Editor’s Note: Bruce Katz delivered the following speech before the Netherlands Environmental Assessment Agency Spatial Planning Conference on May 21, 2013.
Thank you Maarten for that introduction and for the invitation to speak at this conference. I think the topic of this gathering could not be more timely or relevant.
We are living in a disruptive period which is fundamentally altering the form and function of cities and metropolitan areas. Large, sweeping forces—new market dynamics, fiscal constraints, energy transitions, demographic tumult, technological advances, and climate change—are compelling nations and communities to reshape their economies and remake their places in the service of broader productive, innovative and sustainable goals.
In the United States in addition, something equally profound is happening: the roles and responsibilities of different levels of government, and the private and civic sectors as well, are being irreparably resorted.
I call this The Metropolitan Revolution, the title of a book which is conveniently coming out on June 17.
The thesis is simple and straightforward.
In the aftermath of the Great Recession, U.S. cities and metros are recognizing that with our federal government mired in partisan gridlock and most states adrift, they are essentially on their own to grapple with super-sized economic, social and environmental challenges. The cavalry is not coming. Washington is not riding to the rescue.
Fortunately, cities and metros—and the networks of leaders who govern them—mayors for sure but also business, civic, community, business, labor and environmental leaders—are responding with pragmatism, energy and ambition to, as we say in America, “get stuff done.”
These leaders are stepping up and doing the hard work to grow jobs and restructure the economy for the long haul. Lacking any choice, they are innovating on the big stuff: policies and practices that drive the wealth-generating, trade-able sectors of the economy. And they are doing this in a way that leverages their distinct assets and advantages in the global economy.
In Denver and Los Angeles, they are investing in transformative infrastructure, like state of the art transit to ensure mobility and the expansion ports and airports and broadband to enhance connectivity.
In Cleveland and Youngstown, they are making manufacturing a priority again and creating tight ecosystems of firms, business associations, labor, universities, and new intermediaries.
In Portland and Minneapolis St Paul, they are devising export plans, connecting small businesses to global markets and forging strong relationships with trading partners in mature and rising economies alike.
In Houston and Chicago, they are integrating immigrants and giving workers the skills they need.
In Detroit and Cambridge, they are creating vibrant innovation districts around anchor institutions like universities and medical campuses.
And in New York City, economic development has fundamentally shifted from subsidizing sports stadia to attracting world-class technology universities to provide a platform for generations of growth.
America is remaking itself from the bottom up.
This is a revolution fundamentally in tune with the zeitgeist of an Urban Age and Metropolitan Century: crowd sourced rather than close sourced, entrepreneurial rather than bureaucratic, networked rather than hierarchical.
This is a revolution totally aligned with the harsh reality that as national governments become overwhelmed by support for our aging population, cities and metropolitan areas need to step up and step in to compensate for big economy shaping and place making investments—infrastructure, innovation, education.
I look forward to discussing today the extent to which the American experience speaks to the Dutch and European experience.
But first things first: let me start by discussing some of the disruptive dynamics that are driving fundamental change in the United States to provide context for our shared challenges and opportunities.
And that means starting with the economy.
In the wake of the Great Recession, the U.S. needs to create more jobs—more than 10 million by one estimate—to recover those lost during the downturn and to keep pace with population growth and labor market dynamics.
Beyond pure job growth, we need better jobs to grow wages and incomes for lower and middle class workers and reverse the troubling decades-long rise in inequality. In 2000, 81 million Americans were either poor or near poor; by 2010 that number had growth to 107 million people.
Finally, beyond more and better jobs we need accessible jobs. We have 60 years of sprawl, distended metropolitan development, to counteract. A typical metropolitan resident, however, can access only 30 percent of the jobs in their metropolitan area via transit in 90 minutes.
There is no easy fix to achieve these goals.
But two things are clear:
- We need to purposefully restructure our economy from one focused inward and characterized by excessive consumption and debt to one globally engaged and driven by production and innovation; and
- We need to unleash the places—our cities and metropolitan areas—that are the engines of our economies, the centers of trade and investment and are the vanguard of population growth and demographic change.
