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Back to the Renaissance? A New Perspective on America's Cities

Joel Kotkin

VENETIAN SOLUTIONS

With mass-manufacturing and mass-produced services increasingly shifting to locales on the urban periphery or outside the country altogether, cities are unlikely to recapture their past economic or demographic dominance. To survive, they will have to occupy those classical economic niches—commercial, artisanal, and cultural—that drove the growth of great cities in antiquity, the Renaissance, and the early modern period.

History has shown—most spectacularly in the Renaissance and early modern periods—that cities do not have to achieve demographic dominance to retain an important role in the economic, cultural, and spiritual life of the general society. However, they must concentrate on performing those functions in which cities enjoy a competitive advantage over rural and suburban regions.

One obvious area revolves around trade, particularly international trade. Virtually all of the great cities since antiquity—from Ur to Alexandria to Venice and the great cities of the Atlantic era—derived much of their sustenance through exploiting key trade routes. As world economies have developed through the ages, these have presented enormous opportunities for cities. As Fernand Braudel notes:

A world economy always has an urban center of gravity, a city, as the logistic heart of its activity. News, merchandise, capital, credit, people, instructions, correspondence all flow into and out of the city. Its powerful merchants lay down the law, sometimes becoming extraordinarily wealthy.

As in Renaissance Venice, early modern Amsterdam, or London, the increasing ethnic diversity of America's cities is critical to seizing the "cross-cultural" trade niche. Over the past thirty years, cities such as New York, Los Angeles, Houston, Chicago, and Miami have become ever more multi-ethnic, with many of the newcomers hailing from growing trade regions such as East Asia, the Caribbean, and Latin America. Upwards of three-quarters of America's ten million immigrants during the 1980s settled in a handful of urban states, with New York and California accounting for roughly half of that total. As a result, eight of the nation's ten most diverse counties are located either in the Bay Area, greater New York, or Los Angeles.

In these cities large immigrant clusters often play a role similar to that played by resident outsiders—like Armenians, Germans, and Jews in Renaissance Venice—by forging not only economic ties with the city, but critical bonds of cultural exchange and kinship networks. As futurist Alvin Toffler has observed, these bonds bring with them financial, market, and other business connections to the global economy:

Rather than looking at ethnic communities as purely sources of trouble, [we should view them as] resources we can use in penetrating the most vibrant markets in the world—Asia to the west and Mexico and Latin America to the south. We should be saying: "Look, Mexican-Los Angelenos, El Salvadorans, South Americans and Asians, look back to your places of origin and tell us what we can sell to them, what can we do with them, what partnerships can we make with them?"

This intermingling of demographics and economics can be seen in places such as "Toytown" on the grimy industrial eastern fringes of downtown Los Angeles. Founded by Charlie Woo, an immigrant from Hong Kong, the district now consists of over 500 different toy importers, warehouses, and distributors. Employing roughly 6000 people and with estimated revenues of $500 million, the district has also engendered a renaissance in local toy-making and design. This development has allowed Los Angeles to control roughly 60 percent of the $12 billion in toys sold to American retailers.

Much like renaissance Venice, the sprawling industrial region around downtown Los Angeles has developed a series of specialized industrial districts tied to the processing, warehousing, and trading of global products such as toys, textiles, and food products. At a time when high-rise space in the central city remains in vast oversupply, demand for modern warehouse and manufacturing space has continued to grow. Just this year, in the shadow of these near-empty towers, Lowe Development Corporation completed a 23-acre import/export center to service the booming trade sector. "The people who own the high-rises are going to face the music, but we are developing new properties for where the future is," Lowe's Doug Hinchcliffe explains. "It's the importers, the garment people, the immigrants, the Asian entrepreneurs who are driving things around here now."

In Los Angeles, trade-related activities have spawned the growth of more than 100,000 jobs during the past decade and today sustain a larger number of jobs than aerospace, previously the region's bellwether industry. But Los Angeles is not alone in its increased reliance upon cross-cultural trade. Other major immigration entrepots, such as Houston, Chicago, Miami, and New York have also become increasingly reliant on international trade, thereby providing a counterweight to the continuing migration of traditional manufacturing and service jobs towards the periphery.

