The world according to Brûlé, part 2

Tyler Brûlé is in trouble again. Monocle have published their annual ‘global quality of life’ index, and as editor he has received a good deal of flak from FT readers for his latest column. Some people dislike his choices; others his methodology; others his attitude. That’s understandable: ‘For readers in Chicago, yet again your appalling homicide rate knocked you out of the running’, says Tyler at one point.

I’ve got some sympathy with attempts to rank cities against each other – after all, everyone loves a league table. But it’s very hard to do this in a way that has much general meaning – especially if, like Tyler, you’re a high-maintenance frequent flyer who rarely seems to be anywhere for more than a few days.

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Here’s what I said a while back:

First, let’s remember what we’re trying to do with city rankings. All of this is – very loosely – trying to achieve what urban economists call ‘spatial equilibrium’. This is where people and firms sort themselves across space, trading off economic, social and environmental pros and cons so that everyone finds their best place to be.

… Indexes are usually commercial products aimed at specific users. In Monocle’s case it’s globe-trotting cosmocrats  with Japanese friends; for Cushman Wakefield’s Cities Monitor it’s developers and property investors; for the Economist and Mercer, CEOs. So policymakers – who have to think beyond single interest groups – should approach with caution.

Second, actually measuring the ‘real cost of living’ is very hard to do. No-one has the definitive answer. I’ve been helping on a SERC project looking at these issues – the best work is from the US, where government economists have access to price data on thousands of items at very local level (like this paper by Bettina Aten). But even here, the researchers don’t go near the kind of soft measures Monocle is using.

Third, we need to remember that this is all about tradeoffs. In spatial equilibrium, actors are balancing economic, social and physical welfare. The main sources of urban growth and vitality - critical mass, big labour markets and ideas flow – tend to have a flipside, namely congestion, pollution and expense.

For that reason, the most liveable cities – where people might want to be – aren’t necessarily the ones where people need to be. This is why it feels odd that places like London, NYC, Hong Kong and Los Angeles don’t rank higher on the liveability rankings. In these global cities the pull of place is very strong. As Jared Diamond points out, in many ways cities like LA are terrible places to live, but millions of people still choose to be there.

Monocle readers may well live in one place and work in another – so this matters less to them. Tellingly, Brûlé eventually reveals that having tried Zurich for a few months, he moved back to much less ‘liveable’ London. His compromise is to be based in the UK and flit between Zurich (winter), Copenhagen (summer) and Tokyo (business trips). Nice work if you can get it!

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‘Poor Tyler Brûlé, condemned to orbit the earth like some kind of 21st century Flying Dutchman‘, says one FT detractor . Ouch! I guess he can take some comfort from being the star of his own, uncannily accurate parody site. And, of course, persuading people to keep paying for his business class chat.

E Pluribus Prosperitas

I’m writing a chapter for a forthcoming edited book, E Pluribus Prosperitas, which brings together a group of researchers working on the economics of cultural diversity.

The book is being put together by Jessie Bakens (VU University), Peter Nijkamp (VU, Tinbergen Institute) and Jacques Poot (Waikato University) and will be published soon by Edward Elgar.

Our contributors group met in Amsterdam a few weeks back for a workshop organised by VU Amsterdam and Tinbergen. It was an intensive couple of days, but left me excited about the final product. In the typical style of academic timelines, the book itself should be out late this year or in 2014. But you can get a flavour of the thing at the Tinbergen site, where the presentations are up here, here and here. Mine is here. For the other chapters, including contributions by Giovanni Peri and Barry Chiswick, you’ll need to wait til publication day.

This is not a Gateway

 

 

 

 

 

 

I was in the Economist last week talking about the Thames Gateway. As New Labour’s flagship regeneration programme, the Gateway has not surprisingly been dropped by the Coalition. It hasn’t vanished completely though. Later this year, the Centre for London is publishing a collection of pieces on prospects for the area (for a flavour see this post and discussion). What we might call ‘Gateway Thinking’ also periodically reappears, for example in legacy planning for the Olympics, and in the proposed  Thames Estuary Airport.  And the place retains a strong hold over a certain kind of urbanist, especially in the dystopian excursioneering pioneered by Iain Sinclair and Laura Oldfield Ford.

