GROWTH

Part I rests upon some form of growth (individual, firm, industry or jurisdictional size). That will be challenged, at least for Big Cities, in Parts II and III. Part I is dominated by city-building, infrastructure installation and formation and maturation of the jurisdictional economic base. Big Cities developed first, and punched their ticking profit cycle clock earlier than the other regions which are predominantly in their initial stages of growth—or, in the South’s case, mired in an unsustainable, low-wage, subsistence, manual, largely non-urban agricultural-export economy. The West and South are out of sequence with the Big Cities. Their story lies ahead. For the moment, however, the hegemonic Big Cities are the leading edge of American economic development. They are growth machines writ large—that, however, is about to change.

Part II is also driven by growth, but a more complex, more nuanced growth. Growth requires, it seems to those of that time, periodic modernization and upgrading. Obsolescence, expressed primarily in housing and transportation infrastructure, is the most serious detriment to further growth. Without growth potential disruption will result. Disruption, however, comes in many forms—that will be quite evident in Part II—and Big Cities faced the threat of disruption and potential decline from an unexpected direction: its hinterland.

Such potential disruption greatly threatened the urban/regional competitive hierarchy. Growth was its core, bottom-line criterion. That works fine when there is no decline. Cities can simply benchmark themselves to other cities to see how well they are doing. When decline becomes a possibility because the Big City risks losing control over its hinterland, however, each city must fight a two-front competition. The competitive hierarchy now includes (1) decline as a possible scenario, and, (2) it becomes clear a second hierarchy, a metropolitan hierarchy, has become critical to the primary of the Big City. This is a turning point in our state and local ED history. Big City success is not just growing in population and/or economic base—it also means harnessing the growth of a hinterland that threatens autonomy.

If the emergence of a second competitive hierarchy were not bad enough, the jurisdictional economic base was getting too big for its britches. The jurisdictional economic base had evolved into a highly-concentrated economic behemoth. Industry concentration affects the structure of business elites, central to the policy systems prevalent in Part I. Concentration meant one percenters no longer concentrated on their Big City alone; they now had national ambitions, and had interests at the Federal level and national markets—they had a northern economic hegemony to run—and keeping the politicians in order diverted their attention.

More local and regional business elites now operated local EDOs; they lacked the firepower of one percenters, increasingly they were torn over how to protect their beloved CBD and make a few bucks from the expanding suburban hinterlands. Unions had arrived on the scene and urban working class had discovered they could factor in the elections of mayors—and working class were less concerned with growth, especially when Prohibition threatened, along with gangster violence. The Gilded Age/Structural Reform municipal policy systems was for the most part, a memory. Economic development was about to be moved into the back seat of municipal policy-making.

Finally, population mobility, up to this point, overwhelmingly net positive for Big Cities, will shift markedly. Immigration was over; the Great Migration was accelerating. By the 1920s, storm clouds are brewing for our Big Cities—the red sky in the morning, a sky that sailors take as warning, is on the horizon of business leaders, Policy Worlders and those who see themselves as economic developers.

The Depression, starting officially in October 1929, hits during the thirties—Part II. In very many ways, the Depression “resets” economic development and, to mix metaphors, shuffles the deck dramatically. Part I is almost entirely focused on the municipal level—American ED until the Depression is municipally driven. There is no doubt who is in charge of the policy area: cities, towns and villages. That will change noticeably during, and after, the Depression. Of course, the federal government will enter the picture in a big way, but little noticed is that FDR’s approach to federalism, “marble cake” it is called, operates through state governments. States during these years will acquire the capacity that municipal governments obtained after the turn of the century. They will become players as well late in Part II and certainly Part III.

“Red Sky in the Morning, Sailor Take Warning”:

The Winds of Depression, War, and Victory, 1930–1961

Within a three-decade period, the most serious depression America has ever known, a World War followed by nuclear Cold War, global world leadership, and no normalcy to return to could have been the Perfect Storm for American economic development. What is so amazing is how much of the past Classical Era persisted through the storm. That is the story for much of Part II. What is also evident is the Perfect Storm changed the fundamentals of the “old order”—in particular tearing down the pillars of the Northern–Midwest hegemony. The hegemony, like the British Empire, survived the storm and sunset less than a generation later.

Make no mistake there were serious changes afoot during the Part II years.

