BROOKINGS MetroMonitor

A PATH TO UNDERSTANDING THE IMPORTANCE OF REGIONAL INTELLIGENCE AND THE IMPERATIVE OF EVOLVING REGIONAL STRATEGIES

On 17 June Gooze Views posted “How Virginia’s Metro Areas Are Weathering the Recession” about the three largest of Virginia’s 11 Metropolitan Statistical Areas (MSAs). On the same day a WaPo story addressed the Washington, D. C.-VA-MD-WV MSA. As Peter noted, the data to support both stories came from an invaluable new research tool developed by Brookings Institution called MetroMonitor.

MetroMonitor has just been launched but is already a very useful resource. It provides data on ten parameters covering – Gross Regional Product, Employment / Unemployment / Wages and Shelter for the largest 100 MSAs in the US of A. The MetroMonitor web site http://www.brookings.edu/metro/MetroMonitor.aspx?emc=lm&m=226673&l=2&v=41423 includes maps that are color coded by quartile for all ten parameters and a spread sheet. Brookings plans to up date this resource quarterly.

Viewing MetroMonitor as a whole, the first thing that strikes one is the immense diversity among the 100 largest MSAs. The 100 largest MSAs encompass about 75% of the economic activity in the US of A. (There are 366 MSAs in the US of A and a whole alphabet soup of other “Census Defined” geographies. The New Urban Region data used by SYNERGY is based on the 68 largest urban agglomerations and represents over 85 percent of economic activity in the US of A.)

The primary message to take from MetroMonitor? These data document that there is NO one nation-state-wide policy that will improve the economic, social and physical well being of all Regions. Further some of the most often touted “policy alternatives” (aka, ways to spend federal money) will damage many Regions.

Three examples drive home this point:

It is painfully apparent that MainStream Media and most Governance Practitioners are still dreaming that the Great Recession will be eclipsed by the two principle economic forces that have been relied on to end every recession since World War II. (It is worth noting in passing that it was World War II, and not specific economic policies that ended the Great Depression.)

The sale of cars and houses have pulled citizens and their Organizations out of every recession over the past 64 years.

It does not take Adam Smith, John Keynes or Milton Friedman to understand that policies that make shelter cheaper will damage, not help, all those Regions with depressed residential real estate markets and large numbers of lender owned housing. That is the focus of WaPo story noted above: “Region’s Economic Performance Ranks High: Housing Sector Remains a Drag.”

The US of A is an Urban society and many believe most of the ‘urban ills’ of the past 64 years were CAUSED by Federal policies. Kirkpatrick Sales provides a thumbnail summary of this view based on his analysis of the demise of South Bronx in Human Scale.

The other primary recession killer employed over the past six plus decades has been car sales. Policies to boost cars sales (especially Large, Private Autonomobiles) will help some rust belt MSAs over the short haul but it will damage EVERY Region in the long term because it will continue to drive dysfunctional human settlement patterns. Oh yes, then there is the matter of balance of payments / imported oil, air pollution, etc.

EMR suggested in this forum (“Addicted to Autonomobiles,” 2 June 2009) that those who can afford an autonomobile already have two or three and those who cannot afford an autonomobile need functional settlement patterns, not a vehicle they will not be able to afford soon. (You have noticed that every time the stock market ticks up because someone “sees the bottom,” the price of crude jumps even thought there is now a glut of petroleum.)

For all Regions, one-size-fits-all programs like “Cash for Clunkers” is just another way to dig citizens further into the Mobility and Access Crisis.

Finally with respect to employment:

Recent data shows that the National Capital Subregion (and other MSA-comparable geographies) have added jobs but also increased unemployment. EMR has pointed in this forum that what is needed in most Regions are jobs for those who are not highly skilled and are not highly motivated.

