Abstract
Cities today are confronting never before seen challenges to their pole position on top of the economic hierarchy. In this chapter, we lay out four challenges, past and future, that cities today face and identify policies that can help address the problems we identify. The common theme throughout is that cities, their residents, and their business leaders need to embrace a dynamic ethos and be given a freer hand to reposition their municipalities to face a future that is shaping up to be quite different than the past.
We thank Tim Bartik, Josh Hall, and Brad Hershbein for suggestions and insights. Any errors are our own.
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Notes
- 1.
Additionally, recent research has shown the persistent, harmful effects of the arbitrary boundaries drawn on the 1930's Home Owners Loan Corporation (HOLC) “redlining” maps. The HOLC was a temporary program created to handle existing home loans. Not only were factors such as home ownership and home values stunted in neighborhoods deemed more risky by the HOLC in the 1930’s, but it has been shown that racial segregation by neighborhood grade was found across the maps’ drawn boundaries. Areas graded D, or most risky, became more heavily African American than nearby C-graded areas over the course of the twentieth century (Aaronson et al. 2021).
- 2.
Mohl (2004) discusses the urban history of freeway revolts. In the city of Baltimore, for example, city planners initially hired Robert Moses to draw a plan for where highways should be located. The Moses plan projected the displacement of some 19,000 people in the central city, mostly in slums. Moses was quoted stating the benefits of this plan to cut through poorer neighborhoods as “the more of them that are wiped out the healthier Baltimore will be in the long run.” The Moses plan drew widespread opposition, primarily from people in the targeted neighborhoods but also from respected Baltimoreans.
- 3.
Using recent American Community Survey data, Patterson (2020) notes important current trends: 20% of Black households do not have access to an automobile, 24% of public transit riders are Black, the second largest group of riders (even though their share of the US population is 12%), 24% of Blacks live near highly trafficked roads, and 18% of traffic-related pedestrian deaths are Black.
- 4.
Houses built prior to WWII but after the turn of the last century tended to cater to a rising class of relatively affluent automobile owners, while building housing for working-class people (such as duplexes and triplexes) tapered off (Harris 2013). These houses tend to be somewhat easier targets for redevelopment, because they were built quite close to city centers as the infant paved-road network made it impractical to build too far out. There were some exceptions during this time period, as the 1920's also saw a large number of small, single-family detached houses built for the rising manufacturing workforce in certain cities, such as Detroit (Farley and Danzinger 2000; Martelle 2014), or new boomtowns, such as Greater Miami (Knowlton 2020).
- 5.
Source: Authors' calculations from the 2019 American Community 1 Year Survey (Table B25034).
- 6.
We note that these vintage effects favoring pre-1945 housing and discounting postwar housing appear in other countries, such as the Netherlands (Rolheiser et al. 2020).
- 7.
While we believe that remote working will be higher after the COVID-19 pandemic than before, we note that while office vacancy rates and utilization declined with the onset of the pandemic, there is yet no evidence as of this writing (in Fall 2021) that commercial rents have declined, perhaps because landlords are reluctant to change their rates in either direction until there is more economic clarity (Chung and Dill 2021).
- 8.
Dettling and Kearney (2014) find that increased housing prices lead to fewer children born. In their analysis, housing prices exert a larger effect on birth rates than unemployment rates.
- 9.
Of course, general population decline is not the only demographic threat. Highlighting the US experience, the 2020 Census data showed between 2010 and 2020 domestic migration shifts to smaller metros and non-metropolitan counties as jobs and housing began to disperse outward in the aftermath of the Great Recession. This trend may further solidify in the COVID-19 era thanks to the aforementioned remote working shift (Frey 2020).
- 10.
That is not to say that population decline is irreversible. For example, Washington, DC recovered from a mid-century population slump, in part through active civic engagement and policy planning. In the mid-1990s, business and civic leaders planned and pushed for both a new downtown sports and entertainment arena and the establishment of a downtown business improvement district stretching from the White House to the Capitol Building. Using city-owned land, tax increment financing, tax abatements, arts grants, and zoning changes, the goal was to produce a “living downtown” to complement office buildings with more housing, culture, and entertainment. However, many cities have been trying similar strategies without Washington’s success, meaning there is no policy panacea for the decline.
- 11.
For example, Wisconsin started in the 1950s making it much easier for outlying areas to incorporate (which makes it harder for them to be annexed) and have its courts to interpret the law to make it harder for municipality-initiated annexations to occur. The result is that almost all Wisconsin cities’ avenues for growth into unincorporated territory have been closed off (Zeinemann, 2007).
- 12.
In both cities, efforts by elected officials to pursue a merger with Detroit and Cleveland (respectively) caused a citizen backlash, resulting in recall campaigns. Readers should bear in mind that these cities are now majority African American, who purposefully sought to leave the center cities for the suburbs. The politics of these mergers should thus not be taken for granted by researchers or policymakers, even in the case of extreme fiscal distress.
- 13.
By “natural,” we mean migration, net births, or immigration. All of these have either been in decline for some time or are forecasted to decline as sources for population growth (for migration, see Molloy et al. [2017]; for births, see Kearney et al. [2021]; and for immigration, see Tavernise and Gebeloff [2021]).
- 14.
Cities should of course aim not to get overzealous in their annexation attempts. Memphis recently began de-annexing some outlying neighborhoods that were simply not generating enough tax revenues to cover their costs. These neighborhoods tended to be exurban or semi-rural in character, thus much less dense than your average inner-ring suburb.
- 15.
As Mast (2020) shows with ward versus at-large representation, councillors representing small geographical units are much less likely to support new housing development.
- 16.
We suspect that COVID-19 will not dent young, affluent, unmarried people’s desire to live in “trendy” parts of large cities. Educational sorting and agglomeration economies continue to ensure that these locations remain the best places for dating for young, college-educated people. While dating can occur remotely, most people (for obvious reasons) will find this undesirable for longer than short stretches.
- 17.
We expect both groups to grow, spurred jointly by population aging, which will strongly increase the demand for professions like home health aides and nurses (Goodhart and Pradhan 2020).
- 18.
While most developers prefer to operate on big, undeveloped plots of land, great innovations are occurring with manufactured homes and 3D printing to make small-scale development quickly, cheaply, and well, e.g., Kamin (2021).
- 19.
Asquith (2021) shows that renting has risen steadily among older workers since the Great Recession, particularly among those without a college education.
- 20.
This is in part because in most states the effective property tax rate on an apartment building of any size is higher than a single-family home, due to “homestead” exemptions.
- 21.
In fact, this is simply an extension of a trend begun in the 1980’s when many abandoned urban factories were converted to loft apartments (Hornick and O’Keefe 1984).
- 22.
For example, the (Bartik 2018) results on the impact of local incentives are heavily dependent on the assumption that 100% of the directly created jobs will appear in the local area—even relatively small reductions in the number of jobs that might be done remotely greatly diminish the value proposition of most incentive policies.
- 23.
They can also be successfully implemented in fairly small cities. The first city to build one was Kalamazoo, Michigan, whose current population is about 76,000.
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Asquith, B.J., Bock, M.C. (2023). The Case for Dynamic Cities. In: Kassens, A.L., Hall, J.C. (eds) Challenges in Classical Liberalism. Palgrave Studies in Classical Liberalism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-32890-9_2
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