The Rust Belt in the New International Division of Labor

Proposal for Change to Reduce Inequity and Enhance Economic

Potential

Source: Cillizza, 2009.

The Spatial Restructuring of Deindustrialization, or Why it's called the Rust Belt

Picture Source: Hansen, Bryant, & Spencer, 2007. Data Source: Authors' analysis of U.S. Census Bureau Data.

Milwaukee: 19%

Source: Wial & Friedhoff, 2006

Source: TIP Strategies, 2010.

• Metropolitan areas (logical cities) in the Rust Belt are not declining

Central Cities Metro Areas

Source: Author's Calculations from U.S. Census Data

Examples of White Flight

Baltimore Demographic Trend (1950-2007)

Source: Author's Calculations based on Levine 2000 and U.S. Census data.

Source: Ostara Publications, 2005.

Source: Saez & Piketty, 2003, with updates by Saez through 2007.

Source: Kruse, 2008. and Thompson, 2009.

Social Capital: "The norms and social relations embedded in the social structures of societies that enable people to co-ordinate action to achieve desired goals" (Grootaert, 1998).

Chart Source: Gini vs Social Capital in the USA, 2010.

Index of 14 measures including* % attended meeting on town or school affairs* % agreeing that "most people can be trusted,"* mean presidential election turnout, etc.

Source: Smeeding, 2007.

ln(expenditure) = 0.3289 ln(GDP)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

0.00 2.00 4.00 6.00 8.00 10.00 12.00

Log of GDP per capita (constant 1995 US$)

Log

of s

ocia

l wel

fare

exp

endi

ture

s as

a p

erce

nt o

f G

DP

Source: Ben-Naim, 2006

Source: Isaacs, 2008

What Should Milwaukee do?Increase Economic Capital?

• Good:• Addresses problem directly

• Bad:• Limited or no political support at the local level• Transfer payments may yield low rate of return - thus a bad investment of scarce resources

Increase Social Capital?• Good:

• More politically tenable• Potentially better return on investment

• K-12 education and public health investment studies cite ROI's from good to fantastic

• Bad:• Less immediate poverty reduction• Still limited political support and infrastructure

23 - Milwaukee

27 - Vienna

32 - Cleveland

34- Paris

35 - Detroit

40 - Baltimore

44 - London

46 - Cincinnati

60 - St. Louis

67 - Toronto

Source: Demographia, 2010

Political Fragmentation

Source: Razin & Rozentraub, 2000.

Proposal

• Milwaukee should work towards Regional Cooperation in order to enhance social capital

• Expand and share local property tax bases• Leverage economies of scale to reduce service

expenditures per person• Access greater federal and state funding with

a larger population count• Create positive momentum

Reasons for Optimism

• Rust Belt cities are...– Dense– Huge amounts of fresh water and fertile land– Ready for expansion– Strong Identities, histories of good government– Positioned for manufacturing growth– Health Care is already set to improve

Bibliography

Ben-Naim, E., Vazquez, F., & Redner, S. (2006). Parity and Predictability of Competitions. Journal of Quantitative Analysis in Sports, 2, 4, 1.

Cillizza, C. (2009, August 18). Rust Belt Revival. Washington Post [Online Version], retrieved 2 May, 2010 from http://www.cpr.maxwell.syr.edu/faculty/smeeding/index.html

Demographia. (2010). GDP per Capita, Top 100 World Metropolitan Areas. Retrieved May 5, 2010 from http://www.demographia.com/db-intlmetgdp2005.pdf

Garfinkel, Irv. (2009, June 23). Wealth and Welfare States: Is America a Laggard or Leader? Retrieved April 10, 2010 fromhttp://www.hks.harvard.edu/saguaro/manchester/workshop2009/Readings%20/Irv%20Garfinkel/GarfinkelSummer%20School%20Lecture%205%2027%2009.ppt.

Gini vs social capital in USA, (2005, December 3). In Wikipedia, the free encyclopedia. Retrieved May 3, 2010, from http://en.wikipedia.org/wiki/File: Gini_vs_social_capital_in_USA.jpg. Data used in chart is from based on U.S. Census, 1999 Income Data, Table S4: Gini Ratios by State, available from http://www.census.gov/hhes/www/income/histinc/state/state4.html and 14 state-level measures of social capital from Putnam, R, 2000, Bowling Alone: Collapse and Revival of American Community, New York: Simon & Schuster.

Grootaert, C. (1998). Social Capital: The Missing Link? Social Capital Initiative Working Paper #3, World Bank.

Hansen, J., Bryant, J. & Spencer, T. (2007, March 10). Which Way Forward? Birmingham News [Online Version], retrieved 2 May, 2010 from http://blog.al.com/bn/2007/03/which_way_forward.html

Holton, N. (2010, March 8). Race Matters in Milwaukee. Retrieved 4 May, 2010 from http://themilwaukeedrum.wordpress.com/2010/03/08/race-matters-in-milwaukee-the-effects-of-milwaukees- segregation/

Isaacs, J. (2008). Getting Ahead or Losing Ground: Economic Mobility in America. Washington DC: The Brookings Institution.

Kruse, M. (2008). Social Indicators 2007. Retrieved 5 May, 2010, from http://krusekronicle.typepad.com/kruse_kronicle/social_indicators_2007_series/

Lampman, R. (1984). Social Welfare Spending: Accounting for Change 1950-1978. Orlando, FL: Academic Press.

Levine, M. V. (2000). “A Third-World City in the First World”: Social Exclusion, Race Inequality, and Sustainable Development in Baltimore. In Polesi, Mario and Richard Stern (Ed.), (pp. 123). Toronto: Toronto University Press.

Ostara Publications. (2005). Appendix 1: The Multi-racial Decline of Cities in the United States of America - A Photographic Essay. Retrieved 5, May 2010 from http://www.white-history.com/hwrdet.html

Razin, E. & Rozentraub, M. (2000). Are Fragmentation and Sprawl Interlinked? North American Evidence. Urban Affairs Review, 35, 821-836.

Saez, E. & Piketty, T. (2003). Income Inequality in the United States, 1913-1998. Quarterly Journal of Economics, 118, 1, 1-39. Updated version with figures through 2007 retrieved 15 April, 2010 from http://elsa.berkeley.edu/~saez/

Smeeding, T., Garfinkel, I & Rainwater, L. (2007, June 5). A Re-examination of Welfare States and Inequality in Rich Nations: How In-Kind Transfers Indirect Taxes and Income from Wealth Change the Story. Retrieved 1 May, 2010 from http://www-

cpr.maxwell.syr.edu/faculty/smeeding/index.htm

Thompson, K. (2009, December 24). Black men hit hard by unemployment in Milwaukee. Washington Post [Online Version]. Retrieved 2 May, 2010 from http://www.washingtonpost.com/wp-dyn/content/article/2009/12/23/AR2009122302550.

html?hpid=topnews

TIP Strategies. (2010, April 7). Geography of Jobs. Retrieved 1 May, 2010 from http://tipstrategies.com/archive/geography-of-jobs/.

Wial, H. & Friedhoff, A. (2006). Bearing the Brunt: Manufacturing Job Loss in the Great Lakes Region, 1995–2005, Metro Economy Series . Washington, DC: The Brookings Institution.

Bibliography, cont.