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A CTA Brown Line train leaving the Madison/Wabash station in the Chicago Loop. (Photo: JeremyA/Wikimedia Commons)

A Second American Century

• February 19, 2014 • 12:10 PM

A CTA Brown Line train leaving the Madison/Wabash station in the Chicago Loop. (Photo: JeremyA/Wikimedia Commons)

The United States will continue to lead the world as it shifts to a Legacy Economy, but only some cities will play a role in that.

If I remember my political geography and world-systems theory from graduate school, then (taking my cue from Peter Taylor) we have witnessed three hegemons. The Dutch ruled the 17th century. The 18th and 19th centuries belonged to the British. Colonialism and imperialism gave way to the Washington Consensus in the last century. Will the new millennium end hegemony and the world-system? Or, will China dominate the 21st century? Both questions assume the decline of the United States. The foundation for a second American century:

As part of his landmark civil rights initiatives, Johnson signed into law the 1965 Hart-Cellar Act, which was then viewed as a minor tweak but had revolutionary consequences. The legislation brought to an end the discrimination in immigration imposed in the 1920s in the form of quotas favouring northern Europeans and excluding Asians and Africans altogether. It decreed that future immigration would be non-discriminatory, and based on skills and family reunions. …

… When the Hart-Cellar Act was debated in Congress, politicians treated it simply as a logical extension of civil rights legislation. They expected little demographic change, with most additional migration coming from Italy, which had a backlog of 250,000 visa applications. Dean Rusk, then secretary of state, estimated 8,000 Indians would enter in the next five years. The number turned out to be 27,859. Arrivals from Europe were soon dwarfed by those from Latin America and Asia. Today the nation has 18m US and foreign-born Asian-Americans, including 4m Chinese-Americans and 3m Indian-Americans.

The act started a demographic revolution that intensified with further liberalisation of immigration laws. Until the 20th century, immigration comprised overwhelmingly North Europeans, along with enslaved Africans. But after Hart-Cellar, non-whites and Hispanics soon began to dominate immigration. The outcome is that the historically dominant white, non-Hispanic majority in the US will become a minority by 2040. This has already happened in California.

Emphasis added. Indeed, the 1965 Hart-Cellar Act changed everything concerning migration. The poorest and least educated (see Great Migration) got stuck. The best educated would move to improve. Countries started complaining about brain drain. Richard Longworth unintentionally hits on the inflection point in a review of the history of two Chicagos (global and parochial):

Two Chicagos spring from the same era, the sunburst of heavy industry that once made Chicago the “City of the Big Shoulders.”

Immigrants came from around the world to work in the city’s mills, factories, and stockyards. So, from about 1910 until 1960, did black Southerners, fleeing the racial oppression and poverty in the South in search of a better life in the North. About 6 million African Americans came north, with hundreds of thousands of them settling in Chicago, because that’s where the jobs were.

Legal residential segregation confined these arrivals to enclaves on the south and west sides of the city. But these ghettos were economically integrated, home not only to factory workers but to teachers, business people, and other middle- and upper class blacks. The workers themselves were poor but not destitute, earning a living wage, living mostly in intact families.

Starting in the 1960s, two things happened. First, the big factories and steel mills that provided most of the jobs for unskilled labour went away — at first to the suburbs or the South, later to Mexico and Asia. Second, legal segregation ended and anyone who could leave the ghetto — the more educated and skilled, mostly — did so.

Everyone else was left behind, without jobs or hope. Today, it’s their descendants — the third or fourth generation by now — who live in these decayed neighbourhoods. Most of these areas carry verdant names — Englewood, North Lawndale, West Garfield Park — but they are killing fields of broken families, drug wars, and 50 per cent unemployment rates.

Hart-Cellar effectively birthed global Chicago and isolated the Great Migration ghettos. African-Americans move to the North for the wrong economy, manufacturing. The first American Century wasn’t about industrial might. Britain owned that distinction. Mighty Pittsburgh started its slide into global irrelevance in 1910. The atom bomb and space race scattered seeds of economic development in the form of government laboratories. Hart-Cellar delivered foreign-born talent to the mix that would give rise to the Innovation Economy. Silicon Valley rules the world.

Silicon Valley is dying. In 1910, Pittsburgh was dying. By my count, the decline of the current hegemonic economy is right on time. Silicon Valley has peaked and it is a long slide before most people notice the downturn or the advent of something new. Something new is the Legacy Economy and it will underwrite the second American Century.

Innovation is spreading to an increasing number of outposts. The next few decades will celebrate one next Silicon “X” after another, a la the Manufacturing Economy and the brash upstart (e.g. Japan) sporting its own hell with the lid off. But demographics won’t support this knowledge sprawl. The world is dying.

In response, every country legislates its own Hart-Cellar. That is, if the politicians can mollify the nativists. “Tolerance,” the enlightened will preach. Not every welcoming place can win the war for talent if too many play Moneyball.

Blue- and white-collar Chicago only comprise 2/3 of the current economic story. Chicagoland also boasts an impressive Legacy Economy. Color Longworth unimpressed:

From Washington University in St. Louis to Case Western in Cleveland, Midwestern cities have long boasted first-rate universities. Many of these universities had their own hospitals and medical centers. Often, both the universities and the hospitals were philanthropic creations by the families and companies that owned the local factories.

The factories are gone now. The schools and hospitals remain. Since they’re all there is, the cities are basing their futures on them. …

… In Cleveland, four of the top five employers are eds or meds, led by the mighty Cleveland Clinic. In St. Louis, Boeing ranks second in employment and Wal-Mart fifth: otherwise, it’s Washington U., two health care systems, Scott Air Force Base, and the local Roman Catholic archdiocese.

Longworth doesn’t discuss Chicago, likely because the metro has successfully cultivated a robust Innovation Economy. Global Chicago is a winner, not caught in the middle like Cleveland or St. Louis. It needn’t cling to a false hope such as eds and meds.

I agree with Longworth that most Rust Belt cities won’t benefit from the Legacy Economy. But some regions (e.g. Cleveland and Pittsburgh) will. The sources for the talent that birthed the Innovation Economy will have their day in the sun and support a second American Century.

As those with college degrees streamed to San Francisco, Boston, and (yes) Chicago, the talent will swim back upstream and return home. If Case Western or Carnegie Mellon aren’t feeding Silicon Valley or Alley, then from whence will the creativity come? A few stellar universities will educate the world. A few health care centers will provide high-end services for export. The United States will be at the center of this world system. Will Chicago be there, too? I’m skeptical that it will. Mayor Rahm Emanuel and the Chicago Council on Global Affairs are doubling down on the wrong economy, yesterday’s.

Jim Russell

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