THE METROPOLITAN REVOLUTION

How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy

By BRUCE KATZ, JENNIFER BRADLEY

Brookings Institution Press

Copyright © 2013 the brookings institution
All rights reserved.
ISBN: 978-0-8157-2151-2

Contents

Foreword by Judith Rodin...................................................viiAcknowledgments............................................................xi1 A Revolution Unleashed...................................................1PART I. The Living Laboratory: The Metropolitan Revolution Today...........2 New York City: Innovation and the Next Economy...........................173 Denver: The Four Votes...................................................414 Northeast Ohio: The Post-Hero Economy....................................645 Houston: El Civics.......................................................88PART II. The Future of the Metropolitan Revolution: Ushering In the Metro
Age........................................................................6 The Rise of Innovation Districts.........................................1137 Toward a Global Network of Trading Cities................................1448 Metros as the New Sovereign..............................................1719 A Revolution Realized....................................................192Notes......................................................................209Selected Bibliography......................................................245Index......................................................................251

CHAPTER 1

A REVOLUTION UNLEASHED

I will not tie this city's future to the dysfunction in Washingtonand Springfield.

—RAHM EMANUEL, mayor of Chicago

A revolution is stirring in America. Like all great revolutions,this one starts with a simple but profound truth: Cities andmetropolitan areas are the engines of economic prosperity andsocial transformation in the United States.

Our nation's top 100 metropolitan areas sit on only 12 percentof the nation's land mass but are home to two-thirds ofour population and generate 75 percent of our national GDP.Metros dominate because they embody concentration andagglomeration—networks of innovative firms, talented workers,risk-taking entrepreneurs, and supportive institutions andassociations that cluster together in metropolitan areas andcoproduce economic performance and progress. There is, inessence, no American (or Chinese or German or Brazilian)economy; rather, a national economy is a network of metropolitaneconomies.

Cities and metropolitan areas are also on the frontlines ofAmerica's demographic change. America's population—and itsworkforce—will be much more diverse in the future than atpresent, and soon no single race or ethnic group will be thenation's majority. Many of our metros are already living thatfuture. In fact, every major demographic trend that the United States isexperiencing—rapid growth, increasing diversity, an aging demographic—ishappening at a faster pace, a greater scale, and a higher level of intensityin our major metropolitan areas.

Empowered by their economic strength and driven by demographicdynamism, cities and metros are positioning themselves at the cutting edgeof reform, investment, and innovation. In traditional political science textbooks,the United States is portrayed neatly as a hierarchical structure—thefederal government and the states on top, the cities and metropolitanareas at the bottom. The feds and the states are the adults in the system,setting direction; the cities and metropolitan areas are the children, waitingfor their allowance. The metropolitan revolution is exploding this tiredconstruct. Cities and metropolitan areas are becoming the leaders in thenation: experimenting, taking risk, making hard choices, and asking forgiveness,not permission.

Like all great revolutions, this one has been ignited by a spark. TheGreat Recession was and continues to be a shock to the American zeitgeist,a brutal wake-up call that revealed the failure of a growth modelthat exalted consumption over production, speculation over investment,and waste over sustainability. A new growth model and economic visionis emerging from the rubble of the recession, a next economy wherewe export more and waste less, innovate in what matters, produce anddeploy more of what we invent, and build an economy that works forworking families.

The default proposition in the post–New Deal era is that the restructuringof a national economy as complex and diverse as America's wouldbe led by the national government. Indeed, in the immediate aftermath ofthe Great Recession, the federal government stepped in, and stepped up,with a stimulus package that kept the economy from collapse and stabilizedstate and local governments reeling from the housing-market freefall.

