Today, the G20 group of countries is convening in Pittsburgh to consider, among other things, the fate of the world's financial system. The location is very appropriate. Business Cycles teach us that contractions aid in transferring resources from old, out dated industries to the new growth industries that drive the economy to expand and create new wealth.
Pittsburgh has understood that fact very, very well. Until the 1980's, Pittsburgh was synonyms with steel. Then other materials began to take the place of steel and plants began to close down. In the 1980's, Pittsburgh lost 100,000 jobs.
But the city government did not spent any time or money trying to save the steel industry. Instead, they invested in, and encouraged, the growth of health care and education in Pittsburgh. Carnegie Mellon University and the University of Pittsburgh, and the University of Pittsburgh Medical Center are highly visible symbols of the city's new direction.
The population has leveled off at about 313,000, and the city has become a center for high tech inovation.
Let's hope that the message of Pittsburgh is not lost on its newly arrived guests.
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