Latest / Art of the Question / Why Are People Leaving Big Cities? - Prof. Steven Pedigo - #66

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Why Are People Leaving Big Cities? - Prof. Steven Pedigo - #66 · Art of the Question

• Julius Moorman: We we are rolling. So yeah, Steven, thank you so much for for coming on the show. Today we're going to be talking about why people are leaving big cities. I think that many people are moving out, like cities like New York and Los Angeles are are losing many people to smaller cities. So yeah, I would love to understand why that is and and what cities can presumably do to kind of stop people from moving out. And yeah, what other cities are doing to attract those people moving. But before we get into all of that, I was curious to understand how did you get into urbanism and what do you find so interesting about it? Yeah, well, first of all, thanks for having me. It's great to be with you. you know, my passion for cities, I mean, started, I don't know, twenty five years ago. I, you know, my story is I went to I went to the University of Illinois thinking I'd be a PhD student, in speech and rhetoric. And what I realized ironically was I didn't want to be I realized I didn't want to be a college professor. I actually wanted to go and do policy work. Shit on me now looking at what I'm doing now, right? But that's we'll talk about that in second. so I actually left the PhD program at at at the University of Illinois and went to policy school. ended up at Carnegie Mellon and there were you know, and I went into policy school thinking I would actually probably do federal policy. That was where my inter I thought that's where my interests were. and I met a guy by the name of Richard Florida. You probably heard his name before. He wrote The Rise of the Creative Class. Rich I took one class from Richard and then from there, just my passion for cities really grew. He and I built a relationship, ended up joining his research team. He and I ended up doing consulting work for all over the world for about fifteen years together. and it you know, kind of my career. So I think, you know, I always think back to to Rich Florida, who's a dear friend and a dear mentor of mine now, twenty five years later. And I think he's he's part of the reason I got really interested in cities. I think, you know, the idea that you know, I think one of the things that really struck me is I, you I grew up in pretty r in pr in rural East Texas, and small town, less than about about three thousand people. And and I was and I was a gay kid, right? And it was one of those things that was really interesting to me was is that you could go to cities and just kind of be yourself, right? I think about this. Twenty five years ago, we're not thinking about where gay rights were as are is today. and I think that's really kind of what stuck with me and Richard's idea of tolerance and tolerance and diversity and all of that. And then, you know, you meet Gary Gates, who wrote about the correlation and the relationship between tolerance and diversity in cities and and the growth of innovation and technology, man. And that's just stuff was like magic in my brain. And it was like juice for and that's where I got that's where I really got interested and excited about this work. Yeah, I can imagine. And and do you think that more acceptance happens in cities because they are by their nature a more diverse area? So you get to see a lot more different people, or do you think people that have a preference for diversity move to cities and that's why they are more accepting, or it's like a bit a bit a little bit above. Yeah, you're asking the chicken and the egg question, right? Which is the what what happens, right? I think I mean, look, I think Jane Jacobs, when she wrote the The Death and Life of Great American Cities, it said one of the great things about cities is they're kind of these great mixing pots of different people, right? cultures, backgrounds. and that's always been the attraction to to to making, you know, urban urban environments and city environments, right? And so And and frankly, that's been the secret. That's, you know, we're gonna talk about the rise of second second tier and third tier cities in a bit. And that's really, one could argue was has been kind of the the secret sauce for a lot of those cities. That's one of the reasons that Austin, Texas, which I know we're gonna talk about in a bit, not to spoil to get spoiler. But that's one of the successes of Austin, right? Was that diversity and lots of mixing of different people. So I think it's a bit of both. but I mean, you know, what's always I think awesome about about d urban communities is that you do see you know, different Pla people connecting together, you see folks being able to find their connection in in places. And and one of the things that we know about economic development or urban development is one of the key drivers in economic development is is social capitalism, right? And how we create community and build community. and that's a really important part of that. And that continues, I think, to be a part of what drives cities today, frankly. Yeah, and for me, I grew up in a pretty big city, Amsterdam. I still live in Amsterdam. And have you have you ev have have you ever been there? Yeah, great city. I was one I'm obviously been one of those tourists that you guys hate, but yeah, I've been to that city. Yeah, it was great. I I wanna get into that as well. I I don't understand why people hate tourists that much. that live in Amsterdam. Of course there's quite a lot of but it's like, yeah, if you don't wanna live in a city that has tours. I think it's a privilege that so many people are interested in my city and that they are willing to travel the entire world to to come and see it. But yeah, but I think for me it was a lot of fun. I remember growing up and when I got to a certain age, I I think around twelve, I was able to kind of explore the city on my own. So my parents did give me these boundaries. They you're not allowed to go in d d this and this neighborhood. which of course then we did but it was kind of like an adventure and and it was just fun to walk through the city and I think it really matured me at a at quite a young age and I re remember when I went to to university I studied in Leiden which is like a a small student town within the Netherlands But it's like a village compared to Amsterdam. And I really did enjoy being around so many people who saw Leiden as this big city they were moving to because they grew up in in the more quiet areas, in the more farm areas. And it was very interesting to me to have all these different perspectives. But one thing that I did note is that everyone who came from the bigger cities like The Hague, Amsterdam, Rotterdam, they seem to be quite mature because they had experienced a lot of things that you wouldn't usually experience in little towns. And of course we didn't experience some of the things that they saw and they had. But yeah, to me that was a a really rich feeling growing up and and and feeling much more mature at a at a younger age. Yeah, and I I look I think same for me. I think the first time I went so my my experience was different, right? I grew up in rural Texas. my first experience in a city was when I went to you know, Austin, Texas in nineteen ninety seven would if you go think back you know, tw almost thirty years thirty years ago, you know, Austin was a very sleepy town. It wasn't a lo it wasn't the city of what is today. I mean it's it's much larger today. And we'll talk about the the trajectory of that city. But, you know, for me, Austin was the first experience where you could actually kind of see have that a bit opportunity to be a bit more you know, exp have more opportunity for exploration, thinking about who you are as an individual, all those types of things, right? And