There is a lot of debate about how much economic boost ‘green’ jobs will produce but no one is talking about the sort of jobs for which most of the unemployed now (or after training will) qualify. Broad brush federal programs to ‘add jobs’ may not add the right jobs in any Region. The bottom line is that jobs need to be the right ones for each Region, not a one-size-fits-all hole into which the fed pours newly printed dollars.

All this points to the need for Regional Strategies to address Regional Conditions in order to evolve sustainable New Urban Regions comprised of Balanced Communities. Did someone say Fundamental Transformation of governance structure?

A couple of suggestions:

The MetroMonitor would be greatly enhanced by the addition of an indicator measuring Regional Consumer Confidence. If 70 to 80 percent of the US of A’s economy is consumer consumption then knowing Regional consumer confidence is critical.

Citizens can do a lot if they have the right information, are motivated and confident that what they are doing will improve citizen well being and quality of life.

Another improvement would be to aggregate the MSA data MegaRegion. Right now it looks like there is great diversity WITHIN MegaRegions.

For example, the National Capital Subregion (Washington MSA plus) and the Baltimore Subregion (Baltimore MSA plus) do not fall in the same 20 percent category for a single one of the ten indicators.

This suggests there is a need for not just Regional strategies but also MegaRegional strategies where Balance can be achieved from trade-offs within a MegaRegion.

Brookings staff is aware of the “America 2050″ program that is focused on MegaRegions. This would seem to be a simple step to take on the path to creating ‘Real Regional’ data (aka, New Urban Region and MegaRegion Data) not just MSA data. Even more important will be to evolve subsets of the Regional Data to reflect Beta Communities and NOT state or municipal jurisdictions.

This last suggestion illustrates how valuable MetroMonitor would be if Governance Practitioners had not been doing everything in their power to obscure and obfuscate an understanding of the evolution of the organic structure of Urban systems for the past 222 years.

EMR


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Comments

19 responses to “BROOKINGS MetroMonitor”

  1. Anonymous Avatar
    Anonymous

    It does not take Adam Smith, John Keynes or Milton Friedman to understand that policies that make shelter cheaper will damage, not help, all those Regions with depressed residential real estate markets and large numbers of lender owned housing.

    You said a lot with this sentence!

    There are Trillions of dollars in mortgage backed securities that will crash if cheap credit and tax incentives to buy drive housing prices lower — or even keep them at the current levels.

    With Underwater Mortgage

  2. Larry G Avatar

    I'm not sure how you "fix" this problem because what drove up the price of housing was a market with a LOT of "new" buyers – who turned out to be unqualified new buyers who have now departed that market.

    So the demand for housing has dropped back to what it was before we were giving mortgages to people without verified incomes and assets.

    I think the loss in housing value is real and we're not going to regain it for a long time.

    If you are the owner of an underwater mortgage – whether you be the occupied owner or an investment banker with a bundle -at some point – aren't you going to have to write it down?

    What are you going to do at tax time – claim the original value for tax purposes?

    Many localities are either already or shortly will undergo reassessments to recalibrate the value for taxing purposes.

    I do not understand after that is done – any holder of a mortgage could claim a higher value that the assessed value.

    or have I got this all balled up?

  3. Anonymous Avatar
    Anonymous

    "It does not take Adam Smith, John Keynes or Milton Friedman to understand that policies that make shelter cheaper will damage, not help, all those Regions with depressed residential real estate markets and large numbers of lender owned housing."

    This statement is simply not true. Adam Smith would argue that a fair market always works to make goods cheaper. If there is a large amount of lender owned homes, then it is because they loaned too much against the homes in the first place: they should have been cheaper.

    It is unknown whether a particular policy to make shelter cheaper is good for the region or not without considering all the other factors that impinge on the effectiveness of the policy. You will never know whether a policy is "good" or "bad" by looking at the policy and its immediate results. And as I have argued government regulation is one of the three costs that drives our total cost and therefore our total well being. That total cost is what you have to look at, not just the regulatory part.

