Servicing the Global City. (Commentary).

Remarks from the Global Cities Symposium Harvard University, September 6, 2002

Necessary but riot sufficient" is how the relationship between oxygen and fire is often described, and the characteristics of great global cities fall into the same category.

Those cities are centers favorable for the international exchange of capital, ideas, goods, and people, and for the generation of economic value out of ideas. They nurture the communication and information technology that financial networks rely on; they reward high risk investments with even higher returns; and they attract the people that make the system work.

In an age of wondrous electronic communication, easy national and international travel, and remarkable professional mobility, middle and upper middle class populations that bring dynamism to a city and relate well to the world economy can live wherever they choose to live. And where those bright, educated, creative, and dynamic types choose to live and work greatly affects what takes place there, global networking included.

Experience has demonstrated that those who can, shun threats to their physical safety and avoid political jurisdictions with high local taxes and poor services. On the other hand, they are attracted to cities with good transportation facilities, with welcoming public spaces and social peace and, above all, with recreational and cultural activities that come under the heading of "quality of life."

With appropriate infrastructure, an educated population for support, and with an encouraging political climate, a critical mass of talented people will soon assemble. The stage is then set for an agglomeration of highly specialized legal, accounting, high-tech communication, consulting, advertising, forecasting, engineering, and other services which international financial centers require today.

Rudolph Giuliani's dramatic success in lowering crime rates and business taxes did not create the New York business boom of the '90s but it permitted it to land there rather than somewhere else.

Those cities which have followed his lead have benefited accordingly. Taking seriously small crimes ("the broken window" syndrome) and carefully analyzing current crime data (the Compstat program) really do pay off, and we now know that lowering taxes can indeed increase revenues.

Good retail outlets, good heath care facilities and a wide choice of housing are desirable; but in a free market economy, well-to-do populations can outbid others for choice housing; they can afford private doctors for what ails them; and they can purchase whatever goods they wish.

Good education should ideally be a universal free good; but sadly it isn't.

The widespread failure of public education is the greatest tragedy in American life today, not only for global city types but for all those who cannot afford private schooling.

The favorable experience of the nation's parochial schools with the same inner-city students failing in the public schools (and at a fraction of the per capita cost, too!) indicates that the solution lies in reversal of educational and social policies that our public refuses to recognize; but that can change.

Perhaps the day will return when New York's public schools again produce literate and numerate graduates and when our public colleges again produce Nobel Prize winners, as they did between the two World Wars.

For now, education is our greatest governmental failure; and New York's global workforce will tend to attract single or childless individuals and those who live in the suburbs or who can afford private schooling.

In other matters, Adam Smith's "invisible hand" will, if permitted, soon fill--for those who can afford it--whatever needs government does not. And we free market entrepreneurial types are the fingers of that "invisible hand."

To perform successfully, we must understand, and anticipate and fill the needs of sophisticated clients with complex requirements.

If Tokyo is an exporter of capital, and London a processor of capital, and New York an importer and provider of services for capital, their agents must be in efficient contact. If Kuala Lumpur is an important market for financial futures and Singapore for currency trading (and they are), their agents must be in contact with colleagues in New York and London, Tokyo and Paris, Frankfurt and Boston.

In many types of financial activity, cooperation rather than competition is the order of the day and linkage rather than isolation is the goal. Cities may compete, but today individual firms often cooperate.

And we, the entrepreneurs, must help the global city participants meet their needs and at a charge to them greater than our cost. While they are involved in market-making, underwriting, mergers and acquisitions, risk management, and so forth, we supply the platform on which they operate.

We must provide them with physical premises, the varied services they rely on and a context in which they can operate successfully--for their benefit, for ours, and for that of the cities in which they operate. And we must work to make our respective cities more receptive to those business and professional activities.

For the urban generation of the 1960s to the 1990s, business was seen as a "cash cow" whose taxes paid for government-supplied social services for the urban poor; today, business more often is seen as the provider of jobs that permit people to earn incomes which enable them to take care of themselves.

In the previous generation, demagogic, or misguided politicians applied municipal revenues to subsidize short-term consumption rather than long-term investment; the clearest examples are New York's decision to "save the five cent fare" at the expense of building the Second Avenue subway or trading the benefits of the remarkable underground highway and river front park system called Westway for subway operating subsidies. Today, at long last, capital investment in infrastructure is back on the agenda.

Healthy cities today are seen not so much as vehicles for wealth transfer as for wealth creation, not so much as donors to those on the bottom as catalysts of upward mobility for immigrants and others, not so much as the home of static business activities as the incubator of new business enterprises, new ideas, new cultural forms that flourish in this new world of privatization, deregulation, and digitalization.

Although the first stage of the high-tech revolution took place in the shadow of universities, the next, explosive stage (designing software content and so forth), is taking place in the creative sections of dynamic cities, often in the recycled manufacturing premises of a previous economic cycle. It is not surprising to find that in New York, for example, the massive old Lehigh-Starrett freight warehouse is today the address of choice for cutting edge new-media companies.

Cities like Detroit or Philadelphia (before Governor Ed Rendell served as mayor), which imposed punitive taxes to support swollen public payrolls or which regarded their police departments as "part of the safety problem, not as a solution," witnessed painful economic and demographic decline in the same time frame in which cities like New York, which think and act differently, have flourished.

In America today, the beleaguered city of Cincinnati looks with wonder at nearby Indianapolis; sophisticates in Detroit are painfully aware of the positive developments in Cleveland, and the word is spreading. In Europe, everyone is aware of the exciting resurgence of Spain's Barcelona and of the fierce problems of Manchester, England. Copenhagen's triumph of the pedestrian over the automobile is well known, and Bilbao, whose Frank Gehry museum brought to the city in its first three years over $500 million in economic activity and over $100 million in new taxes (which recouped its cost), is there for all to see.

In New York, the quintessential global city, the combined impact of the World Trade Center disaster and (God willing) the 2012 Olympics could lead to changes making New York the world's first truly 21st century metropolis. Once we dismiss the equally ill-advised ideas of restoring exactly what was destroyed or of creating a 16-acre cemetery, something wonderful can emerge.

Thoughtful observers understand that Lower Manhattan has always had a relatively poor transportation network compared to that of midtown. We now have an opportunity to make the area a mass transit dream come true. Federally-funded improvement in mass transit will be the catalyst for the whole redevelopment effort, which can turn a former white-collar ghetto into a 24-hour, seven-day mixed-use paradise with office, housing, retail, hospitality, recreational, and cultural facilities in proper balance.

An appropriate memorial for the World Trade Center site is a sensitive subject because wounds are still raw and an unemotional exchange of views is not yet possible. Newly-bereaved families have little interest in the long-term aspects of urban design or regional planning, and significant time should pass before important irrevocable judgments are made.

The memorial models most often suggested are Oklahoma City, Pearl Harbor, Hiroshima, and the Vietnam Memorial in Washington, DC, the first conveying a deep sense of sadness, the second one of serenity, the third of the need for education, and the last of remembrance.