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jerryking : rust_belt   20

How to funnel capital to the American heartland
April 15, 2019 | Financial Times | by Bruce Katz.
* The Innovation Blind Spot, by Ross Baird.
* Ways must be found to rewire money flows in order to reverse the export of wealth
* A federal tax incentive intended to entice coastal capital into the heartland may end up helping to keep local capital local.

Over the past year, economically distressed communities across the US have been engaged in an intense discussion about mobilising private capital. Why? As mayors, governors, real estate developers, entrepreneurs and investors have learnt, buried in the 2017 Tax Cuts and Jobs Act was a provision that created a significant tax incentive to invest in low-income “opportunity zones” across the country......the law’s greatest effect, ironically, has been to unveil a treasure trove of wealth in communities throughout the nation. Some of the country’s largest investors are high-net-worth families in Kansas City, Missouri, and Philadelphia; insurance companies in Erie, Pennsylvania, and Milwaukee; universities in Birmingham, Alabama, and South Bend, Indiana; philanthropists in Cleveland and Detroit; and community foundations and pension funds in every state.

These pillars of wealth mostly invest their market-oriented equity capital outside their own communities, even though their own locales often possess globally significant research institutions, advanced industry companies, grand historic city centres and distinctive ecosystems of entrepreneurs. The wealth-export industry is not a natural phenomenon; it has been led and facilitated by a sophisticated network of wealth management companies, private equity firms, family offices and financial institutions that have narrow definitions of where and in what to invest.

The US, in other words, doesn’t have a capital problem; it has an organisational problem. So how can capital flows be rewired to reverse the export of wealth?

Three things stand out:

(1) Information matters. The opportunity zones incentive has encouraged US cities to create investment prospectuses to promote the competitive assets of their low-income communities and highlight projects that are investor-ready and promise competitive returns.

(2) norms and networks matter. The opportunity zone market will be enhanced by the creation of “capital stacks” that enable the financing of community products such as workforce housing, commercial real estate, small businesses (and minority-owned businesses in particular) and clean energy, to name just a few. Initial opportunity zone projects are already showing creative blends of public, private and civic capital that mix debt, subsidy and equity.

(3) institutions matter. Opportunity zones require cities to create and capitalise new institutions that can deploy capital at scale in sustained ways. Some models already exist. The Cincinnati Center City Development Corporation, backed by patient capital from Procter & Gamble, has driven the regeneration of the Over-the-Rhine neighbourhood during the past 15 years.

More institutional innovation, however, is needed. As Ross Baird, author of The Innovation Blind Spot, has argued, the US must create a new generation of community quarterbacks to provide budding entrepreneurs with business planning and mentoring, matching them with risk-tolerant equity. These efforts will succeed if they unleash the synergies that flow naturally from urban density. New institutions will not have to work alone, but hand-in-glove with the trusted financial firms that manage this locally-generated wealth.
books  capital_flows  cities  coastal_elites  community  economic_development  economically_disadvantaged  economies_of_scale  high_net_worth  howto  industrial_policies  industrial_midwest  industrial_zones  institutions  investors  match-making  midwest  municipalities  networks  network_density  P&G  PPP  packaging  place-based  private_equity  property_development  prospectuses  Red_States  rescue_investing  rust_belt  tax_codes  venture_capital 
april 2019 by jerryking
PNC’s Bill Demchak hopes Pittsburgh’s old money will finance its tech-driven future
July 29, 2018 | Financial Times | Patti Waldmeir.

Pittsburgh native Bill Demchak, chief executive at PNC, to reflect on the rebirth of one of America’s great Rust Belt cities — and what lessons it may hold for other cities trying to recover from decades of decline.

Few American metropolises suffered the kind of economic conflagration that first hit Pittsburgh in the 1970s when its economic foundation, the steel industry, collapsed......one reason Pittsburgh has money today is because it had money yesterday: the fortunes earned by the city’s early industrial entrepreneurs — such as Andrew Carnegie and Andrew Mellon — helped fund philanthropic institutions that were still in place to help bail the city out decades later.

