Archive for attracting talent

Are global house prices overvalued?

A couple weeks ago the Economist published an article, “Global House Prices: Floor to Ceiling“.

In it, they argued presented a chart suggesting that most countries’ housing markets were “overvalued.”  This whole article didn’t work for me.

The criteria they used to determine what countries were overvalued, and by how much, was the long-term average rent versus the average ownership price.  A big change in ownership price, versus rental rates, means overvalued.

The most overvalued places include Hong Kong, Australia and Singapore.

But these are places that are substantially urban, and with strong demand from regional and global people to move there.  Hong Kong is, for all intents and purposes, a city-state as is Singapore.  Australia is a desert island with a few major metropolis around the outside–such as Sydney, Melbourne and Brisbane–which have been popular migration points for native-born as well as immigrants.

The more people that want to live in a city, and in its cool, hip urban core, the more prices will go up.  It’s a supply-demand issue.  Overvalued would suggest that either demand is expected to wane, or somehow supply will catch up.  But in big cities there is no more land to develop close to the big employment nodes and the core area (the essence of the city), so supply can’t really catch up.

Saying a country’s housing market is overvalued, therefore, is to suggest that people will stop migrating to the major cities.

I don’t see that happening in Australia, Hong Kong, Singapore or Canada.  Do you?

It is also interesting that the Economist data also suggests Japan’s housing market is undervalued, and there is a country with an aging and declining population that is not attracting global migrants.  Personally, I’m not going to run out and buy property in Japan.

 Now tweeting on cities

Women’s decisions shape cities

The choices and experiences of women are shaping 21st century cities–in fact, they also did so in the past, an often-overlooked phenomenon.

First, consider the choice to have fewer children.  In 1959 women in the US and Canada had on average 3.7 to 3.9 children in their lifetimes.  To look after this larger household, one person needed to make this their full-time job and the family needed the space offered in the suburbs.  The division of labour in the household and separation of residential from industrial and commercial spaces fit society.

Today, women in Canada have 1.6 children in their lifetime, on average.  In the US, although the national average fertility rate is 2.1, among college-educated women the number is closer to that of Canada.

This allows for a different urban development pattern, motivated in part by the choices of working women.  You can raise one or two kids in an apartment, condo, or urban townhouse much easier than four of them. Moreover, fewer children allows for the potential for more women to maintain careers while also being dedicated mothers.

Second, the expanding knowledge economy requires clusters of educated, innovative people.  Women earn 55% of bachelor’s and master’s degrees in the US and Canada. Knowledge-based companies (which could be anything from engineering firms to accounting, computer programing, or advertising) need to attract and retain talent.  They need women, as well as men, in order to keep their positions filled.

These big, structural changes in society and the economy require changes in the urban environment to accommodate them.

One change that is happening is a shift toward higher-density living closer to employment nodes such as downtowns and town centers.  Living in condominiums or (luxury) apartment rentals, are two more visible housing choices that many individuals and families are making in order to balance career and family or in the absence of children other lifestyle choices. There is also stealth density happening in the formerly-single-family neighbourhoods whereby duplexes, triplexes, and extra suites in houses are adding homes closer to employment nodes.

In larger metros (think Toronto, Chicago, etc.), where much of the housing is in the suburbs, and a long commute to downtown, we may see companies specifically locating satellite offices in the suburbs in order to hire the hidden talent pool of educated women who are available while their kids are in school.  Rather than being motivated by less expensive real estate prices in certain suburban business parks (as they were in the past), one Toronto-based commercial real estate broker told me that attracting the “9 to 3 labour pool” is motivating some of his clients’ decisions.

If women won’t or can’t come to them downtown, they’ll go to where the women are.  Not all women like (or will be able to afford) high-density urban living, but they’re still educated and talented.

What I expect to change in the suburbs, in response, is the type of office space in demand.  Isolated business parks may not be as attractive as office space in closer proximity to residential areas, perhaps attached to the community shopping centre or in a suburban “town center.”

Certainly, the types of jobs and careers available to the woman who chooses close-to-downtown, or downtown living for her family may be different than those in the suburbs.  The suburbs have traditionally offered more service-oriented “back office” type positions that are frequently lower paying.  However, this could change.

