Monday, August 31, 2009

The Story Behind Pittsburgh's Revitalization, Part I

[Part I is here] [Part II is here] [Part III is here] [Part IV is here] [Part V is here] [Part VI is here] [Part VII is here] [Part VIII is here] [Part IX is here] [Part X is here]

The G-20 is coming! The national and international media are here (yes, they're here already). And they all want answers to the same question:

How did Pittsburgh do it? How did Pittsburgh "revitalize" itself and achieve the "renaissance" that justifies holding the G-20 in the first place? How did Pittsburgh get so hip?

This post is the first of several that will take a crack at answering those questions. Back in March, I offered a short thumbnail. The new series of posts will offer more detail.

To start:

Question: Did Pittsburgh revitalize itself?
Answer: No; cities don't "revitalize" themselves, at least not if you assume that "cities" or "a city" can decide to do such a thing.

Question: Has Pittsburgh been revitalized?
Answer: In some superficial respects, yes; in many structural ways, no.

Question: Is Pittsburgh undergoing a renaissance?
Answer: Only if you focus on bright, shiny buildings in the Downtown neighborhood and in a couple of neighborhoods nearby.

Question: How did Pittsburgh do it? I pose that question because many people will ignore or overlook the previous questions, and the answers. There's no doubt that the tone of the city and the region is different and sunnier today than it was even five or six years ago. Pittsburgh is acquiring a not-altogether-deserved international reputation as a successful post-industrial city, largely because the cost of living in Pittsburgh is so low relative to the range and depth of its urban amenities.

Why is the cost of living in Pittsburgh so low? Because over the last 30 years, so few people have wanted to move here. Why is the range and depth of its urban amenities so rich? The answer to that question is the start of the answer to "How did Pittsburgh do it?" The rest of this post is devoted to beginning at the relevant beginning.

Question: Why did Pittsburgh need to do it?
Answer: Because Pittsburgh screwed itself up in a big way. In many significant respects, Pittsburgh's current success begins with Pittsburgh's massive failure.

As everyone in the world knows, for the first half of the 20th century Pittsburgh was the home of an extraordinary and extraordinarily successful confluence of industry and finance. Pittsburgh built the world.

The steel industry and related businesses were so successful, wealthy, and powerful in the Pittsburgh region that they largely interfered with processes of entrepreneurship that might have diversified the economy. The demise of steel in the 1970s and 1980s was not a surprise; it was foreseen, and its effects -- which were dramatic and traumatic -- might have been mitigated. But planning for the transition wasn't done. For more, refer to the work of Ben Chinitz, cited in earlier posts at Null Space and also here at Pittsblog (and here). And refer to the work of Clayton Christensen, who characterized mini mills as a disruptive technology that led to the demise of complacent steel companies that continued to rely on vertically integrated production.

If you have read Pittsblog before, you know that I'm not a fan of historical explanations (or prognostications) that rely too much on personal virtue and heroic figures. You will no doubt read a lot in the next few weeks about Pittsburgh's can-do spirit, about the resilience of its citizens, and about the never-say-die ethos that characterizes the region. (I've even contributed to that theme, here and there.) But other regions are happy to characterize themselves the same way, and truthfully. There's no credible way to claim that Pittsburghers are better (more entrepreneurial or innovative, faster, stronger, able to jump higher) than residents of St. Louis or Providence or Detroit. (Cleveland, of course, is a different matter.)

A new book from Pitt professor Franklin Toker thoughtfully suggests that Pittsburgh's many neighborhoods are what keeps the city afloat. That's a common view and a highly romantic one. But I think that it's wrong. Pittsburgh's neighborhoods are strong, and they've provided an important social fabric for what remains of the city's population. Think of the neighborhoods, however, as a lattice that allowed Pittsburgh residents to hang on, but with little momentum of their own.

Sometimes, key individuals can be galvanizing in important ways -- both good and bad. More often and more important, however, are institutions.

