Pittsburgh's bridges falling down

Business on the South Side are taking a hit from the Birmingham Bridge closing. I wonder how much money they've lost? Given the sorry state of bridges and other infrastructure (remember this?) in Pennsylvania and nationwide, you'd have to multiply that figure by thousands -- at least -- to get some sense of the economic impact of this collective neglect. That would also give you some idea of the payoff were public funds invested in infrastructure repair, rather than in convention centers, arenas and luxury condos.

We've seen this movie before

Jack Markowitz is disappointed, though not surprised, that Pennsylvania hands out tax breaks to filmmakers:

The new Pennsylvania pattern is that nothing seems to get built, or even relocated, without politicians leaping in to "help" with your money. (link)

Money well spent

The Post-Gazette reports that Hi-Tops -- located directly across the street from PNC Park -- is shutting down. It's one of several North Side restaurants located near the ballpark that have closed down over the last few years, and some of those that have opened up did so after getting public subsidies.

I suppose one could argue that the Pirates' dismal performance lo these many years is to blame for these businesses folding, but the whole point of building PNC Park was so the Pirates could have a competitive team.

Then again, I shouldn't dwell on the past. The important thing is that our public officials have learned their lesson, and won't waste taxpayer dollars on any more pro sports facilities.

Oh, wait...

Power to the people right on

North Side residents are shocked, shocked, to learn that Luke Ravenstahl could care less what they want for their neighborhood:

Others at the meeting, held at The Pittsburgh Project building on North Charles Street, accused officials of being more enthused about building a casino than tackling the crime and poverty that have ravaged North Side neighborhoods. (link)

Well, duh. Of course politicians would rather build a casino than address crime and poverty. Just like they would rather build stadiums, arenas, convention centers and luxury condominiums than address crime and poverty. As our president might say, reducing crime and poverty is hard work. The causes are complex and the solutions not readily apparent. Progress often occurs so slowly that if you're not careful your successors end up taking all the credit. (New York City's celebrated decline in crime began under David Dinkins, for example.)

But large, glitzy economic development projects are easy. You just hand over money to a politically connected developer and within a matter of months you're getting your photo taken with a big shiny shovel. By the time anyone realizes the project was a dud, you just might be out of office, or even dead. Which would you prefer if you were a politician?

The North Side residents are not wrong to demand more of their mayor. Just a bit naive. On the other hand, there is an alternative.

Wanted: blue collars

State and local leaders should take note of Bill Steigerwald's Q &A with Joel Kotkin. I've occassionally had my differences with Kotkin, but he's right on the money in much of what he says about the state of the American manufacturing industry. Here are some relevant quotes and my thoughts:

I have to tell you, almost every place I go in this country, particularly where the economy is growing, if you ask business people what is it that would really help them, they say "skills." Machinists. Welders. It's not like there's a Ph. D. shortage, generally speaking. But there is a welder shortage, there's a plumber shortage, there's a machinist shortage. But nobody wants to talk about this. Cities that have lost their industrial base don't want to talk about it, and many cities that still have it are almost ashamed of it. In one of the great historical ironies, the places where they are not ashamed of manufacturing are places like Houston and Charleston and Charlotte. But the places with the great industrial traditions, it's almost as if they are ashamed of their lineage.

Many Pittsburghers are so ashamed of their steel-making heritage that we wring our hands over a lousy football team mascot, and the mayor brags on national television--somewhat erroneously--that steel has completely vanished from the regional economy.

Kotkin's other point, about skilled labor, hits close to home as well. When I was still at the Tribune-Review, around 2000, I wrote a story exploring Pennsylvania's dearth of skilled and technical workers. (The Trib's archives are hard to navigate, but you are welcome to dig for it.) We are flush with colleges and universities (I now work for one) but we don't have enough technical schools, and guidance counselors and teachers turn their noses up at vocational high schools. Talented students are pushed into college no matter where their interests lie. But workers with technical training can earn as much as those with bachelor's degrees, and guess what? You can't outsource plumbing or carpentry to India.

Let's continue:

But I think the reason that manufacturing -- particularly at the higher end, which is more and more what is there -- is so important is that -- going back to Jane Jacobs -- it is a classic export industry. If you are in Seattle and you are assembling planes, or if you are in Dubuque and you are assembling and building systems for building roads around the world, you are taking money from other parts of the country or the world and you're bringing that money in to your town. Most of the stuff that has been growing isn't doing that -- it's retail; it's health care, which is basically serving your own people. ...manufacturing is one part of what you have to offer...

Even somebody who's going to work in, let's say, an auto plant today, going forward is going to be more skilled because you're going to have more robots; it's going to be more computerized. So it's kind of misleading to look at manufacturing as a low-skilled industry. ...

States in the Upper Plains have basically fairly high education levels. A high school graduate in Iowa or the Dakotas is generally much more literate than a high school graduate in the Northeast or California.

