Bacon's Rebellion

James A. Bacon



 

Listen up, will ya?!

No More Nerdistans!

 

To prosper in the global economy, Virginia must adopt patterns of development that create wealth, not destroy it, and facilitate the virtual economy, not inhibit it.


 

How do the Europeans stay in the game? According to the conventional economic wisdom, we Americans should be cleaning their Swiss clocks in global business.

 

Think about it: Europeans work shorter days and take longer lunch breaks – when they’re working, that is. The Continent periodically shuts down for lengthy vacations. Labor markets are rigid, encrusted with union rules, government regulations and welfare entitlements that ossify hiring and firing. Outside of England, the European financial services sector can’t compete with ours. For all our problems, the U.S. still has the most transparent equity markets and strongest investment banks, and no one touches us for the depth of early-stage equity funding. Taxes are higher in Europe, regulations are worse, the cultures are more intolerant of risk and industries are more coddled by protectionism.

 

Economic growth in the major European nations, Germany, France and Italy, in particular, has, in fact, under performed that of the U.S. over the past decade or more, but only by a modest margin of a percentage point or two on average. Given all of our advantages, we ought to be beating the culottes and lederhosen off them.

 

Perhaps there are forces at work – offsetting advantages -- that Americans don’t sufficiently appreciate. Europeans do save more money than we do, which allows them to accumulate more capital. They do a better job in K-12 education and preparing people for vocational careers. And they don’t have trial lawyers running amuck and wrecking entire industries. But there’s more to it than that. I have a suspicion that Americans are overlooking something really big.

 

The classical economists analyzed economies according to the productivity of the three “factors of production” – land, labor and capital. Americans lavish analysis on the latter two, with the consequence that our labor and capital markets are arguably the most efficient in the world. But as the farming, mining and forestry sectors have steadily diminished as a share of the economy, economists and policy makers have slighted the importance of “land” as a factor worthy of attention.

 

Perhaps because our nation is so vast, Americans have always thought of land as bountiful. Access to land was never a constraint on our economic growth, therefore, we’ve always considered it an afterthought. As a result, we tend to use land inefficiently. I’m not talking about farming here: Americans can squeeze more yield out of an acre of corn or wheat than anyone else on earth. I’m talking about the pattern and density of development: the spatial distribution of our houses, offices, factories, stores and public places.

 

At recently as World War II, U.S. cities were as compactly organized as European cities. But the spread of automobile ownership, in the context of land use and transportation decision-making fractured between federal, state and local governments, led to a very different pattern of development and growth: the hopscotch, low-density and land-intensive phenomenon we call suburban sprawl.

 

There have been three broad consequences, two of which are well documented and thoroughly understood in academic quarters, though not widely enough acknowledged in the public policy arena, and one that has come into play only in the past decade with the advent of the Knowledge Economy.

 

  • Higher infrastructure costs

  • Destruction of property values in aging suburbs

  • The revolt against the Nerdistans

Smearing development over vast spaces drives up the cost of building and maintaining public infrastructure. Low-density development means building more miles of road, trenching more miles of water and sewer lines, stringing more miles of cable and electric lines, building more fire, rescue and police facilities, erecting more schools and busing children greater distances. This observation is non-controversial. No one, to my knowledge, disputes it.

 

I would venture one step farther, into the realm of the unproven: I would hypothesize that local jurisdictions in the U.S. (and, by extension, Virginia) spend significantly more money per capita than their European counterparts to provide a comparable level of infrastructure and government services. As metropolitan regions tend to be the primary units of economic development across the globe today, this productivity edge in infrastructure gives European regions a considerable boost over their American competitors.

 

While the U.S. public sector wastes billions of dollars on sprawling infrastructure, the private sector squanders tens of billions of dollars building new places in the suburbs because so many of the old places aren’t worth preserving. Virginians, of course, are no exception. What we as a nation are doing is not simply creating value in the outer suburbs so much as transferring value from property owners in the aging suburbs to the owners of property, many of them speculators and developers, on the urban fringe. As a consequence, much of the infrastructure, housing stock and commercial areas built during the 1950s and 1960s is going to seed. Many of the structures are vacant; property values in many areas are actually declining.

