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Carl Sandburg did not call Chicago the "hog butcher for the east central United States." He called it the hog butcher for the world. The claim was, for once, more than mere Chicago-style braggadocio. A century ago even that rather large part of the world that did not eat Chicago's bacon was conscious of Chicago not just as a new kind of city in the world, but a city that was important if only in what it portended.

Today the world is festooned with Chicagos — ambitious, self-conscious, fast-growing outposts poised on the edges of great hinterlands through which capitalists in distant cities create, then exploit new markets. Yesterday's Chicago is today's Hong Kong, Berlin, Santiago.

Which suggests an interesting question: What kind of city will tomorrow's Chicago be? Having scraped off most of the rust from its aging industrial base, Chicago will survive. The question is whether and how it will thrive. Can Chicago attain — or regain, depending on your view — status as a "world city," a city with global clout?

Chicago has been a global city in the narrowest economic sense for more

... But can it be a global city?

than a century. ("Chicago" is here defined as the economically integrated conurbation centered in the Loop that encompasses industrial northwest Indiana and that part of Wisconsin that the locals, happily, do not call "Milwaukeeland.") However, the Chicago of legend was not so much a competitor of other cities as a creature of them. As historian William Cronon has noted, in 1858 two-thirds of the stockholders in the Illinois Central Railroad lived in England.

Today's Chicago remains a global city whether it likes it or not, if only to the extent its firms must compete in an ever more internationalized economy. As recently as the late 1960s, recall, Chicago still led the United States in the manufacture of telephones, radios, TVs and other appliances — products it now (save for the manufacture of cellular telephones and pagers) largely imports from other nations.

Definitions vary (see "Nice neighborhood: What, exactly, is a global city?" page 15), but "global city" here means any city where trends are started, reputations made, decisions taken, a place where money is earned and spent in socially significant amounts. A global city shapes, as well as is shaped by, the rest of the world. It is a city not just where things are made but a city where people decide what is made and where and how to make it, and where they get the money they need to make it and the ideas they need to sell it.

Such cities are as diverse in their significance as their geography. Trade, entrepreneurship, finance, invention, culture, politics — each is a field in which a city may distinguish itself internationally. New York City — as center of an urban agglomeration of more than 16 million, it is the global city in the United States — is a center for diplomacy, corporate management and finance, fashion, pop culture, the arts. Geneva is a banking capital,

Brussels a bureaucratic one. Milan ranks as a design leader, Los Angeles as a purveyor of pop culture. Paris is important for, well, being Paris.

Global cities, whatever their later status, tend to begin as centers of trade that confer not mere prosperity but wealth of the scale that supplies capital and underwrites (and justifies) empires. It is easier, in fact, to become a global city without a navy or political clout than it is to become one without wealth. The soldiers in today's conquering armies are dollar bills. Hong Kong is at the vortex of an economic boom that is expected to transform not only China but all of Asia and, indeed, the entire global economy, and in the process — Beijing willing — Hong Kong will turn itself from a wealthy city into an important one.

If Chicago is to dominate a major industry again, it will have to invent one.

Such great wealth is usually amassed by tapping new markets, offering new products or pioneering new technologies. Chicago, for example, boomed by exploiting new products (refrigerated beef) and new technologies (catalog retailing) to cater to new markets (the rising American middle class) in a virgin territory (the burgeoning Midwest). But, because old Chicago was essentially a branch office of New York and Boston capitalists, the immense wealth that tunneled through it flowed back East.

Chicago will never be a national political capital, nor an international administrative one like Brussels. (A campaign to put the administrative offices for the North American Free Trade Agreement in Chicago failed.) It will never amass a colonial empire like London's of the previous century or a commercial one such as today's Tokyo.

Pop culture is a major national export; look at Disney, Nike or the NBA. Here too Chicago's moment may have passed. Chicago gave the world Chicago-style blues, but that music was a product of a black community now largely dissolved, and blues players work these days in clubs frequented by white tourists, much the way Munichers frolic in lederhosen during Oktoberfest.

