Cities Must Find the Economy's Fix

With Washington paralyzed by its debt and states facing deficits, the pressure is on local governments to raise more revenue or make significant structural changes to reduce costs.
by | July 2011

My wife and I just returned from almost three weeks in Italy, a trip we had wanted to take for a long time. A lot of scenes compete as my favorites, but my true “aha moment” was more subtle. It was during a visit to the Galileo Museum in Florence, when what I had read in my history books so many decades ago finally sunk in. Leonardo da Vinci, Galileo, Michelangelo, Botticelli and all the other famous artists, musicians, engineers and scientists -- most of whom lived in the same 110-year span of time in Florence -- collectively had sparked the Renaissance that led Europe out of the Dark Ages.

There is a very clever name for this phenomenon: the “Medici Effect,” which is described in a book published five years ago by Frans Johansson. “When you step into an intersection of fields, disciplines or cultures,” he wrote, “you can combine existing concepts into a large number of extraordinary new ideas.”

That’s what happened in Florence in the mid-15th to mid-16th centuries. The banking and merchant family, the Medicis, largely underwrote the Renaissance, much like the Carnegies, Mellons and Rockefellers did centuries later in the U.S. during the Industrial Revolution.

That very same collaborative brilliance promoted by the Medicis in Florence is today created and promoted by cities, according to a new book. “The artistic innovations of Florence were glorious side effects of urban concentration; the city’s wealth came from more prosaic pursuits: banking and cloth-making,” writes Edward Glaeser in Triumph of the City [read "Is It Time To Retire Jane Jacobs' Vision of the City?"]. These days, in the same way, “Bangalore, New York and London all depend on their ability to innovate.”

Glaeser is an economist, director of Harvard University’s Taubman Center for State and Local Government and a free-market conservative. His book presents economic and demographic data that is poignant and easy to digest. Some facts: Workers who live in U.S. metropolitan areas with large cities earn 30 percent more than those who don’t, largely because they are so much more productive.

“There is a near-perfect correlation between urbanization and prosperity across nations,” he points out. “On average, as a share of a country’s population that is urban rises by 10 percent, the country’s per capita output increases by 30 percent. Per capita incomes are almost four times higher in those countries where a majority of people live in cities than where a majority of people live in rural areas.”

The Great Recession will be challenging for cities, yet he argues that “our urban future looks bright. Even the Great Depression failed to dim big-city lights. The enduring strength of our cities reflects the profoundly social nature of humanity.”

Glaeser is right about that. Until the U.S. economy collapsed three years ago, an urban revival was well under way. It was uneven and complex, for sure, but it was happening in most cities in every region. Yet the current news from many of our urban areas is dismal: layoffs, salary cuts, sale-leasebacks of public structures, down-and-dirty fights with public employee unions, dwindling stimulus funding and slashes in state aid.

With Washington paralyzed by its overhanging debt and states facing structural deficits (despite their recent revenue bounce), the pressure is on local governments. Cities, counties and regions must raise more revenue or make significant structural changes to reduce costs, or both.

It can be done. I write this from Benzie County in northern Michigan, a rural county in what usually is described as the nation’s basket-case state. Voters here just approved two millage increases to continue the Benzie Bus service (three-to-one approval) and to boost the budget for two libraries (more than two-to-one). It reinforces my feeling that if voters know what budget increases are for, they are far likelier to approve the funding. What needs more discussion is why the county, the state’s smallest in land area, has 12 townships and seven town governments. Including the county itself, that’s 20 governments for 16,000 citizens, with plenty of overlapping services.

The chief advantage local governments have in sorting out possible solutions is that their politics tend to be less ideological and partisan and more pragmatic. That brings to mind yet another recently published book worth perusing, this one by Rick Baker, the two-term mayor of St. Petersburg, Fla., and a winner of Governing’s 2008 Public Official of the Year award. The Seamless City: A Conservative Mayor’s Approach to Urban Revitalization That Can Work Anywhere is a recounting of how Baker achieved such success, not only in improving public services and energizing the economy, but particularly in healing racial and economic rifts. He was re-elected in 2005 by a landslide, winning 90 percent of the vote in the core precincts of Midtown, where most voters are African-American (Baker is white) and where riots took place a decade earlier.

Baker is not so much a conservative as a pragmatic, determined, businesslike leader. We’ve had a bunch of them in cities of all sizes in the past couple of decades, and we still do. As a group, they stand out as our most impressive political leaders, which is good because that’s the most important ingredient in continuing the revival of urban America.

Peter Harkness
Peter Harkness  |  Founder, Publisher Emeritus
pharkness@governing.com

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Potomac Chronicle