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Civic Bulletin
No. 15 December 1998


The Wealth of Cities

John O. Norquist

John O. Norquist is the Mayor of Milwaukee, Wisconsin and an Advisory Board Member of The Manhattan Institute's Center for Civic Innovation. The following remarks are based on his recently published book, The Wealth of Cities: Revitalizing the Center of American Life (Addison Wesley Longman).

When the Rodney King verdict came down in 1992, a riot erupted in south central Los Angeles that left 50 people dead and over $1 billion in property damage. The response of the United States Conference of Mayors, to which, as mayor of Milwaukee, I belonged, was disturbingly instructive. Meeting in an emergency session, the USCM sought how to capitalize best on the riot and convince the federal government to pay attention to the urban agenda. “What should we ask for?” many mayors asked. It seemed as if the mayors were treating the rioters—who had burned down their neighborhood and killed people—as the vanguard for a new federal urban policy. In seeking federal aid in the aftermath of the riot, too, we sent a repulsive message to private capital markets. Imagine the CEO of a private corporation who told stockholders “we’re dangerous to be near,” or “we’re broke, and if you don’t give us money we’ll burn.” What would the stockholders do? They’d sell their stock—fast. 

This is a fundamentally mistaken view of the city, since you can’t build a city on pity and you can’t build it on fear. Appealing to these emotions might get you some money in the short run, as it did in south central LA, but pity soon sours into contempt and fear hardens into hatred. Valuable cities like New York, San Francisco, Seattle, and Milwaukee shouldn’t be on their knees begging for alms from a federal government itself encrusted in debt and generally hostile to cities. And why should we want to associate our wonderful cities, rich with possibilities, with the horrible calamity of the LA riot? Instead, you can build a city on its natural advantages: its efficient proximity and density; its processes and markets; its amazing capacity to promote the success of its citizens.

To bring out these natural advantages several things need to be done: we must make our cities safe havens; make sure they have attractive schools; make them friendly to economic growth through sensible budgeting; and support their beauty and build on it.

Safety First

As mayors, we need to make cities absolutely safe. After all, cities formed for purposes of commerce, human interaction, and most of all safety. Cities protected people from marauding armies, dangerous vagabonds, and wild predators. Today, things have been turned upside down: crime scares away homeowners and  investors, who flock to the suburbs and countryside for safety, thus devaluing cities. In fact, there’s no limit to how safe cities can become other than to have no crime at all. How do we do it?

First of all, the state and federal governments need to throw their support behind cities by effectively operating their respective criminal justice systems. States in particular have long paroled criminals into cities where they too often repeat their crimes. They must stop doing so. But cities themselves are on the frontline for solving urban safety problems. Such cities as Charleston, South Carolina, New York, and Milwaukee have slashed crime through an attitude absolutely intolerant of crime, a willingness to put more cops on the street, renewed attention to quality-of-life crimes, and a careful use of community policing as a means and not an end in itself.  

These cities show just what can be accomplished. In New York, murders have dropped from 2,000 a year to 700 or so—an amazing reduction—and crime across the board has dropped precipitously. In Milwaukee, we’ve cut robberies by 17 percent, sexual assaults by 26 percent, burglaries by 6 percent, auto thefts by 11 percent, and homicides by 25 percent over the past five years. In Charleston, the city has become so safe that residents have nicknamed it “Saintsville.”

With a concerned and involved citizenry and a city government committed to fighting crime, we can make our cities safer. Safer cities mean higher property values, business expansion and job creation, a renewed cultural and civic life, and a reborn sense of community.

Educational Choice

If its schools are attractive, then people with kids choose to live in the city. But poor elementary and secondary schools remain a glaring problem for America’s cities. If you had kids and worked at a bank or law firm in New York City, for example, you would think twice about living in the city if you didn’t have enough money to send your children to private school—the public schools, with few prestigious exceptions, are that bad. The crux of the problem is that the public school system is set up in a way where the customer—the parent—doesn’t really matter, so there’s no incentive for the system to do better. Instead of being committed to serving customers through their service representatives (teachers), the public schools—like most monopolies—tend to define their customers as problems.