Chicago has always been full of clever people, but it has never been an especially creative place. The publishing market is bent toward professional journals and textbook publishing. Since its heyday in the 1920s, Chicago's contribution to national journalism was printing it. As for advertising,

Illinois Issues February 1997 / 13

the town is dominated by big dull ad agencies that work for big dull companies that want safe dull ads; if you want a hot shop, you have to go to Portland or (believe it) Minneapolis.

And the fine arts? Museums and galleries and concert halls are already essential venues now that the world's city centers are meccas of cultural tourism. Chicago today is a place where world-class art is consumed, not where it is created. Its theater is adolescent, its dance is borrowed, and the Chicago Symphony Orchestra is as much a museum as the Art Institute. Only the Lyric Opera seems intent on creating art rather than recreating it.

No patriotic Illinois an broods for long about what Chicago is not. We will here focus, as its founders did, on what Chicago might be. The newer global cities like Tokyo and Hong Kong (along with "cities" like Silicon Valley) have risen to prominence variously by making things, by inventing things, by selling things, or by giving advice, money and tools to people who do all of those things.

Today, alas, the Midwest market is mature in every way — its population aging and static, its appetite for Chicago's appliances and foodstuffs largely sated. The city has always had a massive export trade in manufactured goods, but until very recently this trade mainly was with other U.S. states; Chicago's firms treated markets outside the United States mainly as places to unload surplus capacity. Like every great manufacturing city, Chicago has evolved networks of labs, small shops, artisans — crucial supporting players in the running tragedy of industrial rise and fall. But this body of skill was geared to local industry's needs, not international consumers.

Thus "Made in Chicago" was never a globally recognized imprimatur. To grow rich again, Chicago must continue its recent trend toward selling what the world wants. That means expanding the number of firms such as Finkl & Sons, the Lakeview steel-making boutique that recently set up a factory in England's industrial heartland, and medium-tech firms such as modem-maker U.S. Robotics. It also means


To grow rich again,
Chicago must continue
its recent trend toward
selling what the
world wants.

becoming a marketplace for portable "idea goods" such as consulting, training, retailing, broadcasting, publishing, advertising, communications, finance.

The model here is the Chicago exchanges. When wheat futures drop on LaSalle Street, somebody loses sleep in Sydney; Chicago's Board of Trade and Mercantile Exchange survived the 1970s and '80s as two of the three largest futures markets in the world. (The other is the London International Financial Futures and Options Exchange; the fact that London, not traditional rival New York, is today Chicago's main competitor in this field is itself a measure of how globalized finance has become.)

The new information economy has already transformed Chicago's economy, and its landscape. Most of the major office buildings that went up in the 1980s were paid for by such firms as AT&T, NBC, Leo Burnett, Chicago Title and Trust, the American Medical Association and PaineWebber. LaSalle Partners now has offices in Paris and Mexico City and enough doings in China, France and the United Kingdom to make it the nation's largest real estate money management firm, according to Pensions & Investments magazine. Insurance giant Allstate, realizing that Germans dent good cars as well as make them, plans to start its first European direct-sales operation in that country. Printer R. R. Donnelley & Sons Co., the quintessential old-line Chicago firm, in 1995 opened a whiz-bang new printing plant in Shenzhen in southern China's Guangdong province as part of its larger plan to lock up the phone book market in Latin America, Asia and central Europe.

Manufacturing employment is expected to continue to drop according to federal estimates, from 729,000 workers in 1996 in the six-county metro area down to a projected 701,000 in 2006, while work in finance, insurance, real estate and services is expanding (from 2,061,000 workers in 1996 to 2,337,000 in 2006). Jobs generated by the big exchanges, for example, have grown one and a half times the pace of overall Chicago employment in the past 10 years.

Order by order, firm by firm, industry by industry, Chicago is moving toward reorienting itself — not bad for an industrial economy that was considered dead 10 years ago. Many a smaller Chicago-based firm looms surprisingly large in lucrative international markets. Morton International Inc. — the salt company — controls nearly half of the automobile air bag industry in Japan; Sara Lee makes the No. 1 coffee brand in four countries of northern Europe, and owns the leading coffee brand in another 11 nations on that continent.

