Newark's urban regeneration strategy and neoliberal renewal efforts

Human Geography

By 1970, Newark, New Jersey was already a city in decline. The city, which had been built on a diverse industrial base, had been prosperous through the middle of the 20th century. By 1970, however, the city was poor. The population sat at 381,000, down 13% from post-war highs and was in the midst of a long-term downward trajectory. The city had already been the focus on urban renewal efforts in the 1950s, as outlined by Harold Kaplan in 1963. These efforts ultimately failed and the city had descended into poverty and racial tensions, culminating in the 1967 race riots that touched off another round of middle-class flight from the city. Urban renewal efforts would not return until the 1980s, as a consequence of a precipitous decline in the city's tax base. Newark since that time has followed the lead of many other faded industrial cities in adopting neoliberal policies, while simultaneously focusing government intervention on significant infrastructure projects intended to attract a wealthier demographic back to the city. A unique component of Newark's urban regeneration plan has been its ability to attract a diverse immigrant population, which has participated in the urban renewal. This paper will analyze the efforts of Newark towards urban regeneration. The evidence supports the contention that thus far these efforts have only had marginal success in restoring the vitality of the city but are starting to take hold in recent years.

There are three main components to Newark's urban regeneration efforts -- infrastructure improvements, crime reduction and economic diversification. Each serves a critical purpose in the neoliberal approach to urban regeneration. Modern infrastructure is necessary to maintain both an industrial base and a middle-class population. In order to encourage upwardly mobile middle class, cultural facilities must also be developed. Crime reduction in areas beset by poverty and criminality is a critical component of neoliberal renewal -- high crime rates discourage investment and they also cause government to spend a disproportionate amount of resources on law enforcement. Lastly, Newark's fortunes were built on economic diversification yet, with the exception of the insurance industry, most of its former economic base has withered. Newark has only begun to attract new investment in order to grow its economy.

Infrastructure

Newark's decline coincided with the decline in its economic base. As this occurred, the city was caught in what economists term a "death spiral" -- it needed to upgrade its infrastructure to meet the needs of its citizen and businesses but faced with a declining tax base was unable to do so at an adequate rate. Newark became uncompetitive compared with newer cities and towns with modern infrastructure. There are two infrastructure components that should be considered -- basic infrastructure and cultural infrastructure. Newark has gradually taken steps to address both of these issues. For example, it has invested in upgrades to its 150-year-old sewer system (CDM, 2009).

The other component of infrastructure investment is cultural infrastructure. There are two core purposes to this investment. One is to improve the quality of life for the residents and potential residents, thereby attracting wealthier citizens and increasing the tax base. The other is to create spinoff investment and spending. Major cultural centers, such as the Newark Arena, the Newark Museum, Riverfront Stadium and the New Jersey Performing Arts Center are all evidence of the city's investment in cultural infrastructure (Kaye, 2004). In Newark's case, the city had been successful as a city in its own right, but without these cultural institutions it could realistically only appear as a suburb of New York City. The cultural infrastructure was necessary to re-establish Newark as a vital city worth of attention in its own right, thereby competing with New York on culture on the basis of its comparative advantage in geography for New Jersey residents.

These facilities are intended to act as magnets, bringing people from the city and its hinterland to the downtown core. This influx of spending is intended to spur an increase in investment as well, resulting in a compounding effect on the government spending. This represents a shift towards neoliberal economic views in the Newark government. The basic GDP equation is as the sum of consumer spending, business investment, government spending and net exports. Government spending on social programs may increase the GDP, but it does not create wealth. In particular, it fails to generate new taxes. Taxes are required to pay for social programs, however. What Newark has done with its neoliberal model is changed the type of government spending to that which has a multiplier effect, increasing C. And I along with G. This is essential because C. And I are where taxes are generated.

