Tag Archives: agglomeration

Agglomeration, continued

Nike Agglomeration crop

More items of note on agglomeration:

From City Journal, the “Seven Pillars of Agglomeration.”

  1. Economies of scale in production
  2. Economies of scale in trade and transportation
  3. Falling transportation and communication costs
  4. Proximity with other firms in the same industry
  5. Advantages of diversity
  6. The quest for the center (of the industry)
  7. Buzz and bright lights

And, from The New Republic‘s Avenue blog, a visualization of those principles in action, looking at the athletic and outerwear industry in Portland, OR – from Pendleton (1889) to Nike (1978).

But the A&O cluster is also an interesting case study in cluster morphology and dynamics. Check out this cool genealogy map developed by sometime Metro Program author Heike Mayer of the University of Bern, for example. Meyer’s info-graphic shows well how the A&O cluster has grown over time and now epitomizes the frequent structure of highly dynamic clusters, which often find a small number of large foundation firms (in this case Nike, Adidas, and Columbia Sportswear) surrounded by a cloud of scores of smaller, more entrepreneurial firms. In Portland, hundreds of these small and sometimes tiny firms are now proliferating–driving growth, developing their own niches, and providing services to the bigs and larger new firms.

The accompanying infographic (full size image – PDF file) shows this phenomenon in action, and through time.  As noted, building on these existing clusters, taking advantage of these agglomerations is the smart approach to economic development:

All together, it’s a great example of how the best sort of economic development eschews chasing after firm relocations and other silver bullets and instead concentrates on “organic” growth that arises from local distinctiveness.

Agglomeration is about letting cities be cities.

Nightlife agglomerations & the corner bar

The Corner Bar, Divernon IL - CC image from Randy von Liski

The Corner Bar, Divernon IL - CC image from Randy von Liski

A few booze-related items I thought I’d comment on:

The Hill is Home takes note of ANC 6B‘s seemingly preferred method to avoid “Adams Morganization” – a moratorium on all new liquor licenses.  Nevermind that the trigger for this fear of Adams Morgan is Moby Dick House of Kebob – which makes me think those leveling this barb have neither visited Adams Morgan recently nor dined at Moby Dick.

Matt Yglesias notes that such efforts to control liquor licenses is fighting the natural tendencies urban economics, where things like to cluster.  That’s what cities are, after all – clusters and agglomerations of people, firms, skills, capital, etc.  Yglesias makes a great point about the appropriate scale of governance of these issues.  While small, local groups (such as an ANC) might be affected by a new bar or restaurant, the practice of giving them veto power over things like liquor licenses has some severe implications:

The bigger question here is about levels of governance. Insofar as you empower residents of my building in DC to make the decision, we will attempt to regulate the food service establishments on our block so as to minimize late-night noise. After all, the service sector jobs lost in the process aren’t the jobs that we do while as homeowners we bear the losses of reduced property values on the block. And to simply disempower us, as a block, would be arbitrary and unfair. But empowering each and every block leads to highly inefficient outcomes with the bulk of the pain felt by low-income people and there’s no obvious reason of justice to think this kind of hyper-local empowerment is more legitimate than taking a broader view would be.

Ryan Avent adds on, noting that these kinds of restrictions and inefficiencies lead to poor outcomes for consumers:

That’s largely because it’s very difficult to open new bars. And the result is a pernicious feedback loop. With too few bars around, most good bars are typically crowded. This crowdedness alienates neighbors, and it also has a selecting effect on the types of people who choose to go to bars — those interested in a loud, rowdy environment, who will often tend to be loud and rowdy. This alienates neighbors even more, leading to tighter restrictions still and exacerbating the problem.

Sadly, this is the kind of dynamic that’s very difficult to change. No city council will pass the let-one-thousand-bars-bloom act, and neighbors can legitimately complain of any individual liquor license approval that it may lead to some crowded, noisy nights. It’s interesting how often these multiple equilibrium situations turn up in urban economics. In general, they seem to cry out for institutional innovation.

Avent specifically laments DC’s lack of the ol’ neighborhood corner bar.  Having been born and raised in the boozy midwest, where the small, corner bar is an institution and people drink alcohol the way others drink water, I miss the corner bars, which aren’t as common as they could be in the District.