so those benefits that cities create is something that really struck with me for sure. Yeah. And it is my understanding that people are in fact leaving bigger cities like New York, like like Los Angeles, for example, and that second tier cities are on the rise. Is that true? Do we have some some numbers to back that up? And I don't expect you to have all the numbers like ready right now, but is that actually being reflected in the numbers or just something that I see happening through social media, for example? Well, I think it's a you know, so so you know, Julas, that's a great question. It's it's a it's a bit of a mix, right? So You know, clearly pandemic 2000 and n you know, nineteen to where we were in the pandemic, what we saw across I think across all the co not just in the US and in North America and Canada, we saw this in Europe as well, which was that you did see an exit of s of large, large cities, right? And everybody kind of wrote about the death of New York and the particularly the death of San Francisco and Los Angeles. And I think, you know, a lot of us had studied cities for a long time, really kind of thought that that would be kind of overplayed, right? I mean, look, you can go back and study all of previous kind of pandemics, right, that have happened in the health crises over the course of urban history. And really what you find over time is actually large cities, yes, they can track, but they do roar back a lot a lot faster, right? They're much more, much more resilient. I mean, one of the things that makes New York City, New York City is that it's an extremely resilient place. London the same, right? These are places that have been resilient. And a lot of the economic research would show that those cities have have have become much stronger. so so, you know, I think the death of large large cities, and by the way, I'm gonna talk in American context. So, you know, the death of of of large American cities, I think, was a bit overblown, for instance. The however that is is not to say that the growth of small American cities has not happened. That has happened, right? I mean, we have seen smaller American cities. Now, I'm not talking, you know, small No nowhere cities. I'm talking about cities that were already on the trajectory. So let's talk about those. Like think Austin, Texas, right? Think about Denver, Colorado. Think about Nashville, for instance. I th you know, I think about Miami and other places. Now, those are cities that are no, they're not extremely low. And those are still pr pretty good sized cities, right? I mean, one of the things that makes America so different, you know, is that we've got we've got 52 cities over a million 52 regions over a million residents, right? That's a that's a really unique attribute for who we are. So while we've got a handful of super cities, we've also got a lot of these sort of in sort of mar minor and major metros as well. And I think the wonder that I would say is that a lot of these cities that were able to do and create those ecosystems that were similar to larger cities, right? Which is to say innovative eco, you know, innovation. Focused on innovation, focused on quality of place, diversity, which we just talked about earlier, have been pretty successful, right? They created a culture because what they start to do is kind of create these mini ecosystems, right? That you start to get in larger urban environments. So you do see the rise of, you know, the places that I just rattled off before, right? and Austin being a a really great prime example of that. You know, I think one of the other accelerators for that, frankly, has just been the cost of living. Right. So America you know, generally speaking, cost of living is pretty expensive in the US, just like in other places, right, right now. And so, you know, I think when you are a young graduate, maybe an entrepreneur, you're looking for while you know, you're looking for it's a trade-off, right? This is what I always talk about in my urban economic development class, right? You know, the clustering effect is a trade-off, right? So why do we know that entrepreneurs and innovators go to Silicon Valley typically? Well, because there's a conglomeration effect of having access to you know, investors, the best talent in the world, mentorship, that social capitalism that we talked about, right? on the flip side of that, what you see is on you know, for smaller and mid-tier cities, you offer a bit of a cost advantage, right? And so you have to kind of weigh your benefits. And the secret sauce for a lot of these places, right, which has been is that you try to balance the both you try to balance both. So the rise of some of these second-tier cities has been that they have been able to create environments that are a little bit much more affordable than LA or San Francisco or New York, et cetera. however, they have also kind of recreated those kind of ecosystems, right? So they kind of hit that sweet spot. Now, there's all the however's and caveats to that, right? Which are one, Austin, which we'll talk about the story a little bit deeper here, you know, Austin kind of has its moment. And its moment is it's, you know, everyone thinks about its moment being recent, right? in the pandemic, but the story of Austin, Texas is much, much, much more longer than that. And so we should, we should talk about that. Yeah. but Austin, you know, Austin starts to experience the same kind of cost advantage cost disadvantages that other places start to experience, right? So L, you know, it becomes really affordable, unaffordable to live there. We see declining populations in the city because because residents can't afford to live there. So we see residents living outside of the city. So, you know, Austin also gets the same, you know, it is a superstar city that has some of the same externalities that large cities like LA is having to deal with. And and and credit to some of the policymakers there, Mayor Watson and others, is I think they've ad they they have have really identified that and they've been able to you know, start to address some of those externalities in a way that That is important, you know, building more housing, thinking about the development of that and we'll th what look that's what that looks like. Because they don't, you know, I think they don't want to lose the advantage that they've started to create. Yeah, and I think the difference in pricing regarding homes is so much bigger in the US than it is in the Netherlands, for example, because don't get me wrong, Amsterdam is by far the most expensive city to live in. I think what is currently the price like 10,000 euros per square meters if you want to buy a home in Amsterdam, which is just ridiculous when you think about it. but when you go outside of the city, it's not like it's I mean, there are some places where it's like r a much, much lower. But I remember scrolling through Instagram the other day and I for some reason got served videos of this a Texan realtor that was selling homes outside of the city. I don't know, it it was probably a smaller town, but you could literally buy a mansion, like MTV Crip style mansion for for under a million dollars. I I think it was like six hundred thousand US. and for that price you can get like a pretty small apartment in in Amsterdam and presumably also within the city. So I feel like the price difference what you your your money really goes a lot further if you prefer to live big. You shouldn't be living in the city. Yeah. I mean, look, it it's all about, I mean, one of the things that we always talk about in urban development is that everyone, every individual, every every company, they all we all have choices that we make, right? And so you figure out what is the right choice for you and you and you try to make it work, right? Which is You know, do you want to live in a a place that, you know, creates economic has