Gateway City #2: New Bedford

While [whaling] brought wealth to certain sections, to the waterfront it brought rough living and exploited vice. A notorious district known as 'Hard Dig' was burned in 1826 by a mob of zealous citizens. 
- Massachusetts; a guide to its places and people, written and compiled by the Federal writers' project of the WPA (1937).

This post is part of an ongoing series where I visit each of the 11 original Gateway Cities  and record my thoughts on their community, economy, and civic culture. Second is New Bedford, onetime Whaletown, USA.

It’s got to be tough to be a city whose major claim to fame is whaling. Whale oil’s importance to the economy is a go-to cliche when describing economic change. I can see it now: the CEO of a hip new tech company is explaining the economy to a vigorously nodding talk show host: “The new watchword in our economy is disruption, Jim. What happened when petroleum replaced whale oil as a source of fuel? Disruption. Supply chains, economies, whole ways of life had to change. And that’s what our new app, Zoozie, is going to do for the online marketplace.”

NewBedford_1876_wb
New Bedford in one of its heydays – 1876. In the next 50 years, the city would grow by 500%.
Source: old-maps.com

That said, being a former whaling town is better than the other thing New Bedford is known for: being an allegedly awful place. I have been interested in Southeastern Massachusetts for a long time – I first came across it because the region has one of the largest Portuguese communities in the US – and from the information available, to call the city’s reputation negative would be like describing New England’s interest in the Red Sox as passing.

Whenever I asked people from Massachusetts what the area was like, New Bedford and its partner city Fall River (which make up part of the Providence, RI metro area rather than Boston metro) were universally panned. The day before my first visit I asked my neighbors, lifetime Massachusetts residents, if anyone had anything nice to say about the city. They all pled the fifth.

NB4So imagine my surprise when I stumbled on one of the most well-executed downtown revitalization efforts I’ve ever seen. The streets were beautiful, preserved the character of the historic core, and looked clean enough to eat off of (I didn’t try). Public art and trees dot the beautiful sidewalks. An interesting mix of commerce and institutions including art galleries, coffee shops, a theater, a bookstore, and a skateboard shop with its own sponsored team, gave me plenty to explore. Tourable docks and a whaling museum (which I unfortunately didn’t visit) form the basis of a hopeful tourist economy. They hit every one of the typical downtown talking points and the end result is very charming.

Maybe because the bad press had set my expectations set so low, I was most surprised by the park in the center of the city. The area was formerly a lightly used parking lot, and a comprehensive plan commissioned by the city recommended the space actually live up to the name it was given (Custom House Square Plaza Park) by being usable for humans rather than cars. On Google maps it’s still a quarter-full, depressing cement slab, so I was shocked to see that in real life the town actually followed through and made a functional village green out of it.

If my visit was any indication, it demonstrates that the town leadership is willing to put money where its mouth is rather than just commission reports to go on the shelf. In any event, my experience seemed shockingly at odds with what I had expected.

Custom House Park
Custom House Park before (on Google Maps)…
NB1
…and after

The Economic Context

So what gives here? Had my friends just never given it a chance? Was I fooled by a Potemkin village of downtown reinvestment? It’s important to point out that I had a pretty limited interaction with the city, and that both a beautiful downtown and a crumbling exterior could coexist with relative ease.

Most people’s impressions start with the troubled history of the area. New Bedford is a city of 95,000 that hit its population peak in 1920. The history of the city’s major industries seem like they were handpicked by a maleficent economics teacher to show the impact of outsourcing, resource limitations, and economic dislocation: whaling, textiles, jewelry, unskilled manufacturing, fishing.

NB7Incredibly, New Bedford’s harbor today has the highest catch value of any port in the US, a fact that doesn’t create a broad base of prosperity and skilled workers, “as the processing and distribution system involved in seafood production and distribution do not require highly-educated and very skilled manpower” according to the regional planning agency’s economic development strategy. Mostly, it reflects how much people are willing to pay for scallops, which are delicious.

