Michael Livermore 0:10
Welcome to the free range podcast. I’m your host, Mike Livermore. This episode is sponsored by the program on law communities and the environment at the University of Virginia School of Law. With me today is Rich Schragger, my colleague here at UVA law, who is a leading expert on local government, federalism and urban policy, among other areas. He’s also the author of the book, “City Power: Urban Governance in a Global Age”. Rick, thanks for joining me today.
Rick Schragger 0:38
Hey, thanks for having me, Mike.
Michael Livermore 0:41
So maybe as a starting place, we could actually just begin with this idea of city power, which is really been an ongoing concern of yours for for a number of years. Yeah. What is this idea of city power? And why should we care about it?
Rick Schragger 0:57
Well, that’s a good question. A lot of my colleagues often don’t think about cities, especially in law schools, where we talk a lot about the Supreme Court and Congress and other institutions that are at the national level. But, you know, I’ve been teaching local government law and other sort of locally related classes, urban law, and policy and land use, for many, many years, almost two decades at this point. And I’ve been an advocate for thinking much more about local power than, than we often do in our law schools. City power is a book that brings together a lot of the work I had done prior to pulling it together. And it really is meant to challenge the the usual narrative that we often have about local governments and in particular cities, that they are either not able to really control their economic and fiscal fates, that is that they are susceptible to people just fleeing them. And therefore they have to engage in policies that attract and retain residents and firms and businesses. And the way they do that is usually through providing certain kinds of amenities to people or tax breaks to firms, or they have to have a business friendly environment or so on. So there’s a view of cities that they they are really constrained by kind of large scale economic forces. And then there’s a companion view of cities, that they’re corrupt, that they’re badly managed, that they need oversight, either by the state governments, or by the national government. And I’ve been pushing against those two narratives for a very long time.
Michael Livermore 2:44
So So one question that kind of came up, and you talk about this quite a bit in the book. And so, you know, I’d be interested in your thoughts on this. So, right, as you were saying this, this long literature, and there’s a lot of influential thinking that cities, in a sense, are, like highly constrained. And you talk about this idea of cities as products, right, that some way that city governments are selling a suite of policies, amenities, that they provide a set of tax policies that go along with those amenities? And then the market is the market for capital, like, who’s going to locate their, you know, in the old days, we would say, factories, but you know, whatever capital stuff, that we’re moving around, and then for workers and for residents and for retirees or for whatever else. And that, you know, as you say, that’s a very influential view. And it seems like there’s two parts of it. So one is the existence of that market, that there are markets for capital and for people, and that cities are in that market in some general sense. And then there’s kind of a second view, which is about what the ideal set of policies are, that are going to kind of arise out of that market, or that cities are going to be more successful with. And it seems like those aren’t necessarily this the same that there could be a market, but you know, what people’s views about what that suite of policies are could be mistaken. So, so which, so you’re you’re arguing against the standard view, so which part of that view are you arguing against? Is it that cities aren’t really in this competition? And it actually doesn’t matter too much what they do, in the sense that people and firms will locate one way or the other kind of, irrespective of what cities are up to? Or is it that, you know, maybe the standard, you know, understanding of what the suite of policies are that is most likely to benefit cities in terms of attracting capital and labor, we’ve got that wrong.
Rick Schragger 4:42
Yeah. So it’s, it’s great question. It’s, it’s a little bit of both, although the former and this is where it gets a little, it’s a little unconventional kind of argument, the argument that various folks have articulated in this various ways, but the argument that businesses, a factory or, or a firm or individuals, essentially look out into the world and, and then make a location decision as if they were consumers in in, in a general marketplace is quite powerful as you’ve as you’ve said, and it comes out of literature from Tebow who this guy said, you know, people vote with their feet, they they decide they’re going to move to the say, into the city or into the suburbs or into a particular metropolitan area. And they do so in part, at least based on the available amenities in those places, including, presumably, what kind of tax rate is in that place, and what what kinds of things you get in exchange for that tax rate like good schools or other kinds of things like that. And this, this can explain some level it’s called, we might call it sorting or something else, there’s, there’s a beneficial aspect to this, which is everybody gets what they want, they go and this is this is the benefit of decentralized local government, which is people vote with their feet. And then people’s preferences are obtained by their location choices. So there’s, the book talks about how some of these things are, that some of this is mistaken. The first mistake is to mistake that sorting, for a theory of economic growth. So they’re not the same thing. So what we, what we might say is, well, people sort into various things. And then we often move very quickly to saying, Well, this the city that’s deindustrializing or a city that’s losing population, well, they’ve, they’ve failed in this consumer chase this hunt for, for for, for businesses, or for residents. And that failure is why they’re declining, say economically in space, right? Because that’s what a city we’re not sure what a city is, the city is presumably, the activity of the people in a particular location in a particular spatial location. And so we’ve made a mistake sometimes in assuming that economic growth and a trend and residential sorting or or firm sorting is the same thing. And they’re not. We actually don’t have great theories about economic growth in the world. We think we know sometimes what causes economic growth, but we don’t we, we should have some some modesty about that. And I think that’s applies to cities and metropolitan areas as well. So one thing I say in the book is, we should be skeptical of claims that a city has failed, because it’s losing population, you might say about that, Oh, they’ve just failed to provide the kinds of goods and services and tax rates that attract people, and therefore they’re losing population. But a different account is we’ve got, we’ve got a mystery of economic growth, how does economic growth happen in a place which usually is accompanied by population, it doesn’t have to be accompanied by increased population, but normally is what are the mysteries of economic growth. And it turns out economic geographers aren’t, are have other accounts that have nothing to do with sorting among consumers making location preferences. So I think that’s a mistake. And what that mistake leads to is folks saying you should be doing this, this and this, right, you should have a great downtown business district, and arts and, and all these amenities. And all these great things, you should have more bars and more restaurants that are open later, and nightlife and, and a football team and a basement and that’ll make your city great. And it turns out, all cities are doing all of those things all the time, but it doesn’t actually change outcomes over time. And so we should stop doing that. We should stop pursuing a bunch of fads. This is at the local pause. And this goes to your second part, a bunch of fads, which is oh, we’ll build the downtown mall that’ll attract new people, we’ll we’ll put in, you know, we’ll put in a stadium that’ll attract new people. And we often make mistakes, thinking that the thing we did caused the say the uptick in population, or the or, or, or on the other side, down a downward spiral in population. So we make mistakes by saying, Well, the problem with Detroit’s decline was bad management. They just didn’t do invest in the right kinds of things. And then on the other side, we say, Oh, the the resurgence of New York City and the resurgence of all these cities actually all over the globe, is is because they made some other kinds of choices. Well, turns out, no one predicted the urban resurgence of the last two decades or more. And the reason they didn’t predict it is because we actually don’t have any idea what has caused the urban resurgence, we still don’t know. And so the book addresses this too. So I think the the argument of the book is a little bit complicated in the following sense is is says, You can’t in fact, control these things that you think you can. But you can control some other things. And the other things you can do is just provide good municipal services. Even when you’re in an economic downturn, you might need help from other levels of government to do that. But in fact, we’re going to see booms and busts in, in in cities. And we’ve seen that all throughout history and to attribute false causes to those booms and busts is a real mistake.