At the heart lies the restructuring of the U.S. economy. A new growth model and economic vision is emerging from the rubble of the recession, a next economy where we export more and waste less, innovate in what matters, produce and deploy more of what we invent and build an economy that actually works for working families. In other words, we are moving towards a “next economy” that is fueled by innovation, powered by low carbon, driven by exports, rich with opportunity, and led by America’s largest metropolitan areas.
Let’s unpack that a little so we both understand the broader growth model and the special moment we find ourselves in.
Why innovation? Because resilient growth is spurred through the virtuous interplay of invention, commercialization, manufacturing, and skilled workers.
Over the past two decades, the discussion of innovation in the U.S. narrowed, positioning it as something only conducted in the ivory tower or among exceptional entrepreneurs like Steve Jobs. We forgot something early generations intuitively understood: the inextricable link and virtuous cycle between innovation and manufacturing.
While only about 9 percent of all U.S. jobs are in manufacturing, about 35 percent of all engineers work in manufacturing.
Although the manufacturing sector comprises only 11 percent of GDP, manufacturers account for 68 percent of the spending on R&D that is performed by companies in the United States and are responsible for 90 percent of all patents in the United States.
Going forward, we will innovate less if we do not produce more. We must make things again. And we must do so in a way that connects and leverages the innovation ecosystems—not just firms but also the supportive research and skilling institutions.
Why low carbon? Because we have the potential to ignite a global green revolution, as powerful in scale as the technological revolution underway since the inception of the Internet.
This is not a shift to a green economy, but a greening of the broader economy which will change everything: the energy we use, the infrastructure we build, the products we buy, even the homes we live and the office and retail buildings we frequent.
Why exports? Because we have crossed an economic Rubicon. Brazil, India, China—the BICs— are expected to account for about one fifth of the global gross domestic product in 2010, surpassing the United States for the first time. This will grow to more than 25 percent by 2015.
Growth in the BICs—and in their bursting cities and rapidly expanding middle class—means new fertile markets for Western goods and services, particularly sustainable products and services. So let’s visualize an economy where more firms in more sectors trade more goods and services seamlessly with the world. As a great trading nation, the Netherlands understands this imperative more than just about any country in the world.
Why opportunity rich? Because the next economy offers the best chance to grow jobs that pay decent wages and provide decent benefits. The prior economy drove income inequities in this nation; the next economy must drive economic inclusion, social mobility and social cohesion.
This is a macro model. But it comes to ground in the major cities and metropolitan areas that shape, determine and deliver the economy.
The real heart of the American economy lies in 100 metropolitan areas that after decades of growth take up only 12 percent of our land mass, but harbor two-thirds of our population, generate 75 percent of our gross domestic product and, on every single indicator that matters—innovation, human capital, infrastructure—punch above their weight at dizzying levels.
This is the power of concentration and agglomeration: the network effect of firms, universities, institutions fertilizing ideas, sharing workers, extending innovation, enhancing competitiveness and catalyzing growth.
This is the synergy between the enterprise and the ecosystem.
Bottom line: there is no national American economy or American society. Rather, the U.S. economy and society is a network of powerful metropolitan economies and metropolitan communities.
And these places, empowered by their economic strength and demographic dynamism, are positioning themselves at the cutting edge of reform, investment, and innovation.
In theory, a restructuring of the economy as profound as the one I have described would be led by national governments. They would set the platform for a new kind of growth through smart investments, smart rules and smart signals.
That is not happening in my country. Washington, for all intents and purposes, has left the building. So it is up to metros to not only be the engines of the economy but to be the vanguard of change.
Fortunately, they are stepping up.
Signs of the revolution can be witnessed all across our country. It can be found in grand, economy shaping gestures: an Applied Sciences District in NYC, an Infrastructure Trust in Chicago, large scale transit investments in Denver and Los Angeles, modernization of port and freight infrastructure in Miami and Jacksonville and Dallas.
