Tag Archives: New Orleans

City population dynamics since 1850

The reason why some cities grow and some cities shrink is a heavily debated topic in economics, sociology, urban planning, and public administration. In truth, there is no single reason why a city declines. Often exogenous factors – new modes of transportation, increased globalization, institutional changes, and federal policies – initiate the decline while subsequent poor political management can exacerbate it. This post focuses on the population trends of America’s largest cities since 1850 and how changes in these factors affected the distribution of people within the US.

When water transportation, water power, and proximity to natural resources such as coal were the most important factors driving industrial productivity, businesses and people congregated in locations near major waterways for power and shipping purposes. The graph below shows the top 10 cities* by population in 1850 and follows them until 1900. The rank of the city is on the left axis.

top cities 1850-1900

 

* The 9th, 11th, and 12th ranked cities in 1850 were all incorporated into Philadelphia by 1860. Pittsburgh was the next highest ranked city (13th) that was not incorporated so I used it in the graph instead.

All of the largest cities were located on heavily traveled rivers (New Orleans, Cincinnati, Pittsburgh, and St. Louis) or on the coast and had busy ports (New York, Boston, Philadelphia, Brooklyn, and Baltimore). Albany, NY may seem like an outlier but it was the starting point of the Erie Canal.

As economist Ed Glaeser (2005) notes “…almost every large northern city in the US as of 1860 became an industrial powerhouse over the next 60 years as factories started in central locations where they could save transport costs and make use of large urban labor forces.”

Along with waterways, railroads were an important mode of transportation from 1850 – 1900 and many of these cities had important railroads running through them, such as the B&O through Balitmore and the Erie Railroad in New York. The increasing importance of railroads impacted the list of top 10 cities in 1900 as shown below.

top cities 1900-1950

A similar but not identical set of cities dominated the urban landscape over the next 50 years. By 1900, New Orleans, Brooklyn (merged with New York) Albany, and Pittsburgh were replaced by Chicago, Cleveland, Buffalo, and San Francisco. Chicago, Cleveland, and Buffalo are all located on the Great Lakes and thus had water access, but it was the increasing importance of railroad shipping and travel that helped their populations grow. Buffalo was on the B&O railroad and was also the terminal point of the Erie Canal. San Francisco became much more accessible after the completion of the Pacific Railroad in 1869, but the California Gold Rush in the late 1840s got its population growth started.

As rail and eventually automobile/truck transportation became more important during the early 1900s, cities that relied on strategic river locations began to decline. New Orleans was already out of the top 10 by 1900 (falling from 5th to 12th) and Cincinnati went from 10th in 1900 to 18th by 1950. Buffalo also fell out of the top 10 during this time period, declining from 8th to 15th. But despite some changes in the rankings, there was only one warm-weather city in the top 10 as late as 1950 (Los Angeles). However, as the next graphs shows there was a surge in the populations of warm-weather cities during the period from 1950 to 2010 that caused many of the older Midwestern cities to fall out of the rankings.

top cities 1950-2010

The largest shakeup in the population rankings occurred during this period. Out of the top 10 cities in 1950, only 4 (Philadelphia, Los Angeles, Chicago, and New York) were still in the top 10 in 2010 (All were in the top 5, with Houston – 4th in 2010 – being the only city not already ranked in the top 10 in 1950, when it was 14th). The cities ranked 6 – 10 fell out of the top 20 while Detroit declined from 5th to 18th. The large change in the rankings during this time period is striking when compared to the relative stability of the earlier time periods.

Economic changes due to globalization and the prevalence of right-to-work laws in the southern states, combined with preferences for warm weather and other factors have resulted in both population and economic decline in many major Midwestern and Northeastern cities. All of the new cities in the top ten in 2010 have relatively warm weather: Phoenix, San Antonio, San Diego, Dallas, and San Jose. Some large cities missing from the 2010 list – particularly San Francisco and perhaps Washington D.C. and Boston as well – would probably be ranked higher if not for restrictive land-use regulations that artificially increase housing prices and limit population growth. In those cities and other smaller cities – primarily located in Southern California – low population growth is a goal rather than a result of outside forces.

The only cold-weather cities that were in the top 15 in 2014 that were not in the top 5 in 1950 were Indianapolis, IN (14th) and Columbus, OH (15th). These two cities not only avoided the fate of nearby Detroit and Cleveland, they thrived. From 1950 to 2014 Columbus’ population grew by 122% and Indianapolis’ grew by 99%. This is striking compared to the 57% decline in Cleveland and the 63% decline in Detroit during the same time period.

