New Urbanism and Industrial Policy – Toeing the Triple Line

Introduction:

In the past, I’ve written about the way in which new urbanism needs to do a better job attending to issues of class. However, I want to avoid the accusation that new urbanism is classist in the same way that others have made the argument about race. The reality is that the kind of transformations that new urbanism envisions are a lot easier to do with resources, and those are easier to find in a city that’s expanding, and given the history of post-war urban development that tends to be a particular kind of city.

If we want to revive cities, and not just help cities already on the upswing, if we want to bring New Urbanism to the Detroits, Baltimores, and New Havens and not just the Seattles, Portlands, and Denvers, New Urbanists need to bring industrial policy into their worldview.

Background

To begin with, we need to recognize that all cities practice industrial policy. They don’t do it well; to begin with, cities tend to conduct industrial policy almost entirely through tax breaks and free public services. This drains the city of desperately needed revenues and puts an additional burden on the revenues that remain. It forces cities to compete in a vicious game of beggar-thy-neighbor where corporations can put the screws to everyone but the lowest moral common denominator. Next, most industrial policies are shaped in the dark and often in a disjointed fashion as opposed to as a comprehensive picture. As a result, the citizens of our municipalities rarely have the open debates and clear, democratic choices about the economic choices they are making.

And make no mistake, these decisions have consequences. As Joshua Freeman writes in Working Class New York, New York City in 1945 was a thriving manufacturing hub with over a 2.6 million workers, and a million of them were union members. Together, they built a social democratic city on a foundation of rent control, that oft maligned policy which kept a world capital a working class city for a generation, the best public housing in the country, cheap and comprehensive public mass transit, public hospitals and health services, and some of the best public schools in the world. It was a New Urbanism for its time.

Yet over the next thirty years, this all came tumbling down –  in large part because when the pressures of global competition and automation came up against the city’s disadvantages when it came to land availability, high costs, and high wages, the city failed to do anything about it – at the same time that it was encouraging the development of finance, insurance, and real estate. By 1966, the majority of manufacturing in the region was located outside the city. Thus when the financial crisis hit New York in 1975, it created an opening for business and political elites to construct a new city where Wall Street rather than unions held power. Not only did this change the physical makeup of the city, as factories are knocked down to build high-end condos and corporate office buildings, but it changed the social structure. New York City went from being a city with a roughly diamond-shaped social structure with a broad, economically secure working class into one of the most highly unequal places in America, where the mega-wealthy sit on top of a pyramid of money.

This was a decision made through action and inaction. And these decisions are happening around us all the time. The question is: how do we make decisions that make cities on the decline better places, and all cities a better place for ordinary people?

Industrial Policy for Rusting Cities

Finance – the great difficulty of municipal reform is that many cities are constrained in both the forms and levels of revenue they can raise from taxes and the bond market. There are two potential ways for cities in decline to unshackle themselves. First, Metropolitan Reserve Banks. Just as with state governments, cities can establish reserve banks that can generate large amount of finance, especially for new industries. Naturally, the more limited basis of a city’s holdings and revenue will make these reserve banks smaller than their state counterparts, but given that the size of the projects they’d deal with are smaller too, it’s not a problem. Second, Build America Bonds. The Build America Bonds established by Obama were a godsend for the cities, allowing them to invest in infrastructure at lower costs. A permanent Build America Bond program, or even a program for cities to borrow directly from the Federal Reserve would allow the cities to take advantage of the Federal government’s functionally-unlimited financial capacity while giving the Federal government yet another tool to spread demand around in the future.

Make Real Estate Work for the City – especially in the cases of cities like Baltimore and Detroit which have declined from larger populations, there is a huge untapped potential in the vacant housing and real estate for economic development. First, rehabilitation of vacant housing and real estate can be the foundation for a direct job creation program with extremely valuable production. Second, selling that housing cheaply (in the case of Baltimore for a dollar) or just giving it away to working people literally spreads the wealth while expanding the city’s tax base. As occupancy rates in these properties rise, so does the value of housing and land the city owns – building up the Metropolitan Reserve Banks in turn. Third, it can provide a real solution for homelessness by just giving people a key to an apartment and access to facilities.

High Road Economic Regulation – there also some ways that a city can promote a more egalitarian political economy that don’t involve spending money. Many of these policies – Buy Local provisions that direct purchases to local (and preferably) union vendors, Project Labor Agreements that involve unions in negotiating wages and benefits in city construction projects, and Living Wage Ordinances where cities require vendors, service providers, and businesses that receive public assistance to pay a higher than minimum wage – are already in place in many cities, but they aren’t universally and comprehensively in effect and they haven’t really been part of the New Urbanist toolbox.

They need to be. To begin with, policies that promote an egalitarian distribution of income are conducive to the kind of sustainable living we want – when working people and their families cannot afford to live close to where they work, they increasingly get pushed out into the suburbs. The demand for transportation resources and the resulting strain on our transportation network increases. As a result, the environment is degraded by ever-expanding sprawl and increased emissions from commuters, the high cost of gasoline and the hours lost to commuting exact a further burden on working people and their families, and the outward search for affordable housing continues to spiral outwards, until the fabric of our communities can no longer stretch. When workers can afford to live where they can walk or take public transit to work, not only do communities become more economically and racially diverse, but the forces that lead to sprawl begin to reverse gear, creating systemic incentives for sustainability. Moreover, advocates for social justice could use the kind of innovative, experimental approach that New Urbanists could bring to the human as well as the physical needs of the city.

Public Goods – as I’ve written before, the services that cities provide can make all the difference in livability of a city and its attractiveness to new industries and new migrants who can support a tax base. A municipal public option (building off of expanding Medicaid and SCHIP) and high-quality public hospitals and health clinics, municipal child care services and subsidies, municipal broadband wireless, high-quality social housing and housing subsidies, and yes, municipal job insurance, can transform a city into a commonwealth, where everyone is taken care of and takes care of everyone else.

If new industries and new residents with income are going to take a chance on cities that can’t offer what cities on the rise can, it will take something dramatic to attract them. However, this scale of public goods can’t be afforded by cities on their own – it needs support from state and Federal government. With loans, revenue-sharing to support new services, and Federalization of existing social services, Federal and state governments help shape the entire course of urban development.

Conclusion

It’s fashionable in “socially responsible investment circles to talk about the “triple bottom line” of social, environmental, and economic outcomes. New Urbanism has tended to focus largely on the last two, but it needs to include the first. Industrial policy will make New Urbanism better, and will bring allies that New Urbanism has not have before.