The internationalization of Chicago is evident in more than fact sheets. If the heart of the economic region is the city-state (see "The real super bowl: Schaumburg vs. San Diego," page 19), the heart of the city-state is the central business district. Central business districts are highly specialized machines for producing, processing and trading specialized information. Such a machine Chicago's Loop always was, and is.

Downtown Chicago is the very model of the service-based city of the '90s. The conversion of old warehouses and railyards around the Loop into living space for bright young "symbolic ana-

14 / February 1997 Illinois Issues

Nice neighborhood:
What, exactly, is a global city?

Scholars of the city have not been much interested in why some cities become world cities and others, seemingly equally favored, do not. Urbanologists can't even quite agree on what a global city is. A "significant node for decision-making," intones one. No, says another, it is a place with "international atmosphere and profile," with "global character."

Thanks for clearing that up, guys.

Having been abandoned by the experts, we will have to venture our own definitions. Here's one: A global city is one that the rest of the globe wants to see. According to U.S. Department of Commerce figures, Chicago in 1995 attracted about 1 million international visitors (most of them Canadians or Mexicans). That's up 16 percent over the previous year, but that still left the city only the ninth most popular American city with overseas visitors. (London that year attracted 24 million tourists, most of them from outside England.)

Happily for Chicago, if popularity as an international tourist destination vaulted a place into the ranks of global cities, Orlando would be talked about in the same breath as London. Because marketers know more about the world than do economists, the frequency with which a city is cited in advertising is an especially revealing index to global status. Airbus, the European airliner consortium, touts its long-range A340 model with a map showing it capable of flying from Mumbai (Bombay) to Chicago nonstop. Readers must decide whether they are meant to see Chicago as a city worth flying to or as such an out-of-the-way place that only an Airbus A340 can reach it.

What about size? In its boom years of the previous century it was assumed that Chicago would overtake New York City as what economic geographers call America's "primate city." It didn't, but 30 years ago the Chicago metropolitan area still was one of the top 10 biggest cities on the planet. For all its size, however, the city was generally considered only of regional significance.

Chicago today barely makes the top 30 list of most populous cities. However, even the chambers of commerce secretaries of the Jakartas, Seouls and Tianjins will concede that these are not yet global cities. And just as large size does not guarantee global status, so small size does not necessarily preclude it; Paris is about the same size as Karachi and Lagos and Delhi.

Peter Hall, an economic geographer at University College, London, has been writing sensibly about cities since the 1960s. Hall once defined what he called world cities simply as cities "in which a quite disproportionate part of the world's most important business is conducted." Professor Hall defined "business" expansively, and included not just trade and finance but politics and learning, the arts, communications, and — not insignificant in an economy driven by consumption — the practice of good living.

In the end, it is foolish to try to define globalness any more closely than this. As urban historian Spiro Kostof once observed, "Cities are too particular a phenomena ... to be pinned down by absolute tax- onomies." JKJ

lysts," as former U.S. Labor Secretary Robert Reich calls them, is not a symptom of failed industrialism but of a fledgling postindustrialism, a more evolved industrialism, if you will, in which commuter railroads funnel knowledge producers to information factories the way they used to funnel coal to the steelyards.

The Loop has never been more European in ambience, at least during the work day; 30 years ago the peckish businessperson had the choice only of a Reuben or a cheeseburger for lunch; today he or she can nibble on nigirisushi and seaweed rolls or pisto manchego. Clubs on the North Side offer Japanese performance artists; the


orchestra and opera downtown are paid serious attention in the world press. The Art Institute remains a significant institution, and while Chicago's international film and theater festivals may not rate with, say, Edinburgh's, the fact that they exist is significant. Thus the opinion, general among Chicago boosters, that Chicago already is a great world city, only the world doesn't know it yet.

But a globalized city, in short, is not necessarily a global city. Every big city is doing more of its business internationally, because that's where a lot of today's business is. Chicago's exports are still not proportional to its population, its huge and diverse production capacity and its excellent transport system. Most of its export sales are made by a few huge firms. Schaum- burg-based Motorola Inc., for example, has been one the nation's top 10 exporters in recent years. Of that company's $28 billion in sales in 1996, more than 60 percent were outside the United States. Amoco Corp. — which recently signed a preliminary agreement to build a multibillion dollar liquified natural gas plant in Egypt — amassed $5.7 billion in foreign sales,

Illinois Issues February 1997 / 15

Still, the U.S. Commerce Department reports that in 1995 Chicago was the nation's second-fastest-growing exporter behind San Jose, the capital of Silicon Valley — admittedly from a smallish base. More significantly, the city ranked fifth in the nation with more than $20 billion in foreign sales.

