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Civic Bulletin
No. 14 May 1998


Let’s Break Up the Big Cities

Howard Husock

Howard Husock is Director of Case Studies in Public Policy & Management at Harvard University's John F. Kennedy School of Government. He is author of Repairing the Ladder: Toward a New Housing Policy Paradigm, and has written for The Wall Street Journal and The Public Interest.

* This Bulletin is adapted from a longer article in the Winter, 1998 City Journal.

The idea of metropolitan government—a single, benevolent, expert central administration for urban areas—has tempted efficiency-minded urban theorists for generations. Here, they’ve argued, is a way of bringing order to the chaos of central cities surrounded by a crazy quilt of independent suburbs. Yet across the country local activists have been rejecting the push to create bigger jurisdictions. They want to retain—or create—smaller governments, by seceding from existing city governments; by incorporating new, smaller jurisdictions carved out of larger ones; or by resisting annexation by larger governments. Most notably, in Los Angeles, the ValleyVote movement, with Governor Pete Wilson’s support, proposes to detach the entire San Fernando Valley (population: 1.2 million) from the rest of the city. Proponents say such a secession could come to a referendum vote in the year 2000.

 The conflict between localism and metropolitan government is a clash not over form but philosophy of government. To liberals, localism reflects a greedy retreat from the commonweal, sacrificing the city for the short-term improvement of the suburbs. If the suburbs shared their often considerable riches, older, poorer neighborhoods wouldn’t decline into dilapidated urban ghettos. This view, the elite wisdom about secession and incorporation movements, is simply wrong. Localism is popular not because it promises a sweetheart deal for a few privileged suburbanites at the expense of the greater good, or because the unsophisticated fail to understand a demonstrably superior metropolitan approach. Instead, it rests on common sense—which economics and political science amply confirm. Voters’ common sense tells them that the closer they are to government, the more it will respond to their demands. They will see their hard-earned tax dollars spent on the kind of projects they prefer and will have a greater assurance that interest groups—such as public employee unions—will not usurp local government for the benefit of their own members, who may not even live in the city in which they work.

 In fact, there are good reasons to go one step further. To improve older neighborhoods in older cities requires not a single, bigger government but increased numbers of smaller ones. Rather than expanding cities, we should break them up into an array of independent, neighborhood-based governments that would set their own property tax rates, elect their own officials, and give city residents the same control and sense of community that their suburban counterparts take for granted.

In Los Angeles, the secessionist movement makes just such arguments. The head of the ValleyVote movement is a commercial real estate broker named Jeff Brain. In his professional life, Brain rents out storefronts in this and other small strip malls along the length of Ventura Boulevard, one of the San Fernando Valley’s main streets.

 Brain’s complaints are very specific. Most nights, only two police cars patrol his own community of Sherman Oaks, which, like other residential areas in the Valley, has its own name but not its own government. Sidewalk cleaning in the commercial areas along Ventura Boulevard is dismal, even though merchants pay extra fees to the city for a private contractor to do the work. Brain also resents the private school tuition he pays for his four children to keep them out of the giant LA Unified School District, with its unmanageable 800,000 students. Moreover, the city pays little for Valley road repair (only $4 million out of a $28 million budget), even though the Valley contains a third of the city’s total area. Look at the number of residents per City Council member, Brain complains: some 250,000 people per Council district. With fewer than 100,000 residents, nearby independent cities like Burbank and San Fernando have their own mayors and city councils, along with lower business taxes and an easier permit process. Brain looks enviously at older commercial main streets in these neighboring communities, where small beautification steps have paid big dividends by helping to attract and retain shoppers and businesses, while Van Nuys Boulevard, another of the Valley’s main drags, grows shabbier by the day.

For Brain, being too distant from local government to get anything accomplished is more than a metaphor. “In order to get something for our area,” he observes, “we have to go downtown. That’s an hour’s drive to start. Then we have to convince council members from all over the city. They say, ‘Why should you get something if my neighborhood doesn’t?’ Then you reach an impasse.”