The universities they funded were around too, generating the talent and the infrastructure for the innovation economy Pittsburgh is counting on for prosperity in the 21st century.

“What we had to our advantage, then and today, was a very strong university system, with University of Pittsburgh and Carnegie Mellon University. We had an extremely strong philanthropic community driven by the old money from the Mellon family, the Heinz endowments, Carnegie,” he says.

These foundations offered broad-based support as technology came to the fore in the mid-1990s, he adds, when CMU was a leader in robotics and autonomous vehicles, as it is today.
Andrew_Carnegie  Carnegie_Mellon  CEOs  cities  Colleges_&_Universities  industrial_Midwest  innovation  midwest  old_money  philanthropy  Pittsburgh  revitalization  Rust_Belt  Red_states  structural_decline 
july 2018 by jerryking
Silicon Valley Is Over, Says Silicon Valley - The New York Times
Kevin Roose

THE SHIFT MARCH 4, 2018

By the end of the tour, the coastal elites had caught the heartland bug. Several used Zillow, the real estate app, to gawk at the availability of cheap homes in cities like Detroit and South Bend and fantasize about relocating there. They marveled at how even old-line manufacturing cities now offer a convincing simulacrum of coastal life, complete with artisanal soap stores and farm-to-table restaurants.....For both investors and rank-and-file workers, one appeal of non-coastal cities is the obvious cost savings. It’s increasingly difficult to justify doling out steep salaries and lavish perks demanded by engineers in the Bay Area, when programmers in other cities can be had for as little as $50,000 a year. (An entry-level engineer at Facebook or Google might command triple or quadruple that amount.)......And the hot demand for engineers in areas like artificial intelligence and autonomous vehicles has led companies to expand their presence near research universities, in cities like Pittsburgh and Ann Arbor. ......Venture capitalists, who recognize a bargain when they see one, have already begun scouring the Midwest. Mr. Case and Mr. Vance recently amassed a $150 million fund called “Rise of the Rest.” The fund, which was backed by tech luminaries including Jeff Bezos of Amazon and Eric Schmidt, the former executive chairman of Alphabet, will invest in start-ups throughout the region.
coastal_elites  Silicon_Valley  venture_capital  vc  Rust_Belt  midwest  Red_states  industrial_Midwest  J.D._Vance  Pittsburgh  Ann_Arbor 
march 2018 by jerryking
As Silicon Valley Gets ‘Crazy,’ Midwest Beckons Tech Investors
NOV. 19, 2017 | The New York Times | By STEVE LOHR.

The rationale for investing in the Midwest combines cost and opportunity. A top-flight software engineer who is paid $100,000 a year in the Midwest might well command $200,000 or more in the Bay Area. The Midwest, the optimists say, also has ample tech talent, with excellent engineers coming out of major state and private universities in the region.

But they also point to technology shifts. As technology transforms nontech industries like health care, agriculture, transportation, finance and manufacturing, the Midwest investors argue that being close to customers will be more important than being close to the wellspring of technology.

“The value will come from marrying industry knowledge with technology,” said Mr. Olsen of Drive Capital. “There’s an arrogance in Silicon Valley that we don’t need industry expertise. That’s going to be less and less true in the future.”.....Referring to the troubles chronicled in his book, Mr. Vance said that “at least a partial solution is to get more investment capital into this part of the country.”....Mr. Case and Mr. Vance talk of the need to create “network density” by bringing together more entrepreneurs, customers, partners and investment capital. The trips can and do yield investment candidates for Revolution, but start-up evangelism is the main theme.
investors  Silicon_Valley  start_ups  Hillbilly_Elegy  venture_capital  vc  Midwest  Steve_Lohr  J.D._Vance  industrial_Midwest  rust_belt  Steve_Case  industry_expertise  network_density 
november 2017 by jerryking
Why I’m Moving Home
MARCH 16, 2017 | The New York Times | By J. D. VANCE.

