What happens when "elite" cities do business with each other and the world, instead of with their American counterparts? Maybe we're finding out.
The New York Times recently published a think piece about how a small number of American global cities, including Seattle, have disconnected from their former inland connections, contributing to the sharp divide in fortunes between the two.
About San Francisco it states, “Douglas fir trees logged in the Pacific Northwest were turned into lumber schooners here. Steel from the East, brought in by railroad, became merchant vessels. During World War II, workers assembled military ships with parts from across the country: steam turbines from Schenectady, N.Y., and Lester, Pa.; gear winches from Tacoma, Wash.; radio equipment from Newark; compasses from Detroit; generators from Milwaukee.”
That’s mostly gone now. It offers this hypothesis from Temple Professor Ram Mudambi: “The more globally connected a city, the more prosperous it is. And as such cities gain global ties, they may be shedding local ones to the ‘hinterland’ communities that have lost their roles in the modern economy or lost their jobs to other countries.”
While this offers a tempting theory of Trumpism’s hatred of “elite” coastal cities (the President is a native New Yorker), it has some holes.
For example, the parts of Washington that aren’t completely dragged down by the legacy timber industry are doing fairly well precisely because of continued connections to the Puget Sound region (or, as with Vancouver, Wash., to Portland). For example, the state’s robust and prosperous agricultural sector moves its bounty through the ports, and Boeing operates a major flight-testing operation at Moses Lake. Spokane continues to be the rail gateway to the Northwest, albeit with far fewer workers. Metro Seattle’s prosperity subsidizes the red counties of Eastern Washington.
Railroads offer a useful window into change. They employed 1.5 million nationwide in 1950, on dozens of major railroads — most also offering passenger service. Today, the United States has only five mega-railroads, freight-only, with Amtrak a perpetual prisoner of inadequate federal funding (and all transportation, especially cars, is subsidized). It happened because railroads were heavily taxed and regulated while highways and airports were built by the government; technology allowed for smaller workforces and longer trains, and finally Wall Street encouraged massive mergers. All across America are former railroad division points left with, at best, a small museum.
Wall Street’s merger boyz were savaging the headquarters companies, banks and factories of the industrial Midwest, too, especially in the 1980s. Classic rural America has been declining since the 1920s.
All this long before Amazon came along.
To be sure, the cities that hit the trifecta of being technology centers, closely connected to the world and able to lure and employ highly educated workers have far outperformed others in recent years.
But the soup of success is complicated; it takes more than a dream of luring Amazon HQ2. For example, Tucson, Ariz., (which sent an uprooted saguaro cactus to Seattle to publicize its HQ2 neediness) is home to the University of Arizona, a major research university, but suffers a talent deficit. It can’t keep those UA grads, thus suffering a lower rate of adults with bachelor’s degrees or higher than the national average, much less than in Seattle territory.
Paul Krugman, the Nobel laureate economist and New York Times columnist, wrote, “for generations we have lived in an economy in which smaller cities have nothing going for them except historical luck, which eventually tends to run out.”
Those of us from the West know about ghost towns. But it’s different in a nation of 323 million people. Add up enough zombie, if not ghost, towns, and you have major social and political problems. Plenty more count an Amazon warehouse as a major economic-development win — these are hardly positioning themselves for future leadership.
Would better education and federal investments in advanced infrastructure — and science to launch new industries — help? Sure. But that’s not happening anytime soon. And coal mining is not making a comeback, either.
Today’s Econ Haiku:
A drone columnist?
Can’t land on a carrier
But it can drone on