Just as making things has become a smaller part of the global economy, making things has become an ever- smaller part even of manufacturing. Design, financing, planning and marketing are what really add value to a product, and cities that can do those things well should thrive. Nor does a city have to limit itself to designing, financing, planning and marketing the things it makes. Telecommunications technologies mean that the thinking part of manufacturing may be organizationally and geographically separated from manufacturing.

Consider design. Here Chicago can draw on — and perhaps improve on — its own traditions. Backed by visionaries like Walter Paepcke of the Container Corp., Chicago's Association of Arts and Industries in the 1920s brought manufacturers, retailers and investors together with artists, architects, designers and students from the United States, Europe and Asia to found a "New Bauhaus" along the lines of the famed German design school founded by Walter Gropius. Alas, the New Bauhaus and its successor schools led to few actual products. (The school eventually became the Institute of Design that was attached to today's Illinois Institute of Technology.) A few firms later established global reputations for good in-house design — Motorola's goes back to Edward Klein's famous table radio in 1954 — but their achievements were exceptions to a sorry rule.

Designing products for a global market is even trickier. It requires a kind of cross-the-boundaries creative thinking, not to mention a cosmopolitanism that is alien to the analytic thinking used by traditional-minded U.S. financial, marketing and engineering pros. For that, firms will need to rely on now-despised liberal arts majors adept at languages, history, sociology.One reason London is a


What made Chicago
great was new ideas.
Ideas are the crucial
raw materials in
industry again today.

center of European, rather than merely British, business is that the British university graduates are more cosmopolitan than their continental counterparts, and literally worlds ahead of American MBAs.

Chicago has always been a foreign city; the 1890 census revealed that more than three-fourths of the people living in the city proper were immigrants and their children, and even today, some 17 percent of the citizens in the city proper were born outside the United States. But historically Chicago's foreign-born were not cosmopolitans. (European immigrants gave Buenos Aires a Parisian flair; not so Chicago's Poles and Irish.) Usually poor, often illiterate, they were displaced villagers who continued to see the world as villagers, even from their three-flats in the big city.

As with products, so with industries. Achieving global status in a new industry is easy; Chicago did with meat packing a century ago what San Jose has done with computers. If Chicago is to dominate a major industry again, however, it will have to invent one. Innovative devices and applications emerge from places such as Silicon Valley or Seattle, says management guru Tom Peters, because these cities serve as convergence points for enthusiastic entrepreneurs. One of the things entrepreneurs must be enthusiastic about is the cities they converge in. A budding entrepreneur used to scout access to ports or raw materials or a railroad; today young, athletic engineers and techno-wizards look for access to ski slopes, wind surfing and building sites with views. Alas, Chicago lacks the intellectual climate of Cambridge and the fun climate of Austin; its weather is not as clement as the Northwest or as stimulating as the desert.

Chicago harbors a surprising wealth of high technology, or "innovation- based" companies. Motorola is to the analog cell phone what Armour used to be to bacon; modem-maker U.S. Robotics is No. 1 in the world, after buying up a competitor. Chicago also has an important national research lab in Argonne, and techno-wizards abound in such places as the Materials Research Center at Northwestern University, which since 1959 has produced diamond-and carbon-based films for machine tools, coatings for CD-ROMs, semiconductor materials, polymeric materials used in batteries and optical communications, and — with luck — infrared semiconductors to speed fiber optic transmission in collaboration with such companies as Motorola, AT&T and Ingersoll-Rand.