" The economist Matthew Kahn has shown that in Appalachia, for instance, the highly skilled are much likelier to leave not just their hometowns but also the region as a whole. This is the classic “brain drain” problem: Those who are able to leave very often do.

The brain drain also encourages a uniquely modern form of cultural detachment. Eventually, the young people who’ve moved out marry — typically to partners with similar economic prospects. They raise children in increasingly segregated neighborhoods, giving rise to something the conservative scholar Charles Murray calls “super ZIPs.” These super ZIPs are veritable bastions of opportunity and optimism, places where divorce and joblessness are rare." ......“The sociological role [colleges and universities] play is to suck talent out of small towns and redistribute it to big cities.” There have always been regional and class inequalities in our society, but the data tells us that we’re living through a unique period of segregation....This has consequences beyond the purely material. Jesse Sussell and James A. Thomson of the RAND Corporation argue that this geographic sorting has heightened the polarization that now animates politics. This polarization reflects itself not just in our voting patterns, but also in our political culture...JD Vance has decided to move [back] home-to Ohio....."we often frame civic responsibility in terms of government taxes and transfer payments, so that our society’s least fortunate families are able to provide basic necessities. But this focus can miss something important: that what many communities need most is not just financial support, but talent and energy and committed citizens to build viable businesses and other civic institutions."
sorting  segregation  neighbourhoods  polarization  geographic_mobility  brain_drain  super_ZIPs  cultural_detachment  Rust_Belt  midwest  Red_states  whites  political_partisanship  political_polarization  working_class  J.D._Vance  highly_skilled  industrial_Midwest  Appalachia  cities  engaged_citizenry  talent  Charles_Murray  civics  social_mobility  self-perpetuation  values  opportunity_gaps  college-educated  geographic_sorting  regional  compartmentalization 
march 2017 by jerryking
Movement politics: a guide to the new globalisation
NOVEMBER 24, 2016 by: Alan Beattie.

The Great Convergence: Information Technology and the New Globalization, by Richard Baldwin, Harvard University Press, RRP£22.95/$29.95, 344 pages.

....Just as South Korea has changed, so newly industrialising countries are less keen on setting up entire industries at home and instead try to insert themselves into global supply chains. Sometimes this means changing, not just exploiting, their comparative advantage. Baldwin cites Vietnam, which joined Honda’s supply network by starting to manufacture motorcycle parts using production and technical expertise imported from the parent company. Thus Vietnam’s existing advantage of low-cost labour joined with the management and technical know-how of Japan to create a new specialism......

This framework explains a lot about current tensions around globalisation. For one, the stricken manufacturing towns of the American Midwest, many of whose poorer inhabitants switched to voting for Donald Trump, have experienced first-hand what it feels like rapidly to become a redundant link in a global value chain.

Second, it shows why modern trade deals, such as the proposed Transatlantic Trade and Investment Partnership between the US and EU, are centred on rules protecting patents and copyrights, and allowing foreign corporations to sue governments if they feel their investments are being expropriated. Multinationals are less concerned with goods tariffs, which are now generally low and belong to an earlier era of trade governance, than they are with trying to protect the specialist knowledge on which their global supply chains depend.

It also foresees the future of globalisation once technology has relaxed the third constraint, the movement of people. The easier it becomes to manage processes from afar — improved videoconferencing, remote-controlled robots — the more virtual immigration can substitute for actual and the specialisation of global supply chains proceed even faster.
books  book_reviews  supply_chains  Vietnam  Honda  international_trade  comparative_advantage  patents  videoconferencing  TTP  MNCs  redundancies  globalization  Midwest  Rust_Belt  industrial_Midwest  value_chains  copyright  transatlantic 
november 2016 by jerryking
Small Factories Emerge as a Weapon in the Fight Against Poverty
OCT. 28, 2016 | The New York Times | By NELSON D. SCHWARTZ.

... small manufacturers like Marlin are vital if the United States is to narrow the nation’s class divide and build a society that offers greater opportunities for everyone — rich and poor, black and white, high school graduates and Ph.D.s.

