April 28, 2015 | By Richard C. Longworth

New Life for Old Cities


UPDATE: This week’s blog posting was written before the riots and destruction in Baltimore, sparked by the death of a young black man through what appears to be police brutality, but fueled by decades of joblessness and economic despair – from any sense of a stake in an economy that has simply abandoned too many people. It’s a crisis not just in Baltimore or Chicago but in every city deformed by the departure of industry and the arrival of a global economy that is deaf to the needs of many citizens. The answer lies not in the neighborhoods themselves, which long ago lost the ability to shape their own economic situation, but in the men and women – the global citizens – who make the economic decisions that shape our economy and who often live close enough to smell the smoke from the fires in the streets.
 

Instead of larding the PACs of their favorite political candidates, wouldn’t it be nice if Chicago’s plutocrats put their money where it might actually do some real good? 

 
Such as creating companies in parts of the city that desperately need jobs and investment. And doing it as a real investment, not as philanthropy.

We wrote here last week about the need for a Chicago makeover, both in substance and image, and suggested a focused commitment to social equity, to close the yawning gap created by the departure of the industrial era and the arrival of the global age.

As it is, the city gets plenty of investment, both from Chicagoans and from outside investors. It could use more – who couldn’t? But future investment is likely to go where it’s going now, into the Loop and into the booming neighborhoods next to the Loop and up the north and northwest sides. All this creates jobs and economic vitality, but mostly for the educated and globally-connected one-third of the city. Many cities, not just Detroit, would be thrilled to be doing as well.

But virtually none of this investment goes into the neighborhoods, especially the African-American ghettoes, which the global era has left behind. The result is a cruelly divided city, plagued by all the social pathologies – drug use, crime, broken families, dropouts – found in the wreckage of a broken economy.

It’s easy to say that the residents of these ghettoes should get on a bus and come downtown, where the jobs are. For reasons beyond the scope of this posting, it doesn’t work that way. The two Chicagos are further apart, economically and socially, than Chicago and Shanghai.

The solution, then, is to take the investment to where the people are. This means creating businesses in these neighborhoods and employing as many of the local residents as possible.

One way to do this is to provide loans and venture capital for the residents themselves to set up businesses. This would work, to a degree, but it means relying on entrepreneurs in great swatches of the city where entrepreneurialism has all but fled.

The alternative is for investors to set up companies themselves and to hire locally, working with community colleges or in-house programs to train workers.

All this is easy to say. But where would these investors be found?

One place is the new generation of super-wealthy Chicagoans who spend most of their spare cash these days endowing museums or donating to the political PACs of their friends. Illinois Gov. Bruce Rauner has set up such a PAC, already to $24 million and growing, to battle trade unions.

There’s more where that money came from. If these donors really want to help workers, as they claim, creating jobs is the way to do it. Most unemployed people just want a job and don’t care if it’s unionized or not.

Another source would be the investment that Mayor Rahm Emanuel brings to the city whenever he persuades a non-Chicago company to move in. The city already is bribing them, through tax or real estate breaks, to make the move. But Emanuel could help both these companies and the cities by tying this aid to a commitment to do business in the inner city.

Some of these companies absolutely need to be in the Loop, but many don’t. All, though, come here because they want to be here, and would be open to incentives to settle in the inner city.

It can be done. A San Francisco-based company called Method, which makes cleaning products, just opened a factory in a depressed neighborhood near Pullman, on the far south side. It will employ 60 people at least.

Sure, it got the usual public funding and tax breaks. But it wouldn’t be in Pullman at all unless it felt it could prosper there.

That’s the point. This isn’t philanthropy. It’s not a feel-good and tax-deductable donation. It’s a serious commitment. It’s putting some skin in the game.

It’s also the way things used to be, and aren’t any more. It’s the difference between philanthropy and investment.

Chicago and the Midwest were built by investors and innovators establishing companies and offering jobs. In time, some of these companies – US Steel, Ford, Caterpillar – became huge employers, literally shaping and driving their local economies.

None of these companies was necessarily social-minded. All were in it to make a profit, not to do good. Most were as anti-union as Rauner and his friends. But by doing what they did, they created whole cities and an industrial middle class.

That’s over. In recent decades, all these companies, still doing what businesses do, have killed more jobs than they created. Most are still generous philanthropically, trying to make up through their foundations what they no longer do in their day jobs.

It’s not enough. Across the Midwest, cities that once thrived on the paychecks of these companies are decaying today, philanthropy or no philanthropy.

Obviously, changing this pattern of investment means changing hearts and minds. It means convincing the businesses that abandoned these neighborhoods that they should go back. It means providing the security and training to enable them to do so safely and efficiently. Mostly, it means a commitment to community that goes beyond a strict devotion to the bottom line.

But in the end, of course, it won’t work unless it also benefits that bottom line. The betting here is that it will, as Method feels and as big-box stores have recently discovered, that once-abandoned cities can be a source of profit.

At the very least, one more high school grad with a job means one less high school dropout on the street corner. For companies invested in the city, the social cohesion of the city – all of it, not just the wealthier parts – is part of the costs and benefits of being there.

About

Richard Longworth is nonresident senior fellow on global cities at The Chicago Council on Global Affairs and author of On Global Cities and Caught in the Middle: America’s Heartland in the Age of Globalism, on the impact of globalization on the American Midwest. He also was a distinguished visiting scholar at DePaul University and adjunct professor of international relations at Northwestern University, and is a mentor at the Harris School at the University of Chicago.

Archive


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