Remarks at State of the Cities The Urban Recovery: Real or Imagined

Thank you very much. It is a pleasure for me to talk about cities. We are assigned today the task of trying to determine whether or not there has been a revitalization in our cities. Cities are organic forms of government. Cities endure. Empires come and go, nations come and go. These are artificial creations of politics and war, but cities go on and on.

These last 50 years, as difficult as they have been for American cities, have not hurt cities that much. In fact, I think cities will thrive for a number of reasons. But it is pretty depressing sometimes. When I consider what has happened to U.S. cities over the last 50 years — the destructive impact of federal programs, grossly excessive road building, the elimination of most trains and transit, FHA-subsidized suburbanization, other inducements to sprawl, the resulting social chaos and confusion — as the son of a Presbyterian minister, I turn to the first chapter of the Lamentations of the Prophet Jeremiah: “How lonely sits the city that was full of people. How like a widow she has become. She that was great among nations, princess among provinces has become tributary. She weeps bitterly in the night, tears on her cheeks. Among all her lovers, she has none to comfort her. All her friends have betrayed her.”

If you look at some of the federal programs that have developed over the last 50 or 60 years, it gives you cause to think twice about whether the federal government can really be the answer for America’s cities.

First of all, half of the board of directors of the federal government is based on geography, so Wyoming, North Dakota and South Dakota have six votes in the United States senate, and California and New York have four. So every time they make a decision, it’s not necessarily one that’s going to be pro-urban.

Look at the distribution of money. States like Wyoming get a lot more funds if you count all the benefits from federally owned lands, water rights, timber rights, military help, subsidies to the oil drilling industry. Wyoming is a great beneficiary of federal largesse.

Then compare that to New York City, which pays out far more than it gets in federal benefits. It makes you wonder. I mean, everybody in Wyoming probably thinks they’re subsidizing people in New York City. The really pathetic fact is that probably most people in New York City think they’re being subsidized by Wyoming, too.

The federal government is often a bad deal for cities. I’m going to give you the exceptions, though, just so you don’t think I’m bashing the federal government. The Interstate Commerce Act is good for American cities. It’s fundamental to our economy. We had the European Economic Community in the United States 200 years ago. The Bill of Rights is good for American cities. Democracy is better for cities than totalitarianism. And it would be good for American cities if we had universal access to health care in this country.

But a lot of other programs are not so good for cities. The highway programs, for instance, are not good for cities, although ISTEA is now an attempt to better serve cities. I would point out that ISTEA is a sneaky attempt. It’s good policy, but I don’t think it’s really been fully explained. If it was truly understood by senators from Wyoming and other places, and by the political culture in these smaller states, I doubt they would support it. Daniel Moynihan understands it, and he understands cities better than any other United States senator. But it’s a little frightening to think that if there was a referendum held today on whether or not the transit system in New York should get help, would it pass? Would the American electorate support that? Particularly, would they support it through the voting pattern that we have in the United States Senate? They probably wouldn’t.

The federal government gets involved in many other areas, like housing. Some of you would say, “Well, we probably need more involvement in housing.” In fact, the Kerner Commission report said the federal government should get more involved. You remember that back in 1968: A Nation Divided. I don’t like the Kerner Report, and I don’t like the conclusions of the Kerner Report. That might surprise you. I happen to like Otto Kerner. My father was a Presbyterian minister and we were in Springfield for a while, and he was an elder and an usher in the church that we attended, and he was a very good man. But the Kerner Report highlighted pathology and associated pathology with American cities. The solution they advocated was for more federal government, even though the federal government had become very, very involved with cities in the 40 years or so leading up to that.

For example, the FHA, Federal Housing Administration. From 1934 to 1949 the FHA required segregation covenants in any subdivision that used FHA financing. Until 1962 they allowed that. And so in the 1960 census, with over 50,000 people living in Levittown, New York, in Long Island, just a few miles from Bedford-Stuyversant and Harlem, not one of those 50,000 people was an African-American. That wasn’t just a market phenomenon. In fact, it wasn’t a market phenomenom. It was required by that covenant that was still in place as late as 1962. So when you look at the federal government as the answer for housing problems, take a look at the concentration of public housing in the city. Even the scattered-site housing program hasn’t been enforced on any suburbs. And it’s really not that popular in cities either. The average taxpayer doesn’t wake up in the morning and say, “Honey, you know, what we really need in our neighborhood is a scattered-site house.” (Laughter.) You don’t hear that.