Median household incomes are a bit more than half the level of the state. The percent of the population with a bachelor’s degree, a key economic indicator, is 15%, in comparison with a statewide percentage of 39%. These numbers, although similar to many other Gateway Cities, are in a slightly different context in Southeastern Massachusetts. The Southeast as a region has fewer anchor institutions like universities or hospitals than the Worcester area or the Pioneer Valley (Springfield, MA metro area).

Remnants of past industries remain, such as locally owned jewelry stores and food manufacturing, but nowhere on their previous scale. Unemployment is somewhere between 8 and 15% depending on the metric used and time of year, but one thing every measure agrees on is that the rate is much higher than the rest of the state, and among the highest in Massachusetts. There’s lots of noise in the unemployment data of a small city, which may explain why New Bedford showed the largest drop in unemployment in the country in July as reported by the Wall Street Journal. I don’t mean to imply that this good news is necessarily meaningless, just that it’s a bit difficult to tell how permanent the shift will be. Either way, a major reason that New Bedford was able to post such gains is because it started from such depths.

New Bedford’s Assets

Similar to what I wrote about Worcester, New Bedford has an interesting immigrant background. Portuguese speaking people, especially from the Azores and Cabo Verde, make up a large percentage of the population. 37% speak a language other than English at home, and 17% speak English less than very well. It was historically a small but important hub for freedmen, fugitive slaves, and other African-Americans. Frederick Douglass settled there after his escape from slavery and makes substantial reference to New Bedford society – although not all positive – in his autobiography.

NB6From my very cursory examination of circumstances there, I’d say New Bedford is much more the victim of state and outside neglect than Worcester is. The paradigmatic example is SouthCoast rail, a proposed rail expansion to the cities from Boston that has been promoted by each of the last five governors but remains unfunded. Whether or not the expansion will be the promised boon to the area is up for debate, but all of the gubernatorial lip service in the world won’t deliver the type of connections the SouthCoast needs.

When it comes to governance, New Bedford seems to be much better governed on average than Fall River, which just had a messy mayoral recall election. An example of the growing strength of leadership structures is the ability to accept some criticism for the way things are. Similar to most Gateway Cities, schools in New Bedford face dramatic challenges (the New Bedford district has poverty levels comparable to Boston, but with fewer community resources) and two 2011 studies showed the harsh conditions and lack of progress in the city’s schools. One, a white paper from the UMass Dartmouth Urban Initiative, specifically cited the system’s ability to accept harsh criticism as one of its strengths.

This is admittedly a minor victory, especially when the actual work of improving schools remains to be done, but willingness to admit something is wrong is an important step, especially in the context of Fall River’s backsliding political leadership and the notorious parochialism of the region and small city Massachusetts. Researching the area, I’ve seen many an internet comment wishing for a benevolent dictator in the mold of Buddy Cianci to turn the region around. Strong leadership is important, but the region needs to disassociate itself from a history of political corruption and anti-democratic decision making on its path forward, not reinforce it.

Downtown Revitalization as an Economic Development Strategy

To return to the focus on downtown redevelopment: given the tremendous obstacles, is any amount of downtown revitalization going to turn things around? The refurbished downtown district does give the area more potential for “churn.” Without new bodies moving through, small cities tend to stagnate. As people have a reason to spend time there, their opinions change and the mental walls break down.

NB Game
A Kickstarter for “New Bedford: A Boardgame of Historic Whaling & Town Building” barely missed its goal right before I started writing this post. Dernit!

But can this approach be the basis for a successful economic development strategy? For that to be the case, New Bedford will have to answer some questions that have tripped up towns much further down the path. Can the small district be self-sustaining and move forward, eventually without outside funding? New Bedford benefits from the attention gained by Gateway Cities and state level help, but that support can be fickle. Will the good impact downtown spread to the rest of the city? Many cities pursuing a “downtown first” strategy create resentment in the rest of the city or feed a perception that the attention of city government is on “outsiders” like tourists or condo-dwellers. Third, will this strategy of beautification and reinvestment build the basis for broader economic development? The job gains from recent months are impressive, but is a broad base of industry and businesses going to push the whole community forward as a result?

