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NRO’s domestic-policy blog, by Reihan Salam.

Urban Bauble-Chasing



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David Brooks’ latest column draws on a forthcoming book, The Metropolitan Revolution by Jennifer Bradley and Bruce Katz, to argue that power is shifting from the national government to municipal governments, which are less ideologically constrained and more closely tied to the day-to-day lives of citizens:

Metro governments deal with issues in their particularity, not as abstractions. Leaders in northeastern Ohio can focus on their region’s historic strengths, including a history of expertise with polymers. That leads to certain concrete opportunities — the chance to get into flexible electronics, which are very thin electronic components attached to flexible materials. They can design specific policies around concrete circumstances.

Because issues on the regional level are so tangible, it is possible to debate new proposals without getting immobilized by the big government-versus-small government frame. Republican mayors tend to be more activist than their Congressional counterparts, and Democratic mayors tend to be more business friendly. Katz and Bradley highlight New York City’s fantastically successful effort to lure the Technion-Cornell engineering school. That was an exercise in using government to set the table for long-term growth by luring human capital, not in trying to micromanage the future with shiny office buildings, a downtown stadium or a mall.

Finally, city governments actually have power over the basics, which are the key to promoting growth. American growth lags not because of higher order problems, but because of the bad elemental things, like lousy schools and bad infrastructure. Cities can change this. A study by the Economist Intelligence Unit predicted that Chicago will be the ninth most competitive city in the world by 2025. Its rise in the rankings is fueled by the fact that the city is taking care of fundamentals: $7.3 billion in infrastructure spending over the next two years, a community college program that links education to employment.

There is much to be said for municipal governments, and for the principle of subsidiarity. And David’s broader point is well-taken — cities have to be less ideological, in part because it is more difficult to achieve redistribution at the municipal level than at the national level (because municipal governments require steady revenue streams, they generally have to eschew mobile and volatile tax bases). But my sense is that many municipal governments are wasting time on industrial policy efforts when they ought to be upgrading transit, K-12 education, and crime control and encouraging density while limiting congestions cost (via road-pricing, etc.) — policies that facilitate “superlinear scaling.”

Technion-Cornell is a paradigmatic example, in my view, of ill-advised bauble-chasing. The effort to lure the school was certainly successful, but of course the value of the implicit subsidies associated with the new technology campus meant that it was never going to be terribly difficult to attract a respected research institution. What I find confusing is that Bradley and Katz seem to associate an expensive, high-profile effort to attract a new technology campus (Stanford, widely regarded as the first choice, balked at New York city’s conditions at the end) as a hands-off approach while “shiny office buildings, a downtown stadium or a mall” are characterized as micromanagement. Publicly-subsidized malls and downtown stadiums are worthy of condemnation. Shiny office buildings, however, wouldn’t need much in the way of subsidy, as there is a great deal of demand for new structures in the urban cores of Manhattan and Brooklyn. And besides: the point of Technion-Cornell is that it is supposed to be a shiny technology campus located in Roosevelt Island, far from the city’s technology agglomerations. 

New York city didn’t need Technion-Cornell to lure human capital. Talented workers are very eager to settle in New York city, including large numbers of aspiring technology entrepreneurs. The real barrier to luring more human capital is the high cost of housing, which will only be lowered through new development, i.e., shiny residential buildings. The long-term question is not whether Technion-Cornell will lure human capital. Rather, it is whether it will lure more human capital than alternative policies, e.g., relaxing zoning restrictions in the neighborhoods where technology firms have concentrated (Union Square, DUMBO, etc.), that will cost the city the same amount or less. Technion-Cornell strikes me as a paradigmatic example of empire-building on the part of a mayor about to leave office, whereas relaxing zoning restrictions in the city’s technology corridors (and elsewhere, really) is a less glamorous, and potentially more contentious, but almost certainly more cost-effective approach. This is why I think David Schleicher is the most important thinker we have on the subject of local government.



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