the economic advantages for you depending on what your career market looks like, that's you know considered to be a thick, thick labor market. Is cost one of those things that you really are concerned about? So maybe you you're thinking about places as it relates to cost and the advantages of what that looks like. Or maybe it's culture, right? Or politics or things of that, right? And and so you're making location decisions because of that. I think one of the things that we know. So yes, I totally agree with you there, right? We all make those personal decisions. I mean, we are, you know, your questions your questions about, you know, s the growth of second-tier cities and where people are moving comes at a kind of a really interesting time because, you know, pre you know, middle of pandemic, kind of post-pandemic, you know, Americans, Europeans were pr pretty darn mobile, right? Because what we learned is that, we can do remote work. we can live wherever we want to live, the right the death of distance, you know, the rise of technology, all those types of things come into play. And, you know, all of that kind of accelerates really, really fast. and we sort of see that and we see the implications of that. So you see cities seeing vacancy rates in their urban, their urban districts being really high. You see you know, you see the rise of the rest of the second class cities. the death of larger cities, supposedly, that we keep hearing about. But then, you know, speed up to where we are today. And then you see f inflation across the world, you see costs rising. and then, and then because of that, what happens is is we start to build a bit of a stuck labor market, right? And so right now, generally speaking, Americans aren't very, are not very, are not very mobile, right? They're just not. And and so they're they're stuck, right? I mean they're so they're not moving. Some of them are actually be you know, some of them because of housing costs, maybe maybe they owned their house or they bought their house at the height of the market, and they can't afford to you know, and a lot of w a lot of American mo migration, frankly, because we have have the kind of obsession with the American housing movement and the American real estate dream and all that jazz, that means that people are are just not are are just not moving as much right now. And so that with the calls back to the office, you see other employers saying that you need to be back in the office, that's kind of put an interesting friction about where we kind of are in migration, right? Right, as of now. And so you know, and and mobility, by the way, tends to be a privilege, I mean, of the upper class, right? Let's not forget that. not to forget that, right? It means that it is it's expensive. You tend to be highly more educated. All of those things that we know kind of that come with that come with that. So, you know, it's it it it's an interesting time right now and frankly, a really piss-board job market for for recent graduates, right? So it's it's one of those times where normally you see a lot of migration moving around to to, you know, but now we're it it's almost like time is kind of frozen right now into what happened with what's happening in the across the country with cost of living across the world with finan the financial markets, cost of living, et cetera. Yeah. And especially like you like you say, at least in in Europe, but I assume it's the the same in the the US, that a lot of people who just graduated find it very difficult to to get a job because a lot of the things if we look at law firms specifically, I have a background in law. I used to be be a tax lawyer and you see all these companies that Basically, the work you'd be doing when you just start working is exactly the type of work that AI is very capable of doing. You still need those more senior people to sign off on it and to kind of see what the the the more junior person delivered. But the the initial work, the research, the initial drafts, that that was all done by by analysts. And now that's something that AI is very capable to do. And of course it needs some adjusting and it needs some perfecting, but that's usually done by people higher up the ladder anyway. So you see a lot of companies that basically stopped hiring or just hire a lot less people. So I think that also makes sense. Which is stuck the labor market, right? Which is and look, my own firm, my own advising firm is a great example of that, right? Normally, you know, I look at the size of our team right now and and the number of com number of cities that we're working with in our portfolio. You know, four or five years ago, I probably would have had three or four more analysts on our team, frankly, to support the research work, right? And now because we've, you know, we've adapted to technology, we utilize those technology, technology that you're describing in our firm to to assist it research and help the help some of the data collection processes. We have also slimmed down, we have skinny our own firm, right? And so I'm just a small, small startup, right? And you can imagine what is happening across the c across the world when you start to magnify that again. that puts pressures on the market about where we start to see what the labor market looks like, right? And where we are in the labor market. Yeah. It's it's it's an interesting time for sure. let's talk about Austin specifically. I'm I'm I'm curious to hear the story there. And it's one of the reasons why I wanted to do this episode. Like I have never been to Austin, but I've been fascinated by the city because I've heard so many good stories about it and then you know how it works. Once you start seeing one video, you click on one video and then all of you sudden all you see is is Austin. So I have a trip. I haven't booked my tickets yet, but I have a trip planned there next year. One of the things that is really appealing yeah, one of the things that is so appealing to me is it's the the cultural sector. They they they have a a lot of comedy now. there's a lot of music happening in Austin. And it also feels like a very mobile city. It some people describe it as kind of European in the sense that you don't necessarily Ne need a car per se to go everywhere. There's some beautiful nature around there as well to to go swimming. But you've you've been there for a long time. You've I've you've moved now, but you've seen the the city change as well. why did Austin get so popular and wh where did it start it and and what did it look like when you moved there first? Yeah, I mean, so so so thanks for that. I'm I'm wearing my Texas shirt today, by the way. you know, so the story of Austin, right? I mean, Austin's story really is a is a story of decades in the making, right? I mean, it really is. I mean, you have to go back, you know, nineteen, you know, or 1995, 1996, 1997, actually even before I was an undergraduate there, right? and you know, its story is Frankly, you know, I think its story is quintessential rise of the creative class, Richard Florida from start to finish. And so, you know, and and his work has been criticized, obviously from you know, some of the externalities it creates. And I think Austin's kind of the poster child for that, which is what, you know, Florida. Let's let's just step back and let me let me let me frame this up as as a as a professor for a second, right? Please. So Florida basically in early kind of 2000, basically in the rise of the creative class says, Look. You know, to be a really innovative to be a really innovative creative city, you gotta have kind of three things that matter, right? He makes an argument that one, you gotta create in you've gotta kind of create an innovation culture and you've gotta have an anchor institution to do that. Anchor institution meaning kind of this these universities or large scale research institutions to do