To some extent these isolated examples (so far) of moves to where the women are go against other urban workplace trends I’m seeing.  In particular, some major Canadian corporations have been or are in the process of consolidating their operations into a single downtown location (rather than have offices scattered throughout the metro areas).  Or maybe the motivator is the same: going where the people you want to hire live.

The location of job space is perhaps at a cross roads.  But it will be women’s choices that shape where new office space will be, as it always has been.

What do you see happening?

Are hip cities leveling economic disparity?

Many large cities have enclaves of depressing poverty and some of immense wealth.  But getting past the extremes, there is some evidence that in expensive cities, the difference is diminishing between what people in typically higher paying professions (such as doctors) are earning and those in normally lower paying occupations (such as retail clerks).

From a 2005 report I found by chance by Sagoon Conan Lee of the Sauder School of Business:

Average wages tend to increase with city size. Most explanations of this urban wage premium emphasize productivity spillovers. This paper proposes a consumption-side explanation….The wide consumption variety found in large cities is more important to high-skill hence high-income) workers than low-skill workers, and thus the higher wages found in large cities are due to the selection of high skill workers choosing to live there. A testable implication f my theory, distinguished from productivity-based theories, is that urban wage premiums may be negative for high-skill workers. This implication is confirmed by data on the medical profession. At the top skill level, there is substantial urban wage discount: doctors in large  cities are paid 8 percent less than their peers in small cities.

And it makes sense.  For a city to function well, you need everyone from chefs to dishwashers, doctors to janitors and barristas to barristers.   But, in occupations requiring less education and experience, wages tend to be lower.  In hip, urban areas where many people want to live, life is expensive and in such places minimum wage often is not a living wage.  Therefore, to attract and retain staff, employers have to pay higher wages in these types of occupations than they do in a city.

At the other end of the shrinking spectrum, educated individuals, such as doctors, want to live in big, cosmopolitan cities with great cultural activities, world-class restaurants, and other amenities.  They’d rather not live in smaller communities that lack these things.  Therefore, they typically demand a premium to live and work outside of a big city (which given the lower living costs means a high standard of living).  Meanwhile, many will accept a lower salary and lower standard of living to be in the amenity-rich city.

While medical specialists and burger flippers are still earning vastly different sums, both are needed and the difference in their earnings is comparatively smaller in the expensive cities.

As North America urbanizes over the next decades, this may be an interesting trend to watch.

Tax breaks, recession, and cluster development

 An intriguing article ran in The Vancouver Sun on Friday about the video game programming industry.  As of the Fall of 2008, 44% of the 14,000 Canadian “Entertainment software” employees were in metro Vancouver, 37% in Montreal, and 14% in Ontario.

Vancouver is unique in that the industry has grown up without a lot of tax incentives and government help, and largely because that’s where the talent is,” said Danielle LaBossiere Parr, executive director of the entertainment software association — or ESAC.

This is an example of the expected 21st century world in which demography means a talent shortage and companies will go where the skilled people are — tax breaks can’t program World of Warcraft.  I suspect that companies located in Silicon Valley also receive few if any tax breaks for being there — they are there because that’s where the cluster of talented people and complementary organizations are.

Will the recession mean a pause to this approach?

In the economic downturn, provincial and metro governments will seek ways to prevent more layoffs.  Meanwhile all variety of businesses facing reduced revenues will be looking for ways to save money.  Are some companies going to look to pull out of a region without (increased) tax concessions?  Or will they play poker and threaten to do so (but with no real intentions of leaving San Jose, Austin or Vancouver, for example, in favour of Fargo)?

My own concern is that some larger employers will in fact do the latter — use this downturn to gain a tax break.  Such a break could be short-sighted on the part of both the government / politiican who gives it and the company who takes it.   The scarce public money could instead have gone into making other broader improvements in the region that would help attract and retain talent generally.

Chicago: Creative Capital of the Universe?

Fast Company has released the 2008 Fast Cities report. Chicago and London are its cities of the year.

What intrigued me was the statement that Chicago is the creative capital of the universe (at least for 2008, presumably).

