Can We Stop the Decline of Our Cities

Article excerpt

Unless and until they start putting people first - by cutting costs and anti - growth tax rates - no amount of Federal aid can reverse the trend.

For More Than a quarter-century, Americans have been voting with their feet against the economic policies and social conditions of the inner cities. Fifteen of the largest 25 U.S. cities have lost 4,000,000 people since 1965, while the total U.S. population has risen by 60,000,000. The exodus no longer is just "white flight" - minorities also are leaving the cities in record numbers.

In recent years, the departure of businesses, jobs, and middle-income families from the old central cities has begun to resemble a stampede. For example, since the late 1970s, more than 50 Fortune 500 company headquarters have fled New York City, representing a loss of over 500,000 jobs. Cleveland, Detroit, Philadelphia, St. Louis, and other major cities also are suffering from severe out-migration of capital and people. Those once-mighty industrial centers are becoming, hollow cores of poverty and crime.

Ever since the Los Angeles riots and looting, urban lobbyists - including mayors, public employee unions, urban scholars, and many members of Congress - have been arguing that the inner cities were victims of Federal neglect under Presidents Ronald Reagan and George Bush. "There was, quite literally, a massive Federal disinvestment in the cities in the 1980s," according to Congressional delegate Eleanor Holmes Norton of Washington, D.C. To revive them, the U.S. Conference of Mayors is asking for $35,000,000,000 in new Federal funds - a "Marshall Plan for the cities."

The Federal government already has tried the equivalent of some 25 Marshall Plans to revive the cities. Since 1965, it has spent an estimated 2.5 trillion dollars on the War on Poverty and urban aid. (That figure includes welfare, Medicaid, housing, education, job training, and infrastructure and direct aid to cities.) Economist Walter Williams has calculated that this is enough money to purchase all the assets of the Fortune 500 companies plus all of the farmland in the U.S., but it has not spurred urban revival. In 1992 alone, Federal aid to states and cities rose to $150,000,000,000. Adjusted for inflation, that is the largest amount of Federal intergovernmental aid ever extended - hardly a massive disinvestment.

Central cities' budgets

on the rise

The budgets of Cleveland, Detroit, Philadelphia, New York, St. Louis, and other large central cities have not been shrinking; they have been rapidly expanding for decades. In constant 1990 dollars, local governments spent, on average, $435 per resident in 1950, $571 in 1965, and $1,004 in 1990. The largest cities saw an even faster budget rise. In real dollars, New York's budget nearly tripled from 13,000,000,000 in 1965 to $37,000,000,000 in 1990. Philadelphia, another nearly bankrupt city, allowed its budget to rise by 125% between 1965 and 1990 - from $1,600,000,000 to $3,500,000,000. During the same time period, the city lost 20% of its population. In short, 25 years of doubling and even tripling city budgets have not prevented urban bleeding.

Not all U.S. cities are in decline. Among the nation's largest urban areas, there are dozens - many on the West Coast, in the Sunbelt, and in the Southeast - that have been booming financially and economically for at least the past 20 years. Las Vegas, Nev.; Phoenix, Ariz.; Arlington and Austin, Tex.; Sacramento and San Diego, Calif.; Raleigh and Charlotte, N.C.; and Jacksonville, Fla., all have rapidly rising incomes, populations, and employment and low poverty and crime rates.

What do growth cities - Phoenix, Raleigh, and San Diego, for example - do differently from shrinking cities such as Buffalo, Cleveland, and Detroit? The answer is found, at least partially, in their fiscal policies. Bureau of the Census finance data from 1965, 1980, and 1990 for the 76 largest cities reveal significant and consistent patterns of higher spending and taxes in the low-growth cities than in the high-growth ones. …