The Smart City: Boston, Minneapolis, and Milan
Singapore and Gaborone are imperfect models for cities that are neither independent states nor national capitals. They also can’t serve as examples for places in regions where decent economic policies are the norm. Singapore succeeded, in part, by investing in education and by choosing economic policies that would positively differentiate itself from its neighbors. No American, European, Indian, or Chinese city has that much control. In larger countries, economic policies are determined mostly at the national level, not the municipal level. Generally speaking, America and Europe have a relatively well-established rule of law, so no one place is going to stand out too much in that arena. The ability of any city within a large country to determine its education level is also more limited, for migrants will generally be educated elsewhere.
Indeed, historical accident plays a large role in determining which American cities are the best educated, and in many cases, the most successful. Most of the differences in college achievement in 2000 can be explained, in a statistical sense, by education levels in 1940. If less than 5 percent of an area’s adult population had a college degree in 1940, then, on average, less than 19 percent of that area’s population had a college degree in 2000. If more than 5 percent of an area’s population had a college degree in 1940, then, on average, 29 percent had a college degree in 2000. We can see such effects even if we look much further back into history. Boston, like New York, has staged a remarkable comeback since the 1970s, a rebirth that owes as much to decisions made in the 1630s as to any recent policies.
Boston was founded by John Winthrop and his friends for largely religious motives. Winthrop came to the New World because “It will be a service to the Church of great consequence to carry the Gospell into those parts of the world, to helpe on the coming of the fullness of the Gentiles, & to raise a Bulwork against the kingdom of AntiChrist which the Jesuits labour to rear up in those parts.” The anti-Jesuit hysteria of Winthrop and his companions does them no credit, but their fear-filled competition with Rome was the starting point for Boston’s success in education.
Like many Protestants, the early Bostonians believed that reading the Bible was the surest means of knowing God’s will. They saw education as a key brick in that “Bulwork against the kingdom of AntiChrist” and founded the Boston Latin School in 1635. The next year, they allocated £400, more than half of the colony’s tax revenues in 1635, for a college. Another £375 and four hundred books came from the estate of John Harvard, a Cambridge-educated Puritan minister. These investments made Massachusetts “a federation of parishes made up of laity who were devotees of the religion of the book: possibly the most literate society then existing in the world.”
Boston’s human capital mattered because the city and its region had little worth exporting. New England’s climate is very similar to that of old England, so Boston couldn’t send much overseas that the English couldn’t get more cheaply closer to home. Yet Bostonians wanted to buy European manufactured goods, like guns and Bibles. In its early years, Boston operated as a sort of colonial-era Ponzi scheme: the first wave of immigrants sold basic survival items, like food and clothing, to the next wave of immigrants, who, like John Harvard himself, came over with money.
The problem with Ponzi schemes is that they require eternal exponential growth, and Boston’s growth stalled when the English Civil War established a Protestant commonwealth in the old country. Boston’s citizenry then tried a lot of different moneymaking experiments, like ironworks and printing presses, but its first reinvention owes more to luck than skill. In 1647, a famine hit the rich sugar colonies of the West Indies. The planters sent boats north looking for food, and one found its way into Boston harbor. It started the triangle trade that made Boston’s fortune during the Colonial era. The city exported basic commodities south to the cash colonies, where land and slaves were too valuable to waste on producing food and wood. Those colonies exported sugar and tobacco to the Old World. Manufactured goods were exported to Boston, which could buy them with the money made from selling food and wood to the Caribbean.
Boston’s first-mover advantage in this triangle trade didn’t last forever. New York had a better river and was closer to the South; Philadelphia was surrounded by richer farmland. Boston faltered again, and then reinvented itself again in the early nineteenth century. The same improvements in ship technology that established New York as the hub of transatlantic travel made it possible for Bostonian mariners to create a global trade network. Faster trips and longer journeys decreased the relative cost of starting in Boston and increased the value of the city’s oceangoing human capital, built up over centuries of seafaring. The city had top-notch sailors and merchants, who set up trading networks in places as far away as China and South Africa.