The article then offers discussion as to why this is from “creative” residents, including Grant Achatz (business person) who insists that an environment in which people will take risks is key, as workers but also as consumers and in life generally.

“People perceive New York as the most creative place, but it’s not as lively as it is here. More risks are taken here. You have a community that’s willing to embrace food for what it is, look past preconceived notions, and not be scared to try something new.”

The attitude behind this bold statement fits Richard Florida’s assessment of Chicago’s personality as being one of an extrovert. Interestingly enough, however, in Florida’s research Chicago did not come through as a place particularly open to new experience.

Others thought that Chicago’s grit gave it an authenticity as well as the edgyness that makes people think.

Chris Ware (Graphic Designer):

It’s an honest city, and because of that, it has a grim, refreshing isolation to it.”

Brad Morris (Second City Comedy Ensemble Member)

A great creative place has to have great art, great food, and a combination of beauty and grit to be inspired by. Chicago has all of that.”

While Chicago no doubt has lots to offer and tons more potential as a city, the creative capital title seems a stretch. But, if the point is to get everyone thinking differently about Chicago, and re-thinking any older images they may have had — then it worked for me. (Calling the Bay Area or New York a creative capital would hardly have been newsworthy.)
Here are some economic facts about Chicago, some of which really surprised me.

  • Chicago has a faster growing economy than either New York or Los Angeles, at 1.9%.
  • In 2007 it had the 7th fastest growing population among US cities (not sure if this is the metro area or Chicago proper, presumably the latter).
  • 29% of downtown Chicago residents have graduate degrees (over 3 times the national average)
  • Chicago is the number one city for business investment and expansion according to Site Selection Magazine.
  • 30 Fortune-500 companies are based in the Chicago Metro, second only to New York in the USA.

addendum: highly recommend a read of the post on the same topic by Brendan at Where Blog.

4 ways to read “Who’s Your City”

Richard Florida, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life.

Where you choose to live may be the most important decision in your adult life — at least according to Economist Richard Florida. And he makes a compelling case for it in his latest book. Your choice of city will shape who your friends are, who you marry and your career possibilities. More people have the means to be mobile than ever before in human history, with profound implications for the 21st century.

Therefore, the book’s content will interest a wide range of people from urban economic development specialists to college students with their futures ahead of them to people who simply want to understand better the relationship between urban development and the world and US economies.

Rather than write a standard book review, I thought I’d offer some thoughts on how four different groups could read and benefit from the knowledge in Who’s Your City.

1. Newer Urban Studies students (graduate or under graduate level or self-taught).
The book offers a valuable background on scholarship and theories about cities. The first half of the book (or so) centres around explaining why and how the world is spiky, refuting Thomas L. Friedman’s assertion that is is flat. The highest levels of economic growth and development is concentrating in cities, and certain cities are experiencing much faster economic prosperity expansion than others.

The power of clustering is a key reason why and through several chapters Florida “unpacks” clustering, explaining in detail the multifaceted aspects of this phenomenon. Who’s Your City offers a good foundation on which to build a knowledge of how cities work.

2. Seasoned urbanologists – aka knowledgable city buffs – In addition to the details on how clusters work, Florida offers a new approach to understanding cities that is intriguing. Examining clustering in detail led him to wonder whether certain cities and mega regions tend to attract more of particular personality types. He investigated and it appears that indeed they do. For example, extroverted people gravitate toward Chicago and other cities in a swatch heading southward including St. Louis, Memphis and Atlanta. Neurotic people cluster very heavily in New York. Open to experience people cluster in California and Cascadia, among other places.

As a result, you could say that cities have personalities. Florida suggests that people may be happiest if they find a city that matches their own personality because this means they’ll find more like minded people. Something young people looking for their city-mate might want to keep in mind.

3. College juniors and seniors as well as young people generally who will soon face a location choice. Often it seems Florida is talking directly to this group — particularly in later chapters although throughout the book are sections that read like college lectures, perhaps where he field-tested the material before publication.

In the final chapter, Florida offers a series of questions and steps that people should follow in order to find good potential urban matches. He suggests people consider everything from the quality of the airport to traffic congestion, schools, entertainment, energy level, crime rates and ease of networking.

