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New York Times Economix Blog

 

If The Tea Party Went Downtown

March 15, 2011

By Edward Glaeser

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Big cities are not typically Tea Party territory, but if the new Republican members of Congress apply their libertarian principles assiduously to a few key federal policies, they could do much for urban America.

Residents of dense downtowns should urge Tea Partiers to take up the fight against socially engineered suburbia through federal homeownership subsidies and sprawl-inducing federal highway spending.

A strong Tea Party push for choice and charter schools could help city children. Even keeping marginal tax rates low is — in effect, if not in intent — pro-urban, because metropolitan workers typically earn more.

Good libertarians might ask why the federal government has any business promoting particular lifestyle choices, like homeownership. Shouldn’t Americans be free to choose where and how to live without the government prodding them to buy and borrow?

The federal home mortgage interest deduction is public paternalism at its worst. The mortgage deduction made the federal government the silent, subsidizing partner of the millions who lost billions in the recent housing crash. The subsidy encourages Americans to borrow as much as possible to bet on housing.

The failure of these housing policies is practically a perfect parable on the folly of public paternalism. I hope that the Tea Party learns this lesson and fights to get government out of the interest-subsidy business.

If libertarians stand against the mortgage deduction, they will also — purely by chance — stand with cities. More than 85 percent of dwellings with three or more units are rented, while more than 85 percent of single-family detached dwellings are owner-occupied.

Subsidizing homeownership implicitly encourages people to leave urban areas with tall buildings. Eliminating that support — creating more public neutrality — would create a more level playing field for cities.

Many Tea Partiers are appropriately skeptical about the transportation spending in President Obama’s new budget. Vast public infrastructure projects, like high-speed rail, helped create Spain’s current fiscal morass and did little to revitalize Japan during its lost decade. If there must be more highways, let them be private and paid for by users, not with federal largess.

If the Tea Party takes on bridges to nowhere, they will also be helping cities where density already allows easy connection. The federal fondness for infrastructure is often an extra subsidy for sprawl.

The economist Nathaniel Baum-Snow found that each postwar highway that cut into a big city reduced that city’s population by 18 percent of its metropolitan area. Per-capita infrastructure spending in the 2009 stimulus was twice as high in the nation’s five least dense states as in its five most dense states.

Cities are hubs of private entrepreneurship and competition. When the Tea Party cheers those forces, especially in public education, it is also championing urban America. Some charter schools, like Geoffrey Canada’s Promise Academy, have proven capable of remarkable test-score improvements.

Work by Will Dobbie and my colleague Roland Fryer finds that middle-school children who are placed into the Promise Academy by lottery do so well that the black-white achievement gap is effectively eliminated.

Because urban scale enables more competition, it shouldn’t be surprising that recent work on Massachusetts charters finds they deliver far more academic gains in cities than outside them.

Tea Party opposition to high tax rates can also be good for cities, because per-capita productivity and wages are higher in urban areas. Payroll per employee is more than $100,000 in Manhattan and $42,000 in the country.

High marginal tax rates don’t just discourage people from working hard, they discourage people from paying the commuting and housing costs needed to earn high wages by working in the large, highly productive metropolitan areas that surround cities. Higher tax rates take more from higher-earning urbanites and less from lower-earning workers in rural areas. The Tea Party fight for lower taxes is also implicitly pro-city.

Urbanites are not natural libertarians. New Yorkers should like government more than Montanans, because New Yorkers have more need for an effective local government.

Crowding thousands of people into a tiny spot of land creates a risk of crime and contagious disease and congestion, and those downsides of density need public management. America’s cities became healthy only when local government spent vast sums on clean water; they became safe only through massive local policing efforts.

While urbanites do need strong local governments, they can make common cause with libertarians opposed to a larger federal government, especially because national largess often goes to low-density states with more senators per capita.

The original Tea Party was a child of the city. Urban interactions in 1770s Boston helped create a revolution and a great nation.

The current Tea Party could return to its urban roots if it stands up against subsidies for home borrowing and highways and if it encourages competition in urban schools.

Original Source: http://economix.blogs.nytimes.com/2011/03/15/if-the-tea-party-went-downtown/?src=tptw

 

 
 
 

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