Michael Livermore 10:40
Yeah, super interesting. And just to kind of clarify, when you talk about a city failing, I think what I take that to mean is actually the city government failing, in some sense, like cities go, as you said, there’s kind of, you know, there’s growth, there’s decline. And I guess one question is, do you think that those, those are really policy independent processes? Like, say city policy? Yeah, independent processes? Or is it just that we don’t know what the, because I take the point that we don’t know what the policies are, that contribute to or detract from growth as I can imagine, because part of it’s like I can, there’s got to be policies that would be bad for economic growth. I mean, if you just like what their policy is going to be, is we’re going to, like tear down every single building or not allow a single thing to get built there have tax rates of 50% of income or whatever, like, that’s not gonna be good for doesn’t gonna be good for economic growth, right. But within the, you know, kind of on the margins, or within the policy space of what we kind of think of as like reasonable, you know, policies that a city’s might actually adopt. Maybe we don’t have much of an idea about what actually contributes to growth or not, but I guess, yeah, so the question back to you is, do you think it’s, it’s an epistemic issue? We don’t know what the answer is? Or is it literally, it could just be independent, like, you know, it’s like a sickness likes to a certain extent, that’s under my control, but I can get sick for reasons that are entirely outside of my control as well.
Rick Schragger 12:12
Yeah. So I think it, it may be both and it’s really tricky to disentangle. But it’s the super interesting question, which is, and again, I’m not a growth economist. And so I don’t have we have lots of there’s plenty of theories out there, of how you induce growth, say, in a whole continent like Africa, or in countries in a continent, or it’s so it’s at every scale, there’s lots of questions about how we do this. And then policy does follow from that. So actually, you gotta get your debt under control, or you can’t be protectionist, or the Washington consensus, and then we find out well, that didn’t really work very well. And theories of other theories of growth, democracies are gonna grow faster, let’s say the North, the authoritarian regimes, but then you you get counterexamples. federal systems will grow better than centralized systems. But of course, then you get, you get counter examples to that, too. So I think, when we’re talking about the relationship between institutions and growth, there is a strong argument that or a strong, strong group of scholars who say institutions really matter for growth a lot, right? Whether you’re doing whether you’re you’ve got institutions or private property, right.
Michael Livermore 13:30
And in North Korea doesn’t look it doesn’t look like it’s doing a great job.
Rick Schragger 13:32
But within an I agree within a range, though, it’s not entirely clear, right, that this is what’s doing the work. So the relationship between institutions and growth is, I think, quite a fraught one, despite some very optimistic kind of views on this or very strong views on this. My own view is institutions and growth haves, they’re going to have some relationship and the question is at what scale? So what’s interesting is right, Jane Jacobs, the famous urbanist right patron saint of the book, the patron saint of the book, for for sure, she’s she’s She appears many, many times over as, as she does for many urban, you know, urbanists, who have been influenced by her work. You know, she had a, she, she was trying to write about cities, right. And in much of her work, and a lot of a lot of her work is not as, as read as her her most famous book, which is the The Death and Life of Great American Cities. But she also wrote books like the cities in the Wealth of Nations, right, and some of these other other later books. And she was trying to figure out what generates growth, actually, I think, at the end of the day, and economists have come to appreciate some of her insights, which was one of which is this idea of agglomeration or externalities of the fact that the space in the city generates knowledge between industries and between the same industry. And that generates knowledge that leads to economic development. And those Jane Jacobs externalities have been, had been recognized in some ways, or that’s how they’ve been called by, by economists. So her her account, and it was an attempt again, to look at growth was that if you have a, and this was at the, at the various lowest level at the neighborhood level, at the block level, at the street level, if you have a diversity of uses a mixture of of types of industry of types of small business types of people, of types of housing, that will generate a vibrant and, and economically dynamic place, which she called the city. So she said the city is where this happens. This is where economic growth happens. Not in not in regions, not in the hinterlands not in rural areas, but in cities and the city does this work. And so there is a kind of theory of growth that is, is quite closely connected with the nature of the city itself, that does inform my book on city power, but I don’t, I don’t feel like I need to endorse it wholeheartedly. I’m sympathetic to it. But I think it’s enough to say, hey, those traditional those conventional things you think you’re supposed to do, are, are really not really in your control. And so in fact, you should be doing some other things.
Michael Livermore 16:44
So yeah, so that actually sounds like a different thing. That sounds like there are things that that cities can do. It’s just that it’s not what we think that they are. So there’s this Yeah, again, this kind of strikes me as the as a as a tension in some way in the argument that because on the one hand, it could be that these are just policy independent processes, right, that, you know, that you’ve, you know, Detroit, maybe as an example of, there’s just globalization and trade, and none of that is under Detroit’s control. Like, maybe it’s not policy independent in the sense that like, you know, trade policy is part of the picture, but there’s just these big systems, you know, systemic things happening at regional, national and global levels that are, you know, bad for Detroit, or, you know, climate change is, you know, in 100 years, Phoenix, and Tucson and Miami might not look as vibrant as they look today. Right. And it’s not because of anything that had to do with the management of those particular cities. It’s just that like, Miami is underwater, and Phoenix is like, 150 degrees, right? So, it’s not gonna be that much, but it will be hot, a heck of a lot hotter. So. So there’s that these are just their processes that are, you know, kind of policy independent in the sense of, at that scale at the scale of a city. But on the other hand, you know, the the argument that you were just providing is more like, Well, no, we can if we create these vibrant and diverse communities that have certain characteristics, that’s actually going to lead to development. You know, growth is a funny word, because that usually just means like GDP, that’s to say, development in a positive sense, right? Yeah. Yep. And so that’s actually very policy oriented. And there’s all kinds of policies that we could do to disrupt that. That process from happening, there’s things that we could do to foster that from happening. So is it just that? So where’s the mistake? Is it or is it just, it’s a mix of mistakes?
