Mastering the New Disorder: Cities, Infrastructure and the Post Pandemic Economy

Toronto, Canada The Good Roads Conference · April 11, 2022

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It is an absolute pleasure to be back in Toronto. The rise of this city and Ontario more broadly as a global hub of technology and innovation is one of the success stories of the past 25 years.

I am here to speak about the role of infrastructure, broadly defined, in helping cities and metropolitan areas build an innovative, inclusive and sustainable economy in the midst of a now erratic pandemic and a rising global conflict.

There is no doubt that cities and metros are the right place — the right geography — to have a discussion about how to design and deploy infrastructure (and steward and reshape the economy) during a period which I purposefully call the “New Disorder” rather than the “New Normal.”

Cities now confront a bewildering array of disruptive and destructive dynamics, some unleashed by the pandemic, some long standing in nature, some catalyzed by broader policy decisions, some precipitated by the Russian invasion of Ukraine.

As Jeanna Smialek recently observed in the New York Times:

The pandemic, and now geopolitical upheaval, have taken the economy and shaken it up like a snow globe. The flakes will eventually fall – there will be a new equilibrium – but things may be arranged differently when everything settles.”

Cities and metros have the mix of market relevance, civic agency and network power necessary to navigate through this period of economic disruption and destruction. Because they concentrate and co-locate the key assets that drive prosperity — including the infrastructure to move people, goods, services, ideas and energy — cities and metros are the organizing units of global trade and investment and the engines of national economies. They are the economic gift that keeps on giving. And, as Jeremy Nowak and I described in our 2018 book The New Localism, cities and metros are also the platforms for interdisciplinary problem solving, thus unusually positioned to master the complexity of modern challenges.

In the United States, these distinctive advantages will now be put to the test, given the unprecedented burst of federal investment in a broad array of infrastructure assets. The Infrastructure Investment and Jobs Act, signed by President Biden last November, makes some of the largest investments in transportation, water and digital infrastructure in the country’s history, and includes new investments in climate resiliency and low-emission technology to ensure we can adapt to the impacts of climate change. Combined with the funds made available by the American Rescue Plan, these legacy-forming measures have the potential to remake the American economy and reshape the physical landscape of communities.

With that backdrop, my talk today will cover the following:

First, I will describe the disruptive and destructive dynamics that make up The New Disorder. This is not a period for the faint of heart. Cities are being buffeted by super-sized market, demographic, social, technological and environmental forces that defy conventional solutions and stress legacy institutions. These forces challenge the way we think about our cities and compel a reset in paradigms, policies and practices.

Second, I will tease out the federalist nature of the US Infrastructure Moment. Despite the attention paid to the size and scope of federal infrastructure investment, the success of our national effort will be determined by the effectiveness of state allocation and local design and delivery, with lessons for provinces and cities in Canada and many other countries. The federal government is bankrolling this moment; but all of this is dependent on networked governance in cities and metropolitan areas and the marshalling of private and civic resources. Only at the local level will a myriad of infrastructure investments be pulled together for cumulative rather than disjointed impact and long term rather than short term effect.

Finally, I will spend the bulk of my talk focused on solutions and how cities deliver Infrastructure with a Purpose and shape an economy and society that is innovative, inclusive and sustainable. I spend my time working with cities across the US and beyond with colleagues at the Nowak Lab, Accelerator for America and the Aspen Institute’s Latinos and Society Program. Our work is based on a clear premise: infrastructure is not an end in itself; it is a means to an end.

With the right project choices, intelligent design and effective implementation, infrastructure has the potential to drive outcomes that are aligned to this moment: the regeneration of city districts and corridors, the regionalization of production and supply chains, the greening of the economy, the imperative of inclusive growth and the potential for technological innovation. I will capture some early signals that we are seeing from cities that are using this period to drive infrastructure solutions for broad, transformative effect.

This uncertain period will take years to settle. It has the potential not only to reshuffle the order of successful cities but to redefine what we even mean by success. For cities that are organized, deliberate and purposeful, there is the tantalizing prospect of using infrastructure spending to leapfrog, diversifying and greening their economies to become more economically resilient, socially inclusive and environmentally sustainable.

