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WIKIPEDIA/Pittsburgh7 - Cathedral of Learning, Heinz Memorial Chapel and other monuments of Pittsburgh University, July 10, 2008.
Metropolitan Revolution

Are cities the cure for short-termism?

We are hearing a lot about short-termism this political season.

Hillary Clinton has called for an end to the “tyranny of short-termism” and the focus on quarterly earnings reporting in corporate America. Last month, Senators Bernie Sanders and Elizabeth Warren came out in favor of a bill to limit activist hedge funds, which they claim value short-term returns over long-run sustainable growth.

On the Republican side, former minority leader Eric Cantor cast a wider net, calling short-termism a problem not just for the private sector but for government and politics as well. “Where they have something in common,” he said, “is this lack of trust or faith in institutions.”

These Washington assessments of the forces driving short-termism tend, not surprisingly, to lead to federal proposals to curb the practices of short-term actors. I suggest another approach: provide more support for the places—cities and metropolitan areas—that are already thinking and acting for the long term.

Since their inception, cities have been built to invest in the future—in quality, enduring infrastructure to move people, goods, energy, and ideas; in the creation of authentic and vibrant places and destinations; and in the schooling and skilling of people to help them reach their full potential.

Cities do these things through a mix of investments by a broad range of public, private, and civic investors that cut across sectors as well as jurisdictional and disciplinary lines. Of course, cities are not exclusively governments, but rather broader networks of institutions and individuals—homeowners, universities, hospitals, philanthropies, private businesses, utilities—that are committed to, and fundamentally depend upon, the betterment of their place.

Unlike the short-termers, these urban stakeholders are patient investors, committed to long-term value appreciation and broad prosperity rather than the quick buck. They are both stewards of the past and foundation-setters for the future. Rather than viewing the city as a collection of separate and unrelated investments, they see it as a unified asset and recognize the synergistic effect of disparate investments—housing, infrastructure, education—that strengthen and reinforce each other’s value.

Examples of long-term investment—public, private, and civic—abound in our cities. Voters in Los Angeles, Denver, and Seattle have approved dedicated taxes to invest in state-of-the-art transit systems; voters in Broward County, Fla., King County, Wash., and San Antonio, Texas have done the same to invest in children. Major anchor institutions like Carnegie Mellon University in Pittsburgh, Drexel University in Philadelphia, and Texas Medical Center in Houston have embarked on significant expansion plans that are catalyzing the regeneration of adjoining neighborhoods and the growth of entrepreneurial companies, affordable housing, and locally serving businesses. The rebirth of entire sections of Detroit is being led by an eclectic consortium of philanthropies like the Kresge Foundation and corporations like Quicken Loans.

If the next president is serious about mitigating the broader issues around short-term thinking, he or she should commit to empowering the long-term institutions in our cities. This can be accomplished any number of ways: by increasing federal investments in basic science and applied research (the fuel for long-term growth); by locating satellites of isolated national energy and military labs near urban universities; by using new credit enhancement tools around transit systems, water infrastructure, and urban rail stations to attract large-scale private investment; by increasing flexibility in federal grants to local communities to let leaders on the ground decide the uses with the highest impact; and by standardizing and disseminating data—on new instruments like social impact bonds or regional venture funds—that gives city networks the market intelligence to make smart decisions.

The next president, in short, needs to recognize that cities and metropolitan areas require long-term financing in many forms and from a variety of sources, often pooled and combined in intricate mixes, to shape their economies, make quality places, and equip their workers with the skills they need to compete.

Classical philosophers coined the term ars longa, vita brevis—art is long, life is short. Perhaps it is time to modernize this maxim for our urban age: life is still short, but cities are made to last.

Editor’s Note: The Kresge Foundation is a donor to the Brookings Institution. The findings, interpretations and conclusions posted in this piece are solely those of the authors and not determined by any donation.

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