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Will Other U.S. Cities Follow in Detroit’s Footsteps?

July 29, 2013 at 12:00 AM EDT
The Detroit bankruptcy has been described as a tragedy, but is it a unique case? What can be done to prevent similar fates for other cities across the nation? Jeffrey Brown turns to Kathryn Wylde of the Partnership for New York City, Richard Florida of the University of Toronto and Bruce Katz of the Brookings Institution.

JUDY WOODRUFF: Next, we examine the financial health of our nation’s cities in the wake of Detroit’s bankruptcy.

Jeffrey Brown is here with that discussion.

JEFFREY BROWN: To what degree is Detroit a special case? In what ways is it representative of problems in other cities? Those and other questions have been much in the air since the bankruptcy filing.

For some answers, we turn to Kathy Wylde, president and CEO of the Partnership for New York City, a nonprofit focused on the city’s economy, infrastructure, and education system, author and urban studies theorist Richard Florida, director of the Martin Prosperity Institute at the University of Toronto. His books include “The Rise of the Creative Class” and “The Great Reset.” And Bruce Katz of the Brookings Institution, co-author of “The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy.”

Welcome to all of you.

Bruce Katz, let me start with you. Answer those questions. To what degree is Detroit special? In what says does it tell us something larger?

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BRUCE KATZ, The Brookings Institution: Well, I think Detroit is special in the extent of the collapse.

I mean, this is a very large city, 138 square miles, which has seen radical population loss, from two million in 1950 down to less than 700,000, and the out-migration of jobs. A great portion of the jobs are located more than 10 miles from the downtown, unlike many other cities.

But it’s similar than other cities, as what we’re seeing is the emergence of a network of corporations and civic leaders, philanthropies and universities that are really coming together to build on the special assets and advantages that the city has in its downtown primarily and its midtown.

JEFFREY BROWN: Richard, Richard Florida, same question to you. What does it tell us and what doesn’t it tell us about the health of cities?

RICHARD FLORIDA, The  Martin Prosperity Institute: Well, first off, Detroit has declined economically, but, as Bruce said, it’s now beginning to come back.

There’s a lot of investment going into that downtown. Civic leaders and business leaders like Dan Gilbert are putting a lot of money into bringing jobs back downtown. It’s interesting that bankruptcy has occurred as the accumulation of decades of disinvestment, white flight, movement of jobs outside of the city.

The bankruptcy has occurred just at the time the city is beginning to turn a corner. I do think Detroit is unique in going through this bankruptcy. And I don’t think — you know, we have seen covers saying, is this going to spread all over the United States? I don’t think it is going to spread through the United States. And I do think Detroit will ultimately come out stronger because of this.

JEFFREY BROWN: And, Kathy Wylde, same question. You’re sitting in New York. What are the lessons, the immediate lessons you’re taking from Detroit?

KATHRYN WYLDE, Partnership for New York City: Well, clearly, New York has its own near-bankruptcy experience in the 1970s.

And that was an instance of a failure of public and private leadership. And the city didn’t live within its means. The same certainly is true of Detroit. And it’s good to hear that there are efforts under way to do something about it. But I think we have to recognize cities don’t print money. States don’t print money. That’s really the province of the federal government.

So, cities have to live within their means. They have to have a very viable tax base. And that has to be a top priority. Clearly, that has not been the case historically in Detroit over the last decade. Hopefully, it will be going forward.

JEFFREY BROWN: All right, now, Bruce Katz, what are the — where do you see the challenges for cities that are not doing well? What are the biggest factors? What are the biggest problems they face?

BRUCE KATZ: Well, I think for cities they need to understand, what are those assets and advantages that you can build on?

For Pittsburgh after the steel crisis in the late ’70s, it really was about diversifying their economy, building off the so-called eds and meds, the research institutions, the medical campus. And you have seen Pittsburgh basically come back.

For other cities, let’s say Akron, it’s tried to build off of its special niche in the manufacturing economy. Akron was the rubber capital of the world. Now it specializes in polymers and plastics and it’s still a manufacturing player in bio and clean energy. So cities have to understand, what’s your niche? What is your function? What is your role and how do you build smartly, strategically through a network government, corporate, civic, university?

JEFFREY BROWN: And do — and, Richard Florida, do they all understand that? Because surely they’re not all — you and Bruce especially started on a very positive note here. And yet we have Detroit. We have a lot of problems still.

RICHARD FLORIDA: Well, I think cities have realized they’re not going to grow their economies by bribing companies to come in.

Just as Bruce said, they’re going to build on their own strategic assets, and as specialized as they are — and Bruce knows this — they also to be diverse. Diverse economies grow. But in the United States, the cities and regions that are having trouble are the manufacturing regions that have not revitalized and developed their knowledge assets and diversified.

And Sun Belt regions that are dependent on real estate and construction, our economy is being reshaped around knowledge centers, big and small. Ann Arbor right outside of Detroit is doing fabulously well, and energy centers — and those are becoming the powerhouses of the U.S. regional economy. But there are very real winners and losers in this economy. And for those falling behind, they have to take steps to specialize, to focus on their niche, but also to diversify their economy.

