Three Random Thoughts

I am back in Los Angeles.  Returning to LAX after a 12 hour flight from Rome, I waited one hour to get through passport control and another 40 minutes to clear customs.  This part of the airport looks like a prison and it struck me that we were all wasting our time for no good reason.  The LA Airport people know when planes arrive.  Why can’t they increase their staff capacity at these key times to open up more lanes?   I was impressed with my 9 year old son’s self control but unimpressed with my own complaining. 

Have you ever wondered why Detroit is poor while Chicago is rich?   Here  is some wisdom about Detroit’s problems.   Chicago’s universities, its embrace of being a “green city” and its bet on finance have certainly helped its rise.   In the year 1965 would you have predicted the Chicago vs. Detroit divergence?   Do you give Michael Jordan and Mike Ditka all of the credit?

Did you know that no top women economists blog?  To see my evidence read my piece here.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

26 thoughts on “Three Random Thoughts”

  1. Chicago was always more diversified, with not just manufacturing but food processing, consumer packaged goods, shipping and distribution, commodities markets, drugs, even some electronics.

    But if I were looking at particular individuals I’d put my money on the entrepreneurial visionaries who’ve been running the car companies for the past 50 years or so.

  2. If you fly internationally a couple times a year or more the US has something called “Global Entry” that gets you thru passport control in minutes. In some airports it can also speed you thru the customs lines but in others you still have to wait. Costs $100 and is good for 5 years.

  3. People who knew what to look for might have been able to roughly predict the future of Detroit vs. Chicago in 1965, but no one could have predicted the epic badness of Detroit’s governance over the next four decades, and it wasn’t necessarily obvious that trade policy would evolve in the way that it has, or the Bradley v. Milliken would have been decided as is was, so I think the magnitudes would not have been predictable. Glaeser may or may not be right his analysis of Detroit’s decline, but comparing the People Mover to the proposed LRT down Woodward is silly. The LRT has a guaranteed customer base of the people taking 30,000+ rides up and down Woodward in packed buses. There is a reason that line qualifies for Federal funding, and it is because it is a busy route already.

  4. Chicago kept some of its trains, and so, its downtown (the Loop!), and that downtown’s centrality in regional business activity, intact. Detroit, built, like L.A., on a “fast” streetcar and interurban system, couldn’t survive the shutdown of that system. The freeway system, in Detroit, destroyed and isolated neighborhoods, and accelerated the exodus of the prosperous and business to the suburbs. That Ed Glaeser titles his “wisdom”, Detroit’s Decline and The Folly of Light Rail, is no doubt, an intended irony. That man is evil.

  5. I’m old enough to remember 1965 in Detroit, and it was already well on its way to disasterville, though, truthfully, all major American cities looked pretty bad in 1965. But, it wasn’t like anyone had to project ahead to disaster for the city; disaster was already a reality for the city, proper, in 1965, and no one saw a way out.

    Some of the same macro-economic policies that drove financialization in the last 10 or 15 years, created an industrial dustbowl out of Michigan and Ohio. The economic problems of those states were not a product of local policy. The national and international economic policies that made Manhatten boom, condemned Michigan and Ohio to disinvestment.

    And, yes, good rail transit does enable the density that certain kinds of Finance thrives on.

  6. I would guess that there are a lot of factors as to Chicago’s success. One of them has probably been its embrace of the gay community. There was a paper in 2007 on this showing that gay-friendly cities (as well as those that encouraged creativity) were more likely to prosper economically.

  7. “Have you ever wondered why Detroit is poor while Chicago is rich?”

    No, not really; In 1967 I lived a half block north of 9 mile road, in Warren. The riots stopped close enough to my house to hear the noise.

    It’s not hard to predict a city is going down the tubes when it’s residents are burning it down. Not even for a six year old.

    Subsequently both Detroit and Chicago have had massively corrupt government, but Chicago apparently had moderately competent corrupt government, while Detroit’s government was corrupt in an almost laughably incompetent manner. I mean, who can forget when the police chief’s ceiling fell in because he’d stuffed too many sacks of money into it?

    I think it had something to do with the racial dynamics. Administrations in Detroit didn’t HAVE to be competently corrupt, any time state level authorities made a move towards cleaning the joint up, they’d join shoulders, threaten riots, and the state would back off.