So why have Columbus and Indianapolis grown since 1950 while every other large city in the Midwest has declined? There isn’t an obvious answer. One thing among many that both Columbus and Indianapolis have in common is that they are both state capitals. State spending as a percentage of Gross State Product (GSP) has been increasing since 1970 across the country as shown in the graph below.

OH, IN state spending as per GSP

In Ohio state spending growth as a percentage of GSP has outpaced the nation since 1970. It is possible that increased state spending in Ohio and Indiana is crowding out private investment in other parts of those states. And since much of the money collected by the state ends up being spent in the capital via government wages, both Columbus and Indianapolis grow relative to other cities in their respective states.

There has also been an increase in state level regulation over time. As state governments become larger players in the economy business leaders will find it more and more beneficial to be near state legislators and governors in order to lobby for regulations that help their company or for exemptions from rules that harm it. Company executives who fail to get a seat at the table when regulations are being drafted may find that their competitors have helped draft rules that put them at a competitive disadvantage. The decline of manufacturing in the Midwest may have created an urban reset that presented firms and workers with an opportunity to migrate to areas that have a relative abundance of an increasingly important factor of production – government.

Chief Resiliency Officers Versus Antifragility

At The Atlantic CitiesEmily Badger writes about a new program from the Rockefeller Foundation called 100 Resilient Cities, focused on equipping cities with a new employee called a Chief Resiliency Officer. The program states its goals as follows:

Building resilience is about making people, communities and systems better prepared to withstand catastrophic events – both natural and manmade – and able to bounce back more quickly and emerge stronger from these shocks and stresses.

[. . .]

There are some core characteristics that all resilient systems share and demonstrate, both in good times and in times of stress:

  • Spare capacity, which ensures that there is a back-up or alternative available when a vital component of a system fails.
  • Flexibility, the ability to change, evolve, and adapt in the face of disaster.
  • Limited or “safe” failure, which prevents failures from rippling across systems.
  • Rapid rebound, the capacity to re-establish function and avoid long-term disruptions.
  • Constant learning, with robust feedback loops that sense and allow new solutions as conditions change.

In his book Antifragile: Things that Gain from DisorderNassim Taleb defines antifragile as something that not only recovers from shocks, but becomes stronger after recovery, in line with the stated objectives of 100 Resilient Cities. Following its Great Fire of 1871, Chicago demonstrated antifragility. It rebounded rapidly from a disaster that killed 300 people and left one-third of city residents homeless, many without insurance after the fire bankrupted local insurers or the blaze destroyed their paperwork. Despite this great loss, residents of Chicago quickly rebuilt their city using private funding and private charity that was small relative to the amount of damage, but without any government funding. In rebuilding, Chicago developed safer building techniques both through entrepreneurship and with new insurance requirements and  new municipal building codes. The city invested in a better-equipped fire fighting force to lower the risk of fire damage in the future. Despite not having the telecommunications that seem critical to allowing fast disaster recovery today, Chicagoans began building new, safer buildings immediately, investing $50 million in the year after the fire, and tripling the real estate value of the burned blocks within 10 years. Its difficult to imagine a twenty-first century city allowing property owners to move so quickly through the approval process, and its difficult to imagine a Chief Resiliency Officer widening this bottleneck.

A bureaucrat like a Chief Resiliency Officer would not be able to learn the lessons from a natural disaster that the residents of Chicago did in their rebuilding efforts because this knowledge is dispersed, only to be discovered by individuals acting in what they believe to be their own best interest. Taleb describes bureaucrats as fragilistas because they do not suffer from downside risks and therefore cannot learn and grow stronger from shocks. If a disaster strikes a city equipped with a Chief Resiliency Officer and it turns out the city was ill-prepared, he or she will not be held accountable for failing to predict what may have been a very low-probability event. In fact, we often see government efforts toward making cities more resilient introducing fragility contrary to their stated intentions. For example, federal flood insurance minimizes the downside risk of owning flood-prone property. In turn, this encourages more people to live in the highest risk areas, putting them at greater risk when disaster strikes. Cities will not have an opportunity to learn from this to better prepare for future flooding because their rebuilding is subsidized; however, bureaucrats cite this insurance as a success because it facilitates rebuilding without adapting to risk.