But all that sail-specific human capital lost its value with the rise of steamships, and in the midnineteenth century, Boston had to reinvent itself yet again, this time around manufacturing. A Harvard-educated scion of a shipping family, Francis Cabot Lowell, had traveled to England in 1810 and brought an understanding of Manchester’s power looms back to the Boston area. Lowell’s mills were powered by rivers outside the city, but as engines got smaller, factories moved within city limits.
In the nineteenth century, the area’s intellectual establishment flourished alongside its resurgent economy, and various elements in Boston’s vibrant religious mosaic founded new colleges: Tufts by Universalists in 1852, Boston College by Jesuits in 1863, Boston University by Methodists in 1871, and Wellesley by a lawyer-turned-lay-preacher in 1875. Even more portentous, new institutions like the Lawrence Scientific School, at Harvard, and MIT, a land-grant college, were being formed to transmit technical knowledge.
In the twentieth century, the advantages of rail and urban factories evaporated in many cities, and by the 1970s, Boston was a hollowed-out hull. Real estate was priced far below construction costs. Ethnic strife, epitomized by an epic battle over school busing, tore the city apart. Yet Boston, like New York, managed to reinvent itself again, and this time the reinvention relied heavily on educational institutions built up over centuries.
Boston’s postindustrial success has been built on engineering, computers, financial services, management consulting, and biotechnology—all education-oriented industries. A young MIT engineer, Vannevar Bush, partnered with his college roommate to create the American Appliance Company, which became Raytheon, which has spent the last eighty-five years working on the commercial applications of cutting-edge science, especially missiles. Raytheon’s current headquarters in the old watch town of Waltham looks across the Cambridge Reservoir to Route 128, a technology corridor that once rivaled Silicon Valley as a computer hub. In the 1950s and 1960s, engineers from MIT and Harvard created companies like Wang Laboratories and Digital Equipment Corporation (DEC), which located throughout greater Boston and competed with IBM for a share of the growing computer industry. At their height, Wang had 30,000 employees and DEC had over 120,000. Even before Wang and DEC went out of business, economist AnnaLee Saxenian at Berkeley foretold the decline of Boston’s computer industry, arguing that its firms in their isolated office parks had lost the edge that comes from urban density.
Luckily, Boston was generating plenty of new technologies to offset the demise of the computer industry. Like New York, Boston has long been an innovator in financial services, establishing the first business trusts in 1827 and the first investment trusts, or closed-end mutual funds, as early as the 1890s. The most successful of all the Boston funds, Fidelity Investments, was long led by Edward C. Johnson II, a bow-tied product of Exeter, Harvard College, and Harvard Law School. His vision for Fidelity included risky investments, selling funds to a mass market, and above all, making a fetish out of serious stock research, all of which have become hallmarks of America’s finance industry.
Boston also saw the birth of management consulting in 1886 when an MIT chemist, Arthur D. Little, started his own firm to do fre
elance scientific research. Over the past 120 years, the firm can boast of many innovations, from high-altitude oxygen masks to computerized technologies for inventory control and American Airlines’ pioneering SABRE reservation system. Even more important, Arthur D. Little was a training ground for smart people like Jack Treynor and Fischer Black, and it created spin-offs, like the Boston Consulting Group, which then spawned its own spin-offs like Bain and Company.
The Boston region has long been a hotbed of biomedical research. Harvard Medical School teachers were performing autopsies in a small chapel in Harvard Yard, where I often teach, before America had a constitution. But treating a city’s own citizens generally can’t generate enough revenue to fund future innovations, so for medical knowledge to create urban success, the city had to figure out ways to “export” health. Boston exports its skills by drawing non-Bostonians to its hospitals for treatment, just as non-Bostonians flock to the region’s universities. Boston also exports its biomedical expertise more directly, by creating and selling new health technologies.