For cities, which have been losing jobs to suburbs, edge cities, and smaller towns for much of the last few decades, such trade activities have emerged as one of the leading sources of new, good paying jobs. Since 1986, according the US Department of Commerce estimates, the percentage of jobs supported by exports has grown from 7.6 percent to 10.9 percent. Equally important, jobs tied to exports pay an average of 13 percent higher salaries than those aimed at domestic customers. Jobs in wholesale trade in California, for example, a field dominated by international commerce, pay on average $36,000—far above the state average of $29,000. "International trade, if you look at cities, isn't an option anymore," Kenan's John Kasarda observes. "Now it's a necessity."

Like Los Angeles, Miami in the 1980s was largely seen as little more than a sun-drenched paradise gone bad, weighed down by massive immigration from Cuba and other Spanish-speaking countries. Yet in reality, the massive movement of Latinos into the Florida metropolis transformed the once sleepy city into the dominant center of "cross-cultural" trade with South America and the Caribbean basin, an area accounting for nearly one-quarter of all US trade with South America, including nearly two-fifths of all exports, two-fifths of all US trade with the Caribbean and almost three-fifths of all US trade with Central America. Modesto Maidique, himself a Cuban émigré and President of Florida International University, observes:

If you take away international trade and cultural ties from Miami, we go back to being just a seasonal tourist destination. It's the imports, the exports, and the service trade that has catapulted us into the first rank of cities in the world.

Much the same process has taken place in Houston. Following the "oil bust" of the 1980s, the city seemed fated to fall into the ranks of declining urban regions, since the energy industry had come to complete dominate its economy as of the 1970s. However, the oil recession, notes University of Houston economist Barton Smith, shifted the city's focus towards international trade, which has grown by nearly a third since 1986. Smith estimates trade now accounts for roughly ten percent of regional employment, and played a critical role in the region's 1990s recovery. "After all, oil has been at the core of our economy since 1901," explains Smith. "Every boom leads people to forget other parts of the economy. After the bust, people saw the importance of the ports and trade." Accordingly, although it is renowned for its plethora of "see through" buildings, Houston last year ranked second in the nation in total office space absorption and third in increases in rents.

As in Miami and Los Angeles, Houston's expanding trade sector has been enhanced by the city's growing immigrant population. Between 1985 and 1990, Houston, a traditional magnet for domestic migrants, suffered a net loss of over 140,000 native born residents. But the immigrants kept coming—nearly 200,000 over the past decade. In the process, Houston became one of America's most diverse cities. Houston's Latino population increased from seventeen percent to more than twenty-seven percent in 1980, while the number of Asians doubled, growing from barely two percent to more than four percent. By the year 2000, Houston's minorities—Latino, Asian, and African-American—will constitute over two-thirds of the city's population.

Among those arriving in Houston during the 1970s boom was a Taiwanese engineer named Don Wang, who founded Metro Bank with backing from a few Asian friends in 1987. Amidst the hard times and demographic shifts, Wang and his clients-largely Asian, Latin, and African immigrants-saw an enormous opportunity to pick up real estate, buy homes, and start businesses in fields such as food processing, distribution, and electronics assembly. Recalls Wang:

In the 1980s everyone was giving up on Houston, but we stayed. It was cheap to start a business here and easy to find good labor. We considered this the best place to do business in the country, even if no one on the outside knows it.

Today Metro Bank, with assets over $300 million, is Houston's ninth-largest bank. Perhaps even more importantly, the presence of immigrant communities, most particularly the Chinese, now plays a critical role in attracting capital to urban areas, which have often suffered from disinvestment from large financial institutions. Surveys of new investment from Asia show that major cities—notably Los Angeles, New York, Houston, Chicago, and San Francisco—garner not only the vast majority of immigrants, but also most of the investment capital coming from across the Pacific Rim. Foreign buyers from Europe, Asia, and Latin America have invested heavily in residential properties as well, particularly in New York.

Possibly no city relies more on its global connections than New York, America's traditional trade center. Although no longer the hegemonic city of the 1950s, New York has continued to grow its global business, particularly in service industries such as advertising, marketing, and finance. This was true even in the 1980s, when foreign banks accounted for more than half of the total growth in banking employment in the region. For many New York service firms, business links with Europe, Asia, and Latin America have become as important as those with their domestic customers, and sometimes even more so.