While he recommended people visit potential city-matches, I was disappointed that he didn’t suggest “test driving” a city. While still in college people have good avenues for doing this such as doing a semester exchange to another school in a potential match city, or finding a summer job or internship in a different city.

4. Planners and economic development specialists.
Florida points out that cities are increasingly finding themselves competing for talented people. The skilled are attracted to a combination of urban amenities and productivity in their field, not all of it within the control of civic officials.

Some cities appeal more to certain demographic groups than others. Florida divides them into young singles, young families and empty nesters and offers analysis as to which cities best fit people at these life stages. Some cities — such as San Francisco — perform better for wider ranges of people than other places, and intriguingly this often correlates to high innovation rates. An obvious conclusion the reader can draw is that making cities accessable to people at all stages of their lives is important. HOwever, Florida focuses on his strength of pointing out trends and leaves it to policy makers to decide how to handle this information.

One key finding that is a dangling thread in this book is that places with highest levels of innovation also seem to have highest levels of prosperity, but also poverty. As Florida states, this may be one of the greatest political and social challenges to come in the 21st century.

****

This book has something for everyone. This leads to my main critique: it doesn’t have one strong thread tying everything together — it often seems like a series of essays — fascinating ones, but not always connected ones.

The book’s main purpose appears to be the message that place matters. And yes, Florida illustrates that. But somehow the early chapters on the growing importance of clusters and the rise of mega regions don’talways seem connected to the later chapters on personality as well as “where we live now?” and Place yourself. This all may be because we hear two different voices from Richard Florida. One, the analytical academic — particularly in the earlier chapters that may have been stand alone articles previously — the other a friendly, casual tone that offers some personal, autobiographical content. Both styles are enjoyable reads, just sometimes seem forced in this book.

This is a minor quibble. Florida offers a highly accessible analysis of how cities and megaregions work, including new perspectives including the notion that cities have personalities.

Floating semi-cities?

The Creativity Exchange ran a post this week about The Freedom Ship – a floating city complete with airport, university, office space, and residences priced from $180,000 to $44 million.   The Freedom Ship is supposed to circumnavigate the globe every 12 months, which seems a little challenging — those Atlantic and Pacific storms might be tough to endure.

However, the idea of a stationary floating urban space is intriguing.

Many prosperous world port cities face obstacles to economic and demographic growth from geographic constraint.  Being able to add space off shore could prove valuable.  Here are some ideas for floating urban spaces:

1. A regular suburb.  You would reach it by boat or air, with frequent regular shuttles connecting it to the main city.  The space could contain a park, playground, restaurants, a grocery store, and other amenities that would make it as workable as any bedroom community suburb.  The advantage of living here would be great views, fresh air, and perhaps a short commute to work downtown.  This wouldn’t need to be as big as the floating freedom city, so could fit offshore in many coastal metropolis.

2.  A floating business park, or single occupancy company campus.  Companies like Google, Microsoft, Cisco, Electronic Arts are well known for their university-like campuses containing hundreds of thousands or even millions of square feet of office and amenity space.   As they expand, it becomes harder to find contiguous space.  Moreover, to attract and retain talented people, many of these types of companies face the issue that their employees want to live downtown or in a cool dense, urban area rather than an outlying suburb (ie San Francisco not Mountain View, Vancouver not Burnaby or Surrey).  Perhaps a solution is a floating company campus near to downtown with regular shuttles from major transit hubs and/or urban population centers.  A floating campus could offer great views, lots of natural light and air, and that special funky edge that might appeal to many workers.

3.  A floating “lifestyle centre-  A high end shopping mall and casual entertainment space such as cafes, restaurants, etc.  along with a limited number of residential units.  Served regularly by small ferries, the merchants would also offer free shipping to a pick up point at a parkade back at the mainland.  So you could shop, then have your parcels sent ashore while you enjoyed a light lunch.

4. A floating university campus.  The new trend is for universities to integrate themselves more into the downtown and broader urban scene.   But, downtowns and urban areas are often by definition full, leaving limited space to add classrooms.  Here’s a solution.

