May 5, 2009 City Council packet - Laserfiche WebLink

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upon us —the rise of the West in the i5th century and the rise of America in the tgth century being the two previous sea changes. But Zakaria added that this transition is defined less by American decline than by "the rise of the rest." We're to look forward to a world economy, he wrote, "defined and directed from many places and by many peoples." That's surely true. Yet the course of events since Stembriick's remarks should give pause to those who believe the mantle of global leadership will soon be passed. The crisis has exposed deep structural problems, not just in the U.S. but worldwide. Europe's model of banking has proved no more resilient than America's, and China has shown that it remains every bit the codependent partner of the United States. The Dow, down more than a third last year, was actually among the world's better -performing stock -market indices. Foreign capital has flooded into the U.S., which apparently remains a safe haven, at least for now, in uncertain times. It is possible that the United States will enter a period of accelerating relative decline in the coming years, though that's hardly a foregone conclusion —a subject I'll return to later. What's more certain is that the recession, particularly if it turns out to be as long and deep as many now fear, will accelerate the rise and fall of specific places urithin the U.S.—and reverse the fortunes of other cities and regions. By what they destroy, what they leave standing, what responses they catalyze, and what space they clear for new growth, most big economic shocks ultimately leave the economic landscape transformed. Some of these transformations occur faster and more violently than others. The period after the Great Depression saw the slow but inexorable rise of the suburbs. The economic malaise of the ig7os, on the other hand, found its embodiment in the vertiginous fall of older industrial cities of the Rust Belt, followed by an explosion of growth in the Sun Belt. The historian Scott Reynolds Nelson has noted that in some respects, today's crisis most closely resembles the `Long Depression," which stretched, by one definition, from 1873 to t896. Itbegan as a banking crisis brought on by insolvent mortgages and complex financial instruments, and quickly spread to the real economy, leading to mass unemployment that reached 25 percent in New York. During that crisis, rising industries like railroads, petroleum, and steel were consolidated, old ones failed, and the way was paved for a period of remarkable innovation and industrial growth. In 1870, New England mill towns like Lowell, Lawrence, Manchester, and 3