But now, four years after the recession's official end, it is clear that thereal, durable reshaping is being led by networks of city and metropolitanleaders—mayors and other local elected officials, for sure, but also headsof companies, universities, medical campuses, metropolitan business associations,labor unions, civic organizations, environmental groups, culturalinstitutions, and philanthropies. These leaders are measuring what matters,unveiling their distinctive strengths and starting points in the realeconomy: manufacturing, innovation, technology, advanced services, andexports. They are eschewing fanciful illusions of becoming the next SiliconValley and instead are deliberately building on their special assets,attributes, and advantages, using business planning techniques honed inthe private sector. They are remaking their urban and suburban places aslivable, quality, affordable, sustainable communities and offering moreresidential, transport, and work options to firms and families alike. Andthey are doing all these things through coinvention and coproduction.

Similar to the Tea Party and the Occupy movements, the metropolitanrevolution is a child of the Great Recession. Yet it is reasoned rather thanemotional, leader driven rather than leaderless, born of pragmatism andoptimism rather than despair and anger.

Like all great revolutions, this one has been catalyzed by a revelation:Cities and metropolitan areas are on their own. The cavalry is notcoming. Mired in partisan division and rancor, the federal governmentappears incapable of taking bold action to restructure our economy andgrapple with changing demography and rising inequality. Recent SupremeCourt decisions have also circumscribed the ability of the federal governmentto respond to national challenges. States are a varied lot. Some,often under the leadership of mayors-turned-governors, are aligning policiesand programs to meet the needs of their metropolitan engines; someare too broke and broken to engage and, in fact, are scaling back investmentsin critical areas like education, redevelopment, and communityhealth; still others have a long history of antagonism toward their urbanand metropolitan engines.

With each illustration of partisan gridlock and each indication of federal,and also state, unreliability, metros are becoming more ambitiousin their design, more assertive in their advocacy, more expansive in theirreach and remit. To borrow from Pogo, metro leaders have met the solution,and it is them.

With innovation the clear driver of economic growth and productivityand federal innovation funding at risk, metros like New York aremaking sizable commitments to attract innovative research institutions,commercialize research, and grow innovative firms. With human capitalthe necessary ingredient for successful firms and places, metros likeChicago are overhauling their community college systems to ensure thatstudents are trained for quality jobs that offer good wages and benefits.With infrastructure the platform for global trade and investment and nonational freight policy in place, metros like Miami and Jacksonville aremodernizing their air, rail, and sea freight hubs to position themselves foran expansion in global trade.

With companies and consumers demanding communities that are morespatially efficient and federal funding for transportation uncertain, metroslike Los Angeles, Denver, and Chicago are largely self-financing the buildingand retrofit of their own transit systems. With global demand rising andthe future of federal trade policy unclear, metros like Portland, Syracuse,and Minneapolis–St. Paul are reorienting their economic development strategiestoward exports, foreign direct investment, and skilled immigration.

With the world undergoing a systemic shift toward sustainable growth(a third industrial revolution) and federal energy and environmental policiesunder siege, metros like Seattle and Philadelphia are cementing theirniches in energy-efficient technologies. And with immigration altering thesocial fabric of American society and national immigration reform seeminglyimpossible to achieve, metros like Houston are taking innovativesteps to integrate tens of thousands of new immigrants into economic andcommunity life.

The metro revolution reflects the maturing of U.S. cities and metros interms of capacity and focus. Over the past three decades, these communitieshave innovated on the form of their places, regenerating downtowns,revitalizing waterfronts, restoring historic buildings, inspiring grand architecture,expanding transit and transportation choices. Now they are focusingon their function and the very shape and structure of their economies,taking on the core elements that drive economies: innovation, human capital,infrastructure, advanced industry.

Over the past three decades, these places have labored to improvethe delivery of core services such as education and public safety to ensuregood schools, safe streets, and a high quality of life. Now they are innovatingin the service of a grander ambition and necessary purpose: a localeconomy that generates wealth and shares prosperity.