The New Disorder

So, let me begin. We often hear the phrase the “New Normal” to define periods that follow economic tumult. Yet that phrase inadequately captures the complexity and discontinuities of this moment. The “New Disorder” more aptly describes the large disruptive, if not destructive, dynamics which create the context within which cities function.

The New Disorder is being propelled by a disparate set of precipitating factors and economy bending forces. Here is the view from the US.

The pandemic itself has reset the context for city, regional and national competitiveness by upending global supply chains and triggering a new era of inflationary pressures, inflating the prices of many goods and exacerbating what was already a housing affordability crisis. A run-up in the stock market and real estate prices has increased the volume of private capital seeking investable projects, which, in the U.S., is worsening the affordability crisis as investors buy up swaths of rental housing.

Beyond goods and housing inflation, the pandemic is accelerating remote work, as workers in a vast array of occupations were instructed to work from home. Overnight, tens of millions of people in major cities around the world went from commuting to central business and financial districts and meeting in person to living on Zoom, Microsoft Teams and a dizzying array of communication and collaboration platforms. Downtowns became ghost towns in an instant, triggering negative second order effects on restaurants, service businesses, transit ridership and local tax revenue generation.

Beyond remote work, the pandemic is ushering in a new era of digital commerce and tele-services. The pandemic showed that nearly everything – from cars to electronics and groceries to prescription drugs – can be ordered on line and arrive “just in time.” This phenomenon is altering the use of land and driving a form of “warehouse sprawl,” with macro fulfillment centers located at the periphery of metropolitan areas and micro-fulfillment centers taking over vacant storefronts and even former shopping malls to enable 15-minute delivery systems.

This surge is punishing many small local retailers that have fragile finances and few ties to our mainstream banking system. In New York City, it is claimed that a 3,000 square foot, continuously stocked micro-fulfillment center can either serve or replace 1 square mile of dozens of small storefront bodegas. Unless we act, just in time consumerism could exact a brutal toll on what we love about cities: distinctive neighborhoods that give entrepreneurs the ability to offer multiple choices in goods, services, food and amenities and build wealth for themselves and their community.

The pandemic lastly, relatedly, unveiled the ravages of institutional racism in the US, disproportionately decimating Black- and Brown-businesses and placing low-income Black- and Brown-workers and communities in harm’s way. The racial reckoning that has followed the murder of George Floyd further highlighted the deep racial disparities that continue to define American society.

But the forces affecting cities today are not limited to those unleashed or accelerated by the pandemic. Changes that have been decades-in-the-making are now reaching critical mass. The maturation of next generation technologies — the internet of things, robotics, artificial intelligence, big data analytics, genomics and precision medicine, machine learning — is redefining the very nature of work across the economy and fundamentally altering the skills our workers need to succeed. These technologies permeate all sectors of the economy, fundamentally altering what we even mean by the tech sector and giving small startups advantages over long established companies.

Climate change has also reached a point of no return during this period. Most cities around the world actually exacerbate carbon emissions due to the dirty sources of their energy, the excessive level of dependence on automobiles for intra-city mobility and the low energy efficiency of their buildings. They also, increasingly, bear the brunt of climate change, due to the consequences that extreme weather has for urban populations and urban infrastructure.

To further complicate matters, investments and policy changes at the global, national and state levels set new parameters for the economic positioning of cities around the world. In the United States, these changes include the electrification of the auto sector, the greening of the nation’s energy supply, the upgrading of the nation’s infrastructure and boosting domestic manufacturing capacity around medical supplies, pharmaceutical products, and high-tech. Policy changes are being bankrolled by unprecedented (but likely short lived) volumes of federal rescue and recovery funding.

And then there is Russia’s horrific invasion of Ukraine which, as Mark Carney, a former head of the Bank of England recently contended, could leave a bigger mark than the pandemic, triggering volatility in energy and commodities markets, reinforcing deglobalizing dynamics already underway and intensifying the struggle between autocracies and democracies.

These forces raise a series of hard questions and tantalizing possibilities:

Will supply chain issues inspire companies to manufacture more domestically, reversing years of globalization that had held down wage and price growth for decades?

Which cities will own the next generation economy and invent rather than just deploy the technologies used by the rest of the world? Which cities will lead the Blue Economy? The Green Economy?