I spent some time working on Gateway policy while in DCLG, and all of this got me looking back through old notes and papers. Some rough thoughts follow.

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First, the Gateway concept now feels madly ambitious – especially compared to today’s minimalist development environment. Remember that the 70km Gateway was one of four ‘growth areas’ set out in the 2003 Sustainable Communities Plan.  The Plan proposed around  550,000 new homes in these zones by 2016 (42,000 a year, when current annual housing starts for the whole country are now around 98,000), and envisaged ‘delivery’ of  430,000 additional jobs.

In practice, the other three growth areas – Milton Keynes, Ashford, and the ‘Peterborough-Stansted-Cambridge’ corridor – involve building in popular areas where developers are happy to operate. The Gateway was always going to be a much more challenging environment.

Second, there was (and is) a strong social argument for public investment along the Thames Estuary. Some communities along the river are deeply deprived , with residents held back by low incomes, low skills and thin local labour markets.  However, the economic case is rather weaker. It was never clear whether the Gateway programme was intended  as a response to economic pressures in the Greater South East (in particular, high house prices and low building), or a much bolder attempt to restructure the deeper regional economy. Neither was it clear why these communities merited public spending ahead of (say) those in Manchester, Liverpool or Leeds.

The Greater South East economic ‘system’ is heavily weighted towards the North and West of London, where there is a polycentric system of smaller cities (Milton Keynes, Oxford, Cambridge, Reading) around the capital. East of London, towns and cities tend to be smaller and local economies are heavily commuter-powered.

As the Economist notes, parts of London’s economy have been moving Eastwards for years. But the Gateway attempts to shift the entire urban system  towards the East – and to shift activity away from commuting towards self-contained communities. The evidence tells us that urban economies are highly path-dependent (e.g. here, here and here), and  that this kind of rebalancing takes decades if it happens at all. By contrast, the Gateway strategy promised 160,000 net new homes and 180,000 net new jobs over 15 years.

Third, this terraforming aspect is integral to the Gateway’s staying power. As a classic grand projet, the programme was highly appealing to a certain kind of politician (Michael Heseltine, John Prescott, Gordon Brown) and urban planner (Richard Rogers, Terry Farrell). Brown actually raised the jobs target to 225,000 in 2007, just as the credit crunch was kicking in.

Such visioning also gets in the way of getting things done. An obvious but important example: the Gateway isn’t a single zone, but a collection of very disparate communities. This matters. Treating the Gateway as a kind of continuous policy space made for convenient shorthand in speeches, but obscures the huge differences between key economic sites like Canary Wharf and Shellhaven, versus smaller towns like Thurrock, and struggling former resorts like Southend.  Arguably, it also made it harder to think about economic development, since policy had to be retrofitted into a high-level planning concept rather than based on local circumstances.

Fourth, Gateway delivery systems were pretty badly designed. Governance somehow managed to be both too top-down, as explained above, and not dirigiste enough at a local level. Notably, detailed policy development was generally left to Urban Development Corporations, who lacked a democratic mandate, had no statutory powers and held no assets. By contrast, New Town Development Corporations could set long term planning goals, and leverage a substantial public land portfolio. The trade-off was the lack of accountability, but land holdings eventually transferred to local authorities.

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None of this is to call time on the policy or the area. As I said earlier, the kind of deep structure change envisaged by Heseltine and others take decades to take shape. Developments like the London Gateway Port are potentially transformational, and London’s eastern boroughs will continue to evolve. By starting with economic fundamentals rather than grand planning, and placing help for individuals alongside physical regeneration,  a simpler, more effective approach might begin to emerge.

[apologies to TINAG for stealing the title.]

Top team diversity

Like many Western countries, the UK has become substantially more ethnically and culturally diverse. The 2011 Census makes this crystal clear. Since 2001, the foreign-born population in England and Wales has jumped from 4.6 to 7.5m. At the same time, the ‘white British’ ethnic group shrank from 87.5-80% of the population.