that. And for for the for the univers for t for Austin, you know, that's the University of Texas at Austin, you know, fifty thousand students, one tier one research institution. It's one of the best public institutions in the country, strong science and technology. So it's not just a great public institutional liberal arts, but you know, think think technology in some of the best engineering, some of the best computer science schools in the country. and then you've also got to have, you know, open, tolerant community. Austin was a root was a real kind of weird place, right? The place where hippies went, it was a music culture, it was kind of art and music scene. It was had great cost advantage, right? And so it was weird, you know, keep Austin weird was really keep was weird, right? It was just a kind of a interesting, kind of unique place to interesting place to live. And then, you know, it had it had great it was attractive to people, right? It had the university. So it had all it by definition, it already had a magnet of really smart people, professors. entrepreneurs, students that were going there. So, you know, it had kind of all of the all of the assets. And then and then you had people like Kirk Watson, who was mayor early mayor at the time, who's now back as mayor, by the way, said, you know, thinks that buys into Florida's theory, which Florida says to be a really cool place, you've got to have quality of place. You've got to really invest in culture. You got to make it a really great place that people want to to live. So You know, its story is a decade in the making. You have UT, it then attracts a a big first investment with IBM. You know, Samsung is there, and Austin becomes not a software application town. It basically lays the found. I it's kind of a Silicon Valley story in the sense, right? It lays a foundation around chips. And And then it gets the big win where Michael Dale obviously creates and founds Dell and Dell there, you know, that is the story. So that ecosystem is there. And then you match that with the university and having a real active university that understood what technology transfer was. And then, you know, smart policymakers as well as arts and culture folks who understood what it was like to build culture. So it was almost like that secret sauce. It all really kind of came together and it creates this. This place where it's pretty innovative place to live, right? And you see the rise, you see Austin take off. So Austin takes off, you know, and it starts to grow. You see South by Southwest happen. You see ACL Music Festival. And so, you know, my argument for Austin is that the Austin story isn't something that's really new. It's just the fact that the pandemic, because of everything we talked about at the beginning of the pan the the the this this discussion. It accelerates, right? It's a pretty cheap place to live. at the end of the day, you know, Texas had really interesting COVID policies that California did not have, right? Where you know, we weren't as full fully in lockdown as some places. And you can debate that good or bad, but it was the truth, right? We were a bulk blueberry in a bull in a and a red state. So there was that that that open c that open around the health and health dynamics played out. And so Austin really benefits from that. And The buying power and purchasing power of people from New York and LA and San Francisco and other places just comes and it really accelerates the growth of Austin, Texas. and I think so so you see that. And then it's also this other mixing and matching, which was that Austin just, you know, a lot of times as I tell cities, the portfolio of of your of your industry clusters. Now, this is kind of getting geeky in terms of urban development, really matter, right? Austin just had a really smart mix of of of technology clusters that were important at the time. Does that make sense? So what I mean by that is you saw investments in life sciences there, right? They they create a a teaching system, a a university system that has starts to commercialize life science research. we can't talk we cannot talk about Austin, Texas and not talk about The capital factory and what John Josh Baer built there, who who recently passed away, unfortunately. But the that they create a really innovation, really interesting accelerator there that creates the same kind of culture that you see at a in Silicon Valley, but at a lower cost place. And the city starts to build out its own investor portfolio, right? and then, you know, the other thing I will say is that. You know, Austin gets lucky and wins a few things, right? So it gets the Army Futures Command. And so you see technology investing in and and defense in technology and AI gets there and connected there. So it's kind of this perfect storm almost that sets up this kind of really interesting growth in other, right? Now, so it all looks and sounds like road, you know, blueberry, you know, rainbows and blue bonnets. Now, there's externality. So what I always tell my students, right, is that. And any growth, there's externalities to development and externalities to growth, right? And so let's talk about that because that's really important for folks to understand in terms of the Austin story, which is that now there are trade-offs to that, right? And that is some argues that the Austin was starting to lose its soul. So music's music venues start to close. it becomes expensive. We see real gentrification in our core where Black and brown residents are being pushed out outside of the city, right? I think we are the only growing principal city that starts to lose residents of color, for instance, right? housing costs become really extravagant because then what you have is, you know, you've got a city that's growing really fast, but not developing enough real estate, right? Because of an old land use code and frankly, a a city government that is just asinine in what it turns to be in terms of land use planning. So you you, you know, it's sl supply and demand. So you've got high, high demand, people coming in from California and New York, people like me who moved back. And we we what do we do? We we balloon prices, right? And so then what you get, you know, 2000 and two, two thousand and three is you get a city that becomes starts to face some of the same challenges that all of the other superstar cities expect. Loss of diversity, loss of loss of culture, some. And moreover, it just becomes extremely exper price. So what you've seen recently is you saw a housing bubble that kind of busted, right? If you look at housing data, we have some of worst housing values in the country now in terms of because it th if you think about it, the market went like a race it went like a rocket and it had nowhere to go but down, right? And so the market's really correcting itself now. So all that is to say, you know, that you know, everyone's kinda p you know, Austin was the darling child of of the pandemic, everything that you're that you that Julius that you talked about. And then if you were opening the papers up last year and the year before, you would have read in the New York Times, the Wall Street Journal, and Washington Post the same death of Austin story that you read about the death of San Francisco in New York. And the reality is is that kind of, but not really true, right? Yes, there is a correction to the market for sure, right? I'm not probably anish not to to understand that. But that is not to say that Austin is not going to Austin is, you know, exactly what what we know, which happens with these creative cities, is that if you don't manage the externalities of growth, you c those externalities come to bite you back in the butt. And that's kind of where Austin was now. I think Austin is starting to is very much starting to address that with a lot of the housing policy it's done in the past. And and you see that now with, you