The Metropolitan Revolution at CityAge Summit

Bruce Katz
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University

August 7, 2013

On June 18th 2013, Bruce Katz delivered a keynote address at CityAge – The Global Metropolis, a summit that brought together urban policy and city building leaders from across business, the public sector and academe.

The prepared remarks are as follows:

Let’s just start with the reality and it’s pretty harsh. We are in the middle of a pivotal decade in the United States—I would call it a shock decade. We need to grow 10.1 million jobs to make up the jobs we lost during the recession and keep pace with population dynamics.

We also need better jobs—and this is probably the most shocking statistic I will show you—81 million people in poverty or near poverty in 2000 jumps to 107 million in 2011, partly because of the recession and partly due to a collapse of manufacturing during the 2000s.

So the point is we need to restructure the economy, from one pre-recession that was fueled by consumption and debt, to one that is fueled by innovation, ideas and manufacturing, powered by low-carbon and advanced energy, driven by exports and global engagement, and one rich with opportunity that works for working families.

There is a challenge: The federal government, like Elvis, has left the building.

As Senator Joe Manchin said during the sequester debacle: “Something has gone terribly wrong when the biggest threat to the American economy is the American Congress.”

But there is a structural issue here as well. Over the next decade, as our demographics age, we are going to see a major shift in the federal government. Federal spending will shift toward entitlement spending and interest payments, driving down investment in housing, in R&D, in infrastructure.

Metropolitan areas will have to figure out how they will compensate for this, both with their own resources and with private and civic investments.

Hence the Metropolitan Revolution: our notion that cities and metropolitan leaders are stepping up and doing the hard work in the absence of the federal government—and frankly in the absence of many states—to grow more jobs and to make their communities more prosperous.

They are doing this because they are powerful. There are 388 metropolitan areas in the U.S.; the top 100 by population sit on just 1/8 of our land mass, but they house 2/3 of our population, create 3/4 of our GDP and on every statistic that matters—innovation, infrastructure, human capital—they account for 75, 80, 85 percent of the national total.

There is no American economy; all we are is a network of city and metropolitan economies and here’s what they’re doing:

For decades the United States built its economy on debt and consumption.

For cities this meant throwing public money at sports arenas and stealing businesses from their neighbors with tax breaks.

But what about after the game? You can’t build an economy on beer and hot dogs and what happens when the businesses you stole leave for a better deal somewhere else?

The Great Recession was a wake up call.

We forgot the fundamentals. Productive and innovative growth drives consumption, not the other way around.

Smart metro leaders are going back to basics: investing in infrastructure, making manufacturing a priority again, connecting small businesses with investors in new markets, helping workers get the skills they need.

If metros get the basics right, the beer and hot dogs will follow.

We focus in our book on several really interesting examples of game-changing initiatives.

We focus on Denver and Los Angeles using local resources to build out state-of-the-art transit.

We look at Northeast Ohio, that before we even started talking about the reshoring of production in the United States, began to support their small and medium-sized manufacturing firms.

We focus on New York the Applied Sciences district, a really major play to diversify an economy and set a platform for tech-orientated growth over many decades.

We focus on Portland, where you see a city and a metropolis essentially heeding the notion that we should double exports in the United States over the next five years and look for new growth abroad.

We look at Houston, where a network of 21st century settlement houses is integrating tens of thousands of new immigrants into the economic mainstream.

And we even look at Detroit, at Downtown and Midtown, where off a base of strong anchor institutions—Wayne State University, Henry Ford Health System, the College for Creative Studies, and Detroit Medical campus—and clusters of tech and creative industries, they are reviving the city from its core.

So lets focus on the Applied Sciences example. In the depths of the recession, Bloomberg and his team convened hundreds of corporate, university and civic leaders and said: We need to take this as a wake up call. We cannot continue to be so dependent on financial services. We need to focus on technology and engineering and innovation; not just to diversify the economy, but because so many industries in this city depend on tech workers and constant innovation.

$130 million of local resources leveraged $2 billion of private capital primarily from the Cornell-Technion move to Roosevelt Island. Over the next 30 years, $30 billion of private investment is expected to create 50,000 jobs and 1,000 new companies. This is the smart kind of productive, innovative growth model that we need post-recession.

Let’s hear from some of the leaders who made this happen:

Bob Steele: As you look at the economy in NYC, we have a lot of strengths, but its clear everywhere in industry that technology is disrupting business models. So while Applied Science can help start-ups, its also required for the key industries that are already here.

Kathy Wylde: These great institutions that have made a commitment to come to New York not in an ivory tower tradition, but to partner with industry, to partner with the corporate community to really design the next generation of whole industries.

Seth Pinksy: It really is a momentum that has fed upon itself. You’ve seen the reality on the ground change and as the reality on the ground changes I think the ambition of these universities in turn has continued to ratchet up. This is really a virtuous cycle that we hope continues for many, many years into the future.

So this is the new kind of economic development. This is where we see it happening, though frankly there are many stories around the country.

Now, this is what we’re saying to cities and metropolitan areas all across the United States.

The message is you’re on your own. Washington is mired in partisan gridlock today and will be for some period of time. They are not riding to the rescue, so here’s what folks have to do.

You’ve got to create you own network. You have to find your network. It’s not really just government; cities are unlike the federal or state government. They are networks of leaders.

It starts with elected leaders, like mayors and country officials, but what really matters to cities is to find the business groups and major employers, the university leaders, civic leaders and philanthropies.

This is what makes cities strong. Cities collaborate to compete. Cities have institutions that are powerful in their own right, but they’re even more powerful when they come together and work together and do grand things.

Next: Set your vision. There’s this notion that cities always want to be like other places, like the next Silicon Valley, but the fact is cities are very different from one another.

What Phoenix makes is different from what Pittsburgh makes. Find out what makes you special in the world—your assets, attributes, advantages.

As Dolly Parton said, “Find out who you are and do it on purpose.”

Finally, find your game-changer. These are the ones we have identified in the book, but frankly there are many more around the country and we expect this will continue to happen around the country as this notion that Washington has left the building really begins to be absorbed into our political and societal zeitgeist. 

Here’s where I think we’re headed:

From an early age we are taught how our nation is supposed to work:

The president, vice president, and members of Congress sit at the top. Governors and legislators run their states. The rest of us take our cues from them.

But while states and the federal government may be part of the constitution, our population and economic power is actually concentrated in our metropolitan areas.

It’s time to rethink power in America.

In this century, metros will lead and states and the federal government will follow.

In cities and metros public, private, and civic leaders are helping workers get the skills they need, investing in infrastructure, growing jobs through expanded trade and investment—the hard work necessary to renew our economy.

Our cities are powerful. They are networked. They are attuned to the new city age and what we need to do is basically step up and take back the country. 

We already are the engines of the economy, the centers of trade and investment, on the frontlines of demographic change, and cities are the vehicles for environmental sustainability and social progress.

So, there is a metropolitan revolution today and there will be more to come.