July 11, 2013 6:51 pm

America is at the vanguard of the global metropolitan revolution

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The legacy of the Great Recession will be the redistribution of power to cities, writes Bruce Katz
Chicago skyline©AFP

Throughout America’s history, economic shocks have remade governance. The fiscal collapse of state governments in the 1830s triggered constitutional reforms that affect how states spend and borrow to this day. The Great Depression gave birth to the modern federal government through new institutions such as the Securities and Exchange Commission. The Great Recession, and its political and fiscal aftershocks, is shifting the locus of power downwards, away from the federal government and even state capitols to the cities and metropolises that drive the economy.

These communities are not waiting for Washington, mired in partisan rancour, to get its act together. They are driving a “metropolitan revolution” – doing the work needed to increase jobs and restructure their economies. Dallas, Denver, Los Angeles and Miami are using local resources to boost private investment in economy-shaping infrastructure such as transit systems, ports and airports. Boston, Cleveland and New York City are refocusing their development on innovative, productive and export-driven growth rather than the pre-recession mixture of stadium building, homebuilding and consumption. Chicago, Houston and San Antonio are working to integrate immigrants, make early education universally available and equip young workers with the skills they need to compete globally.

Metropolitan leadership on issues of US competitiveness is a natural extension of cities’ economic power. The 100 most populous metropolitan areas sit on only one-eighth of the nation’s land mass but house two-thirds of the population and generate three-quarters of gross domestic product. More importantly, they contribute upwards of 90 per cent of educated workers, advanced industry jobs, patent creation and trade-oriented freight flow – assets that the nation needs for growth.

Demographic forces, particularly the ageing population, are also altering structurally the allocation of federal and state resources. By 2023 the federal government will spend $1.6tn more a year on mandatory programmes such as Medicare and Medicaid than in 2013, according to Congressional Budget Office projections. As a result, non-defence federal spending is expected to fall to its lowest level as a share of GDP since the 1960s. Metropolises will help the US adapt to this by smartly using public resources to catalyse private and civic investment.

Finally, metropolitan areas are in tune with how economies and societies function today. Unlike state and federal governments, they are led not just by elected officials but by networks of government, business, university and civic leaders who come together across party and jurisdictional lines. They do not have the luxury of bickering when bridges collapse and jobs disappear. They solve problems and get stuff done.

US governance will look very different in a decade. Washington will do less, focusing on priorities such as national defence and a common safety net for the elderly and disadvantaged. Cities, metropolises and leading states will take on even more of the burden of investing in economy-shaping infrastructure and education.

This is welcome. Washington and state capitols spread investment like peanut butter on a slice of bread, often placing it where need is absent and market return negligible. Cities and metropolises are more likely to use their own money in ways that make sense for their economy and location. They are fast, eager learners, adapting innovations from elsewhere to their own requirements.

Innovations in America, of course, rarely stay there. Given rapid global urbanisation, this triumph of devolution is likely to affect the way other nations govern themselves. London is already seeking greater revenue-raising powers to meet the infrastructure challenges of a fast-growing metropolis. Cities in China, India and Brazil need governance reforms to grow more sustainably. In mature and rising economies alike, it is hard to imagine metropolitan “economic giants” will remain “fiscal infants” for long, to borrow a phrase from Boris Johnson, London’s mayor.

The political legacy of the Great Recession will be to redistribute power in the US and, ultimately, across the world. In a metropolitan century, it is cities and metropolitan areas, and the leaders who govern them, that will drive nations rather than the other way around.

The writer is a vice-president of the Brookings Institution and a co-author of ‘The Metropolitan Revolution’

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