In his presentation (and in our Metro North America report), Bruce Katz outlined a three-part playbook for how sub-national leaders are acting to further trade, investment, and economic growth in our three countries:
Set a vision. City and metropolitan leaders are setting bold visions for the future of their economies that can focus public, private, and civic sector actors on shared goals for growth. Mayor Smith outlined his cityâ€™s new mantra: Educate, Innovate, Facilitate, Elevate. His economic development agenda is focused around strengthening Mesaâ€™s assets in healthcare, education, aerospace, and tourism (HEAT), and working together with partners in the Maricopa Association of Governments and the Greater Phoenix Economic Council to create and execute a metropolitan business plan . Taking greater advantage of the regionâ€™s already strong ties with cities and states in Mexico is an important part of those visions.
Invest in what matters. The factors that drive city and regional growth are innovation, human capital, and infrastructure. The quality of those assets, regardless of the sector in which they are applied, account for long-run economic success. Windsor, Ontario Mayor Eddie Francis described how the downturn in the auto industry in the late 2000s threatened tens of thousands of workers in his city, a major North American auto hub just across the border from Detroit. Recognizing this, the city and region invested in helping auto suppliers transition into the aerospace industry, taking advantage of workers with widely applicable manufacturing skills and excess plant capacity to diversify the economy towards a sector with growing opportunities. Working with the University of Windsor to develop a new aerospace engineering program, the region has succeeded in attracting thousands of new aircraft maintenance, repair, and operations (MRO) jobs. Even the universityâ€™s automotive research programAUTO21 has become a key partner in bolstering the regionâ€™s emerging aerospace cluster.
Network globally. The capstone of the GCI-Mexico forum was the signing of a new agreement by mayors Miguel Ãngel Mancera of Mexico City and Rahm Emanuel of Chicago to partner together on strategies to grow the economies of both cities. While â€œsister citiesâ€ agreements have existed for some timeâ€”and Chicago alone has 28 of them, focused mainly on cultural exchangeâ€”the new agreement aims to take the citiesâ€™ already-strong relationship in an explicitly economic direction, exploring joint opportunities for foreign direct investment, export promotion, and increased tourism. As Mayor Emanuel described during a discussion with Mayor Mancera moderated by JPMorgan Chase Executive Vice President Peter Scher, Chicago is acting boldly because the city cannot be held hostage to the functioning (or dysfunction) of its state and national governments. And Mayor Mancera noted that even given the progress being achieved today at the national level in Mexico, mayors are ultimately co-responsible for generating local and regional growth and prosperity.
As Michael Bloomberg recently wrote in the Financial Times, great urban centres, like New York, London and Toronto, canâ€™t outpace the rapidly growing cities of Asia or Latin America simply by offering lower costs, tax breaks or other subsidies. â€œFor cities to have sustained success, they must compete for the grand prize: intellectual capital and talent,â€ he said. â€œI have long believed that talent attracts capital far more than capital attracts talent. The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities.â€
Florida also asks the bigger question of why the best and brightest are not thinking about running in municipal politics in some cities.
A while back, at a dinner party, a friend who occupies a vaunted position in Torontoâ€™s entertainment industry asked me: why is it that Toronto canâ€™t attract the best and brightest to local office? World-class global cities face thorny problems that require top-flight leadership. In Boris Johnson, London has a media-savvy, Oxford-educated conservative mayor who cares deeply about the quality and diversity of his city. Rahm Emanuel in Chicago is an immensely experienced, extraordinarily capable former U.S. congressman and chief of staff to Barack Obama who is governing effectively from the left of the political spectrum. In New York, Mayor Michael Bloomberg, the billionaire businessman, is a pragmatic moderate who calls on the best minds from all sectors and strata. Even Newark, the city of my birth, one of the most economically disadvantaged cities in America, now has the dynamic Cory Booker, a Stanford grad and Rhodes scholar with a law degree from Yale University, as its mayor. Here in Canada, Vancouver has Gregor Robertson, a former organic farmer and businessman whoâ€™s delivering on a green agenda and actively addressing homelessness, public health and affordable housing. And Calgaryâ€”to which Torontonians love to feel superiorâ€”has in Mayor Naheed Nenshi a young, Harvard-educated Muslim whoâ€™s intent on reforming council and growing his prosperous city in a fair and sustainable way.
While other cities are attracting effective mayors from across the political spectrum, our mayor has become a symbol of Torontoâ€™s plight. Yet that plight is not of his making. Municipal governments across Canada have limited powers. Times are lean, which leads to shrill debate about how best to achieve these goals. Battles about bike lanes and library hours and plastic bags fill the daily media, but they distract us from the reality that the cityâ€™s future is being shaped by global forces we ignore at our peril.