 

From a national economic perspective, the malign neglect of aging suburbs means that hundreds of billions of dollars of economic assets are grossly underutilized. It is a highly unproductive use of land and the capital improvements on it. And it is a pattern, I would suggest, that is rarely replicated in Europe.

 

This phenomenon is so huge, yet so unappreciated, that it requires some elaboration. It helps to contrast the fate of Virginia’s older suburbs in recent years with that of its core urban areas. Riddled by higher crime rates and poor schools, the core cities would seem to compete at a hideous disadvantage with the suburbs. But cities have assets the suburbs lack: historic architecture, cultural institutions, distinctive neighborhoods, attractive public places and an appealing streetscapes. Cities, for all their problems, have character. They have assets that people find worth preserving and are willing to reinvest in. As a consequence, gentrifiers have reclaimed neighborhoods like Ghent in Norfolk, Old Town in Alexandria, the Fan and Church in Richmond, as well as comparable neighborhoods in smaller cities from Charlottesville to Roanoke. Even big developers have gotten into the act, pumping huge sums into Richmond's Tobacco Row, Richmond's waterfront, and innumerable properties in Alexandria.

 

While the 1990s saw a revival of Virginia’s inner cities, or at least portions of them, blight moved to the aging suburbs -- swaths of strip shopping centers and ticky-tack subdivisions built in the 1950s and 1960s. When these first “sprawl” neighborhoods were built, newness was their only virtue. They haven’t aged well. Drive along U.S. Route 1, the Jefferson Davis Highway, anywhere along its length from Richmond to Northern Virginia. Survey the scattered, boarded-up stores and commercial buildings, so unattractive, so poorly interwoven with the surrounding neighborhoods, so devoid of public spaces and cultural institutions. Who would want to restore this? But rather than redevelop these areas, redesigning them from scratch and exploiting their one undeniable virtue -- their proximity to the metropolitan core – our political and economic institutions encourage developers to hop, skip and jump out to the urban fringe and start from scratch.

 

As the old suburbs deteriorate, property values deteriorate in value. The American pattern of development, to which Virginia is no exception, silently destroys wealth of untold magnitude. But the destruction is largely invisible and little commented upon. Virginians move to new neighborhoods. Nobody travels on U.S. 1 any more. No one patronizes the defunct businesses. Unlike the poor precincts of inner cities, there are no constituencies of poor and dispossessed to remind us of our neglect.

 

Here’s what’s scary. Virginians remain oblivious to this phenomenon. We have learned absolutely nothing. While developers pump billions into brand new subdivisions, they have changed the template only marginally. New projects differ from the Jeff Davis Highway model mainly by the size and expense of the houses, and perhaps the addition of minor amenities such as bike paths, jogging trails, club houses and landscaping. Public facilities are still spattered across the landscape, the commercial architecture is forgettable, and land uses remain strictly segregated according to industrial-era notions that people must live one place, work another, and shop yet another – traversing the distances exclusively by automobile, of course.

 

Most damning of all, the new suburban communities create no sense of “place.” Only a handful of the largest planned communities offer anything resembling a “core.” There is nothing distinctive or authentic about most of the new development. There is nothing but their newness to sustain the affection and loyalty of the people who live there. One day, these neighborhoods will grow old and threadbare. Some undoubtedly will reinvigorate themselves, just as some 50s- and 60s-era suburbs -- generally the more affluent ones and those that are better integrated into the urban fabric -- have survived. But many will wither as people migrate from the old, worn-out, faceless cookie-cutter suburbs to new, faceless cookie-cutter suburbs. The process of wealth destruction continues apace.

 

European communities are not immune to blight. Many European cities are characterized by vibrant city centers and aging, neglected peripheries. European planners have created dingy, industrial suburbs on the edges of their cities. Millions of working-class Europeans reside in boxy, lifeless apartment complexes, soulless suburbs that have become breeding grounds of social discontent. However, I have the sense – and I’m willing to stand corrected – that Americans have developed, abandoned and left underutilized real estate on a scale the Europeans would find incomprehensible.

 

The trends I’ve touched upon help explain why the U.S. economy isn’t trouncing the European economies to the extent that would be predicted if we focused only on the productivity of labor and capital markets. The European pattern of land development is far more efficient and productive than ours, which compensates in part for the flaws in their other institutions.

