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Inbreeding Homophily

Globalization favors open networks, people who can do business with each other on a minimal amount of trust, and avoids closed networks, the parochial neighborhoods that only look out for their own.
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Statue of Solomon Juneau, who helped establish the city of Milwaukee. (PHOTO: SULFUR/WIKIMEDIA COMMONS)

Statue of Solomon Juneau, who helped establish the city of Milwaukee. (PHOTO: SULFUR/WIKIMEDIA COMMONS)

In The American Prospect, Nona Willis Aronowitz tells the tale of two Milwaukees. For some millennials, the Rust Belt city teems with opportunity. For others, the recession drags on. Globalization arrives in Wisconsin:

This past May, I visited Milwaukee and spent the day with a few young startup founders. You know the types: college-educated twenty-somethings who, upon graduating into a terrible job market, decided to create their own jobs instead. Bright, organized, and creative, they are the kind of Millennials often held up as the scrappy saviors of our brave new economic world. They told me how affordable Milwaukee was, especially compared to the city’s pricier neighbor, Chicago. Angela Damiani, director of NEWaukee, a networking organization for young professionals, and a homeowner at 27, observed that “if you want to start a business or follow a pipe dream, Milwaukee is the type of place you can do that, because it’s so small and cheap and so interconnected.”

But after leaving NEWaukee’s cozy basement space—complete with a basketball hoop, a PBR longboard, and afternoon mimosas—and stepping out into the street, I encountered a strikingly different scene. A large group of workers, most young and of color, were protesting outside the Grand Avenue mall. The demonstration was the latest in a series of strikes by fast-food and retail workers demanding $15 an hour and the right to form a union. I asked everyone I met the same questions I’d asked the startup kids earlier: Is Milwaukee chock full of opportunities? Is Milwaukee cheap?

“Haha, that’s cute. No,” said 18-year-old Amir Graham, who works at McDonald’s to help out his mother, a bartender and single parent. It’s not hard to imagine Graham at a small liberal-arts school—“I put my head in the books and do a lot of studies on my own time on economics, sociology, stuff like that”—but with his schedule, going to school full-time would be a struggle.

Emphasis added. To understand Milwaukee's competitive advantage, one must spend time in world city Chicago. Migration, not racism, best explains the dramatic disparity of economic experience. There are the mobile and the stuck. Move or die.

Globalization favors open networks, people who can do business with each other on a minimal amount of trust. Globalization avoids closed networks, the parochial neighborhoods that only look out for their own. In Why the Garden Club Couldn’t Save Youngstown: Civic Infrastructure and Mobilization in Economic Crises, Sean Safford draws such a distinction:

Despite sharing very similar economic histories, Allentown and Youngstown have nevertheless taken dramatically different post-industrial paths since the 1970s. The paper analyses how the intersection of economic and civic social networks shapes the strategic choice and possibilities for mobilization of key organizational actors. The analysis shows that differences in the way that civic and economic relationships intersected facilitated collective action in one location and impeded it in the other. However, in contrast to much of the literature on “social capital”, the results indicate the downsides of network density, particularly in times of acute economic crisis. More important than network density is that the structure of social relationships facilitate interaction—and mobilization—across social, political and economic divisions.

I'm seeing the same forces at play within a community, within Milwaukee. Those who left home for Chicago experienced life as a newcomer. Innovation is required every day as a bunch of folks from someplace else build relationships and crack the code of the international part of the city. Richard Florida invokes tolerance and diversity as key descriptive variables for the Creative Class. An abundance of both indicates open networks, globalization. Upon return, these migrants bring the open network way of doing business with them. This is how globalization diffuses. The world is flat.

No such experience is afforded the stuck. Whether ethnic enclave or inner city ghetto, isolation and too much trust beget poverty. You have Youngstown instead of Allentown:

Two examples for migrant networks with different degrees of integration are illustrated in Figure 1. The figure on the left describes an ethnic enclave. Its members, represented by the circles, have close connections within the network strong ties, but very few connections to the outside world, represented by the crosses. An enclave is a typical example for a network with a high degree of closedness. This is a pervasive pattern in social networks, to which the literature often refers as inbreeding homophily the fact that individuals with similar characteristics form close ties among each other (McPherson et al., 2001; Currarini et al., 2009). Examples for such closed-up migrant networks are Mexican neighbourhoods in Los Angeles or Chinatowns in most North American cities.

The graph on the right represents a well-integrated network, whose members have weak connections among each other but strong connections to the outside world. Examples for such groups are the Germans in London or the Dutch in New York.

There are two reasons why a potential migrant receives better information from a well integrated network than from an enclave. First, the well-integrated network has more connections to the outside world. Its members receive more information and therefore have better knowledge about job perspectives in the receiving country. In contrast to this, members of an enclave typically have little knowledge of the language of the host country (Lazear, 1999; Bauer et al., 2005; Beckhusen et al., 2012). An enclave may offer job opportunities within the migrant community, but it has very limited information on the labor market outside the enclave.

Emphasis added. A very dense urban enclave is a desert of labor market information. The disconnect from the outside world, the lack of migrants, makes the supposed density dividend moot. A grand and unfortunate irony, conventional wisdom preaches more social capital for the pockets of poverty. Promoting inbreeding homophily is the policy of choice. Such efforts increase inequality and segregation. The world is spiky.

Talent retention, plugging the brain drain, is another form of inbreeding homophily. The aim undermines economic development and stifles innovation, density be damned. Your town is a black box, a closed network. Even people who dare to move there leave soon after because they don't feel a part of the community. It's a death spiral all too familiar in the Rust Belt. The cities become more isolated and poor. The best and brightest still go to Big City.