I haven’t looked at costs or feasability.  This is pie in the sky, but intriguing none the less.

Any other ideas?

Creativity, anarchy and civilization

From Journalist Frances Bula’s City States Blog:

My son, who does visuals for DJs … sent me an email from Austin today. He’s of course at the South by Southwest music festival … It seems he also has something to say about city policy.

“we went to a show last night that started at 3am and was on a bridge. like basically imagine if a band played a show on cambie st bridge and 800 people showed up and it didn’t get shut down. i asked a cab driver how it’s possible that all these shows can happen in such crazy locations and he said sxsw funnels something like 30 million dollars into austins economy so the city just turns a blind eye to all these crazy events. i thought it was really funny imagining these bands filling out paperwork to get a permit to play a show on a bridge at 3am but i guess there is none, the city just lets people do whatever they want.

i wish vancouver would relax it’s liquor license laws and take the same attitude, which would promote art and culture, instead of spending millions of dollars trying to force designated “culture” or “club” sections of the city. and only giving liquor licenses to people who can afford the 250 thousand dollars or whatever which only corporate superclubs can really afford. a similar sxsw event could happen in vancouver if only they would do that.

[apparently there is some organization of the spontaneity according to a reply from Gary Etie, an engineer and consultant in Austin]

“I just want to get the word out, because, as you say, it is a very critical issue, that affects the arts, and the ability to party, while preventing disasters that can occur from overcrowding in unsafe buildings, if not done properly and professionally.”

[Bula:] Now that is what I call one dedicated watchdog.

So there is in fact a permit system. But, from the sound of it, it’s a unique and flexible one that Austin has developed so that, yes, it can encourage exuberance and, yes, bands can hold concerts on a public bridge at 3 a.m., but there are also some rules in place so that the city doesn’t end up with bodies floating in the river, major disasters, etc.

For those who want a closer look at Gary’s site and blog, go to www.austincitypermits.com and www.austincitypermits.com/blog.

Urban areas can be like the frontier, where new forms of living or expression can be tried, beyond the reach of the state. Or, cities can be highly prescribed places where order is the main goal of government. It seems that many cities drift back and forth from “over ordered” to a state of nature.

As cities attempt to offer more space for creative expression and fun, I predict many challenges from business, citizens and other organizations to where a city policy will sit on the spectrum between anarchy and boring, excessive order. Austin is known as a “creative” hub, and a festival like this furthers that image, which probably helps attract talented, highly creative people.

***

More semi-random thoughts on this:

I like the idea of relaxing the order for certain occasions, like sxsw, to let creativity reign anywhere and everywhere for a few days so long “as bodies are not showing up in the river” the next morning. Locals can participate or leave for the duration. And, such an event can contribute to a city’s creative “brand.”

To me this approach seems more inspiring than having a designated “entertainment” zone in a city where the anarchy can take place most nights — like the New Orleans French Quarter. The latter almost seems artificial — a disneyland for young adults.

But I also wonder: could the Austin SXSW festival disorder work in cities and places that are normally tightly controlled? Or would the removal of some authority create a situation that many people cannot handle responsibly?
My reasoning (based on perhaps debatable premises) is that places like Texas naturally have less state presence and control so people are accustomed to being more responsible for their actions and looking after themselves, rather than relying on the state. So, relaxing regulations further for a few days isn’t a shock to the system … as it might be elsewhere.

Clusters and (health) company towns

In the 19th and early 20th century many towns and small cities were dominated by one industry or even one company – the factory town. For example: Flint, MI and General Motors or Dearborn, MI and Ford.

Now, in the early 21st century some new company towns are emerging in the US — ones centred around providing superior health care and even health tourism of the most expensive variety: A “hospital town” instead of a factory town.

A recent Economist article featured Rochester MN, home of the Mayo Clinic, and Cleveland, OH home of the Cleveland Clinic.

They asked the question:

What happens when a clinic takes over a metropolis?

And noted a couple of intriguing differences from the factory town era.

1 . The town needs a lot more hotel rooms per capital.  Rochester, much smaller than Minneapolis has the same number of hotel rooms.  These serve medical conference attendees as well as patients, and their families.

