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Equipping America to Thrive in the New Economy President Barack Obama’s chief of staff, Rahm Emanuel, is reported to have said, “A crisis is too good an opportunity to miss.” I suspect he was talking about how the economic and financial crises that ushered in the current recession should be remedied with alterations in national, rather than urban, policies. But what is implied in what Emanuel said applies even more so to urban America, because America cannot retain its position as one of the world’s strongest economies if its metropolitan production centers do not update and strengthen their agglomeration economies. These changes must be done during the same time that the world deals with the destabilization and hardships of the recession that started in late 2007. The world economies that have been reshaping themselves since the advent of globalization will emerge from the school of hardships imposed by the recession into an entirely new world economic order—referred to here as the new economy. Correcting those flaws that pertain to the United States will be necessary for the United States to thrive in the twenty-first century economy. It is particularly and critically important to correct the flaws that limit the productivity and social cohesion of the cities, towns, villages, and counties of the urban regions that are home to most of the country’s economy. Here are some of the already discernable changes to which local, state, and national policies and cultures must adapt to enable the United States to prosper in the emerging global economy: ■ The use of the U.S. dollar as the reserve currency of the world can only be expected to continue if the United States makes significant progress in reducing its negative balance of trade. 170 8 Urban Policies for the New Economy ■ The concept that capital markets can be expected to self-regulate for the public benefit is dying, if not already dead. This reality must be realized in regulations of capital markets that reinstitute the safeguards erected following the Great Depression and add rules to protect against the dangers of new financial instruments and the opacity of electronic records and transactions. ■ American consumers will save more than they have in the past. ■ Americans will no longer believe that housing values will always escalate. As a result, houses will be bought as homes, not as investments. ■ To survive and prosper, American business will have to compete with costeffective products and services developed and marketed in response to consumer tastes, rather than rely on financial engineering. ■ Public awareness of global warming and the market and legal costs associated with environmental regulations will require the use of alternatives to high carbon-releasing fuels, and energy-saving vehicles, equipment, and buildings. ■ In the next twenty years, the population of the United States will increase by about 27 million people. The two largest age brackets in the population will be “Generation Y,” born between 1970 and 1995, and the “Baby Boomers,” born between 1946 and 1964. The high propensity within these generations to seek new housing adjacent to services, entertainment, shopping, and workplaces will create strong demand for housing in mixed-used clusters that facilitates lifestyles that conserve energy. America’s urban places cannot help the United States meet the challenges of the twenty-first-century economy—not with local regulations that prevent the replacement and updating of municipal infrastructure, patterns of development , and structures that were built in response to the demands of the nineteenth and early twentieth centuries. The U.S. economy that emerges from the recession will need the support of enhanced agglomeration economies in the metropolitan areas that provide its workplaces. Without metropolitan regions attuned to the needs of a growing new economy, the nation’s gross domestic product growth will be weak and shallow. The recession and chaos of the credit crunch have left the United States with the advantage of more affordable housing. The haircut given to housing values was bad news to individual homeowners and their lenders. But it is good news to the nation’s future economy and citizens. The metropolitan areas of the United States that lead the country’s economic resurgence will be those that maintain the advantage of more affordable housing. These regions will also facilitate and encourage the replacement of obsolete building with an adequate supply of mixed-use clusters of development. If urban development policies along the lines of the thirteen changes subsequently spelled out in this chapter are put...

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