Developing an Ecosystem for Social Enterprise

by Melanie Friedrichs

Cities around the world are struggling with unemployment, troubled school systems, violence and environmental degradation. Government welfare programs and traditional charitable organizations have been throwing money at the same problems for years. Business initiatives and private sector growth help the few, but leave the many exposed to the perils of the free market. How can cities create sustainable, equitable growth?


Students of the Afghan Institute of Learning, a social enterprise that provides education and health services to over 350,000 women and children each year. Source: Ashoka

Social enterprise is a compelling answer. Unite market and mission with organizations that work to address social, environmental and economic problems through earned-income strategies. Target root causes and seek structural change through innovative solutions to old problems. The dream of social enterprise has captured hearts in many fields, appearing in books like "How to Change the World," by David Bornstein, and features like "Faces of Social Entrepreneurship" in the New York Times Magazine.

But wait, there's a catch: starting a successful social enterprise isn't easy. Funding is especially challenging because such ventures don't qualify for grants from many charitable foundations or offer the profit potential sought by investors. They also don't quite fit within current legal systems. While best practices for starting a business or non-profit have been tested for years, experience-based advice for mixed models is rare. Infrastructure for meeting the needs of social entrepreneurs is still in formation.


Social enterprise ecosystem builders. Source: Melanie Friedrichs

Social enterprises need a fertile "ecosystem" to grow, including:

• capital: innovative funding mechanisms
• advocacy: initiatives to raise awareness
• incubation: tailored mentorship and training
• network: opportunities to collaborate and scale
• education: support for young social entrepreneurs

This takes concerted effort and collaboration from a wide range of players, but success can turn the dream of social enterprise into a powerful driver of economic development.


The 2012 SEEED Summit. Source: Brown Daily Herald

The Social Enterprise Ecosystems for Economic Development (SEEED) Summit is a national conference that brings social entrepreneurs together with related actors to share experience and ideas. SEEED aims to build a national ecosystem and support local ecosystems, encouraging students, academics, professionals and anyone interested in learning more to attend.

Last year, the first SEEED Summit featured talks by Diana Wells, president of Ashoka, Michael Brown, co-founder and CEO of City Year, and Christopher Gergen, president of Bull City Forward. This year we'll hear from Ira Magaziner, president of the Clinton Health Access Initiative, Carla Javits, president of the Roberts Enterprise Development Fund (REDF), and many other exciting participants.


The 2013 SEEED Summit takes place on April 26-27 at Brown University in Providence, Rhode Island. Details and registration are available at seeed.org.

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15 Points About the Underbanked

by Melanie Friedrichs


Source: The East African

Definitions

"Underbanked" is a bit of a buzzword in the financial services industry, but it rarely finds its way into popular culture. Different definers offer different definitions, but the most authoritative is that of the Federal Deposit Insurance Corporation (FDIC), whose National Survey of Unbanked and Underbanked Households defines it consistently in relation to "unbanked":

1. Unbanked: "Households that do not have a checking and/or savings account."

2. Underbanked: "Households that have a checking and/or savings account and have used non-bank money orders, non-bank check cashing services, non-bank remittances, payday loans, rent-to-own services, pawn shops or refund anticipation loans (RAL) in the past 12 months."

In casual language, the term "underbanked" usually refers to the "underserved" — individuals or households who don't fit neatly into the conventional financial services landscape. I offer a broader definition:

3. Underserved: The unbanked, the underbanked and all consumers who can't access credit because of poor, thin or no credit files, or face some other barrier to accessing financial markets.

Demographics

Charts tell this story better than I can:

4. One in four U.S. consumers are unbanked or underbanked:



2011 banking status of U.S. households (percent). Percentages are based on 120.4 million U.S. households and may not sum to 100 because of rounding. *These households are banked, but there isn't enough information to determine if they're underbanked. Source: "2011 National Survey of the Unbanked and Underbanked Households" by the FDIC


5. The unbanked are disproportionately minorities:



Unbanked households by race. Source: "2011 National Survey of the Unbanked and Underbanked Households" by the FDIC

6. Cities: According to the FDIC National Survey: "Larger proportions of unbanked households are located in urban areas than other banking status groups. The largest share of unbanked households (41.2 percent) are concentrated in urban areas, while only 30.9 percent of underbanked and a quarter (25.5 percent) of fully banked households live in urban areas."

Reasons

7. Distrust: On Friday I ran into an acquaintance on the train to Boston and, when I pulled out my debit card to pay for my ticket, he remarked that he doesn't do that anymore. He had pulled his money entirely out of the system to avoid supporting big banks. While he is in a small minority, aversion and distrust are important reasons for the high percentage of underbanked. And distrust works both ways, as risk aversion and fear of default leads some institutions to tighten their lending rules.

8. Low rates, high fees: Both the public perception and the value proposition of financial institutions right now are near rock bottom. The Federal Reserve's "quantitative easing" measures drove down lending rates, the primary source of revenue for banks and credit unions, which in turn led to higher fees and lower deposit rates. Consumers now have to search for a deposit account that will earn them money instead of costing them money.

9. Regulation: Regulation isn't designed to hurt the underbanked, and some regulation, such as the 1977 Community Reinvestment Act, is specifically designed to help. Regulation is, however, designed to catch money-launderers and identity thieves, and reduce systemic risk. Identity verification and "Red Flag Rules" strengthened under the Patriot Act can prevent applicants with thin credit files — mainly young people, recent immigrants and low-income workers — from opening even a basic checking account. Basel III liquidity requirements may cause some banks to lend more conservatively, and Consumer Financial Protection Bureau (CFPB) oversight may cause them to raise fees to cover compliance costs. Talk about unintended consequences.