One of the problems is in the tools used to limit these licenses.  As Avent and Yglesias note, the kinds of tools bandied about by ANCs lead to an inefficient marketplace.  Instead of preventing Adams Morgan, something like a moratorium ends up ensuring a slippery slope towards “Adams Morganization” rather than preventing one.

On the broader issue of retail mix (ANC 6B’s stated reason to oppose new liquor licenses), the December issue of the Hill Rag had two contrasting pieces on the issue of retail on Barrack’s Row.  The first discusses potential options – none of which seem palatable for actually encouraging retail.  Regarding a moratorium, the impact is exactly what Avent describes:

One problem he cites is that it seems to be “too easy to become a bar or pub once you have the license.” So, even if there is a moratorium on new licenses, there is always the chance that existing licenses can morph from restaurants, which most neighborhoods don’t mind, to bars that operate later and attract different customers.

Another suggested tool is a zoning overlay district, but such a tool is a mismatch between the stated problem and solution.  Zoning is best used to regulate the physical form and the use of buildings, broadly defined.  Zoning can separate a retail use from a residential one, or an office use from light industry – but it is not an adept tool to parse out specific kinds of retail, or in differentiating between Moby Dick and Chateau Animeaux. The issue of bars and liquor licenses is more an issue of how those physical spaces are programmed.  Zoning is not a good tool to control these kinds of issues, and these types of regulations often backfire.

Refreshingly, another article in the issue (about parking, no less) from Sharon Bosworth of Barracks Row Main Street gets at the real reason 8th St SE is more favorable to bars and restaurants instead of retail:

By mid 2009, The Wander Group, consultants who make saving America’s historic corridors their specialty, reported back to BRMS: our commercial corridor, specified by none other than Pierre L’Enfant in 1791, is today uniquely suited to businesses requiring small square footage because of the antique proportions of our buildings which are well protected in the Capitol Hill Historic District. Restaurants require small square footage and restaurant owners would always be on the hunt for charming, historic sites. Wander Group predicted more restaurateurs would find us, and so they did. Our tiny buildings are difficult (but not impossible) for most retail footprints, yet they work perfectly for restaurants.

In addition to those challenges, there’s the broader issues facing retail – online competition, fighting against the economies of scale for big box and chain retailers, etc.

Instead, we have an industry that works well in an urban setting and wants to cluster here.  Here’s one vote in favor of more corner bars.

Weekend Reading

CC image from sabeth718

CC image from sabeth718

There’s a whole host of good stuff out there this weekend, covering the economy, smart growth, transit, high speed rail, and more:

Smart growth is nothing to fear: Roger Lewis aims to quiet the fears of Washington Post readers:

In fact, as new long-range plans are implemented in the coming decades, your property’s value will probably go up, your way of life and neighborhood character will be enhanced, and traffic congestion will not worsen. Indeed, it may ease. Also remember that such plans primarily serve future generations.

Optimism is justified. Stable, low-density residential neighborhoods and subdivisions will remain untouched. Transportation network plans do not depend on routing future traffic through subdivisions and local residential streets, many of which are loops and cul-de-sacs. And redeveloped areas actually will provide new, desirable conveniences for residents able to walk or bike to buy a quart of milk or sip coffee in a cafe.

Daniel Gross puts that into a larger context: Complete with quotes from Richard Florida, Mr. Gross looks to optimistic visions of the future and the chance to re-shape our economy, using the pending economic rebound to re-shape things – putting those kinds of smart growth plans into action:

So what will our new economy look like once the smoke finally clears? There will likely be fewer McMansions with four-car garages and more well-insulated homes, fewer Hummers and more Chevy Volts, less proprietary trading and more productivity-enhancing software, less debt and more capital, more exported goods and less imported energy. Most significantly, there will be new commercial infrastructures and industrial ecosystems that incubate and propel growth—much as the Internet did in the 1990s.

Not everyone is so optimistic: Reihan Salam at The Daily Beast isn’t nearly as optimistic about our economic prospects, despite the good intentions and aspirations of folks like Roger Lewis.

But one could just as easily argue that we’ve been furiously spending taxpayer dollars propping up the McMansion-and-Hummer economy. To protect homeowners, we’ve launched an extraordinary series of interventions designed to buttress housing prices, an approach that effectively transfers wealth from those who rent to those who own. Collapsing housing prices could prove a boon for less-affluent households or cautious investors who were reluctant to buy at the top of the market. That can’t help unless we accept that housing prices can and should collapse, even if that hurts key constituencies in the short term. And the same goes for efforts to keep the domestic automotive industry on life support.

