Over a decade ago, Witold Rybczynski wrote a wonderful essay for The Atlantic on the idea of downsizing cities. It anticipates Mayor Bing’s strategy in Detroit, and it offers useful principles for other American cities that are going through a wrenching transition.
Rybczynski begins his essay by suggesting that one of the favored strategies of liberal urban reformers, annexing affluent suburbs to declining cities to enhance the base of the latter and to enhance cooperation and coordination across the metropolitan area, is not politically plausible in most cases, particularly those in which the central city is in most desperate need of renewal. I’d add that there are real disadvantages to city governments that are too large. Though there is certainly a case for metro-wide cooperation on transportation, policing, and a number of other functions, there are diseconomies of scale as well as economies of scale. Smaller cities can pursue a more diverse array of strategies regarding the mix of amenities and taxes, thus enhancing Tiebout choice within a metropolitan area. And to the extent one is concerned about the distribution of income, this a function better handled at the state or federal level, thus allowing municipalities to pursue their core competencies. The fact that cities often have high concentrations of poor people isn’t always a mark of failure: it could mean that poor workers, often immigrants, are drawn to cities in search of economic opportunities. Granted, this is less true in a city like Detroit or Baltimore, where you have very high concentrations of families suffering from intergenerational poverty.
If the metropolitan strategy isn’t available, Rybczynski points in a more promising direction.
Like a mall owner, the administration of a city with a low occupancy rate can try to increase its tax base by refurbishing the downtown area to make it more attractive to business. It can organize riverboat gambling and build aquariums and world trade centers. It can stimulate employment by enlarging the public sector. (It cannot, however, create the sort of manufacturing jobs that were the basis for the earlier prosperity and growth of great cities like New York, Chicago, and Philadelphia.) It can also try to balance its budget by raising revenues through higher property taxes, business taxes, and income taxes, and by curtailing services — although these tactics, like raising rent, will eventually only hasten population decline.
The mall owner who has tried everything and finds that there is simply no demand for space has a final option: make the mall smaller. Consolidate the successful stores, close up an empty wing, pull down some of the vacant space, and run a smaller but still lucrative operation. Many cities, such as New York, Detroit, and Philadelphia, don’t stand a chance of annexing surrounding counties. Downsizing has affected private institutions, public agencies, and the military, as well as businesses. Why not cities?
After explaining why depopulated neighborhoods are dangerous and undesirable, and thus expensive to police and maintain, Rybczynski suggests a couple of interesting strategies. The first and less attractive is what he calls “zero-occupancy zoning,” or declaring certain neighborhoods dead zones and cutting off services.
The objection may be raised that zero-occupancy zoning would create large tracts of empty land whose presence would disrupt the proper functioning of a city. In fact many cities have grown up around cemeteries, or have enveloped earlier industrial areas such as quarries and railroad yards, and most cities already have large areas of land such as tank farms and container depots that are cut off from everyday use. The only difference between these areas and zero-occupancy zones would be that the latter would be unused, and would not create noise or air pollution.
One of the reasons this strategy is so unattractive is that it would involve inducing the remaining families to move on, which would be difficult and, to put it bluntly, tragic. There is, however, another route to “planned shrinkage.”
Cities have another option: divestiture. Contiguous parcels of, say, at least fifty acres could be put up for sale, with one of the conditions of sale being that the land would cease to be part of the city. According to Peter Linneman, the director of the Wharton School’s Real Estate Center, large tracts in proximity to cities but without the burden of city taxes and bureaucracy would very likely attract developers who would otherwise shun them. The new developments, whether residential or commercial, would be responsible for their own municipal services, as new developments already are in suburban locations. Assuming that questions of ownership of rights-of-way and underground infrastructure could be worked out, the prospect is attractive. Cities would increase their income (although they would not gain taxpayers), and they would divest themselves of unproductive land. At the same time, people and economic activities would be attracted back into the urban vicinity.
Because almost all politicians are empire-builders, with the possible exception of the remarkable Dave Bing, it’s hard to see many mayors going for this approach. It does, however, make a lot of sense. This reminds me of Paul Romer’s call for “charter cities,” Hong Kongs carved out of developing countries.