Continuing to see Illinois highways as growth and job generators

The selection of a new executive director of the Illinois Tollway suggests the agency wants to continue to push growth:

Greg Bedalov, president and CEO of Choose DuPage, an economic development organization, will take over as executive director at the agency, officials said…

Rauner’s pick for Chairman Bob Schillerstrom told the Daily Herald that economic growth and job creation go hand-in-hand with the tollway.

It’s expected Bedalov will reflect that philosophy as the tollway heads into the third year of a massive $12 billion road building program…

In a 2012 op-ed piece for the Daily Herald, Bedalov talked about communities collaborating in the region instead of competing to create jobs.

“It is critical that local and county economic development agencies work collaboratively with state and federal agencies to uncover additional opportunities for economic wins,” he wrote.

This sounds like a growth machine approach to building tollways: providing increased capacity for vehicles will lead to new economic opportunities for businesses who want access to such transportation options, workers who can reach jobs more quickly, and developers who can develop and build nearby. The argument here is that this can be good for the entire region as the benefits of improved or new tollways would extend across communities.

Quickly, some possible objections:

1. It is really difficult to build new tollways in a region that is already largely developed. It is costly (acquiring land, environmental studies, increasing construction costs) and takes a lot of time.

2. Adding highway capacity just increases traffic: people see more available roads and drive on them. Why not put some of this transportation money into mass-transit and denser developments that could benefit from an economy of scale?

3. Who really benefits from such construction? The firms getting the contracts and the developers? How exactly do the benefits trickle down to the average resident?

Obama bypasses Congress and talks to mayors about economic policies

President Obama talked to big city mayors yesterday in efforts to work outside of Congress:

White House aides say the U.S. Conference of Mayors meeting was an ideal opportunity to press the president’s agenda with a more sympathetic audience. White House spokesman Eric Schultz told reporters before the speech that it was a chance to move “forward on priorities helping the middle class despite inaction in Congress.”

The president urged mayors to raise the minimum wage, guarantee paid sick leave, and expand childcare and pre-kindergarten education — all issues with little traction among congressional Republicans…

Since Obama called for an increase to the minimum wage in 2013, 17 states and the District of Columbia have passed raises. Large retailers, including Wal-Mart Stores Inc, IKEA, and Gap Inc. have also pledged to increase the lowest hourly wage for their employees.

This could be viewed as a political ploy to shame Congress or subvert the typical process by which Washington works. In contrast, Obama’s strategy works with one of the standard lines about big-city mayors: they can’t be as partisan as legislators or those in the executive branch because they have to attend to more practical details on a regular basis. In other words, they have to make sure their cities work and can’t afford to get bogged down in ideological standoffs. (Interestingly, I heard this again recently at a conference in Chicago and there was some open laughter.)

That said, economic issues would certainly matter to many mayors as they need jobs for citizens as well as the economic benefits that come with jobs and economic growth (increased population, more tax revenues, increased prestige, etc.). Of course, there is disagreement about how to best do this. Chicago mayor Rahm Emanuel presents some of these contrasts. Is he pro-Walmart? He certainly seems to like attracting big corporations and tech start-ups. Is he truly interested in economic development in poorer neighborhoods? How much influence do wealthy businesspeople have in Chicago? He was behind raising the minimum wage in Chicago. Can he be considered non-partisan?

Whether Congress acts or not, cities and metropolitan regions are large economic engines and their leaders do have some latitude in policies that could encourage or discourage economic growth.

Naperville ranked as the 186th most diverse city out of 230 biggest cities

Naperville may be the safest big city but it doesn’t have much diversity according to new rankings from WalletHub:

As the culmination to our series on diversity studies, this final installment combines our previous reports on economic class diversity, ethno-racial and linguistic diversity, and diversified economies with household diversity to paint the clearest image of America’s cities today. Recognizing that economic opportunity follows diversity, where in the U.S. would you rather live? Better yet, where would your unique background be most valuable to society?

To help you answer those questions, WalletHub once again examined the demographic profiles of the 230 most populated U.S. cities. In order to construct our final rankings, we tallied each city’s scores in the four major diversity categories we analyzed in this series.