Of course he ignores, that many did run but could not beat Ford but he does get around to the answer.
To start, Toronto requires the rudimentary governance tools needed to chart its future course. It makes little sense that this nationâ€™s largest city canâ€™t govern itself and plan its future. The mayors of U.S. cities have considerably more power, which is one reason the Bloombergs and Emanuels are attracted to the job. The political theorist Benjamin Barber has charted the highly innovative, pragmatic solutions on everything from fighting crime and improving schools to economic growth and climate change developed by this new breed of mayoral talent, and argues that much of economic and social life would be better â€œif mayors ruled the world.â€ Canadaâ€™s mayors cannot even rule their own cities.
Over the years, the federal government and provinces have downloaded many costs and obligations to the cities, but little authority. As the philanthropist and Maytree Foundation chair Alan Broadbent has pointed out, Canadaâ€™s cities essentially â€œrely on the kindness of strangers,â€ notably the provincial and federal governments. This, he suggests, leaves cities with essentially no control over their destinies. Canadaâ€™s cities need to become more like provincesâ€”with real power and real revenue to solve their problems and build their economies.
Toronto has a wealth of city builders and city-building organizations. What it needs is more effective leadership vehicles that can braid their myriad efforts together as a real force for change. Richard Daley Jr., the Democratic mayor who spearheaded Chicagoâ€™s global rise for more than two decades, told me recently that the key to much of the success he had was progressive business leadership. In Chicago, that type of leadership goes back more than a century. The 1909 Burnham Plan, which envisioned a revitalized city centre, was supported by the Commercial Club of Chicago, a group of businessmen who responded to the need to make improvements to their fast-growing city. Today, a group of private sector leaders called World Business Chicago, whose mission is to build a â€œglobal economic powerhouse,â€ is focused on attracting new corporations to the city.
He also talks about the need for regional planning
One illustrative example comes from Silicon Valley. Not too long ago, this area south of San Francisco had little long-term strategy or vision, just a welter of competitive entrepreneurs intent on developing the next big thing. After the recession in the early 1990s, the entrepreneurs came together to form an organization called Joint Venture: Silicon Valley. As its name implies, it was formed as an inclusive network of business, political, labour and civic leaders, and organizations from multiple cities and jurisdictionsâ€”a stark contrast to the top-down organizations and old boysâ€™ clubs found in older cities. It based its deliberation on data-driven analyses of the local economy, measuring variables that shape the regionâ€™s prosperity. Armed with such facts, and backed by many of the major institutions and players in Silicon Valley, Joint Venture became a highly effective agent of change, identifying key issues the region faced, and bringing state and federal attention to problems and opportunities it identified. It focuses on issues like unaffordable housing, transit, growing inequality and a burgeoning class divide. Sound familiar?
Toronto needs to act in harmony as one region, not a city versus its suburbs. Joint economic development would enable municipalities to grow together. It makes no sense for separate towns to compete for businesses that are going to locate in a shared region. Daley organized the mayors of greater Chicagoâ€™s municipalities and would actively help them land new business prospects rather than compete against them. By working together as a single region, we can stretch our boundaries, leveraging the broader capabilities that can enable greater Toronto to compete with much larger cities around the world.
There is a path to greater prosperity in Saskatoon but we just don’t want to take it. Â Instead we hang on the mantra of lower and lower spending and taxes. Â We are the Walmart of North American cities.
Really, really messed up. It is bankrupt.
As dire as Chicagoâ€™s finances are, those of Illinois are in even worse shape. The primary cause, once again, is pensions, which are underfunded to the tune of $83 billion. Retireesâ€™ future health care is underfunded an additional $43 billion. Thereâ€™s a lot of regular debt, tooâ€”about $44 billion of it. And Illinois, like Chicago, has run large deficits for some time. Despite raising the individual income tax 66 percent and the corporate tax 46 percent in 2011, the state is projected to end the current fiscal year with an accumulated deficit of $5.2 billion. While California has made headlines by issuing IOUs to companies to which it owes money, Illinois has taken an easier route: it just stopped paying its bills, at one point last year racking up 208,000 of them, totaling $4.5 billion. Some businesses have gone unpaid for nine months or even longer. Unsurprisingly, Illinois has the worst credit rating of any state. Unable to pay its bills, it is de facto bankrupt.
Itâ€™s dragging down Chicago with it.
What accounts for Chicagoâ€™s miserable performance in the 2000s? The fiscal mess is the easiest part to account for: it is the result of poor leadership and powerful interest groups that benefit from the status quo. Public-union clout is literally written into the state constitution, which prohibits the diminution of state employeesâ€™ retirement benefits. Tales of abuse abound, such as the recent story of two lobbyists for a local teachersâ€™ union who, though they had never held government jobs, obtained full government pensions by doing a single day of substitute teaching apiece.
