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David Kaufmann

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Varieties of Capital Cities

The Competitiveness Challenge for Secondary Capitals

David Kaufmann

The political and symbolic centrality of capital cities has been challenged by increasing economic globalization. This is especially true of secondary capital cities; capital cities which, while being the seat of national political power, are not the primary economic city of their nation state. David Kaufmann examines the unique challenges that these cities face entering globalised, inter-urban competition while not possessing a competitive political economy.
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Ronald W. Coan

The chapter opens by contrasting Penn’s Privatist Pennsylvania and Philadelphia with Winthrop’s Progressive Massachusetts and Boston economic development (ED) evolution through 1820. The importance of political structures (such as state/colonial constitutions, corporate charters, principles of administration and relationships between state and municipality) and how each is shaped by the values of its elite cultures is discussed. From the beginning, ED displays a division between two macro cultures/approaches, each with its own priorities, goals, tools and programs. The chapter’s second theme is the interaction of population mobility (a driver of economic development policy) with economic development structures and cultural values/priorities of migrants. Migrations discussed include the Yankee Diaspora, Scotch-Irish, and Deep South planter/Cotton Belt. Irish and German immigration is also considered. The impact of cultural migration on ED-relevant structures such as form of government, propensity to urbanize, sector/industry innovation and policy priorities are stressed. The reader is introduced to the importance of initial city-building to economic development. By 1850 it is clear that three distinct regions exist (North/Midwest, South and West), and each displays its own shared patterns and goals. From the foundation of the American Republic the practice of economic development reflects the region in which one works and lives. Each region possesses its distinctive cultural values, demographic composition, jurisdictional economic base configuration and period of initial settlement. Each region demonstrates different styles of city-building; produces different jurisdictional policy systems/outputs; and different actors participate in policy-making.

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Ronald W. Coan

This chapter’s subtitle is the “The short story of American economic development.” It is a review of the more prominent themes and developments described in our history. It harkens back to the Chapter 1 model, the drivers of economic development policy, the characteristics of economic development, and the two ships, Progressivism and Privatism, that each launched an approach to economic development that has continued from 1789 to twenty-first-century contemporary economic development. From the diffusion of political cultures, through population mobility to the formation of jurisdictional economic bases, the development of three distinct competitive hierarchies—to the arrival of a polycentric post-suburbia, a 50-state competitive systems, a global comparative advantage hierarchy and an incredibly politicized contemporary economic development. It’s all there. The chapter ends with a challenge. What emerges to the author is a need for mainstream economic development and community development to come together, sing a few bars of “Kumbaya” and recognize, if nothing else, that both face a common enemy: decline—chiefly in the form of a competitive global comparative advantage hierarchy that renders the concept of a geographic fixed asset meaningless. The mission of economic development in a developed nation as the United States seems more to cope with the vicissitudes of Schumpeter’s creative destruction. Economic development’s ultimate task today is no longer producing pure growth, but managing and coping with opportunities and threats unleashed by creative destruction. Mainstream economic development and community development each cope better with one of the two sides of creative destruction. The need is, somehow, to find a way to blend each other’s strengths to face a common enemy.

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Ronald W. Coan

The Depression overwhelmed anything it touched—it broke Big Cities, rolled over chamber-style economic development, brought the West a Dust Bowl and crushed the South. Big Cities under mayors like Detroit’s Cavanaugh and NYC’s La Guardia, with a little “help” from a guy named Robert Moses, took advantage of the war relief, infrastructure development programs of FDR’s New Deal. Chambers fought Roosevelt tooth and nail. The New Deal, as far as cities went, wasn’t all that it is cracked up to be today, but still the feds launched several important sub-state economic development-related initiatives—workforce being one. During the Depression the suburbs were still debated and we contrast Le Corbusier with his helpmate Moses, and Frank Lloyd Wright with his proponents Catherine Bauer and Rexford Tugwell. The idea of a “multi-nuclear metro area” results in several FDR “New Town” initiatives. During the Depression and War Years, however, neighborhood-focused community development confronts the formation of new black migrants from the Great Migration. A new CD wing unfurls, under the leadership of Saul Alinsky playing reveille for radicals. But then Pearl Harbor. World War II turns American economic development upside down and inside out. Building factories and war contracts, the Fortress strategy leaves the Pacific Coast and becomes the normal chamber strategy across the nation. War production, however, spawns suburban industrial growth. The requirements of war production gives rise to a new, and generation long, federal policy called industrial decentralization. Industrial decentralization may have been the most important federal economic development policy—ever!