Boston Scientific, which started in Watertown, was an early pioneer in tiny medical devices, and the region has since spawned a slew of biomedical research companies, like Biogen and Genzyme, which take advantage of the area’s human capital. Foreign firms, like Novartis, have also come to Cambridge for its skilled workers. Novartis’s Cambridge office is located in the former home of the New England Confectionary Company, maker of Necco Wafers. There was a time when urban economists thought that Cambridge could never survive the decline of its candy industry. They underestimated the ability of skilled cities to reinvent themselves.
Many might also have written off Minneapolis, which lost 30 percent of its population between 1950 and 1980 and hardly seemed like a natural candidate for urban renaissance. The city’s winters make Boston seem balmy, and the advantages that once came from its riverside location became largely irrelevant after World War II. But Minneapolis, like Boston and New York, has come back. In 2009, per capita personal income in the Minneapolis metropolitan area was $45,750, making it the highest-earning metropolitan area in the Midwest and the twenty-fifth highest in the country.
The secret of the city’s success is education: 47.4 percent of the city’s adults have a college degree, and 37.5 percent of the Minneapolis area’s adults have a college degree, making it the seventh-best-educated metropolitan area with more than a million people in America. The Scandinavian Lutherans who originally settled the region brought with them a belief in learning, but most of all, Minneapolis’s highly educated population reflects its land-grant college, the University of Minnesota. The city’s most striking economic success stories have some link to that school.
Medtronic, which earns $14.6 billion in annual revenues and has thirty-eight thousand employees, was formed in 1949 when a graduate student in electrical engineering at the University of Minnesota partnered with his brother-in-law to make medical devices in a garage. The company’s early success reflected, in part, connections with people like Walt Lillehei, a University of Minnesota professor and a pioneer in open-heart surgery, who saw the need for a small, battery-powered pacemaker and turned to Medtronic to whip one up. Minneapolis’s megaretailer, Target, owes much of its success to Bob Ulrich, another University of Minnesota graduate, who helped create the chain’s blend of logistics and style. Target’s slightly more highbrow alternative to big-box competitors like Walmart and Kmart seems natural for the sophisticated Ulrich, a collector of African art who has spent a fortune endowing a Museum of Musical Instruments.
Milan is another former manufacturing giant that has come roaring back in the postindustrial age, and education has been part of its success. In the eighteenth century, Empress Maria Theresa initiated a series of school reforms (paid for with confiscated Jesuit wealth) that reinvigorated education around Milan and the nearby University of Pavia, which then trained two mathematicians who went on to lead education in Italy at the time of reunification. They then founded advanced schools, such as Milan’s Polytechnic Institute, or Politecnico, and the academy that would later become the University of Milan. The Politecnico was worldly, modeled on German industrial schools, and became an incubator for entrepreneurs, like the rubber baron Giovanni Battista Pirelli.
Pirelli was among the first graduates of the Politecnico. His stellar performance won him a 3,000 lire prize, which paid for a tour of Europe to learn about a “new or scarcely diffused industry in Italy”—the use of rubber. Pirelli visited European factories, inspecting machinery and learning modern management practices, using his education to import ideas into Italy. Today Pirelli may be best known for its tires, but the company was also an information technology pioneer. Before it made its first tire, Pirelli was making telegraph cables insulated with rubber, starting in 1879. This high-tech business induced Pirelli to set up its own research team, populated with engineers hired from the Politecnico.
While Michelin linked itself with good food, Pirelli established a link between its products and design. Lots of tire companies give away cheesecake calendars, but Pirelli’s pulchritudinous calendar aspires to be art. Goodyear’s corporate headquarters in Akron is a nondescript office building. Pirelli’s Milan headquarters is an architectural icon, built in the 1950s by Gio Ponti, another graduate of the Politecnico. Ponti founded and edited two design magazines, one of which (Domus) is still in print. He was a professor at the Politecnico who designed ceramics, bottles, and chairs, including the featherweight modernist classic, the Super Leggera. Ponti reminds us that education occasionally improves aesthetics, which proved to be another element in Milanese endurance.