Source: Bankless Times

Solutions

The "traditional" way to serve the underbanked is through Alternative Financial Services (AFS), including check-cashing, payday and tax-refund loans, rent-to-own agreements, subprime mortgage and auto loans, as well as person-to-person lending. Although not exploitative by rule, AFS have a bad reputation because need-based leverage, informal operations, local monopolies and information asymmetry allow AFS providers to charge high fees or lock the underbanked into burdensome debt agreements. I know of three interesting ways to serve the underbanked outside of AFS:

10. Alternative data: As mentioned above, many of the underbanked have thin credit files, which cause problems with identity verification and sometimes make them "unscorable" by credit data reporting agencies. Loan applicants with no credit score are usually denied credit, creating a Catch-22 in which applicants without credit history can't get credit history. It is possible to incorporate alternative data sources, including utility payments, phone bill payments, rental payments, remittances and other non-payment data into credit scores. A number of companies started packaging alternative data for financial institutions in the 1990s and 2000s with limited market penetration, but in the past few years supporting research by advocacy groups and careful integration of alternative data by major credit reporting agencies has helped bring alternative data into the mainstream.

A graph from the Policy and Economic Research Council (PERC) shows credit scores with and without the use of alternative data:



Distribution of credit scores for all consumers in sample with and without utility payment data and for those consumers with only utility payment data. Source: "Using Non-Traditional Data for Underwriting Loans to Thin-File Borrowers: Evidence, Tips and Precautions" by Michael Turner and Amita Agarwal

Incorporating alternatives to financial-institution payments into the score can help underserved consumers access credit. For more information, see "Give Credit Where Credit is Due: Increasing Access to Affordable Mainstream Credit Using Alternative Data" from PERC and the Brookings Institution Urban Markets Initiative.

11. Prepaid cards: Prepaid cards evolved from gift cards and government Electronic Benefit Transfer (EBT) cards as a way to pay unbanked employees. Private prepaid card providers emerged in the early 2000s, in some cases charging high fees and engaging in exploitative practices similar to those associated with AFS. Prepaid cards have generated much speculation recently with the launch of prepaid cards by major companies, most notably Bluebird by American Express and Walmart. For more information, see "Cards, Cards and More Cards: The Evolution to Prepaid Cards" from the Federal Reserve Bank of St. Louis.


A few popular prepaid cards on the market today. Source: Melanie Friedrichs

12. Mobile banking: Recently, a number of organizations and publications have touted mobile banking as a way of serving the underbanked. Many underbanked consumers have mobile phones — more than the number who have a personal computer or home Internet connection among some demographics. Mobile allows low-income consumers to access key financial services at a low cost, and also integrates with personal financial management tools to encourage smart spending and "financial capability." It also provides opportunities for peer-to-peer payments and peer-to-peer lending. For more information, see "Reaching Underbanked Consumers Through Mobile Services" from Celent and the Center For Financial Services Innovation.

So What?

Definitions, demographics, reasons and solutions are of little use without a reason to care. Many consumers who distrust banks may simply say good riddance. For banks, the demographics of the underbanked tend to overlap with the demographics of their least profitable and highest risk customers. So why, apart from an ethical appeal to equal opportunity, should we care about the underbanked?

13. Lifetime value: "Fortune at the bottom of the pyramid" aside, the underbanked have long-term potential greater than their short-term appeal. And remember, we're not talking about a few customers who slip through the cracks; we're talking about a full quarter of the population. Financial institutions of all stripes today are eager to lend, and offering credit to an underbanked but responsible consumer who would have otherwise used AFS can benefit both parties.

14. Catalyst for change: Cost-effectively serving the underbanked requires out-of-the-box thinking to lower the cost and increase accessibility of transaction services. Luckily, this is exactly the kind of thinking that banks should be doing anyway. Alternative data, prepaid cards and mobile banking are all tools that banks and credit unions can use to improve their service offerings substantially.

15. Macroeconomics: Standard economic theory says that entrepreneurs need access to financial services to obtain funds to innovate. Exclusion from financial services prevents would-be small-business owners from starting out and growing; it may also prevent the underbanked from pursuing higher education. Similarly, the burdensome interest rates and high transaction fees of AFS keep the underbanked in poverty, which hurts the economy and society at large.

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Portrait of a Slum Raises Questions About Corruption

by Melanie Friedrichs

Last month, Katherine Boo won the National Book Award for "Behind the Beautiful Forevers," a chronicle of life in an Indian slum based on several years of in-depth reporting. The slum she chose, Annawadi, lies next to the Mumbai International Airport, surrounded by five luxury hotels — "a stretch where new India and old India collided and made new India late."


Flying into the Mumbai International Airport, above Annawadi. Source: ABC

When I first heard about Boo's book, I worried that it had won the award for sensational descriptions of poverty and misfortune. After a summer spent working near the Mumbai International Airport, I was somewhat familiar with the scene and wary of its misrepresentation.


Cover photo from "Behind the Beautiful Forevers." Source: Barnes & Noble

Boo's subject matter is sensational, but her prose is matter-of-fact; she doesn't indulge in drawn-out or tragic descriptions, and her story rang true for me. She is a brilliant reporter, offering a textured depiction without analysis or solutions.