For our purposes the thirty years could be split into two equal phases. The first fifteen years marked the entry and dominance of the federal government forced into state and sub-state affairs by the Depression and the War. The second phase brought victory but America was the only major nation left intact by war and emerged as the leader of “the Free World,” the world’s most powerful economy, and the lead player in a new global finance/trade system. That we were in a sort of Permanent War with Communism meant that war, or its threat, never left us. Domestically, the second fifteen years witnessed a federal pullback, still leaving in place a serious role for the federal government in state and local matters—but locals, especially, resumed what had been the Classical Era’s municipal leadership of American economic development. But they did so in a vastly changed environment. This was not to be a return to normalcy,” but entry into a “brave new world.”

The rise of the federal government in state and sub-state ED was a first-order change. So was Keynesian economics; that economic model injected the federal government into the jurisdictional economic base. The federal government through the Second Reconstruction of the South, western infrastructure, war production, industrial decentralization, and a flood of population mobility drastically altered the economic bases of the West and the South, and dramatically injected a steroidal growth in their local jurisdictions. The abrupt and crisis-driven transformation overwhelmed these cities, but left in its wake completely different policy systems, demographics, and a metropolitan landscape. While the industrial bases of the hegemony seemed to weather the storm in good shape, federal industrial decentralization had planted new gazelle-like sectors firmly in the West and Texas—as well as Route 128. It would take almost two generations for economic development to see the effects of that change.

In an era of “permanent war,” Keynesian economics and the world’s reserve currency, the American national economy enjoyed a rare near-monopoly of prosperity and growth in a bombed-out and exhausted Old World globalism. Another major change was the actors that participated in the jurisdictional policy systems. Federal programs required accelerated capacity and professionalization by state governments. State government emerged as a serious player in sub-state economic development by the end of the period. Unions were players in most hegemonic states; chambers, however, still in charge faced an entirely new municipal landscape with a stronger mayor and municipal government. The one percenters had formed a new powerful EDO, the Committee for Economic Development (CED), with influential local chapters. American ED incorporated a largely new, vigorous, but ideologically prone academic/think-tank/policy institute/foundation nexus that played a serious role in agenda-setting and policy formulation.

The practice of economic development, the Practitioner World, underwent its own disruption, with port authorities developing, in onion-like fashion, their own separate professional identity, grew into vastly more powerful and critical position in their jurisdictional economic bases, but also converted them into transportation service providers and players in the national logistical system. Municipal government EDOs, led at first by transitional quasi-public/private EDOs, emerged by 1970 as independent, leading players in municipal and county-level economic development—displacing the chamber as the jurisdiction’s primary EDO.

From municipal-level ED’s perspective, the second phase could have been called the “Age of Urban Renewal.” A battle between CD’s public housers and Mainstream ED and one percenters over the use of slum clearance—in neighborhoods for public housing, or for a modern, refunction corporate-led CBD, commercial centers, industrial parks, eds and meds, and culturals. Housing agencies competed with redevelopment agencies—but both resulted in demolishing much of the older, deteriorated Second Ghetto neighborhoods. What they missed was destroyed by federal and state interstate highway construction. The federal government, expectedly, was a major player—but was pulled in by the locals. Urban renewal provided the script that rewrote Big City economic development, but the variety and flavor of urban renewal as it was implemented in Big Cities once again demonstrated the power of political culture, as well as the variation in beliefs of its business community. In any event, urban renewal proved to be the midwife of modern era economic and community development.

By the end of the period, more sophisticated suburban policy systems developed; some were engaged in economic development. Western suburbanization was in a league of its own. That is ironic, because the unifying ostensible purpose of urban renewal was to constrain, or at least manage, suburban decentralization so to preserve Big City hinterland’s second competitive hierarchy. That’s why highways to the CBD were so important—so suburbanites could shop and work in the CBD. But during these years, the suburbs exploded, malls were built, and the Big City changed demographics

By 1961, the three regions had evolved into four—with Texas and the Southwest, including southern California, united by a reasonably consistent political culture pursuing its own form of growth, driven by policy systems congruent with their approach. The Pacific West evolved its own path. The South in turn was, by the end of the era, engaged in its own civil war, with a New South contesting for leadership over an Old South wracked by civil rights and race. The “non-southwest” West, growing and prosperous to be sure, struggled with its identity, torn between its ties to the Big City East and its western heritage.

As for the Big City hegemony—that lies below in Chapters 10 and 11.