Take job security for public school teachers. An effective teacher isn’t going to get rewarded; a teacher who is an abysmal failure isn’t going to get punished. In Milwaukee, there hasn’t been a teacher fired since 1978 who didn’t commit a felony. But if teacher performance doesn’t matter, this means we’re not truly valuing our kids—we’re saying that how they do doesn’t matter, either.

Here’s a sign of how little the public school system values children. Most states have a way of counting students for dispensing aid to school districts. In Wisconsin, the day of the aid count is the third Friday in September. On that day, school districts count attendance scrupulously. Many schools go to great lengths to attract kids to school so they can be counted, offering fun menus, celebrity guests, and sometimes door prizes. On count day, as people call it, a kid is worth $6,000 or $7,000 to the Milwaukee public school system; the next day, when the count is done, and for the rest of the year, the kid’s value is zero—or worse, a net debit, an incurred cost. This is not a system that is friendly to children.

What needs to be done is simple: give parents power to break the public school monopoly. In Milwaukee, it was the inner-city African-American community in particular who protested the glaring injustice of the system. If you had money, you could opt out of a failing school; if you didn’t, forget about it—you had no choice. Through the efforts of state representative Polly Williams—a former welfare recipient and a single mother raising four kids—and an unusual coalition of Democrats and Republicans, Wisconsin now has a partial system of school choice. Up to $5,000 of the pupil aid the state gives to schools is available to 15,000 families to send their kids to non-religious, and now, thanks to the recent decision of the Wisconsin Supreme Court, parochial private schools. The number of participating families is about to increase exponentially.  Wisconsin is at the cutting edge of school reform.

Some might complain that sending money to religious schools is un-American, that it violates the separation of church and state. But we do it all the time. In higher education, we already have school choice. Students can go to all sorts of schools at public expense. Using the G.I Bill, Pell Grants, the New York State Tuition Grant program, and various other government programs, millions of Americans have been educated at public, private, and religious colleges and universities. A student can use the G.I. Bill or a Pell Grant to go to Yeshiva University and become a rabbi or go to Georgetown and become a Catholic theologian. Or he might go to the University of Wisconsin and become—a communist. Nobody complains about this, and soon nobody will complain when the same mechanism of choice extends to K-12th grade. It’s a matter of social justice.

Indeed, because of their vast and diverse populations, cities need school choice more than other locales. And they should be able to offer the greatest array of educational choices and highest- quality education. Why can’t the best schools in New York State be in New York City, or the best schools in Wisconsin be in Milwaukee? Part of the wealth of cities should be a wealth of educational choices. Soon, parents with school-age kids will say: “I want to live in the suburbs, but Milwaukee has this great choice program, so I’m moving to the city.” In May 1996, USA Today published an article on housing values in the Milwaukee area. It    compared a house on the city’s east side with a house nearby, in the suburb of Shorewood. In every way imaginable, the houses were alike. Yet, the Shorewood home was worth $20,000 more. Why? Because it wasn’t within the boundaries of Milwaukee’s public school system. A choice system will help reverse that equation for Milwaukee and other big cities by eliminating artificial constraints and unlocking the value of cities.

Sensible Budgets

Since the end of World War II, cities have sought transfer payments from the federal government to solve their problems. But while this kind of federal aid increased for a while, it is now largely atrophied. We should leave it that way, since it did more damage than good. Cities should concentrate more on boosting productivity and less on finding out how to tap more state money.

One of the necessary tasks is to reduce the heavy tax burden on urban taxpayers. Since I was first elected, I’ve followed “Norquist’s Law”: hold increases in city spending below the inflation rate. Admittedly, it’s a crude measurement tool, but it has the virtues of accessibility and reliability. Taxpayers want a simple measure to apply over time to see if government is doing a good job. Norquist’s Law fits the bill. Over the last eight years, compared with the inflation rate, Milwaukee’s tax levy has shrunk 21.4 percent—$31 million—and since we made the savings in the operating budget, they recur each year.