Katherine Boo in Annawadi. Source: Outlook India

I admire the decision to stick to description. Often the best thing one can do to address a problem is to seek a thorough understanding. Still, I found myself drawn to passages that hint at opportunities for institutional reform or charitable aid, like the following:

Mr. Kamble had grown up poorer than Asha: abandoned infant; dweller on pavement; doer of hopeless jobs, among them trudging office to office to sell perfumed cloths to sip into the earpieces of telephones, on the tiniest of commissions. "A perfumed phone cloth, sa'ab? To hide the hot season stink?" In his thirties, though, he'd had a bolt of fortune, While he was working at a train-station kiosk, a regular customer, a maintenance worker for the city government, had come to like and pity him. In short order, the man offered Mr. Kamble his own surname, a bride, and the grail of every poor person in Mumbai: a permanent job, like his own.

Mr. Kamble felt honored by this responsibility. He and his wife had three children, bricked the walls of their hut, and on one wall installed a cage for two pet pigeons. (In his pavement-dwelling years, he'd developed a fondness for birds.) The job had been to clean public toilets and falsify the time sheets of his benefactor and other sanitation workers, so that they could take other jobs while collecting their municipal pay. Mr. Kamble had been one of Annawadi's great successes — a man deemed worthy of titles like ji or mister — until the day he collapsed while cleaning a shitter.

A scene from Julia Waterhous's documentary project "Don't Waste People," about a waste-picker colony in New Delhi. Source: Don't Waste People

There is a community of sanitary workers in New Delhi who have worked for decades at jobs with salaries set during the heyday of caste reparations, following independence from Britain. The community is relatively affluent by Delhi's standards, much more so than the waste-picker colony I visited on the city's borders (where former Polis intern Julia Waterhous is working on a documentary project that came to mind frequently while reading Boo's book). It's not inconceivable — in fact, it's quite likely — that some of the residents of the affluent community farmed out their professions to people like Mr. Kamble in order to take cleaner, more upwardly mobile jobs.

Is this form of corruption doing more good than harm? Would forcing municipal workers to actually work or give up their salaries allow people like Mr. Kamble to fill their jobs legitimately, for higher pay and possibly heath benefits? Or would it place such jobs permanently out of surrogate workers' reach, sending them back to peddling or waste picking?

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In Pursuit of Urban Entrepreneurship

by Melanie Friedrichs

Providence is not a large town. You can walk from end to end in an hour (even though most people choose to drive), and it's common to see familiar faces on the streets. The metropolitan area is just populous enough to attract big-name bands on their way down the East Coast, but some people still consider it a suburb of Boston.

Providence is not a rich town. Rhode Island's unemployment rate is the second highest in the nation, and Providence's rate is 1.6 percentage points higher. Last spring, the mayor's appeal to Brown University for monetary assistance led to a highly publicized squabble with the university administration. A brief pit-stop at a student protest landed me in the Wall Street Journal (below, far right).


Source: Wall Street Journal

As is often the case with cities that are neither large nor rich, there are many people trying to save Providence. (Perhaps it's all part of an instinct to care for small and helpless things). All of the would-be saviors more or less agree on one thing: Providence needs jobs, and because everyone knows that importing casinos isn't a particularly sustainable strategy, jobs means entrepreneurship. Of course, every would-be savior has a slightly different idea of what entrepreneurship means and how to go about promoting it. The following is a rough grouping of these approaches, which I hope will lead to useful discussions on sparking innovation and employment in cities.

Private Sector

Most of the Providence professional community is employed by one of the mandatory outposts of too-big-too-fail banks (Fidelity, Citizens, TD, Bank of America) or one of two idiosyncratically located corporate headquarters (CVS, Hasbsro). Professionals are courted for their spending capacity, and they read about each other in the Providence Business News. The entrepreneurially inclined go to Providence Geeks or Betaspring (Providence's premier startup incubator) to network. Despite valiant efforts, Betaspring tends to attract only entrepreneurs who are too poor to locate in Boston, New York or Silicon Valley, and who move away after about 18 months. The number of for-profit companies founded in Providence over the past 10 years that employ more than 15 people can be counted on two hands. According to the private sector, Providence doesn't have jobs primarily because Providence doesn't have talent: All the brains drain to the big city and leave behind a lackluster workforce.


Judges at Demo Day, the culminating event of the Betaspring incubator program. Source: Betaspring

Nonprofit Sector

While the private sector dreams of the next Facebook, the nonprofit sector chases micro-entrepreneurship, which tends to be modest, gritty and local. In many cases, a "job" means minimum wage and a "company" means a home-cleaning service with three or four employees. Providence's nonprofit sector is further split between young savior-wannabes and seasoned social workers who know the system inside and out. The two groups have different visions. Young saviors believe in catalyzing social change from the grassroots up — that microloans made by the Capital Good Fund or employment opportunities offered through Amos House will lead to a healthy, happy economy. The system insiders, for the most part, are just trying to keep the boat afloat until the mythical rising tide lifts all. According to the nonprofit sector, Providence doesn't have jobs primarily because Providence isn't empowered: Youth grow up in an oppressive cycle of poverty, crime and unemployment, without access to the resources or support they need to break free.


Amos House started the Friendship Cafe to provide job training. Source: Amos House

Public Sector

Providence's biggest entrepreneurial engine should be the Rhode Island Economic Development Corporation, but it's widely considered underfunded and ineffective. The more energetic city and state officials run between ribbon cuttings and events hosted by the private sector or the nonprofit sector; bureaucrats with empty pockets become glorified cheerleaders. I'm a big fan of the General Treasurer, but I get the impression that she is too bogged down in the quagmire of welfare programs, unemployment insurance and pension plans to have much energy for anything else. The most active arm of the public sector in Providence is probably the Rhode Island Foundation, which is not a public institution at all, but is so old and established that it almost seems like one. According to the public sector, Providence doesn't have jobs primarily because Providence doesn't have money: State stimulus funding has long ago run dry, leaving little resources for entrepreneurial job creation.


