Top Quotes: “The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class-and What We Can Do About It” — Richard Florida

“Just six metro areas — the San Francisco Bay Area, New York, Boston, Washington, DC, San Diego, and London — attract nearly half of all high-tech venture capital investment across the entire world.”

“The fifth and final dimension of the New Urban Crisis is the crisis of urbanization in the developing world. The urban optimists believe that urbanization will ultimately bring economic growth, rising living standards, and a growing middle class to these places, just like it did for the United States, Europe, Japan, and more recently, China. Cities, after all, have historically driven the development of national economies. But this connection between urbanization and a rising standard of living has broken down in many of the most rapidly urbanizing areas of the world. We are seeing the rise of a troubling phenomenon of urbanization without growth, in which people pour into rapidly urbanizing areas of the developing world, but see little or no improvement in their living standards.”

“Just forty mega-regions — constellations of cities and metros like the Boston — New York-Washington corridor-account for roughly two-thirds of the world’s economic output and more than 85 percent of its innovation, while housing just 18 percent of its population. The amount of economic activity packed into small urban spaces within the leading cities is even more astonishing. Just one small sliver of downtown San Francisco, for instance, attracts billions of dollars in venture capital annually, more than any nation on the planet save for the United States.”

“The rise in CEO pay was fueled largely by the increased use of stock options and other forms of equity compensation — the basic idea being that this would provide a powerful incentive for better performance. It didn’t turn out that way. There ends up being little actual correlation between CEO pay and company performance. The companies run by the highest-paid CEOs had the worst overall performance between 2004 and 2014, according to a study of 800 CEOs at 429 corporations.”

“That geography has changed dramatically, with venture capital investment and startup companies becoming much more urban. With nearly $6.5 billion in venture capital investment, San Francisco topped the $4.2 billion that the San Jose metro (which encompasses Silicon Valley) received in 2012, ranking as the world’s number one location for venture capital investment that year. Greater New York took in more than $2 billion, the bulk of it in Lower Manhattan. Those figures grew even larger in 2013. In that year, the San Francisco metro took in a whopping $8.5 billion in venture capital investment, with $6.2 billion of that flowing into the city itself, compared to $4.8 billion in venture capital investment in the San Jose metro. Venture capital investment in Greater New York grew to more than $3 billion.

Across the United States, more than half of venture capital investment (54 percent) and nearly six in ten startups (57 percent) were in urban ZIP codes in 2013. Roughly 60 percent of venture investment in the Bay Area went to dense, walkable neighborhoods in urban ZIP codes.”

“Propsition L was a narrowly defeated proposal in 2000 to ban high-tech development and other forms of gentrification from SoMa, the Mission, and other downtown neighborhoods.”

“In 1980, only two metros — New York and Santa Barbara — had large shares of affluent, highly educated whites living in and around their downtowns.”

“In one exclusive building on Eleventh Avenue in New York’s Chelsea area, residents have elevators that lift their cars right to their doorsteps.”

“The development of vast interconnected systems of global trade has broken apart the historical connection between cities, local agriculture, and local industry that powered the more balanced urban economic development of the past. For much of history, cities provided markets for and consumed the food that local agriculture provided. But with today’s vast global food chains, cities no longer depend on the agricultural production of their surrounding hinterlands. People in rapidly urbanizing global cities can be cheaply fed with food imported from other places.

Globalization has similarly broken the link between cities and the development of localized manufacturing industries. In the past, cities developed a wide range of basic industrial activities — quarries, brickmaking, lumber yards, food processing, and others — to house, feed, and clothe their people and move them around. In today’s globally interconnected economy, all of these things can be inexpensively imported from other parts of the world. Instead of having these activities spread out in cities across the globe, they are concentrated in a much more. limited number of places.

As a result, many cities and regions in the developing world are no longer able to build up their economies around the traditional agricultural and industrial activities that spurred local economic development in the past. They have far fewer of the kinds of jobs that can provide pathways for upward mobility and help to raise living standards for the millions upon millions of new urbanites that are streaming into them. When we in the advanced world think about the impacts of globalization, we think about the manufacturing jobs that have been displaced to less expensive foreign factories; but for far too many cities in the developing world, globalization has essentially cut off workers’ path to economic development.

The nub of the global urban crisis is this: in the midst of the greatest urban migration in human history, urbanization has ceased to be a reliable engine of progress.”

“They were forced to spend the majority of their time taking care of life’s immediate necessities: fetching their own water, bartering for and preparing their food, and traveling long distances by foot or rudimentary forms of transportation. This left them scant time to devote to the things that bring greater development — the further enhancement of their own skills and the broader development of their communities. The way to break this cycle and improve the productivity of slums, the study concluded, is to enable the urban poor to use their time more productively.”

“George in fact suggested that undeveloped land be taxed at a rate of 100 percent, minus the improvements made to it. Absent such improvements, he argued, all of the land’s value should return to the public commons. In today’s cities, property owners who use their land for, say, undeveloped surface parking lots would be taxed at a very high rate. A small apartment building would be taxed at a lower rate, and a larger one at an even lower rate. This system would provide greater incentives to put land in high-priced urban centers to its most efficient and productive use, increasing density and clustering.”

“The High Line Park in New York, for instance, created a huge increase in the land value of surrounding property; which & generated windfalls for real estate developers, but little if any of those gains were returned to the park or the broader community. The same is true on a smaller scale in virtually every urban neighborhood that is seeing an influx of new residents, new restaurants and cafés, new and better schools, or reductions in crime. A land value tax can help ensure that those benefits are shared more broadly by the public, because the rise in the value of the land that occurs through these broader neighborhood improvements is also captured by the tax and returned to the public, where it can potentially be used to invest in needed services and help close economic gaps in the community.

Another intriguing idea involves using local tax policy to essentially co-opt NIMBY opposition to new development. The basic idea, referred to as tax increment local transfers, is to allow the residents of neighborhoods to share in the tax revenues that come from new development — for example, by rebating and reducing their own property taxes over a period of time.”

“True high-speed rail (traveling at speeds like France’s TGV or Japan’s Shinkansen) could reduce the travel time between New York and Boston, or New York and Washington, DC, to less than ninety minutes, and between Dallas and Houston, or Dallas and Austin, to about the same; trips from LA to San Francisco, or Pittsburgh to Chicago, would shrink to a more manageable two and a half hours. This could substantially expand the functional labor markets of these places, enlarge their economies, and bolster their overall economic competitiveness.”

“If we want to build a new middle class, we have no choice but to turn the tens of millions of low-paid service jobs we are stuck with into higher-paying jobs.

Transforming low-paid service jobs into middle-class work is not nearly as outlandish a proposition as it may seem at first glance. In fact, it’s analogous to how we turned the low-paying manufacturing jobs of the late nineteenth and early twentieth centuries into the family-supporting blue-collar jobs of the 1950s and 1960s.”

“The United States should also consider underwriting and assisting in the development of refugee cities that could take advantage of the skills and talents of the displaced. This would be a more effective way to address the worldwide refugee crisis than what we are doing now — providing aid for woefully inadequate refugee camps — and it would also be less expensive and enable people to stay closer to home, where they would prefer to be.”