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Skids Row 

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To the editors:

Ann R. Markusen offers an expose-style new version of the often-told tale of Chicago's economic decline ["City on the Skids," November 24]. Much of what she has to say about the city's economic ills is cogent and trenchant. But Markusen's objectivity is tempered by exaggerations and devil-theory explanations, culminating in a prescription of the same kind of idealistic neighborhood mercantilism she espoused as an economic planner in the Harold Washington administration.

First, the exaggerations:

Markusen says Chicago was outperforming the rest of the nation until the mid-1970s, when its rate of job growth fell behind the nation's.

Actually, local growth started falling behind the nation's job growth rate after 1929.

Markusen says Chicago's economy did not recover from the 1983 recession, continuing to "inch downward" since then.

True enough, local recovery faltered through the first term of the Washington administration. But over the last two years, Chicago was fourth highest in job growth among the nation's 15 largest urban areas, and third highest in job recovery since 1983 (16%).

One can but marvel at Markusen's ability to write such a comprehensive essay on Chicago's job decline without once citing a number of jobs gained or lost, or a single reference to previous work done on this topic. Better yet, she is able to complain that, in the middle 1980s, while Chicago's economy "went through the floor," it was "hard to find how bad things really were from the city's newspapers," and that the local economy is "enormously understudied."

Actually:

The Chicago Tribune's hard-hitting series on Chicago: "City on the Brink" was reprinted in book form in 1983.

John McDonald's exhaustive monograph on Employment in Metropolitan Chicago came out in 1984.

The Commercial Club released the first of its biennial reports Jobs for Metropolitan Chicago in December 1984, reported in front-page stories in the Sun-Times and Tribune and favorable editorials with headlines and phrases such as: "City in Trouble," "Business Out to Reverse Economic Slide," "Don't expect quick fixes: it may take a decade or two."

Along with a score of detailed background reports, the Commercial Club began in 1985 publishing its monthly Chicago Enterprise.

Among several ongoing local economic studies by academics after 1984, I shall mention only my own annual "Chicago's Economic Report Card," first released on April 2, 1985 and reported in front-page stories in the Sun-Times and Tribune; namely, M.W. Newman, "Study finds city lags in recovery from the recession," and Stanley Ziemba, "Area lagging in job growth, study finds."

Markusen also complains that business writers "prefer to herald every tiny upswing in any indicator, while ignoring the more prevalent downers." She fails to point out that her colleagues in City Hall were the major source of such upswing indicators at this time.

Thus, The Washington Administration at Mid-Term proclaimed, in 1985, that "we have presided over a Chicago economic revival which saw 64,000 more people employed, industrial investment more than doubled, and downtown office space booming in 1984."

When I questioned the validity of the above indicators, the city's economic planners protested to a Tribune reporter in October 1985 that "he works against all our efforts." "I know he says Chicago is still losing jobs, but in the end it's his study against our study, and the numbers are so conflicting."

The pith of Markusen's essay is her analysis of five myths or "misconceptions" about Chicago's economy. She is essentially correct in denying that Chicago persists as an industrial giant or is successfully shifting from an industrial to a service economy. But exogenous structural forces such as the global economy, national economic policies and brain drain, rather than the lack of local will and leadership, are accountable for Chicago's lackluster showing in high-tech and defense industries.

As an example, there is no way that the massive Ford plant on Chicago's southwest side could have continued to operate after the Korean War. (Incidentally, it was converted into the shopping mall Ford City, not a suburban residential complex.)

Markusen's dispatch of the five myths leads, without warning or logic, into a prescription of industrial revitalization based on what she calls the "Tokyo model," in which Chicago could reclaim its place as preeminent steelmaker to the nation.

As a specialist in the steel industry, Markusen ought to know that Japan replaced the U.S. a decade ago as the world's largest steelmaker largely because its labor cost per ton of steel is less than half ours, and that South Korea is now the fastest growing steelmaker because its labor cost is one-fifth ours. She also ought to know that Chicago, with its strong labor unions and high industrial wages, is not ready for Japanese labor-management methods and wages.

Markusen rejects two other scenarios for Chicago's economic future--development of regional service activities, which she calls the "Cleveland model," and "a la Daley;" and the build-up of Chicago's international financial services, as suggested by the Commercial Club, which she calls the "Manhattan model."

In fact, Cleveland is 11th among the 15 largest urban areas with respect to indicators of regional dominance. The five fastest job growing areas score 1st, 4th, 5th, 6th and 7th in regional dominance, not a bad pairing.

Markusen's concern for the retention of Chicago's industrial jobs and the retraining of workers displaced by factory closings is commendable. Pilot projects in which storefront community development groups offer technical aid to small firms are deserving of encouragement. But these efforts can coexist with a free-market economy without recourse to "deep cultural transformation" of the neighborhood mercantilist model fostered by Harold Washington's economic planners. Even the U.S. is not rich enough to afford to subsidize local inefficient industry simply delaying the inevitable shift in the structure of production.

In any case, job flight to the suburbs--not discussed by Markusen--is far and away more important than job flight to the two coasts as a cause of factory closings in the city.

Pierre deVise

Chicago

Ann Markusen replies:

It is amusing that deVise should incorrectly identify me as a neighborhood mercantilist. I spent much of the last five years arguing that public resources might have to be heavily concentrated in industrial areas in order to ensure better job opportunities for all Chicagoans. (I was never an economic planner in the Washington administration, but did the Steel Task Force research with my own consulting firm on contract with the city.)

Numbers? Try these. From 1979 to 1983, the six-county Chicago metropolitan area lost 164,000 manufacturing jobs, or 26 percent of all such jobs. By 1988, after five years of "recovery," it had gained back only 10,000 of those jobs, a gain of about 1.5 percent.

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