The European metropolitan revolution

This speech was delivered at the “Cities of People-Perspectives on Living, Housing and Participation in European Metropolises” event at HafenCity University in Hamburg, Germany, on May 3, 2016.

It is a pleasure to be back in Hamburg.

I want to thank Wolfgang Schmidt for this invitation and for his leadership in this city and all issues urban.

As Wolfgang noted, about three years ago I co-authored a book with Jennifer Bradley, a close friend and colleague at the Brookings Institution. The book was called “The Metropolitan Revolution“.

The thesis was simple and straightforward.

In the aftermath of the Great Recession, the leaders of U.S. cities and metros recognize 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.

These leaders further recognize that the cavalry won’t come. The aging of our societies are compelling national governments to shift enormous resources to care for our elderly populations. The federal government in the United States, for example, dedicates three fourths of its budget to safety net programs and the military–it is essentially a health insurance company with an army.

As a consequence, adequate national funding for everything from roads and bridges to research and schools is no longer predictable or stable. Cities and metro areas are becoming increasingly responsible for investing in the nation’s future through innovation and infrastructure, schools and skills, and quality place

Now these dynamics could lead to deep societal paralysis.

Instead they are precipitating a burst of positive problem solving and innovative action.

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. 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 using local resources to invest in transformative infrastructure like state of the art transit.

In Cleveland and Louisville, 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 Philadelphia, 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.

Now some of these transformations are being led by elected leaders, particularly mayors, who are doing what leaders should do: set a vision, build coalitions, take risks.

That’s what Mayor Bloomberg did in New York City when he attracted Cornell and Technion Universities to Roosevelt Island.

And that’s what Mayor Villagaroisa did in Los Angeles when he successfully pushed through a sales tax to fund transit.

Yet most of our stories in “The Metropolitan Revolution” were not about mayors but about private, civic, university, and community leaders.

In Houston, Angela Blanchard and Neighborhood Centers Inc. have become a global model for integrating and assimilating large numbers of immigrants into American society.

In Detroit, Rip Rapson and the Kresge Foundation have helped catalyze the rebirth of the Greater Downtown, spurring new hope for a city that only recently emerged from bankruptcy.

In Philadelphia, John Fry and Drexel University are leading the remarkable regeneration around 30th Street Station and beyond.

This is a revolution fundamentally in tune with the zeitgeist of an Urban Age: crowd-sourced rather than close-sourced, entrepreneurial rather than bureaucratic, networked rather than hierarchical.

Now I see a metropolitan revolution underway in Europe.

The precipitating factors for the European revolution bear some similarities to the U.S.:

Europe like the U.S. is seeing the enormous fiscal implications of an aging society at the national level, which pushes responsibility for investing in the future, particularly around infrastructure and children, down to the local level.

Europe like the U.S. is also seeing challenges like the refugee crisis which, frankly, are so large in size and so complex and multi-dimensional that they can only be successfully addressed at the local level through integrated and cross-sector solutions.

I think that European cities, like U.S. cities, are stepping up and innovating in remarkable ways.

You are creating new patterns of innovation, new norms of governance, and new forms of finance that will be applied, adapted, and tailored across the world.

Let me offer just a few examples.

Barcelona, Spain and Sheffield, England are at the cutting edge of a new spatial geography of innovation that revalues proximity and connectivity and enhances the competitive strengths of distinctive regional ecosystems.

Barcelona has sparked a global trend by creating and naming an innovation district—the 22@ district—that strengthens the links between anchor and cultural institutions, media and tech companies, entrepreneurs, business incubators, residential housing and vibrant, quality places. The 22@ district has depended on major infrastructure improvements to improve the streetscape of this burgeoning hub of creativity.

Sheffield, for its part, has created a globally significant center of applied research, corporate/university collaboration and apprenticeship training. The University of Sheffield has created an Advanced Manufacturing Park (AMP) on a former coal mine dedicated to providing dozens of advanced manufacturing companies (including global giants like Boeing and Rolls Royce) access to industrial expertise, sophisticated machines, and equipment and, ultimately, solutions to complex technological challenges.

Manchester, England has become the test case for greater devolution in Britain, one of the most centralized states in the world. In March 2012, the Greater Manchester Combined Authority successfully negotiated a “city deal” with Whitehall that allowed for Manchester to earn back a portion of its tax revenue to create a revolving infrastructure fund, establish an investment framework to guide economic development, build a city apprenticeship and skills hub, and form a housing investment fund, among other initiatives. A subsequent agreement in November 2014 devolved greater policy making and funding powers.

Hamburg and Copenhagen are forming new kinds of special-purpose publicly owned but privately managed institutions to unlock the value of underutilized public assets and finance a wide range of transformative projects.

Hamburg is effectively expanding its city center by 40 percent through the redevelopment of HafenCity, a site formerly used for shipping and industrial purposes. Significantly, the redevelopment is being led by HafenCity Hamburg GmbH, a publicly owned urban development corporation that has successfully guided and financed the transformation through the smart combination of public interests and private capacity.

In Copenhagen, the city has used a publicly company, BY&HAVN to finance the bulk of its transit system and catalyze waterfront redevelopment through strategic zoning decisions, land transfers and partnerships with the private sector.

Now these are examples of individual cities taking ownership of their future.

But cities in Denmark and Sweden are going one step further and acting as collectives of cities to maximize their political power (negotiating with federal government on budgets in Denmark) as well as leverage their market power (establishing a separate municipal financing authority—Kommuninvest—in Sweden). Kommuninvest, notably, has become a leader in the Green Bond Financing movement.

As Dr. Luise Noring of Copenhagen Business School has taught me, the European metropolitan revolution is more publicly led than the U.S. Revolution—building on not only the powers devolved to cities in Europe but the greater capacity and competence in general of the public sector.

But the core thesis remains.

Cities are networks, not governments, and can draw on expertise across disciplines and sectors.

Cities, close to the ground, are natural problem solvers in ways that defy and overcome 20th century bureaucratic fragmentation and specialization.

And city leaders are pragmatic to the core—they run businesses, provide services, educate children, train workers, build homes, and develop community. At a time of increasing polarization—they put place over party, collaboration over conflict, and evidence over dogma.

I fully believe that cities and their broader metropolitan areas are the level of society that will address many of the economic, social, and environmental challenges facing the world today.

I further believe that cities can often do so in a way that is more efficient, more effective, and more democratic than national governments.

I finally believe that city power and problem solving will define this century to the same extent as national power and problem solving defined the last one.

My message to European cities: Embrace the metropolitan revolution. It has the potential not only to transform your communities but to invent new innovative practices and institutions that will transform cities across the world.

Editor’s Note: The Kresge Foundation and Drexel University are donors to the Brookings Institution. The findings, interpretations and conclusions posted in this piece are solely those of the authors and not determined by any donation.