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Ronald W. Coan

The primary theme of the chapter is “First Wave” chambers as the municipal lead agencies of economic development. The post-Civil War rise of modern chambers—their “one-percenters” governance, primary strategies of attraction/promotion, tourism, tax abatement and deal-making and “exposition competition”, and their subsidiary EDOs (industrial bureaus and industrial parks)—were core to the development of mainstream, classic economic development. Gilded Age city-building is discussed, with privately led “planned communities” such as company towns and Garden Cities as new forms of suburbanization. The turn of the century professionalization of chambers and chamber secretaries, using Ryerson Ritchie as an example, led to the establishment of modern chambers across the USA. A discussion of the usefulness of the First Wave chambers concept follows. The chapter’s second theme is the modernization of municipal government to develop sufficient capacity to conduct meaningful public policy implementation. Home rule, charter reform and the early twentieth-century victory of business “structural reformers” installed strong mayoral, commission and city-manager forms of government. The role played by municipal one-percenters in municipal research bureaus, the formation of the US Chamber of Commerce and the injection of responsible and professional management into municipal government are considered. A final section presents a little-known early municipal strategy—“selling frozen water”—as an example of Dillon’s Law in operation.

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Ronald W. Coan

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Ronald W. Coan

The Truman and Eisenhower administrations inherited a strong and intrusive federal government and a totally changed international and global system. Truman had his urban and social ambitions, but a hostile world, the Korean War, put them off to the side. A skeptical Eisenhower took his foot of the federal gas pedal, but still Congress pushed him into creating the Small Business Administration (SBA), and the lobbies pursuing a national interstate highway system put a bill on his desk. He signed it, engendering perhaps the most destructive phase of urban renewal as Big Cities dug up their neighborhoods for highways and bypasses to connect to suburbs—which were exploding. The white middle class was heading out to the “burbs” and the Age of the Leave it to Beaver sitcom suburb had begun. Cities responded, developing plans by the new leader of CBD-focused urban renewal, Victor Gruen. Public housers built huge high-rises for residents of the Second Ghetto. Now in a permanent war with Russia, and leader of the free world, the United States occupied a unique and quite beneficial position in the world’s economy. American prosperity resulted, a prosperity that would mask changes in Big Cities that transformed dry rot into outright full-scale decay by the beginning of the 1960s. But you would never have known it at the time—except in the New England textile mills, which were going down for the last time. A disease appeared in New England’s manufacturing base that tossed textile workers onto the streets in tens of thousands. Industry demanded action; so did unions—but little happened at the state level, however, despite active new governors like Muskie and Herter. The “disease with no name” had struck, and the only visible source of destruction was southern governors with IRBs in hand to steal the mills and move them down South. The shadow war intensified. Finally, port authorities became transportation behemoths, developing a metro presence and freeing themselves from Big City constraints. The NY–NJ Port Authority innovated and a logistical revolution in ports followed. Containerization hit in the mid-1950s, and within the decade most major ports were relocated to vast suburban expanses able to accommodate intermodal transportation. Big City waterfronts had lost a major player in their jurisdictional economic base. Economic development had its first major example of onionization.

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Ronald W. Coan

This chapter reviews the Early Republic federal government and its relationships with sub-state economic development. Clay’s American Plan,” the reaction of Jackson and the controversial history of Early Republic strategy for “internal improvements” are considered. Early “tools of the trade,” tax abatement and eminent domain, are discussed. The crisis need for transportation and urban infrastructure, as well as fostering banking/finance and manufacturing firms, required the development of our first hybrid public/private EDO (HEDO): the corporate charter. The strengths and weakness of the corporate charter as hybrid EDO and its eventual rejection in the 1840s exerted a profound impact on contemporary economic development in the form of state (and local) constitutional gift and loan clauses. Within a decade a second HEDO, the publicly empowered modern corporation (railroads), was utilized. The construction of roads, steamboats, canals and then railroad transportation infrastructure is examined, with emphasis on the importance of competition with other cities. The importance of railroads as an Early Republic EDO and their innovation of modern strategies of economic development (tourist, industry and people/homesteading attraction and city-building). The chapter concludes with a description and explanation of the 1868 Dillon’s Law decision which to this date has ruled city–state relationships.

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Ronald W. Coan