6 Special reportThe Midwest The EconomistJuly 25th 2020
21under way. Sonya Mays stands in a small house that smells of
freshly cut wood and new paint. A property developer, she has
plans to construct 1,000 housing units, two-thirds of them in simi-
lar, once run-down neighbourhoods. Half will be affordable
homes that get support from J.P. Morgan, a bank. If the quality of
the housing stock improves, the population will return.
Mr Katz says that, until the pandemic struck, cities in the Mid-
west were “perfecting this playbook” of selling themselves as more
fun than before and more affordable than elsewhere. Companies,
too, recognised that it was cheaper to employ staff in cities with
lower housing costs. He cites Pittsburgh as an early example of a
city that got over the collapse of the steel industry and remade it-
self as a centre of new technology, robotics, artificial intelligence
and more. Tom Murphy, a former mayor, says a tough decision to
cut spending, notably on police, created a fund for buying land
from former steel mills to be used by other businesses.How to be richer
One insight: rather than luring investors with incentives, cities
should just create appealing living conditions. A second: cities
have more assets than they realise. Public land can be exploited to
raise funds for redevelopment and better public transport.
The region bursts with examples. Minneapolis and Madison
have done well in health care, helped by the Mayo Clinic and firms
like Medtronic, a maker of medical devices with revenues of $31bn
and 90,000 staff. John Cranley, the mayor of Cincinnati, says his
city has studied and tried to emulate Pittsburgh. Chicago’s success
is exceptional: its central population has surged from 18,000 in
1980 to 110,000 today. Columbus, Ohio’s capital, has been gaining
an extra 10,000 residents a year, making it one of the fastest-grow-
ing cities in America. Its boom, says Kenny McDonald, who leads
the One Columbus redevelopment agency, reflects a diversified
economy and good location for logistics.
Not everywhere prospers. When states barely add to their pop-
ulation (or, like Illinois, shrink) one city’s gain is another’s loss.
Cleveland has lost out to Columbus and Cincinnati. The small tend
to be eclipsed by the big. Decatur, Illinois, has slumped over the
past decade, after the American headquarters of admand Tate &
Lyle, two food-processing giants, moved to Chicago.
Aaron Renn, formerly of the Manhattan Institute think-tank,
has assessed America’s “stagnating cities” in a report focusing on
those that have shed 20% of their population since their peak. He
talks of the Midwest coping with a “decline phase”, when “people
pool into the places that are still successful”. Bigger urban areas
keep growing by slurping up young graduates from smaller ones.
Midwestern cities struggle with entrepreneurship. He cites Indi-
ana as an exception that is also prepared to experiment with re-
form of government. Mr Renn, who lives in Indianapolis, praises a
decision in the 1980s to merge the city and nearby county govern-
ments. That has lifted the city’s official population and propped up
its tax-base. Crucially it binds suburban residents to the city.
Detroit would love to do the same, but it cannot easily annex
nearby places because of a century-old state law. It could learn oth-
er lessons, such as the unusual readiness of Indianapolis to per-
suade companies to bid for municipal business, which has helped
to repair the city’s finances. Sadly, Indiana’s market-friendly ap-
proach is not typical. A report in May by Heartland Forward, a
think-tank of the Walton family (who own Walmart), laments that
old, big companies do well in the region, but young firms rarely
flourish. That is especially true in places that fail to encourage re-
search and innovation. The young firms are likelier to generate
new jobs, but regulation chokes small ones and stymies the entre-
preneurial-minded. Occupational licensing for businesses such as
hairdressers, or telling a bodega that it will need 15 permits to
open, saps economies everywhere. 7T
o walk ina Midwestern city is to get an education. Outsiders
learn of invisible lines that are blindingly clear to locals. Head
south from central Chicago on Martin Luther King Drive, and you
enter an area that is just getting by. Bronzeville in the mid-20th
century was crammed with 110,000 African-Americans; Duke El-
lington played there. Today it is gentrifying. After public-housing
towers were toppled, people moved into low-rise places.
Farther south, Englewood is depopulating. In one of the two
census tracts here, 94% of residents are African-American. Median
household income is under $20,000 (one-third of the county aver-
age). Less than 10% of residents own their homes, and 75% of chil-
dren are in poverty. Average life expectancy, at 60 years, is decades
less than in richer places. Violence is partly to blame. On May 31st 18
people were murdered in Chicago, its bloodiest day in six decades.
Yet Melvin, a barber, won’t blame those in Englewood. “Once you
got torn down neighbourhoods, abandoned buildings, drug in-
fested, guns, then you know these kids, they’re vulnerable.” Many
homes, shops and churches have been boarded up for years. A
Whole Foods supermarket opened in 2016, but is mostly used by
commuters who pull in from a motorway.
The common story of Bronzeville and Englewood is of slow-
motion ejection of African-Americans. The mostly white, Hispan-
ic and Asian populations north of Chicago are flourishing. But
black residents are flocking out. The black population in the city
has shrunk by nearly 290,000 this century. People go to suburbs, to
Indiana or, in a “reverse great migration”, back south. The census
this year is likely to show, for the first time, more Hispanics thanSeparate,downtrodden
The region has particular problems with segregation and policingRace and the city