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Listen
up, will ya?! |
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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
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