Such frustration drove Brain to mount a successful campaign this past fall to persuade Governor Wilson to sign legislation allowing city neighborhoods to detach, without first getting the permission of their existing city councils. Next he’ll try to get the more than 100,000 petition signatures necessary to get a regional advisory board to examine the issue, as required by law. Brain expects the petition drive—and then the secession vote—to succeed. And he believes that large parts of Los Angeles will follow suit, seeking to detach and incorporate on their own.

The reason to believe that Brain and other incorporation and secession leaders are right begins with history—even though the metropolitanists assert that history is on their side. Americans historically have supported the creation of more local governments, not fewer. The formation of independent cities and towns fueled the explosive economic takeoff of the late 1800s; it defused tensions between immigrant and native born; and it allowed the upwardly mobile to build communities that reflected their hard-won new social status. Distinct ethnic and cultural groups established their own niches, as in the once “dry” towns of Pasadena and Compton, California, where Methodists for many years used local control to keep out alcohol. The lesson is crystal clear: independent jurisdictions are a crucial means through which a nation as diverse as the U.S. can develop a modus vivendi among peoples of wildly various backgrounds. Even as advocates (including the Department of Housing and Urban Development) beat the drums for metropolitan government, the number of local governments in the U.S. has kept rising. From 1952 to 1992, the number of municipalities grew from 16,807 to 19,279.

There’s no shortage of theory to explain why this long-standing American preference for localism makes sense. The key fact: we don’t all want the same things from our local jurisdictions. Those with small children may care most about education, unmarried joggers may want to spend public money on parks, and the tidy-minded may want the streets cleaned three times a week. Forty years ago, in a brief but classic essay, economist Charles Tiebout argued that local governments do more than coexist side by side. Instead, they compete with one another for residents by offering different packages of services. Of course, wealthier communities can provide more amenities than poorer ones; that’s part of the free-market incentive structure. But at equivalent income levels, governments can differentiate themselves, in terms of the kinds of services they offer and also the cost-efficiency with which they provide them. If they fail to provide what people want at reasonable cost, residents can “vote with their feet,” wrote Tiebout. When municipalities lose residents, property values fall, leaving remaining residents with a powerful incentive to figure out what’s gone wrong.

Daniel Elazar, Director of Temple University’s Center for the Study of Federalism, observes that some of the nation’s most smoothly functioning cities may owe part of their success to competition of this sort. Elazar notes that in the Bay Area, three flourishing midsized cities—San Francisco, Oakland and San Jose—compete (and also cooperate) with one another and with Silicon Valley towns like Palo Alto and Sunnyvale. Prosperous and efficient Minneapolis and St. Paul, along with a gaggle of nearby cities with populations between 100,000 and 150,000, do the same.

In other words, because of this anti-monopolistic mechanism, smaller—not bigger, as the metropolitanists contend—is more efficient. New research from the Institute of Government at Florida International University, located right in the middle of Dade County’s wave of incorporations, soundly debunks the big-is-efficient argument that is the linchpin of the metropolitanists’ case. Public administration professor Milan Dluhy examined the costs per resident for a wide range of core municipal services in metropolitan Dade County and in 24 “fragmented municipalities” within and around the county. Dluhy found that economies of scale existed in only two areas: fire protection and library services. Localities can provide all the other services—police, recreation, public works, waste management—at equal or         less cost.

In addition, as government jurisdictions get larger, control gradually melts away from voters; realizing the difficulty of influencing officials, and increasingly impotent against the organized electoral power of public employees, individuals give up: as Jeff Brain likes to point out, voter participation is much lower in the San Fernando Valley areas that are part of Los Angeles than in those that are independent municipalities. Growing voter apathy gives organized public employees and other special interests a clear field to advance their own agendas, while the higher campaign spending that comes with big government allows unions and government contractors to sway officials by providing campaign funds and volunteers.