Rick Schragger 18:40
Yeah, so totally fair. And I think I tried to capture this in the first chapter of the book by talking about a number of ways. And we actually do this constantly. And we do it in one sentence, we’ll mix different accounts. So one account is, as you pointed out, the city is a product in the location marketplace, or the local government marketplace, and you can improve your product. And then you get consumers, they walk around and they get the they get the product they want. And if you do a good job, you get more population and more wealth. And if you do a bad job, the opposite happens. And when we talk about cities declining because of corruption or bad government, that’s partially what we’re we were suggesting. That’s the kind of claim we’re making, like they made a mistake, or they tax the wrong people, or they, they they made an error or where the governor or the mayor sorry, was, was corrupt, or that could also be attributed with some other level of government, right? You could say, well, in this, the legislature did some bad things, or Congress did some bad things. And that affected the city too. So it doesn’t have to be them but it’s still a product conception of the city as a product. Another conception of the city, which you’ve articulated also is as a byproduct of large scales, social forces, one of those might be just technology. So one of the big ones is for folks who look at the growth of cities they say air conditioning. Big deal for the Sunbelt, automobile, huge right affects the city allowed for the dispersal of people outside the city, the internet, IT is a huge thing that people say, Well, this is a structural force that allows for the dispersal of people because now they can, they can live wherever they want, right? And once you’ve once you’ve reduced, once you’ve reduced transportation and communication costs to zero or close to zero, you’re not going to have cities anymore. Now the problem with this, just to say the problem, I’ve talked a little bit about the problem with the product, product account, the byproduct account is also just often just often wrong, right? So if it’s true that the IT revolution should allow people to live wherever they want, then our cities should have declined in the in the first half of the 20th century. And in fact, they their populations tended to stabilize or increase. And again–
Michael Livermore 21:04
This could be, sorry to interrupt. But yeah, that could be that’s not necessarily a ding on the byproduct theory in general, that’s just a ding on a particular…
Rick Schragger 21:12
A certain application. Right. Yeah. So but the the fact that we’re not quite sure what the effects of a certain technology are on that is suggests to me that our our accounts are still pretty primitive, right? So another account would be Oh, and this is you often see this cities developed were at the at the terminus of railroads and roads. This is, is this seems obvious, because when you look at the map, you see cities. But it turns out, there are lots of cities that could have been at the at those locations. And Jacobs points this out in one of her books, he’s like, there, there were hundreds of cities that had deepwater ports, or had or could have been placed in a perfectly fine place for railroad transportation, and certain ones did and certain ones did not come to be and survive. And if you look at the competition between Chicago and St. Louis, often there’s a bunch of accounts that that say, Well, the reason Chicago wins is because of XY and Z. But it turns out, none of that is clear, except in hindsight. And that’s especially true of our more recent accounts of how cities have come back. So for example, New York City in the 70s, you wouldn’t have bet on New York City Real Estate in the 70s, when the city has in dramatic decline, in lots of ways, maybe overstated, actually, but in a budget, budgetary crisis and a fiscal crisis. And and, and now, then you have to tell a new story as to why in 2022, the city has just the value of housing in the city, so and land is so high. So there’s some stories that we tell, but they’re they’re quite incomplete on the byproducts. So how do I solve all this? I don’t really So to be fair, I think we should be modest I, I like the account of the city as a process, to try to think about it not as a product or as a byproduct of technological factors. But and this borrows, again, from Jacobs, as a kind of organic, a kind of organic phenomena which occur and I think the economic geo–the economic geographers Have some of this embedded into their models of how city populations rise and fall or how city growth rises and fall. And it’s complicated. It’s complicated, but it’s, it’s I think we make mistakes when we when we when maybe we use the wrong analogies.
Michael Livermore 23:50
Yeah, yeah, it’s really interesting. And as you’re, you’re kind of just talking through this. One way to maybe one display to see if it works is, you know, there’s the city is the process. And that’s obviously a very open textured description of a thing. Process. But once you know, and again, trying to think about the relationship of, you know, kind of policy independent stuff that’s happening versus stuff that does depend on policy and so on, is we, you know, in some ways, kind of we could abstract away from the markets that the markets in a certain sense that cities are embedded in, like we could say, Okay, let’s imagine the cities have a fixed amount of capital and a fixed in their existing population, and then that firms can’t leave and they can’t enter, and that people can’t leave and they can’t enter, like, just as an abstraction. And then you got cities like that, and you have different policies in different cities, right. Yeah. As a consequence of those different policies, there will be differences in outcomes, or at least in theory, there could be differences in outcomes, right. So it’d be like if a city said, our policy is As you know, we’re gonna do zoning such that, you know, there’s just gonna be a neighborhood of hospitals and a neighborhood of schools and a neighborhood of residences, and we’re going to separate everything out into different zones. And then there’s another city that says, we’re going to integrate everything. And there’s going to be, you know, commercial, mixed use residential education embedded, you know, that kind of thing. Yeah. And that those different people can’t move, right. Because listen to Tebow thing, right? This is just, you know, we’ve got these different ways of structuring cities. And that it sounds like on your theory, that could have consequences for how the city’s developed over time. It’s not going to be through this sorting mechanism. But it’ll be through this more like processed organic kind of mechanism.
Rick Schragger 25:42
So I think it’s possible. The thing is that, again, this is Jacobs is that cities and, and the way I like to think about them is that cities have these effects over long distances. So a closed system is, is almost antithetical to the definition, in a way, right, because materials are being brought in trade is happening right, inside and outside the city. You could, you could have a kind of a closed system, but then you’re playing a game, you’re playing like a monopoly game, or like a board game. And this like things games like SimCity appeared like this, you put up your stuff and you make, then you you hope that your city survives. And in fact, the in those kinds of games, sometimes your city, you make the badge, the bad land use choice and the city declines, right? You make the good land use choice in the city prospers, it’s a closed system. But of course, no city is really a closed system. And, in fact, almost definitionally, a city is having effects well beyond its borders, in lots of different environmentally, of course, we know that they’re taking water and supplies and food from the hinterlands and bringing them in, certain kinds of regions are doing and then trade. And then they’re inventing things in cities, lots of inventing goes on in cities. And those inventions are being used to make more efficient agriculture outside the city. So it’s very hard to talk about a closed system, it’s something we’re inclined to do, because we want to isolate the kind of policies. But I, you know, I’m going to resist that a little bit. Because I think it is a little bit antithetical to the, to the the, the nature of the right. Another way to think about this is urbanization is just a phenomenon, right? So we could just talk about urbanization. And then we don’t have a city necessarily, or a suburb or a rural area, we just have a kind of a sociological phenomena. And then we can talk about what when do we see urbanization? When do we not? And certainly we can we have theories about that, too. But again, a lot of this is using analogies that don’t quite match up with what we see in the real world.