My summary is far too simplistic: New Bedford is in no way making an all-in bet on downtown. Like almost all the Gateway Cities, though, they are making strategic investments to drive people to a refurbished downtown area that leaders are hoping will catalyze a broad resurgence. I’m opportunistically using my experience in New Bedford as a way to examine this theory of resurgence.

Honest critique is vital: it not only sets the path for success, it also help create a more realistic view of what such a strategy can achieve. Small town newspapers often have to play the role of constant cheerleader in order to maintain the forward progress, and we can’t rely on politicians to be critical or skeptical.

The Gains are Fragile but Promising 

My view is that New Bedford has done an amazing job working on its downtown, which bodes well for the future of the city. I am deeply skeptical that these measures alone will be enough – not merely for this city, but for any city that overpromises what downtown can do in a struggling area.

I think there’s some useful insight to gain from the New Bedford case. The downtown first economic development strategy is the darling of economic development: creating creative, vibrant, dense downtown areas is seen as an engine for jobs and innovation, drawing from theories such as the “creative class” and other human capital attraction models.

NB5If you believe that, it’s pretty difficult to see what a place like New Bedford could conceivably be doing better. They are deploying the full force of a marketing strategy. They’re developing in a way that’s true to their historical character by using cultural institutions like the Whaling Museum as an anchor to draw people in, rather than trying to implement the latest fad, like building a symphony or whatever. If these theories are meaningful at all to small Gateway Cities, I hope we see some steady turnaround in New Bedford in the next couple years.

New Bedford deserves your respect and attention for how it’s improving. Although I’m very skeptical that New Bedford’s resurgence can be based on a 5×10 block stretch of downtown and the hope of attracting prodigal sons and daughters alone, my gut tells me that things are looking up in New Bedford. It’s hard for neglected cities to inspire any sense of optimism, but to my eye the city is doing it. If downtown development continues apace, more and more people will start seeing the area as worthy of investment and support.

New Bedford has a much better base to build off of than they get credit for, but the truly hard work remains. Unless it can start to tackle the tough challenges in education and industry, it’ll leave the city facing the wrong way on the long road left to cover.

The Bait and Switch

This tweet got me thinking about how the future of communities is tied up in current economic shifts:

I can’t help but feel the same way. I might just be feeling pessimistic from finishing George Packer’s The Unwinding yesterday (strongly recommended) but to my eye, recent history is full of examples of the economic bait and switch. There’s a recurring pattern of poor people and minority groups arriving at the chance for economic opportunity just a bit too late, with the economic advice of ten years ago, and paying for it dearly.

Home ownership was supposed to be a foolproof way to move up in the world – houses never go down in value, and exploitative lending practices weren’t the concern of the middle and upper classes – until the housing collapse wiped out generations of painstakingly accumulated wealth. In the last twenty years, as a university education has become more accessible to minority groups, college has become vastly more expensive, harder to finish, and the wage premium for a bachelor’s degree has ebbed lower than ever. While on average it’s still worth it to go to college, I understand why some have the distinct feeling that they did “everything they were supposed to” and ended up with nothing.

Much ink has been spilled showing that the wealthy are generally moving back to the cities as the suburbs are becoming poorer and more diverse. Poverty in the suburbs can be a big problem because the environment is not built for it: public transit is bad, infrastructure and housing can be poorly constructed, and the jobs, amenities, and social services are located far away. Although some suburbs will continue to be islands of wealth, some are already headed down the path towards concentrated poverty, and those are the very ones that tend to have the worst access to resources.

It’s not because of some evil puppeteer behind the scenes pulling the strings, but it is a natural and predictable result of an economy that punishes people behind the curve – naturally, those without a share of the wealth and decision making power. It’s easy to see how Saunders could be fearful: lacking the resources to stay on top of these trends makes people extremely vulnerable to personal circumstances or poor timing.