So, are we in a moment of change or not?  The point about renters and owners is well taken, it reminds me of plenty of discussion around tax day about the perils of the mortgage interest deduction.

Beyond these big, national-level policy questions, there’s plenty of room to debate the local impact.  Housing Complex notes that DC has lots of jobs (relatively) and high rents, circling back to the notion that the ability to change things won’t be uniform across the nation.  Places like DC are positioned well to make the transformation – provided the Federal framework enables these kinds of changes.

On that note, Aaron Renn looks at a potential city-friendly federal policy framework, emphasizing talent, innovation, and connection – looking at policy areas of transportation, housing, the environment, and immigration.  Perhaps the key takeaway is the requirement of flexibility – many of today’s problems stem from federal policies that are too rigid to be of much use in urban environments.

Density discussions: Density is good for cities.  It’s also often misunderstood and feared – see Roger Lewis’ calming of fears regarding smart growth.  A few posts on the subject:

  • Yonah Freemark questions whether streetcar suburb densities are enough to get real urbanism and transit use.
  • Aaron Renn asks if density is overrated for smaller cities, as they can still compete without it, taking advantage of highways and cars that work well at lower densities.
  • Cap’n Transit criticizes both thoughts, emphasizing the bigger picture about why we want to encourage urbanism and transit use in the first place – arguing that Renn’s rationalization isn’t helpful in the long run.

Miscellany:

Infrastructural and industrial spaces

CC image from nathansnider

CC image from nathansnider

The Infrastructural City – Something I’m eagerly anticipating is a sort of on-line book club discussion of the infrastructural city, spearheaded by mammoth.

Over the course of the next several months, mammoth will be coordinating an online discussion of The Infrastructural City: Networked Ecologies in Los Angeles (edited by Kazys Varnelis and published last year by Actar), as an experiment in the cooperative reading and discussion of a text.

As Varnelis explains in the introduction to The Infrastructural City, Los Angeles is perhaps the American city most fully indebted to infrastructure for its existence and survival:

“If the West was dominated by the theology of infrastructure, Los Angeles was its Rome. Cobbled together out of swamp, floodplain, desert, and mountains, short of water and painfully dependent on far-away resources to survive, Los Angeles is sited on inhospitable terrain, located where the continent runs out of land. No city should be here. Its ecological footprint greater than the expansive state it resides in, Los Angeles exists by the grace of infrastructure, a life-support system that has transformed this wasteland into the second largest metropolis in the country. Nor was this lost on Angelenos. They understood that their city’s growth depended on infrastructure and celebrated that fact. After all, what other city would name its most romantic road after a water-services engineer?”

Yet despite that history and the continued role of infrastructures such as the Alameda Trench and the Pacific Intertie in shaping the physical, social, and economic form of Los Angeles, the city has also developed an extraordinary resistance to the planning of new infrastructures.  A myriad of factors, including ferocious NIMBYism and empty state coffers, make it increasingly difficult to implement new infrastructures or expand existing systems.  Furthermore, the city’s infrastructures are increasingly inter-related and co-dependent, interwoven into what Varnelis terms networked ecologies — “hypercomplex systems produced by technology, laws, political pressures, disciplinary desires, environmental constraints and a myriad other pressures, tied together with feedback mechanisms.”

Free Association Design will also be participating, as will the Center for Land Use Interpretation.

Speaking of CLUI – mammoth also points out CLUI’s spring newsletter, with some fascinating pieces on everything from ghost fleets and shipbreaking to urban oil extraction in Los Angeles.

Agglomerations – Paul Krugman has to give a talk in a couple weeks, and he found inspiration in northern New Jersey’s claim to be the embroidery capital of the world.

It’s an interesting history of individual initiative and cumulative causation — the same kind of story now being played out all across the world, especially in China. I still love economic geography.

Never Stop the Line – last weekend’s edition of This American Life featured the fascinating tale of NUMMI – a join GM-Toyota auto plant in Fremont, CA.  Toyota showed GM all their secrets to making high quality cars – lessons that GM couldn’t easily translate to other plants.

A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: how it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn’t learn the lessons – until it was too late.

Given GM’s current status and Toyota’s recent recall issues (many of which are attributed to growing too fast to control quality), it’s a fascinating tale for anyone interested in American industry and manufacturing.