The Way Ahead for Charlotte—and Cities

Brookings Institution’s Bruce Katz: Cities like Charlotte hold key to future

Former Clinton and Obama administration housing official Bruce Katz is the first Centennial Scholar at the Brookings Institution in Washington, D.C., where he concentrates on “the challenges and opportunities of global urbanization.” I spoke with Katz last year for a piece on the growing importance of Charlotte in the context of the 2016 Presidential election. Katz recently co-wrote The New Localism: How Cities Can Thrive In the Age of Populism (Brookings Institution Press, $25.99), which will be published in January. In the book, he and co-author Jeremy Nowak argue that in an age of populism, when state and federal governments have largely abandoned the idea of solving big social and economic problems, it falls to cities and their “networks” of public, private, nonprofit, and educational leaders to develop their own customized solutions. Katz was in Charlotte last week to attend and speak at a National League of Cities City Summit. On Thursday evening, he appeared at Park Road Books for a book signing that no one attended but me, so I interviewed him; transcript edited for clarity and space.—G.L.

Charlotte magazine: Tell me a little about the book.

Bruce Katz: So the book is basically what we hope is a playbook for cities. Populism means one thing in the U.S. and another thing in Europe. I’ve spent a lot of time in Britain, Spain, Germany; and populism there, with Brexit in England and the Catalonian independence movement—I mean, these are vast structural changes that are happening, and at the end of the day, cities are left as the only functioning units in these countries. They’re the places that have to get up every day and problem-solve. The challenges will obviously differ from place to place, but (in the United States), social mobility, economic insecurity, economic relevance for the city, infrastructure finance, investments in children—you just keep going down the list, and responsibility has just been devolved down to cities and metropolitan areas.

CM: What is the distinction between populism in Europe and the United States?

BK: I think what’s happening in the Western economies is a sort of grave frustration with the inability of economies to deliver good jobs, quality wages, decent benefits. This is kind of a global phenomenon. There’s also a level of cultural anxiety that is permeating these countries, particularly outside the major cities. So populism is a way to exploit grievances. In Britain, it takes the form of, “We want out of the EU.” In Spain, in Catalonia, it takes the form of, “We want out of Spain.” In other parts of Europe, because of the refugee crisis, it’s, “We don’t want those people here.” I think the Trump phenomenon was a level of frustration that the “Establishment,” broadly speaking, was not hearing the pain of a large segment of our citizenry—people left behind, places left behind—and there was a sense that unless something dramatic happened, nothing would ever change. Now, localism is also derivative of the times. It’s a way of solving the problems. Populism is a way of exploiting grievances. So these two movements are essentially co-existing at the same time.

CM: It seems that the common thread both here and in Europe is xenophobia and frustration with the effects of the global economy. Would you agree?

BK: Well, in Spain right now, xenophobia is not the issue. There, it’s more nationalism. Generally, there’s a sense of, “Stop the merry-go-round. We want to get off. We want all this change, all this disruption, which is not working for us, to stop. We want to go back.” And “going back” means different things in different places.

Globalization has had a lot of disparate impacts in different parts of the world, but in the United States, it’s clearly associated with deindustrialization, with frankly the cities gaining more market power and relevance—this spatial shift of centers of relevance. When deindustrialization happened, a lot of that was not, generally speaking, in the cores of the cities. They may have been in other parts of the metropolitan areas, or outside them. Now, at the end of the day, growing good jobs, dealing with the infrastructure deficit—these are hard challenges, and they’ve been pushed down to the local level.

So we’re in the middle of an enormous experiment in the United States and across the world. Can cities and metropolitan areas—not governments, but networks of leaders—come together to design, finance, and deliver initiatives that are going to actually make a difference? My answer, and Jeremy’s answer, is yes. There are models, there are examples, and not just in the U.S. But it’s going to take a radical change in how people at this level think about strategies, collaboration, institutions. We’re going to have to completely remake the playbook.