And in some critical ways, identified above, Pittsburgh's key institutions let the region down. Hundreds of thousands of jobs were lost when the mills closed. Hundreds of thousands of people left the city and the region. Because so many of those mill jobs were highly paid, thanks to the successful efforts of labor unions to negotiate to help their members with both wages and benefits (steelworker wages increased in the 1970s even as demand for steel declined and steelworker employment fell), the amount of money that left the region with those people was likewise enormous.

Paradoxically, however, during this same period (beginning in the 1950s), other Pittsburgh institutions were working dynamically to move the city forward. In the short term, the most visible of those was the Allegheny Conference on Community Development (the ACCD), a private group of civic leaders (mostly from the business community, including some leading steel industry players ) that partnered with the city of Pittsburgh (led by Mayor David Lawrence) and Allegheny County to address some of the city's most pressing environmental and infrastructure issues. The ACCD led efforts to clear Downtown Pittsburgh of the relics of its industrial past. Train sheds at the Point were replaced by the Gateway Center towers, for example, and Pittsburgh's skies were largely cleared of the smoke that prompted the legendary description of Pittsburgh as "hell with the lid off." The Port Authority and Point State Park were also products of this era, now recalled as "Renaissance I." Pittsburgh's leaders concentrated on the structure of Downtown and on some key infrastructure issues, and did so successfully, at precisely the right moment. With additional (if not always successful) investments in Downtown during the 1960s, 70, and 80s, Pittsburgh's Downtown retained a strong foundation on which current development has built.

Renaissance I and the ACCD have long been widely recognized for sowing seeds that paid off in the short term. It's important to recognize that those investments are paying off today, too, even if Pittsburgh's contemporary political leaders, and the modern ACCD itself, are far less equipped to negotiate regional solutions to environmental and infrastructure challenges than they were 50 years ago. Had Renaissance I not taken place, it is difficult to imagine Pittsburgh looking as relatively bright as it does today.

The second major institutional development of 50 years ago was one that attracted far less notice at the time and had relatively modest short-term implications for Pittsburgh. But it was a move that in time has made a world of difference to the city that now defines its economy in the popular (if inaccurate) phrase "eds and meds." In the 1950s, various wings of the Mellon family donated more than $50 million to the University of Pittsburgh to finance the construction of a new medical school, and to endow the program. For the first time, Pitt and Pittsburgh were in a position to operate a world-class medical research program, and operate it Pitt did. Jonas Salk was a young researcher at Pitt in the early 1950s, and in Pittsburgh he researched and tested what became the polio vaccine. (In a preview of what has become a complex local, national, and international debate about the university's pursuit of patents and profits at the expense of the public interest, Salk famously refused to patent his work so that it could be distributed as broadly and inexpensively as possible. The University of Pittsburgh, at least initially, wanted to pursue a patent. Salk left Pittsburgh and established the Salk Institute in La Jolla.)

The long-term payoff of the 1950s investment in Pitt's medical school and research program has been profound, however. The clinical program at the University of Pittsburgh Medical Center, which benefited from enormous publicity surrounding its transplantation practice in the 1980s and 1990s, is recognized as among the world's best, and UPMC has become one of the largest and most economically influential institutions in the region -- the leading presence among the area's "meds." On the research side, the University of Pittsburgh accounts for close to $1 billion -- "b"illion -- in federal research funds annually, which puts Pitt in the top-most tier of federal research universities. That number has gone up dramatically over the last 10 years. Among other things, that represents a significant and strategic decision by leaders at Pitt and UPMC to build on a regional asset that was first identified in the 1950s - back when steel still ruled the city.