 

Although Americans are blind to it, our sprawling pattern of land development harms the global competitiveness of our cities and towns. In the future, the penalty for persisting in wasteful patterns of development will only intensify. The continued shift from a post-industrial to a knowledge-based economy will place an ever greater premium on compact, well designed development as opposed to thoughtless sprawl.

 

In a process that may decades to run its course, we are experiencing a tectonic shift in the form of economic organization. We are moving from an era dominated by large, vertically integrated corporations to an increasingly “virtual” economy in which smaller firms, even micro firms and individuals, play an increasing role. Organizational forms are increasingly fluid. Corporations are outsourcing more functions than ever before. Rather than add to overhead by filling permanent positions, they are employing more contract and temporary workers. In a parallel trend, more people -- especially knowledge workers with creative and technical skills -- are self employed, working on a free-lance or project basis.

 

In the hey-day of the post-industrial era, corporations built vast suburban “campuses” that existed in sublime isolation. The practice made sense insofar as corporations brought most business functions in-house, literally under a single roof. The vast majority of employees within these high-tech campuses – economic developer Richard Florida calls them “nerdistans” – had no need to interact with anyone on the outside.

 

But nerdistans are a poor physical setting for the virtual economy. Free-lancers, consultants, micro-firms and other players in the fast-growing “virtual” segment of the economy must continually interact with others. They can’t conduct all their business by telephone and e-mail. They are constantly meeting, conferring, networking and schmoozing. And nerdistans -- islands of concrete steel and glass separated by oceans of parking lot, dysfunctional street design and splotches of untraversable woods – are not an environment where such interaction can readily take place.

 

Workers in the virtual economy find it far easier to interact in an urban environment. They drive to an office in close proximity to others like themselves, where they can walk (gasp!) to restaurants, conference facilities and the offices of their vendors, partners and customers. People enjoy the serendipitous encounters on the sidewalk, in the club or in the café. And they appreciate the ready access to cultural institutions and other amenities that create a richer all-around experience.

 

Nerdistans wrap employees in cocoons that raise the cost, measured by the time spent in transit to other locations, of human interaction outside the office building. Commercial districts like Tysons Corner offer impressive skylines, but the ground-level design is catastrophic. Often, it is literally impossible to walk across the street. Car travel is the only option, but traffic congestion is hideous. Tysons, the largest employment complex in Virginia, throws physical impediments in the way of creative interaction, undermining its desirability as a business location. Northern Virginia is an economic success despite its dysfunctional regional design.

 

The Europeans create their own barriers to the virtual economy, mostly in the realm of antiquated and restrictive labor markets. But the physical design of their cities, with their vibrant cores, is far more conducive than most U.S. metropolises to the interaction of the creative and professional classes. As Americans, and Virginians, ponder ways to build more competitive regions, they would do well to think how the pattern of land development -- the physical layout of their communities -- helps or hinders the growth of the virtual economy and their long-term economic development.

 

-- November 25, 2002

Bring Home the Bacon

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Welcoming New Wonks

 

A goal of Bacon's Rebellion is to introduce new perspectives into the dialogue over how best to create wealth and improve the quality of life for all Virginians. One discipline that does not command sufficient attention, either in the press or in government studies, is regional planning. What should our communities look and feel like? How should they be organized spacially?

 

I can think of no better person to address these crucial issues than our newest contributor, E M Risse, in his column, The Shape of the Future. Ed will write about land use and transportation in Virginia. His first column, "What's Next?",  interprets the significance of the Nov. 5 defeat of the Northern Virginia and Hampton Roads tax referenda.

 

A second columnist, Daniel K. Slone, is not entirely new. We published the inaugural edition of his column, Sustainability, in mid-September. Next week, Dan will contribute his second piece on his vision of "sustainable" development, i.e. development that is sustainable economically, environmentally and socially, in the sense that the current generation does not deplete the assets it bequeaths to the next.

 

Because Risse and Slone advocate changing the way we do things, some may perceive them as anti-growth or anti-

development. Nothing could be further from the truth. Both writers, like myself, strive to understand the complex forces at work on our society today, and to devise policies and practices that create lasting prosperity.