The Transportation Security Administration offers a preview of what bureaucratic disaster prevention looks like; top down planning for low-probability events results in attempts to prevent the catastrophic events that we’ve seen in the past without realizing that we’re unlikely to see these same events in the future. As TSA critic Bruce Schneier explains:

Taking off your shoes is next to useless. “It’s like saying, ‘Last time the terrorists wore red shirts, so now we’re going to ban red shirts,’” Schneier says. If the T.S.A. focuses on shoes, terrorists will put their explosives elsewhere. “Focusing on specific threats like shoe bombs or snow-globe bombs simply induces the bad guys to do something else. You end up spending a lot on the screening and you haven’t reduced the total threat.”

Likewise, preparing for low-probability natural disasters, such as 100-year storms, is not something that can be done from the top down. To the extent an event is foreseeable, some individuals and firms will prepare for it, as we saw with Goldman Sachs’ generator and sand bagging efforts in the aftermath of Hurricane Sandy. The disaster revealed successful preparation methods, allowing more individuals and the city as a whole to learn and be better prepared for the next disaster. Chief Resiliency Officers are unlikely to accurately foresee low-probability shocks to their cities. To the extent that they protect cities from these shocks, they will likely take away the learning process that would make cities better able to withstand larger shocks, introducing fragility instead of greater resiliency.

Shortfalls in non-profit disaster rebuilding

This post originally appeared at Market Urbanism, a blog about free-market urban development.

After receiving years of praise for its work in post-Katrina recovery, Brad Pitt’s home building organization, Make It Right, is receiving some media criticism. At the New Republic, Lydia Depillis points out that the Make It Right homes built in the Lower Ninth Ward have resulted in scarce city dollars going to this neighborhood with questionable results. While some residents have been able to return to the Lower Ninth Ward through non-profit and private investment, the population hasn’t reached the level necessary to bring the commercial services to the neighborhood that it needs to be a comfortable place to live.

After Hurricane Katrina, the Mercatus Center conducted extensive field research in the Gulf Coast, interviewing people who decided to return and rebuild in the city and those who decided to permanently relocate. They discussed the events that unfolded immediately after the storm as well as the rebuilding process. They interviewed many people in the New Orleans neighborhood surrounding the Mary Queen of Vietnam Church. This neighborhood rebounded exceptionally well after Hurricane Katrina, despite experiencing some of the city’s worst flooding 5-12-feet-deep and being a low-income neighborhood. As Emily Chamlee-Wright and Virgil Storr found [pdf]:

Within a year of the storm, more than 3,000 residents had returned [of the neighborhood’s 4,000 residents when the storm hit]. By the summer of 2007, approximately 90% of the MQVN residents were back while the rate of return in New Orleans overall remained at only 45%. Further, within a year of the storm, 70 of the 75 Vietnamese-owned businesses in the MQVN neighborhood were up and running.

Virgil and Emily attribute some of MQVN’s rebuilding success to the club goods that neighborhood residents shared. Club goods share some characteristics with public goods in that they are non-rivalrous — one person using the pool at a swim club doesn’t impede others from doing so — but club goods are excludable, so that non-members can be banned from using them. Adam has written about club goods previously, using the example of mass transit. The turnstile acts as a method of exclusion, and one person riding the subway doesn’t prevent other passengers from doing so as well. In the diagram below, a subway would fall into the “Low-congestion Goods” category:

club goods

In the case of MQVN, the neighborhood’s sense of community and shared culture provided a club good that encouraged residents to return after the storm. The church provided food and supplies to the first neighborhood residents to return after the storm. Church leadership worked with Entergy, the city’s power company, to demonstrate that the neighborhood had 500 residents ready to pay their bills with the restoration of power, making them one of the city’s first outer neighborhoods to get power back after the storm.

While resources have poured into the Lower Ninth Ward from outside groups in the form of $400,000 homes from Make It Right $65 million  in city money for a school, police station, and recreation center, the neighborhood has not seen the success that MQVN achieved from the bottom up. This isn’t to say that large non-profits don’t have an important role to play in disaster recovery. Social entrepreneurs face strong incentives to work well toward their objectives because their donors hold them accountable and they typically are involved in a cause because of their passion for it. Large organizations from Wal-Mart to the American Red Cross provided key resources to New Orleans residents in the days and months after Hurricane Katrina.

The post-Katrina success of MQVN relative to many other neighborhoods in the city does demonstrates the effectiveness of voluntary cooperation at the community level and the importance of bottom-up participation for long-term neighborhood stability. While people throughout the city expressed their love for New Orleans and desire to return in their conversations with Mercatus interviewers, many faced coordination problems in their efforts to rebuild. In the case of MQVN, club goods and voluntary cooperation permitted the quick and near-complete return of residents.

The Road Home?