Los Angeles leads the way at #1 and Chicago is at #32 overall. For the record, Naperville ranks 125 in income diversity, 336 in educational diversity, 265 in racial & ethnic diversity, 170 in language diversity, 149 in region of birth, and 183 in industry diversity. Naperville is also listed as one of the five lowest in marital status diversity as well as in household type diversity.

The commentary on the rankings suggests that economic opportunity is linked to higher levels of diversity. This may be the case but it doesn’t necessarily mean that the economic opportunities are equitably spread across cities. Perhaps having opportunities nearby is better than no opportunities at all – though I’m reminded of some of the earliest American sociological neighborhood studies like The Gold Coast and the Slum that noted how closely the rich and poor could live near each other with no interaction. Even if Naperville is not diverse in many of these areas, that doesn’t mean that it can’t be wealthier or that it won’t be viewed as a desirable place to live (ask Money or other magazines). Indeed, some might see the lack of diversity as highly desirable for both defensible (wanting a higher quality of life – isn’t that what the suburbs are supposed to be about?) and indefensible (trying to avoid members of a different racial/ethnic groups or certain social classes).

Building the world’s next 15.5 million miles of roads accounting for environmental concerns

Here is a quick look at the massive road-building in the world’s future:

According to a 2013 study by the International Energy Agency (pdf), humans are going to pave 15.5 million miles of road by 2050. Ninety percent of this is expected to take place in developing countries.

The researchers approached the problem initially by making two base maps. The first rated the world’s environmental value pixel by pixel taking into consideration things like biodiversity and proximity to protected areas. Using similar estimations they made another map that showed economic value of future roads based on the agricultural value of the lands they connected. (The maps to the left show each value in isolation.) Then, the researchers analyzed the overlap between the two layers.

The result is a color-coded map of ecological and economic value. Greener pixels indicate more environmental value, while red means there’s money in the banana stand. Darker pixels represent potential areas of conflict, where both values are high.

road-world

Of course, the assumption that environmental concerns should be taken into account when building roads is an interesting one. A good argument can be made that quickly building roads and ignoring environmental concerns will eventually lead to other increased problems down the road, including possibly declining productivity and growth. However, the short-term demand for economic growth in first-world or third-world countries is often a powerful motivating force. Roads are so basic to trade and movement of people that inevitably some roads will be constructed with less than ideal consequences for the environment.

Growth sector: catering to the wealthy

Here is one area for economic opportunity: providing goods and services for the wealthy.

Nathan Wilmers, a sociology Ph.D. candidate at Harvard, looked at how the growing impact of wealthy consumers is reshaping the economy and wages. Others have termed this phenomenon “the plutonomy,” or an economy in which earnings and spending are dominated by those at the top.

Consumer spending by the top 5 percent of households has grown 5.2 percent a year since 1989, while spending by the bottom 95 percent has grown at 2.8 percent, Wilmers said. In the past, economists have estimated that the top 5 percent of consumers account for nearly 40 percent of consumption…

Wilmers said that “the increased influence of these consumers sets up big rewards for businesses that create and sell the sorts of products the affluent want.” Specifically, he looks at salaries for butlers, wine producers, Realtors, lawyers and bankers and found that those who are best at their professions and excel at skills valued by the wealthy have the highest wages.

Even within the same industry—say, law or household staff—people hired by wealthy patrons make more than those that serve the middle class or affluent. Companies favored by wealthy consumers also have higher margins (as anyone who’s looked at Hermes profits in Birkin bags can attest).

A few thoughts:

1. At what point does the market become saturated with people and businesses trying to sell to the wealthy?

2. Some historical context would be helpful here. How much does this differ from previous eras? It makes sense that the wealthy consume more but is this significantly different than a few decades ago?

3. Isn’t this a reasonable outcome for a capitalistic system? If you want to make money, you want to find consumers who can pay for your products. Having smaller profit margins may provide for a need or exhibit altruism but a purely profit-motivated firm would seek out the wealthy.