Just like the other bait and switches, we could probably find a way down from the ledge if we spot it soon enough and work hard to avoid it. If exploitative lending practices were not systematically reinforced and hidden from view, the crash of 2008 would have been a lot less harmful. If colleges work hard at serving their local population rather than the typical student of 2 generations ago (white 18 year old male attending full time), they become the engine for economic opportunity that they are supposed to be for all people.

The response to this problem is, first, to be aware of the trends. Not just “one thing” is happening in suburbs and cities: see Saunder’s typology of gentrification for a general theory about how different cities are evolving.

Second – and here’s where it gets really hard – only building new ties of community will break down this ugly cycle of displacement and neglect. Cities that successfully weather this storm will spend a lot of time thinking about how to break down the walls between new arrivals and old residents. We are at a moment of significant community “churn” when patterns of settlement are shifting rapidly for reasons that are not totally understood. In my most optimistic moments I feel like those changes can provide the pretext to create stronger, more diverse community bonds.

If that seems like a naive or simplistic solution, it’s never really been put in practice. Whether through segregation (racial or economic) or increasing community polarization (technologically or politically driven) communities have always been reactive rather than proactive, and in the worst ways. “Waiting to see what happens” has led us down the wrong path. My big dream for the next generation would be to jump on these trends as a new opportunity to create a shared sense of community – whether it be in suburbs, cities, or small towns.

My idealistic dream notwithstanding, Saunders is right to worry. Wealth and opportunity naturally follow one another, and if we don’t do a better job decoupling them, suburban concentrated poverty could lead to decades of unnecessary misery.

Foolish, Impossible, or Unproven – the Path Forward

In part one of this series, I weighed the risk of a coming wave of techno-funemployment. In this installment, I’ll look at possible policy responses, with the word “possible” interpreted broadly.

I argued previously that there is a big risk that technology will disrupt our economy in ways that we cannot predict and that our current job system cannot handle.

In February Marchant, Stevens and Hennessy published an article looking at the policy options, creating six categories of government response:

  1. Protecting employment: laws mandating some level of human employment.
  2. Sharing work: spreading the same amount of work out over more people.
  3. Making new work: government funded work programs.
  4. Redistribution: moving wealth between unequal groups, either through social programs or guaranteed income and a progressive tax.
  5. Education: educational programs or curricula that promote lifelong learning and help increase the flexibility of all levels of the labor market.
  6. Fostering a new social contract: basically, redefining the relationship between living and work.

With these options we have our choice between the foolish, the impossible, or the unproven.

Protecting Employment

The simplest approach to mitigating human obsolescence is to make it illegal for machines to do everything. On the upper-income side, there could be regulations on the number of human doctors or accountants per operation or audit. Oregon and New Jersey mandate that gas stations have attendants to pump your gas, and a similar restriction could be applied to manufacturing or self-service automation. The downside: command and control regulations are a pretty blunt instrument to promote anything beyond crappy, anachronistic jobs. Like gas station attendants.

Sharing Work

The government could mandate a shorter workweek, greater vacation time, or earlier retirement, ostensibly making it necessary to hire more workers to get “everything done”. Similarly, the government could create incentives for more flexible, shared work schedules an interesting approach practiced in countries like Germany with significant crossover into approach #6. The downside: this approach is pushing against several headwinds in the economy. Wages are stagnant and, as more jobs become automated, the overall number of hours might decrease. If poorly designed, these programs would incentivize the sharing of benefitless or extremely low paying jobs (can you imagine trying to feed a family on a shared McDonald’s job?). This approach also squeezes business, especially in a world where employers are responsible for benefits and could counter-productively cause employers to outsource to reduce costs. Overall, this strategy isn’t the worst, but shifting current employment patterns will require either a good chunk of government or private spending, neither of which is forthcoming.

