History shows that the places commerce favors change over time. In the United States, many of the cities that prospered in the 19th century faded in the 20th century as the logic of business shifted the location of prosperity. That same process will unfold again in the 21st century. Seemingly unlikely places will thrive in the decades ahead, for reasons that might not be immediately apparent now. And places that are booming now will fade, just as happened in the century just ended.
This dynamic was underscored in an article in the February 3, 2014 issue of Bloomberg BusinessWeek entitled “Data Factories Spring Up in Santa’s Backyard” (here). In the past, technology companies had located their data centers first near universities with the skilled staff needed to run the facilities, and later near major urban centers, to be closer to the customers using the facilities. But more recently companies such as Google, Microsoft and Facebook have chosen to locate massive data centers in Scandinavia, to take advantage of the availability of cheap hydroelectric power to run the centers and of the abundant chilly waters to cool the centers’ heat sensitive servers.
The article describes the Swedish city of Luleå, 70 miles south of the Arctic Circle, where Facebook has developed a 300,000 square foot data center, to take advantage of the city’s inexpensive hydroelectricity and cool air. The article describes the town’s prosperous main street as “flanked by a park, high-end clothing shops and hotels.”
At the same time as seemingly unlikely locations such as Luleå are prospering because of their natural advantages, other areas are being forced to confront their natural limitations. An article in the February 10, 2014 issue of Time Magazine entitled “California Drying” (here, subscription required) states that 2013 was the driest year in California since it became a state in 1853. Communities throughout the state may run out of water altogether in two to four months. The Sierra Nevada snowpack, a crucial water source, is just 20% of its average.
Of course, the drought conditions in California could improve, but there is also a risk, the article explains, that the current drought “may represent a return to California’s bone-dry history.” The geographic area encompassing the state has “had multiple megadrougthts that lasted 10 to 20 years, as well as one that started in A.D. 850 and stretched for 240 years.” As a result of global climate shifts, the American West is “likely to get even drier.” In his January 17, 2014 state of the state address, California Governor Jerry Brown warned that the current drought may be “a stark warning of things to come.”
As if it were not enough that business prosperity in California must try to survive a hostile environment, businesses in the Bay Area are also being forced to confront actual hostility. Another article in the same issue of Time Magazine explains the street protests and social tensions that are arising in San Francisco as the city’s tech boom drives up rents and forces lower and middle income residents to have to move out of the city.
As the Time article puts it, “A combination of exploding wealth and limited space has led to an affordability crisis. Much of the angst among the have-nots is directed toward the region’s booming tech sector, which is attracting well-paid workers who once settled around San Jose and now regard the City by the Bay as the only place to be.” The have-nots are not taking this shift quietly. Confrontations between displaced locals and the private bus services the tech companies use to ferry worker from the city to their job sites have become frequent.
There may be solutions to the social tensions that the booming tech economy are creating, such as through the construction of additional affordable housing. But California’s water problems, if they persist or even worsen, are not easily solved. Changing social conditions can be accommodated, but life without sufficient water is simply not possible.
For large parts of the 20th century, a great deal of effort in the United States was focused on getting water to places where people wanted to be. In the 21st century, this process may have to reverse itself. The people may have to move to where the water is. When people realize that this may have to happen, they are going to notice something really important. That is, 21% of the world’s fresh water – and 84% of North America’s surface fresh water – is located in the Great Lakes.
There are a lot of people in very dry places in the American West who might want fresh water from the Great Lakes brought to their communities. However, due to a very far-sighted set of agreements among the eight states in the Great Lakes region called the Great Lakes Water Compact, the water in the Great Lakes hydrological system cannot be removed by human means from the Great Lakes water basin. In other words, if you want the water in the Great Lakes, you have to come to the Great Lakes — the water isn’t coming to you.
It makes sense that the tech companies are moving their servers to where the electricity is cheap and the air temperatures are cooler. It may make even more sense for companies to move their employees to a location where there are actually sufficient quantities of fresh water.
And not only does the Great Lakes region have fresh water, it has some of the most reliably sustained winds in the country (particularly when proximity to urban centers is taken into account), capable of providing a reliable source of renewable energy. The availability of modern natural gas extraction technologies also means that the abundant natural gas in the region can help provide low cost and relatively low carbon impact energy, as well.
If employers were to move their operations to Cleveland, the crowds of locals gathered at the private bus stops wouldn’t be there to protest; they would be there to celebrate. Everyone in Cleveland would be so happy to have the jobs and the economic activity.
I am not the only one suggesting that California’s future may be in Cleveland. As Matthew Yglesias put it in a December 13, 2013 Slate article entitled “Move Silicon Valley to Cleveland” (here), it is time for the tech companies to move where they will be appreciated. Cleveland, as Yglesias points out, has plenty of affordable housing and plenty of available office space. It even has a Federal Reserve Bank.
The Great Lakes region is of course known for its harsh winters. As I type this blog post, I am looking out my window at a fairly impressive winter storm that has already dumped about eight inches of snow. But you know what? That eight inches of snow represents an astonishing quantity of water that has been brought to the Great Lakes from outside the region. The winter weather replenishes the hydrological system.
The winters here in the Great Lakes region are harsh. And they last a long time. But I grew up in Virginia, and I have managed to acclimate.There is something about having all four seasons that makes you more realistic about life. And then there is the great secret that few outside the Great Lakes region appreciate – that is, this area is absolutely beautiful for the rest of the year. (I have previously documented the splendid pleasure of a Great Lakes summer, here).
Here’s the thing. The time to get in on the coming Great Lakes region land rush is now. The abundant, low-priced real estate is not going to last once everyone figures out that they are going to have to move to Cleveland (or Milwaukee or Toledo or Buffalo or Erie, Pa.) for the water. The smart money is already going there.
Sure, go ahead, laugh. When you get thirsty enough, you won’t think this is funny at all.
Do you want to talk about earthquakes now, or should we save that for later?