know, business building permits, the housing market correcting, the home initiative, which is now you see density happening back in it in a Texas city, and things that are that are improving. I think my fear for Austin is what what happens with state of Texas policies and what does that mean for for that innovation ecosystem going forward, friend. Right. And how much has it grown? Because it's currently around a million people, I believe. Wha what was it? Well the city is over a million. Yeah. We are a city over a million now. The metropolitan area is about two and a half million, right? So I think the city at one point we were the tenth largest city in America. We lost a few folks. I think we are now the eleventh largest city in America. But it's grown really fast, right? I mean, it's the city is almost you know, it's much larger it's much larger that It you know, like I I know it's it's hard to get caught up in in terms of city city boundaries, right? I think metropolitan areas because labor markets think about that way. But about two and a half million people now, it's in the top fifteen metros across the country. remember before the p you know, think about way before n you know, twenty years ago the transformation of that city is that it was less than a million people, right? So it it it's it's pretty significant. Yeah, and w what can cities do to kind of keep In in business terms you would call it churn, basically, losing losing customers. What can p cities do to prevent churn? I recently read a book, phenomenal book called Godfall. It's a science fiction book about a huge alien that drops inside of this small village. It wasn't a city, it was a village, but because it turned into this tourist attraction within the span of one or two years. they build an entire city around it and part of the book is about the the local people who find it so distressing and don't recognize their own town anymore and some people move out and so some people are too stubborn to leave but it does happen when you you mention there l people are afraid that it's losing the identity of a city. Is it even possible to to grow a city while while keeping the identity and and and keep the the current population happy? It's tough, man. I mean, I think I mean, especially for a city that sees that sees that much transformation so quickly, right? I mean, just blunt to you know, to be to be blunt about that, right? I mean, it is it it is it is it's it's challenging. You have to manage externalities and you have to be on top of that. And frankly, I don't think any American city has done a very good job of this, by the way. Right. I mean, I can't point, you know, everyone says, well, point to a city that's really grown gracefully and been able to manage policy and or or any even any frankly, I can't paint point to any city across the across the world that's done that really in in a way. Like even Canadian cities, right? Which have been, you know, people talk about, you know, Toronto and Vancouver and Montreal as being these great beacons of innovation and culture and all those types of things. But they too have experienced the externalities of growth as well, right? I think you know, one of the things I think that that I would say is that, you know, policymakers The the initiative for the The incentive for policymakers has changed over time. So let's let's like not let's take a step back about that and talk about that, right? Which is what I mean by that is, you know, if you're a policymaker, you're the mayor of a city or city council member, you run an economic development organization. Man, we weren't talking about affordability. I don't know about y'all in in Europe, but like seven years ago, we weren't talking about the affordability challenge in American cities, right? I mean, we kind of were, but not really. I a and and policymakers weren't weren't quote unquote rewarded for that, right? Meaning that they weren't re-elected or they didn't see, you know, public support. They were awarded for, you know, getting the next company wind, getting the next company relocation, thinking about the growth of the economy, but you know, how many jobs were we're creating, what was the investment look like, what types of parks and things were we investing in terms of quality of place. That was that those were The types of things that we were putting on the on on the on the board and holding people accountable for, right? But, you know, the the the narrative around cities has changed. I think the narrative of cities has changed because so small so many cities across the across the world became focused on growth and and frankly followed the playbook and did it pretty damn well. Do you know what I mean? Grandly speaking. And and so they did it pretty well. And then people look around and say, my God, my my city has changed. And or I can't afford to live here or my kids can't afford to live here. And so then there's this this is there is a wake up call that happens, right? And it's a wake up call that now you see, you see people pushing back on policies. You're saying, Well, we don't want, you know, this ex company to be to relocate. We don't want to give incentives to this company. And or what are you doing to help? help me, me, the Stephen, the resident, see myself in the econom in the future of the city, right? And or how do I see my kids in the future of this? People couldn't see themselves in these futures, right? And so the narrative changes. And so now the the narrative grow of grow, grow, grow has now become a narrative of how do we main protect culture? How do we make sure the place can be more affordable? how do we think about affordable housing? And and and and and that's changed. So the policies in cities have changed, priorities in cities have changed. And that's kind of where the moment of where we are today. Think about what you're seeing just in about the pushback in data centers across the across our country, possibly your city, right? That is they are the kryptonite of economic development right now because it they represent everything that has happened to American cities. or American residents, frankly, in the last seven in the last decade of of the growth of their cities, which is this, which is innovative cities grow. There's a set select people that get to participate. You gotta have the skills or the tech the the the the assets to do that. And if you don't, you don't get to play in the party, which means you get pushed out. And so data centers are the same thing, which we're telling American we're telling people all the world, back to our earlier conversation We're going to replace, you know, think of and this is why I can't no, you know, the tech bros across the world just drive me bucking bananas with data centers because, you know, they're all throwing their hands, policymakers too, they're all throwing their hands in their errors and like, look at all these dumb residents who who support don't support our data centers. I have friend that works for Amazon and she's on their data center team and she keeps mentioning about data centers. And I'm I'm like, you don't get it because you you you're you guys are so stupid, right? Which is that You have a narrative, which is you're s it's the narrative of what happened in the growth of tech of tech cities, which is that you you're telling folks that technology is gonna t replace their jobs and or their kids' jobs, and they can see it. And now we're saying let's take and create take community value or community opportunity and and offer it back to a an an intervention or an investment that could accelerate. All the externalities that we've we've kind of experienced in the growth of cities so far. Or we're not it maybe experiencing that we are seeing happen, right? I mean, and I say that to say I work in all kinds of cities across the across the world. And I work in small cities, rural cities, and