Global Metro Summit makes strong case for metro-based approach to 'next economy'

December 15, 2010
6 comments

This post was written by Jacques Gordon, Global Strategist, LaSalle Investment Management; and Member, MPC Board of Governors.

I was fortunate to stop by the Global Metro Summit, which took place at the University of Illinois (UIC) Forum in Chicago last week. Metropolitan Planning Council (MPC) invited its Board of Governors to attend, and several of us accepted the offer to hear an extraordinary slate of speakers and panel discussions.

The author at MPC's 2010 Annual Luncheon

Photo by Michael Prischman

The guest list was equally impressive: I sat next to a row of officials from the U.S. Dept. of Housing and Urban Development, and in front of a row of staffers from the White House. Academics who research urban issues were also in good attendance. Most interesting of all were the number of foreign guests: I saw nametags indicating people came all the way from the Netherlands, Italy, Germany and Japan ... and I wasn't even trying to mingle!

There was not much publicity – at least not to the local business community – on what this summit was all about. So, I was not sure what to expect. Here’s what I learned:

Regionalism is now central to an active, growing, international dialogue.
Some very smart, articulate people are re-thinking the notion of "planning" as it relates to metropolitan areas.
Finally, "The Urban Question," as framed by authors such as Daniel Patrick Moynihan, Herbert Gans, and Manuel Castells, is being re-framed again.

This time around, it is taken as a given that the overwhelming predominance of economic and social activity in highly developed countries (including the U.S., Germany, Italy and Japan) is now conducted in metropolitan areas. Yet, as the founding director of the Brookings Institution’s Metropolitan Policy Program Bruce Katz pointed out effectively (watch his presentation on Brookings' web site), the political constructs needed to govern and manage these vast settled areas have not kept pace. Metropolitan areas are the economic reality of the 21st Century. They possess assets and liabilities that do not respect the antiquated political jurisdictions of the 19th and the 20th centuries that govern them. Katz argued persuasively for an intentional, metro-based approach to discovering and investing in the engines of growth most likely to succeed in the "Next Economy." These "metro business plans" would focus on: 1) The goods and services exported to national and global markets; 2) where innovation occurs within the region; and 3) how "sustainable, low-carbon" initiatives can help metros compete in the global economy for years to come.

Josef Ackermann, chairman of Deutsche Bank (DB) and co-chair of the World Economic Forum Foundation Board, described this era as the "urban age." Using arguments that sounded like they came straight out of a column by Thomas Friedman of The New York Times, Ackermann reminded the audience how much China is investing in sustainable energy, and that we Americans better take notice. Ackermann explained that what he called "The Green Opportunity" has become his personal passion, as well as an area of expertise of his bank. Developing alternative energy sources, establishing "carbon markets," managing the carbon footprints of Deutsche Bank’s buildings – these are all simply good business, according to Ackermann.

I had a lunchtime meeting back in the Loop, so I could not stay for all the interesting panels that followed the opening speeches by Ackermann and Katz. Without a single cab in sight, I hopped on the No. 12 Roosevelt Road bus back to my office at the Aon Center. The contrast between the world of urban policy experts and the people on the bus hit me squarely. Here were hard-working people and a scattering of students going to or from their jobs, their classes, or perhaps looking for work. Many were chatting amiably, all were staying warm, and everyone headed into the heart of the city in one of those ubiquitous, "articulated" CTA hybrid busses. When we got to the Red Line stop, I was struck by how well this basic infrastructure still works to move people around here in Chicago, despite the disinvestment in various pieces of it. I was back at my office in about 25 minutes, including the Red Line transfer. One of Katz's key themes was that our nations must invest in basic infrastructure. And here, in front of me, was as good an example as any PowerPoint presentation.

I made it back in plenty of time to meet with the global management committee of Jones Lang LaSalle (JLL). My assignment was to share major trends and economic forecasts to help our firm refine its 2011 budgets. I couldn't help but deviate slightly from my script to discuss some of what I had just heard at the summit. The heads of our European, Asian and North American business lines immediately picked up on the major themes of metropolitan growth, infrastructure and sustainable energy. Business people don't always have time for day-long seminars on "urban policy." But many of my colleagues quickly "got it” once I explained the major themes of the "Next Economy," as laid out clearly by Bruce Katz.

The head of our European business division shared that our firm helped plan and execute DB's move to their new state-of-the-art, energy-efficient, headquarters in Frankfurt. Our firm was hired to construct and manage a totally "green" building – including the materials used and the way waste water and trash recycling would be organized. To DB’s credit, they bought into one of the most dramatic plans for any headquarters of a major European corporation. My colleague was gratified to hear that Josef Ackermann was proud of what DB had been able to accomplish. The global management team at JLL pointed out that many other large corporate clients also are now pursuing this path.

In the days since I attended the summit, I have had the chance to leaf through the remarkable series of conference papers. The readability, thoughtfulness and persuasiveness of these documents is much higher than many other examples of "regional planning" literature I have seen. They include case studies from around the world that show how regions have organized themselves to address major challenges; a very well laid-out case for "Metropolitan Business Plans" by two Brookings authors, Chicagoan Robert Weissbourd and Mark Muro; and a short paper from a group of scholars and policy analysts from the London School of Economics on "Policy Lessons" in the EU and Asia.