Which cities will be winners and which will be losers in the rapid electrification of auto sector? How will cities, more generally, speed the transition to clean energy and how will that affect the transportation and building sectors?

Which cities will use the technology revolution to crack at long standing racial disparities on income, health and wealth?

Will the shift to an Amazon economy and just in time consumerism affect the ability of small enterprises to compete on price and convenience and the ability of nodes of commerce to thrive and survive? Will cities and their anchor institutions be able to use the procurement of goods and services to provide new sources of demand for small businesses?

Will remote work continue to undermine the concentration of office work in downtowns and central business districts? If 20 or 30 percent of office workers now move to flexible work schedules and are allowed to work from home for two to three days a week, what will that mean for small businesses, transit systems and local tax systems that rely on employment density? Will polycentric nodes of commerce and employment now be the future?

Will innovation districts be sheltered from remote work trends, since the nature of research and commercialization still rewards collaboration, proximity and collisions?

Will private capital be productive or parasitic and predatory? Who will own the city? Its homes and commercial real estate? Its waterfronts and amenities? Residents? The public? Absentee landlords? Large private equity firms?

In short, what changes will be structural as The New Disorder settles? And what will be cyclical?

These questions are not academic or theoretical or abstract. They are already being answered by actions that different cities are taking to reposition and diversify their economies, test new approaches, unlock hidden strengths and build new assets.

The message is clear. To paraphrase Bob Dylan, “Those cities not busy being born are busy dying.”

The Infrastructure Moment

 As I mentioned above, the response to the New Disorder has taken a particular shape. President Biden’s Build Back Better agenda has largely consisted of massive investments in a broad array of infrastructure assets. That, in turn, has meant that the answers to the questions posed above increasingly have an infrastructure twist.

To its credit, the federal government is making sizable investments in infrastructure after decades of drift and disinvestment. The Infrastructure Investment and Jobs Act supports $1.2 trillion in programming, including $550 billion in new spending across a broad array of asset classes. The Act provides $110 billion for roads, $39 billion for transit, $25 billion for airports, $17 billion for ports, $65 billion for broadband, $73 billion for the electric grid and on and on and on. The Act appropriates these funds on top of the infrastructure investments made in the American Rescue Plan Act, most notably $126 billion for investments in elementary and secondary schools, to enable their safe reopening in the face of the COVID-19 pandemic.

To complicate matters, the federal government is making its investments through, literally, hundreds of programs across dozens of agencies. Some of the programs have existed for quite some time; some are literally brand new. Funding will flow with different rules to different recipients along different time frames and via different allocation methods (e.g., block grants versus competitions versus innovative financial mechanisms). The end result is a Rubik’s Cube of government programming and investment.

Now comes the hard part — moving from national legislation to state and local action. The Infrastructure Moment is a New Localism moment for several reasons:

  • There is a fundamental disconnect between the organization of the federal government and the functioning of real communities. The federal government is exclusively a government, vertically organized as a series of rigidly balkanized bureaucracies, mostly created in the mid-20th century when specialized expertise was deified.

Cities and metros, by contrast, are organized as networks of public, private, civic and community institutions and leaders, horizontally organized across multiple sectors and disciplines. This gives them the unique capacity to coordinate and integrate disparate infrastructure investments in the service of larger goals — say inclusion or climate change or urban regeneration. A port authority might, for example, work with African American and Hispanic business chambers to ensure that procurement helps advance business diversity and grow Black and Latino businesses. Multiple agencies might work with business chambers and corporations and land owners to transform a dilapidated section of a city.

In the words of Matthew Taylor, the former head of the Royal Society of the Arts in the UK, cities can do this because they are able to “think like systems and act like entrepreneurs.”