Michael Livermore 28:06
Yes, well, okay, so. So then maybe this does take us back to so I keep going back to the, you know, flipping between these different positions, which is that it doesn’t matter what cities do, like city policies can be whatever it’s like, literally, they could just be whatever they are, whatever, like, we could throw darts at a policy dartboard. And like it’s just tested will have no effects on development in the city. Because there’s just it’s just other because there’s other processes, because policy just isn’t an input into that output. I guess. Right. That’s, that would be the thing.
Rick Schragger 28:44
Yeah, that’s the strong claim would be no policies. I don’t think I would embrace the strongest claim. Because as you, as you point out, you know, if you expropriate everybody’s land, and you right, tell them he’s gonna shoot everybody. Shoot everybody. That’s great. We can be and part of it is how do you define what we’re talking about? Right. So the city is the city, the people in the city, the city, is it the firms in the city is just the value of the land that dirt in the city, is it the city government, and we often mix those up too?
Michael Livermore 29:17
Let’s say, we could do we could probably, I mean, there might be different ways of talking about some of it, but presumably, we could get at least a passable definition so that we could at least have a conversation.
Rick Schragger 29:26
Yes, certainly. Certainly. So, again, I again, I’m not resistant to the to the strong form the argument, I think I am resistant to the weak form of the argument, which is that specific policies will have I think, in terms of economic growth, and let let me be really clear about this. I think we’re still not quite sure what does it.
Michael Livermore 29:48
I think that it’s actually more and more that we’re radically unsure about what does it.
Rick Schragger 29:52
Yeah, I think that’s right. If we knew if we knew even a bit about it, we would actually be have predicted the urban resurgence or someone would have said, yeah, and then 20 years, 30 years this will this will come to pass as Detroit. And we would have, we would have been able to predict maybe the decline too, right? So 1950s, Detroit has the largest population in the United States or one of the largest and is the, just the leading edge of the leading technology of the time, which is the automobile. And now we turn around 50, 75 years later, and, and the population of the cities half that or less, and the wealth is certainly is certainly less. So we we would be able to make some some claims about that. And I just don’t think we’re capable of doing that. Now, what do I see the say the city can do? Well, the city can engage in therefore and should and now we’re talking about within a range of policies, right, I don’t want them to shoot everybody I don’t want to can pursue instead of pursuing growth, right, which seems like a vain and, and costly enterprise with a lot of mistakes, for lots of for the reasons you’ve stated, but it may be because we don’t know how to do it or because nothing we do can have an effect. And again, I’m going to toggle between those a little bit. But what we can do is provide basic municipal services well, to the people that exist in that place, right, as a matter of social justice, not as a matter of growth seeking the problem. And this is gets back to the thesis of the book. The problem is that we think of cities as mostly as mostly agents that are supposed to be growth seeking, not justice seeking. And that just seems like a terrible mistake.
Michael Livermore 31:46
Yeah, no, I think it’s a really interesting move right from to go from where we’re what we were just talking about, which is the, you know, the lack of autonomy, in a sense, or the lack of agency, the inability to influence this feature that’s very important, which is economic growth, again, either for epistemic reasons or for, you know, just because the structure of things, but you actually see this as liberating. Yes. As unleashing city power, it’s actually the inability to affect growth that is that is liberating. So yeah, how do you how do you make that move? And then, you know, what are what are some, what are some of the areas that you see this kind of this new, this new, this new power, this new Liberty being important?
Rick Schragger 32:32
Well, because what it does is by saying, Listen, we don’t have we don’t have very much control over growth, or at least growth seeking seems like a pretty challenging task. For, for all the reasons we’ve stated. And we should be modest about that. By the same token, the policies that folks say are going to retard growth are also not proven, right. And so that means that cities are liberated to do some of the policies that folks would have said, they can’t do, like redistribution. So folks would say you can’t tax people, or impose a minimum wage or lots of other things. Because the, the wealthy residents or firms or businesses will just move across the border, they’ll move from the city into the suburbs, or they’ll move, you know, out of Detroit to, you know, to someplace else. And and this is this is the common view of the limited city and city power is kind of a play on book from the 80s by Paul Peterson called city limits, which basically made this argument that the there’s no way the city because it’s a territorially defined jurisdiction that doesn’t have control outside of it, to any extent. The territorially defined city can’t redistribute, it can’t do very much at all, in terms of moving moving resources around. What they can fight about in the city is developmental spending, essentially. And that’s sometimes that’s, you know, that’s a fight, but it’s not that important. They’re all kind of headed in the same direction. And this explained, in part why the politics of the city was so focused on things like land use, and in, in, in the business community, right, you needed the business community on board to get the city blah, blah, blah, blah, blah. So So, I’m, the liberating part, and you make the point nicely is that you can also do policies that they would have said will hurt your city, and that’s not going to hurt your city either. And one of those policies might be, for example, adopting a minimum wage, right for a living wage or environmental legislation or regulation or so on. And we’ve seen cities do that and not lose population. We’ve also seen and continue to see differentials in tax rates between cities and suburbs and the cities are thriving. In high tax jurisdictions, now it might be because those residents have a preference for high tax jurisdictions or so on. But it also just might be that those policies don’t actually have the effects on growth that that folks had had thought they would have.