Rhode Island State Capitol, far more imposing than it needs to be. Source: Wikimedia Commons

Institutions

When it comes to creating jobs, the power of Providence's universities and hospitals dwarfs that of the private sector, the public sector and the nonprofit sector combined. In 2009, five of the 10 largest employers in Providence were hospitals, and two were universities. Jobs are obviously not the main priority for hospitals and universities. For three years, Brown's Rhode Island Center for Innovation and Entrepreneurship was the closest thing Providence had to an entrepreneurship hub, but it didn't manage to focus the energies of the private, nonprofit and public sectors to offer effective support for entrepreneurs. The university cut its funding in 2012. According to research institutions, Providence doesn't have jobs because, well, there are many reasons. Why don't we get someone to study it? Oops, semester's over, time for exams!


Brown University, the giant on the hill. Source: Brown Broadcasting Service

Progress?

As an employee at Andera — one of the largest Providence start-ups — and a Venture for America fellow, I am supposedly part of the answer to reversing brain drain, but I'm definitely not answer enough. As a former intern with Social Venture Partners Rhode Island and confessed savior wannabe, I am also aligned with Providence's nonprofit community, but haven't effected even micro change. As a citizen of Providence, I am part of its government (by the people, for the people, of the people) but I find that I can do nothing but watch it flounder. When I was a student at Brown, I was unable to build something strong enough to withstand the transience of university initiatives.

I often wonder if the would-be saviors would be stronger together. My affiliation with all four sectors suggests that the entrepreneurial community isn't as splintered as it may seem, but it's still far from a cohesive body. As in all urban settings, the magic happens when everyone is brought together. Most of my posts about Providence (especially here and here) have been about such moments. However, the most significant gap is between potential saviors and the people to be saved. Providence's low-income residents are seldom a driving force behind initiatives to promote entrepreneurship.

It's easier to write about tragedy than triumph, and I'm afraid this post has been a downer. After all, we've been in a recession for four long years. Still, each sector has helped enrich Providence socially, culturally and economically. Their work merits criticism rooted in profound respect. If you'd like to talk about Providence, please contact me via @mfriedri or melfriedri@gmail.com.

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Return to Jackson Heights

by Melanie Friedrichs

From Providence

Every few months, the gravity of New York City sucks me in and pounds my feet madly to the pavement until I escape, exhausted, on an outbound bus. Last Saturday, it pulled me to a place I had visited only once before. It was an assignment for "Cities in the 21st Century," a comparative study-abroad program that whisks American students around the world to experience urban forms in other countries, beginning with two weeks at home. The assignment was simple: Go to Jackson Heights. Riding the subway to Queens last weekend brought back my impressions and discoveries from that day.

Interview with Ben Berkowitz of SeeClickFix

by Melanie Friedrichs


SeeClickFix co-founders (left to right) Jeff Blasius, Ben Berkowitz, Miles Lasater and Kam Lasater. Source: SeeClickFix

Ben Berkowitz is co-founder of SeeClickFix, a website and software application that allows users to upload pictures of infrastructure problems — like potholes or downed trees — and report them directly to local government. SeeClickFix offers its software and data to users for free. It also does paid work for municipalities, developing solutions to infrastructure problems from start to finish. SeeClickFix recently teamed up with The Huffington Post to assist with recovery from Hurricane Sandy. Ben sat down with Polis to talk about how users have reacted to SeeClickFix, and share his views on governance and entrepreneurship.

What inspired you and your co-founders to start SeeClickFix?

There were a number of problems in my neighborhood that were supposedly being documented and dealt with through city channels. During an attempt to get graffiti off of a neighbor's building, I had the idea that publicly documenting the problem would help hold the government accountable. I think my co-founders were feeling some similar frustrations. I was also motivated by a general interest in getting involved with a social venture that could have a long-term impact on our community.

New Haven is an unusual place for a tech start-up. Why did you choose to stick around instead of moving to New York or Silicon Valley?

Miles [a co-founder] always jokes that the food kept him here longer than he expected. New Haven really has an amazing restaurant scene. Also, my family is here, and with food and family you tend to stay. Then, as if by local karma, you find that there are all these other awesome reasons. Access to talent is really high because of the universities, and demand is not as high for technical people here as in Boston, NYC, the Valley or even Boulder. And, of course, the city itself is a fun place; there are lots of livable, walkable, cyclable places — the same things I enjoy in some of my favorite big cites like Boston, New York and Vancouver.

When you first brought the idea of using SeeClickFix to local government, what kind of response did you receive?

I was not expecting it to go as smoothly as it did. I didn't expect issues to get fixed when we made them public. I suspected that local government wouldn't like us right away. But it works, and it turns out most local government officials actually do want to do their jobs. More and more governments are partnering with us and not trying to look the other way. Also, I was surprised that so many governments started using our software for managing internal data. I have lots of faith in the engineers on our team and we're building really good software, but I thought that "legacy software" was more entrenched in local government than it was.

When I started, I had a very "us vs them, citizens vs government" mentality, and now I have more of a "we" mentality. There are people on both sides who can be disruptive to the community, and people on both sides that can really make the community a positive place.