CM: What has driven this shift?

BK: I think the nature of innovation has changed. It is a more collaborative process, more networked. This sort of myth in the U.S., that it’s Steve Jobs sitting in his garage coming up with some new product, is not really how the innovation economy, which drives the rest of the economy, works. It’s about collaboration between companies, universities, faculties, investors, etc. Once you have a networked economy—it doesn’t happen overnight; it takes a while to bake into the system—but what a networked economy wants is proximity, density, and connectivity, and all that describes cities. So when we had an economy where companies were able to innovate—remember Bell Labs, by themselves?—they were off into science parks and research parks and keeping their secrets secret. When you actually have to compete based on networked research and networked innovation, they’re all coming back into the cores of the cities. They need to be near the universities. They need to be in places where there are high levels of amenities.

The other thing that changed was demographic preference, and this is definitely true in the United States. A rising portion of our country wants to be in communities where you can live, work, and play, where you have options about how you get from here to there. So the market desire for proximity and density was matched by a demographic shift—the millennials, empty-nesters, who were also looking for different kinds of communities. These things came together, and it’s accelerated post-recession. I go around Charlotte, and I see all the housing being built in the shadow of the downtown—that’s happening in every single city in the United States. It’s not any federal policy. There’s no state policy, particularly in this state. This is a market and demographic phenomenon, and there doesn’t seem to be any end in sight, really, because there was pent-up demand for a long time that was not being satisfied. Now it’s finally being satisfied.

Now, (cities) still have to deal with all the hard issues. If you’re a growing city, you have to deal with congestion, housing, social mobility, education. I mean, these issues don’t go away. They just get magnified, in some ways, the more prosperous you become. So a lot of cities are struggling with the price of prosperity. On the other hand, a lot of places are struggling with economic shock. So one group of places tends to drift populist, and the others are trying to problem-solve. The question for leaders at this time is, how to do you manage the disruption in your place with no help from anyone and with no real tangible guidebook?

CM: You’re saying that these “networks” are far more complex than just the traditional public-private structure.

BK: It is more complex, and the wonderful thing about the United States is that there is so much variance and so much innovation that there are many different models that are emerging. You go to a place like St. Louis or Indianapolis or Cincinnati, you’re seeing, really, private-public collaboration. The private sector’s driving the collaboration—the universities, the major companies, the philanthropies—and it’s usually around the innovative hubs, you know, Cortex in St. Louis, near Washington University, or the core of Indianapolis. In Europe, the innovation tends to be driven by the public sector. But it’s public-private now.

There’s a big story in this book that probably is the most important story for the U.S., about Copenhagen. Everyone thinks Copenhagen’s this wonderful city, everyone cycles, they’re all healthy. But beneath all that is a publicly owned, privately driven corporation that has regenerated the entire harbor and used the proceeds to finance a citywide transit system. So the U.S. tends to go to its voters and beg for taxes, or maybe the federal government will occasionally rain some resources down. In Copenhagen, they’re financing the entire transit system off of land sales, because they have a public-private collaboration that is intensely productive.

So we’re building new institutions now. In the U.S., we created independent school authorities 100 years ago, or we created port authorities. We’re now creating institutions almost like the market is innovating our products. Now we’re beginning to create them faster. Some are public-private; some are private-public. But that’s the way we’re going to govern our cities now. It’s going to be a radically different world in 10 or 15 years.

CM: What are the implications for cities like Charlotte?

BK: I think the face of the city will look different. There’ll be more regeneration in the core, both the downtown and the rings around downtown. There’ll be more innovative hubs in this core area; I know there’s a smart district being built around North End. These kinds of technology-driven districts that are innovating on products, they tend to be highly centralized, either in or around the downtown and right in the shadow of universities. So the spatial geography is going to start to look a lot different.