What are the economic impacts of these deep demographic shifts, and what do they mean for cities? Certainly, population change has been most striking in urban areas: notably, London is now a ‘majority minority’ city for the first time in its history.

Urban factors may also affect how ‘diversity effects’ play out at firm level. Although the public debate is still focused on migrants, jobs and public services, a number of academic researchers are turning their attention to the wider impacts of immigration, minority communities and population diversity. Globally, there are now studies exploring effects on firms’ productivity, innovation, entrepreneurship, or trade patterns; and channels that may influence house prices, or the mix of local goods and services.

There’s been little parallel UK research to date – but in a new SERC Discussion Paper (supported by LLAKES) I explore the links between the composition of 6,000 English firms’ ‘top teams’ and company performance. Unusually, my data allows me to look at both ethnicity and gender mix.

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What might we expect to see? Owners, partners and directors set firms strategic direction. So the make-up of a ‘top team’ might generate production externalities through diversity (a wider range of ideas/ experiences, helping problem solving) and/or ‘sameness’ (via specialist knowledge or better access to international markets). These channels may be balanced by internal downsides  (lower trust) and external barriers (discrimination), so that overall effects on business performance are unclear.

Big cities might then amplify or dampen these channels. Agglomeration economies might help productivity, and firms may benefit from large, cosmopolitan customer markets. Alternatively, firms in cities might face more competition, or minority-headed businesses might face discrimination.

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My results suggest a non-linear link between top team diversity and business performance, which is net positive for process innovation and net negative for turnover. Further tests on diverse and minority/female-headed firms find positive links for diverse top teams, negative for minority and female-only top teams.

Looking at the influence of urban areas, I find some evidence of complex amplifying and dampening effects. In London, for example, diverse firms are less likely to engage in process innovation; but overall, firms in bigger cities are more likely to.

My data make it hard to identify causal effects, so I interpret these results as pure correlations. The implication is that while diversity has internal and external benefits, penalties from being ‘too diverse’ probably result from external constraints. In turn, that suggests policymakers need to encourage corporate diversity, while taking discrimination more seriously.

In a companion paper on London firms, Neil Lee and I found strong links between firm-level diversity and innovation. This paper suggests diversity-innovation links for firms outside the capital too. Core city leaders should pay attention.

Policy-based evidence making

Heads up: on 30th May I’ll be in Warwick to help give an advanced training session on  ‘Knowledge for Policy, Knowledge of Policy’, organised by the university’s Centre for Interdiscplinary Methodologies.

Evidence-based policymaking was a central trope of New Labour’s time in office.  The idea’s gone in deep: the Coalition is regularly taken to task for ideological policymaking – perhaps one reason  why the Cabinet Office has just announced a major network of ‘What Works’ Centres.

One immediate objection to evidence-driven policy is that evidence doesn’t tell you what you ought to do.  Political values and judgements – even ‘ideology’ – have their place, especially if the alternative is the apolitical solutionism that Evgeny Morozov has been taking to pieces recently.

There’s also an important role for an experimental state which builds an evidence base where none exists.  Sometimes this is pretty uncontroversial, as in the small nudges being tried out by the Government’s Behavioural Insights Team. It’s tougher to make the case in bigger areas of policy – such as devolution to local govt and communities, which has  never been seriously tried in the UK, where the risks of failure are massive, and where there are limits to what we can learn from abroad.  Here, the need for careful piloting is running up against Ministerial enthusiasm for transformational change.

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What does this mean for researchers, especially academics? It’s important to have a clear sense of the policymaking process,  especially the invisible work which goes on between formal consultations and policy events; how policymakers treat different  kinds of evidence and actors in those processes, and the shifting positions of academics and think tanks in the ideas market.

I’ve co-founded a think tank, worked in central government and am now working in academia, so I’ll be bringing some of  these experiences to the seminar.  Also speaking will be Dave O’Brien (City University) and Will Davies (Warwick), who’s organising the session.  Both have similarly heterodox experiences, so it should be a fascinating day … see this post by Will, for instance.

Details here.

