But can effective municipal leaders really save struggling U.S. cities? That’s not so clear, as I will explain.
Here’s how I did my research
Here’s the problem in brief: Declining cities need new jobs, but municipal leaders can do little to create them. This locks cities into a zero-sum conflict with one another, trying to lure employers through various investments and incentives. Declining cities often pay the highest price in that competition. They adopt the same measures as success stories like South Bend — just to keep existing firms from leaving.
To keep this story from being one of winners and losers, with some parts of a region thriving and others suffering, would require state or federal policies that spread the wealth more evenly and prevent cities from entering bidding wars for employers.
Why Rust Belt cities need saving
With few exceptions, cities and towns with a higher proportion of educated residents have pulled ahead. Major metropolitan areas around cities like Boston and San Francisco, which house major universities and attract young talent, have grown richer. Smaller cities have declined. This includes most Rust Belt cities — except large metros like Chicago and college towns like Ann Arbor, Iowa City and South Bend, home to the University of Notre Dame.
Federal policy changes have also made cities more dependent on corporate investment decisions. Programs like Great Society urban initiatives and Nixon’s revenue-sharing once received bipartisan support. These programs lowered regional differences by apportioning federal dollars to cities based on population or sent funds disproportionately to poorer places.
The typical tools for the job: Quality-of-life amenities and economic incentives
In this context, Rust Belt politicians are singularly focused on attracting corporate employers and outside funding for local ventures. Their ability to do anything else depends on it.
One popular strategy is developing quality-of-life amenities like walkable downtowns, diverse restaurants, waterfront museums, hotels and promenades. As one official explained, such amenities show visitors that “we’re not just a bunch of hicks in the sticks” and encourage educated professionals to move there, bringing the companies that employ them. In South Bend, for example, revitalization has focused on downtown, including taxpayer subsidies to build condos and amenities like a ballpark, casino and laser light show over the river.
Municipal leaders say these only work when they create partnerships among civic groups, universities, developers and other employers, creating a vibrant business climate. But even the best development strategy works only if a city has some advantage — like South Bend, where Notre Dame has invested heavily in downtown innovation districts.
Municipal leaders in stagnant or declining cities adopt all the same measures just to keep the employers they already have. From Dayton, Ohio, to Decatur, Ill., politicians devote their limited energies and resources to flashy downtown projects to prevent capital flight rather than bring new jobs. An official in a declining city told me that 90 percent of tax breaks go toward keeping existing employers from leaving, adding that they “ask how much will you give me to come … how much more to stay?”
State and federal policy solutions
Cities in regions like the Rust Belt face a collective action problem; they'd be better off if they worked together than if they competed. But politicians are responsible primarily to their own cities.
That means states and the federal government are in a better position to help regions thrive.
Many nations like Canada and Australia counteract regional inequities with equalization grants that target declining regions. The United States once pursued similar policies, allowing municipal leaders in struggling regions to fund basic services without chasing outside investment.
Here and there, an individual town or city might be able to engineer a turnaround that bucks the trend. But overall, municipal leaders are ill-equipped to change a game that locks them into a costly, zero-sum conflict with one another.