Making New Work

Forging ahead Works Progress Administration /
Source: Library of Congress

Like the New Deal’s employment programs, which worked on a vast number of construction as well as cultural and artistic projects around the US (Zora Neale Hurston and Richard Wright worked on the Federal Writers’ Project) “Making New Work” would depend on the government funding and organizing employment programs. You could also view service organization like Americorps as an initiative to make new work: government funding of social projects that are unmet by the private and nonprofit sector. The downside: Despite occasional liberal calls for a “New New Deal,” this is a dead letter politically. If it somehow did get passed, the program would probably be either of limited duration (which the overall problem of automation is not) or too small to actually move the employment needle (like Americorps). Americorps has been criticized for being too small, hampered by political opposition, and underfunded – this for a program with an extremely modest pay scale. It’s essentially impossible to support a family, for example, on an Americorps stipend.

Redistribution

Instead of increasing the demand for current workers, a redistributive approach would try to soften the impact on people who lose their jobs due to automation. Social programs, spending, or progressive taxation would make the difference between the tech executive making a killing in the new economy and the rust belt worker who is structurally unemployed less severe. The downside: to say that this is politically difficult is an understatement. Whether redistribution is a worthy goal is a highly charged political issue, but in this context it seems to sidestep the question: greater redistribution on its face wouldn’t do anything to either train workers in new skills or change the stigma of joblessness.

Education

https://i0.wp.com/www.usnews.com/cmsmedia/ea/a2/de8e1335479db2c648d4d9a2ecd7/140819-commoncore-map-editorial.jpg
Source: US News and World Report

Dozens of programs and institutions in every state  aim to educate young people and retool the skills of those out of work. Whether the answer is in a better K-12 curriculum or an adult training program that modernizes work skills, it is difficult to see a future where the employment problem is solved without substantial change in the educational system. The downside: sounds great – who’s not in favor of people learning and being able to pursue their dreams? This is basically the status quo, though: piecemeal approaches to changing existing education structures haven’t done much to change the flexibility of the American workforce broadly. Look at the pushback to the Common Core, which is supposed to educate kids in a way that will create a more flexible workforce. The reforms needed would be much more radical.

Fostering a New Social Contract

It’s almost inconceivable to imagine a collective deliberation on an important public issue that doesn’t end in screaming these days, but that’s exactly what this approach would require. Whether through a narrow means like decoupling health insurance from employment, or a broader approach such as a systemic rethinking of how work operates in our lives and livelihoods, the basic idea would be to shift the norms, incentives and culture surrounding work. The downside: Any change on this front would require a groundswell of support in our collective consciousness: these ideas do not just happen. Dell may experiment with providing their employees with standing desks, but it’s not going to disconnect salary from work performed just to see what happens. (Sometime in the near future I’m going to write a post looking specifically at the ways that point 6 could be pursued. I want to grapple with some of the ideas presented by Frithjof Bergmann’s writing on “New Work,” an idea I found totally fascinating. If you’d like an introduction, download the Partially Examined Life podcast interviews with Bergmann: an interview with the author on his work and a follow up Q&A.)

None of these approaches is perfect, but the alternative is simply to wait and see what happens. In fact, I would submit that some of these things are happening in the world of work already – we just aren’t ready to recognize what’s happening or admit that the current system fails for so many.

Texas Should Unilaterally Disarm

When it comes to spending public money to woo companies, there’s other states and then there’s Texas. The Texas Enterprise Fund, created at the behest of Texas Governor Rick Perry a decade ago, was funded to the tune of $285 million from the rainy day fund. During Perry’s tenure the Fund has given over $500 million in deal “sweeteners” to convince companies to move or expand operations in Texas. The Fund is under the Governor’s control, requiring the signoff only of the Texas Speaker of the House and Lieutenant Governor (which are – surprise – members of the same party in Texas).

The Fund supposedly helps Texas secure “close deals” by providing low cost loans to companies that otherwise would almost but not quite consider Texas. Already we can see the absurd logic – public officials pretend they have perfect insight into businesses’ decision making, and know just the right amount (and no more) to sway the companies’ interest. Defenders argue that the Fund helps bring jobs and creates a return on investment for taxpayers for doing so.