“The closing of factories has taken the rungs out of the ladder for reaching the middle class in urban areas,” ....“Manufacturing jobs involve a skill base that you develop over time, and that fortifies your negotiating strength,” Mr. Johnson said. But in lower-skilled jobs, the competition is with someone who will do the same work for less. “The marketplace doesn’t give you any leverage,” he said.

Hope for Troubled Cities

Today, smaller plants are particularly important to job creation in factory work, said Scott Paul, president of the Alliance for American Manufacturing. “Megafactories are the exception today,” Mr. Paul said. “Small manufacturing is holding its own — and you are seeing some interesting developments in urban centers.”....As the sociologist William Julius Wilson has written in his classic studies, “The Truly Disadvantaged” and “When Work Disappears,” the exodus of factories from high-cost, union-dominated cities to cheaper, less union-friendly locales in the South and West in the 1960s and 1970s played a major role in the breakdown of urban cores.

“The trends among non-college-educated, white Americans today look like a lot like the trends among black Americans in the 1970s that so worried policy makers and social scientists,” said David Autor, a professor of economics at M.I.T., who researches the connections among trade, labor and employment. “You see it in the falling labor force participation, the decline of traditional family structure, crime and poverty. It’s all there.”...
African-Americans  automation  Baltimore  blue-collar  deindustrialization  equality_of_opportunity  exodus  manufacturers  micro-factories  microproducers  poverty  robotics  Rust_Belt  tradespeople  urban  value_added  whites 
october 2016 by jerryking
J.D. Vance and the Anger of the White Working Class - WSJ
By ALEXANDRA WOLFE
July 29, 2016

J.D. Vance credits his grandparents, religion and his time in the Marine Corps from 2003 to 2007 for helping him to get his life together. Whereas many of the people around him growing up seemed to have a feeling of “learned helplessness” and didn’t think their decisions mattered, he says, he learned the opposite in the Marines: “My decisions did matter and I did have some control over my own life.”.....“In the family life that I grew up in, the way you handled conflict resolution with your spouse or your partner was by screaming and yelling, and if things got really bad, maybe throwing stuff or hitting and punching them,” he says. He only later realized that rather than fighting to win, he should try to solve problems in a relationship. .....“Concretely, I want pastors and church leaders to think about how to build community churches, to keep people engaged, and to worry less about politics and more about how the people in their communities are doing,” he says. “I want parents to fight and scream less, and to recognize how destructive chaos is to their children’s future.”

He thinks that school leaders could help by being more cognizant of what’s going on in students’ home lives. But most of all he wants people to hold themselves responsible for their own conduct and choices. “Those of us who weren’t given every advantage can make better choices, and those choices do have the power to affect our lives,” he says.
books  Yale  working_class  Appalachia  Rust_Belt  poverty  hopelessness  social_mobility  resentments  grievances  values  habits  USMC  helplessness  conflict_resolution  whites  deindustrialization  industrial_Midwest  family_breakdown  underclass  J.D._Vance  faith_leaders  individual_agency  individual_autonomy 
july 2016 by jerryking
Trump nation: An insider’s tour - The Globe and Mail
MARGARET WENTE
The Globe and Mail
Published Tuesday, Jul. 19, 2016

What explains the appeal of Donald Trump? Many pundits have tried to answer this question and fallen short. But J.D. Vance nails it. His stunning new book, Hillbilly Elegy: A Memoir of A Family and Culture in Crisis, doesn’t even mention Mr. Trump.....It’s misleading to describe the problems of the white working class as an economic crisis. Above all, it is a cultural, spiritual and psychological crisis. The real challenge is not so much the loss of jobs as the loss of values, order and meaning. The yawning chasm between the working and the middle class isn’t about money. It’s about habits and attitudes and a sense of powerlessness.....Mr. Trump is “cultural heroin” – the newest opioid of the masses. He, too, offers an easy escape from problems that seem overwhelming and hopeless.