  • Cities and metros also have the ability to align federal infrastructure investments with the distinctive aspects of a community – the nature of its economy, its physical location, its growth trajectory, any past investments and other factors. What Phoenix needs, for example, is likely quite different from what Portland needs, which is likely quite different from what Pittsburgh needs. By defining and designing infrastructure investments from the bottom up, the fundamentals of individual metropolitan economies can be taken into consideration and better matched to each area’s needs.
  • Cities and metros can combine and layer different infrastructure investments in the same geography – say a waterfront or central business district or innovation district or industrial or commercial corridor. While federal programs focus on singular, technocratic solutions, communities emphasize the connections between different uses, routinely linking different forms of infrastructure with other investments in housing, economic and workforce development, place making and the remediation of former industrial properties. Cities and metros are where separate infrastructure programs come to ground in synergistic ways and create a platform for long-term growth and long-term value.
  • Finally, cities and metros have the ability to use public investments to leverage private and civic resources, both for infrastructure projects and the larger development that these projects enable. The federal investments are substantial and historic; yet the United States is a large country and the combination of decades of disinvestment and the complexity of market and other dynamics require supersized responses that stretch way beyond appropriated funding.

Mastering the New Disorder: Infrastructure with a Purpose

 So, we are entering a truly remarkable period. On one hand, cities and metropolitan areas are trying to make sense of The New Disorder, given dynamics that have not settled and are often chaotic, confusing and even contradictory. At the same time, cities and metropolitan areas are scrambling to use infrastructure spending to drive a future that is innovative, sustainable and inclusive.

Across the US, leaders are thus being compelled to ask the fundamental question: “Infrastructure for what?” These leaders recognize that infrastructure is not an end in itself; it is a means to an end. The central challenge for US cities and metropolitan areas today is to resist deploying the fire hose of federal funding for yesterday’s infrastructure, that was designed in a different era for different purposes.

Over the past two years, my colleagues and I have been working with dozens of cities and metropolitan areas across the United States first to address the economic fallout from the pandemic and now to plan and deliver the future. With funding flowing at unprecedented levels, a good portion of this work involves helping cities design solutions that match the scale of problems, avoid the pitfalls of the pre-pandemic economy and affirmatively deliver a more inclusive and sustainable future.

Given the fog of disorder and the fragmentation of federal investment, there is still no clear roadmap or easy recipe to codify and repeat. But here are early signals about how cities are organizing to use infrastructure to drive next generation outcomes and transformative impact.

First, cities are seeking to combine infrastructure investments to drive the regeneration of core districts and corridors. In the end, cities and metropolitan areas consist of a disparate set of sub-geographies – waterfronts, downtowns, innovation hubs, commercial and industrial corridors, residential areas. Each of these distinctive geographic areas require a foundation of infrastructure investments to flourish, a combination of transportation, energy, water, sewer, broadband, and beyond.

Federal infrastructure investments open up real possibilities for regenerating entire sections of cities through a “whole infrastructure” approach. A growing number of cities are now using a new tool, Investment Playbooks, to enable this by identifying, prioritizing and costing out concrete projects that can access federal resources, leverage private and civic capital and together add up to a “big bang” effect. This tool follows the simple maxim that failing to plan is planning to fail”; federal resources may now be ample but only localities can design specific projects that are fit to place and ripe for investment. US cities have learned the hard way that transformative visions without capital specifics drive conversation, not investment.

Investment Playbooks have already been created for Dayton’s downtown, El Paso’s health innovation corridor and disadvantaged commercial corridors in Buffalo, Greensboro, Philadelphia and Pittsburgh. Probably the most ambitious Investment Playbook in progress is in Erie, Pennsylvania, a former industrial city of 100,000 people that is reimagining the economic purpose of its waterfront, downtown, adjoining low-income neighborhoods and industrial areas. The draft Playbook prioritizes 25 separate projects that have the potential, together, to make Erie a poster child of older industrial city revival. Those projects include a layering and alignment of different federal infrastructure investments in transportation, energy, broadband, port reconstruction and remediation of polluted industrial sites, successfully overcoming the fragmentation of federal programs.

Second, cities and metros are working to use infrastructure to enable the regionalization of supply chains and the re-shoring of manufacturing. As my colleague Scott Bernstein has noted, the national discourse has overly focused on “fixing” pandemic induced supply chain deficiencies by moving goods that are now stuck off the coast of Southern CA. In Scott’s view, we need to envision a future state that includes “the domestic re-shoring of production and manufacturing, the regionalization and networking of production and distribution with associated planning, regulation, and investment, and the backing off from extreme “lean-ness” in production and distribution systems toward the re-adoption of available slack capacities, such as reserves and inventories of goods, materials and services.” All of this requires a re-evaluation of the spatial distribution of manufacturing and goods movement in the US and a frank assessment of which sectors, firms and workers are currently served by our road, rail, transit, water and air systems.