But it can also be discovered in smart structural interventions: an intermediary in North East Ohio that helps manufacturing firms retool their factories for new demand; a Regional Export Council in Los Angeles that helps small businesses access global markets; and a network of Neighborhood Centers in Houston that gives new immigrants access to low cost banking, education, child care and health care.
Second point: The Metro Revolution has profound implications for the topic of this conference, spatial planning and the built environment.
Growing an innovation economy requires not only the generation of cutting edge ideas at advanced universities and research labs and companies but the creation of large scale, wired innovation districts that combine these institutions and their workers in close proximity and the mixed use facilities and mixed income housing that make up quality communities.
Growing a low carbon economy requires not only the invention of new technologies but the construction of renewable energy facilities, the infrastructure to store and transport such energy and service new sustainable products like electric vehicles and the construction and retrofit of buildings to radically reduce energy use.
Growing an export economy requires that metros not only help their small and medium size firms trade more abroad but also that they build and retool the next generation of advanced production facilities and the underlying infrastructure to move people, goods and ideas quickly and efficiently and sustainably by air, rail, sea and land.
Growing an opportunity economy requires metros not only to upgrade workers skills and education but to develop in spatially efficient ways—less low-density sprawl, more high-density nodes—so that workers can live closer to work and actually get to work in reasonable time via multiple modes.
Restructuring the economy requires us in essence to remake the form of cities and metros—for a productive rather than a consumption economy, for a sustainable rather than wasteful society.
I would like to focus on one emerging trend that I think has enormous resonance for the Netherlands: the rise of “innovation districts” in the cores of our cities and metropolitan areas.
Innovation Districts cluster and connect leading edge anchor institutions and cutting edge companies with smaller entrepreneurial firms, mixed-use housing, office and retail and 21st century amenities and transport.
This is a seismic shift in how we build our major cities and metros both in the United States and abroad.
In the 19th century and early 20th century—in Manchester, in Torino, in the Ruhr Valley, in our Industrial Midwest—we built industrial districts, characterized by a high concentration of industrial enterprises commonly engaging in similar or complimentary work.
In the mid and late 20th century—in Raleigh-Durham, in Silicon Valley, in suburban Washington, Boston, and Seattle—we built science and research parks and corporate campuses. Spatially isolated, accessible only by car, these parks put little emphasis on the quality of place or on integrating work, housing and recreation.
Something else is afoot today.
The downtowns and midtowns of cities like Cambridge and Detroit, Houston and Atlanta are seeing a growth in startups as well as residential and commercial growth around
the existing base of advanced research universities, medical complexes, research institutions and clusters of tech and creative firms.
Older industrial underutilized areas in Boston and Seattle are being re-imagined and remade, leveraging their enviable location near waterfronts and downtowns and along transit lines.
And even traditional exurban science parks like Research Triangle Park in Raleigh-Durham are scrambling to urbanize to keep pace with the preference of their workers for walkable communities and the preference of their firms to be near other firms and collaborative opportunities.
Innovation districts reflect a new vision of where innovative firms want to locate, creative and talented workers want to live and work and how ideas happen. They respect the growing penchant for companies in leading edge sectors to practice “open innovation” and collaborate with networks of firms, universities and supporting institutions. They provide the physical and social platform for entrepreneurial growth—incubator space, collaborative venues, social networking, product competitions, technical support and mentoring. They are both competitive places (respecting the dramatic impact that innovative, traded sectors have on broader metropolitan economies) and “cool” spaces (reflecting the growing preference of young workers for livability, walkability and authenticity in neighborhood design).
This is a virtuous cycle of worker preference and firm demand. Young talented individuals and firms in a growing number of sectors are simultaneously, for distinct but reinforcing reasons, embracing those very attributes of urbanism—what Saskia Sassen calls “cityness”—that were denigrated and often destroyed in the 20th century. Complexity. Density. Diversity of people and cultures. The convergence of the physical environment at multiple scales. The messy intersection of activities. A variance of distinctive designs. The layering of the old and the new. An integration rather than segregation of uses and activities. If this trend continues and deepens, we could be on the verge of a profound, structural shift in the physical landscape of work and living.