Michael Livermore 35:19
Yeah. Great. And so it’s couple things I wanted to kind of jump off from from there. But maybe one just to classmates is kind of setting the stage a little bit is, you know, there’s intercity competition and there’s intra city competition, again, depending on how we define a city. But, you know, that border that you were talking about? It actually seems it’s in you know, in a portion of the book, you talk about this, a fair amount is, that is that does seem like there’s some action out at that border, that firms or individuals locate on one side or another, certainly people locate where the to where they think schools are good within a jurisdiction or across jurisdictions. You know, firms may move within within a municipal catchment basin, you know, whatever we would say, where you’re getting those, you know, aggregation benefits, you know, you’re around, you’re in the exciting, fun metropolitan area. But if you can be in the exciting, fun metropolitan area, and take, you know, avoid a 10% income tax by moving two blocks, right, a lot of people are going to, at least there’s gonna be some pressure to do that. So, yes, is what’s up with that, like, how do you think about the distinction between intercity versus interested in competition? And because as you were just saying, you know, you can you seem to be able to persist with some higher tax rates in metropolitan areas, but that doesn’t necessarily mean that nobody’s moving to the suburbs. You know, because of how we draw on these lines.
Rick Schragger 36:47
Yeah. So I think I think, yeah, to be careful about this, I, you know, the lines matter, certainly, and for a long time, and when I teach local government law and, and we, we, we talk a lot about the line between the city and the suburb and the the the ability to flee, flee the jurisdiction, we talk a lot about annexation, and the ability for a city to grow in its borders. So that as more taxable land, there’s some basic, there’s some basic facts, which is a city only really gets to tax, it’s in many cases, its its its main revenue source is, a property tax, and the property taxes is just what’s in the jurisdiction, and you’re, you increase the jurisdiction, you got more property tax, you limit the jurisdiction, you’ve got less. That also is, is the case for the amount of population in the city or cities constrained and its borders, the city is cross city, is now constrained in its jurisdiction, that doesn’t mean that the metropolitan area can’t be understood as a big city, right? It’s the lines between these jurisdictions are usually invisible to most of us, as we cross them, which we do regularly when we live in a metropolitan area. And, and, and in fact, might there might not be any physical difference for some time when you cross into into another place. So I think there is there is some sorting, certainly that’s going on in these places, somebody might be like, well, we lived in a in an apartment in the city, and we’ve decided to move to the suburbs, because we want more space.
Michael Livermore 38:31
As people say, right.
Rick Schragger 38:33
Or we were we were moving for schools and so on that, you know, I think that that it’s plausible to talk in those terms, and cities have to think about those things. But again, what the urban resurgence proved to us was, those factors aren’t as, as big or even close to being as significant as, as other things that we we have not been able to identify. So for example, folks, were saying for a long time, you have to improve the schools in the city before people will move back to the city, right, you have to improve the schools, that’s got to be the first thing that’s got to proceed population shifts into the city. And we just haven’t seen that. It’s not that schools got really great. And then that attracted suburbanites back into the city. It’s that in fact, lots of people started to move into the city or or start to stay in the city and then the schools improved thereafter, which actually, when you think about it makes a certain amount of sense. Because if you had highly segregated poor schools, once you start to, to have have a little bit more diversity in terms of incomes and so on, the schools are going to are going to are probably going to get better. So I think, I think when when we look at the causes of either population increase or decrease in cities, we again as I’ve been saying, we often look at the wrong thing. And then we attribute it to other things like crime, for example, we say, well, the crime went down. And that’s why the cities have now done better, or resurging or populations are stabilizing crime is a real problem. It’s got to be solved. It’s, it’s, it’s something that cities should be doing, is making sure their citizens are safe. But there’s not a ton of evidence that shows that there was a crime decline prior to people starting to move back into cities. And in fact, in European cities and other places around the globe, where there’s also been urban resurgence, where people are moving back to the cities, there was never a serious crime problem to begin with, in these places. So in fact, it’s, that can’t be the explanation. So part of this is coming at this backwards, which is not from a grand theory, but saying, Well, what is our accounts of what you can do and what you can’t do, or what causes what causes people to make certain kinds of choices. I like to use the example of the downtown mall in Charlottesville in my class. So in Charlottesville, small city, quite constrained in its borders, limited taxing ability was in decline in the 70s 80s 90s in the way that much larger cities were also in decline, but just on a much smaller scale, people moving out to the suburbs, classic kind of white flight kind of narrative. And they put in a downtown walking pedestrian mall, close off a street in in, in the 90s. And then everybody says that’s what resulted in the urban resurgence of Charlottesville, Charlottesville now much more popular place stabilized population, high property values in lots of places, lots of demand for downtown living all of this much different than 20 years before, or 25 years before. And then you you point out that the downtown mall that that Charlottesville did put in place was a fad that many cities put in in the 70s and 80s. They all built downtown pedestrian malls, trying to compete with the suburbs for people and consumer dollars and so on. And most of those cities took them out after a number of years, because they weren’t working. And it was clear that they were just a waste of time and money. Charlottesville was late to the game put in its pedestrian mall, and then just didn’t have the resources to take it out. Not that they were even thinking about it, it just didn’t actually cause anything, at least in the in the kind of short or medium term. And yet, what we do is look at the downtown mall and say, Oh, that’s that was a cause of the, of the resurgence of downtown Charlottesville. In fact, there’s a huge gap in time between the downtown mall being put in, and any kind of identifiable resurgence in the city. So again, here’s a here’s a causal story about policy, right, a specific kind of land use policy. And we’re often misled, because we think we see causation and we don’t.
Michael Livermore 43:10
Great, yeah. So this kind of gets us back into the prior obsession. But I’m super interested in this. So I kind of keep wanting to dig on it even though there’s lots of different things that we could talk about, like, because that’s that, you know, that is a almost like a classic problem with how we do humans like attribute causes to things right correlations and then they say causation? How could we, you know, you’re very conversant with the literature on all this. And people have been thinking about all of it for a really long time. You know, there’s the possibility that these are policy independent, at least within the range of reasonable policies, there’s also the possibility that we just don’t know that maybe the mall did the maybe this guy’s made a mistake by tearing other malls or who knows, like, we, it’s very hard to do you need a counterfactual of another Charlottesville with the, you know, without a doubt demo, but you know, these kinds of challenges, we face them in lots of social scientific con contexts where, you know, we don’t know what the effects of different things are in the world. You know, different curricular policies, how to manage schools, how to deal with, you know, prisoner reentry, or, you know, crime control or whatever else. And, you know, I think, you know, we do a terrible job of funding and structuring research to actually be able to figure out how, how public policy, you know, and government spending and lots of other things actually do or do not change the world. But what can we learn about? Is it possible to learn about cities and policies and the kinds of policies that assuming or you know, or even just find out that there are no policies that matter or, you know, if there are policies that they do matter, because it because it could be two options, or it could be? There’s actually three different possibilities maybe more, but three popped to mind. So there’s it’s policy independent altogether. That’s one possibility. The other one is that it matters for policy, policy matters rather for outcomes, but we just don’t know what the answer is, you know, because we haven’t done the research. And the other possibility would be the policy matters. But it’s so context specific, that there’s no amount of information that we could ever collect that would give us a reasonable basis for deciding in this particular context, this policy would matter. So it matters in a kind of counterfactual sense, in a broad way, but like, we’ll never get to the point where we actually know because things will change, like, by the time we know, what’s good for for city policy now, in you know, Atlantis, Atlantic coast, kind of reaching the United States for the existing suite of policy, sorry with existing suite of technology, like technology and trade, and the global circumstances will have changed such that all the knowledge that we had prior is just worthless, like the same way that like the policies that were good idea and like, 1840, right, which had nothing to do with what’s good policy today. So is that where we just were, it’s like the worst of both worlds where it matters what we do, but we can never know, like, ever have you have a reasonable basis for making decisions?
