The Urbanist Musings of Pete Saunders

Open For Business Is Not An Urban Strategy


Contributor Carl Schramm, in Forbes Magazine, asks the question: why does the world’s richest nation have so many failed cities?  He knows one when he sees one:

“A failing city, we have at least 25, is one that can never expect to return to its former prosperity. Soon Detroit’s population will be one third of what it was in 1960 – there is no chance it will ever boast two million again.  While Detroit’s problems are specific in their particulars, cities like Baltimore, Cleveland, Toledo, Scranton and Hartford share histories of similar policy choices that drove their continuous downward spiral.”

And he also knows why:

“Mayors changed from autonomous political actors to supplicants inside a federal system of transfers. Washington reshaped cities by conditioning money for slum clearance, Interstate construction, block grants, public housing projects, modernizing schools, and hospital construction on conforming to the utopian visions of experts on the Potomac.  Today, cities in ruins are little more than colonial outposts.  Mayors pay obeisance to Senators — a century ago it was the other way around.

The prosperity of the 1960s allowed CEOs, union leaders and mayors flush with federal cash to fall prey to the reckless assumption that economic expansion would roll on forever.  Consumers would keep buying, union membership would grow, and cities would enjoy continuously expanding tax revenues allowing them to make lavish promises to newly unionized public employees.  Cities that failed proved incapable of seeing the contractions that globalization was bringing to high cost urban areas.”
And here’s his answer:
“Cities should re-charter under new state laws as autonomous economic entities with lower taxes and reduced regulation, a move that would force states to become fiscally responsible and friendlier to business. Cities should change the part of their economies focused on supporting the poor, often 1/3 of a town’s economy, into market-mediated programs using vouchers for schooling, job training, transportation assistance and rent support programs.  In no time the poor themselves, acquiring market competency, would start businesses and the steady march to building a new economy would be underway.  Only when cities are again cradles to new business can they ever hope to have better years ahead.”
Mr. Schramm is an expert on entrepreneurship, and I suppose everyone can be subject to the saying, “when you’re a hammer, every problem is a nail.”  He clearly views business-unfriendliness as the reason we have so many failed cities in the U.S.  But does anyone really believe that putting a “Detroit — We’re Open For Business” sign and lowering taxes and reducing regulation will push people to the Motor City again?  I definitely believe that small business plays a critical role in the revitalization of cities.  But I think other matters, related to crime, housing, infrastructure and other things will enter into the business relocation calculus.
I won’t dispute the notion of failed cities, but I do believe Mr. Schramm misses the point.  Cities are economic creations, and serve the economic needs of the period they were created within.  However, once they reach a certain economic level, and the economic realities for which they were created shift, cities become more social creations than economic ones, and their continued sustainability is dependent on social responses, not just economic ones.  And our nation does not do social response very well.
In fact, I’d say our nation’s love/hate relationship with cities is a contributing factor in the number of failed cities.  
I see a long history of people extracting economic value from cities and moving away to create new places (suburban, Sun Belt or otherwise), and leaving behind a social legacy they’d rather not deal with.  

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