Trying to craft a singular business message in a multicultural Chicago neighborhood

The Argyle section of Chicago’s Uptown neighborhood has residents from many different countries but wants to craft a coherent message to attract businesses:

Now, the two men and their neighbors have embraced a city-sponsored plan to promote the area with a broader name: Asia on Argyle.

“It really gives us a chance to showcase Argyle Street … and bring people to a very unique cultural destination within the city,” said Ald. Harry Osterman, whose 48th Ward represents the neighborhood.

The campaign is the city’s latest effort to brand neighborhoods beyond the downtown business district as commercial destinations for tourists and Chicagoans. The effort includes sprucing up Argyle’s appearance and opening a night farmers market that eventually would include Asian businesses.

Such branding strategies have worked for some neighborhoods like Greektown, Andersonville and Boystown. But others have spawned clashes as people of different cultural backgrounds disagree about how the neighborhood should be promoted. What’s more, if a neighborhood becomes too popular, gentrification can dislodge immigrant settlers…

Argyle’s greatest asset, its diversity, has also presented some of its biggest challenges. Chinese immigrants were among the first newcomers to try to brand the neighborhood.

There are several things going on here:

1. The neighborhood may look to outsiders to have Asian residents but this is a broad category that comprises a number of different cultures and backgrounds. For example, immigrants from certain countries have different levels of education and income as well as unique social and religious practices.

2. Creating a singular pro-business approach is not just about internal coherence within a neighborhood but also appealing to a wider audience in Chicago and the region. It would be fascinating to get down to some numbers and see how many people might visit such a neighborhood and how it stacks up to other ethnically and socially known neighborhoods profiled in this article like Pilsen, Chinatown, and Boystown. Do you need a slogan? A logo? How unique does the neighborhood have to be?

3. One academic quoted in this story notes that we should ask who will benefit from new economic development and business in Argyle. The city of Chicago? Local residents? Real estate moguls? There are development and businesses choices to be made that move more towards the people of the neighborhood. It doesn’t necessarily have to be a zero-sum game where only one party can come out ahead but it is easy in such situations for people with power and investments to come out even better.

Argument: boost America’s foreign policy by promoting walkable communities at home

Patrick Doherty argues that promoting and developing walkable urbanism at home can boost American foreign policy abroad:

This is the lesson, Doherty says, we should take from that era: “The real key to American strategic success in the 20th century – both during World War II and the Cold War – was not the military stuff. The key was that we understood how to let our economic engine do the heavy lifting.”

It’s clear today, though, that suburbia can no longer do this for us. The children of baby boomers are less interested in living their parents’ lifestyle. And baby boomers themselves are increasingly rejecting it, wary of a choice between isolated houses and nursing homes. If anything, the development model of suburbia now seems to be weakening our economy instead of propping it up. Without eternal new development, the infrastructure costs of existing subdivisions are becoming clearer. And as demand shifts back toward urban centers, we’re left with a dramatic oversupply of another era’s housing (which we continued to build long after the Cold War ended).

So what replaces suburbia as the engine of our economy?

“There’s no good growth story,” Doherty says. Or, at least, that’s how many investors and CFOs feel. But he believes an answer does exist among findings we’ve covered before from real estate theorist Christopher Leinberger: it’s in the rising demand for walkable urbanism.

The connection between foreign policy and suburban development is a fascinating one: economic strength, driven in the past by suburban growth and possibly in the future by walkable development, leads to a stronger foreign policy posture. But, this summary doesn’t connect the dots enough for me. Is there enough demand to make a big switch from suburbs to walkable urbanism? Where will the money come from – as the article notes, the suburbs were subsidized with federal dollars so will walkable urbanism receive similar funding? Given the demand and the money, would all of this be enough to drive the American economy in a new direction? It sounds like Doherty would argue walkable urbanism provides some bonuses compared to other kinds of development (can reduce dependence on oil, it is greener, etc.) but wouldn’t any big trend in development help the American economy and foreign policy?

I’m thinking this could also be an updated critique of the American suburbs: not only are they bad for residents but they hurt American foreign policy. Going further, if we continue with suburban development, America will decline relative to other countries.