Rick Schragger 46:14
Well, so I’d rather not a pine on the the giant question, which is like, can our social science, you know, improve, improve, you know, welfare and global outcomes? I think there are things right, we know that, that clean water is really great. Right? For, for for people to help me. But I think drinkable water is pretty great. And sewage systems and sewage are awesome. Yes, are pretty good. And so having those does improve if we just take a take, you know, health outcomes or death, or death outcomes, right, right. Life expectancy and so on. And so, you know, this, this, that’s a that’s, that’s at the macro level, at the city level. That’s basically what I push, which is, don’t try to what, what Charlottesville shouldn’t have done is say, oh, we need downtown. Maybe politically, this is what ends up happening, because it often does, is we need a downtown mall to help get the downtown businesses help the downtown businesses compete with the indoor mall and the suburbs, right. And the indoor mall is taking up all the all the all the all the space here, and we need to do something to do that, you know, my, and this goes for lots of kinds of city, local base policies, land use of various kinds, and stadium construction, and so on and so forth. Also just subsidizing businesses to come in right industry businesses, or industry subsidies are a big huge expenditure. And, and there’s a lots of evidence that they don’t work. So I’m not opposed to to, to, to looking at evidence, right. I in fact, cite a lot of evidence in the book, for example, that these industries subsidies don’t work.
Michael Livermore 48:16
is that lots of evidence that things don’t work?
Rick Schragger 48:19
Yeah, lots of things don’t work. So my, my, my recommendation to cities is, if you know, if you’re on a clean slate, and you you’re you’re relatively stable, and or, or trying to remain stable as a place with the with the population, invest in the basic municipal services, that that improve the lot of the people that are already there. Don’t go trying to attract new people or other people just invest in the things that improve the lives, livelihoods and lives of the of the people in place. This is important because we often, again, I think a lot of our city policies are intended for people that don’t live there yet. Because the city is like we got to attract those people because they have to bring tax base and other kinds of goods and stuff, then what ends up happening and we see this over and over is that the the poor and the working class basically get chased around a metropolitan region. That is there’s no place that wants them. And there’s no investment in the basic infrastructure that would allow those people to have some mobility into the into the middle class, for example, and stay in place, right. This is another thing we just expect, that people or have in the past at least expected that people will start in a certain part of the metropolitan region and we’ll move right to other jurisdictions because that’s their ladder of life. That’s the next stage. That’s where they’re supposed to go. They’re supposed to be young and not have children in the city and then they’re supposed to move to the suburbs and And then move to a retirement village somewhere. And what we’ve done is we’ve got this kind of sorting and segregation that happens. And in fact, that’s not what the city should be about in any way. It should have a diversity of people ages types, socio economic groups. And that I think, again, going back to Jacobs is a way you have a diverse, robust and might have, and I don’t want to plunk down on this might have beneficial economic growth effects, too. But I don’t want to commit to that, I don’t have to commit to that.
Michael Livermore 50:35
Yeah, you don’t need that. Right. I’ll just say, you know, it’s just good. Because I think in a way, that’s the power of this liberating movement that you make, which is to say, we don’t know, or we can’t do anything about growth. And so let’s just do things that we think are good. So if we want a mall, let’s have a mall, and it’s got nothing to do with competing with anybody. And that’s, that’s how we should make these decisions, basically. And it’s interesting, because there’s always I think, even for you who are like a very strong, you know, like you have as strong a view on this as anybody probably, there’s still like a little bit that wants to say, but maybe it’ll be good for growth.
Rick Schragger 51:20
Well, it’s true, right? You get you get sucked in. And I said it hesitantly but I don’t want to say it. In fact, I want to keep it out. Yeah. And that’s because Jacob says it is, right? Yes. And I don’t want to I don’t want to I don’t want to throw her under the bus. Because. So I don’t want to commit to that, though. I don’t think that’s an and it’s not the reason to act. Right. And I say in the book, The reason to act is for justice, not for growth. And and, you know, it’s possible one day, we’ll know exactly what’s good for growth. And it might be for example, human capital, right? There’s there’s education or something like that, or the liberation of women, I think that’s a pretty good thing, right, for growth, or can be.
Michael Livermore 52:02
There’s you know, honestly, who knows. Right? Right. I think there’s something who knows, right? Yeah, maybe it’s not. But that doesn’t, right, but wouldn’t even provide us a reason with not doing it. I don’t like especially in certain…
Rick Schragger 52:13
It shouldn’t provide us a reason for not doing it. And again, what’s important to me on the city side is that we also shouldn’t be constrained by the opposite, which is the claims about what causes growth are also the claims about what retards growth, and those things are often anti redistributive in important ways and, and, and, and favor. And this is a big part of the book, which you haven’t talked that much about favor mobile capital, right? Mobile capital being Footloose, capital, and cities are immobile. Mobile capital is all over the globe. And the idea has always been, or at least a model of what a city is, is that they have to track that capital. And I’m quite vociferously opposed to that model.
