Motorola was once the backbone of technology industries recruited to Phoenix in the late 1940s and 1950s. Above is the 52nd Street and McDowell plant circa 1965.
How did Phoenix get in this mess? A mess where the economy is in an outright depression after outperforming much of the nation, by some measures, for decades. A mess where its grades in quality economic circumstances are among the worst in America, and where it may be America's fifth most populous city and 13th largest metropolitan area but underperforms its peers by an embarrassing gap.
It took a lot of work.
When I was growing up, people talked about the Four Cs of Arizona's economy: Copper, cotton, cattle and citrus. The fifth C of climate — I don't recall that, and it may have been added later to justify the machinations of the Growth Machine, although to be sure, "health" and tourism were Phoenix selling points for most of the 20th century.
For much of the territory and state's history, climate was a decided negative. In any event, even the "Cs" was an over-simplification, leaving out railroads, a wider array of mineral extraction, other agricultural sectors and the condition of the state. Arizona was a frontier state, isolated, with an unforgiving landscape and sparse population. Even in 1950, the population of the entire state was 750,000. In today's language, its carrying costs were low, its sustainability high. But as an economic player, it was dwarfed by most other states.
By the late 1950s, Flagstaff had timber and the Santa Fe Railway. Globe and the mining districts lived off copper, where Arizona was a world-class supplier. The copper industry paid 22 percent of the state tax load and provided thousands of good jobs, albeit with the downside of control by eastern capitalists. Other minerals hubs were mostly played out, often leaving ghost towns. One exception was Prescott, the onetime state capital, which was a division point on the railroad. Tucson was a major rail center on the Southern Pacific and a military base. Cattle ranches proliferated; this industry was valued at $200 million in 1962 (about $1.4 billion in today's dollars). But most of the state was wilderness. The exception, mid-century, was Phoenix.
The giant Tovrea stockyards and feedlots, along with slaughterhouses and dairies, were a major part of the Phoenix economy in the first six decades of the 20th century.
Phoenix benefited from the post-World War II boom, but it already had good economic bones. Thanks to the engineering miracles of federal reclamation and federal investment, this fertile valley from pre-history was growing a bounty of crops that would have astonished the innovative Hohokam.
Instead of the social engineering envisioned by the Newlands Act, a quilt of Jefferson yeoman farmers, this was a place where agriculture had become big business. Hundreds of thousands of acres were under cultivation growing a wide variety of crops. Long trains of refrigerator cars left Phoenix for points east. Head lettuce — not a C — was the biggest produce crop. One of the nation's biggest cattle feedlots was located here, as well as slaughterhouses. Dairies were big around the valley.
Phoenix was never a big distribution point for mining, as Denver had been. Phoenix was about agriculture. In addition, it had a variety of support businesses for the industry, including suppliers, cotton seed outfits, produce jobbers and wholesalers. Also, locally owned stores, banks, insurers, etc., and some manufacturing (such as the hulking Reynolds Metals plant) built during the war.
Like all "hydrological" civilizations in history, power was highly concentrated, especially with the Salt River Project, Arizona Public Service, Valley National Bank, First National Bank of Arizona, The Arizona Bank — and the federal government. Even so, the city developed a strong cohort of stewards who loved it passionately, personally, and wanted it to succeed.
Air conditioning, starting in the 1920s, indeed added the appeal of climate for Phoenix beyond being a boutique magnet for dude ranches and respiratory patients. Remember, too, the summers were not as long or severe then. But by the late 1940s, Phoenix's leaders knew the city must attract new industries or it couldn't sustain its growing population. Stewards such as Frank Snell made aggressive efforts to attract "clean industry."
These efforts paid off with AiResearch, Hughes Aircraft, Sperry Rand, General Electric and especially Motorola. Makers of automobiles and tractors were lured to establish proving grounds to test under desert conditions. (Between the mines, railroads and construction, membership was very high statewide in trade unions).
In other words, as Phoenix emerged as a populous city in the 1960s, it had an strikingly dynamic and diverse economy, with well-paying jobs — especially for a place so isolated and relatively new. Of course real estate and construction were big (along with tourism). Maryvale and Sun City were new. The groves of Arcadia were being turned into subdivisions. Land fraud was rampant — I remember vividly one man who defrauded my grandmother, a real estate agent, being sent to prison; the Arizona Republic's martyred reporter Don Bolles earned his chops on exposing such schemes. But real estate was a consequence of the real economy. Real estate wasn't the economy.