Our own Daniel Rothschild testified last week before the House Judiciary Subcommittee on the Constitution, Civil Rights, and Civil Liberties, about the role of state and federal governments in obstructing home building in devastated New Orleans neighborhoods. From Louisiana’s Daily World:

Daniel Rothschild, director of the Gulf Coast Recovery Project at George Mason University, said the problem isn’t necessarily that government officials are discriminating, but that they’re becoming overly involved in recovery efforts.

“Federal and state policies designed to rebuild homes sowed confusion and uncertainty, making it difficult for people to make informed choices about how, when and where to rebuild,” Rothschild said.

He said the government should set clear, simple rules, then get out of the way to allow rebuilding to take place from the ground up.

“Community leaders, clergy, social entrepreneurs have leveraged social capital and local knowledge to spur rebuilding, and over 1 million Americans have volunteered their time, some for weeks and some for years,” he said. “They got it fixed and built houses one at a time.”

For more Mercatus work on the problems created by post-disaster government uncertainty, and how we could encourage rebuilding efforts, see some of our extensive publications on the subject.

Is the USACE Ruling a Pyrrhic Victory?

Yesterday’s court ruling that the US Army Corps of Engineers is at least partially to blame for the flooding in St. Bernard Parish and New Orleans’ Lower Ninth Ward after Hurricane Katrina is being hailed as a landmark ruling. The judge in the case wrote in his decision:

The Corps’ lassitude and failure to fulfill its duties resulted in a catastrophic loss of human life and property in unprecedented proportions. The Corps’ negligence resulted in the wasting of millions of dollars in flood protection measures and billions of dollars in Congressional outlays to help this region recover from such a catastrophe. Certainly, Congress would never have meant to protect this kind of nonfeasance on the part of the very agency that is tasked with the protection of life and property.

Residents of the affected areas are hailing this as a landmark decision. But their victory may be Pyrrhic and may have the perverse impact of slowing down post-Katrina recovery. Continue reading

The Downside of “Better” Housing

Earlier this week President Obama visited the of New Orleans to see a city that, four years after Hurricane Katrina, still has not recovered from the damage.  Most of the homes in the Lower 9th Ward where he spoke at a middle school remain vacant.

November’s issue of The Atlantic includes an article about new housing developments in New Orleans — the efforts of social entrepreneurs who have stepped in where government has failed to provide the new housing that it promised. Journalist Wayne Curtis points out that one of the many problems in recovery after Katrina has been policy makers’ misunderstanding of residents culture and preferences. Curtis quotes Andres Duany, co-founder of the Congress for New Urbanism:

Many of the shotgun houses in New Orleans were built by the fathers and grandfathers of people living in them today, and few of them meet building codes.  But no one worries about paying mortgages or insurance. “The situation is that the housing is essentially paid off, and it allows people to accumulate leisure,” he said. “What’s special about New Orleans is that it’s the only place in the United State where you can have a first-rate urban life for very little money.”

One of the first lessons in economics is that we respect consumer preferences, making no judgment about differences in subjective tastes and utility. Unfortunately this often does not carry over to economic policy making. While federal agencies are busy developing plans to allow people to obtain home mortgages, they are ignoring that some people would prefer not to take on and debt — inexpensive housing allows them to work less and to enjoy more hours of leisure.

Policy makers may think that housing standards requiring higher quality construction make people unambiguously better off, but in that case they fail to take into account the unseen consequences such as higher rates of homelessness and requiring that people devote more of their scarce time to earning money to pay for housing. From the point of view of lawmakers, higher building standards improve safety and neighborhoods’ appearance, but it also leads to higher costs, and this tradeoff may not be in line with the subjective preferences of many New Orleanians.

An unseen consequence of housing policy after Hurricane Katrina may be alterations to the culture and sense of place for which the city is widely known. Policymakers should consider the unique cultural attributes that give each city unique flare when dictating legislation that will result in lifestyle changes.

Steward Brand, Slumlord

Whole Earth Catalog founder and onetime Merry Prankster Stewart Brand is one of twelve thinkers asked this month by Wired magazine to contribute to a list of “twelve shocking ideas that could change the world.” In this brief piece, Brand praises slums as good for the environment:

Cities draw people away from subsistence farming, which is ecologically devastating, and they defuse the population bomb. In the villages, women spend their time doing agricultural stuff, for no pay, or having lots and lots of kids. When women move to town, it’s better to have fewer kids, bear down, and get them some education, some economic opportunity. Women become important, powerful creatures in the slums. They’re often the ones running the community-based organizations, and they’re considered the most reliable recipients of microfinance loans.