Before the federal government got involved in the housing business, we had a number of housing creations that the market presented to the people: the cottage in back, the duplex, the triplex. Particularly in Boston. In New England, the triplex was a wonderful creation for people that didn’t have a lot of money. The store, with housing above, has almost been eliminated from the American landscape. It’s a code violation in most places in America now. Ironically, it’s in Disneyworld and Disneyland, where they have created it. In the last 50 years, Main Street has only been recreated in two places: Disneyworld and Disneyland, and that’s because Walt Disney understood that when people paid all that money to go to Disneyworld, they didn’t want to walk through the front gate and see a strip mall. They wanted to see something beautiful. And the urban form is beautiful.

So, are cities doing better now? Well, they are participating in the economy. I was delighted on Sunday to see in the real estate section — not in the social pathology section — of the New York Times (laughter), “Downtown Milwaukee Housing Picks Up.” The article talks about how people are willing to pay up to $735,000 for a condominium in an urban setting. People are starting to realize that the urban form is beautiful.

The urban form isn’t anything new; it goes back to ancient times, to the days of Aristotle. From a design standpoint, however, it appears as if America had a stroke at the end of World War II. All of the rules have been broken. The idea of terminating the vista, the street with a monumental building, which was a standard form of the Greeks, were all thrown out. Today, we have these curvy roads with cul de sacs and these giant commercial strip streets that you can’t walk along, that generate no tourism whatsoever, and their only feature is the appearance of convenient access to parking.

This new urban form has been created by a number of things. One is the institutionalization or the worship that we had for the international designers who fled Europe before World War II, people like Mies Van der Rohe and Walter Gropius, who then sat at the head of the architecture and planning departments of major universities. Suddenly, the ten-year design phenomenon in Europe was imposed on the American landscape. We ended up with separated-use zoning, the automobile city of Corbusier; all this sort of exotic socialist-inspired architecture now embraced by conservatives, like Rush Limbaugh. It’s sort of a strange phenomenon. But on top of that was the Interstate Highway Act, which had a huge impact on the American landscape. As predicted by [Lewis] Mumford in 1956 when the bill was passed, “It will do more damage to American cities than all the bombing did to cities of Europe in World War II, in the next ten years.”

I want to give you a view of Detroit, a city I think is most stigmatized, and tell you something good about it. My parents honeymooned in Detroit in 1946, guests of a grateful government that provided POWs during World War II a week in a hotel. My parents were given a choice between Minneapolis or Detroit. Since they lived in St. Paul, Minnesota, they chose Detroit. (Laughter.) They stayed at the luxurious Book Cadillac Hotel. With the new Bell and Howell movie camera, my father recorded the first days of an enduring marriage in the heyday of downtown Detroit. At that time, Detroit bustled with pedestrians and shoppers in scenes reminiscent of the great cities of Europe. There were three department stores — Hudsons, Kerns and Crowleys — all on Cadillac Square, which rivaled Manhattan’s Bloomingdales, Macy’s and Gimbels. Detroit’s prominent skyline was surpassed only by those of Chicago and New York.

Fifty years later, Detroit has changed beyond recognition. The pedestrians are gone. The streetcars are gone. The department stores are gone. Most buildings are gone or boarded up. The 28-story Book Cadillac, now padlocked, has joined the Detroit acropolis of empty skyscrapers.

If money is the measure, the federal government kept faith with Detroit during its decline. But if results matter, Washington’s dollars were fool’s gold. Billions of dollars flowed from Washington into Detroit in the forms of concrete, the freeways that Lewis Mumford feared. Billions more built public housing in the city, and taxes subsidized middle-class housing in the suburbs.

More was spent on urban renewal and parking lots. So many parking lots that there are not many places left to visit.

Hope springs eternal. New leadership from a dedicated new mayor, Dennis Archer, gives reason to believe that Detroit could thrive again. Baseball and football stadiums are in the works. In 1994, 39 single family housing permits were issued, ending a 40 year drought. In 1995, 67 such permits were issued, yet construction is still dwarfed by destruction. Detroit demolished 5,994 dwellings in 1995, a number that recalls the bombing of Rotterdam in 1940.

Anyway, I’ve made my point. The federal government, through housing and other programs, has not helped but hurt cities, in many, many cases.

What can cities do about it? Well, first of all, cities should emphasize their physical form, which is superior. Detroit, as damaged as it is, looks better if you compare it to its suburbs. Just go around and take a bunch of pictures of Southfield, which has more office space now than Detroit. Compare Detroit with Southfield, and Detroit is more beautiful, because it is laid out on a good plan. It is a plan that has been ignored for 50 years, but it’s a good plan. And if you compare any city or old village on the one hand with the places that have been created in the last 50 years, you’ll see the superiority of the city. It is something to build on. Rittenhouse Square in Philadelphia, for instance. As hurt as Philadelphia has been, Rittenhouse Square is one of the greatest places to stand in the world. It is a gorgeous park.