However, the city's formidable brainpower has traditionally been set to making old products better or cheaper rather than to making new products. (The closest thing Chicago has produced to Sony's product line is a McDonald's menu.) While Chicago's best universities are second to none in humanities or medicine, the city lacks a blue-chip university doing research in electrical engineering, computer science or biotechnology of the sort that stimulated the growth of such high-tech centers as Silicon Valley, Boston's Route 128 corridor and Austin. Without a critical mass of new ideas, suppliers, job options for talented people and experienced senior managers needed to run start-ups, a city can have a dozen world-class high-tech firms, but it will never have a high-tech industry.

16/February 1997 Illinois Issues

Out in the

Chicago's location between the markets of the eastern United States and the exploitable riches of the West made it a great trader and processor of farm commodities. But what was (and remains) a continental economic advantage is something of a global disadvantage. Chicago lies at maximum remove from the emerging business centers of Europe, the Pacific Rim and South America, at least three air-hours more distant than other U.S. cities — Los Angeles, New York, Seattle, Miami, Houston — that serve as gateways to those parts.

Any first-year MBA student will tell you that, just as the railroad shrunk distance in the 1800s, telecommunications has virtually erased it in the late 1900s. The resulting "time-space convergence" means that any place, potentially, is within convenient reach of any other place. Indeed, the more excitable proponents of information technology argue that Chicago's location won't matter because cities won't matter. What cities do — provide a venue for face-to-face information exchange — will be done digitally from anywhere. In the digitized future, all cities will be international cities, and all cities will be burgs, depending on who lives in them, not on where they are.

Until that magic day arrives — and recall that similar predictions were made about the telephone and the fax machine — people will still choose to do business face to face wherever they can conveniently gather. Studies on city-building commissioned by the European Community in 1990 found that location in the remoter reaches of a continent can be a serious obstacle to global status. (Seville and Dublin, both vibrant cities, suffer from an isolated location much like Chicago.) Many a Chicago booster persists in believing that the city lags not because of its inconvenience but because of travelers' ignorance. All Chicago needs to do is explain to the world where it is. "It's the city at America's center ..." reads the ad placed in international magazines by Philip Morris Companies Inc. touting an exhibit at the newly rehoused Museum of Contemporary Art, "and its impact is felt around the world."

Why, if its impact is felt around the world, do so few people know where Chicago is? Apparently because people who look for it are dazzled by the bright lights of the coasts. "Believe it or not, we're still relatively unknown in Europe and Asia... which focus on the East Coast and the West Coast," said Chicagoan and former Gov. James R. Thompson to the New York Times recently. Big Jim added his view that William Daley's nomination as President Bill Clinton's new commerce secretary would "raise our visibility around the world." Perhaps, although if the world can overlook Michael Jordan, World Cup soccer games and the Sears Tower, it is not paying attention.

Maybe if Oprah is syndicated in China? JKJ

As Fortune magazine put it in 1994, Hong Kong is a city for the next century because its residents (ethnic Chinese and Westerners alike) possess more entrepreneurial energy than do managers and deal-makers in the West.

They used to say things like that about Chicagoans too. But entrepreneurship is not a traditional Midwestern trait. Most of the great Chicago entrepreneurs who created industrial Chicago — the Swifts, the Rosenwalds, the Armours, the Wards, the Abbots — came to Chicago from someplace else, drawn by the prospect of wealth as tomorrow's millionaires are drawn to Hong Kong. Today, Chicago's rate of new-venture start-ups remains modest compared to, say, Boston or California — the kinds of places where


energetic Chicagoans have always headed when they get frustrated by a town whose early dominance led it to worship the biggest rather than the first.

Whether entrepreneurial spirit is a cultural trait or merely an economic artifact is not a question we can settle here. What is indisputable is that relatively few of Chicago's newcomers come from entrepreneurial cultures. The East Indian engineers who account for a disproportionate number of start-ups in Silicon Valley, the West Indians who are reinvigorating New York City's economy, the Asians who are a presence in Vancouver, or the Cubans who have transformed Miami into a Southern Hemisphere entrepot of capital — none come within several states of Chicago.

Chicago has always been good at making stuff, not selling it or inventing it or bankrolling it. Such Chicago specialities as electric and electronics equipment and industrial machinery hold potential for expanded craft-oriented manufacturing or "high-tech cottage industry" of the sort that has put Bavaria, parts of Japan and the "Third Italy" around Milan on the world map.