    Or maybe it’s just that the corrupt administrations in Chicago viewed the city as a long term project to manage for maximum long term benefit, while corrupt Detroit administrations were just out to get the most they could in a hurry, not expecting to pass the city onto their children to exploit.

    But, yeah, self-destructive population and massive incompetence/corruption. Everybody in the area saw it coming.

  8. The Economist piece, Let a Million Flowers Bloom supports the Glaeser thesis that small and scrappy enterprises do better than the giants (whether Detroit Big Three or state-owned enterprises in China) over time. The Jane Jacobs Houston versus Hamburg discussion is also useful.

    When you have scrappy little enterprises, as you do in China, you have big temptation to dump your waste in the sewer, so that’s a problem you have to solve.

  9. Brett, I see your ‘Detroit police chief’ and I raise you Paul Powell. Wikipedia says of this Illinois Secretary of State: “he never made more than $30,000 a year, upon his death, shoeboxes, briefcases and strongboxes with more than $800,000 in cash were found in his hotel suite residence in Springfield, Illinois.[2] In his hotel room he also had 49 cases of whiskey, 14 transistor radios, and two cases of creamed corn.”

  10. On another front, who would have predicted Atlanta would put Birmingham in the shade within 10-15 years after World War II as the “capital” of the New South? Birmingham was the industrial behemoth while Atlanta was just Atlanta, home of Margaret Mitchell and Bobby Jones. Maybe people can make a difference, too?

  11. “upon his death, shoeboxes, briefcases and strongboxes with more than $800,000 in cash were found in his hotel suite residence in Springfield, Illinois.”

    Yeah, but they didn’t fall out of the ceiling while he was holding a press conference… I’m not saying Detroit’s administration was uniquely corrupt, just that there was a certain hilarity about the degree to which that corruption was coupled with incompetence.

    Even if they hadn’t been corrupt, they’d probably have run the city into the ground. Just would have taken longer…

  12. KLG,

    On another front, who would have predicted Atlanta would put Birmingham in the shade within 10-15 years after World War II as the “capital” of the New South? Birmingham was the industrial behemoth while Atlanta was just Atlanta, home of Margaret Mitchell and Bobby Jones. Maybe people can make a difference, too?

    Business incentives, among other things, matter a lot. As someone once said, “You can’t boycott steel, but you can sure as hell boycott Coca-Cola.” In fairness, Atlanta’s relatively enlightened leadership was hardly due entirely to that. In general, it was simply a more intelligently run city, with leaders who showed much greater foresight than those of Birmingham. I think their timing may have been lucky also. That was the era when big business started to establish major operations in the south. Air travel (and conditioning) encouraged growth in the region. Atlanta was seen as having fewer problems than Birmingham, so it became the first choice for regional HQ’s and so on, and things went from there. Network effects, perhaps.

  13. And while we’re doing random thoughts, Matthew’s comment on LAX looking like a prison resonates. I just got back from a trip myself, and on reflection decided that the experience of air travel, which I regard as miserable, is something like being treated as a prisoner. Long waits to go through a lengthy and intrusive security procedure. Long waits to board. Cramped conditions on the plane, with minimal food or water. Random delays, etc.

  14. The answer to your question about passport control is that civil service workers work in set 8-hour shifts; you do not call in a few extra to work 2-4 hours at 4 pm. No one wants the extra expense of putting on more workers than you need at medium slow-times because, well, who cares? Where are the passengers gonna go? Most American voters simply do not fly internationally enough to exert significant political pressure on the problem, and the tourists still come . . .

  15. What Brett says about Detroit’s epic political corruption is certainly true. I was in the room in 1972 (and very young, in case anyone is wondering), when Jerome Cavanaugh, Detroit’s last white mayor, was told by Democratic party bosses (well, actually, one particular boss, who only insiders even knew was a boss), no, he could not come out of political retirement to run for U.S. Senator, because his corruption as Mayor had gotten way out of control. The Republican incumbent would survive for another term, before being shoved aside by Carl Levin, who came to prominence in the mid-70s as President of the Detroit City Council.

    The 1967 riots were incredibly destructive of black business and the black middle-class in Detroit — landmark places and businesses were destroyed. And, the scale of things were exacerbated by the responses of Cavanaugh’s still white Administration, and Romney’s State House in Lansing, which were dithering, dilatory and ineffectual.