In fact, the Fund went unaudited for ten years. Rick Perry repeatedly accepted campaign donations from executives of companies that received subsidies. Now, even Perry’s Republican successor, Greg Abbott, is questioning whether the fund will continue under his leadership (we’ll see: it’s easy to criticize Perry for “picking winners and losers,” more difficult to give up the privilege oneself).

Texas could take a huge step to deescalating the Economic Development dollars arms race by discontinuing the TEF. Texas is probably the only state that could have a major effect by unilaterally disarming.

Let’s take a step back. Almost every state has a shadowy, poorly understood network of public dollars that are used to woo companies – whether with outright cash grants, energy price deals, tax abatements, or any number of other fuzzy and opaque methods.

Texas under Perry has elevated this style of business to an art form. Beyond ensuring that his state has low energy prices and regulations – fair game for a Governor – Perry has also famously gone on whistle-stop tours of California and New York, encouraging businesses to relocate to the promised land of Texas.

Some interested parties theorize that it is the Texas Enterprise Fund that really fuels the “Texas Miracle” of recent high job growth. Eliminating it, they say, would hurt the Governor’s ability to hustle for Texas like the auctioneer at a county fair.

There’s a lot of problems with this line of thinking. First, without a public audit, there’s little evidence to suggest taxpayer dollars are helpful, let alone decisive, in convincing the companies to expand in Texas. Second, the combination slush fund/glad-handing business development method is based on an outmoded, beggar-thy-neighbor view of economic growth.

For decades, economic development professionals learned how to lure companies over state lines with bigger and bigger offers of public dollars. It’s this dynamic that created a proliferating arms race of economic development spending at the state, regional and local level. Although under more scrutiny in recent years, the trend reached an absurd crescendo in Reno’s wooing of the Tesla “Gigafactory” to Nevada. I strongly encourage you to read this Fortune piece on the bizarre dance of a company savvy at exploiting $1.5 billion in public funds.

Slowly, people are starting to realize that this development strategy is an overall loser for taxpayers, the country and even the states themselves. Spending a declining amount of public investment dollars on wooing footloose companies can be an unwise investment undermining regional growth and cooperation, which is seen as a more important engine of success than gains and losses over state borders. If you zoom out to the US perspective, moving a company from California to Texas at significant public expense is obviously a net loss.

Texas can afford to ignore some of these trends. It’s doing well economically, propelled by gas and oil, healthcare and technology. The rainy day fund is so flush Texans are spending it on road repairs. Its cities are largely within, rather than straddling, state borders. It already has an attractive argument for multinational corporations: base your business here and you’ll have cheap labor and a government that doesn’t get in the way.

These same factors make it possible for Texas to lead the way on the path away from the arms race. First of all, a curious left-right coalition is emerging against the “crony capitalism” or “picking winners and losers” (depending on your political party) of the Perry Governorship. Texas is doing well now and can afford to take the hit – if there actually is one – of not paying companies to relocate there. If Greg Abbott and the Texas Legislature can work together to loudly rebuke the model, it may just provide a precedent that could spill over to other states.

It is certainly true that other states might redouble their efforts to fill the Texas-sized hole, but other states don’t have the cash or appeal of Texas. Texas politicians can seize this moment of left-right disenchantment with corporate subsidies to their own political advantage, which might make politicians from other states reluctant to double down on the old strategy. Playing on the selfish desires of Texas politicians has never gone wrong, has it?

Texas Subsidies
Top 10 Recipients of Subsidies in Texas.  
Source: Good Jobs First Subsidy Tracker

Another concern – that Texas will continue to use other, more shadowy funds in TEF’s absence – is almost certain. The Good Jobs First Subsidy Tracker shows that many companies received hundreds of millions in public dollars from outside the TEF. A Berkshire Hathaway subsidiary, for example, received a staggering $800 million in Tax Increment Financing benefits, independent of the TEF.

While not a comprehensive solution, eliminating the Texas Enterprise Fund is still a good first step to refocusing the conversation. It is the most transparently politically connected fund with some chance of affecting the national trend. Call a truce, Texas.