Creative Class

The economic crisis continues to reshape our economic geography.

Despite short-term hits, the world’s leading financial centers, New York and London, are likely to remain on top through the crisis and beyond, according to Peking University professor Michael Pettis, writing in Newsweek:

Financial crises tend to trigger overwrought predictions of major economic shifts–and then debunk them. Today’s global economic meltdown is no different. In recent months, it has become popular to predict that New York and London (or NyLon, as they’re together known) will soon lose market share as cities in the emerging world use the crisis to wrest away dominance. But history suggests that the opposite is more likely: that New York and London will actually increase in importance over the decade to come …

Big centers have two huge advantages over smaller rivals: greater liquidity and larger networks. Big investors tend to flock to big financial capitals because they offer higher volume and lower trading costs, and issuers of stocks, bonds and other financial products follow the flock of investors. …When a liquidity boom ends, however, it tends to accentuate the advantages of big markets while diminishing those of smaller ones.

China Digital Times picks up China Law Blog’s similar reading about:

why New York will remain as the world’s financial capital and why, despite the projected growth of Asia’s economies, we should not expect Shanghai, Hong Kong, or anywhere else to usurp it. At least not for an exceedingly long time.

Older Rustbelt centers continue to get clobbered by the structural decline of manufacturing. Job losses at bankrupt automakers GM and Chrysler have been highly concentrated in older Rustbelt centers as this NYT map shows.

And, the sun continues to set on shallow-rooted Sunbelt cities, according to this Associated Press analysis.

Some cities — Las Vegas, Phoenix, Fort Myers are good examples — hitched their floats to housing bubbles and got caught up in development that depended largely on, well, development itself, rather than sustainable, scalable, productive industry, economic analysts say. …

AP Stress Index figures, which calculate the economic impact of the recession on a scale of 1 to 100, illustrate how the downturn has played out in some of these communities:

In Maricopa County, home to Phoenix, the Stress Index more than doubled from 5.12 at the beginning of the recession in December 2007 to 12.67 in March 2009, worsened by a foreclosure rate that nearly tripled.

Mounting foreclosures in Las Vegas’ Clark County drove up its Stress Index score from 10.5 at the start of the recession to 19.3 in March 2009.

In Lee County, home to Fort Myers, unemployment has doubled and foreclosures have soared 75 percent since the recession began, lifting its Stress Index from 10.5 to 19.98 …

Now Phoenix’s hotel industry is tanking, according to the Wall Street Journal.

“Phoenix suffers from the dual challenges of overbuilding and shrinking demand due to the national drop-off in corporate conferences,” said David Loeb, a hotel-industry analyst with Robert W. Baird & Co. “All of this means that Phoenix’s hotel market has experienced one of the steepest downturns among the big markets.”

The New York Times asks artists how the recession is affecting their lives and work (h/t: Alison Kemper). Money quote:

“I love it. The only thing that makes me sad is that I can’t make a living right now.”

While the responses comprise a small, ad hoc sample, my read is that the artists in major centers like NYC and San Francisco seem more upbeat than those in harder-hit Rustbelt communities.

Readers of the blog know I’m a huge Buffalo fan. Visiting the city on “homecoming” weekend, New York Magazine’s Adam Sternbergh tells us why that city and others like it – and no, not his adopted home of NYC – is the new frontier.

New York will always offer you the singular opportunity of testing yourself against the best, of sharpening yourself against the city’s fabled grindstone. Hopeful people will always scrape together their savings to come here, to split a one-bedroom apartment with five other people, whether that’s in Greenwich Village (then) or Bushwick (now). But New York, for all its mythology, is no longer a frontier. Buffalo is a frontier. And when you think of the actual frontier, you’ll recall that no one ever packed up and moved West to a gold-rush town because they heard it had really good local theater. They moved looking for opportunities. They moved for the chance to build a new life for themselves.

This, ironically, has always been the siren song of New York City: the chance to turn yourself into someone new, to live the life you’ve always imagined. But what a city like Buffalo offers is a very different promise of what could be. It offers the chance to live on the cheap and start a nonprofit organization, or rent an abandoned church for $1,000 a month, or finish your album without having to hold down two temp jobs at the same time, or simply have more space and a better view and enough money left over each month to buy yourself a painting once in awhile. A city like Buffalo reminds you that, beyond New York, there are still frontiers.

And Adam, if you’re out there reading: your piece is the No. 3 story on the Buffalo morning TV news (yes, they rank them everyday). Buffalo is our other, local TV market here in Toronto.

Over at Burghdiaspora, Jim Russell uses the very same story to take me to task:

Somehow the urban frontier effect has eluded Richard Florida. He’s busy chasing yesterday’s city stars. The rise of places such as Austin also had a lot to do with providing a frontier experience. In the Sun Belt, blank slate geographies abounded (see Houston for the best example of a frontier political geography). And then the scene of opportunity shifts as the hipster cities mature (i.e. get more expensive). This is the fickle fortune of geographic mobility.

Huh? The Rustbelt elude moi? I am a big believer in observed locational preferences: let’s look at mine. Save for three years in Washington, D.C. and a sabbatical at Harvard in the mid-1990s, I’ve lived since the early 1980s in: Buffalo, Columbus, Pittsburgh, and now Toronto (and yes, it qualifies too). I met my wife in Detroit. Rustbelt cities are fantastic places – filled with history, authenticity, real messy urbanism, abundant garage spaces, spectacular interplay between the built and natural environments and great universities. What has kept them down – caused their own sons and daughters to move out and kept talent away? Simple. In addition to economic trauma, it is a long legacy of close-minded and intolerant leadership – squelchers. I’ve seen it firsthand in so many of these places. That’s now starting to turn around in Buffalo, as Sternbergh’s story shows, and in Pittsburgh, and elsewhere. Go Tor-Buff Bills!