Typical of New York's new breed of service exporters are companies like Audits and Surveys, a market research firm located in the fashionable Chelsea section of Manhattan. Founded thirty years ago, the company has rapidly expanded in recent years into global markets, with offices in Canada and Latin America, in addition to Asia and Europe. Foreign-based clients include such companies as Bell Canada, Citizen Watch Company, Minolta, Nestle, Polygram, and Scandinavian Airline Systems.

To Audits and Survey founder Sol Dutka, the New York locale is critical to his overseas marketing, since most major global companies already have a strong presence in Gotham. There is a cosmopolitan cultural climate in New York, he points out, that he's unlikely to find in cheaper, but more out of the way locales such as Charlotte, North Carolina. "How many people in Greensville or Charlotte know about East Indians or Koreans—both big markets?" Dutka asks. "How would you know there are five different kinds of Hispanics—and each one is a different market?"

But even the greatest of trading cities cannot rely solely upon global transactions for their economic survival. All of the great European cities of the Renaissance and early modernity—Florence, Venice, Amsterdam, Antwerp, London—reached their economic peaks by combining thriving textiles, glass, and shipbuilding industries with their traditional trade functions. On the other hand, historian Lauro Martines traces the decline of great trading cities such as Florence and Genoa at least in part to the gradual weakening of the artisanal sectors even as the transactional economy continued to expand.

In sharp contrast to mass manufacturing or commodity services, cities enjoy compelling advantages in artisan-based production. For one thing, these industries rely far more on the kind of design skills that remain largely centered in urban areas. This shift plays exactly into the demographic, design, and cultural strengths of core cities. Julian Tomchin, senior vice-president for special merchandising at Macy's-West in San Francisco, says most of the "hot" specialty products he seeks out are located in places like Los Angeles, New York, and San Francisco, where many of the best designers and fabricators have clustered. "There's a new breed of company out there that is combining craft-based industry in a factory setting," explains Tomchin, who spent ten years in the design office for Bloomingdale's before going over to Macy's. "It used to be part of hippiedom; now it's an industry."

Unfortunately, many urban planners, politicians, and economists have generally shown little interest in such opportunities. By the early 1990s in New York-once the center of artisan-based industry in America-the city's planning department openly proclaimed that "the industrial sector no longer drives the city's economy or exemplifies its role in the national or international economy." New York social critic Robert Fitch sees such attitudes as the culmination of a decades-long elite consensus—one that includes top business, financial, and government leaders—that the precipitous decline in local manufacturing was "largely inevitable and foreordained."

Yet, as economist Hugh O'Neill has observed, New York still possesses many of the critical prerequisites for a thriving artisan industrial base—a large nearby market, a world-class design community, a growing population of economically motivated, and, in some cases, quite skilled immigrants. Firms making such things as ethnic-oriented food products, mannequins for the garment trade, and printers servicing the financial service industry all have good logical reasons to locate in New York.

Tangible evidence of a potential resurgence in specialized urban industry can be seen in Houston and Los Angeles. In recent years, both cities have witnessed expanded industrial employment, especially in smaller, specialized firms. Between 1995 and 1997, Los Angeles gained over 20,000 manufacturing job in industries ranging from apparel, textiles, furniture, and food processing to highly specialized fields such as aerospace and metals. Houston meanwhile has seen its industrial economy expand even more rapidly, with industrial jobs growing in excess of three percent annually by the mid-1990s.

As in the case of "cross-cultural" trade, immigrants have provided a strong boost to specialty manufacturing. Much has been written about the low-end, often exploitative parts of the LA soft goods industry which employs close to 150,000 people. But if wages for the predominately Latino workforce remain lower than might be acceptable to native born Americans, by 1990 they had helped push Latino family incomes—largely due to pooling of wages—above their counterparts in New York as well as in other cities.

Ceramics maker L.A. Pottery has a workforce that is largely made up of Latino immigrants, many of whom bring tactile skills that they developed in their villages back home. Combined with the design skills of company founder Laurie Gates, himself an immigrant from Canada, the company has expanded through the Southern California recession, even developing large overseas markets in such traditional centers of ceramic production as Germany and Japan. "Each piece we create is different. It's a work of art that many people can afford to have in their homes," explains Gates, who now employs seventy people at his west LA factory. "It's the touch of design that opens so many doors."