Interestingly, recommendations for how to use infrastructure investments to improve regional supply chains is being prompted by a non-infrastructure program. In mid-2021, the Biden Administration put forward a $1 billion Build Back Better Regional Challenge to advance national competitiveness by scaling distinctive industry clusters. The program was smartly structured as a multi-phased process. The funding –– up to $500,000 for technical assistance grants awarded to 60 winners of a first phase, and between $25 million and $100 million for project execution awarded to a final group of 20 winners –– was large enough to attract 529 applicants from across the country.

Given the focus on advanced industries, which naturally involve the domestic and international movement of goods and services, many applicants included a wide variety of infrastructure investments in their proposals. For example, the states of Connecticut and Rhode Island are working to be first movers on the Blue Economy and dramatically expand the production and placement of off-shore wind turbines and technology driven responses to environmental pollution and climate change. Those ambitions cannot be achieved at scale unless investments are made in discrete infrastructure projects like the upgrading of the New London Port in Connecticut (to make it a staging area for wind turbine assembly) and the Narragansett Bay in Rhode Island (to make it a laboratory for scientific assessment of climate change shifts).

Third, cities and metropolitan areas are adamant about using infrastructure spending to catalyze an inclusive recovery that reduces entrenched racial and ethnic disparities on income and wealth.

The US federal government is the largest player in what I call The Procurement Economy. The purchasing power of infrastructure agencies can be a vehicle for growing Black- and Brown-owned firms that can design, engineer, construct, maintain and finance next generation projects. To that end, cities like San Antonio are working with the Aspen Institute and the Nowak Lab to invent Procurement Playbooks to unleash the full potential of federal infrastructure spending to grow Black- and Brown-owned businesses. These Playbooks are intended to build on lessons learned by the supplier diversity efforts of major anchor institutions like universities, hospitals and corporations in Baltimore, Chicago, Cleveland and Philadelphia and elsewhere as public procurement efforts among leading public authorities in the US (like LA Metro or the New York/New Jersey Port Authority) or municipalities in England and Scotland.

The elements of such a Playbook are clear-cut:

  • Collect data to assess the current state of diverse spending, set goals to expand such spending and provide transparent reporting to assess progress or the lack of progress on an annual basis.
  • Assemble an inventory of diverse vendors that have a track record of supplying particular goods and services routinely procured by infrastructure agencies.
  • Drive innovation in financial products through loan guarantees and other mechanisms, so that contractor can obtain working capital without predatory and prohibitive pricing.
  • Consider the creation of Supplier Diversity Intermediaries that can help coordinate and align procurement efforts across multiple public entities and work closely with a consortium of entrepreneurial support organizations, business chambers and capital providers to provide the full suite of necessary services to target firms.

Beyond procurement new infrastructure spending will demand high volumes of skilled labor. My partners at Accelerator for America have developed a Gold Standard Playbook for Workforce Development which shows how cities are building a diverse workforce with career pathways in the transportation industry and the skills to build and maintain new sources of clean energy, assemble and service electric vehicles, install new broadband cable and support millions of new customers as they come online, enhance cybersecurity capabilities across sectors and perform environmental remediation work on brownfields, lead pipe replacement, home weatherization and energy efficiency retrofits. The list goes on and on.

Fourth, cities and metros are exploring how to use infrastructure to advance climate mitigation and adaptation. As you can imagine, efforts in this area cover a broad swath of interventions.

Several winners of Build Back Better Regional Challenge technical assistance grants, including the LA metro, Washington State and Newark, New Jersey, have focused intensely on the decarbonization of the logistics supply chain.

States like Michigan and cities like Columbus, Ohio are seeking to respond to the demand for electric vehicle charging stations precipitated by the accelerated electrification of the mobility sector. The Infrastructure Investment & Jobs Act includes $7.5 billion over the next five years for two key charging programs overseen by a new Joint Office of Energy and Transportation, with a goal of delivering 500,000 charges across the country. Partnering with the American Electric Power and Mid-Ohio Regional Planning Commission, Columbus has already mapped priority charging locations to optimize EV charging placement, and the city added over 200 electric vehicles to local fleets.

