This paper sets out to analyze and contrast the differentiating factors between Pittsburgh and Detroit that have led from there once similar economic states, to their current state.

Detroit and Pittsburgh now have opposing fates. Detroit has been financially mismanaged and has made many poor planning decisions which have led to the city’s bankruptcy. The main attributes leading to Detroit’s bankruptcy include high rates of unemployment paired with high rates of crime and blight, a substantial amount of debt due to too many public employees, poor financial decisions and taxation and lastly, suburban sprawl. On the contrary, Pittsburgh has developed sustainable economic growth by reinventing their city around technology, health care and education by implementing policies such as the “Ben Franklin Partnership Challenge Grant Program for Technological Innovation” in 1982, focused on technological innovation. Pittsburgh’s success is mostly accredited to diversifying their economy, which they did by opening the city to innovation, enticing successful businesses to relocate to Pittsburgh by giving them tax breaks and subsidies.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Pittsburgh and Detroit both share a similar history, both were cities that heavily relied on single industries which eventually collapsed when deindustrialization took place, leaving their economies in shambles. However, before that both cities had booming economies and were highly desirable locations to live in. During the rise of industrialization both cities supplied a large amount of jobs, offering people stability and the chance to relocate to the city life. Industrialization reached its height in the 1950’s, labeling America as the largest manufacturer in the world, and 28 years later employed over 20 million Americans. At the time, Charles Wilson, the former CEO of General Motors said “What is good for General Motors is good for the country and vice versa.”

 

Nearly a century ago, Detroit was the 4th largest city in America, accumulating a population of nearly 2 million at the peak of the industrial revolution. Perhaps one of the most significant factors leading to Detroit’s economic decline was suburban sprawl. Suburban sprawl is the expansion of population away from centralized urban areas into low-density areas such as suburbs. Suburban Sprawl began in Detroit in the 1960’s during the collapse of their industrial based economy and has continued to this day. Since the beginning of suburban sprawl in the 1960’s, Detroit’s population has now declined to less than 700,000. The declining population has had an immensely negative effect on the city, shrinking their tax base and substantially lowering their tax revenues. According to the Washing Post, Detroit’s property tax collections have declines by 20 percent, and income tax revenues have fallen by a third in the past years alone. These conditions only worsen the city’s chances of recovery, as it gives the city administration an ultimatum of either borrowing more money now and subsequently incurring more debt obligations, or cutting expenditures, ultimately worsening the city’s blight. However, Detroit was not the only rustbelt city plagued by sprawl, beginning in 1970, lasting all the way up until 2006, Pittsburgh’s population declined more than 40 percent due to the decline of the steel industry and birth of foreign competition. Pittsburgh was facing a similar fate as Detroit, with a stagnant economy, and increasing debt, Pittsburgh was placed on fiscal oversight in 2004. The Key difference to Pittsburgh’s eventual success was that while the steel and manufacturing industry began to decline and reach their eventual collapse, the city was able to forge a new economic identity around technology and health care. According to the Pittsburgh Courier “The city retained former steelworkers, invested heavily in higher education and launched a controversial campaign to redevelop more than 1,000 acres of industrial Brownfields, replacing decaying lots with luxury homes, office and retail building, and 27 miles of riverfront parks.” By planning for the future, Pittsburgh was able to mitigate their long-lasting sprawl and revive their economy by fueling new industries.

 

Pittsburgh has become a symbol of hope for America’s post-manufacturing economy. The city’s transformation describes what economists like to refer to as creative destruction. Coined by the Austrian economist Joseph Schumpeter, he refers to creative destruction as “the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” This is evidently seen through Pittsburgh’s economic collapse and latter revitalization. During the 1970’s, the American steel industry began to plummet due to foreign competition that was able to essentially undercut local labor costs. In the following years to come, the largest quarterly loss ever recorded in the corporate history of America was realized; a near $600-million-dollar loss. Pittsburgh’s now nearly non-existent steel industry, at the time, created detrimental levels of unemployment, accounting for approximately 50% of lost jobs. Pittsburgh was facing an economic and urban crisis, industrial factories were run-down and blighted, the population was declining and Pittsburgh was the most polluted city in America. The first glimmer of hope for Pittsburgh was seen in 1993, when mayor Tom Murphy was elected to office. Murphy was responsible for the redevelopment of over 1000 acres of blighted land, supervised the development of 27 miles of riverfront greenspace and parks, and partnered with the private sector to influence five billion dollars in partnership between the private and public sector. Amongst other things that helped grow the economy was the “Ben Franklin Partnership Challenge Grant Program for Technological Innovation.” Founded in 1982 by the Pennsylvanian governor, Dick Thornburgh, the program sought to establish new development and economic growth by instituting technology centers to encourage new research efforts, work training and start-up companies. These technology centers were first implemented in 1985 and have since partnered with many universities throughout Pittsburgh, helping fund research and innovation. Despite these efforts true growth was not seen until 2010, when according to Brooking Institutions, worker productivity shot up ten percent, average annual wages increased nine percent and the overall standard of living in Pittsburgh rose thirteen percent.