Here is Stewart Brand’s TED talk from earlier this year where he discusses the idea in greater depth.

Mike Davis wrote in 2007 that slums are, contra Brand, environmental tragedies. For different but related reasons, Tyler Cowen argued in 2006 that in recovering from Hurricane Katrina, New Orleans should allow shantytowns to emerge unmolested.

Assorted Links

New York City Mayor Bloomberg’s job creation math called “puffery” by the city’s Comptroller.

Governor Schwarzenegger holds a garage sale.

Tree-cutting penalties waved for Potomac, Maryland parochial school in exchange for scholarships and environmental curriculum.

Federal aid now flowing to New Orleans boosting rebuilding.

“Seized”: New York’s tax authorities working to collect delinquent sales taxes from businesses. To date, 69 businesses auctioned off.

Local Solutions in New Orleans

Over at Worldchanging.com, Anisa Baldwin Metzger writes about how local rebuilding efforts are trumping big plans in post-Katrina New Orleans.

It’s no surprise that the volume of rebuilding activity is high: federal funds are pouring in for just this purpose. The surprise is how that volume is playing out, through small organizations who are daring enough to allow for experimentation and who know the value of strong partnerships. This network of non-profits and start-ups is taking on the daunting challenge of rebuilding while respecting the identity and character of a place so rich with history.

You might think, as I did, that what New Orleans really needs is a couple of large contractors dedicated to building back large swaths of the city, repairing what can be repaired and rebuilding what needs to be rebuilt. We want to get people back in safe, solid homes, and there is ample frustration at how long everything takes to get done in the city. On top of the issue of slowness, the reality is that large companies are usually better able to invest time in research and development and therefore to foster innovation. But it seems that the community of small players that has risen out of the recovery process is not only making residents and local business-owners feel more like a part of the rebuilding process but is also allowing support and room for growth within the building industry in a way that would not be possible in a larger-scale operation.

Metzger goes through her article without once using the word “entrepreneurship,” which is surprising considering that is exactly the phenomenon she is describing. It’s through the process of trial and error and experimentation that we discover what works. Big, top-down plans seldom work, especially in a situation like post-Katrina New Orleans. Harnessing local knowledge and the entrepreneurial spirit — both in the form of economic entrepreneurship and social entrepreneurship — is critical to rebuilding. The people on the ground are really the leaders in rebuilding; after all, it’s their homes, neighborhoods, businesses, and churches at stake. Continue reading

Brad Pitt Seeks Stimulus

Make it Right House in New OrleansVariety reports that Brad Pitt’s Make It Right Foundation is seeking stimulus money to continue their work building houses in New Orleans’ Lower Ninth Ward:

In a high profile appearance that even drew live coverage on MSNBC, Pitt visited Washington in March to promote Make It Right, meeting with President Obama and House Speaker Nancy Pelosi, along with an array of cabinet secretaries and other elected officials, including Shaun Donovan and Energy Secretary Steven Chu. With Pitt was producer Steve Bing, who has been a benefactor of his housing project.

The foundation was among 12 non-profits joining with the New Orleans Redevelopment Authority to file an application last week for a total of $65 million through the Neighborhood Stabilization Program, which is administered by the Department of Housing and Urban Development. If they get the funding, Make It Right would probably start spending the money in the spring of 2010. Depending on how many homes the foundation has built by then, it could be used to reach their goal of 150 homes in New Orleans or it could expand the program beyond that, said Kim Haddow, a spokeswoman for Make It Right.

The Make It Right Foundation (profiled here on ABC’s 20/20) — as well as dozens if not hundreds of other local initiatives and non-profits — have done incredible work in rebuilding the Gulf Coast after Hurricane Katrina. But much of this success is due to their independence from large government bureaucracies. Stimulus funding has the potential to act as what Jane Jacobs called “cataclysmic money.” There is a real danger that if social entrepreneurs and non-profits like Pitt’s become dependent upon federal funds, they will in effect become arms of the federal government. This would have a dangerous effect on civil society, and reduce our resilience to disasters and shocks, whether natural or economic.

Another problem, of course, is that it’s not a lack of committed federal funds that have slowed rebuilding in New Orleans; it’s the difficulty with getting that money to the street level, and the mixed and oft-changing signals emanating from all levels of government. Stimulus money has the potential to be yet another promise that never comes to fruition, or comes too late to be helpful.

And moreover, having one of the lowest unemployment rates in the country, is New Orleans really the ideal place to invest stimulus cash?

Continue reading