So Kotkin presumably thinks that manufacturing is a necessary condition for a truly robust economy, and that a high level of basic and technical education is a necessary condition for manufacturing. Going back to my previous point, that puts us in a bind if indeed we do lack a good base of skilled labor. One of the things I was told when I did my story for the Trib was that professional labor is more likely to relocate than skilled, blue-collar labor. So if you don't have a homegrown pool of local talent, manufacturers will pass you by.

So what do we do?

I would try to find out if there are companies that are expanding. Are there companies that would like to expand? Are there companies that want to stay? Ask them what they want. We live in this dream world where we say, "Well, if we have a fancy stadium with sky boxes, that will keep businesses here." Well, what do you mean by businesses? Do you mean the gauleiters who represent multinational corporations, so they can hang out at a fancy football game? Or are we talking about somebody who's got 15 people working for him in a shop somewhere in the suburbs and would like to get to 30? What are his issues? Are they tax issues? Are they training issues? Are they regulatory issues? You've got to go ask! I don't see anyone interested in that anymore. It's all "What does some 23-year-old, footloose student want? Does he have enough jazz clubs to go to?" Or some footloose 50-year-old corporate henchman. "Does he have enough arts facilities?"

As a country, we're kind of delusional about our economies.

What Kotkin says here makes a lot of sense, but it would be easy for local and state officials to take his advice too far. We don't want to relax safety and environmental regulations just to please manufacturers, because the long-term costs could outweight the benefits. We don't want to give away subsidies and tax breaks, because they rarely give us a return on our investment.

What we do want to do is drastically re-order our priorities, and consider what we need to do--that we have failed to do thus far--to build a truly sustainable economy.

Happy Labor Day.

Conventionally bad thinking

Some bad ideas just won't die:

Downtown Pittsburgh can finally move ahead with plans for a headquarters hotel, with 400 to 500 rooms, adjacent to the David L. Lawrence Convention Center.

That's because the state Legislature this week included a $34 million subsidy for the $103 million project when it approved projects paid for from the slots development fund. The fund, based on 5 percent of taxes paid by slots casinos, also is helping to pay for a replacement for Mellon Arena. (From the Post-Gazette.)

I wrote this article for the Pittsburgh Business Times last year. I don't think much has changed since then:

Most of the time, Downtown hotels have only about a 60 percent occupancy rate, which to Strunk means that the city doesn't need any more hotels -- least of all a publicly subsidized one adjacent to the David L. Lawrence Convention Center. ...

Pittsburgh's real problem is that it is competing for conventioneers in an overcrowded market, said Heywood Sanders, a professor of public administration at the University of Texas at San Antonio. Sanders has studied the proliferation of convention centers nationwide and has closely followed the situation in Pittsburgh.

"What has gone on in Pittsburgh is what has gone on in lots of other cities, which are often faced with convention centers that don't perform as their proponents had hoped or promised, and so it is argued that what you need is an adjacent hotel," Sanders said.

As in Pittsburgh, officials in several other cities have failed to lure a private investor to take on the cost of building a convention center hotel, and so local governments either finance the hotels and assume ownership, or give subsidies to private developers.

Strunk sees that as evidence that the hotels won't be profitable, and he believes that even the most optimistic convention center projections will leave Pittsburgh with a glut of hotel space most of the year. ...

Sanders said convention center hotels in several cities, including Houston, St. Louis and Philadelphia, have failed to perform as expected.

"You're dealing with a pretty unforgiving market environment when it comes to running a hotel. If people aren't staying there, you can't pay the bills, and if you have to lower your rates to do it, then you put downward pressure on everyone else in the market," Sanders said.

We should never have expanded the convention center. Spending public funds to build a hotel there will only compound the error. How far would $34 million go toward shoring up public transportation in Pittsburgh? Fixing our sewers?

Nah, much better to spend it on a hotel that will sit empty half the year.

A Katrina moment

Pittsburgh had its Katrina moment about two weeks before that hurricane devestated New Orleans and much of the rest of the Gulf Coast. A Downtown water main break flooded office buildings, ruined equipment and forced many of the city's few Downtown residents from their homes.

I'm certainly not drawing a parallel between the actual damage caused by that incident and Katrina. There are, however, other similarities. We now know that local, state and national officials had plenty of warnings that the infrastructure built to keep New Orleans safe was inadequate and in disrepair. In the same way, the water main break was another reminder that Pittsburgh's own basic infrastructure is in decay; some sections of pipe in the city are 150 years old. Water main breaks are fairly commonplace around here, which any casual viewer of local television newscasts knows. A related problem is our aging sewer systems, which during storms send raw sewage into our rivers and streams, a problem that is going to cost homeowners and local goverments millions of dollars to correct.

None of this will destroy the city overnight, of course, but it could render growth impossible and accelerate the region's precipitous decline. We should heed the words of this Post-Gazette editorial from August:

In hindsight, the water main along Fort Duquesne Boulevard should have been replaced when the thoroughfare was rebuilt in 2000. But that's too easy to say five years later. What is more difficult -- and a test of leadership -- is how to expedite the rehabilitation of an aging system now that we've seen the damage, in property and image, that can be done.