That’s not my name

Last week I was at LSE for a seminar on place and neighbourhood branding, ably organised by CityDiplo. Also on the panel were Suzi Hall (LSE Cities) and Ian Stephens (Saffron). It was a great evening, with a sharp and highly engaged audience.

I ran through some new work on the politics of naming in East London’s digital economy, and how the competing brands of Silicon Roundabout and Tech City are playing out on the ground (which I’m writing with Emma Vandore and Georgina Voss).

Suzi gave a great run-down of her work on ordinary streets and vernacular spaces in South London, and Ian delivered a nice overview of official branding strategies for Nine Elms.

The CityDiplo team have now put up a podcast of the session. Presentations should follow shortly.

High Speed Two, cities and the North-South divide

The Government has just unveiled the route map for the UK’s high speed rail network. So will HS2 help the cities on the line? Will it narrow the North-South divide, as some Ministers claim? And what about places left out?

Here’s what I wrote back in 2010, when the detailed modelling was done, and drawing on the international evidence. The punchlines are:

So what does HS2 mean for cities? Urban firms and travellers are the big winners, which is good news for cities if more productive businesses raise wages or employment. Some cities get the kudos of being on the line, and may get a regeneration boost from new stations – although that could turn into a windfall gain for developers. But fairly few firms will relocate, and agglomeration impacts will be pretty small.

On this basis, HS2 isn’t likely to fundamentally change the UK’s economic geography. Rather, it will speed up the economic geography we already have.

… Those who gain from HS2 (business, core cities, those in ‘the North’) are strongly in favour; those who lose (communities and homeowners along the line) are vehemently against. Local opponents of HS2 are hardly irrational – quite the opposite. So rather than handing a windfall gain to business by pegging HS2 fares to conventional fares, HS2 tickets should be pricier – at least in first class.  That provides another way for taxpayers to recoup some of the initial outlay. … The agglomeration benefits for Phase 2 (Manchester and Leeds) seem much larger than Phase 1 (London to Birmingham). Why? Rather than connecting two relatively distant cities, Phase 2 links a lot of nearby places (e.g. Sheffield/Meadowhall to Leeds in 20 mins), and provides indirect access to big cities not on the line (e.g. from Manchester to Liverpool). The fact of HS2 thus strengthens the case for complementary investments like the Northern Hub, which will bring Liverpool, Manchester, Sheffield and Leeds closer together.

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Two other points. First, as John Tomaney argued on radio 4 this morning, the evidence suggests HS2′s economic impacts are pretty complex, and the net effect isn’t clear. Like him and others, I’m basically an agnostic.

Second,  to repeat – it’s crucial to spend money on better links between Northern cities and more London-centric high speed lines. As Richard Leese suggested in the same piece, for policymakers this is not an either/or. Thankfully Ministers agree, and are feeding cash into boring but important investments like the Northern Hub, as well as the bigger and shinier HS2.

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Update, May 2013: The National Audit Office has published its own report, which echoes many of these points.

From Tech City to Smart City?

Is Silicon Roundabout going green? I’ve written a new piece about London’s emerging ‘cleanweb’ scene, highlighting some of the fascinating new firms and ideas emerging from the area.

You can read short versions on the Huffington Post and the SERC blog. The piece was commissioned by LSE Cities, and the full version is in the LSE Cities ‘Electric City’ conference newspaper.

It all builds on the Centre for London report A Tale of Tech City, which came out over the summer.

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I’m starting to write all this up into a journal article or articles – so comments are very welcome.

Bigger, more urban, more diverse

The latest Census data confirms three things we already knew. First, Britain is becoming a bigger and more culturally diverse society. Second, net migration is one of the main drivers. Third, this diversity is largely urbanised – especially in London.

Beneath these headlines are many complications. Diversity is shifting across a number of dimensions at once – country of birth, ethnicity, religion and language. Official ethnic groupings are increasingly inadequate to capture what’s going on: see the huge growth in ‘other white’ and other ‘other’ categories.

Many of these trends will continue, with Leeds University researchers projecting a 20% minority ethnic population by 2051. But there is no obvious evidence that diversity is eroding national identity – 91% of residents identify with at least one UK national identity.

