Sunday, December 27, 2009

Pittsburgh's Last Decade

Some usual and some unusual suspects are quoted in Mackenzie Carpenter's interesting review of Pittsburgh's last decade in this morning's Post-Gazette. I'm in there, too.

There was no way for her or the PG to run more than a small snippet of what I wrote when she asked for my views of the good and the bad things about Pittsburgh's last 10 years, especially from an economics point of view. This is the complete version of the relevant part of my written response; of course, she and I also talked at some length on the phone.
My sense is that from an economics point of view, one really good thing happened in Pittsburgh, and one yet-to-be-evaluated thing happened.

The good thing is that the region finally broke free of the psychic hangover caused by the collapse of steel. Steel's history still matters to Pittsburgh, and there is still a sizable but hardly dominant metals industry in Pittsburgh. But ten years ago the public sphere was nostalgic; it still longed for the return of a dominant industry, which could be steel or something like steel. Today, everyone in Pittsburgh knows that the region will never again be a one-industry economy. Curing that hangover has released a great deal of innovative energy across the region, from the tech spinoffs of the universities to the emerging creative communities of Lawrenceville, Garfield, and the North Side to the restoration of public facilities along the waterfronts.

The yet-to-be-evaluated thing is the emergence of the eds-and-meds economy .... "Eds-and-meds" is code; what everyone really means is that Pitt, CMU, and UPMC are the major public institutions in Pittsburgh. They're the big Pittsburgh players today in terms of employees, budgets, and dollars cycling through the region. But we don't yet know how significant they can really be in terms of contributing to the region's growth. Put a different way, if eds-and-meds are so great, then why isn't the Pittsburgh economy doing better? Part of the answer is that if it weren't for eds-and-meds, Pittsburgh would look truly dreadful! But that's only part of the answer. The other part is that eds-and-meds don't create economic momentum in the same way that big industrial enterprises used to create economic momentum. We don't really know yet what they do or how they do it. But we know that they're essential.
None of that is or should be earth-shattering or even newsworthy, but I thought that the context might interest some people who read the article in the PG.

Next up: Pittsburgh's Next Decade.


Stephen Gross said...

If Cleveland is any guide, Eds and meds isn't the best growth driver ou there. The Cleveland clinic may be enormous, but the city is still mired in poverty. A region needs industries that innovate, as well as find ways to quickly monetize said innovations.

Anonymous said...

"The other part is that eds-and-meds don't create economic momentum in the same way that big industrial enterprises used to create economic momentum."

If "economic momentum" means "lots and lots of low-skill jobs" this is true. But eds-and-meds generates plenty of small, high-skill startups which is very healthy, and seems much more promising long-term than giant steel monoliths.

Mike Madison said...

SG - Cleveland isn't a guide.

Anon - As you've restated my point, you have agreed with it: Pgh's "eds and meds" have created *some* high-skill startups. Exactly how those translate into economic momentum "long-term" remains to be seen.

Vannevar said...

Excellent post. So if Eds-n-Meds are necessary but insufficient (and I believe they're both), what's the remaining "other" to put us at the tipping point?

Looking forward to your next post on the next decade.

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Anonymous said...

But it's not as simple as having a (albeit national recognized) hospital. What is Case Western doing? Are they attacting spinoffs and research that will be part of Cleveland's future like Pitt and CMU are doing?