Much changed from when I left in 1978 and returned in 2000. By that point, the Phoenix economy, while still containing the remnants of the old chip makers plus Intel, had degenerated into a massive real-estate Ponzi scheme plus some call centers. Everything depended on adding 100,000 more people a year.
Aside from this, the metro economy couldn't match up to the diversity, quality, dynamism or incomes of its peers. Arizona, after tracking the national average in per-capita income as late as the 1980s, consistently lost ground, a trend that continued during the 2000s "boom." The three great hopes of the city and state were all paid by the taxpayers: Michael Crow, Phil Gordon and Janet Napolitano. What happened?
1. The great restructuring and consolidation of the American economy clear-cut vital local companies around the country. It hit Phoenix especially hard; the metro area, for all its people, had the business infrastructure of a much smaller place. So losing Valley National Bank, Dial and a few other stalwarts did disproportionate damage.
2. Phoenix never perfected the art of reinvention. Karl Eller built an empire that died too soon. The moves that lured the Greyhound headquarters in the 1960s weren't sustained. The metro area and state were shocked by the 1990-91 recession after the S&L swindles; they established ambitious goals for clusters and the Greater Phoenix Economic Council. These efforts faltered through the decade. And with the 2001 dot-com meltdown, hundreds of promising small tech outfits were killed.
3. Diversification slipped away. Agriculture on the level of the early 1960s might not have been sustainable forever, but a large ag sector provided jobs, economic diversity, local food and cooling in the summer. Almost all of it is gone now, plowed over for subdivisions. The aerospace and electronics foundations begun in the late 1940s and 1950s were largely allowed to wither. Motorola is next to nothing now. The tech sector is a much smaller part of the overall economy now than at any time in decades — more appropriate to a city the size of, say, Tulsa, than Phoenix.
4. Right-wing ideology helped keep the state from adopting the aggressive economic development efforts needed to stay competitive. "Sunshine is all that's needed," the saying went. Well...not for luring major capital investment. This ideology also helped blind Arizonans to their heavy dependence on the federal government — something not shared by conservatives in Texas and Alaska, for example. So after the CAP, a new generation in the congressional delegation refused "pork." The consequences have been devastating, especially with the advanced federal labs, administrative centers and university research funding that went to other states. It also subscribed to a "no new taxes" and budget-cutting religion that starved education and infrastructure.
5. The old stewards died off and few new ones appeared. It was telling that sharpies such as Charles H Keating Jr. showed up in the 1980s, with no ties to the place, only wanting to make a fast buck and totally hooked on sprawl housing development. (John F. Long, by contrast, was a Phoenix city councilman, philanthropist and built contiguous to the existing urban footprint). Only Jerry Colangelo was left, and he was savaged for his efforts — now he's working West Valley real estate.
6. Population growth rapidly outgrew infrastructure — everything from transportation to universities — and the gap was never closed. Meanwhile, the old economic assets were fading, not to be replaced. Only professional sports teams seemed to keep up. Government leaders of the rare temperament to take on these challenges were always backfilling even as new sinkholes erupted. Sprawl pitted suburbs against city for a limited pie, with all being net losers. The Kookocracy did its best to prevent cities from gaining economic-development tools such as tax-increment financing. State and city were inward-looking as globalization became the game. Thus, Phoenix held certain high ranks based on population, and it had big-city problems and high carrying costs. But it lacked big-city economic assets — aside from construction permits — and big-city solutions.
7. The Growth Machine, protected to the death by the Real Estate Industrial Complex, seemed to work. Many people made fortunes. It always came back. Phoenix topped charts on population growth and housing starts. Jobs were abundant. Other things could be ignored, such as under-par incomes, lack of high-paid jobs, lack of venture capital, low scores on almost any measure of social well-being and the ominous growth of an underclass. So what if Phoenix was reduced to one-and-a-half economic engines — they work. Or so went the conventional growthgasm wisdom.