Michael Livermore 53:01
So again, there’s a bunch of stuff we could talk about, I wanted to maybe press on this a little bit more too just because I, you know, it is really important. It’s kind of the core of a lot of the arguments you make. So let’s talk about redistribution. So as you note in the book, in some cities have engaged in summary distributional measures like I think, you know, you talked quite a bit about the the minimum tax regimes living wages and so on. So so I’ll I’ll disclose my, my priors on this, which is I see the minimum minimum wage and and, you know, that that specific policy is pretty weak sauce as a redistribution measure. Okay. And the reason I think that is because, well, Jeff Bezos doesn’t care what the wage is or anything that Jeff Bezos doesn’t care about can’t be redistribution, and mostly redistributing between, you know, you know, worker, people who rely on minimum wage workers, right. This and the richest people in society, so their prices go up a little bit. And then minimum wage workers, some of them see price, you know, see a wage increase. And, you know, there’s always the worry with minimum wage that it could lead to some increase in unemployment that we have fewer employed people. Now there’s the evidence on this is highly mixed. And at the minimum wage levels that we’re talking about, it doesn’t really seem to have much of an effect on employment, right, not much of a measurable effect. And it’s not surprising that cities would be able to get away with some higher minimum wages because wages are higher in cities, right? Yes, cost of living is higher. And so it’s not like super surprising the average well, average wages in San Francisco are going to be higher than average wages wages in rural Alabama. And then you know, so you can you can just are these gonna look the lowest wage and so you can boost up the you can boost up the minimum wage in San Francisco without as much of a consequence, and I think most people agree that if you were to have a $50 an hour minimum wage that would probably pretty clearly have contribute to unemployment. And so there’s really a fairly limited amount of redistribution that we can do with with a minimum wage policy, as opposed to things like taxes on billionaires and millionaires that you then use to fund a universal basic income or wealth tax, or, you know, a really serious kind of value added tax, again, that then is used to find, you know, wage support, or UBI, or earned income tax credit, or a suite of other really serious, you know, housing subsidies, you know, food subsidies, Energy, whatever you want to do, that could actually take a big chunk of money from the wealthiest people in society and move it over to the poorest people in society. Right. That’s what I think of as serious redistribution policy, which minimum wage is a pretty far cry from. And so I guess the question is, how constrained you know, if cities are really liberated, in the way you’re describing, are they that liberated, that they could start to do that kind of stuff? Because like, the minimum wage, you know, I get that some people would say, Oh, they can’t even do that. But, you know, it’s not, it’s not the big, you know, the, I don’t know, like, the it’s not the big hammer. And I’m wondering if can cities reach for the big hammer? Are they? Or are they really, at the end of the day, just have to reach for the little tiny hammer and tap away? As opposed to really go after the, you know, major inequalities?
Rick Schragger 56:29
So I think this is a this is this is a, this is a challenging question. And I do think, obviously, I’m on the side of, of being able to do more, rather than less, I think there, there there, there are, obviously, some theoretical limits, although, you know, I’m pushing against a literature that says you can’t have any real differentials or you’re gonna, you’re really going to lose out. And so in some ways, the minimum wage and I, I agree with you, it’s not it’s not, it’s not a redistribution from the various wealthiest down, right, it’s actually, it’s who’s going to pay this is a real question. And so there’s a kind of workers versus consumers, and we might actually not know, you know, how that’s gonna play out. What what the minimum wage for me or the living wage movement in the cities in the US cities represent was a kind of proof of concept, which is on on the, on the conventional and Orthodox, that has kind of Tebow theory or Paul Peterson theory, that the the, the the any differential in wage wage requirements, that’s not matched to some night, that’s not matched to the cost of living or something like that, is, is going to have employers fleeing just across the border, especially if there’s, there’s, if you have multiple local governments in New Jersey, in a metropolitan area, and in fact, often you do, and they will just, they will hit the road unless there’s something constraining them in various ways. And there’s not much to constrain them in in a world of pretty low cost mobility, right? Low cost, transportation, and so on. And that goes for tax rates, because we do have differential tax rates, the city of New York taxes you a lot more than the suburbs do, right. And that’s the case in lots of cities. And many times people would point to that and say, That’s why the place is declining. Philadelphia has a wage tax, and it’s a real problem. And that’s, that’s reducing investment in the city, New York City’s got to lower its taxes so that it can compete with the suburbs. Right? Same as you have to improve your schools also to get people in, right. It’s the same these are all the same kinds of types of claims, which is that that with mobile, mobile, people and firms, those those folks can flee and then you’re stuck with a city full of people who can’t flee, right? Who have no no capacity to move or, or be mobile. That’s the worry. That’s the worry. That’s right. That’s the ultimate outcome. And that’s what some would have said is what happened to cities in the United States in the 70s. Right? Or through many decades post world war, World War Two. So I again, I going back I see the living wage as a kind of proof of concept, which is actually you don’t lose, you don’t lose firms, they they’ve adjusted pretty readily you your your population continues to increase in these places. Your property values continue to increase in these places, there’s there seems to be even more demand, right for this valuable real estate where you’re going to pay more taxes. And so I don’t think we’re up against the limit of what is possible. And part of this is and there’s a you know, I again, I don’t want to I don’t I tried to be a skeptic all the way through lots of theories, but one account is that in fact, many cities, not all cities, many cities, especially primate cities, but even some not so primate cities had what was that primate primate cities? That kind of New York’s Chicago’s Tokyo’s London’s right, the big the big boys, the big, the big players, they have so much at at this point. And this, to talk about them like this should be a shock to folks who understood these cities in the 70s and 80s. Right, but to talk about them in the following way, which is they have so much economic power, because firms so badly want to be their firms and residents want to be there that they can leverage that, that that location advantage to do lots of redistribution even more so. And here, it would be a kind of dramatic claim. Even more so than the nations in which they are right, nations have trouble right keeping their people they’re taxing so folks are going overseas or they’re moving out of the the nation. But in fact, the power of these these these global cities is such that that firms and residents want to be there so badly, that in fact, they might have more power to tax and redistribute than the national government. Now, the original, the basic account of fiscal federalism is that the sub national governments can’t tax and redistribute at least not that effectively, especially not local governments, maybe state governments can because they’re big enough. But certainly the the appropriate place for taxing and redistribution is at the national level. Because you you, you can capture all your people, right, but in a global world in a global environment, even that’s a problem right for for it’s not as big a problem, maybe. But that’s a problem because people flee those taxing jurisdictions. And so, nation states have trouble, right. And so folks say, Well, it’s hard for you to tax. So now think about the city, the cities which have such locational leverage, because people in firms want to be there, that they’re, they have more power to tax and redistribute than the nation that flips the traditional and conventional account of fiscal federalism that we’ve all basically absorbed. And boy, that could be dramatic. Now, I don’t want to say it in its strongest form, because I think a lot of cities are need national governments to be able to tax and, and redistribute. And in fact, those basically, as a as a, as a legal and constitutional matters, macro economic matter. Nation states are the only ones that can really print money, right and run deficits and do the things that you would have to do to fight recessions and so on cities can’t do that, because they don’t have their own currency. Right. But imagine, city states of the US kind of, you know, of, of London, and then Tokyo and New York and Chicago, and you can end these are places with enormous GDPs. Right, bigger than most nations. And they’re, they have a lot of capacity, even even, even as compared to nations.