2. A much more skilled workforce is needed.  Doctors, nurses, lab techs, physical therapists, etc. and all sub-specialties within them have to be attracted and retained in the hospital town (not to mention the semi-skill work involved such as cleaning, food prep, etc.)

It’s Cleveland’s answer to #2 that’s intriguing.   They are now reaching out into the high schools, educating students on the variety of health care careers available.  Essentially, they are trying to grow their own talent in the town.

As city governments and business communities compete for talented workers, it seems that reaching younger people already in the city would make sense.  Give them early exposure to career options.  Maybe hire some high school students in the summer to help in various capacities.  Offer good, affordable education programs — subsidize them if you must.  And, although some will depart for other cities, many people with family ties in the area will stay — or will return once they start their own family.

The origins of the Federation of North American City States

What could happen if the divide between federal, state and provincial government policy and the needs of metropolitan areas is not resolved soon? How will future historians write about political organization in North America (and the world) during the early 21st century?

Here’s some “social science fiction” – a hypothetical student history paper from the year 2108.

The emergence of the Federated City States of North America in 2027 had roots dating back to the early years of the 21st century.

In the United States elections were fought over distractions and not the real issues facing the country. The war in Iraq, although misguided, tragic and costly was not the biggest threat to the wellbeing of the United States. Nor was terrorism nor abortion rights nor Chinese imports or illegal immigrants from Mexico.

The biggest threats — recognized by many at the time, and also since — were that (1) American citizens and businesses were falling out of sync with the global economy and (2) that the nation’s cities were unsustainable and did not support prosperity as well as those elsewhere in the world. From approximately 2000 onwards, America rapidly became uncompetitive; the dividends from more than a century as a global economic leader were exhausted in a matter of just a few years.

Before we go further some background is required here on what went wrong. America’s 20th century economic strengths had come from its impressive post-secondary education system and ability to be innovative at creating and especially marketing new technology. Open immigration policies in the early 20th century brought motivated, entreprenurial people from around the world to Americas cities. The USA also avoided having international wars fought on its own soil, contributing to a peace and prosperity dividend that lasted several generations.

However, because of its size, the American population and political leaders (and even many academics) tended to view the United States as an isolated “exceptional” island in the world. By the end of the 20th century most of the population either ignored global trends or believed that they didn’t apply to the United States. (Elementary education had also begun to falter such that most Americans could not find other major countries on a map anyway.)

Using fear rather than facts, politicians, the media and others in the early 21st century convinced too many voters that economic survival required the country to close its doors to immigration and to enact barriers to foreign imports — albeit with a few exceptions such as televisions, video game consoles and oil. The latter of which the government subsidized in order to offer voters continued cheap gasoline, which allowed the nation’s political leaders to avoid addressing the need for new styles of urban design as well as transportation systems.

High debts from the growth of government and wars launched during the Bush administration eventually required higher taxes. Public education at all levels saw funding decline. Without immigrants or home grown educated people, innovation fell. Without global competition, and partially because of subsidies, production costs escalated. Soon, the USA wasn’t producing much that anyone else in the world wanted, and global investors became uninterested in the US dollar, dumping them on the market. By 2012 it took $5 US dollars to buy one Euro and the dollar fell to parity with the Chinese Yuan.

City governments meanwhile were trying to offer better services to citizens, in order to create isolated pockets of prosperity. However, replacing the aging road, water, sewer and electrical infrastructure was proving almost impossible. The federal and state governments had no funds to offer and because of trade barriers and protection measures, US cities had to pay twice what those in other countries did for steel, copper, and cement. Without drastically increasing property taxes and/or introducing other levies US cities could not maintain their infrastructure nor improve upon education systems. The few cities — such as Eugene Oregon and Austin Texas — that managed to convince residents and voters that the tax hike was the only way, saw their populations decline drastically.

Meanwhile, infrastructure was decaying and collapsing, everywhere. The most notable events were: the super-earthquake of 2012 that destroyed the Golden Gate Bridge along with numerous highways in the Bay area. A less severe shaker in 2014 took out so much freeway and opened a large fault line such that it split the Seattle metro area in half, with those in Northern suburbs like Redmond and Bellevue virtually unable to reach downtown Seattle by car. A tornado took out two sections of freeway in Dallas in 2013, cutting off the airport . Five Chicago area overpasses simply collapsed in 2014. FEMA collapsed when faced with so many disasters (and decades of mismanagement).