The early rise of Innovation Districts in the U.S. reflects not only a paradigmatic shift in development patterns but the manner in which they are delivered. In some cases, one entity is driving redevelopment: the local government, a real estate developer, the manager of the research park. There is a guiding hand, perhaps even a master plan. In other cases like Detroit, a passionate network of visionary and stubborn CEOs of companies, universities, hospitals, philanthropies and non-profit organizations is catalyzing the market. This is organic place-making as jigsaw puzzle, assembled through the simultaneous and iterative actions of dozens of players. In all cases, however, what is clear is that Innovation Districts are being driven from the ground up primarily through the actions of local actors. There is no federal or state program stamping out innovation districts across the country or multi-national corporations doing the same. Rather the federal and state governments are followers, serving rather than setting the vision of renewal.
So, questions for our discussion:
Where are Holland’s innovation zones?
How are they being created, nurtured, leveraged?
Can they be centers not just of sustainable growth, urban regeneration but also economic promise, even in areas like small batch manufacturing?
This leads to my final point: The Metropolitan Revolution is fundamentally altering the locus and focus of power and leadership in the U.S.
I focus on innovation districts as an example of the Metropolitan Revolution—profound economy shaping and place making that is happening from the bottom up.
Power and leadership is shifting downwards, away from national government and even state capitols to cities and metropolitan areas.
Our cities and metros are already the engines of our economy.
They are the centers of trade and investment.
They are on the front lines of demographic change and population growth.
And now they are the vanguard of national progress and prosperity.
When I am in the United States I tell every metropolis that it has what it takes to start its own revolution.
And here’s the roadmap for change I offer:
First, form a network of leaders and citizens who take ownership and responsibility for economic and social progress. In some places your mayor or county executive or governor can convene the network. But if they don’t or won’t then you can step in. Take a look around your metropolis. There are leaders everywhere—in companies and philanthropies; in universities and unions; in civic, environmental and community groups. Convene yourselves. Collaborate to compete. Do grand things together.
Second, declare your distinctive vision, one that is rooted in sound economic thinking and local data and evidence. This requires a little homework because the defining essence of metropolitan economies—your city’s special advantages, its unique offer—differs from place to place. What makes Phoenix competitive on the world stage is different than what propels Pittsburgh. And building on those differences rather than trying to be like everyone else is the key to 21C success. Dolly Parton put it best: “Find out who you are and do it on purpose.”
Third, find your game changer. Discover and deliver the intervention that alters the trajectory of your economy, changes your image or identity and re-makes the form and shape of your community. In New York City the game changer was attracting a world class university. In Los Angeles, it was financing and building a world-class transit system. In Cleveland it was repurposing their incomparable industrial heritage. What’s yours? What will put your city on the global map as a community with imagination and aspiration and the resolve to get stuff done? What will be your gift that keeps on giving?
I fundamentally believe this is how we renew America, from the bottom up.
I fundamentally believe this is how we remake our politics, by practicing pragmatism rather than partisanship and elevating collaboration over conflict.
Does this apply to the Netherlands and Europe?
I believe so.
Before you were a nation, you were a powerful collection of cities like Utrecht and Harleem and Amsterdam.
Before you were a network of nation-states, you were a network of trading cities.
You grew because your cities were strong and resilient and creative.
You powered the world because your cities were rich in leadership and resources.
I look at Europe and see the power of cities, not the hierarchy of bureaucracies or parliaments.
And so I end with this hopefully helpful provocation: Embrace the Metropolitan Revolution.
Enable, empower, nurture, leverage, catalyze, inspire it.
 Saskia Sassen, “Cityness in the Urban Age,” Urban Age Bulletin 2, Autumn 2005.
"There needs to be substantial follow along investment from the supply chain. This is a significant gamble. For [Wisconsin's state investment in Foxconn] to pay off, you need to build not just one company … you need to build a number of smaller and medium-sized companies."