The EconomistJuly 25th 2020 Leaders 912 soned municipal water, still has some manufacturing jobs and a
decent university.
However many places justify greater optimism. Some cities
really can learn to flourish again. Parts of the Midwest, especially
in the suburbs around Chicago, Minneapolis and Madison, can
point to an admirable record in social mobility. Those born poor
there have a much better chance of progressing to a middle-class
life than people in less upwardly mobile regions, such as the
south. That surely has much to do with investments in educa-
tion. Cities cope best with closing factories or other shocks, such
as a pandemic-induced economic slump, when they are home to
people with plenty of schooling.
Our special report in this issue highlights some success stor-
ies. The population of Columbus, Ohio, is one of
the fastest-growing in America. Indianapolis
does well getting small businesses to blossom
while keeping city finances healthy. And though
much of the Midwest is too slow at reducing ra-
cial segregation—so evident in Minneapolis,
where a policeman killed George Floyd in May—
the likes of Cincinnati, which reformed police
and promotes African-American businesses,
show that progress can come. That is essential, forcuttingracial
division and boosting the economy go hand in hand.
Each place has its particular story, but the Midwest holds
broad lessons for post-industrial areas elsewhere, whether they
are in Europe or Asia. One is that recovery tends to grow from the
inside out. If a town centre is an attractive place to live, work and
play—with renovated bike paths, lots of parks, restaurants and
nightlife—that draws young graduates, the newly retired and
more. As a whole, Chicago’s population may have stalled but its
downtown is an example of how to expand: its population, of
around 110,000, is over six times bigger than it was four decades
ago. People come both because such places are more fun than
they used to be and because they remain less cripplingly expen-
sive than coastal conurbations.
Cities also do well when they tap their own resources, or local
social capital, instead of hoping for federal help or for a one-off
giant investor who, with enough subsidies, will come in as a sav-
iour. Pittsburgh rebounded after its steel mills shut by shifting
spending from police, buying land from bankrupt mills, then let-
ting various new businesses in high technology flourish there.
In Grand Rapids, Michigan-based philanthropists, firms and of-
ficials persuaded local manufacturers to stay and then attracted
others, for example from Germany.
Another lesson is that the most successful places bet on “eds
and meds”. Cities with a decent university or an expansive hospi-
tal system (often the two go together) reliably outperform others.
The Midwest has many of both. Pittsburgh did
especially well by co-operating with Carnegie-
Mellon University to get new firms in tech, arti-
ficial intelligence and robotics to expand. Some
now call the city Roboburgh. Chicago plans an
ambitious scheme to encourage universities
and tech entrepreneurs to work together in a
similar way. Minneapolis and others have had
success with big health-care companies. The
benefitsarefewer when universities remain in bubbles, but the
most successful ones now strive to engage with local residents.
This matters, last, because cities with the deepest pools of tal-
ented workers tend to be long-term winners. Rahm Emanuel, a
former mayor of Chicago, boasts that his city produces or lures
140,000 new graduates each year. That’s a big reason why many
companies choose to put their headquarters there. Columbus
and its flourishing midsized firms also manage to keep hold of
bright graduates and are learning to do vocational training that
produces high skills for non-academic types. That makes the city
appealing to investors of all sorts. Investing in its people is, ulti-
mately, the Midwest’s greatest strength—and it is a recipe for
other places, too. 7Gross domestic product
Selected economies, 2019, $trn*Combined gross state productBritainGermanyMidwest*Japan543210B
y official measuresTanzania is doing brilliantly. Covid-
may be devastating its neighbours, but Tanzania is complete-
ly free of the virus—and safe for tourists—says President John
Magufuli. Sub-Saharan Africa’s economy will shrink by 3.2% this
year, predicts the imf, but Tanzania forecasts gdp growth of
5.5%, making it one of the world’s star economies. This month
the World Bank promoted it from “low income” to “lower-middle
income”. That implies that income per person has surpassed
$1,036, five years ahead of the government’s schedule.
Were these figures true, Tanzania would have much to cele-
brate. But the closer you look, the less plausible they seem (see
Middle East & Africa section). For more than a decade from 2000
Tanzania’s economy, east Africa’s second-largest, was indeed
among Africa’s best-performing. After ditching one-party rule
and “African socialism” in the 1990s, the government opened up
the economy and welcomed foreign investors. gdp grew by a
cracking 5-8% almost every year. However, when Mr Magufuli
came to power in 2015, he turned a hopeful country into a fearfulone. Journalists were jailed, opposition mps have been arrested
or shot. The “bulldozer”, as he is known, has scared off investors
by ripping up agreements, arresting employees and demanding
arbitrary sums from companies. Acacia Mining, the largest for-
eign investor, was ordered to pay $190bn—more than three years
of Tanzania’s gdp—though this absurd figure was later scaled
back. Investment has slumped. Tanzania has fallen by ten places
in the World Bank’s ease-of-doing-business ranking. Business
folk think the economy slipped into recession well before co-
vid-19. But official numbers show it galloping ahead.
imfstaff smelt a fish last year. Official gdpnumbers seemed
out of step with other gloomier data. The imfraised concerns
about the numbers and noted that the government’s “unpredict-
able or interventionist policies...could lead to meagre (or even
negative) growth.” Its report should have sparked debate. It did
not, because Mr Magufuli blocked its release.
If Tanzania’s economy grew by almost 7% in the fiscal year to
the end of June 2019, why did tax revenue fall by 1%? And why hasYou say bullish, I say...
Tanzania’s statistics smell fishy. TheIMFshould stop accepting themTanzania