The Mellon investments in Pitt's medical school are also emblematic of a third and final major institutional force at work today: Pittsburgh's philanthropic community. The steel era in Pittsburgh enabled the accumulation of enormous wealth, much of which was concentrated in a small number of Pittsburgh families that, fortunately, had the wisdom and foresight to direct much of it to philanthropy. Much of that wealth remains at work in the region, distributed via foundations, and that funding has been essential to the sustainability of much of Pittsburgh's cultural infrastructure even as the collapse of steel undermined the region's economy in other critical ways. Pittsburgh's Downtown Cultural District, the Cultural Trust, and the city's traditional cultural institutions -- the Symphony Orchestra, the Carnegie Library, and the Carnegie Museums of Pittsburgh -- now have diversified income sources (if not always stable income sources), but they are here today in no small part because of support that's a legacy of Pittsburgh's industrial heritage.

Pittsburgh philanthropy has changed in recent years, and that change (like Pitt's strategic decision to grow its portfolio of federally-funded biomedical and bioscience research) has contributed in a significant way to the recent "brightening" of the city. Ten or twelve years ago, cultural philanthropy gave the outward appearance of noblesse oblige. When Pittsburgh celebrated its arts and cultural communities, what it celebrated were the elite institutions that the philanthropic community and the upper echelon of Pittsburgh society had long valued: the symphony, the museums, and so forth. Over the last decade Pittsburgh's foundations have started to take a broader and more forward-looking view of their role in the region, sometimes quite aggressively investing in artists and arts organizations that don't fit the Cultural District model, investing in social enterprises, and investing in infrastructure for economic development throughout the region -- this last being a role that in Pittsburgh was long reserved primarily for the Allegheny Conference. The philanthropic community is a long-standing Pittsburgh player that has taken on a new role.

The post is long enough, and perhaps too long. Even then, an account like this omits almost as much as it includes. But it is only Part 1. Watch for the next Part.


Tom Mc said...

Mike -- Thanks for posting your ideas. Jim's blog took me here. Jim is thinking through GIII. I do not think it is really complicated as folks make it. Capital is still the fuel of growth. The engine is ambition mixed with education and need. Ambition seeks out capital to help fulfil its desire. Capital is looking for engines to fuel its need for growth. Pittsburgh and the US grew and became what is was based on ambition, desire and need. Capital followed. Capital is not finding the same level of ambition, desire and need in the US as it did in the early 1900 and in the 1980's with the immigrant tech boom. Capital is moving to China and India not because of cheap labor, but due to an abundance of ambition, desire and need.

Pittsburgh and the US needs to rebuild the engine. Ambition is low, desire for money is high, but to work hard is low and there is not much need left. The larger and deeper the safety net, the less need is there. Complacency set in. This is the what needs to be fixed.

When complacency is high and ambition, desire and need is low, all the capital in the world will not jump start an economy for long.

Anonymous said...


Interesting piece.

It caused me to wonder if the real question that others want to know is:

Why is Pittsburgh doing relatively better than the rest? more so than how did we re-invent ourselves. I think the re-invention question is for satisfying someone's surprise at our relative situation.

As you say, the reason we have a low cost of living here is few people have wanted to move here. That sounds to me like a supply-demand argument. Can this mean that Pittsburgh has right-sized into a city that is balanced between cost of living and quality of living? I suspect some people are questioning the attractiveness of booms-and-busts of their locales and would gladly accept an alternative that is more steady and slower.

Daria Brashear said...

In some ways I don't think the ACCD could get so much done today even if they had the drive to do so; the climate was right at the time as many more jobs were focused in the city rather than around it, and so more people had an interest in the regional picture.

Mark Rauterkus said...

More than 30 years ago Pittsburgh had a low cost of living too -- in terms of the cost of houses. Home prices in Pittsburgh are a bargain. That is part of our legacy.

Back in the day, the URA had great home buyer programs. Then it lost its way.

Also, the land value tax has a big role in this positive legacy for Pittsburgh -- but it has recently changed for the worse. It is but a memory now.

Mike Madison said...

You are absolutely right to raise the URA and the land tax system. Those will appear in a separate post in the series, toward the end.