Thursday, October 11, 2012

The Wisconsin Idea meets Barcelona (Part II)

by Stephen Malpezzi, Professor and Lorin and Marjorie Tiefenthaler Distinguished Chair in Real Estate

In addition to the Barcelona Mayor’s official opening statement, the opening session included some very thoughtful remarks by Deputy Mayor Antoni Vives, who discussed some of the challenges faced by cities – increasing their productivity and that of their labor forces, facilitating the sharing of knowledge and ideas, and doing so in a sustainable fashion.
The World Bank’s Abha Joshi-Gahni introduced our Rethinking Cities book forthcoming at the end of this year.  She noted it was a time to think hard and fast, since the best UN forecasts suggest the world will add about 1.7 billion to its cities between now and 2030.
Among the many points reviewed by Harvard’s Ed Glaeser (see previous post), let me touch on one I particularly like to share with students, based on one of my favorite papers.  Fifty years ago, Professor Benjamin Chinitz wrote a classic study, Contrasts in Agglomeration: New York and Pittsburgh.  A short version [located here] was published in the American Economic Review.
This brief and deceptively simple paper suggests that one reason Pittsburgh went into a long slow decline, while New York had ups and downs but ultimately reinvented itself, was the difference in structures of their local economies.  A century ago, Pittsburgh was dominated by the steel industry, with large-scale plants and huge vertically integrated firms like U.S. Steel, a combine that included Andrew Carnegie’s 19th century mills.  (My father and other family members mined some of the coal that fueled these mills).  New York’s major industry was the textile industry, which was much more an agglomeration of many small and medium sized firms, that were much more entrepreneurial and networked.
After World War II both Pittsburgh’s steel industry and New York’s garment industry slowed, and ultimately declined.  The accompanying figure shows (in log form) the population of both Pittsburgh and New York (cities, not the metro areas!) back to the first few Censuses two centuries ago.  You’ll notice that New York was always larger than Pittsburgh; no surprise there.  For more or less the 19th century, both grew at very fast rates (the slope of a log chart is roughly the growth rate of the original data).  But notice that although New York’s population slowed its growth after the War, it still grew, with just a decade or two of some decline.  New York City’s 2010 population of about 8.2 million is its highest ever.  Pittsburgh, on the other hand, went into a steep decline; its city population peaked at about 670,000 in 1950, and it’s around 305,000 today.
Chinitz argued, and provided data to support, the notion that no small part of the contrast between the two cities is that the more diversified and entrepreneurial New York did a much better job of reinventing itself; the “company men” of U.S. Steel floundered.
I find Chinitz’s analysis very thought provoking though, as he himself admits, incomplete. Virtually all of the older eastern central cities had some period of declining population, or at least relative declines, simply due to the demand for larger homes and lower transport costs that fueled postwar suburbanization; New York City was and is so physically large that in a crude sense some of the outer boroughs are partly their own suburbs.
Nevertheless, I think this difference mattered, a lot, especially in the 60s through perhaps the 1990s.  But as has also been noticed, Pittsburgh has undergone a limited rebirth, led by two first-rate research universities (the University of Pittsburgh and Carnegie-Mellon University) and a university-connected thriving health care industry that serves the region and beyond.
None of this is to downplay the problems Pittsburgh continues to face; many of the health care jobs pay much less, in real terms, than the old steel jobs.  A lot of the city’s basic infrastructure is in dire need of repair and reconstruction, and the city’s fiscal position is precarious, due in no small part to sharp practices in their pension accounting.
But to end on a high note, if we ever needed to pick a “dream team” from any time or place to play one of the great Packers teams, either from recent decades or the 1960s; as a Pennsylvania native of a certain age, might I offer the services of the 1975 Pittsburgh Steelers?

No comments:

Post a Comment