Michael Livermore 1:03:24
Yeah, it’s really interesting. So let me just ask you one more question. Because we’re bumping up against our, our time limit here is, you know, given this new prominence, and this kind of folds into some of the more recent work that you’ve been doing, given the province of these mega cities or these include extremely important cities, but also, you know, even smaller cities and structuring economic development, our economic life, let’s just say our cultural life and our social life. You know, we have a funny constitutional system in the US that places an enormous amount of power at the state level, rather than at the city level. And you talk, there’s some really interesting discussion in the book about, you know, kind of some of our constitutional decisions and how that’s affected cities and city power and the like. But my kind of big blowout question is, you know, sometimes I just feel like states are vestigial things in our constitutional system, like make no sense. And if we had, you know, kind of a constitutional convention, you know, which could happen. And we were really rethinking, you know, how we wanted to structure governance in the US, you know, like, the federal government, big mega regions and cities is where we would place governance authority, and it wouldn’t be at the at the state level. I’m just curious, your thoughts on that. Are our states still worth anything? Or are they just this thing that we’re kind of stuck within the current constitution and it’s actually a pretty crappy place to locate authority?
Rick Schragger 1:04:53
Yeah. So you’re, you’re channeling me a little bit I’m really glad to hear you’re preaching to the choir. So I agree with you. Maybe not in the strongest version of what you’re saying, but recent articles I’ve written have have essentially made this kind of claim, which is that the the States, I think, there, there have long been arguments that the US states in fact, are, are a product of a right of flawed compromise, and now have lost their reason for being and, in fact, as we, as is commonly understood now, I think is the Senate is quite anti democratic, and so is the, the, the Electoral College, and that’s based on states and, and that distorts and skews our, our politics as our national politics. That’s right. And so I have been, I’ve been long fighting the following fight, which is, when you talk about decentralization or federalism in US legal and constitutional discourse, the immediate reaction is you don’t trust states, do you, like states in the South had Jim Crow, and we needed civil rights laws and employment laws and anti discrimination laws, and you needed the national government to come in and, and do the work do that work. And, and so I say, No, it’s not, it doesn’t have to be about states, it can be about you can be opposed to states but in favor of cities, right. And so this is the claim I make in a recent article about metropolitan isation. And the problem of states, which I think states are skewed in lots of ways, their politics are skewed in lots of ways similar, I think, to the national government in some ways, and skewed by certain kind of anti urbanism, or an anti city kind of, I think we see that at the national level, frankly, the hostility to states, the urban rural divide that we’re seeing is, is a national one, but it starts in the States. And in part, we had constructed state constitutions in some ways to address the urban rural divide, especially in the, in the, in the 19th. And then early part of the 20th century, where there was a fear of the big city, right, the big city is going to take over, and it’s going to have economic and political power, and we need to do various things to constrain it. And so that’s been a long running theme in in state state level politics. And we’ve also seen in the last decade, a rise in state level preemption of local laws of city laws. And I wrote a piece called The attack on American cities, which is kind of a dramatic title for a law review article. But I think it is actually accurate in a lot of ways, rise in state legislatures deciding that all kinds of policies that the cities are embracing, including, by the way, quite prominently living wage laws in cities, but lots of other things too, environmental protection in cities, all kinds of stuff. What we’ve seen is city state legislatures come after those things quite aggressively. We saw it in the in the pandemic, we saw that as well, state legislatures and governors, overriding local health and safety regulations and so on. So we’re seeing a lot of conflict between states and their cities. And, and my one of my sort of claims is that that is representative of our national political life, in fact, so what we’re seeing is a kind of phenomena at the state city level, which has kind of reproduced itself nationally. And so when we talk about the urban rural divide, or other things like that, those are divides within states. It’s not that you have blue states and red states and blue cities, mostly blue cities, right. Or what you have is in Dallas is is states that are red, and rural and and and ex urban areas and are much more and are blue in their cities. And so the divide, what federalism and this is the this is a direct answer to your question about states and what use they are. If federalism state based federalism is intended to allow different kinds of places different kinds of regions to govern themselves in their own way and to to limit the impact of national or centralized or, or, or global laws on these local communities. It’s not doing that work, because it’s the divide the most salient political divide today is internal to states, it’s between cities and their and their surrounding areas. And that means you need mechanisms inside states to achieve some of the goals that federalism is supposed to achieve. And so I think our state based federalism doesn’t work in the way it was perhaps intended. It hasn’t worked for a long time. And what we’re seeing is, in fact, especially more recently, is that that results in occluding, the actual, the actual divide that’s, that’s most salient which is between these cities and their and their, and the rural areas in those states.
Michael Livermore 1:10:40
Yeah. And, you know, for what it’s worth, the state level constitutional change is a heck of a lot more likely than, yeah, the national level constitutions.
Rick Schragger 1:10:47
And so that, that brings me to Home Rule, which I’m a big advocate of. And Home Rule is often associated, can be associated with a kind of conservative or reactionary approach, because it was invoked, you know, by those resisting civil rights and so on from the national government. But the way I use Home Rule is about this, about cities actually having the power to do these things without undue interference from their state governments. And that seems like a huge problem characteristic of the 20, late 20th and early 21st centuries, that we should really pay a lot of attention to, and doesn’t get as much attention as it should. And so I’ve been pushing quite hard to just make that more prominent in at least in legal scholarship.
Michael Livermore 1:11:35
Great. Well, I’m much more to talk about Rich but but this has been a fascinating conversation. And we’ve covered we’ve covered a lot of ground. Thanks so much for for chatting with me today and all the work that you that you do on this stuff.
Rich Schragger 1:11:50
Oh, thanks. Thanks so much, Mike for having me on the on the podcast. It’s a real pleasure.
Free Range Podcast 