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These demographic changes are among the most profound of our lifetimes. So what are the economic and social impacts of these shifts?

My research is taking first steps towards answering the economic questions. European Urban and Regional Studies have just published this piece, which gives you a nice overview.

There is more detail in these working papers on the economics of super-diversity, the long term impacts of migration in cities, ethnic inventors, and diversity, entrepreneurship and innovation in London firms. This last piece, joint with Neil Lee, is coming out shortly in Economic Geography.

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We’re only beginning to understand some of these long term, dynamic channels. So it’s an exciting – and important – time to be working in the field.

Many of the key people will be in the UK in April for the 2013 NORFACE Conference. If you’re around, I’d encourage you to join us.

City Deals: The Second Wave

Some thoughts from yesterday’s City Deals workshop, fronted up by Nick Clegg and Greg Clark, and ably compered by Alex.

The major announcement was that 20 cities and city-regions get the chance to bid for a ‘Wave 2′ deal. It’s a competition – the Cabinet Office sift bids around the turn of the year. Successful pitches will get a ‘core package’ plus local options, then go live sometime in 2013.

There was also lots of reflection on the wider Deals process – now almost a year old.  I got quite excited about all this back in December. Some real challenges are now emerging.

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Some immediate points on the Wave 2 proposals. First, we need more detail on the sift criteria, and a sense of how many cities will get through. I suspect the Cabinet Office and HMT may have different views on this. Officials are also working on core package specifics. I’d expect skills, transport and finance to feature – and perhaps, Earnback-type arrangements for everyone?

Second, not all the 20 are city-regions. Ministers say local groups should self-organise. But the evidence says fitting the right policy asks to the appropriate scales is crucial. Relying on local political coalitions may not result in genuine functional economic areas.

Some wider issues:

1/ What can we expect? Ministers were very confident that City Deals will achieve substantive economic change: ‘the leadership of cities is incredibly important to their success’, said one. But the evidence is ambiguous on whether these direct effects actually exist. There may be indirect links from empowered leadership to growth – say, if this helps secure investment, or produces innovative policies. City Deals will help test that argument.

2/ It’s the process, stupid - as I’ve said, this is a long game. Getting the systems right is crucial – on negotiation and sift in the short term, and delivering culture change in the longer term. Like industrial strategy, the Deals system has to be flexible, and allow for failure.

As Dani Rodrik argues, in some ways process is more important than content in these situations. City Deals are basically experiments, and some won’t work out. The right institutional setting and rules are fundamental – not least to identify failure quickly. So it’s good that Core Cities will get a chance to renegotiate Deals in future, for example. Wave 2 cities should also get this.

3/ Whitehall as blockage – Clegg, Clark and others were very open about problems persuading some parts of Whitehall to engage (shades of Blair’s ‘scars on my back’ speech?).

Some of these blockages were already emerging last year, and Ministers and the Cities Policy Unit have done well to minimise these. But I guess one reason for the Wave 2 announcement is to keep the pressure up, co-opt city leaders in the cause, and build a critical mass of devolutionary pressure.  There will be severe tests of political leadership ahead, especially on welfare and benefits.

4/ Peer support and mentoring – Central government is investing in mentoring for cities – each gets a Cities Unit ‘partner’, alongside a senior ‘sherpa’ for each LEP. The Core Cities group also says it’s interested in peer support advising Wave 2. This is welcome stuff, which will be essential for some of the candidate cities. However …

5/ Too far, too fast? - Central government capacity is now getting very stretched. The officials are good, but there’s only so many of them. Even if over half the Wave 2 candidates are sifted out, this still doubles the workload. And there was some talk yesterday of a Wave 3, covering rural areas, before 2015.

This rapid roll-out has already drawn some fire from New Economy Manchester. There’s clearly  a political argument for acceleration. But Ministers should be very careful it doesn’t come at the expense of effective delivery. Official capacity needs beefing up. And again, process is key. Individual Deals should move forward at different speeds; some will be renegotiated; some may need a pause.