the narrative has this narrative of affordability has permeated, right? I mean, I can be in X, you know, X community, which is so small, and I can look around and, you know, you can open up and people are like, it's so damn unaffordable to live here. And reality is on paper, that's not true. But in narrative, perception is reality, right? And so that's in my mind, Julius, that's kind of where we are right now in the growth of innovation cities, which is yes, you see this rise of the rest, which is awesome. Places like Austin and Nashville and other places being really successful. You see, you do see the success of large cities happening again, but It's such a clouded picture right now because of what's happening across the country in terms of, you know, economic conditions and just the idea that I think a lot of residents feel like they've just been left behind. And so that's changed the ballgame a bit. You don't get to be the mayor and do ribbon cuttings anymore. You're the mayor now and you have to think about how you're thinking about affordability. Yeah. And by the way, and that may swing too far as well, right? Which is that I always say this too, is like, Yes, you've got to address the externalities, but you also can't throw the baby out with the bath water as well. You still have to be able to create innovation ecosystems because at the end of the day, we know that is what that has been proven over and over through lots and lots of decades of research that shows that is still the secret sauce for what drives economic development going forward. We'll go back to the conversation in just a second, but first I have an important announcement to make. If you've made it this far, I'm going to assume that you're enjoying the show. If you want to support the show, you can do so by leaving a like or a comment if you're watching on YouTube, or by rating the episode if you're listening on Spotify or Apple Podcasts. However, the single biggest thing you can do to support the show is by sharing it with someone you think might enjoy this episode. This could be a friend, it could be a family member, it could be a colleague. It doesn't really matter. If everyone who's currently listening to this episode would share it with just one person, the show would blow up in no time. Which also means that I could go full time. That means more episodes, it means better episodes, and it also means a happy host. So Please consider sharing the episode. It really helps me a lot. And I thank you. Now let's get back to talking. Yeah, it's a thin line, it seems. And the the data s the data centers is crazy. It's happening here in the in the Netherlands as well. And there's these spokespeople from from these companies saying how it's going to benefit the economy and such and so on. But I think you only need like a couple of people to to have the to turn the lights on and keep it running. But it's not like a factory or something that actually creates a lot of jobs for people, a workplace, is just a place where servers stay and use a bunch of energy and a bunch of water. Yeah. Yes. You know, and I worry also too like I'm gonna show a little bit of my politics here a little bit, which is I wonder you know, I I'm wondering as well, like you we're in the middle of the Trump administration right now, or we're two years into to what feels like an eternity. And for for all of us in the fucking world, right? It's just bananas. you wake up every day and just wondering what's gonna happen, right? but like, you know, what's happening, like and and look. And there's a lot of things to criticize in terms of the Biden administration as well, which happened, right? And we don't we we would need hours to unpack the the politics around the American political system. But America also had a really interesting moment too in time, right? Which was with the Inflation Reduction Act and the CHIPS Act, there was a there was this awesome moment. And there still is, by the way, and I don't want to undersell this because What we've been talking about is a rise of technology hubs, innovation technology hubs in a very traditional sense, right? But there was this major catalytic investment happening in America where we see the rise of industrial innovation back in the US, right? So you see places in Kansas and Arizona and Missouri and Michigan get large federal investment to see the creation of large E B battery facilities or chips manufacturing, et cetera, right? So we see, you know, we see this just large catalytic innovation ecosystem happens. And frankly, it's still playing out. Like, I mean, we could talk about Greater Phoenix forever in terms of like Greater Phoenix at the time, you know, 10 year, five, six years ago was this back office center. Now it's a the hub of kind of this industrial innovation center happening. Detroit's a great example of that as well, right? And because of politics and policy, you know, we've seen a We've seen a digression in the investment that the American federal system has been placing in this innovation, this industrial innovation ecosystem, right? around federal investment. And you see those dollars kind of getting turned off a little bit. Yes, it's happening in AI technology, but like chips and life sciences, because of politics, right? Where we see, you know, that happening because of the Trump administration has just made different decisions on how to how to do research. You see the federal system tacking our research institutions, right? As opposed to opposed to thinking about them as catalytic. You know, and so I also think that in addition to everything we just talked about, we're also in a moment where America's maybe squandering the opportunity to re-industri to re-think about the industrial innovation that was happening across this country, not just in large cities, but in small small communities as well. And That also, you know, that also, because of that, I think you see the the pressure and the pushback of some of the things that are happening, you know, with data centers, et cetera, right? I mean, I and I know I'm rambling a bit, but I I you know, I think one of the things I just want to say is you know, for for your listeners, one of the things that's always made the American system so awesome is our university system. And I'm not saying that as a university professor, but like it is the thing that is, it is, it is a it is a secret sauce, right? Which is that. We have always had some of the bet we have had the we still have the best research university system in the country. But in addition to that, federal government through military spending, through univers federal spending, have always catalytically funded those institutions to be so important and catalytic, right? That those dollars come in and that research gets commercialized and then it goes in those ecosystems that we just described, like Austin, and the magic happens, right? And right now we're at a really interesting place in terms of growth where we're kind of stuck. Right stuck in our innovation pluses. We're stuck in the affordability challenge. And it's kind of an interesting time to be thinking about what's happening across the country in terms of growth. Yeah, that's interesting. I I do feel like especially I mean, the big thing right now is AI, obviously. Of course. And one of the things that I am quite annoyed about. quite often is that we see almost zero innovation coming out of Europe when it comes to AI. I mean we have A ASML, which makes the machines that produce the chips to do AI. So that's a big one. But other than that, we we are often more focused on regulation than we are on actually inspiring people to to start a business. And I think there's I I don't have the exact numbers ready, but I I think when you see the amount of entrepreneurs that American top universities produce com and you compare it to European top universities like Cambridge, for