    Chicago’s 1968 riots, in the wake of the King assasination were a study in contrast. Mayor Daley, perhaps informed by Detroit’s mistakes, responded with overwhelming force to the news of King’s fate, not waiting for actual unrest. And, Chicago’s South Side gangs, energized with a sense of community responsibility by black-power ideology, protected local business, which confined the damage that occurred primarily to the West side.

  16. I was in Detroit in 1967, right after the riots, but it was pretty obvious even then that downtown Detroit was in deep trouble before the riots. And, right now, I teach at a university in Gary. If someone had asked “Who could have forseen that Gary would tank so badly, after being one of the fastest growing cities in America between 1920 and 1960?” (which it was), I would say that the dominance of the economy by a small number of extremely large firms (headquartered elsewhere) and the absence of anything approaching an entrepreneurial culture made it likely. As did what turned out to be pretty incompetent (but not overtly corrupt) local governance from the late 1960s on.

    And note that when we talk about how well “Chicago” has done, the picture does not look quite the same if you take into account the distribution of economic development withing the city. Despite some bright spots, the south side has not done well. The steel/auto complex on the south shore is virtually dead. Close-in communities (I’m thinking of Cicero, Berwyn, Chicago Heights, Ford City, and others here) have become basket cases. The Loop and parts of the north side (and much of the north suburban area) have done well-to-OK. But the success is not area-wide.

  17. Ugh. This is only wisdom to those who don’t know or understand the problems facing Detroit.

    Anyone with any familiarity with the People Mover know what an ill-conceived joke it is – poor planning doomed it from the beginning. It is a short track encircling the downtown entertainment district. It serves no purpose to the city’s residents – it caters to weekend drunks attending sports games. Anyone with any familiarity with the city would know this.

    Further, one of the problems the city faces is one of transportation. With the city wrecked by poverty, reliable transportation IS a problem. The bus system is a joke, underfunded and a maze of poor planning. And considering all the areas jobs are in the suburbs, which have done quite well in comparison (Oakland County, directly north, is one of the country’s wealthiest counties), this is a big issue. The proposed light-rail would run from reisidential areas in Detroit through Oakland county up through automation alley.

    If the city and the surrounding counties hadnt refused to cooperate with each other for decades, a lot of these problems could have been avoided. Instead racial animosity and distrust has prevailed.

    Quite disappointed in this site for passing along such obvious bullshit.

  18. “The answer to your question about passport control is that civil service workers work in set 8-hour shifts; you do not call in a few extra to work 2-4 hours at 4 pm. ”

    Oh yes, Megan, it’s all “the government’s fault”.
    The issue is not government vs private; the issue is alternatives, and relative power. There are no alternatives to LAX for many purposes, there is no alternative to going through DHS, and passengers have no power over both these issues.
    Private industry in this regard is every bit as bad. Cell reception is abysmal all over LAX, even though this is an area full of people trying to arrange pickups with each other. But what can you do — no power, no alternatives.

  19. Obviously the troubles in the Detroit metro area are a result of the area having bet its entire bankroll on one industry a century ago, the (mostly self-inflicted) troubles in that industry over the last 30 years, and the lack of any new growth drivers since.

    What I’m more interested in is why the city of Detroit has done so much worse relative to the rest of the metro area than have most other similarly-situated cities since 1950. I began by comparing Detroit and Philadelphia, partly because they were similarly-sized in 1950, and partly because I grew up in South Jersey, about ten miles outside the city, and have lived in various Detroit suburbs for almost 33 years now. In 1950, Philly had 2.07 million people, while Detroit had 1.85 million, and the Philadelphia metro area (present Philadelphia MD plus Camden MD) was 3.67 million, versus Detroit (present Detroit MSA plus Ann Arbor MSA) at 3.3 million. By 2000, the Detroit metro area had added 44% to its population, while the Philadelphia area had added 37%. Detroit proper, however, had lost 49% of its 1950 population, while Philadelphia had lost only 27%. And now in 2010, Detroit is at 39% of its former self, while Philadelphia has recovered a bit to 74%.

    Expanding the search a little, looking at the ten largest cities from 1950, we have Los Angeles in 2010 at 192% of its 1950 population, New York at 104%, a group of cities including Chicago, Philadelphia, Washington, and Boston between 74% and 77%, Baltimore at 65%, then the laggards of Cleveland at 43%, Detroit at 39%, and St Louis at 37%. And Detroit is unique in having lost virtually all of its white population, working, middle, and upper class (remember when Mitt Romney was born his family lived in the Palmer Woods area of Detroit). Can some sociologist or anthropologist explain what the hell happened here that didn’t happen in other cities?