Industry enabled Italy and Milan to come back after World War II, but the same forces of globalization and technological change that caused manufacturing to decline in the American Rust Belt also made Milan’s population plummet after 1970. Yet as in Boston and Minneapolis, human capital enabled Milan to reinvent itself for our age, when ideas are more valuable than machinery. The city’s population increased between 2000 and 2008, and as of 2008, Milan’s per capita productivity is the highest of any geographic area in Italy, a solid 54 percent above the nation as a whole. Today, three quarters of Milan’s workers are in services, and finance is a major occupation, just as it is in New York and London. Also like those cities, Milan is a hub of fashion.
Miuccia Prada and Patrizio Bertelli are a well-educated couple. She holds a PhD from the University of Milan; her husband studied engineering at the University of Bologna, two hours away from Milan. Bertelli brings an engineer’s rigor to the management and marketing of the brand. Prada’s fabrics, like the waterproofed nylon called Pocone, are often cutting-edge, and Prada stores were early adopters of radio frequency identification, which provides instantaneous inventory information. When a handbag is scanned by a high-tech wand, images of the bag start streaming from abundant screens. While Prada and Bertelli surely learned more from doing than from studying, their success and style still bear the imprint of formal education.
The Versaces represent the opposite side of human capital in Milanese fashion. While Gianni Versace did study architecture, he left school at twenty-one, and much of his learning seems to have come from working in his mother’s dress shop. His style was not the international cool of Prada and Armani, but a local lushness, borrowed heavily from Italy’s Baroque past. The head of Medusa, which adorns so many Versace products, was also used by the Milanese armorer Filippo Negroli for his emperor’s parade shield. European human capital reflects millennia of culture, and that can also provide the education that creates comparative advantage for both a company and a city. In Milan’s case, all that designing talent does more than make the city a dynamic exporter of clothes and handbags; it also makes the city more fun and exciting to inhabit, a place to consume as well as produce, and that is another road to urban success.
The Consumer City: Vancouver
Vancouver also attracts talent by being one of the world’s more pleasant places to live. A quarter
of the Vancouver area’s residents over the age of fifteen have at least a college degree, as opposed to 18 percent in Canada as a whole. It regularly lands at the very top of global quality-of-life rankings, and that helps it attract thousands of talented migrants each year.
Of course, Vancouver enjoys natural advantages that are denied to Boston or Minneapolis or, for that matter, Singapore. Its Januaries average 37 degrees, far warmer than Boston or Minneapolis, and its Julys average 63 degrees, which is cooler than the other two cities. Add in Vancouver’s abundant coastline, beautiful mountains, and lovely countryside, and nobody could deny that the city has been extravagantly blessed by nature. But Vancouver has taken canny advantage of those blessings.
Vancouver was a logging town with a natural harbor that became important as the western terminus of the Canadian Pacific Railway’s intercontinental line in 1886. A fire that wiped away the town’s older structures that year gave Vancouver, and its largest property owner, the Canadian Pacific Railway, the opportunity to start fresh with good sewers, trolley cars, and sturdy, safer new buildings. The City Council requested that a thousand acres, then part of a military base, be set aside as a park, which remains one of the city’s many pleasant green spaces. In 1915, the University of British Columbia was founded there, giving the city a source of well-educated citizens.
Vancouver’s trajectory during the twentieth century followed a familiar pattern. Its population stagnated during the Great Depression and then fell during the heyday of suburbanization between the 1960s and the early 1980s. But since then, the city has expanded from 415,000 to 610,000 people, an increase of almost 50 percent. Vancouver’s boom has been fueled by a passionate attention to quality of life, a willingness to build up, and a flow of talented Asian immigrants.
Triumph of the City Page 29