So what should be done? Well, cities need to focus on solving problems, as opposed to wallowing in them. When the Rodney King verdict came out, riots broke out, resulting in billions of dollars worth of property damage and 50 people killed. President Bush left Washington, DC, for South Central LA. So did I, candidate Clinton, and a number of others. The U.S. Conference of Mayors, which I was on the advisory board of, met in Washington shortly after the riots to come up with an urban agenda. We now had captured the public’s attention and the federal government’s attention, and wanted to seize this opportunity to start addressing urban problems.

I was very uncomfortable with that. I said to some of my colleagues, I think this is a mistake to associate ourselves with this calamity. Once the CNN cameras were off, the only people that would remember what happened in South Central LA were the people who lived there, who had gone through that situation which scared them, scared them to a point they thought they might die. And some did. The other group that would remember would be investors, whether they were American investors or British or Japanese or German. They would remember South Central LA because they would not want to put their money where it might get burned. Hopefully, someday they would forget. But they would remember longer than the political structure would.

Linking an urban agenda to the riots is almost like being a private corporation and telling your stockholders that you were about to go out of business, or that it was very dangerous to be near them, so please invest in my company. Or if you had vendors who supplied you, and you told them you were about to go out of business. Or customers that you supply, you tell them you are about to go out of business. A very foolish thing to do. The fact is, we were asking everyone to associate our cities with that calamity. A big mistake, because you can not build a city on pity, and you certainly cannot build it on fear. You have to build a city on its positive virtues, which are many: proximity, diversity of markets, central to the metropolitan areas that they are in. There are many, many advantages.

To sell the city, you need to focus on reducing the size of the problems. In New York City, crime has been reduced by about 50 percent, and as a result of that, the economy is doing much better. People feel safer going there, having their money there, investing, living, shopping. New York City is doing better. And other cities around the country, including Milwaukee, have had big reductions in crime as well, and that helps. That makes people want to invest.

Cutting spending and foolish regulation is critical. You must reduce the cost of living in the city and working in the city, and make things more efficient. If you have a permitting process that is not insane, that does not insult those who want to do things positive in the city, then you will get more investment.

Reducing taxes. The idea that high taxes in urban areas are necessary or even desirable — that somehow taxes ought to be high — is absurd. Who pays those taxes? In Milwaukee, the per capita household income is $22,000 a year. Why is it good to tax people like that? They can’t afford it. So if you reduce taxes, they have more money to spend on their lives. We have reduced taxes ten years in a row in Milwaukee, and it has led to a situation now where our real estate values are climbing faster than the rate of inflation. I think that is good. It means the city is worth more.

It is also important to allow the advantages of the city to manifest themselves. We have done that in higher education. If you look at New York City, for example, you have NYU, Columbia, Fordham, the City College of New York, 40 or 50 other colleges and universities, all in New York City. If you look at the body of universities in the United States, they are largely concentrated in urban areas. They are not perfect, but they are the best in the world. And what kind of system do we have? We have one where the customer, the prospective student, has a lot of power. And the power is increased by the government, through the GI Bill, the Pell Grants. Forty-nine out of 50 states have tuition grant programs that allow people that don’t have all the resources that others do to be able to access the system.

Then you look at K-through-12 education. Let us look at Chicago, for example, which is doing a lot to improve its delivery of services. We are waiting for that big breakthrough in quality. So the mayor is helping to run it a little bit better.

But the University of Chicago is a place where people from all over the world want to go to university. It’s in Chicago. It’s in the Senator’s district. And De Paul, Loyola, University of Illinois at Chicago, and another 25 or 30 colleges and universities are also located in the city of Chicago. But even in its somewhat improved state, how many people want to move to Chicago to educate their kids?

The difference is, we have enshrined government monopoly as public education. We have made the system more important than the people that are supposed to be educated by it.

In Milwaukee, we are on the road to replicating the higher education system in our K-12 public schools. We have tuition grants, otherwise known as vouchers. That allows the customer to be able to go to any public, private, or parochial school, assuming that the state Supreme Court rules the way I expect they might in another month. That is essentially the same system we have at the higher ed level. It is all voluntary. You do not have to go to Notre Dame, if you don’t want to. You do not have to go to Yeshiva. But you can. Somebody can go to Yeshiva with a GI Bill and learn to become a rabbi, and be helped by the GI Bill, by federal tax money. You can go to Georgetown and become a priest. Or you can go to the University of Wisconsin and become a socialist, whatever you want. (Laughter.) It is your choice. The democracy did not crumble just because people were able to choose where they wanted to go. We need to unlock this situation.