example, Oxford, in the US it's much, much higher. So it's i interesting to to hear from you that you still experience it that way, which I I I believe it's sh certainly true, but it's one of the things that I am very annoyed about with I I guess European culture in in general. There's this sense that and that is why I I mean as hooked up as America is, right? And we are really screwed up. No, but that's that's what I love about it. And this is I think what's also just so so stressful and so discerning about the im immigration policy, right? Which is that Going back to our very part of our conversation about what drives innovation, the mixing and matching of different places, right? And the talent and what that's always been the American secret sauce, right? You come in, you know, rather than disencouraging residents and pushing residents out, man, every every kid that graduates from an American university should get a green card staple to their diploma because it is the opportunity to really leverage that that technology, you know, that that that that that innovative mind. And America has always had that scrappy f that scrappy environment about being a great a place of entrepreneurism, right? And so, you know, we want to make sure that we're able to continue that, right? And continue to have that environment, that social capitalism, that federal policy, that research environment, right? And we're kind of at a, you know, we're kind of in a weird moment right now where yes, and and and we didn't even talk we haven't talked about and people will be pedigos not even talked all anything about AI. And yes, there's a a lot of things happening in the AI space. And America's leading in AI and everything's that you just described. And so I don't want to, you know, I I don't want to underestimate it that and put that that is a part of the con that is part of this. But also there's all of the other scrappiness that comes around with innovation that we're I think I worry that we're losing some of that that discussion and that that focus because we become because we have become so so focused on what's happening in the AI market, the AI the AI race arms race, et cetera. Right. Yeah. And speaking of innovation, I mean innovation when I think about in innovation, I think about Silicon Valley, which is located in inside of California. At the same time, we see a lot of very big American corporations move out of California, moving to Texas, for example, Tesla, SpaceX, Oracle, Chevron, Palantir, which is amazing. and there's so many Of these huge companies moving their headquarters outside of California. Now, obviously, this has something to do with with Texas. So not Texas, the state, but Texas that we have to to pay. are the people like actually following it? Or is it more just almost a political move to show hey, we are moving out outside of your state and we're moving to a state that has less legislation and is has a more free approach to doing business. Because at the same time, I feel like a lot of the actual tech people still live and work inside of Silicon Valley and the surrounding area. Yeah, I think what you see is I think you're seeing satellite offices, right, creating or you're seeing you're still you know, some people have moves, some of those jobs have some of those folks have moves, right? There's no doubt about that. I mean you look at what what Musk has done with all of his ventures, right? They now a lot of that has happened. SpaceX, Tesla, you know, you see those investments happening in in in Texas. So again, I think it's a bit of a mixed bag, right? I look, anyone that talks about the death, I mean California and Silicon Valley is still the secret sauce. Right. It always will be, right? and it's still the brightest minds. It is still where the deepest capital capital markets are. And what drives innovation? People and capital. Right. And so, you know, and so, so, you know, and that's not to undermine the success that Texas has had. It's just to say that, you know, to to talk about the death of California is is to, you know, the death of California is to be a is a little I think, you know, just kind of premature and and not and really kind of somewhat ignorant, right? The sense of the California still will be. It's still one of the most innovative places. I mean, it's still got some of the most innovative universities in the world, right? Talking about talk to that as well. You know, I think one of the things that is the again, what we're seeing in Texas, or what we saw are still seeing in Texas around the narrative, you know, the state's is facing lots of pushback on all these company relocations, right? I mean, the narrative that I hear over and over with the work that we do is that yes, we've got Tesla. Yes, we've got, you know, you know, all the companies that you mentioned, HP and SpaceX and others, to what end and who though? You know, is it benefiting people that are moving to Texas? Is or is it benefiting current residents of Texas, right? This has been a big, big question around SpaceX in the Valley, for instance, right? Where folks have said, you know, what is the narrative around SpaceX? Is it the fact that kids that grew up in the Valley can finally go back and have a job there? Or is it the fact that what you're seeing is Just a bunch of relocations that are happening there to Brownville. People are living there as part time residents and or just for a few years, they make their cash, they get their start and they leave. Like that in itself has a big implications on what this looks like as well. Right. Yeah. And what what I was curious about is you've obviously traveled to to to Europe. I mean, you've been to to London, you mentioned, you've been to to Amsterdam as well. what are some things that European cities could learn from American cities and what are some things that American cities could learn from European cities? Look, I would say one would be I mean, European cities have always been great about investing in quality of place, livability. American cities have been kind of late to the party on that, right? So I think they're look, I think you guys are sometimes innovative leaders. If in policy, right? In a way that maybe it's a little too heavy handed and deb in and top down, frankly. And maybe we could argue that, you know, Americans probab American system probably needs a little bit more policy, right? You we see this playing out right now in the debate of AI, right? Which is, you know, just in the last week, everyone's talking about the scary shit that comes with AI. And we see people saying, let's put the brakes on this or we need some regulation. And you see the com you know, this Congress and the Senate, many of them have no clue about what's going on with this technology and how do they innovate in this space. They don't really have a sense of it. And then you see the Trump administration being like, well, we don't need any of this regulation, right? and so there is a need to have maybe think about some of the lessons learned about pol the some of the policy that you just described. On the flip side of that, look, European cities have always been very top head. You know, one of the things I find about European cities, European cities are slow to lead on the innovation space. But very fast elite on the policy of innovation. Does that make sense? Yeah, it does. Right? So they'll, you know, we'll build out the policy environment and and and and and almost kind of snuff out the little, you know, it's kind of like you build, you know, you build up a really great fire and you s you put a lot of wood and things around the fire and you kind of snuff out the little spark that you have, right? Where American system basically the the other metaphor is a little different. We build this big fucking fire, we put all the kerosene on it, but we don't put any pretty barriers around it. Right. So I think I'm