SeeClickFix workflow. Source: Alliance for Youth Movements

Do you think SeeClickFix has succeeded in helping residents and local government connect?

Definitely. People have gotten together to resolve things, people have gotten together to discuss things, people have gotten together to lobby things, people have helped each other. Here's my anecdote of the week: Users reported a desire for a dog park in a previously unused public space, and we helped fundraise for the dog park and got it put up. I just saw a report that a woman's purse had been found in front of the dog park and was posted to SeeClickFix. I'm not sure if she's gotten her purse back yet, but it's amazing to think that the incident might not have been reported if that park hadn't been there.

What do you think is the biggest problem in local government today?

Inefficiencies. General inefficiencies, communication, allocation of resources, failing infrastructure. I think that a great strategy is including more people in the act of governance. That's not a statement about big or small government; it's just a statement about more inclusive government. It's remarkable how many people from local government are willing to invite people in to help make communities better, and also what local citizens are willing to do in their neighborhoods that they wouldn't normally think of as governance. It would be great if the federal government could have as much success, but all the lobbying and politics get in the way of the things that really matter to people.

How would you characterize the role of entrepreneurship in cities?

Entrepreneurship is invaluable to cities. Any kind of culture that says, “Get it Started” and “Do it Yourself” is good if you're working at a nonprofit, if you're a kid in 4th grade selling lemonade, if you're the director of public works or if you’re the C.E.O. of a local tech start-up. That willingness to try something with minimal resources is what sparks innovation and keeps the country going. I’ve seen local government wake up to that, from New York City to much smaller cities like New Haven.

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Revisiting Urban Economics

by Melanie Friedrichs

In writing about cities, I often recall a course I took with Nathaniel Baum-Snow, which drew upon "Lectures in Urban Economics" by Jan Bruekner. The three concepts outlined below are my biggest takeaways from the course. Many principles of urban economics seem like common sense oversimplified, but articulating them has helped me assess their value in illuminating the nature of cities.


Source: Melanie Friedrichs

1. Agglomeration Effects

"Agglomeration effects" is a fancy way of saying "two heads are better than one," or rather "many heads are better than a few." It’s also the primary economic explanation for the existence of cities.

There are two main types of agglomeration effects:

• Pecuniary. Things are cheaper in cities. This is obviously untrue for rent, and many goods and services — like restaurant meals and boutique clothing — that fluctuate with demand. But it probably is true for shared resources like electricity, water and transportation.
• Technological. People are more efficient in cites, possibly because they can learn more from the diversity of people around them or because they are able to find more suitable jobs. In a farm town, there aren’t as many options for employment, and you might not be good at the job that’s available to you, but in a city there are more choices and opportunities to find a good fit.

Barcelona is a classic example of a high-amenity city. Source: Corsi Spagnolo

2. The Indifference Principle

Economists spend a lot of time thinking about why people do what they do. Some employ an overarching framework based on the notion that, when all things are considered, people choose what makes them happier or just as happy as any other available choice. According to Steven Landsburg's indifference principle, individuals are impartial toward choices that yield equal utility. This corresponds with Adam Smith's theory that individuals choose what will make them happiest, and thus what will make society happiest overall, through more or less rational decisions.

Urban economists often refer to the indifference principle in explaining why people live where they live. They generally group the factors involved into three groups:

• Rent. How much does it cost to live in a particular city?
• Income. How much can you earn in a particular city?
• Amenities. What is the city like? Examples of positive amenities include good weather, beautiful architecture, low crime, a waterfront and a lively music scene.

The principle of indifference seems like common sense, but can be a powerful tool of analysis. It implies that changes in any one of the three factors above tend to influence the other two. If jobs decrease, people will move out of the city, and with less demand rent will fall. If the amenity value of a place increases, then people will move into a city, and with more demand rent will rise.


Source: Alexiptoto

3. The Monocentric City Model

The monocentric model is a standard component of urban economics. In the monocentric world, there is one dominant place to work: the central business district (imagine downtown Manhattan).


Source: Melanie Friedrichs

Rent is highest closest to the central business district, decreasing as distance increases and the commute to the central business district gets longer and more annoying (in accordance with the indifference principle). When the amount of rent a central-business-district commuter is willing to pay is the same as the rent farmers are willing to pay for an acre of cropland, the city ends. (This is called the "urban fringe.") Consumers tend to pay higher rents per square foot closer to the central business district and lower rates farther away; that’s why the line for city rent is curved.


Source: Melanie Friedrichs

The monocentric model is a little out of date, however, as many cities have multiple centers and the Internet makes centralization of employment less important. But there are important lessons to be drawn from this model:

• Cities are denser at the center. Did you need a model to tell you that? Probably not.
• Transportation increases sprawl. Or, rather, faster transportation increases the convenience of commuting, increasing rent that central-business-district commuters are willing to pay, and thus increasing the area of developed land without a corresponding increase in population. For this one, at least for me, the model helped.

These three concepts are some of the basic building blocks of urban economics. Together they are meant to shed light on why cities exist, what drives up rent in some areas and down in others, and why transportation fuels sprawl. Of course, all of these principles are substantially distorted by power relations, asymmetric information and other contingencies, so cities rarely, if ever, reflect an idealized urban economy. I think of them more as the structural beams of a skyscraper, which determine the basic shape of the building without determining the texture of daily life inside.

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A Better World by Design and Technology

by Melanie Friedrichs

If you had the power to rebuild the world from scratch, how would you design it? The question seems hypothetical, but the more I think about design and technology, the more realistic and important it becomes.

