A lesson from Cleveland: To avoid deepening inequality, prepare for economic growth before it starts.
The story of Cleveland, as with many other Rust Belt cities, is a story of falling from grace. How is “grace” measured? Population rankings, mostly. Cleveland was America’s 5th biggest city in 1920, beneath only New York, Chicago, Philadelphia, and Detroit. By 1950 it was 7th. By 1980, 20th. Then down to 45th by 2010. And so on.
So, Cleveland shrinks. Shrinking cities are not what successful cities “look” like. They look funny. Cleveland has a “man boobs” problem.
Let me explain.
In 2006 the NBA’s Houston Rockets hired Daryl Morey to be their GM. The intent was to bring sabermetrics from baseball to basketball, or to systematize the likelihood of a given player’s success. To do this, Morey developed a basic algorithm. In 2007 his model really liked European prospect Marc Gasol, who eventually became a multi-year All-Star. But they passed on him. So did every other team. Why?
“The scouts had found a photograph of him shirtless,” Michael Lewis writes in his book about behavioral economics and the science of decision making, The Undoing Project. “He was pudgy and baby-faced and had these jiggly pecs. The Rockets staff had given Marc Gasol a nickname: Man Boobs.” Put simply, Gasol didn’t “look” like what a successful NBA player is supposed to be. He was summarily derided and dismissed.
In fields of all stripes, people, including experts, are bad at judging and predicting success. That’s because individuals use heuristics, or mental shortcuts, when making decisions, which often do more harm than good. The heuristic employed here was “representativeness”, wherein the chance of success was made by comparing what something looks like (Marc Gasol) against what we think it should look like (LeBron James).
It’s a sloppy way of decision making, whether you’re trying to build a basketball team or a city. It turns out that population growth is a poor measure of success. Cleveland’s real per capita income ranks 27th out of some 380 U.S. metros, whereas the swelling metros of Phoenix and Las Vegas are 250th and 271st, respectively. Yet the bias against not growing is tough to beat, particularly in the ten-gallon hat mentality that’s America.
The problem with bad judgement in city building, however, isn’t that banker-types fail to predict the emergence of “comeback” cities—that’s a “buy low, sell high” issue that centers on inefficiencies in how investments are made. Instead, biases can blind local leaders to their own city’s emergence. This lack of foresight can in turn prevent safeguards from being put in place before the market gets hot, setting the stage for what Richard Florida has dubbed “the New Urban Crisis”—the transformation of economically successful cities into wealth-sorting, bifurcating enclaves as capital reenters.
How to fix this bifurcation is up for debate. But lessening a crisis is different than preparing for the absence of one. It’s akin to preventive medicine versus the treatment of disease. Cities need to start getting much better at preventing a crisis in the first place.
There’s arguably no better place to test this notion than in the cities of the Rust Belt. The issues of the new urban crisis are still nascent in places like Cleveland, where the problems associated with the old one—poverty, disinvestment, and crime—are not exactly in the rearview. But this also means the market hasn’t yet dictated the terms of these cities’ reemergence. Those cities with the best foresight will have the greatest ability to put equity-based policies in place.
Early in 2016, in my role as the director for the Center for Population Dynamics at Cleveland State University, I began advanced discussions with the Office of Mayor Frank G. Jackson of the City of Cleveland on an analysis. The objective: Build that foresight. The guiding philosophy was not so much to manage decline as to prepare for growth. Our study, which was released last week, charts economic, demographic, and real estate trends to identify parts of the city that are beginning to reemerge. Those areas are tagged as prime spots for building an equity infrastructure, one jumpstarted by $65 million in public and private investment.
Kyle Fee of the Federal Reserve Bank of Cleveland, who partnered on the analysis, notes that parts of Cleveland, particularly the urban core, have already experienced demographic changes consistent with reinvestment. Specifically, neighborhoods that were low income from 1970 to 2000 became more affluent over the last 10 years. Perhaps surprisingly, Cleveland had the highest increase in gentrifying neighborhoods in the 2000s, compared with peer cities Cincinnati, Columbus, and Pittsburgh.
Overlaying changes in assessed real estate values since the Great Recession proved equally instructive. The greatest appreciation in Cleveland’s Cuyahoga County occurred in the urban core, as illustrated in the map below. Spatially, this is the classic “reverse of the donut hole,” in which prior patterns of disinvestment that bled from the core are infilling in the form of increased valuation.
The issue, of course, is the splitting of the city. The pockets of blue are reflective of an increasingly globalizing Cleveland, or those appreciating neighborhoods attached to the knowledge economy; the pockets of red reflect cut-off Cleveland, or those depreciating neighborhoods detached from the manufacturing economy. Left to its own devices, the pattern will simply deepen. But that’s not yet the case in Cleveland, and local leaders are now armed with anticipatory insight to do something about it.
The alternative? To be obsessed with shrinkage, an internalization imbued with faulty judgement, and simply “juice” those parts of the city that are gentrifying in an effort to grow. But grow into what exactly? A divided city, basically.
After all, today’s representative of the “successful” city is how unequal it’s become, if only because people with means want in. It’s another sloppy heuristic. Inequality isn’t success. It’s an admission that cities haven’t succeeded yet.