Wednesday, August 21, 2013

Hamilton, Ontario – Future Detroit?

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The bankruptcy of Detroit got me thinking about Hamilton, Ontario. I lived there after high school but for all intents and purposes, I practically grew up there. When people ask me about Hamilton I usually describe it as the “Detroit of Canada.” And it a lot of ways it really is. Some problems with Hamilton mirror Detroit’s issues. Both cities failed to diversify their exports when manufacturing became less prominent. Entrepreneurship took a backseat to the socialist daydreams of municipal politicians and bureaucrats. As boondoggle after boondoggle failed to rejuvenate Detroit’s wealth, the city eventually had to face the reality: there’s no more money. While Hamilton’s particulars don’t exactly match Detroit’s – as cities in the State of Michigan are politically different than municipalities in Ontario – the market fundamentals are similar enough to draw some interesting conclusions.

Hamilton’s steel mills harbour the city’s access to most of Lake Ontario. Once the economic backbone of the city, this vast industrial site and surrounding area are now decrepit eye sores. The downtown reflects this post-industrialized state: Gore Park, John Street, Barton Street, etc. are hang out spots for crackheads. The infrastructure is crumbling. Most people have escaped to suburbia on the mountain, a 300-foot escarpment that physically separates the city. Like Detroit, Hamilton’s politicians have tried to re-polish the city via multi-million dollar boondoogles. Copps Coliseum was a $36 million project that involved demolishing some classical architecture for a modern-day sports complex. 40 years later and the arena is still surrounded by homeless people and drug addicts. The renovation of City Hall was a million dollar fiasco, finishing off budget and overtime. The city has an infrastructure debt of $2 billion. When I moved away in 2010, all the talk was about light-rail transit – a billion dollar project that would improve traffic flow, rejuvenate the downtown core and bring about a Heaven on Earth. Of course, light-rail will bring about none of those things. My source is a woman who used to lived in Toronto.
In 1961 Jane Jacobs wrote her magnum opus, The Death & Life of Great American Cities. In the work she describes how cities thrive and how they decay. Gene Callahan and Sanford Ikeda wrote that “her works are full of arguments and insights on the economic nature of communities, on central planning, and on ethics that libertarians would find original and enlightening.” Cities are “problems of organized complexity,” which require “dealing simultaneously with a sizeable number of factors which are interrelated into an organic whole.” Jacobs unwittingly came across what Hayek had discovered through his studies with Ludwig von Mises. That, “planning fails to take into account the subtleties of the knowledge possessed only by the individuals on the scene (for which she coined the term “locality knowledge”)”
A city is a dense concentration of individual actions. Purposeful action implies means and ends – each individual has a plan on how to act. Each plan produces a vast array of knowledge and only through voluntary interaction can meaningful signals arise that aid the coordination of each individual plan. This ultimately means that wealth – however defined – is dependent on voluntary action. Coercive behaviour destroys this “locality knowledge” inherent in communities. Taxation disrupts price signals; government spending destroys them. If Hamilton has a future, perhaps it’s best to look to Detroit’s potential now that the obvious has happened.
Long before Detroit declared bankruptcy, the city’s entrepreneurs started reclaiming land for urban farming. Now Detroit is on the forefront of this burgeoning movement. But whereas New York, Milwaukee or Vancouver have to apply to the local government for their urban farm – Detroit’s residents often resort to homesteading. “If it’s vacant, I’ll take it,” says one entrepreneur.
Artwork is another field where Detroit is leading the way. Throughout the city, a graffiti culture has sprung up, attracting artists worldwide. As Karen DeCoster writes in her blog, “As a libertarian, I don’t sanction the graffiti on private property, however, I can certainly appreciate and endorse the homesteading going on in a city with more vacant real estate than occupied property.”
Likewise Hamilton has a thriving art scene. The Art Gallery has been around since 1914, while the McMaster Museum of Art is celebrating its 46th birthday. Recently new art centres have opened up, including The Factory, Downtown Arts Centre, Community Centre for Media Arts and many other galleries which are springing up mostly around the downtown core: James Street, Locke Street, Rebecca Street and King Street. The art scene is drawing people back to the downtown core and is slowly but surely redefining the culture of a working-man’s city to a sort-of “underground” art scene, complete with hippies, beatniks, freaks and punks.
While urban farming hasn’t taken off in Hamilton the same way it has in Detroit, the potential is there given the amount of vacant lots, buildings and rooftops. But perhaps when times get tough, Hamiltonians will homestead health-care facilities instead. There are many homeless, drug addict and mental health issues in Hamilton and government policies and organizations often do more harm than good.
Given the rapid decay of both cities, the ability for governments to spend recklessly or impose arbitrary bylaws is weakening by the day. Both Hamilton’s and Detroit’s residents have the opportunity to implement the ideas of Jane Jacobs or the Austrian school. Jacobs wrote that city governments can’t rejuvenate downtowns with multi-million boondoggles. A downtown must have mixed uses of residential and commercial property – a downtown must have something that actually attracts residents and makes them want to stay (and perhaps even live there). The Austrian school has laid out an entire framework on how to correctly understand market phenomena and recognize the fallacies in central planning. Both viewpoints complement each other and offer a refreshing perspective on something we are told is fallacious. The success of a city, according to our wise overlords, depends on how much governments spend on whatever project they have in mind. Allowing people to freely exchange with each other will cause all kinds of inequalities and poverty.
Hamilton’s ongoing boondoggle is the light-rail initiative. It will breath life into the downtown, say the proponents. But a fast train to downtown won’t change the fact that there’s nothing downtown to go to. People work downtown – lawyers, bankers, service sector employees, etc – but no one actually says, “let’s go out tonight – downtown? Sure!” The closest thing downtown receives to a nightlife is the joyous company of crackheads looking for a fix or Hess Village which is still a few blocks away. The growing art scene is an opportunity that may strengthen in the coming years – but endless construction on a million dollar train will destroy any incentive to go downtown. Entrepreneurs are the force that will attract people back to the downtown core and restore the city’s wealth and culture. If there’s something to go to, people will find a way. Light-rail or not.
In the meantime, if Hamilton’s bureaucrats and politicians don’t learn from Detroit’s mistakes, then they’re bound to the same fate. Subtle differences (such as close proximity to Toronto) may offset their decline, but the fundamentals are the same – Hamilton is neglecting entrepreneurship for million dollar projects that serve no real purpose and leave everyone poorer.

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