There’s clearly going to be a lot of technological advancements that get introduced first in the cores of cities, because these places tend to be the first adopters. But then the institutional framework will look different. We’ll still have elected officials. But we may have a new public-private or private-public institution that’s created to do cradle-to-career (education), so that we have universal early childhood education, smart interventions from (ages) zero to three, three to six, more activities and initiatives for kids who are in school—and all of this will be governed not by separate entities but by a unified institution that is working with the school districts, working with the child care providers, working with the community colleges. It’ll be more seamless in the U.S. than it is today. Today, it’s pretty fragmented.

On the infrastructure side, there’ll be more tools, more revenues generated from the local (communities), not just from taxes, but from smart management of public assets: the land and buildings the government owns. In a bottom-up world, where you’re actually responsible for solving problems and financing the solutions, the institutions will change. They’ll have to. We can’t do it with our current institutions. We have to create new ones or repurpose old ones. So, you know, buckle up.

CM: How does Charlotte stack up compared to other American cities in its readiness for the future?

BK: What you have, like some other Southern metropolitan areas, is companies—and they tend to be European companies, like Siemens—and what they tend to do is bring over the European perspective around what they would call technical institutes, what we call community colleges. You’re sort of a leader on that. Your community college is, if not the best, one of the best in the United States. So what you’re really good at is basically credentialing a very technologically sophisticated workforce. You’re really good at that. That’s different from being a Carnegie Mellon (in Pittsburgh) or Georgia Tech (in Atlanta), which are creating the next products. I would say that gives you a path forward.

I think you’ve got a particular kind of niche. You’ve got a high quality of life. You’re making a lot of smart investments. The challenge for you and for everyone else is that you’ve got to move faster on solutions now. I think for a long time, the political, business, civic, and university establishment in the U.S. felt like, “Well, at some point the state will do something, or maybe the federal government.” That’s over for the foreseeable future. The real question is, how much harm will they do?

It’s not really important what you choose to do as a network. The most important thing is to do something at scale in a sustained way. If you do that, then you’ll take on the next challenge with confidence, and you’ll take on the challenge after that. That’s the Denver story. Denver started by making investments in downtown Denver and a few other things. Then they built the airport, then they built a 122-mile light rail system, and they just keep going. They’ve learned to work together around transformative projects. They do grand things together. You’ve done some really important things here, but you tend to have done it as separate institutions.

If you’re going to own the future, I think there are three things you need to invest in: innovation that really is reflective of who you are—you don’t want to just imitate anyone else. Every place has its sort of distinctive niche. You have to invest in infrastructure, and that can be multiple things. A lot of folks focus on Bus Rapid or light rail transit, but there’s multiple types of infrastructure, and particularly in a climate world, we need more green infrastructure because of the vulnerability of many of our cities.

And the last piece is inclusion. You have to invest in cradle-to-career (education). You’ve got to invest in the next generation. Those three aspects, they may have federal or state investments, but at the end of the day, the local level will be the prime investors: public, private, civic, connecting to global sources of capital in many of these things, particularly around infrastructure. This is like the major leagues now. We think of cities as the bottom of the federal Republic. Actually, it’s sort of at the top. The pyramid’s flipped. This is the future-facing level of our society now. The feds are mostly a health insurance company with an army.

CM: And it may soon get out of the health insurance business.

BK: It’s a shrinking footprint. And the states are primarily hostile and captured by partisanship and ideological polarization. So this is it. This is the pragmatic level. If you’re a city leader—I don’t care if you’re a corporate leader, philanthropy, university, elected official—and you realize, “We now are in charge,” I think everyone will look in the mirror and say, “We don’t have all the tools yet.” So this is a book that’s trying to identify the next generation of tools and institutions.

CM: How can cities keep from dividing the wealthy and skilled further from the poor and unskilled, as the 2015 Chetty study showed is a particular problem in Charlotte?