Timing is everything. Phoenix seemed to dodge the worst of the dot-com crash and crowed about the pain in places such as the Bay Area and Seattle (even though, in reality, Phoenix was hurt by that downturn). Then came the collapse of the greatest speculative bubble in history and Phoenix, Arizona, was ground zero.
Coming back won't be easy, particularly because the remaining elites can see no alternative but hope for a resumption of good old days that will never return.
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My book, A Brief History of Phoenix, is available to buy or order at your local independent bookstore, or from Amazon.
Read more Phoenix history in Rogue's Phoenix 101 archive.
Jazz, Motown, Rock & Roll, Blues, Fusion, Grunge, R&B, Rap, Hip Hop, etc. These words bring to mind once and always great cities: Chicago, New York, LA, San Fran, Detroit, Seattle, Philadelphia, Memphis, Austin, etc.
Then, there are the great classical musicians connected with the major cities: The Chicago Symphony Orchestra, The Los Angeles Philharmonic, The New York Philharmonic, Boston’s Orchestra’s, etc.
Then there are the venues: The Met, The Hollywood Bowl, Benaroya Hall, Red Rocks, etc.
Phoenix is a city without rhythm, harmony, or even melody. Even Muscle Shoals, Alabama, has more musical muscle than Arizona.
Music is an echo of the heart of a community. When I am in Phoenix, I hear the swoosh of speeding cars, the monotonic hum of rubber on tarmac, Sky Harbor’s jet engines, the backup beepers of bulldozers and garbage trucks, and the bellowing of Kooks.
Only at night, under the starry sky in the desert, far away from the city’s lights, can I sometimes hear the faint echoes of a haunting, wooden flute.
Posted by: Rate Crimes | August 17, 2010 at 03:31 AM
Phoenix lies brutally exposed from all its bad choices. There's no road back because the carrying costs have now become prohibitively expensive. Short term, we did as all humans do: deny. Now we sift through the rubble looking for anything that might serve as a positive sign. Cheap houses, anyone?
The economic monoculture of real estate was the inevitable consequence of boosterism without actual content and thought. Now we're gazing into an abyss. That road back has washed away and, anyway, we're out of gas.
Peak oil is one pincer. Above a certain threshold, say $100/bbl, growth not only becomes impossible, the entire financial house of cards begins to teeter from unpayable debt. http://www.postpeakliving.com/preparing-post-peak-life.
The other pincer is climate change. This one is safe to predict: we will do little or nothing to mitigate global warming despite all the warning signs. The desert Southwest will suffer early and grievously. http://www.grist.org/article/2010-08-12-ucs-article-drought-tracker/.
Phoenix planted itself in the crosshairs of geography and history. It was a winner and now it's going to be a loser. It won't happen overnight but as the crisis worsens, the panic will become electric. Of course, there's always the refuge of the road. But, then, where would you go? Good luck making that choice.
Posted by: soleri | August 17, 2010 at 08:23 AM
Interesting column and good comments.
Sometimes I wonder:
When a person, group, community or state end up shooting themselves in the foot, I wonder why they did it. Was it by design, ineptitude or accident.
An example:
Herb Drinkwater was a good, down to earth person. He promoted Scottsdale his entire adult life. He was so successful that in the end his efforts ruined the city that he loved. All the aspects of the town which tourists loved were buried under traffic and over-development. So, too much of a good thing went bad.
Now, when we get to the valley and state level, I have watched our legislature make decision after decision which usually end up being one of the following: wrong, backwards looking, spiteful, narrow-minded, etc.
Why? Why would they do that? What purpose is served?
I have a theory. I'll call it the Arizona Taliban.
For those of you who have not spent time in rural Arizona, let me tell you, you have no idea how much rural Arizona hates "The state of Maricopa". They hate eveything about the valley and they hate all the millions of "ants" who live in the valley. Over the years, some of the craziest legislative measures have come from rural legislators. When you group the rural kooks along with the east Valley Mormon kooks and the west valley ultra-conservative kooks, you have a majority which can by design or ineptitude do immense damage to the state.
The Afghan Taliban regularly do things which shout out to the world - we are ignorant, we are uneducated, we are mindless religious, fanatical robots, we have guns and we will kill you all.
The Arizona Taliban, don't use guns, they use votes.
Anyway, it's just a theory. Cause I sure can't see reasonable explanation of why we had the chance to do great things and instead blew it.