Not only are metropolitanists mistaken when they assert that bigger jurisdictions are more efficient than smaller; they are equally in error when they claim that such jurisdictions promote growth better. The reverse is closer to the truth: metro government is more likely to discourage than to foster growth. Why? Consider what I’ll call the golden goose effect. Communities are willing to accept new development, the golden goose, so long as they can be sure of getting the golden eggs—strengthening their tax base and adding or improving such neighborhood amenities as schools, parks, or police protection. Metro government changes this whole calculation. Suddenly there is no guarantee that city hall will use new tax revenues the neighborhood generates to improve the neighborhood. A community’s incentives change dramatically. Suddenly new developments bring a guarantee of costs but not of benefits. Areas asked to accept the new industrial park may get no improved services or new school buildings; the additional tax revenue, if not simply swallowed up in the day-to-day administration of the consolidated government, may well be spent in other parts of the city—probably those with the most political clout, which will probably not be the poorer areas.

Helping poor neighborhoods is the real agenda for metro government, which at heart, its supporters believe, will help less by facilitating economic growth than by facilitating redistribution. Stripped of its pretenses about efficiency and economic growth, the metro movement turns out to be a campaign to support the growing package of social services that our big cities provide—what might be called the municipal welfare state. Those who have fled the crime and disorder of inner cities must be joined with those who have been “left behind,” metropolitan advocates argue.

 Instead of promising more of the redistributionist machinery that has failed so roundly over the last generation, however, breaking up the cities holds out a more valuable promise to poor neighborhoods: it offers them the incentive and the means to encourage economic growth. Knowing for sure, as suburbs now do, that they will benefit directly from new investment, poor municipalities would try to make their business climate accommodating. Independent municipalities will have the option of limiting regulation and accepting employment-generating businesses, even waste-recycling centers or power plants, that middle-class areas may not want, but whose financial benefits a poor community might find well worth the costs. (State and federal health and safety standards would still  apply, of course.) Neighborhoods would have the incentive to find the highest and best use of their land and buildings.

Whatever the complications very poor neighborhoods pose to creating a system of independent city neighborhoods, though, they should not obscure the tremendous benefits that such a system would bring the vast majority of neighborhoods. Not the least of these would be the new political cultures that will have a chance to take root, more communal and truly democratic than today’s. Here’s how it would work.

Neighborhoods that already have their own, informal identity, and often their own zip codes, would become formal municipalities, empowered to set property tax rates, operate police and fire departments, make zoning and land-use decisions, pick up garbage, and clean and repair their own streets. This does not, mean, however, that each municipality will in fact do all these things. Like suburbs, they will provide some services themselves and contract out others to either a private firm or another public entity, typically a county. Over time, individual municipalities will doubtless figure out which services should remain local, which are better provided through joint effort, and what is the best way to pressure outside contractors to keep prices down. The costs and revenues of those services for which metropolitan economies of scale exist could be shared through special-purpose districts that would oversee airports, say, or libraries or arterial roads.

Some new municipalities wouldn’t have to raise all their tax revenue internally. New municipal boundaries might divvy up poor communities among more prosperous neighboring areas. Any municipal breakup campaign will have to recognize that some sort of regional revenue sharing will have to guarantee that all areas have  decent schools and adequate police and fire protection. But assuring, say, a floor below which school spending must not fall is a far cry from aiming at overall tax equalization. What percentage of tax revenues should be shared? And who should pay it? All communities above a certain income level? Only the winnowing of the political process can provide final answers to such questions.

This is a radical proposal, true. The neighborhoods of our big cities have long been bound together; residents think of themselves as New Yorkers or Chicagoans. But they also think of themselves as residents of Flatbush and Canarsie—and in that capacity they lack the means of exerting political control over the places they call home, in contrast to people short distances away who have, in effect, greater rights to influence where they live. Perhaps the strongest argument in favor of the unthinkable possibility of breaking up the cities is that the movement to do so has already, spontaneously, begun. Metropolitan advocate David Rusk has written that we should not consider the “political geography of mature metropolitan areas” to be “immutable.” Just so—but not in the way he believes.

 


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