For fifty years, metropolitan areas have relied on their biggest singleinvestor—the federal government—to finance infrastructure, housing, innovation,and human capital. They have dutifully competed for federal grantsand aligned their visions and strategies to the federal focus du jour. Now citiesand metros are driving the conversation, making transformative investmentsin the public goods that undergird private investment and growth.

The tectonic plates of power and responsibility are shifting. Across thenation, cities and metros are taking control of their own destinies, becomingdeliberate about their economic growth. Power is devolving to theplaces and people who are closest to the ground and oriented toward collaborativeaction. This shift is changing the nature of our leadership—whoour leaders are, what they do, and how they govern. The metropolitanrevolution has only one logical conclusion: the inversion of the hierarchyof power in the United States.

A REVOLUTION IN TUNE

The metropolitan revolution is accelerated by the twinned failure of theeconomy and Washington. But what is happening in the United Statestoday is also rooted in timeless and quintessential American values and isuniquely aligned with the disruptive nature of this young century and themanner and places in which people live their lives. The emerging revolutionis not just a cyclical reaction but also a structural shift.

Our federal republic alternates between an emphasis on the "republic"and the "federal." Power is at once centralized and diffuse, amongstates as constitutional partners and, in this century, among cities andmetropolitan areas as de facto engines of the economy and social change.This diffusion, endlessly varied, often chaotic, is central to the Americanentrepreneurial strain and cultural narrative. Like Chicago's mayor RahmEmanuel, local politicians and other leaders have long held an ambivalencetoward Washington. This reflects an ingrained American suspicionof institutions that are remote, removed, and far from home. Leaders incities and metropolitan areas are close to the ground. They shop in localstores, eat at local establishments. They are seen and accessible, open toinformal, everyday conversation rather than the formal interactions oflegislatures and bureaucracies. Cities and metros aggregate people andplaces in a geography that is large enough to make a difference but smallenough to impart a sense of community and common purpose.

Yet the metropolitan revolution is not only about the local and traditional.It is also thoroughly attuned to the pace and tenor of modern lifedriven by technology and globalization. We are living in a disruptive momentthat worships speed, extols collaboration, rewards customization, demandsdifferentiation, and champions integrated thinking to match and master thecomplexities of modern economies and societies. The metropolitan revolutionis like our era: crowd sourced rather than close sourced, entrepreneurialrather than bureaucratic, networked rather than hierarchical.

In a world in which people live, operate, communicate, and engagethrough networks, metros have emerged as the uber-network: interlinkedfirms, institutions, and individuals working together across sectors, disciplines,jurisdictions, artificial political borders, and, yes, even politicalparties. In the process, a new kind of metropolitan leadership is beingspawned. It is, at its core, a pragmatic caucus, which puts place overparty, collaboration over conflict, and evidence over dogma. As New Yorkmayor Michael Bloomberg observed in remarks to the Economic Club ofWashington, D.C., "As a result of [the federal] leadership vacuum, citiesaround the country have had to tackle our economic problems largely onour own. Local elected officials are responsible for doing, not debating.For innovating, not arguing. For pragmatism, not partisanship. We haveto deliver results at the local level."

Members of this pragmatic caucus share common traits. They areimpatient. They do not tolerate ideological nonsense or political bromides.They are frustrated with gridlock and inaction. They bristle at conventionalpessimism and focus on constructive optimism. They are risk takers.They do not have a partisan allegiance; they have a political attitude.

With its broad-based membership, the pragmatic caucus defies easypolitical categorization. In Houston, a network of Republican businessleaders supports and champions one of the most advanced immigrantintegration efforts in the nation. In Salt Lake City, a far-reaching effort tocurb sprawl and promote reinvestment is taking place in a state that hasnot voted for a Democratic presidential candidate since 1964. In Portland,Oregon, a metropolis best known for its commitment to smart growth, adiverse set of leaders are embracing an ambitious agenda to boost trade,exports, and foreign direct investment.