Crime

Crime is another central component of Newark's urban renewal program. Economically, crime is another area where government spending has no spinoff effect, until crime rates are held below a certain level that allows for business and consumers to have confidence in a particular area. For Newark, the extended period of economic decline had resulted in significant crime rates. Crime was for the longest time a fact of life in Newark, and this had two effects. The first is that it discouraged investment. In economic terms, crime is an externality that adds costs to doing business. If the opportunities do not outweigh the costs, then investment is discouraged. There is an equilibrium point at which crime and opportunity meet, and below this point investment will increase. New York saw significant improvements in business investment in the wake of its anti-crime campaign, but that city has more opportunity than does Newark; just as Newark has more opportunity than smaller towns. Newark has seen its crime rates drop in recent years, which should encourage new investment. The city has, however, not addressed crime as creatively as other centers and for this reason its improvements generally lag those in many other areas. Crime was not made a political priority until after the 2006 election of Mayor Cory Booker (Soliman, 2010).

Economic Diversification

If the decline of Newark was essentially a death spiral precipitated by the decline of the city's industrial base, then reversing this trend surely would be the key to bringing renewal to Newark. Infrastructure improvements are one important step. Crime is a more complex issue, because crime is a response to the lack of economic opportunity (Hamnett, 2003). However, with a relatively minor reduction in crime, the economy can be gradually stimulated. Newark has undertaken a couple of key strategies in recent years to promote diversification of the city's employment base.

With the manufacturing base deteriorated, Newark's core employment came from the insurance industry. With high crime and a compromised infrastructure, Newark needed to capitalize on its other advantages. The first of these to be aggressively exploited was its physical location, which provided an advantage in transportation. The Newark airport was exploited to take advantage of tight capacity at New York City's airports. The Port Authority of New York and New Jersey is also making heavy infrastructure investments in Newark (Roney, no date).

Lastly, Newark has leveraged its higher educational facilities as a means to build a knowledge industry, taking advantage of the New Jersey Institute of Technology and Rutgers University. The University of Medicine and Dentistry of New Jersey has resulted in the city developing an industry in medical research. Each of these initiatives has taken advantage of an existing competency in order to build a high-value industry that can serve to attract the middle class back to Newark. The degree to which that happens will determine the intensity of Newark's renewal success.

Costs

That said, there are costs associated with such renewal. In the 1960s, Newark experienced race riots as the result of urban renewal efforts. A demographic shift and the creation of knowledge industries can precipitate similar conflict today, given that the city still has an African-American majority and much of this majority remains in poverty. The lack of economic mobility among this community is not explicitly addressed in Newark's urban renewal plans. Ramos-Zaya (2009) argues in a study of Hispanic youth in Newark that neoliberal renewal policies result in shifting sense of identity among such youth. Other studies such as Newman & Ashton (2003) have showed that the impacts of neoliberal land use policies geared towards regeneration often fail to deliver benefits to the old-established residents of the neighborhoods in question, and as a result are more a form of gentrification than renewal. Such an outcome would be expected under Newark's current strategy, given the city's demographics and the expected beneficiaries of its neoliberal renewal policies.

Conclusions

After years of government inaction and inefficient spending on social programs, Newark has in recent years embarked on an aggressive strategy of urban renewal. This strategy has focused on infrastructure investments (everything from sewers to arenas) and tax cuts to attract investment and the development of new industries. The result is that Newark is showing signs of economic renewal, in particular in its ability to attract middle class professionals back to the city. Over time, this trend will create a more dynamic Newark with a diverse economic base and a vibrant demographic. However, the impacts of these changes on the existing residents, most of whom are poor minorities, are largely going to be negative. They have neither the education nor training to take advantage of the new jobs and industries, and may find themselves priced out of their own neighborhoods. Newark appears headed for economic renewal, but social renewal may be stifled by rising tensions between the existing citizens and the new citizens that Newark intends to attract. These citizens, already facing lower social spending as the city shifts its funding priorities to infrastructure projects, may be compartmentalized into smaller pockets of the city or forced outside of Newark altogether, resulting in civic disharmony that the city will need to manage in order to continue to experience economic regeneration.

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