Posted by: azrebel | August 17, 2010 at 09:47 AM
"Azliban", azrebel?
Well, anyway, the complaints about the "ants" do resonate.
Also, I love my many Mormon friends. I can't clump them into any larger tribe. They got their own thing goin' on.
Posted by: Rate Crimes | August 17, 2010 at 10:10 AM
How, in AZ, can it continue to be called, "real estate". Would it not be more honest to call it "unreal estate".
Posted by: Rate Crimes | August 17, 2010 at 10:12 AM
Rate,
Let's go ahead and go with AZREBEL. I can't pronounce the other one. Maybe Talizonan?
I have primarily Mormon friends. However, the Mormons I speak of are the "Taliban" of their religion. They are BYU'ers who will only do business with their kind and associate with no one else. They are the people who say "Come to Mesa, we're business friendly". The part they leave out is that they are business friendly to LDS run businesses. Thus, in Mesa, we have no commercial businesses. We have to go to Chandler, Gilbert, Tempe or Scottsdale. Pearce, as one of their leaders, would love for all of AZ to be Mormon. I promise you, he does not speak for 80% of the Mormons in AZ, however, the 20% he does speak for, are as dangerous as any radical Muslim.
Posted by: azrebel | August 17, 2010 at 10:42 AM
Kookiban? But maybe that sounds like Russell Pearce's deodorant.
Posted by: Rogue Columnist | August 17, 2010 at 10:50 AM
Way to go Rate, you started a word game using "Taliban". I bet it would be a big seller in Afghanistan and Pakistan. A board game for ages 5 and up. If you chose a word that was already made up by another player, the board blows up killing everyone in the house. Fun for the whole family.
Concerning your music concerns, not to worry. There are two major types of music in the world and we have both of them.....COUNTRY and WESTERN.
( : - )
Kookiban Deodorant - "It'll keep you smelling fresh as a mountain meadow even as you "lose your cool" on national TV.
Posted by: azrebel | August 17, 2010 at 11:51 AM
How much LESS damage would there be if Saint Janet had not departed, leaving the Kooks in charge? Didn't she sorta have her finger in the proverbial dike?
How much BETTER might our future prospects look with Terry Goddard to offset the loonies?
And maybe Rick Romley becomes County Atty, David Lujan becomes AZ Attorney Gen. and Penny Kotterman becomes Sup of Ed?
It would be encouraging to have a few adults in charge, would't it? Right now, there's nothing much standing in the Kookracy's path!
Posted by: Jim Hamblin | August 17, 2010 at 12:33 PM
"Didn't she sorta have her finger..."
PULEEEEZ!
Posted by: john | August 17, 2010 at 04:18 PM
"There are two major types of music in the world and we have both of them.....COUNTRY and WESTERN." - azrebel
hehe
OK, Willie Nelson and a few others can get away with singing while wearing a cowboy hat and still be substantive, authentic artists.
Can anything with flashpots, smoke and lasers be called C&W?
Bringing this thread full circle, what is(are) Arizona's anthem(s)/theme song(s)?
Posted by: Rate Crimes | August 18, 2010 at 05:44 AM
"I remember vividly one man who defrauded my grandmother, a real estate agent, being sent to prison"
I followed my heart to Phoenix in 1990 and immediately fell in love with the Sonoran Desert. Two decades later, I remember the agent who sold my first house and helped me buy my second, becoming a mortgage broker at the beginning of the last 'boom'. He made a mint getting people to put their signatures on papers. Instead of prison time, he cashed out before the bubble burst, dumped his house, and -- as Arizona crumbled -- moved his family to Oregon.
Posted by: Rate Crimes | August 18, 2010 at 08:52 AM
Rate Crimes wrote:
"Bringing this thread full circle, what is(are) Arizona's anthem(s)/theme song(s)?"
The Arizona March Song:
"This song, originally titled Arizona, was written in 1915 by Margaret Rowe Clifford and published by the Hatch Music Company in Philadelphia, Pennsylvania. This Arizona State Anthem, as it was designated, was adopted by the Fourth Arizona State Legislature and became effective February 28, 1919. The act, adopting this song, required that all schools, public institutions, and the Battleship Arizona be furnished with copies by the Commission of State Institutions."