Every October for the past five years I've attended a conference called A Better World by Design. Founded in 2008 by two engineering students at Brown University and two industrial design students at the Rhode Island School of Design, the conference attracts social entrepreneurs, urbanists, artists and students of all stripes for a weekend of ideation, iteration and, most importantly, inspiration.


"The Grand Anything" workshop at A Better World by Design 2010. Source: A Better World by Design

Many of the speakers touch on cities. Here are some of my favorites over the years:

• Cameron Sinclair (2008), founder of Architecture for Humanity
• Jaime Lerner (2009), urban planner and former mayor of Curitiba, Brazil
• Ben Hamilton-Baillie (2010), expert on traffic management and street design
• Steven Bingler (2011), founder of the architectural design firm Concordia
• Timothy Beatley (2012), author of "Biophilic Cities: Integrating Nature into Urban Design and Planning"

But the conference covers a wider range of themes than even the catch-all of "cities" can encompass. This year there were workshops on "Persuasive Communication," "Hip Hop for Social Change," "The Nature of Wood," "Eating Insects" and "Throwing Paper Airplanes at the Moon."

When I first attended as a wide-eyed freshman, I would have defined design as "the aesthetic arrangement of words and images on paper," or perhaps, as an afterthought, "the aesthetic arrangement of objects in space." Through the conference, I've gradually expanded my definition of design to something closer to the one offered by this year's closing speaker, Cheryl Heller: "Design is a process for seeing unconnected things in relationship to each other."

For the past five years I've watched the iPhone conquer the mobile market and entrepreneurs apply tablets and touch-screens to finance, retail, education and healthcare. Rapid innovation produces what economist Joseph Schumpeter called "creative destruction," a process by which new technology renders existing products or systems obsolete. The cell phone has nearly replaced the landline, which replaced the telegraph. The camera phone is substituting for the scanner, which has almost killed the fax. Ruby on Rails is growing more popular than Java, which dethroned C++ as the most popular programming language. Creatively destructive technologies are by definition better: faster, easier, cheaper.

Technology is constantly replacing existing products and systems with new ones. In a sense, each new round of creative destruction wipes the slate clean and rebuilds that particular part of the world from scratch. We get a chance not only to make things faster, easier or cheaper with technology, but also to entirely rethink how we go about doing things in the first place.


Memorable bus stops built during Jaime Lerner's tenure in Curitiba, Brazil. Source: EMBARQ

Enter design. After five years of adjusting and expanding my definition, design to me now means "consciously building with a better world in mind." There is a fine line between design and technology. Design alone can provoke a process of creative destruction (take, for example, the entire fashion industry) but, more often, hard mechanics start the cycle and design adds layers on top. If we let pure mechanics push the system forward, we'll end up with a world that is faster, easier and cheaper, but to only a fraction of the degree it would be with the addition of design. For example, I'd put the difference between the Blackberry and iPhone at about 20 percent technology and 80 percent design.

The relationship between technology and design applies to cities as well. Putting in the mechanics, whether a subway system or LEED-certified building, is only part of the opportunity. Hannah Bebbington, a member of the A Better World by Design planning committee, explains:

A city can be designed as more than just a system of roads, fast food joints, and department stores. A city can be more than just a hub for the masses. The way the buildings are built, the way nature is incorporated, the way art can become part of daily life, can transform a city into something intimate and community-oriented, creating a platform for relationships, creativity, exploration, and more for the people living there. When cities are built with an eye for environmental sustainability and community-oriented infrastructure, a better world will emerge that is long lasting and strong.

Design is key in applying technology toward these kinds of cities and this kind of world.

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Four Communes, Four Brotherhoods, Four Winds

by Melanie Friedrichs

Dakar sits in a crosswind, both literally and figuratively. Senegal’s capital has neither geographical isolation to shelter it, nor size to anchor it, nor wealth to protect it. It sways helplessly in the storm of globalization.



Four Communes

I’ll start my tale in the 14th century, when the first Portuguese ships landed on the western coast of Africa. Europeans transformed West Africa into a patchwork of “strip states,” located around major rivers and dedicated to trading for ivory, gold and slaves. Ports on the coast slowly grew into cities. In the 1600s, France claimed the area’s four main ports: St. Louis, Rufisque, Dakar and L’Ile de Goree.


The Island of Goree, a former port in the slave trade and one of the four Senegalese communes.

In the 1600s, French traders began to marry Senegalese women, contracts that were conveniently valid only while the traders were in town. The daughters of these Senegalese wives seduced the next generation of French traders and won from them bigger houses, better education and slightly more respect. Soon a class of mixed-race, French-speaking Senegalese known as the Métis took over the port towns, and French traders found themselves connected to the country by blood as well as gold.


The Métis. Source: Black Past

Perhaps because of the Métis, or perhaps just because it was still early in the age of colonization, the French allowed Blaise Diagne, a native Senegalese man, into their Chamber of Deputies in 1914. He convinced them to grant citizenship and voting rights to the inhabitants of the four major trading ports (renamed “the four communes”) in 1916. The rest of the country remained under authoritarian rule.

Although France revoked the rights of the four communes when it realized that naturalizing the colonized would soon leave native-born Gauls outnumbered, de jure separation between the communes and countryside created a de facto divide between baguette-eating urbanites and their “backward” rural brethren, which still exists today. When France finally deigned to listen to African calls for independence, she listened first to the French-educated elite and handed the government to its rebellious but respected son, poet-president Leopold Senghor.