BK: I would say reducing the achievement gap, the opportunity gap, will fuel economic growth going forward. The cities that are able to innovate on that front are going to enjoy more political stability, but more importantly, they’re going to enjoy more economic prosperity. The different between today and, say, 20 years ago is that we actually know what works. There are proven interventions in early childhood and after-school (education). You go across the life cycle of children and young adults, we actually do know what works. What generally happens in the U.S. is that there’s been a gap between research and action. The researchers sit here and wring their hands and say, “We understand what matters,” and the folks who are actually making the decisions and investments don’t have access to the research in a practical, tangible way. So I think what’s going to happen is these idea-to-action cycles are going to be reduced radically in the U.S.

One of the ideas in the book is that we’re working on a Children’s Accord. What we have right now is a Climate Accord out of Paris. Cities sign up, “We’re going to reduce carbon emissions by X by 2050.” We think that same model will work for kids and young adults. Cities sign up, “We want our children to be middle class by middle age, and here are the interventions we’re going to sign up for, and here are the institutions that are going to manage this across the board, and here are the investments we’re going to make, and here’s how we’re going to make them.” I think that’s where we’re headed. It’s a smart thing to do, because it’s going to make your city more economically strong when a larger portion of your citizenry have the talent, skills, and potential to earn more, contribute more, pay more. It’s really a common-sense approach, but the tools and institutions, I think, are out there now to be applied.

CM: The so-called “urban-rural divide” has been a big topic of conversation in the year-plus since President Trump’s election. Isn’t there a risk of rapid progress in cities worsening that divide?

BK: The U.S. is the quintessential metropolitan nation, right? You have 388 metros, they’re 84 percent of the population, 91 percent of the GDP. So this country is really an aggregate of our metro areas. Metros are central cities, older suburbs, mature suburbs, exurbs—and many rural areas. The rural areas are the commuter origins for a good portion of the metropolitan workforce. Half of the people who live in rural America actually live in metropolitan America, because we’ve sprawled out our metros so far, we’ve jumped through rural counties. So for half of rural Americans, their future is inextricably linked to the prosperity of their metropolitan areas. What’s going to happen, I think, is that we’re going to create new intermediaries that make the linkages between the core city and the rural periphery tighter and sharper. There are things that the rural periphery should do—around logistics, or still manufacturing and production, energy sourcing, food-to-market—that the core city can’t do. These linkages are going to be strengthened.

Therein lies the way to heal the urban-rural rift. Denver’s the best example of this, because that’s where you have a Metro Mayors Caucus, the rural counties sitting with the urban counties, reaching agreement on a whole range of things: around infrastructure, redevelopment. That’s the model going forward. I think if the pragmatists and the problem-solvers run our country from the bottom up, this intense partisanship and polarization will not completely go away, but it will be dissipated, because we’ll show that there are solutions to these things, and there’s a relationship between these different geographies. When people talk about urban and rural, they’re acting as if they’re talking about Manhattan and Kansas. No, we’re talking about metropolitan areas. We’re talking about Charlotte-Mecklenburg. And really, what’s the difference between different parts of this place?

Some of this is about a platform for innovation, company formation, company growth. It will create enormous employment opportunities if it ultimately plays itself out. Now’s the time to put into place some institutional mechanisms so that as the value does appreciate, it redounds to the benefit of the broader community, you’re able to preserve affordable housing—there are mechanisms to do this. You don’t just have to wait for the market to affect you. You can actually take control of the future.

CM: How well do you think Charlotte is positioned to do that?

BK: This period, I think, is going to be remembered as a period where these kinds of collaborative efforts and just the city-state writ large became accelerated. That’s what we’ll look back on. Trump (through former Presidential adviser Steve Bannon) said he was going to “deconstruct the administrative state”—what he’s actually ended up doing is accelerating the city-state. In Charlotte, the field’s wide open. You can jump to the head of the list, and it could be around something that is now on the table, or it could be something radically different. It’s your choice.