerful economic engines with considerable political power, and that local leaders are more likely to take on the nation's big challenges than politicians in Washington. Katz is a vice president of the Brookings Institution. He spoke to FRESH AIR contributor Dave Davies.

DAVIES: You know, you talk about metro areas being kind of the economic units that we function on and an increasing power. But in our constitutional system, so many legal and institutional tools rest with state governments. I mean, they - often a city or region can't change its tax policy without permission from the state capital. And in state capitals, you see a lot of the same, you know, bitter partisanship that afflicts Washington. What do we do about that?

KATZ: Well, we have inherited a federal republic where we really have two constitutional sovereigns: the federal government and our states. The reality of our country, however, is that cities in metropolitan areas are the engines of the economy and the centers of trade and investment. So there are 388 metropolitan areas in the United States. The top hundred only sit on about an eighth of our land mass. They're two-thirds of our population. They're three quarters of our GDP.

But on everything that matters to modern economies - the education and skills of your workforce, how innovative you are in patents and advanced industry, the strength of your infrastructure to move goods and people and energy and ideas. The top hundred metros are 75, 80, 85, 90 percent of the national share and 47 of the 50 states have the majority of their GDP generated by their metropolitan areas. So I think we need to graduate to a point where we understand that the role of the federal and state governments are to be in service of metropolitan progress and prosperity. What that means on one hand is to do what these cities and metros can't do. On the other hand, it means more flexibility, less prescriptive rules, less technocratic rules. Unleash the power of your cities and metropolitan areas. And if you're a governor or a state legislature or a congressman or a senator, you will be seen frankly, as truly representing your community.

DAVIES: So you think we can, people can change their mentality in these offices, even though, you know, they run in partisan elections and, you know, partisan priorities often rule in caucuses and party organizations.

KATZ: Well, when I go to cities in metropolitan areas - as opposed to states, state legislatures or Congress, obviously. I have to tell you, it's pretty hard for me to figure out who is a Democrat and who is a Republican and who's a liberal and a conservative. What I find...

DAVIES: I agree.

KATZ: Yeah...

DAVIES: I hate to interrupt, Bruce, but, you know, that's been exactly my experience covering local government. But what I find then is that local governments need changes at the state level. They need authorization for tax changes, etcetera. And at the state level, they are hard-edged and ideological and partisan. The local officials who think more broadly, who don't think in a partisan way just in a wall.

KATZ: But here's I think the political math, right, because these metros are so powerful economically. If they come together, cities, suburban, exurban and rural, really come together around particular investments and priorities, then you can overcome the partisan divide. We have a story in our book about Los Angeles making a very substantial investment off their sales tax to build state-of-the-art transit over a 40-year period. What happened in the depths of the recession is they basically put forward an idea, we should accelerate construction into 10 years so we can create 160,000 jobs and help people get back to work. They went into dozens of metropolitan areas around the country - Republicans and Democrats, liberals and conservatives that said, you know, if we can get the federal government to give us some innovative finance, we all would be better off. That coalition came together, came to Washington and they passed infrastructure finance reform last year as part of a transportation bill.

The partisan divide can be overcome by pragmatism, by bipartisan effort at the local and metropolitan level by sending a signal, we want our representative members to be parochial, to actually represent us and get beyond this ideological nonsense, essentially, that permeates these higher level governments. I think at the end of the day, city and metropolitan innovation will be the cure to the partisan poison we have at the federal and state level.

DAVIES: Well, Bruce Katz, thanks so much for speaking with us.

KATZ: Well, thanks for having me.

GROSS: Bruce Katz is the coauthor of "The Metropolitan Revolution." You can read an excerpt on our website, fresh.npr.org.

Coming up, a bioethicist who is an advocate of the right to die, who has had to wrestle with the issue in her family.

This is FRESH AIR. Transcript provided by NPR, Copyright NPR.