The issues described in Hillbilly Elegy – low social mobility, the yawning gap between the haves and the have-nots, the waning prospects and social decay experienced by people at the bottom of the ladder – are among the greatest challenges of our times. They can’t be fixed with technocratic or government solutions.
books  Margaret_Wente  working_class  J.D._Vance  Appalachia  Rust_Belt  poverty  Donald_Trump  resentments  grievances  values  habits  social_mobility  hopelessness  helplessness  industrial_Midwest  whites  family_breakdown  underclass 
july 2016 by jerryking
London lives again: Inside the revival in Ontario’s rust belt - The Globe and Mail
JOHN IBBITSON
LONDON, ONT. The Globe and Mail Last updated: Friday, Feb. 05, 2016

Synergies between the education sector and the private sector lie at the very heart of Southwestern Ontario’s future. By incubating, encouraging and then feeding workers into London’s emerging high-technology sector, Western and Fanshawe are doing for their city what the University of Waterloo has long been doing for Kitchener-Waterloo’s computer-based industries and the University of Guelph is doing for bio-technology in Guelph.
John_Ibbitson  rust_belt  manufacturers  job_loss  revitalization  Southwestern_Ontario  entrepreneur  automotive_industry  UWO  Kitchener-Waterloo  synergies 
february 2016 by jerryking
Startup activity ramps up in the U.S. Rust Belt - The Globe and Mail
ANWAR ALI
Special to The Globe and Mail
Published Tuesday, Jun. 23, 2015
start_ups  rust_belt  Ohio  venture_capital  vc 
june 2015 by jerryking
Rust Belt revival: Lessons for southwest Ontario from America’s industrial heartland - The Globe and Mail
ADAM RADWANSKI
The Globe and Mail
Published Friday, Jan. 16 2015

Not all the start-ups and emerging businesses in Grand Rapids are as sexy. Some are tied to auto parts and office furniture, the traditional manufacturing around which Grand Rapids was built. Others are in communications technology or health sciences. Notwithstanding some growing financial-services companies, they tend to fit into the region’s proud history of making things.

As the Brookings Institute’s Vey notes, that tradition – and the accompanying institutional knowledge and infrastructure – can help Rust Belt cities take advantage of the current “maker’s movement,” in which a DIY culture makes the manufacturing market accessible to small enterprises.
revitalization  rust_belt  Southwestern_Ontario  industrial_Midwest  economic_development  institutional_knowledge  Pittsburgh  urban  urban_decline  philanthropy  cities  DIY  entrepreneurship  start_ups  manufacturers  Makerspace  Colleges_&_Universities 
january 2015 by jerryking
Midwest at Dusk - NYTimes.com
November 4, 2010 | New York Times | By DAVID BROOKS. "David
Brooks captures, and not for the first time, a central dilemma in
American politics: our post-industrial economy has not provided
attractive economic alternatives for the blue collar families of the
industrial midwest. Seething and increasingly desperate, they enjoy a
standard of living and life prospects that are considerably worse than
their parents. They vote accordingly -- for change. They were pro-Bush,
then anti-Bush, pro-Obama, now anti-Obama. They are not irrational and
they cannot be won over by large, easily parodied, government programs
-- even those like the auto bail out and health care reform that benefit
them directly. The midwest is a political cauldron and Brooks is
probably correct that even if New York and California join the EU, the
future of the USA will be determined here."
David_Brooks  Democrats  op-ed  working_class  blue-collar  industrial_midwest  Obama  resentments  grievances  deindustrialization  Rust_Belt  opinion_polls_&_surveys 
november 2010 by jerryking
High-Tech Start-Ups Put Down Roots in New Soil - WSJ.com
MAY 26, 2009 | Wall Street Journal | by SIMONA COVEL. Cities
Like Kalamazoo Dangle Incentives as Silicon Valley and Other Old Hot
Spots See Pullback in Venture Loans
cities  economic_development  incentives  industrial_midwest  Michigan  midwest  pullbacks  Rust_Belt  San_Antonio  silicon_valley  Simona_Covel  start_ups 
june 2009 by jerryking

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