And cities from New York to New Orleans are adapting European methods to respond to America’s water infrastructure challenges. Overwhelmed wastewater systems, washed out roads, shorted electrical circuitry and flooded transit stations revealed the poor and aging condition of many of these important systems. The rebuilding of the nation’s water system goes beyond repair and restoration. Rather, cities are also working to capture and soak up storm and rain water –rooftop vegetation, porous pavements and soils — rather than building expensive infrastructure to channel it away. 

Finally, cities and metros are exploring ways to use infrastructure spending to boost technological innovation and the formation and scaling of public and private sector responses. Infrastructure spending will create enormous demand for smart technology solutions:

  • Tech marketplaces that can boost supplier diversity by making seller demands and buyer credentials transparent, across a plethora of agencies and authorities;
  • Smart grid solutions as hundreds of thousands of small- and large-scale projects are projected to come to fruition in the coming decades; and
  • Sensors that can monitor and communicate the environmental and economic impact of extreme weather, traffic congestion and other dynamics so consumers can modify behavior in real time.

The City of Columbus and Columbus Partnership collaborated to form Smart Columbus, a smart city initiative that leverages over 30 utility, academia, government, transit, and private sector partners to reimagine mobility for the region. Awarded a total of $50 million in 2016 through the U.S. Department of Transportation’s first Smart City Challenge, the initiative catalyzed pilot projects that enhanced human services, leveraged existing technology, and tested emerging technologies. The Smart Columbus Acceleration Fund, seeded by private sector funding scales and sustains Smart Columbus programs.

These five moves – around regeneration, supply chains, inclusion, sustainability and technological innovation — are not the full sum of what is happening in the United States. But they are a powerful snapshot of the different kinds of strategies that could make up a radically different approach to city building in the post pandemic environment.

And these moves are supported by other reforms in governance and finance. Several cities, for example, have been working with Accelerator for America and the Nowak Lab to create Stimulus Command Centers to enable coordination and cumulative impact across fragmented federal programs. In Dayton and Louisville, Mayors appointed senior executives to create and lead new teams to set priorities and deploy flexible COVID relief funds and coordinate engagement with public-private stakeholders. In San Antonio, Mayor Nirenberg established an Executive Roundtable of leaders from public authorities and a local military base to coordinate metro-wide infrastructure planning and competitive grant applications.

Other cities are acting to reform public authorities and other institutions to enable smart value capture mechanisms to ensure that public infrastructure investments yield long term public wealth. Tulsa, Oklahoma, for example, recently created a public asset corporation modeled after European successes in Copenhagen and Hamburg. The effort started with a merger of multiple public authorities and entities into a new Tulsa Authority for Economic Opportunity (TAEO). This new authority will own substantial assets, including multiple parking structures and surface lots in the downtown, large landholdings prime for redevelopment just outside of downtown, residential lots throughout the city, and a hangar leased by American Airlines. Excitingly, these assets generate stable cash flow and have the potential to generate even more revenue through smart development and disposition, which then be reinvested into the poorest neighborhoods in the city.

Using public infrastructure spending to create public wealth for the long haul can and must become a norm.

Conclusion

Let me conclude with this thought. It will take time for cities to find their true balance post the upheavals the world has experienced and is experiencing. There will be no bounce back; The New Disorder will be with us for a while.

The combination of market relevance and civic agency give cities the ability to master this moment if and only if they focus on the fundamentals that drive prosperity and innovate without restraint or limit.

As Jeremy Nowak and I wrote several years back,

“Power belongs to the problem solvers. And these problem solvers now congregate disproportionately at the local level, in cities and metropolitan areas across the globe.

New Localism embodies this new reality of power. It is the twenty-first century’s means of solving the problems characteristic of modern life: global economic competition, poverty, the challenges of social diversity, and the imperatives of environmental sustainability.”

Infrastructure spending – wisely designed and deployed – could give cities like Toronto the ability to emerge from this period stronger and more resilient and inclusive than before. Carpe Diem.