All in all, I was impressed enough by the whole experience that I thought it worth sharing with the larger MPC community. If you attended the summit, I’m curious to know: What did you take away?

Keywords

Brookings, infrastructure, metropolitan regions, public-private partnerships, regional planning, regionalism

Comments

1. Kris Hammargren from http://wisconsinviewpoint.blogspot.com/ on December 17, 2010

I've been hearing more and more about regionalism--from the Brookings Institute and from others. Interesting point about governance, though. Will be very important consideration as metro areas grow and merge together, esp. across state borders. Thanks for your sharing your pov!
2. Jeffrey Havsy on December 17, 2010

It is an interesting balance trying to create greater cooperation among existing government entities without too much government and regulation. Look at school districts in Illinois as an example. Most school districts are not unified. We have separate districts for elementary schools, middle schools and high schools. This has has created an expensive bureaucracy that reduces the money that actually flows to the students and makes it more difficult to ensure cooperation among schools. However, no one wants to give up their job or take on the teachers union to force action and parents are unwilling or unable to force the necessary changes. With no guarantee that the new structure will be an improvement from the existing one and knowing how hard it is to make additional changes, the risk isn't worth it to most individuals.

The same applies to any metro region. Everyone knows that more cooperation is needed, but the how, the when and the where is up for debate. Toss in the lack of accountability, and no one is willing to be the driving force. Until a crisis forces the change it is unlikely to happen.

Jacques example of the CTA is a good one, but does not tell the whole story. The system is functional (barely), but not efficient or world class. It manages to get the job done, but it could be greatly improved. Until the system is on the edge of collapse we will not see great strides.

Often politicians are unwilling to make the necessary tough decisions that is needed in a non-crisis environment. Maybe a special commission needs to be created to deal with the issue. They can make recommendations that will be voted up or down by the existing local and state legislative bodies that need to approve such measures. This takes the risk away from those who need to seek votes and are unwilling to take the necessary risks, yet does not totally let them off the hook. A good proposal that is binding could overcome some of the hurdles. It is a cowards way out since our elected officials are elected to make these decisions, but we all understand that the reality of the political environment prevents that.
3. Jacques Gordon from Chicago on December 17, 2010

I agree with all these comments. How can something as seemingly ungovernable as a "metro area" promote itself strategically, develop its assets or invest in its infrastructure? These are tough questions. I also don't think that these are issues any of us are comfortable delegating to State government or the Federal government. Don't local business leaders and institutions like Universities also need to play a bigger role in helping define and improve a metro's future? How would that happen? What are your thoughts?
4. Jeffrey Havsy on December 17, 2010

Local institutions are absolutely key stakeholders in the process and need to get involved. They need to raise their hands and step up. There is no excuse for them not to be more active. They should be leading the charge.

Business leaders are a trickier issue. They need to be involved and should want to be part of the process, but they need to show that this is adding value to their companies. Explaining to shareholders (public or private) that investing in the future will payoff , but not necessarily next quarter is difficult.

This is certainly an argument that any of us could make. The problem is, in today's soundbite world that is difficult to do in 30 seconds. We are in the process of having this extend discussion on the issue. I doubt any of us could boil this down to a 30 second sound bite that covers all the issues. Having a supportive Board of Directors that encourages and supports their leadership is key. A business leader who is comfortable in his/her position is more willing to engage in these issues.

Jeffery Immelt of GE has started talking about some of these things and his publicly stated goal is to increase GE's revenues from manufacturing and to do it in the U.S. He has the support of his board.

Maybe more work needs to be done within the business community by the MPC. The Global Metro Summit was a start, but this needs to be followed up with more. Showing business leaders the value of a strong metro with good education and infrastructure isn't a hard sell. I am sure they are all supportive. Taking the next step and showing how they can help will start the process. Politicians and tax-payers will listen to the business leaders if they understand the gains in jobs and wages. One caveat is that this must be a transparent process! Side deals and hidden tax breaks to a preferred few undermine the process and create distrust. The opposite of what is necessary to succeed.

I think the next step needs to be done by the MPC and that is rallying the business community.
5. Jacques Gordon from Chicago on December 18, 2010

No question business people "get" metros. Media markets, Commercial real estate markets, consumer products all think in terms of metros. Labor markets are metro. Banks and law firms think in metro terms (but in doing their work have to take into account federal reserve districts, circuit courts, state-muni-fed laws or whatever). Most of the big business associations based in Chicago are metro-wide (Commercial Club, NAIOP, ULI, Chicago Bar Assn). But: The home rule traditions of smaller, local jurisdictions are so strong here in the US. There is the argument (from Tiebout and others) that they give businesses and residents a wider menu of tax/service choices than metro-wide government would. So, I agree that the argument for regional infra planning or economic development is really one for multi-jurisdictional cooperation or incentives. Getting the Tollway Authority and the RTA to work together on congestion pricing, for example (both authorities have expressed interest in studying this).
6. Mark Finger on December 23, 2010

Thanks for your thoughtful comments. Somehow I long for a charismatic individual to gather up the myriad strings that make up our metro! The Chicago Metropolitan Agency for Planning's long list of partners is both exhilarating and daunting, and is far from a comprehensive roster of NGO's, governments, trade associations, and business. Whew! A metro business plan would indeed be quite a challenge.