JEFFREY BROWN: And just to stay with you, how much is population growth a factor one way or the other?

RICHARD FLORIDA:  Zero. We have a pretty good analysis out of the Martin Prosperity Institute that finally breaks the notion that population growth is synonymous with economic growth. It is not associated with employment growth very strongly. It is not at all associated with productivity growth. And it’s not at all associated with wage growth.

It is associated, matter of factually, with higher rates of unemployment. But I think we have got to get over the notion in America that population growth equals economic growth. In some cases, it does, but not very many.

JEFFREY BROWN: Kathryn Wylde, start there with the population growth issue.

KATHRYN WYLDE: While growth of population may not be critical, the quality of the talent pool is critical. And that depends on the education system, partnerships and building up of your higher education systems.

It depends on creating a place that is safe and livable, where people who have choices want to locate. And, of course, that’s the big challenge that every city faces. And those cities that have been successful in attracting and maintaining top talent are the ones that are thriving. They are the centers of innovation in our economy. They are driving the national economy.

There was a study just produced by some top economists that came out last week, a study of equal opportunity around the country. Which cities provided the greatest opportunity for people to move out of the bottom rung of the economic ladder and up to the top? And those cities, it’s no accident Detroit was in the bottom couple of those cities, and cities like Pittsburgh, Seattle, Boston, New York were in the top 10.

JEFFREY BROWN: You know, we did something on that study last week on the program.

But — so let me just stay with you for that. When you look at the cities that are not allowing citizens to move up the ladder or that are not thriving, what do you see as the biggest single factors?

KATHRYN WYLDE: Clearly, their education system is failing, but also transportation infrastructure, green cities that will attract people who are looking for healthy, attractive environments, and obviously safe cities.

If the city isn’t safe, as we found out in New York, went through a very difficult time in the 1980s, today, we’re proud to be the safest big city in America, perhaps the world. And that has a lot to do with what brings people here, what supports talent.

JEFFREY BROWN: Bruce Katz, you wanted to jump in?


I would just say that we need to redefine talent. We look at the STEM economy, science, technology, engineering, math. It’s about a fifth of the American economy. A good portion of these jobs can actually be filled by people with high school-plus. Right? Remember shop, remember trades, remember voc-ed? We have got to bring that back to the United States and have these specialized high schools, but also community colleges, customized to sectors in…

JEFFREY BROWN: But when you think about Americans, we still love our cars.

BRUCE KATZ:  Absolutely.

JEFFREY BROWN: We still are — many people still seem very willing to live far away from where they work or where they play. Do you see the character of American cities changing fundamentally?

BRUCE KATZ: This is changing, because actually we have seen driving taper off. We have seen transit going up like a rocket. We see people choosing — particularly millennials, but also empty nesters, beginning to choose communities where they can walk, where they can bike, where they have options around transportation to get to work or to the necessities of daily life.

The economies of cities are being shaped, as Rich has said, but also our communities are being reshaped, to fit very different demographic preferences in this country. So, in this regard, the past of sprawl is not necessarily prologue. As urban growth has tapered off, city growth is coming up. This is a different American landscape than we have seen in the past.

JEFFREY BROWN: But, Richard Florida, this, as you were saying, comes with winners and losers, right, not just cities, winners and losers, but populations within cities.

RICHARD FLORIDA: Yes, we’re seeing incredible levels of unequal economic opportunity, rates of income and socioeconomic inequality in our cities. 

And it’s not — it’s no longer — as many of Bruce’s own studies, Brookings studies have shown it’s no longer just the poor in the city and the rich in the suburb. We have a fragmented and fractured metropolis, with areas of concentrated advantage right in the center of the city alongside areas of concentrated disadvantage, and poverty growing in our suburbs right next to affluence.

So, this whole idea that it’s the city that dilapidated and the suburb that’s booming is changing as our economies change. And back to Kathryn’s point, we have two migrations in this country. Those with high educations, college degrees, advanced degrees in the knowledge and professional sector have a great deal of mobility. Those that don’t have those kind of degrees, whether they’re in Pittsburgh, or Detroit or even New York — and prospects are better in New York — they’re finding themselves stuck in place.

So I think we’re dealing with two very different sorts of outcomes. And, in fact, I think, when we look at this, our spatial segregation is even worse than our economic unevenness.

JEFFREY BROWN: Kathryn Wylde, just very briefly, 30 seconds, we have your city not that long ago was in deep now. Now we have Detroit. Is there a lesson for how one city revitalizes itself?

KATHRYN WYLDE:  Well, certainly there is.

And I think that the key in New York was public sector, business, organized labor came together and really identified what are common interests in making sure New York was both a great platform for international business, but also a city of opportunity, where all people could rise up.

So I think that Detroit can do the same thing. Clearly, I think Bruce Katz would say in a metropolitan context I think they’re going to need a lot of support from their larger region, but I would say that certainly an American city has every opportunity.

JEFFREY BROWN: All right, Kathryn Wylde, Richard Florida, Bruce Katz, thank you, all three.