    Now, as far as the question of whether anyone in 1965 could have predicted the collapse of Detroit, I don’t know, because I wasn’t here at the time. Detroit lost 10% of its population in the 50’s while most of the 1950 Top 10 lost 1-5%, so maybe that was a harbinger (that was a great decade for the auto industry). St Louis lost 12%, so that fits, but Boston lost 13% (and is not now a Detroit-scale basket case).

    One explanation I can come up with is that, in the last building boom for auto manufacturing in the 50’s and 60’s, new plants went to suburbs such as Wayne, Livonia, Trenton, and Sterling Heights, and the workers followed the plants. Auto manufacturing needs a long assembly line, and the companies long ago settled on a single-level model as being most efficient, so the plants have a huge footprint, not really suitable for a densely-developed city. It’s was just lots cheaper and easier to assemble the land on the outskirts than in the city. This isn’t unique to recent decades – plants in the 1910’s and 20’s also were built on what was then the outskirts, which then were assimilated into Detroit or became enclaves such as Highland Park and Hamtramck or close-in suburbs like Dearborn.

    Any other thoughts?

  20. The datum that surprises me isn’t the hour for passport control but the 40 minutes for customs. I used to travel a lot, and the last airport I recall stopping me for a customs check was I think Kiev around 1995.

    Megan’s explanation fails to convince. Immigration officials are civil servants everywhere; and most places manage to keep queues down, including the UK, which checks with similar intensity to the USA. They just treat keeping queues down as an objective.

  21. Don K, read The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit by Thomas Sugrue.

  22. No, not really; In 1967 I lived a half block north of 9 mile road, in Warren. The riots stopped close enough to my house to hear the noise.

    Well, we lived off Fenkell and Hubbell, and when we returned we drove home past blocks of charred buildings. Nonetheless, other cities burned as well and they didn’t go downhill like Day-twa. The Coleman Young cronyism during and after is part of what did in Detroit, in my view. And the ossification of the Big 3. And some cultural backwardness that made me move away almost exactly three decades ago. And lack of diversification in industry.

    So it is almost never simply one thing that does it. It is usually several factors working together.

  23. But none of that explains what happened to Detroit per se. As I said, the surrounding suburbs did quite well enough – granted, the big 3 continually lost market share as competition rose from the 1980s onward, but they also continually hired and expanded and remained profitable. What did the big 3 in was arrogant and incompetent management rather than the conventional wisdom of labor costs.

    What’s happened in Detroit is hyper-segregation and concentrated racialized poverty (remember, literal walls were built to keep blacks inside Detroit proper), a consequence of an undiversified economy where innovation was stifled because the best and brightest either left or remained in the automotive industry. Things like intentionally building I-75 through Black Bottom, wiping out the cultural heart of the African American community, red-lining, union-resistance to integration, refusing to merge Detroit with the surrounding (white) counties, ensured the destruction of the city. Matthew’s comments as to why Detroit is poor is myopic and offensive.

  24. Why anyone reads Ed Glaeser when William Cronon is available makes no sense to me. Chicago (closest point between Mississippi and St. Lawrence River systems) has an element of destiny because of its physical location- very similar to Houston (westernmost deepwater port on the Gulf) or Miami (southeasternmost big city in the U.S.). Chicago’s future markets and diversified economy were assets that Detroit never had. What’s more interesting is how relatively large financial markets in places such as New Orleans, Phily and San Francisco eventually disappeared (although a new one in Silicon Valley was born).

    Once these local financiers sold out to national and multinational financial firms and became rentiers, the energy moved out of a lot of these Cities. That vacuum created an alliance between the only two power groups who needed each other- local real estate interests and politicians. The ill-conceived transportation projects Glaeser loves to make fun of have more to do with this alliance than anything inherently poor about the particular mode of transportation.

    Glaeser’s advice is basically that politicians should ignore present property interests (local real estate and perhaps some larger business) for future property interests (inspiring and heroic entrepreneurs). This is absolutely fanciful.

  25. Lincoln, that’s an excellent point and I read both, for different reasons. One gets (mis)quoted in some circles and is a useful indicator. The other is a Titan in his field and I’m glad to make space on my shelves for his work.

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