This "variety-based manufacturing" is less mechanized and uses relatively shorter production runs than mass

Illinois Issues February 1997 / 17

production industries familiar from Chicago's past. Rebuilding Chicago's industry along today's lines thus means redesigning not just the product but the process. Chicago has done this before too. Chicago's legendary capitalists also invested their genius less in things than in systems to make things and sell things. What made Chicago a great 19th century industrial city was not steel, beef or wheat, but new ideas about how to make steel, how to pack beef, how to market grain. Sears, Wards, Walgreens, Armour and Swift weren't just companies; they were ideological systems devoted to organizing work, sales, warehousing and transport.

Ideas are the crucial raw materials in industry again today. Tokyo is already exporting not just cars but car factories. More important, Toyota is exporting ideas about car factories. Mitsubishi's plant in Normal is an example of this "global toyotaism" both in where the factory is located and how it is run. Chicago remains a city filled with people who know how to get things done — City Hall notwithstanding. Finkl makes steel better and cheaper than its competitors because it makes it smarter.


Confidence is crucial
to global success.
Chicago used to
believe it would be like
no other place.

Expertise in manufacturing competence and production efficiency (including workforce training) is precisely the kind of product that a revivified Chicago can peddle to a world learning how to make and sell things on commercial scales. Already Chicago is a one-stop shopping center for business advice. Accounting giant Arthur Andersen is based in the city; so is the law firm of Baker & McKenzie, which has almost 2,000 attorneys in 56 offices around the world, and was one of the top five law firms internationally offering advice on privatization in 1995. The Chicago Stock Exchange has a tidy little sideline selling computerized trading systems to exchanges in developing markets like Sri Lanka, the Philippines, Thailand and Ecuador.

Thanks to economic globalization, internationalized firms are (in management techniques anyway) probably more like each other than they are like their respective domestic cousins; that has created an international market for management advice. Chicago is home to two of the top-ranked business schools — Northwestern University's Kellogg Graduate School of Management and the University of Chicago Graduate School of Business. Both schools are carrying Chicago's banner to the remote corners of the earth. "Seize the Chicago advantage," say ads for the U of C's International Executive MBA program in Barcelona.

Chicago also is headquarters of the world's biggest management consultancy, Andersen Consulting, which, with 44,000 consultants on the payroll, is easily more than twice the size of its closest rival. In 1995 Andersen Consulting racked up worldwide revenues of $4.2 billion. (Who said talk was cheap?) It is the firm to call if you want to learn fast about corporate re-engineering, about "virtual retailing," about the firm's trade-marked Global Best Practices "knowledge base." It has a prosperous little business selling information technology expertise too; in December it was announced that Andersen had beaten out IBM and Philips N.V. of the Netherlands for a DuPont Corp. computing operations contract, worth an estimated $550 million.

The Economist magazine calls Andersen the McDonald's of the consulting business. This may be an insult to McDonald's. The hamburger king succeeds abroad because it is not a Chicago company, meaning it adapts its menu and methods to whatever local culture it does business in. There would seem to be more risk that Chicago's industrial service giants may turn into the Sears of the 1980s. Large providers may be best positioned for the moment to assert themselves globally, if only because they can mobilize the capital to undertake risky expansion into new markets. But Sears faltered partly because it got too large, and was outmaneuvered by nimble competitors like Wal-Mart and Kmart and speciality stores, and partly because the world it had grown rich catering to changed, and its own culture no longer fit that of its customers.

Businesses are not the only corporate entities that compete for market share. Indeed, according to the new economics of urban development, cities are creatures of marketing as much as market forces. Today all cities are engaged in global PR wars to attract investment and to establish marketable cachets. Chicago fairly invented the art of municipal bragging; that's how it got the name Windy City. Its leaders have always seemed to believe that mediocre cities become global the way mediocre lawyers become mayors — by exaggerating their record.

But it is not all wind. Cities around the world compete as corporate entities themselves, to the extent that they have come to act as entrepreneurs via public investments in convention centers and enterprise zones and airports. Chicago mayors have been conspicuous among those public officials who seek to overcome the market's indifference to their cities by investing large amounts of other people's money to change the image of the city and move it to a higher place in the world hierarchy.