The federal government helped with initial rescue and clean up efforts, but quickly recognized that they could not afford to help rebuild everything and make payments on the debt and continue to fight for oil abroad. Private enterprise helped in some places — it soon cost $50 to cross from Redmond to Seattle on the one repaired section of freeway.

Whether fleeing taxes or escaping from dead infrastructure (or looking for health care), the most talented and hardest working Americans fled — almost one million Americans departed for Canadian cities in 2015 alone (creating both a strain and a tremendous economic boost in Edmonton, Montreal, Toronto, Kitchener, Calgary and Vancouver in particular), and nearly as many departed for other major cities around the world that year. Microsoft moved its global headquarters from Redmond Washington to Vancouver and Richmond BC. American Express went to Toronto from New York. The Bay area also saw an exodous of corporations and their talented workers: Google for example relocated its global headquarters to Kitchener-Waterloo just outside of Toronto, merging with Research in Motion in the process.

Desperate to revitalize their cities, urban political, business and community leaders along with ordinary citizens began proposing solutions.

The Mayor of New York held secret meetings with many of the city’s business and political elite for several years and on July 4, 2016 issued a Declaration of Independence to be voted on in November and take effect January 1, 2018. Although it was uncertain whether the federal government would acknowledge the results, over 80 percent of New Yorkers voted in the referendum and 75% voted in favour of independence.

Bogged down fighting for oil in Iraq, Iran, Saudi Arabia and Kazakhstan the government in Washington decided it couldn’t fight a war against Americans as well and allowed New York to separate. The city of New York would now have its citizens income taxes and businesses corporate taxes with which to operate the city. Surrounding areas in Pennsylvania, New Jersey quickly voted to join New York. By 2020 the New York metro area had morphed into an independent country. Los Angeles and San Francisco soon followed, first amalgamating the many city-suburbs into one super-metro region, and then enacting independence in 2022 and 2023 respectively.

Able to control their own immigration policies, these cities immediately invited anyone to come, having lost thousands and even millions of people over the previous decade. They also had no reason to restrict trade as they needed cheaper steel, concrete, and other products to rebuild and move forward. Thousands decided to return, lured by cheap real estate and a chance to come home to the cities in which they grew up. Establishing universal health care coverage was also a lure in convincing many aging generation x’ers and millennials to relocate to their former home towns, or a new one.
Why did Canadian cities do so well initially, and then collapse much later? In Canada in the early 21st century a series of minority parliaments meant that governments had to play to cities’ needs in order to gain the urban vote. Numerous effective band-aid solutions occurred, typically in the form of cash infusions to major cities. Major metro areas improved their transit, air quality, and lifestyle amenities such as parks, recreation and entertainment facilities. The federal early childhood education strategy emerged that offered money but delegated management to metro areas. Public education received further funding, and top global test scores that Canadian students were achieving helped to draw people from around the world who wanted to give their children opportunities. This kept Canada together through 2025 while the US split into city-states.

However once the massive (re-)migration south began in 2020, Canadian cities struggled to compete for talented workers , and the corporations that hired them. Begging for federal dollars and grants to build and maintain infrastructure was highly inefficient in comparison to city-states like San Francisco and New York that could budget and plan based on income and sales taxes.

In 2023 when the former US-cities proposed a new federation agreement, modeled after the European Union and Euro currency system, residents in many Canadian cities saw this as a solution. The Greater Toronto Area, which by this time included much of the Golden Horseshoe–followed the New York model and succeeded from the Canadian federation in 2024, joining the Federation the same year. By 2027 the remaining major metro areas of Canada had followed suit and joined the Federation.

Residents of satellite cities and hinterlands gradually voted to join one city-state or another.

What was remarkable in this period was how fast North American cities were transformed into sustainable entities when unshackled from a slow, conflict ridden federal government.

The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.

- Alexis de Tocqueville in 1840

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