Lyrics here:
http://www.netstate.com/states/symb/anthems/az_anthem.htm
The part about the "priceless right of way" is spot on. Federal stimulus funds just completed the latest round of road-repaving in the exurbs. (Rubberized asphalt: the smell of "tyranny".)
http://www.azcentral.com/community/swvalley/articles/2010/06/07/20100607maricopa-rubberized-asphalt-southwest-valley-roads.html
Also see this:
http://www.azcentral.com/news/articles/2010/03/08/20100308phoenix-streets-stimulus-funding.html
Posted by: Emil Pulsifer | August 18, 2010 at 07:00 PM
Pretty good try Emil, with documenation and all.
However, the Arizona Anthem is the song by Johnny Paycheck, "Take this job and outsource it".
It's been a big hit for the last twenty years.
Posted by: azrebel | August 18, 2010 at 09:39 PM
Emil, don't forget the federal funds being used to extend the light rail into downtown Mesa...and in Russell Pearce's backyard!
http://www.valleymetro.org/metro_light_rail/future_extensions/mesa/
Interestingly, the Cubs and Mesa have shown interest in building the Cubs new spring training facility in downtown Mesa right next to a new light rail stop! I was shocked as they originally planned to build this thing near Apache Junction (extremely far form transit) or near the 202 which would not have put in in pedestrian traffic friendly zones.
The Cubs also want to build a mini-"Wrigleyville" in this area of Mesa, Wrigleyville West if you will and how they have dubbed it; they have plenty of land to do so...
http://activerain.com/blogsview/1788400/wrigleyville-west-the-cubs-are-coming-to-mesa-az
Posted by: phxSUNSfan | August 18, 2010 at 10:21 PM
42 years in Phoenix and nothing to show for it. That's my story. This state, which when I got here was conservative, and somewhat bigoted against blacks, had, as Jon said, good bones. I worked with all the leaders who have died off, and they did want to build an economy. But the fact that Arizona is 70% public land was irresistible to people. "Land will be valuable, because there is no little private land to develop" became the mantra. It seemed to make sense. But I got involved in revitalizing downtown in 1980. I have focused on that in one way or another ever since. But it just didn't work. Arizona's failure makes ME feel like a failure somehow. I wonder how other long-time residents and natives feel?
Posted by: twitter.com/hardaway | August 21, 2010 at 11:38 AM
hardaway,
You're not a failure. You came into this world wearing your birthday suit, you'll leave wearing the same attire. In the meantime, you lived life. I'm sure you've had successes and failures. We all have. You've seen beautiful Arizona sunrises and even more magical sunsets. When you looked at those sunsets did you fret about all of man's pathetic projects here in the desert, or did you concentrate on enjoying God's desert light show. My life in Arizona has kept me "occupied". What I am truly thankful for is the opportunity to have experienced the beauty of the state and yes, its sunsets.
Posted by: azrebel | August 22, 2010 at 01:22 PM
Francine, I've been here only 22 years but I too feel that somehow I've failed because this state has regressed into the mess it's in today. I can't take the failure as the end of my story, so I am selling my house and starting over in a new place where the hate and ignorance are not so palpable.
It's sad to give up on this place, but it seems like time to leave it to the Mormons and the racists.
Posted by: Sarah M. | August 22, 2010 at 07:56 PM
Sarah M. Where is the hate and ignorance not so palpable? My family and I are repatreating from Russia where I have been living and working for the past 8 years. I had big hopes for the Phoenix area but after reading Jon and commenters I am convinced that Arizona, Phoenix in particular is not the place to be. Thanks Lester
Posted by: Lester P. | November 11, 2010 at 12:16 AM
I'm from Utah and took a trip to pheonix 18 months back to look at real estate. It didn't seem as depresed as I was told. Businesses were operating at what I would call norm. The homes were remarkably cheap in the lower end of town. 19,000 dollars was a common price on a 1200 square foot site built home with its own lot. I would say 1 in 8 homes were abandoned and unoccupied. these appeared to be bank owned homes and sold relativly fast. I would put an offer on one and would get out bid the next day. I never did buy one, would have liked to and use it for future retirement or rental. I see these deals are still available. I have hope for Phoenix and the economy.
Posted by: Dirk Smithson | November 14, 2010 at 06:06 PM