The Reality of Mayors’ Economic Promises

They vow to rev up the local economy all the time, exposing their misunderstanding of cities and political office.
November 2016
Landing General Electric was a big coup for Boston, but it may be an exception to the rule. (AP)
Alan Ehrenhalt
By Alan Ehrenhalt  |  Senior Editor

Nearly half of America’s 100 biggest cities are electing mayors this month, and most of the winners will come floating into office on a tide of promises, some of them achievable and some so ambitious that the candidates themselves don’t have a clue how to pull them off.

Many will have vowed to be “education mayors” -- school reformers who will generate test results so much improved as to make their communities magnets for the affluent residents they are competing to attract. Candidates make these vows despite decades’ worth of evidence that there is little a mayor can do to produce dramatic educational improvement over the course of a term in office.

But that’s the way it is with political promises. To attract attention -- and votes -- you’re better off promising to do something difficult. Nobody runs for mayor of a big city vowing to become the “sanitation mayor.” Picking up the garbage is something everyone expects you to do. Being exceptionally good at it scores no political points. It’s a task that gets noticed only when it’s botched.

The smartest political candidates understand this. They make promises that stand somewhere between the grandiose and the trivial. They look for challenges that, with the requisite amount of intelligence, energy and luck, might be met in a meaningful way. In the words of George Latimer, who was a highly effective three-term mayor of St. Paul, Minn., these candidates don’t chase problems. They chase opportunities.

For many candidates in 2016 who would like to be as successful as Latimer, the question of what to chase is fairly obvious: economic development. Promise to lure in the corporations that will provide massive numbers of new jobs and restore (or preserve) the city’s economic vitality. Push through tax incentives and other economic subsidies that will make your city look more attractive than the other jurisdictions competing for the same prizes. Land a few big fish, and you will leave office with the satisfaction that you have done something important.

It’s an appealing strategy, and it’s one that, in much of urban America, is hard to resist. But how successful is it likely to be? How often does any set of public policies deserve credit for a city’s economic revival? When a city’s economic fortunes improve in a relatively short time, does that mean the mayor was smart -- or does it just mean that he or she was lucky?

Richard Schragger, a law professor at the University of Virginia, has taken a look at mayors and economic development strategies in cities all over the country and has come up with a sobering but compelling conclusion: When the strategies work, it’s mostly luck. “Any claim that a specific policy will foster growth or decline,” Schragger says in his new book, City Power, “should be treated with a great deal of caution. ... Confident predictions that economic growth is attainable if city leaders would just get with the program are seriously oversold.”

Schragger’s skepticism about economic development politics is grounded in a conviction that most political actors misunderstand what cities are fundamentally about. In his view, they subscribe to the market-driven ideology that envisions cities as products, vying with each other to present the most enticing offers and attract the most desirable collection of customers -- or corporations. Schragger, on the other hand, is a disciple of the late Jane Jacobs, and shares the renowned urbanist’s long-held conviction that a city is a bundle of organic processes interacting with each other in myriad ways and much too complex to be understood in simplistic free-market terms. “We talk about cities as if they were businesses,” he writes, “when that is not what cities are at all.”

If cities were businesses or products in competition with each other for sales, Schragger points out, it would be reasonable to expect that over the past couple of decades the ones prospering most conspicuously would have been the ones offering customers the best deals -- specifically, the juiciest array of tax breaks. But as we all know, that isn’t what happened. Boston, New York and Seattle are all high-tax cities, and they are all thriving. Meanwhile, dozens of struggling Rust Belt cities have thrown elaborate tax break bouquets at businesses and are worse off than they were in 1970.

The most impressive economic development coup in the past couple of years is probably Boston’s success at enticing General Electric Corp. to move its headquarters from suburban Connecticut to its downtown waterfront. Of course, this wasn’t accomplished without subsidies. The city of Boston and the state of Massachusetts offered nearly $175 million in grants and property tax relief. But it was far from the best deal on the table. If GE had chosen a new location based only on the financial incentives being offered, it would have done better moving to the suburbs of New York, or perhaps even staying in Connecticut.

So what are we to make of the resurgent big cities of the 21st century? What did they do to earn that distinction? If they didn’t succeed through economic development bribery, maybe they did it by electing leaders who were simply better at management than the competition. Schragger acknowledges a grain of truth to this argument, but not much more than that. Looking back over the past generation, it’s certainly true that Pittsburgh has benefited from having more capable stewardship than Detroit has had. Pittsburgh’s mayors worked hard to nurture the city’s combination of good universities and advanced medical research, rather than making foolish investment decisions and staying yoked to a declining industry. But when you add up all the factors that led to Detroit’s bankruptcy in 2013, it’s difficult to say that bad management -- or any particular set of policies -- was the primary culprit. The decline of Detroit was much more complicated and multifaceted than that. It was, in a certain sense, organic.

Education might best be looked at in a similar way. Every mayor wants to talk about creating better school systems, but as Schragger points out, there hasn’t been much of a detectable correlation in recent years between educational improvement and broader economic revival. Chicago and Philadelphia have been burdened for several decades now by dysfunctional school systems, but both have experienced central city comebacks that have spread beyond the immediate downtown area into an ever-expanding network of surrounding communities.

Reduced crime is often cited as a fundamental ingredient of urban recovery, and I would assign it more importance than Schragger does in explaining the success of Boston, New York and, until the last couple of years, Chicago. The fact remains, however, that crime has declined significantly just about everywhere in America since the 1990s. If safe streets were the secret ingredient of comeback cities, there would be many more of them. Controlling crime may be a necessary condition for urban revival, but it clearly isn’t a sufficient one.

It’s tempting at this point to invoke some sort of amenity thesis, such as Richard Florida’s much-discussed argument that the successful cities are those that do best at attracting the “creative class” of highly educated young professionals. General Electric is, indeed, moving to Boston because of some combination of intangible amenities that young talent is looking for; the company’s executives have made this very plain. There seems to exist a mixture of demographics, technology and culture that can constitute a winning formula for cities. But knowing this is not the same as knowing how to create it. In the 15 years since Florida first advanced his ideas, it is hard to think of a city that has set out purposefully to become a creative-class mecca and actually become one. Urban histories unfold for reasons that are very difficult to understand, as Jane Jacobs knew well and as Schragger argues persuasively.

So what should this year’s crop of eager new mayors set out to achieve? Schragger has a simple answer to that question, although it is not one that all of them will wish to embrace. He believes, among other ideas, that they should set a goal of tempering the inequality that has become endemic to even the most fortunate American cities in recent years. He wants them to fight for a higher minimum wage, one that would rise in graduated steps to $15 an hour and then beyond it. Raising the minimum wage, he says, is a concrete step that most cities can take and then measure the consequences. In Schragger’s view, the consequences will be overwhelmingly positive: If a small number of jobs are lost in the process, they will be more than compensated for by tangible gains for most of the workforce.

That isn’t a practical strategy everywhere. More than a dozen states now restrict the ability of their localities to raise the minimum wage. In those states, Schragger recommends the expanded use of “community benefits agreements” -- deals with developers that extract concessions on jobs, housing and community services in exchange for land use allowances over which the local government has control.

By no means is this a comprehensive agenda. It’s barely a beginning. But it’s built on a recognition that cities would be better off in the long run if mayors and other leaders looked at their capacities more realistically. “Cities,” Schragger says, “should do less of what they cannot do … and more of what they can -- provide quality basic services to their residents. … Abandoning local economic development policies is almost politically impossible for local leaders. But it is the right thing to do.”