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Tuesday, August 26, 2003
Metro Part 2

Unlike towns, cities are less responsive to the positive competitive pressures of the market. Why?

1. A significant percentage of their customers are not wealthy enough to vote with their feet. Because of their incomes, they don't have the same range of options that other citizens do. Many people can only afford low income housing, which is more prevelant in the city. Also, if they can't afford a car, they need access to public transportation. (Note: even if the low income housing and public transportation were available in the suburbs, the compact nature of the city would make it more amenable to low income lifestyles).

2. The state and federal governments disproportionately subsidize cities and, in many cases, cities face a disincentive to succeed since failure (in schools, in urban improvement) makes them eligible for more, not less grant money.

3. Cultural and demographic realities -- although the demographics are changing over time, minorities are still overwhelmingly concentrated in urban areas and the cost of moving for these populations has to include the psychological cost of moving somewhere where you, your children, and your culture are vastly under-represented and, in some places, even unwelcome.

4. Education/participation - - city populations are typically less educated than suburban populations and less likely to vote. This makes it much easier for a smaller group of special interests (such as unions) to control political decisions without real risk of competition. Check out City school boards for an example of this. The Rochester school board recently gave tenure to a woman who had heroin delivered to her at the school. Think the school board would be re-elected in the suburbs? In the City, it is virtually a slam dunk.

5. A non-competive political environment - - For a variety of reasons, cities like Rochester and Buffalo lack a strong 2 party system - - you end up having what is, in essence, a political monopoly in charge of the city. Change is still possible, but much less likely and much less meaningful even if it does happen.

The real question facing us is how to provide the city with an effective marketplace that provides the "carrots and
sticks" necessary to make the governmental system more responsive to the needs of its customers.

The answer is not to centralize authority. That is part of the problem.

Instead, we should look into breaking up the cities into smaller, more manageable and more responsive units of government.

How does this address our problems? Consider a city broken into three units (A, B and C):

1. Breaking up the City allows people to vote with their feet - - it is a mistake to think that people in the city don't move because they have less money. In fact, they move more often because they have less money. They just move from one crappy neighborhood to another. By breaking up the city (and the school district) you provide poor people with the same opportunity that wealthier people have - - to vote with their feet.

Example: Families with kids might move into A because their schools were improving more rapidly. This would put pressure on the school districts in B and C to compete because they would be losing students (and state aid) and property owners in B and C would have an incentive to complain loudly about the state of their schools relative to A. (They have no incentive to complain now, because there is nothing in their experience to show them city schools can work.) Same thing with crime. B might decide they are going to take a tougher approach on crime. If A and C do nothing, they will find themselves the places of hoice for criminals - - worsening their competitive disadvantage with B even more and creating even greater incentives for action.

2. It makes it easier for citizens to counter-mobilize against special interests. Citizen groups not only have a smaller field to play on -- making it easier for non- professionals to organize, but local issues start to play a more central role in political debates.

3. It makes it more likely for a competitive 2 party system to emerge. Republicans are unlikely to win an election in the city in the next decade. Split the city up and the Republicans have three bites at the apple every year. Victory in one area -- and successful policy change -- will create a catalyst for party resurgence in other areas as other residents ask - - why not here?

3. It creates "laboratories of democracy" within cities.

Some of these new governmental entities will make good decisions, others will make bad decisions. Over time, those that make good decisions will find ways, perhaps creative ones, to attract investment, reduce crime and improve education. Their success will provide a model for the other parts of the city to emulate. More than likely, these new entities will have some successes and some failures. They will all learn from each other and the people will be better off.

What about administrative costs, etc... won't those go up? Maybe. Maybe not. Even if they did, the extra money that is spent on paperwork, representatives, etc... will be pennies on the dollar compared to the money saved from creating a competitive environment - - leading to far greater overall efficiencies - - and a lot less leaf pickup.

Best way to think about it: when you go out to lunch with one friend (and are splitting the bill), you are more than likely to order something that is good, but affordable. When you go with 10 friends, you are more than likely to order "up" - - because you will see that others at the table are having the steak and you all will be paying the same! This works at the governmental level too. When you think people in 300k houses are paying for your leaf
pickup, it makes it a lot easier to say yes to the spending.

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