Experts call this "niche-seeking," and Chicago has been doing it for nearly a century. No self-respecting Chicago mayor will be content to run

18 / February 1997 Illinois Issues

City-stale, the real super bowl:
Schaumburg vs. San Diego

Companies don't compete, cities do. Just as one couldn't imagine a Swift and Co. in the 1890s without the Illinois Central Railroad, one can't imagine a Motorola in the 1990s without the tollways or suburban schools. In the cellular phone market, the real competition is not between Motorola Inc. and rival firm Qualcomm Inc., but between — and here's a glimpse of the new world economic order for those who haven't been paying attention — Schaumburg and San Diego.

In 1994 the National League of Cities published a report asserting that in a rapidly expanding global economy, "local economic regions" collectively create a "U.S. common market" that functions as the "real" national economy. Cities make up the real international economy as well. Authors of a recent study commissioned by the European Community concluded that Europe's future is likely to be shaped by entrepreneurial cities whose efforts to promote their own prosperity (including regional cooperation) are partly cause and partly effect of declining nation-states. "In this new world," wrote the New York Times' Thomas Friedman recently, "Wall Street, Tokyo, Singapore, Shanghai, Paris, London, Frankfurt, Zurich and Hong Kong can be as influential in shaping the behavior of states as ... border wars, nationalism and ethnic strife."

While true city-states are fairly rare today (Singapore and Hong Kong are at the head of a very short list), world trade since the Renaissance has been dominated by great independent trading cities. Venice, Frankfurt, the Hanseatic League (the union of city-states in northern Germany from the 13th to the 15th centuries) — all were independent political entities, and remained so in many cases until well into the 19th century.

Cities' economies often run in cycles different from the national economy, and their interests—over currency valuation, for example — often are at odds with those of national administrations. Thus the incentive for global cities to conduct their own foreign policies. An informal network of regional political lobbies, trade offices and "sister city" links functions as a de facto consular system. (Chicago's official family now includes more than a dozen sister cities.) Just as the global order renders nation-states irrelevant, so in time will it render the 19th century boundaries that separate county from county, city from suburb, state from state. In economic terms Chicago is not an Illinois city but part of a poly-centric Great Lakes megalopolis, like Randstad, Holland, that stretches from Milwaukee to Cleveland and Pittsburgh.

Local government also does not match the scale of the economic city-state. Achieving the NLC's "local economic regions"status will require new forms of metropolitan governance or regional collaboration, say the study authors, because the local economy does not coincide with the boundaries of any single governmental jurisdiction — or in Chicago's case, any 100 governmental jurisdictions. JKJ

what is merely the largest city in Illinois, or even in the Midwest. Nor could that mayor accept his or her hometown being publicly compared (even favorably) to an Atlanta or (worse) a revivified Cleveland. In the status competition, the smart player would just as soon join 'em as beat 'em, because a city's place on the international hierarchy depends on the rivals it competes against in the international marketplace. It matters less whether Chicago beats, say, Milan in a trade show competition than whether it's seen as a competitor to an established global city.

But niche-seeking cannot substitute for underlying fundamentals. Studies


on city-building commissioned by the European Community in 1990 found that urban ambition and enterprise, however well-organized and well-funded, cannot alone secure rapid development. After a century of huffing and puffing, for example, Chicago has not been able to turn itself into America's pre-eminent national city.

The vision that has seemed to dance in Chicagoans' heads over the decades has been Paris, or rather the imitation Paris that Chicago invented in 1893, the White City built for the World Columbian Exposition. Visitors praised the results often enough — Fortune magazine in 1967 argued that having shops, theaters and museums and the sophisticated population to sustain them put Chicago (to borrow from historian Carl Condit) "in the front rank of world cities" — that the locals believed it.