Senghor did many great things for Senegal, but he also cemented the culture of the colonizer into the culture of the free colony. He modeled his administration after the French bureaucracy, he made French the official language and he kept the currency pegged to the franc. Common menu items include nutella on baguette, steak-frites with salade, and pain-fromage with ham. Public schools teach exclusively in French, even though one headmaster I spoke with told me that 94 percent of his students speak only Wolof when they enroll.



But this is a history of many winds. While the French buffeted Senegal with slavery, oppression and white bread, other winds have also shaped the dunes of Dakar’s sandy streets.

Four Brotherhoods

Islam hit the western Sahel only a few centuries after Gabriel came to Muhammad on the mount. For nearly 800 years it remained the province of a privileged elite, serving as a distinction between the Muslim rulers and the animist ruled and as a cultural link to trading networks across northern Africa. Although Catholic missionaries came with the colonizers (you can still see their churches today), the religion never took root. Instead, the 1861 conversion of Lat Dyor Diop, King of the Cayor, catalyzed the conversion of the masses.


Mansa Musa I of Mali, who brought so much gold on his hajj that he devalued currency in the Middle East for a decade. Source: Wikipedia

Over time, four dominant Sufi brotherhoods emerged: the conservative Qadiriyya brotherhood from Iran, the small but devout Layene brotherhood, based in the small Dakarai fishing village of Yoff, the Tijaniyyah (alternatively Tijani, Tijaan Tidiane or Tidjane) brotherhood from North Africa, and the largest, the Mourides (alternatively Murits, Muridyyas or Murids). The French helped the Mourides succeed by persecuting, exiling and attempting (but failing) to execute their founder, Amadou Bamba (or Serigne Touba), who emphasized hard work, education and peaceful resistance to colonization.


The only known image of Serigne Touba, founder of the Mouride Brotherhood. Source: Hizbou-Darou Khoudoss

Like most religious institutions, the the brotherhoods dealt not only with spiritual affairs but with economic and political ones. The “marabouts” (meaning “ones with followers”) filled the vacuum created by the exploitative but minimalist colonial government by combining the roles of spiritual leader, political official and traditional chief. The French soon realized that the marabouts could be powerful allies and began courting them aggressively.

The Mouride marabouts of Touba, located in the heart of Senegal’s “peanut” basin, became plantation owners and exporters. Leaders of the other brotherhoods also took bribes and made ties with the French. After independence, the French-speaking Senegalese elite continued to offer the marabouts special treatment in return for political support. Senghor, though a Catholic, gave state funds to a Mouride festival each year in exchange for a political endorsement in the keynote speech.


The brotherhoods have a hand in the Car-Rapides, Dakar’s dominant but completely private mass transportation system.

In the 1980s and 1990s, when the Senegalese government was losing face over the ramifications of the World Bank-designed Structural Adjustment Program, the marabouts began to distance themselves from the government. Today official policy sometimes comes into conflict with religious dictums.

Four Winds

When I stayed in Senegal, my 12-year-old host sister took me to La Librarie des Quatre Vents (The Bookstore of Four Winds) in Dakar. The bookstore was one of the most modern public spaces I had seen in Senegal and sold local academic texts and cookbooks, but also French novels, American bestsellers, British classics and phrasebooks in every imaginable language.

For me, La Librairie des Quatre Vents represents the many cultures that shape Dakar. Most obvious is the “West,” through the many foreign nationals who live or vacation in Dakar, the economic and migratory ties to Senegal’s closest European neighbors, Spain and Italy, and the American music blasting in the streets. American commercial chains haven’t made many inroads (no McDonalds!), but American academia has. Apparently unsold college merchandise is shipped and resold in Africa, and I saw as many Texas A&M tees in Dakar as I have in New York.


A street peddler on the road out of Dakar.

India also gusts into Senegal. A couple of nights into my homestay I was shocked to see my host siblings settle down to watch the same incredibly dramatic Indian sitcom I had watched in Delhi, dubbed in French. HLM, Dakar’s largest fabric market, sells Indian cloth and ready-made salwar kameez modeled by Indian mannequins.


An advertisement for Indian cosmetics with Indian cloth in the background at HLM Market in Dakar.

Senegalese merchants source mass manufactured goods from China. The government hires Chinese engineers to build new infrastructure, particularly roads. Chinese companies even import their own workers, unfortunately for the local labor market.

Finally, via North Africa and the Islamic Ummah comes the influence of the Middle East. Iran, Libya and Saudi Arabia have all built cultural centers in Dakar and funnel considerable resources toward promoting their strands of Islam. Girls cover their legs and women cover their hair, and the call to prayer faithfully resounds from the many city mosques five times a day.


A Senegalese woman in traditional dress.

Last but not least, a hot breeze constantly blows from the sandy Sahel and the hot, humid African interior. From there arrive the bold designs worn by Darkrai women, the millet eaten on traditional occasions, the bandy-legged dances and mad Mbalax drumming. Many of Dakar’s inhabitants are first-generation migrants from small villages, and still return or send money back to the country. They keep rural traditions alive, at least tenuously.


A traditional Senegalese dish.

Senegal is a country caught at a crossroads, and nowhere is the clash and blend of cultures more visible than in Dakar.





Credits: Photos by Melanie Friedrichs unless otherwise noted in the captions.

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Embracing In-Between Landscapes

by Melanie Friedrichs

Last week, I attended a gallery opening for an exhibit tracing the history of American landscape photography at the Rhode Island School of Design Museum in Providence. As expected, the exhibit featured gorgeous photographs of trees, rocks and river vistas, as well as a number of antique-looking, industrial urban prints.