If the state and city had honestly funded the obligations they were taking on, their generosity to their workers would be less of a problem. But they didnâ€™t. As City Journal senior editor Steven Malanga has written for RealClearMarkets, Illinois â€œessentially wanted to be a low-tax (or at least a moderate-tax) state with high services and rich employee pensions.â€ Thatâ€™s an obviously unsustainable policy formula. The state has also employed a series of gimmicks to cover up persistent deficitsâ€”for example, using borrowed money to shore up its pension system and even to pay for current operations. At the city level, Mayor Richard M. Daley papered over deficits with such tricks as a now-infamous parking-meter lease. The city sold the right to parking revenues for 75 years to get $1.1 billion up front. Just two years into the deal, all but $180 million had been spent.
The debt and obligations begin to explain why jobs are leaving Chicago. It isnâ€™t a matter, as in many cities, of high taxes driving away businesses and residents. Though Chicago has the nationâ€™s highest sales tax, Illinois isnâ€™t a high-tax state; it scores 28th in the Tax Foundationâ€™s ranking of the best state tax climates. But the sheer scale of the stateâ€™s debts means that last yearâ€™s income-tax hikes are probably just a taste of whatâ€™s to come. (Cutting costs is another option, but that may be tricky, since Illinois is surprisingly lean in some areas already; it has the lowest number of state government employees per capita of any state, for example.) The expectation of higher future taxes has cast a cloud over the stateâ€™s business climate and contributed to the bleak economic numbers.
It also has some messed up city politics.
Another reason for Chicagoâ€™s troubles is that its business climate is terrible, especially for small firms. When the state pushed through the recent tax increases, certain big businesses had the clout to negotiate better deals for themselves. For example, the financial exchanges threatened to leave town until the state legislature gave them a special tax break, with an extension of a tax break for Sears thrown in for good measure. And so the deck seems to be stacked against the little guys, who get stuck with the bill while the big boys are plied with favors and subsidies.
It also hurts small businesses that Chicago operates under a system called â€œaldermanic privilege.â€ Matters handled administratively in many cities require a special ordinance in Chicago, and ordinances affecting a specific council districtâ€”called a â€œwardâ€ in Chicagoâ€”canâ€™t be passed unless the city council member for that ward, its â€œalderman,â€ signs off. One downside of the system is that, as the Chicago Reader reported, over 95 percent of city council legislation is consumed by â€œward housekeepingâ€ tasks. More important is that it hands the 50 aldermen nearly dictatorial control over what happens in their wards, from zoning changes to sidewalk cafÃ© permits. This dumps political risk onto the shoulders of every would-be entrepreneur, who knows that he must stay on the aldermanâ€™s good side to be in business. Itâ€™s also a recipe for sleaze: 31 aldermen have been convicted of corruption since 1970.
It kills small businesses
Red tape is another problem for small businesses. Outrages are legion. Scooterâ€™s Frozen Custard was cited by the city for illegally providing outdoor chairs for customersâ€”after being told by the local alderman that it didnâ€™t need a permit. Logan Square Kitchen, a licensed and inspected shared-kitchen operation for upscale food entrepreneurs, has had to clear numerous regulatory hurdles: each of the companies using its kitchen space had to get and pay for a separate license and reinspection, for example, and after the city retroactively classified the kitchen as a banquet hall, its application for various other licenses was rejected until it provided parking spaces. An entrepreneur who wanted to open a childrenâ€™s playroom to serve families visiting Northwestern Memorial Hospital was told that he needed to get a Public Place of Amusement licenseâ€”which he couldnâ€™t get, it turned out, because the proposed playroom was too close to a hospital!
And these are exactly the kind of hip, high-end businesses that the city claims to want. Who else stands a chance if even they get caught in a regulatory quagmire? As Chicagoland Chamber of Commerce CEO Jerry Roper has noted, â€œunnecessary and burdensome regulationâ€ puts Chicago â€œat a competitive disadvantage with other cities.â€ Companies also fear Cook Countyâ€™s litigation environment, which the U.S. Chamber of Commerce has called the most unfair and unreasonable in the country. Itâ€™s not hard to figure out why Chief Executive ranked Illinois 48th on its list of best states in which to do business.
Rahm Emmanuel is making some progress
Some of those challenges defy easy solutions: no government can conjure up a calling-card industry, and it isnâ€™t obvious how Chicago could turn around the Midwest. Mayor Emanuel is hobbled by some of the deals of the pastâ€”the parking-meter lease, for example, and various union contracts that donâ€™t expire until 2017 and that Daley signed to guarantee labor peace during the cityâ€™s failed Olympic bid.