To less infatuated observers, Chicago more resembles Birmingham or Lyons, to name just two other provincial capitals reinventing themselves. Chicago also bears a family resemblance to Frankfurt, which like Chicago is an inland crossroads city with a big airport, famous for its trade fairs and conventions. Like Frankfurt,

Illinois Issues February 1997 / 19

Global suburb

Chicago — site of pioneering skyscrapers, suburb plats and the greatest 19th century model city — may contribute another urban innovation to the late 20th century: the global suburb. A Tribune survey of the 100 biggest publicly held companies in the nine-county Chicago area found that 58 are based in suburbia and 42 in the city. News stories about such Chicago-born corporate giants as United Airlines or Motorola Inc. zip around the world bearing datelines of Elk Grove Village or Schaumburg, not of Chicago.

Whether this geographical fastidiousness is imposed by newspaper editors or company PR staff is hard to say, but it is becoming standard practice. McDonald's Corp. is a global concern in every way. It had more than 18,000 restaurants in 89 countries in 1995, and 54 percent of its $9.8 billion in sales came from outside the United States. One recent study named the Golden Arches the "world's leading brand" because the name added more to the value of company stock than any other company's brand. McThis and McThat give English speakers a way to indicate any mass-marketed McProduct. French culture ministers anxious about cultural imperialism gag on the term "les fries" even as they gobble up the dish itself

Yet few customers think of McDonald's as a Chicago firm. This includes McDonald's itself which is careful to identify itself as being from west-suburban Oak Brook — a non-city, much less a global one. JKJ

Chicago is the market city for one of the richest regions of one of the richest nations in the world, although it lacks the banking clout of the German city; Frankfurt is already home to Germany's biggest banks, and will likely host the planned European Central Bank. Like Chicago, much of Frankfurt's output comes from high- growth "intelligent" services such as advertising and publishing. Also like Chicago, Frankfurt is considered uncultured and a bit dull.

What are Chicago's chances of joining the world elite? The city boasts office space, telecommunications infrastructure, and air and rail transport that few cities can match. But when it comes to making itself extraordinary, the quality of a city's infrastructure matters less than (or rather itself derives from) the quality of its people. New York City became great because it was the United States' most European city, and Los Angeles is becoming so because it is the least European. After the downsizing of its vast military industries, Los Angeles is now simultaneously a First World city in terms of commercial infrastructure and markets and a Third World city in terms of population diversity and bustle. This, too, is a 1990s version of what Chicago was in the 1890s, and indeed academic economists at schools such as the University of California at Los Angeles see themselves as privileged to be in the same situation in which University of Chicago sociologists were in the 1920s.

Perhaps no quality is more crucial to global success than confidence. Chicago used to believe that it would be like no other place; lately it seems content to be like every other place. Its tourist propaganda boasts that it offers Paris' museums and boulevards, Rio's beach-



Michael H. Hudson was vice president of public affairs at Illinois Tool Works Inc. and chairman of the Illinois Issues board at the time of his death in 1992. In his memory, fellow board members established an annual essay to examine a significant issue of economic affairs that influences public policy in Illinois. This essay is the third in the series of Mike Hudson Memorial Economics Essays, which are funded by a donor who has asked to remain anonymous. Other essays in the series include:

"Finding jobs in Illinois," by Donald Sevener, January 1995.

"State jobs: Economic boon or bust?" by David Moberg, February 1996.

es, New York's skyscrapers. Officials are constantly frustrated, therefore, by ignorant European tourists who yawn at the Art Institute (more haystacks?) but are eager to visit a blues club or see where Dillinger was gunned down or watch Michael make a winning basket at the buzzer.

Even Chicago's loyal sons and daughters must concede that a global city is one that doesn't need to impress outsiders by being a global city. Yes, Chicago boasts — and boasts of — the world's biggest cookie and cracker factory, the world's busiest post office, the world's biggest candy factory, the world's biggest futures exchange, the world's largest dental library, the world's biggest medical school enrollment, the world's tallest building (soon to be replaced by one in Kuala Lumpur thanks to what loyal Illinoisans will agree is phony measurement), the world's most powerful atom smasher, the world's largest sewage treatment plant, etc., etc., etc.

But it will be truly a global city when it accepts that its one indisputable claim to global status is that it is the world's only Chicago.

James Krohe Jr., a transplanted Illinoisan now living in Portland, Ore., is a contributing editor of Illinois Issues who frequently writes on economic issues for national publications.

20 / February 1997 Illinois Issues

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