I have a lot of faith in public education. My sister is a Milwaukee public school teacher in Milwaukee, at Juno High School, and she is not a big supporter of school choice, I hasten to add. But I have a lot of confidence in her and others being able to meet the challenge. I think public education will actually increase its market share as we have school choice spread across the country.

What we need to do is unlock the ability of cities to be able to serve their constituents and serve the economy. If you look at most things — other than agriculture — such as restaurants, banking, commerce, and manufacturing, you will find they are the highest quality in the highest populated areas of the country. Even today, with as much criticism as Los Angeles gets, it is a goldmine for manufacturing. It is a place that is constantly reinventing itself. But you take anything: Theater, arts, music, dining… you will find their highest quality in the cities.

I love North Dakota, particularly the eastern part of the state, which is a very good place to fish. But you’re not going to find the best restaurants in the world there. You’re going to find them in New York, Chicago, or Milwaukee. (Laughter.)

There is an urban advantage that needs to be unlocked. But there are a lot of the things we have done to suppress that advantage.

I advocate that we build our solutions on that advantage, think positively about cities — not to be Pollyannish and ignore problems — and realize the incredible potential that cities have for raising the value of the American economy and for raising the level of civilization that we have in this country.

To close, my solutions are to reduce crime, cut spending and regulations, reduce taxes, eliminate welfare and replace it with a work-based system, end school monopoly, encourage free trade and immigration into this country, and don’t build freeways in or into cities. Norman Bel Geddes, the guy who designed the GM exhibit at the ’39 Worlds Fair and came up with the idea of the interstates, said that “You shouldn’t build freeways within 20 miles of any major metropolitan area because it will create more congestion than it will solve.” He said that in 1938. And the Europeans knew that. The traffic engineers all over the world knew that. Only here in the States have we really done that. If you go to Europe you will not find that. It is a mistake. In fact, we should start tearing the highways down. The Embarcadero Freeway in San Francisco came down, and property values went up by over 300 percent, as predicted by whom? Caspar Weinberger! Caspar Weinberger, Defense Secretary under Ronald Reagan was a state assemblyman back in 1950. He opposed the Embarcadero Freeway because he said it would reduce property values. And he was delighted to see it torn down, even though the demolition was prompted mostly by environmentalists and Democrats who were cheering when it happened.

We should realize that cities are good for the environment. Just by their very nature, cities concentrate population and allow the land to stay in its more natural state.

And we should change federal policies towards housing. The federal government should do a lot less in the area of housing. We should allow the market-based solutions to take bloom in the cities.

The city did a much better job of managing its own housing affairs through the marketplace than the federal government has done. The combination of public housing being isolated in the city, FHA and the mortgage interest deduction, which shoves capital into fewer and fewer houses at the top end of the market, have been devastating. What we have to do is allow that market to come back through a number of changes.

Finally, I want to say that I’m very optimistic about cities in the 21st Century. If you’re an investor or a banker, you should think twice about whether you want to invest more money in sprawl. Sprawl is ugly. It only has a shelf life of twenty years, and that shelf life is diminishing every day. Some of the buildings they are building now have to be replaced within five years. It is time to rethink development and realize the tremendous values that cities have. All you have to do is look at this city, Washington, DC, which if it didn’t have such oppressive taxation and such high crime, it would become one of the richer places in America. It is so beautiful. Washington, DC, is beautiful. Most Americans do not know that until they get here. It is not just the Washington Monument; it is the beauty of the city itself. In fact, one thing they have done right here is that their building code and zoning code is very good, perhaps the best in America. You can see it in the order. Here is a city with complete disorder in terms of other things — (laughter) — but in terms of their zoning, they have order. They have established it. You can see the value of it constantly rising, particularly in the parts of Washington, DC, that are safe.

So I am very hopeful. I believe that American cities will be very, very important and will lead the American civilization in the next century. Some of these futurists, like George Gilder, have said, “Well, a city is dead because people can live wherever they want.” Then Tom Peters responds, “The city will do well because people can live wherever they want.”

If you solve these problems, reduce crime, unlock the oppressive monopoly that has suppressed quality in our schools, a lot of people will choose to live in the city, including people with children, because the city is a place where kids can walk. In the suburbs, mommy and daddy have to drive them everywhere, until they are sixteen. So the city is actually kid-friendly.

Whatever the problem is, whatever you think is wrong with cities, I think it can be turned around. I am very optimistic, and I look forward to the 21st Century being the century of cities. Thank you very much.