But thereâ€™s a lot that Emanuel and Chicago can do, starting with facing the fiscal mess head-on. Emanuel has vowed to balance the budget without gimmicks. He cut spending in his 2012 budget by 5.4 percent. He wants to save money by letting private companies bid to provide city services. Heâ€™s found some small savings by better coordination with Cook County. Major surgery remains to be done, however, including a tough renegotiation of union contracts, merging some functions with county government, and some significant restructuring of certain agencies, such as the fire department. By far the most important item for both the city and state is pension reform for existing workersâ€”a politically and legally challenging project, to say the least. To date, only limited reforms have passed: the state changed its retirement age, but only for new hires.
Next is to improve the business climate by reforming governance and rules. This includes curtailing aldermanic privilege, shrinking the overly large city council, and radically pruning regulations. Emanuel has already gotten some votes of confidence from the cityâ€™s business community, recently announcing business expansions with more than 8,000 jobs, though theyâ€™re mostly from big corporate players.
New York Magazine has a long essay on the second act of Obamaâ€™s Presidency and what he is doing to revitalize it after the disastrous mid-term elections.
For Obama, retooling on this scale does not come naturally or happily. Among the hallmarks of his political career has been constancy: a tight and basically static cadre of close advisers and a stubborn resistance to calls for midcourse corrections. Yet in a series of interviews in early January with senior White House officials and many of Obamaâ€™s closest confidants outside the building, a picture emerged of a president engaged in a searching, clear-eyed, and sometimes painful process of self-scrutiny, and now determined to implement a plan to fix what has ailed his enterpriseâ€”and himself. To put behind his White House the frenetic, transactional, shambolic style of former chief of staff Rahm Emanuel. To break out of the suffocating cocoon in which he and his team had swaddled themselves. To establish the kind of compelling narrative about where his administration intends to take the country and how it plans to do so that has been lacking since day one.
I was amazed to read how much of an introvert Obama was and how isolated he allowed himself to become.
The more pointed variant of this critique was directed specifically at Obama. Unlike 42â€”who loved to stay up late, jabbing at the speed dial, spending countless hours gabbing with local pols and businesspeople around the country to gauge the political wind and weatherâ€”44 not only eschewed reaching out to governors, mayors, or CEOs, but he rarely consulted outside the tiny charmed circle surrounding him in the White House. â€œWhat you had was really three or four people running the entire government,â€ says the former White House strategist. â€œI thought they put a pretty good Cabinet together, but most of those guys might as well be in the witness-protection program.â€
A funny line, no doubt, but an overstatement, surely? Well, maybe not. â€œI happen to know most of the Cabinet pretty well, and I get together with them individually for lunch,â€ says one of the most respected Democratic bigwigs in Washington. â€œIâ€™ve had half a dozen Cabinet members say that in the first two years, they never had one callâ€”not one callâ€”from the president.â€
You would have thought that with a personality like this, him and Stephen Harper would have become closer friends. I did find this comment interesting by Robert Gibbs.
Perhaps, perhaps not, but that may be beside the point. â€œIn the first two years, controlling both houses of Congress and having the White House meant there was little to no responsibility that was required of the other partyâ€”so people compared us to ourselves, or to the perfect, and you always lose that argument,â€ says Gibbs. â€œNow thereâ€™ll be some ability to compare where each entity wants to take the country, and that will shape in a finer way the values and visions of all those involved. The presidentâ€™s going to get out of town a lot. The presidentâ€™s going to tell a story and show the country what heâ€™s doing, why heâ€™s doing it, and where we want to goâ€”rather than just dealing with Mondayâ€™s or Tuesdayâ€™s or Wednesdayâ€™s problem.â€
It explains why the American electorate hates giving one party a majority in Senate, Congress, and in the White House, you get what the United States got for the last two years.
Itâ€™s more than an article about Politico but also about how the business of journalism is changing
Politico reduces the world to Rahm Emanuel and to the people who want to be Rahm Emanuel.
And yet, this is a passionate conversation among quick and deeply knowledgeable folk. The habit and, perhaps, necessity of traditional news organizations to reduce and simplify and attenuate and, in the process, make news flaccid and often wrong have been superseded by these over-informed motormouths. Itâ€™s the raw stuff, before the family paper or knuckleheaded network news has watered it down.
It is perhaps useless to argue whether this is good or bad. Rather, the world is as it is. And Politico seems like a pretty credible version of what the world will be: obsessives everywhere in their particular narrow-focused areas of interest (â€œsilosâ€ is the modern information term), flashing ever more information, ever quicker, in ever shorter bitesâ€”the shorter you can make it, the more information there can beâ€”to all the ships at sea.