Mobilizing existing resources to meet the current and future needs of cities.
Crumbling streets and bridges. Poorly performing schools and other social services. These are common themes in cities, which too often struggle just to keep the lights on, much less make the long-term investments necessary for future generations.
It doesn’t have to be this way. This book by two Swedish experts in public finance describes a new way of restoring economic vitality and financial stability to cities, using steps that already have proven remarkably successful in some cities. The key is unlocking hidden social, human, and economic wealth in cities. A focus on public wealth shifts attention and resources from short-term spending to longer-term investments that can vastly raise the quality of life for many generations of urban residents.
A crucial first step is gaining a proper understanding of the city’s balance sheet—an understanding that that too many cities now lack. With this in hand, taxpayers, politicians, and investors can better recognize the long-term consequences of political decisions and make choices that mobilize real returns rather than relying on more taxes, debt, or austerity.
Even poor cities own large swathes of poorly utilized real estate, or they control underperforming utilities and other commercial assets. Most cities could more than double their investments with smarter use of these commercial assets. Managing the city’s assets smartly through the authors’ proposed Urban Wealth Funds—at arms-length from short-term political influence—will enable cities to ramp up much needed infrastructure investments.
Praise for The Public Wealth of Cities
Cities are the locomotives of economic progress. But not all cities are successful. This fascinating and important book has divided them into the “treadmill towns” that fail and the “turbo-cities” that succeed. The difference, argue the authors, is that successful cities focus intelligently on developing their long-term assets. They build economic, social, and human wealth.
—Martin Wolf, Financial Times
In terms of the ideas presented, I loved the book. It touches on the organizational challenges of getting municipal finance right while speaking to what execution has to look like as well. It also moves us beyond a discussion limited to taxation and into a conversation about how municipal authorities can claw back some of the value they create, the same as we’d expect any firm in the private sector to do; and in so doing, it offers sustainable ways to fund those functions that won’t make money, but that we’d like to see supported all the same.
—Jeff Fong, Market Urbanism
Drawing on the successes and failures of cities around the world and applying exemplary analysis, Detter and Fölster uncover a treasure trove of hidden urban assets. Transparent, accountable, and professional governance of the economic, social, and human assets of our cities is achievable. A must-read for all mayors, city counsellors and those who elect them.
—Willem Buiter, Chief Economist, Citibank
The authors offer pragmatic solutions, linking better outcomes to asset management practices and new definitions of social capital that promote evidence-based investments. The strategy: identify your economic, social, and human assets; professionally manage assets; and instead of show casing current interests or putting out fires, make long-term investments. With examples and toolkits, The Public Wealth of Cities helps local leaders see our real responsibility: not to produce and manage public wealth but to advocate for residents served by it. Of course, money matters, but not as much as our will to collaborate across sectors in order to govern public resources well and improve lives.
—Ben McAdams, Salt Lake County (Utah) Mayor
Across the globe, people are flocking to cities. But some cities are thriving and others aren’t. As the process of urbanization continues, it’s crucial to understand why some cities succeed and others don’t. In this important and practical new book, Detter and Fölster teach us how to turn around distressed cities.
—Peter Orszag, Vice Chairman of Investment Banking, Lazard, and former Director, Congressional Budget Office
How do we deploy our public assets—our balance sheet—to meet critical social, human, and economic challenges? How do we finance these assets in an economically feasible, politically defensible way? How do we move beyond the essential—unassailable accountability—to our ultimate goal, expanding our metro economic engines? In Public Wealth of Cities Detter and Fölster take the lessons from their earlier work and apply them at the local level, where creativity and innovation are essential and where both the potential promise and pitfalls of government action are in stark relief.
—Anthony Williams, former Mayor, Washington, D.C.
This is an important book. Detter and Fölster have introduced an innovative approach to solving some of the most egregious problems that cities face today. As the world’s population grows, some cities will be forced to adapt while others will founder. Identifying a city’s assets, improving management, and shifting resources from consumption to long-term investment make inherent sense and warrant close attention as a means to improve the quality of city life and standards of living.
—Fergus J. McCormick, Chief Economist, DBRS, Inc.