into that and that's a lame analogy, but the analogy is this or the lesson is this is that maybe we need Americans could learn from a some of the policy innovation and think about how to be a little bit more forefront of policy space. Whereas maybe Europeans should could could lean into the idea of how do you catalyze research a little bit more, how do you ensure that you're getting the entrepreneurship and the support that, you know, that make, you know, just America kind of a cool place to to to live in. To think about business and in and and growth of of startups and innovation, frankly. Yeah. And you also advise cities. And I think one of the questions that must come up a lot is how to attract and retain talent. how how do you go about such a campaign or or a strategy? How what does that look like? Yeah, you know, it it's it's so so a talent attraction is, you know. It so much of my work earlier work was a bunch about talent attraction, right? And it I think it goes back to the idea of how do you do all the things that what we talked about in the earlier part of the podcast, which was what Austin did, which was create quality of place, make investments, blah, blah, blah. You got to do liveability, all that stuff. You know, it's Julius, a lot of my work now is is really about helping cities kind of think about how they tap untapped populations and residents that they currently have. Right, which is, you know, how do you how do you leverage you know, a a resident base that that's got some skills or doesn't have skills? How do we create the right type of career pathways or workforce opera development opportunities that that can tie people back to these growing innovation centers so they can see themselves in economic development? Right. I think that is that's where a lot of my work is right now, frankly. which is how do you help current residents connect back to these fast growing ecosystems that we've that we've that with growth because, you know, I I ch I I, you know, I I kinda wake up every day saying that if we're not able to connect, you know, local residents and the residents that are there, you know, to that community, to what in it, why do we do the work that we why we do we do the work that we do? And what happens is is that I think that the that we may actually start to see a lot more pushback on this this growth if we can't make that connection. If people can't see themselves in their communities, then they want to slow things down. Right. Or they want to stop growth, right? This is really important for people to understand. Right. If you can't see yourself or residents can't see themselves, of course they're going to throw their hands in the air. Of course they're going to want to of want to it's self-interest, right? And so, you know, it's incumbent upon us as people that work in cities. You know, I would push even entrepreneurs and business owners as well as policymakers to think about how do we tap into those residents and how do we start to really kind of create. and and an an opportunity for for for folks to see themselves, you know, and be part of the story and part of the party, so to speak. Yeah. And if we look forward, perhaps using Austin as an example, but it it it could be second tier cities in in general as well, do it is my understanding that the explosive growth that we've seen during and after COVID has kind of stagnated a little bit. where where do you see this going? What's the current trend? are are more people, I think big cities are still losing like tho tens of thousands of people every every single year. do you do you think people are going to continue to move to to second tier cities, perhaps even even smaller towns? what what is your prediction there? Well, Julius, I think what it described, what you've described, right, is it this is probably one of the reasons that's so important to do what I just talked about, right? Which is connecting people back to back to making sure residents can see themselves in growth and make sure that people can connect back into this. Like if you're if you if there's no economic opportunity there, people are gonna leave, right? So you gotta make that connection. You know, I don't know. It's an interesting time, right? I mean Seven years ago, 10 years ago, we were talking about the death of the Midwest, right? And what we've now seen in America is the growth of the Midwest because of climate change. That's the other big thing that we haven't talked about, right? The irony of this is that a lot of places that people are moving are some of the most fragile for climate change. I mean, Austin, Texas has over a hundred degree days of a hundred degree weather and and those numbers are growing, right? You know, like it's I was just in Austin this weekend for a football game. My to go see Texas play Ohio State. And, you know, it was 103 degrees at 90 at 7 p.m. in the evening, right? so you know, like so but that's gonna play a role into this, you know. I think, but right now I think, you know, generally speaking, I think we're stuck. I'll come back to that again. I think people aren't moving. I think we've got to see what's happening with the the housing market. I think what happens with cost of living. All of those things are is are we're we're on a treadmill that's kind of moving a lot very much moving a lot slower than it is. Although the treadmill on the on the top of the, you know, for the the cream of the cream of the talent, which is, you know, folks in working the AI innovation space as we talked about earlier, right? Those pa those folks are way, way more mobile, right? And so it's it it's a tale of two cities, it's kind of a tale of two populations, it's a tale of two Americans and Americas. And frankly, that's always been the story. And I would submit to you that it's getting it's it's getting wider. And unless we are thinking about a event, how we are going back and saying, well, how do we tap into those residents that are that are that are disengaged? What are we gonna do about all these young residents that don't have jobs right now? You know, it's a it's a it's a complicated economic development challenge to solve right now. Yeah. Well, I guess I just have to go and see Austin for myself next year when we're go yeah get some barbecue, get some tacos. I can't I can't. Yeah. no, it's a great city. You know, Austin is here's my analogy for Austin. You know, Austin, you know, Austin is a teenage city, right? It's a tweener. it's a city that's still trying to f you know, and it's it in a in a sense, it's a very young city, right? It's still trying to figure out who it is. And the gr and the I mean it's you know, it's still trying to figure out who it is in terms of its identity. It's still trying to figure out its infrastructure. You know, I think about a teenager that, you know, you buy a teenager and and two year, you know, six months later. you he he or she can't fit in the to the blue jeans that you bought, right? Well America's also's kind of the same way, right? It's still it's out it's growing so fast. It's still kind of awkward. but it's still it's it's kind of an awkward place, but it's still an awesome place to visit, you know, and and kind of see to kind of see this really on the ground in a way that that you know, an an experiment that we that we you can't really see on another a lot of other places, frankly. Yeah. I mean I I can't wait. I'll I'll make sure to to book my trip Steven, this was a lot of fun. Thank you so much for for for coming on the show. If people want to stay up with your work, maybe look at your company, what you're doing, what's the best place for them to go? Yeah, sure. Stevenpedago.com, Steven with a V P-E-D-I-G-O.com is my kind of my academic personal site, or our company Civic Soul, Civic Soul, S I C V I C S O L dot com. Perfect. Well, thank you so much, Steven and yeah, let's let's stay in touch. This was great.