    I'd suggest that by looking at ten parameters Brookings is making a start along the lines of getting a measure that actually measures a basket of activities that represent the economic health of a region. Or the true total cost of all the activites, externalities, and regulations.

    But since shelter is such a basic commodity, it is hard to imagine a policy that makes shelter cheaper that isn't a good thing, unless it only makes shelter cheaper by placing it so far from jobs that the savings is overwhelmed by travel costs.

    Now, EMR is going to argue that the high prices in inner urban areas prove that this is what the market wants. To that I would point out that a monthly parking space for your car in Manhattan costs over $700 a month.

    RH

  4. E M Risse Avatar
    E M Risse

    Larry:

    You are right, this is a sticky wicket but it can be solved.

    My point is that a nation-state-wide policy to generate cheap money / cheap mortgages / more subsidies will hurt the National Capital Subregion and others where there are many underwater mortgages.

    As Anon 5:38 points out, a lot of the financial Enterprise "assets," and not just the ones currently marked "toxic" will have world wide impact.

    Regional, MegaRegional and SubRegional solutions, not nation-state ones.

    The best thing the feds could do would be to devolve taxing power to Regioal entities with specific Community / SubRegional / Regional / MegaRegional strategies.

    Fundamental Transformation of governance structure.

    EMR

  5. Anonymous Avatar
    Anonymous

    "The best thing the feds could do would be to devolve taxing power to Regioal entities …"

    I only want to pay one entity: the one closest to me. After that, they can tax each other, just let me take my tax gripes to the one person my vote has the most control over.

    The last thing I want is more multiple layers of taxation, such that each entitiy is allowed to ignore the interactions it has with others, and ultimately with me.

    RH

  6. I just took a quick glance at the MetroMonitor.

    The "weakest" areas seem to have a few things in common.

    1) They are the areas where the housing bubble was the biggest.

    2) They are the areas with the highest unemployment rates (probably because nobody is building houses).

    3) They are the areas where home prices have dropped the most.

    4) They are the areas with the highest number of foreclosures.

    Now, I am not an economist but it would seem to me that we need to create jobs in other sectors BESIDES building houses in order to "correct" what went wrong, no?

    If we simply focus on fixing housing we would just be chasing our tails, IMO.

  7. Anonymous Avatar
    Anonymous

    RH needs to move back to the 12th Century.

    He is right about the lowest level being the best but it is hard for a Cluster-level Agency to build a Regional transit system.

  8. Anonymous Avatar
    Anonymous

    RBV:

    You gave it away in the first line — "quick glance."

    While you are right 'in general' there is a lot more going on upon closer inspection.

    Almost every Region needs a different set of strategies.

    VBR

  9. Anonymous Avatar
    Anonymous

    "They are the areas where the housing bubble was the biggest."

    In at least some cases the housing "bubble" was biggest because housing prices were artificially inflated with onerous building regulations and fees.

    Home prices then dropped the most because a) they had further to fall, and b) people left for places that still had jobs.

    RH

  10. Anonymous Avatar
    Anonymous

    "He is right about the lowest level being the best but it is hard for a Cluster-level Agency to build a Regional transit system."

    How many agencies and advocacies are involved in Metro? No one agency can do it, and you can have a coalition of cluster level agencies as easy as any other size.

    But if my cluster level representative gets it in his head to waste my money on a Metro like – money-losing, feel-good, boondoggle that does NOTHING useful for me, then he is likely to hear about it.

    That is what will make it hard for cluster level agencies to do big projects. It isn't a matter of not being able to collaborate, it isn't even the fact that you cannot have higher level agencies.

    I only request that they organize to tax my cluster level and negotiate that among themselves and not hit me up with fifty separate tax bills, with each of them acting as if THEIRS is the only one I have to pay.

    Lets have a little bit of coordination, here, with one representative that I have some chance of meeting someday, looking out for my interests.

    Is that so 12th century? Wasn't Stonehenge built through coordination at the cluster level, long before the 12th century?