One section stood out. This was a group of about 20 photos depicting not natural charm or urban magnetism, but vacant lots, bent fences, half-built houses — neither city nor countryside, nor even suburbia, but somewhere in between.


Lewis Baltz, Night Construction, Reno (1977). Source: Volunteers in Art

When I went home I learned that photographers Lewis Baltz, Stephen Shore and Frank Gohlke had all contributed to "New Topographics: Photographs of a Man-Altered Landscape," a famous exhibit curated by William Jenkins in 1975. This was an exhibition that has been described as "a turning point in the history of photography," one that "rewrote the rules of landscape" and "pretty much flew in the face of Ansel Adams."


Lewis Baltz, Southeast Corner, Semicoa, 333 McCormick, Costa Mesa (1974). Source: George Eastman House

"New Topographics" was unusual because its subject matter was ugly. Gholke, Baltz and Shore are exceptionally talented photographers. Their careful composition, attention to light, and in the case of the former two, choice of black and white, make untended backyards, unfrequented streets, trailer parks and construction sites look almost beautiful. But not even that talented trio could overcome what to me seems like a universal human aversion to the aesthetics of the in-between.


Source: "Causes of Sprawl: A Portrait From Space"

The "New Topographics" photographs made me question for the first time why I hate sprawl so much. Within an eight-by-10 frame, the lines and colors of these photographs were not so different than the standard urban landscapes that hung on the other gallery walls. There is no rational reason why I should like a photo of a street in the city center better than a photo of a street at the city's edge, but I do — the first is dynamic, the second is depressing.


Dynamic. Source: Wolfcub Chronicles


Depressing. Stephen Shore, Alley in Presidio, Texas (1975). Source: Masters of Photography

Given the nature of cities, I don’t think sprawl will ever go away. Can we as observers somehow come to peace with it and see the beauty that the new topographers sought and almost achieved? Or is there something hard-wired about places in between that will make us continue to hate them, even as we create them?

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Semiotics of Sticker Art in Providence

by Melanie Friedrichs

If you wander around Providence and pay close attention to tarnished street signs, dusty corners and dilapidated doors, you can occasionally find a small black-and-white square with a message from the past: Andre the Giant Has a Posse. The discovery of one of these old and faded stickers invariably sends a thrill down my spine. I have stumbled upon a secret, a special heritage, an ancient symbol of the city I now love. Some do not know, some have forgotten, but I, I remember.

Of course, the stickers are not secrets at all, but manifestations of a well-documented event in artistic history. In 1989, Rhode Island School of Design student Shepard Fairey printed the stickers and distributed them to the local skater community, who quietly stuck them all over Providence, sparking their eventual appearance in cities all over the world. Andre the Giant Has a Posse went viral before the Internet did, foretelling the rise of the image-with-caption meme. Crisp up the grainy ink-on-vinyl image a bit, and you can even imagine that Andre the Giant is a character in a rage comic.


Old meme, new meme. Analog, digital. Sources: OBEY GIANT (left) and Know Your Meme (right)

Fairey’s second Andre sticker, a close-up of the giant’s brow printed on a red or white background with the slogan “OBEY,” blew up a hundred times greater than the first. Like Andre the Giant Has a Posse, OBEY GIANT was adopted by skaters and spread, slowly seeping into the mainstream. Today OBEY supports a department-store assortment of merchandise. OBEY stickers are easy to find in Providence and, I suspect, are still stuck up fairly often.


This mural by Shepard Fairey has become an unofficial symbol of Providence. Source: AS220

Fairey’s career flourished with his sticker campaigns, and his art has became Providence’s brand. Several local businesses have adopted his bold red-and-black palette, and the mural he designed for the back wall of local arts nonprofit AS220 symbolizes the city in the eyes of many residents, myself included. While not all Providence residents know the story of Andre the Giant Has a Posse, I’m confident that nearly everyone in the city can recognize Fairey’s art.

The transition of Fairey’s illustrations from counterculture to mainstream exemplifies the evolution of sticker art at large. For street artists, stickers function much like graffiti tags, requiring more preparation beforehand but less time when it comes time to do the sticker “bombing.”


A recently (within the past few years) bombed OBEY GIANT sticker.

When Fairey was a student, stickers were big in the punk scene, used for decoration, promotion or to convey a political message. (An essay by Fairey on sticker art can be found here.) And, like every other type of street art, stickers are now used as advertising by commercial vendors. The street signs in Providence are still covered, but 90 percent of them carry logos for smoke shops or vegetarian restaurants, list the lineups at local venues or peddle some other sort of product likely to appeal to the demographic who reads stickers on street signs.


Stickers on a street sign in Providence.

IDEO, the international design firm that Fortune 500 companies and national governments turn to when they need an unconventional solution to a pie-in-the-sky problem, was once hired to help encourage democratic participation in Peru. The team of designers handed out “Fix This!” (“Arregla Esto!”) stickers to citizens of Cuzco and told them to stick them on anything they thought was broken. In very little time, the stickers piled up on surfaces throughout the city, including government buildings, police cars and school doors. The appeal of “sticking it to the man” was irresistible.

I find the many ways to "stick it" fascinating and somewhat amusing. Stripped to its essence, sticker bombing is not much different from scent marking. See this pole here? This is MY POLE. But sticking it is also a richly symbolic form of communication. A few square inches are enough to carry an image or a phrase that can encourage action or create a sense of cultural belonging that lasts long after the person who posted the sticker moves on.

Credits: Photos by Melanie Friedrichs unless otherwise noted in the captions.

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