Why San Fran­cisco beat Detroit

The Pak Banker - - Front Page - Ed­ward Glaeser

COULDN'T the San Fran­cisco Giants, rep­re­sen­ta­tives of the sec­ond-wealth­i­est U.S. metropoli­tan area, man­age to lose at least one World Se­ries game to the Detroit Tigers, the stan­dard-bear­ers for one of the most trou­bled U.S. ur­ban ar­eas? The ever-mag­nan­i­mous New York Yan­kees gen­er­ously boosted the Mo­tor City's morale by giv­ing the Tigers a clean sweep in the Amer­i­can League Cham­pi­onship Se­ries, but the Giants crushed their op­po­nents. Per­haps the Giants felt com­pelled to send the coun­try, and our pres­i­den­tial can­di­dates, a clear re­minder that their home city, and not Detroit, pro­vides a clear model for Amer­ica's eco­nomic fu­ture.

Yet their vic­tory should also re­mind us that the San Fran­cisco model is not al­ways kind to lessskilled Amer­i­cans.

As re­cently as the early 1970s, San Fran­cisco and Detroit seemed to be on a sim­i­lar tra­jec­tory. The San Fran­cisco area's per capita in­come was 31 per­cent higher than the U.S. av­er­age in the 1970 cen­sus; in­comes in Detroit were also a healthy 18 per­cent above the na­tion. Their cen­tral cities had both been de­clin­ing from 1950 to 1970, like most older U.S. ur­ban ar­eas. Murder rates were al­ready quite high in Detroit, but San Fran­cisco was filled with fear of the Zo­diac Killer, who pro­vided the model for Dirty Harry's first an­tag­o­nist.

To­day, the two ar­eas couldn't seem more dif­fer­ent. In 2010 (the lat­est year avail­able), per capita in­come was $59,295 in the San Fran­cisco area, which was wealth­ier than any metropoli­tan area ex­cept for Bridge­port, Con­necti­cut (in­clud­ing Green­wich and Stam­ford). It was $38,197 in the Detroit area. The mean house­hold in­come in the city of San Fran­cisco in 2011 was more than $100,000; the com­pa­ra­ble num­ber for the city of Detroit was $35,709. The unem- ploy­ment rate in greater San Fran­cisco is 8.2 per­cent; the un­em­ploy­ment rate in greater Detroit is 10.9 per­cent. San Fran­cisco had about six mur­ders per 100,000 peo­ple in 2011, while Detroit had more than 48 mur­ders per 100,000.

Those re­mark­able eco­nomic and so­cial dif­fer­ences help ex­plain the dif­fer­ent pop­u­la­tion paths of the two cities since 1970. Detroit's pop­u­la­tion de­clined by 37 per­cent from 1970 to 2000, and fell by an ad­di­tional 25 per­cent from 2000 to 2010. San Fran­cisco's pop­u­la­tion ac­tu­ally rose by more than 12 per­cent from 1970 to 2010. In 1950, Detroit's pop­u­la­tion of 1.85 mil­lion was 139 per­cent higher than San Fran­cisco's pop­u­la­tion, but to­day San Fran­cisco is the more pop­u­lous city, de­spite Detroit's hav­ing more than twice as much land.

Detroit's de­cline was rooted in its spec­tac­u­lar 20th cen­tury rise. Like San Fran­cisco, Detroit rose as a port -- the city is named for straits that ul­ti­mately con­nect Lake Huron (via Lake St. Claire) and Lake Erie. Com­pa­nies, such as Detroit Dry Dock, formed on those straits to sell to the vast flows of Amer­i­can wa­ter­borne com­merce. Those com­pa­nies pro­vided train­ing for tal­ented farm boys, such as Henry Ford, who ul­ti­mately be­came one of Detroit's great au­to­mo­bile en­trepreneurs -- a clus­ter com­pa­ra­ble in ev­ery way to the nexus of tal­ent that gath­ered in Sil­i­con Val­ley 70 years later.

The tal­ented men -- Charles Kirby, the Dodge Broth­ers, the Fisher Broth­ers, Ran­som E. Olds (in Lans­ing), Billy Du­rant (in Flint) -com­peted and co­op­er­ated and col­lec­tively cre­ated the mass-pro­duced au­to­mo­bile.

Ford's big idea was mass pro­duc­tion with au­to­mated assem­bly lines, and this in­no­va­tion both made Detroit mar­velously pro­duc­tive and blessed or­di­nary Amer­i­cans with won­der­fully af­ford­able Model T's. Ford paid $5 a day, bring­ing re­mark­able pros­per­ity to or­di­nary Amer­i­cans, some­thing that San Fran­cisco's Sil­i­con Val­ley has so far failed to achieve.

But vast fac­to­ries, such as Ford's River Rouge, are king­doms unto them­selves. They don't need the cities that sur­round them, and when eco­nomic con­di­tions change, fac­to­ries are re­lo­cated to lower-cost ar­eas, such as the right-to-work states of the South and the de­vel­op­ing world.

San Fran­cisco's man­u­fac­tur­ing base, in­clud­ing its once- mighty ship­yard at Hunter's Point, also de­clined af­ter World War II.

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