Lessons for Pittsburgh

Post-Independence Day thoughts:

I read yesterday's NY Times magazine piece on the manufacturing revolution in China and came away with some impressions.

First, the manufacuring economy in Pittsburgh (as in most similar American cities) will never, ever return. It's not that the wage structure of Western PA is too high, and it's not that we lack the means to make needed capital investments. Here's the key: No matter what Pittsburgh does (and Pittsburgh is hardly alone in this), the Chinese can do it just as well, for less. The region is simply fooling itself to think that there is a meaningful manufacturing component to economic revitalization in Western Pennsylvania.

Second, the idea that "Downtown" can and should be the anchor of economic revitalization is equally misbegotten. The whole concept of "Downtown" is a relic of an economy when capital was "Downtown" and labor was in the mills and factories. The blessings of geography give Pittsburgh an interesting natural asset -- the Golden Triangle -- which can be a destination for people who occasionally visit Downtown (sports and entertainment), a resource for the pioneers who live in and near Downtown (maybe a Walmart, unconventional though it is, isn't such a bad idea), and a home for the handful of firms that, for reasons of history or prestige, find it appropriate to house their employees there. The concept of planned urban "redevelopment," another relic of a bygone era, is intellectually bankrupt. Small, projects, and mostly private ones, are the future.

That's a blend of visions, not one. But the fact of a virtually unlimited labor supply drives manufacturing to China; the fact of a virtually unlimited parking supply moves real economic vitality in the region, to the extent that we have it, permanently out of Downtown. As the mavens of the music business put, in a very different context, you can't compete with free.

(There's an implication in there that we just have to get over another intellectual relic, the supposed conflict between the City and the suburbs. Culturally and socially, the public face of the conflict is between the hard-working folks who live in the City and the effete, wealthy snobs who live in the suburbs. Its private face is a lot of effete, wealthy snobs in the City and a lot of working people and an increasing amount of racial and ethnic diversity in the suburbs. If there's a substantial increase in the occupation privilege tax for people working in the City -- which is probably a good idea, as well as necessary one -- then there should be a corresponding occupation privilege tax on people who work in the suburbs. But suburban communities can't do this themselves; under Act 511 OPT limits are set by state law for suburban communities as well for the City. This is another example of how the financial restructuring of the City may turn out to be futile in the long run without state-level tax reform for all of the taxing authorities in the state. Canonsburg and Cranberry, for example, have the same $10 OPT as the City. If the City OPT is raised to $145 or some such, then these suburbs will have yet another huge economic development subsidy. (A City-imposed "commuter tax" would run into the same problem.) It's a region, people, and eventually -- notwithstanding the best efforts of some of our elected politicians -- we'll have to look at it that way.

Third, and last, could all the lonely single people in Pittsburgh just stop whining about how un-hip and un-cool Pittsburgh is? We've got bigger fish to fry around here. There's a lot more going on that you think, if you look at little bit. And if you can't find the club or the restaurant that you like, then find 5 friends, load up on your credit cards, and open one yourself. For anyone with a genuine entrepreneurial streak (see the reference, above, to Joe DeMartino and his plans for a downtown hotel/nightclub, Pittsburgh has to be nirvana. Because unlike a place like Palo Alto, there's no competition.


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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at]gmail.com. Mike also blogs at Madisonian.net, on law and technology. Chris Briem of Null Space drops by from time to time.

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Pittsblog 2.0 has a motto: "It's steel good in Pittsburgh." Say it aloud, with a Pittsburgh accent.

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