Seattle, take heed: Rosy times won't last

Seattle, I love you. I love you and I worry about you.

For the past 20 years, I have analyzed and reported on urban economies, both as a newspaper columnist and for the Morrison Institute for Public Policy at Arizona State University.

All along the way, Seattle was my gold standard of excellence for a metropolitan economy. I moved here last year, and the impression at a distance is the reality up close.

Seattle's per-capita income, percentage of college graduates and ability to attract talented workers are the envy of most U.S. cities. More than most of its peers, Seattle is closely tied to world trade and knows it.

While many cities bemoan a loss of civic leadership, Seattle still benefits from (and sometimes carps about) powerful, locally interested stewards, such as Bill Gates and Paul Allen.

Most cities have spent 25 years losing their corporate crown jewels. Seattle has lost major headquarters, too, especially Boeing. Yet it has created new ones or seen local firms grow huge, from Starbucks to Amazon.com.

Yet I can't help sensing a certain smugness, leavened by parochial local debates that land only glancing blows at the big challenges coming for every city in the 21st century.

These challenges go beyond the housing meltdown or any cyclical forces. They can be boiled down to this: The next 30 years won't be a reprise of the past 30.

University of Washington President Mark Emmert warmed to this theme when we discussed the region's future.

"Sometimes when you're feeling most successful is when you should be the most nervous," he said. "There's no reason to believe the next 30 years will be the same as the last 30. There is every reason to believe they will not only be different but perhaps radically different."

Two big forces are only beginning to be reckoned with by U.S. cities: global warming and a new paradigm for resources, whether it involves water scarcity or ever higher energy prices. That leaves the kind of car-dependent, suburbanized America as an increasingly costly and unsustainable venture.

Another force potentially undermines traditional Seattle strengths: attracting talent and competing in the global economy.

With the rise of China and India, especially, the primacy of America's most successful cities is under attack. A global city such as Seattle is more exposed to volatility, including trade wars.

At the same time, the state faces what Emmert calls "shocking" dropout numbers. "We lead the country in science and engineering jobs, but we are one of the states at the bottom in the production of scientists and engineers," he said, warning that "the sons and daughters of Washington will be washing the cars for the people who come here for the best jobs."

Ioanna Morfessis competed against Seattle as the economic- development chief in Phoenix and Baltimore.

Warning signs

Now, as an international consultant, she sees warning signs. For example, an IBM study showed that America has slipped from being the No. 1 destination for corporate capital investment in 2005 to being No. 3 in 2007.

"Seattle has world standing, with tremendous intellectual capital," she said. "The biggest threat is being eclipsed globally. The next Microsoft could come from Bangalore, or China, or Israel. No community in this world can take for granted that its present competitive position will continue into the future. There are too many actors on the world stage."

Indeed, this global competition for two movable assets, talent and capital, has profound yet complex implications. To succeed, Seattle must be rich in amenities, invest in infrastructure, protect its environment, produce and retain the most talented workers, and all the while address housing affordability and retain its egalitarian values.

It's a nearly impossible balancing act.

Urban thinker Richard Florida, who gained prominence with his 2002 book, "The Rise of the Creative Class," has pointed out how "creative class" cities risk big gaps between rich and poor, because an industrial nation's value will come more and more from brain work.

He has a new book coming out in March, "Who's Your City." Without giving away too much, Florida told me that quality cities are more important than ever.

But what about average folks?

"Years ago, Seattle was a high-end blue-collar town," said Joel Kotkin, the author of "The City: A Global History" and a presidential fellow at Chapman University in California. Even until recently, Seattle was relatively affordable and accessible. "Now that's gone. You've got well-educated, highly skilled people. Seattle is looking more like the Bay Area. The hard part of that is that the working and middle classes are being pushed out."

Seattle native Mark Muro sees a shrinking middle class as a "warning sign." Muro is now policy director of the Brookings Institution's metropolitan policy center.

"A once middle-class, quite egalitarian place is suffering with one of the fastest growth's of income inequality," he said. "Seattle has thrown in its lot with the high-gain, high-velocity new economy which tends to exaggerate the premium attached to skills and throw off wide economic disparities and winner-take-all scenarios."

Growing concern

Muro also looked at his hometown and worries about innovation and productivity growth. According to Brookings data, productivity per job has been weak since the 2001 crash. "Are you keeping up with Helsinki, Frankfurt and Barcelona, your real competitors? It's a tough game now."

How that game will be influenced by Seattle's "way" may be another question. It's not just that Portland builds popular light rail while Seattle dithers and argues or that leaders were apparently reluctant to rock the boat at the Port of Seattle.

It's that top-drawer competitors such as Singapore and Ireland are fast, efficient and agile in drawing capital, building infrastructure and embracing the next waves of wealth-creation.

Rising giants China and India are redefining the world economy every day. These players will penalize cities that are slow, complacent or tempted to assume the future will look like the recent past.

"The crazy quilt of government authority here makes it difficult to solve complicated problems," Emmert said, pointing especially to transportation, the environment and land use.

"The danger," he said, "is that we love this place to death but we can't solve problems because we also love our eccentric egalitarian way of doing things."