    RH

  11. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Fundamental Transformation.

    http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500.html

    Remember moral hazard and unintended consequences? They're Baack! Some of the analysis I've read says the banks don't want to foreclose because:

    A. They have too many houses already.

    B. If they write the house off, it's an instant hit on their balance sheets.

    C. They don't want the legal hassles with the states/counties/etc.

    D. The losses don't matter because TARP covers it.

    E. They can't figure out who the real owners of the mortgage are.

    F. All the above.

    We've gone from walkaway to stayforfree. No wonder the economy is 'improving'. Who knew that Ninja loans would evolve into a new Ninja Lifestyle?

  12. Anonymous Avatar
    Anonymous

    the banks don't want to foreclose because:

    They are not in the landlord business.

    Some ROI is better than none.

    When they made unreasonable loans, BOTH parties signe the notes and agree to live with the consequnces: we just have a few that were unintended and unanticipated.

    When conditions change and you find yourself trapped against a lee shore, do you give up, wreck the boat and take your chances on getting ashore, work yourself half to death trying to claw off to windward, or throw out the anchor and wait for better conditions?

    Hint: the answer depends on how recently you have eaten and slept.

    RH

  13. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Interesting article I stumbled on.

    http://www.scribd.com/doc/16750352/Goldman-Sachs

  14. Anonymous Avatar
    Anonymous

    Gee, if they are that good, buy some stock. I made 150% 0n BAC.

    RH

  15. "Almost every Region needs a different set of strategies."

    hmmmm…you mean like creating jobs, right? The question is where will the jobs come from?

    "In at least some cases the housing "bubble" was biggest because housing prices were artificially inflated with onerous building regulations and fees."

    Give me a break. That's hardly the reason we are in the situation were are in today.

    For every example you can show me of where that's the case (if there are any) I can show you another of where a locality didn't pass "onerous building regulations and fees", until well after the boom had passed.

    "When they made unreasonable loans, BOTH parties signe the notes and agree to live with the consequnces"

    If that were the case most banks would be out of business by now….instead we ended up with TARP to keep the banks from failing….http://en.wikipedia.org/wiki/TARP

  16. Anonymous Avatar
    Anonymous

    The WSJ suggests tthat the a big cause of the failure of WMATA to replace its old and unsafe cars was the creative financing deal agreed to by WMATA's board.

    TMT

  17. Anonymous Avatar
    Anonymous

    "Give me a break. That's hardly the reason we are in the situation were are in today."

    I agree that is not the entire reason we are in the place we are today, but that isn't what I said.

    It is well documented that places with strong building and development regulations have higher prices than other place AND it turns out they have taken the greatest fall in prices. The reason being there was no underlying or intrinsic value under the inflated prices caused by excessive regulation.

    This may not be "the reason" we are in the place we are today, but it does not make the statement false, nor does it mean it is not a contributing factor.

    RH

  18. Anonymous Avatar
    Anonymous

    "If that were the case most banks would be out of business by now….instead we ended up with TARP "

    Both sides did sign the bad notes. The banks were more adept at having th egovernment bail them out.

    But both sides did sign the notes, the point being that when you sign a note as a borrower, you take on the obligation (to try) to pay it back. The bank takes on the obligation of accepting the risk. The banks got out of their obligations as much as the borrowers defaulted on theirs.

    It might be that everyone who is honest, not upside down, and still making their payments are the losers in this deal (TARP etc.) The only question is whether we would have been still worse off without it.

    RH

  19. Tom Christoffel Avatar
    Tom Christoffel

    Hello –
    Google’s Blog alert sent me to this post because of the term “regional intelligence.” This discussion will be useful to readers of Regional Community Development News, the original "regional intelligence" publication. I will include a link to it in the July 8 issue. The newsletter will be found at http://regional-communities.blogspot.com/ Please visit, check the tools and consider a link. Tom

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