The contrast between the federal and state governments and metropolitannetworks is stark. The federal government and the states are legacyinstitutions: hyper political and partisan, hopelessly fragmented and compartmentalized,frustratingly bureaucratic, and prescriptive.

The federal government and the states are present oriented. They govern,administer, and legislate in two-year cycles, aligned more with thetimeline of political elections than with social or market dynamics. Bycontrast, the new metropolitan leadership is intensely focused on, in thewords of John Hofmeister, a former president of Shell Oil, "getting thefuture right." They think in the long term, act in the short run. Twenty ofthe top fifty metropolitan areas in the country now have formal planningefforts to achieve specific growth targets by 2040.

The federal and state governments, at their core, establish laws andpromulgate rules. In so doing, they reflect the curse of the twentieth-centuryWeberian state: highly specialized, overly legalistic, prescriptiverather than permissive, process oriented rather than outcome directed.They reward consumers who play by the rules, check the box, and confinetheir innovations to tightly circumscribed boundaries. Cities and metropolitanareas, by contrast, are action oriented. They reward innovation,imagination, and pushing boundaries. As networks of institutions (forexample, firms, agencies, schools), they run businesses, provide services,educate children, train workers, build homes, and develop community.They focus less on promulgating rules than on delivering the goods andusing cultural norms rather than regulatory mandates to inspire best practice.They reward leaders who push the envelope, catalyze action, and getstuff done.

The federal and state governments are organized as a collection ofhardened silos, fragmented executive agencies overseen by separate legislativecommittees. These agencies look down at challenges, conforming andconfining the reach of solutions to the powers and resources at hand. Atransportation agency responds to transportation challenges (for example,congestion) with transportation solutions (for example, widening a road),affirming the old adage "If the only tool you have is a hammer, everythinglooks like a nail." Cities and metros are, by contrast, organic communities.Multiple public, private, and civic actors are empowered to lookacross challenges, naturally connecting the dots between related issues.Resolving a transport challenge, for example, might most effectivelyand efficiently be achieved through a shift in housing or jobs location oralternative means of transportation. Metros are integrated rather thancompartmentalized.

The federal and state governments focus on atomistic firms and workersand silver-bullet tax and regulatory solutions. Cities and metros, bycontrast, blend the ecosystem and the enterprise. They focus not just ona singular transaction, firm, or solution but rather on building effectivestructures, institutions, intermediaries, and platforms to give dozens ofentrepreneurs and firms what they need: skilled talent, strategic capital,stable governance, reliable rules, functioning infrastructure, collectivebranding, and marketing.

The federal and state governments, driven by outworn notions of legislativehorse-trading, prefer one-size-fits-all solutions that serve to frustraterather than placate. They spread resources across the landscape ofthe nation and their states like peanut butter on a slice of bread, dilutingreturn on investment and diminishing public confidence in public action.Cities and metropolitan areas are, by contrast, aligned and attuned tothe differentiated nature of their economies. They build on their distinctivestrengths, buttress and leverage their specific assets, attributes, andadvantages. They follow Dolly Parton's maxim: "Find out who you areand do it on purpose."

The federal and state governments constitute passive, representativedemocracy; citizens' only active role is to vote at designated intervals.Cities and metropolitan areas constitute active, participatory democracy:tens, if not hundreds, of thousands of leaders who collectively stewardtheir places, guide their regions, and coproduce their economies.

The federal and state governments think in terms of constituenciescompeting against one another for scarce resources and routinely practicedivide-and-conquer tactics. Because they are dominated by legislaturesthat are divided by party and ideology, they reward those who rely on partisancalculus and engage in partisan combat. There, good politics is goodpolicy—for individuals seeking to move up the legislative ladder. Citiesand metropolitan areas think in terms of networks that act together toachieve common goals and encourage collaboration and teamwork. Theyhave a different disposition toward progress and continuous improvement.There, good policy is good politics—for individuals seeking to gaincommunity trust and commitment.
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