To meet this law with consistency, a city government must avoid budgeting by crisis. One big mistake is to succumb to the temptation to use revenue windfalls—such as a nonrecurring grant or seasonal savings on road salt from a mild winter—to fund permanent operations. Since the permanent operations keep going and the windfall revenue doesn’t, budget gaps and crises loom, and soon become normal. A much better use for one-time revenue gains is debt slashing. In Milwaukee, with the help of city comptroller Wally Morics, we’ve begun to use extra cash to renew infrastructure like old pothole-filled roads, reducing our need to borrow and saving taxpayers money in a long-term way. Result: Milwaukee now has a stellar AA+ bond rating, so the city can borrow money at a low rate when it does need a loan.

We need to shrink government to help our cities become better places to live. There are few surer ways of helping people than by leaving more money in their hands. Every dollar we cut in taxes is a dollar they’ll use for something important, whether it’s for more food on the table, clothes for their children, paying the telephone bill, buying school supplies—or just putting it in the bank. Cutting taxes, like educational choice, can be a form of social justice. And if a city government reduces costs, lowers taxes, and improves its services, it can attract more people and more business, adding wealth to cities, their citizens, and to the nation.

The New Urbanism

People have grown tired of dreary suburban strip development and antiseptic shopping malls. Tom Wolfe, in From Bauhaus to Our House, details a string of accidents that have led to today’s strip malls, single-family houses on cul-de-sacs, and office parks filled with sterile glass and steel structures. American cities are simply more beautiful than the smear of sprawl that surrounds them, and shouldn’t mimic it, as has too often been the case over the last few decades. Cities that support and emphasize their attractive urban form appeal more and more to people making choices about where to work and live, especially when other problems like crime, education, and taxes have improved.

A key to grasping this decisive advantage cities have over suburbs is what I call the post-card test. The Statue of Liberty instantly identifies New York City, just as the Eiffel Tower identifies Paris. Postcards will capture many such beautiful images of a city. When I give a talk on urban design, I’ll contrast slides of traditional urban design with slides of suburban sprawl, then ask my audience: “would you put this on a postcard?” People invariably prefer the traditional design to the suburban sprawl. It’s important to stress that traditional need not mean old-fashioned. Many modern-style buildings can effectively blend in to their surrounding environment in ways that please the eye, as with Collins Avenue in Miami Beach, Florida. What is intolerable are the unending parking lots that create voids in front of buildings, the ugly pylon signs, the absence of sidewalks, and other eyesores that make up much of the postwar suburban style.     

Doubtless, cities can learn from the suburbs, and try to absorb some of what the suburb offers—high quality homes, jogging paths, and other lifestyle amenities. But cities should build on their strengths: coherent and often beautiful architecture; bustling sidewalks; inviting public spaces; the front porch; mixed use neighborhoods—all of these simple elements that make cities more livable and communal human spaces.

Conclusion

We’ve never really been a country that understood and appreciated the wealth of cities. That’s about to change: after five decades of difficulties, cities, leaving pity and fear behind, will flourish in the 21st century.  The raw materials of cities—diversity, proximity, choice, community, and markets—are fundamental ingredients of human civilization. If American cities can solve their problems of crime, education, and spending, they can give Americans much of what they look for. There’s evidence that the turnaround could be much faster than the decline—which makes sense, since cities contain more lasting value than can be destroyed in a few decades. Prosperity has sprung up fast from the big reductions in crime in New York and Boston. Fiscal stability in Philadelphia and Milwaukee has led to increased     private investment. And hope builds in Milwaukee and Cleveland as school choice  empowers parents. As people see beyond the pathologies in cities and see the improvement in the quality of their lives, they start noticing the excitement, beauty, and vitality of cities.  If you’re looking, then, to make long-range or even medium-range investments, look to American cities.  

 


Center for Civic Innovation.

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