American cities, once economic and social launch pads for their residents, are all too often plagued by poverty and decay. One need only to look at the ruins of Detroit to see how far some once-great cities have fallen, or at Boston and San Francisco for evidence that such decline is reversible. In Boom Towns, Stephen J.K. Walters diagnoses the root causes of urban decline in order to prescribe remedies that will enable cities to thrive once again.
Arguing that commonplace explanations for urban decay misunderstand the nature of our towns, Walters reconceives of cities as dense accumulations of capital in all of its forms-places that attract people by making their labor more productive and their leisure more pleasurable. Policymakers, therefore, must properly define and enforce property rights in order to prevent the flight of capital and the resulting demise of urban centers. Using vivid evocations of iconic towns and the people who crucially affected their destinies, Walters shows how public policy measures which aim to revitalize often do more harm than good. He then outlines a more promising set of policies to remedy the capital shortage that continues to afflict many cities and needlessly limit their residents' opportunities. With its fresh interpretation of one of the American quandaries of our day, Boom Towns offers a novel contribution to the debate about American cities and a program for their restoration.
Autorentext
Stephen J.K. Walters is Professor of Economics at Loyola University Maryland and a Fellow at the Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise. He has advised aspiring and elected mayors and governors, given expert testimony in antitrust and tort cases, and consulted for diverse clients, ranging from the Nuclear Regulatory Commission to major league baseball clubs.
Inhalt
Author(s): Stephen J.K. Walters
The decline of many American cities in the second half of the twentieth century is commonly blamed on forces that seem hard to reverse, at least at the local level: racism that causes white flight, globalization that fuels de-industrialization, and a taste for low-density residential environments. This book presents a more hopeful view, arguing that the traditional narrative has overlooked some crucial determinants of urban vitality, and that with proper attention to these fundamentals any city can thrive and enhance their residents' welfare. It presents cities as dense concentrations of capital in all its forms - physical, human, and social - that attract people and make their labor and leisure time more productive and fruitful. Cities that encourage the formation of such capital by protecting their residents' private property rights and efficiently managing the property that their citizens own in common with each other will, therefore, be far healthier than those that do not. Through historical illustrations and contemporary case studies, the book details policies that have both succeeded and failed in this regard, offering concrete and politically practical suggestions for policy reforms relating to taxes, regulation, management of common property resources and public services, and the planning process.
This introductory chapter discusses how cities attracted residents and helped them prosper in the first half of the twentieth century, documents their decline in the second half, summarizes the held theories on this decline, and argues that these theories - though not wrong - are seriously incomplete. It views cities as rich concentrations of tangible and intangible capital and holds that policies which protect the property rights of the owners of this capital crucially affect urban vitality and the welfare of city residents. Accordingly, it offers a hopeful message: that any city can engage in policy reforms that will make it more attractive to capital formation and enhance residents' living standards and quality of life.
Boston's infamous mayor James Michael Curley is highlighted as a practitioner of "Robin Hood politics," in which tax policy is used to redistribute wealth or income from disfavored to favored interest groups. Employing this strategy at the local level can lead to considerable geographic re-arrangement of population over time - i.e., flight by those who see no commensurate increases in public services accompanying the higher taxes they pay. Numerical examples illustrate the wealth losses to owners of capital arising from redistributive policies, and historical data documents the adverse long-term consequences for laborers (who partner with physical capital in the production process) of the flight of capital from urban locales.
The causes and consequences of statewide property tax revolts in California and Massachusetts in the 1970s are examined. The dynamic effects of these voter-imposed cuts in tax rates are chronicled. These effects are sufficiently strong that they suggest a means by which cities may reduce tax rates on productive capital and reverse capital flight without forcing draconian (and politically risky) cuts in near-term spending: a "cash on delivery" plan in which rate cuts that take effect at a future date certain immediately produce new investment and increases in property values that enhance tax receipts that are banked to defray the costs of the future rate cuts.
The UAW's historic triumph over GM during its 1937 sit-down strike is examined to demonstrate the ability of unions to increase the returns to labor and reduce returns to capital via both monopoly pricing and opportunism. A numerical example is used to illustrate the latter practice, in which specialized assets are taken hostage and some of their value appropriated. To avoid such appropriation, however, the owners of capital may redeploy their assets to more defensible locales; if these are in low-density, more isolated settings, the result will be a loss of agglomeration economies and less healthy enterprises and host cities. Data are presented which suggest that increased rates of unionization are associated with lower (often negative) rates of city income growth.
The evolution of the steel industry - from the highly capital-intensive and vertically-integrated methods of U.S. Steel to the mini-mills pioneered by Nucor - is examined in order to document the consequences of unions' opportunistic behavior and firms' strategic responses. Data are presented to illustrate the migration of productive capital out of cities in which its owners' property rights are more tenuous, and toward locales in which labor law and other regulatory policies make appropriating the returns to capital somewhat more difficult. States' right to work (RTW) laws are discussed as proxies for more encompassing and precise measures of their climate for capital investment. Cities in RTW states (e.g., Charlotte, Boise, and Oklahoma City) are examined as case studies.
New Orleans' history of shortsightedness with respect to maintenance of its crucial flood management infrastructure, which contributed to the tragic loss of life attendant to Hurricane Katrina in 2005, highlights some problems inherent in government ownership and management of public goods. Reasons for (and evidence on) widespread deficiencies in capital maintenance in the public sector are presented. Then a method for privatizing the management of key pub…