The Entrepreneurial City: A New Vision for Cities

WHO WOULD HAVE THOUGHT ten years ago that the domestic policy advisor for a leading Republican presidential candidate would be a big-city mayor, Stephen Goldsmith? Or that the prime example of 1970s-style liberalism, former California Governor Jerry Brown, would make his political comeback as a big-city mayor touting sensible, middle-of-the-road policies on education, taxes and crime? These are only two examples of perhaps the 1990s’ most important policy shift, the movement towards free-market policies as the basis for urban governance.

Such a movement would have been unimaginable twenty years ago. Mayors lining up in Washington, demanding federal handouts, were a staple of the political scene. The well-known litany of urban ills—high taxes, poor schools, rampant crime, homelessness, drugs and despair—were considered intractable. And just as importantly, virtually no one thought that cities could heal themselves. Even the most innovative conservative proposals, such as Rep. Jack Kemp’s enterprise zones, largely were initiatives calling for the federal government to pull cities out of their pitiful states.

The 1990s proved virtually everybody wrong, as mayors of all ideologies and both parties proved that cities could become better places in which to live without massive federal government assistance. None of the decade’s most well-known urban success stories—the competitive contracting and tax cutting of former Indianapolis Mayor Goldsmith and former Philadelphia Mayor Ed Rendell, the crackdown on crime of New York Mayor Rudy Giuliani, the innovative school voucher program of Milwaukee’s John Norquist or mayoral takeover of schools pioneered by Chicago’s Richard Daley—were initiated or received significant help from the federal government. Instead, they were the consummate proof of Richard Weaver’s old dictum, “ideas have consequences.”

The result of the old way of thinking about cities is best summed up in the title to the late Professor Edward Banfield’s landmark study of urban America, The Unheavenly City. Professor Banfield noted that cities could be hell to live in despite the angelic actions of planners and bureaucrats. Why? Because many urban residents were part of a culture that focused on immediate gratification who were “present-oriented” that they attached “no value to work, sacrifice, self-improvement, or service to family, friends or community.” Banfield believed that government policies that did not take this basic fact into account, as those animating the Great Society of the 60s did not, would not do much to reduce poverty and despair.

Once one accepts this insight, the failure of the old way of thinking was predictable. Those who ran city governments when Banfield wrote believed their citizens were victims of society. They did not believe cities could repair their characters; they believed the obligation of cities was to ease their pain. So they sponsored the variety of welfare and other income support programs that financially underwrote the explosion of family breakup and illegitimacy. Their police forces did not crack down on “quality-of-life” crimes, thereby allowing neighborhoods to descend into lawless war zones. Their schools stopped expecting students to excel, making these crumbling edifices expensive places to warehouse the young. And the high taxes needed to finance this vision drove those who did not subscribe to this culture to flee to towns that embraced their values of work, family and community.

The culture of the entrepreneurial city is the antithesis to that of the unheavenly city, as well as its antidote. An entrepreneur is someone who exhibits the “future-oriented” virtues that Banfield showed produces economic growth and healthy communities. Such a person values investment in education because he expects to profit from this in the future. He is law-abiding for similar reasons, and values community because he trusts his neighbor has similar values and that mutual cooperation benefits everyone. And since these beliefs tend to produce fewer dysfunctional families and lower crime rates, the taxes needed to support such a community are significantly lower.

Today’s innovative mayors all structure their cities’ policies to reward entrepreneurial values. Look at the successful reforms noted above and they all share this commitment. Norquist and Daley expect their citizens can succeed in the future with a proper education. Giuliani’s policing strategies remove lawbreakers and restore peace to neighborhoods, allowing neighbors to trust one another again. And competitive contracting and tax reduction restores a city’s financial health, making it a more attractive place to locate a business or raise a family.

This intellectual revolution may not have the national political resonance of the supply-side revolution or free trade views, but I would argue it is just as important a development as any in the past twenty-five years. Today’s innovative mayors are showing that when it comes to the things that effect most people’s lives directly—neighborhood quality of life, a child’s education—policies that uphold traditional values and trust private enterprise produce better results. In the long run, these policies are likely to persuade people that the values that underlie them are true, and that idea is one that will have dramatic consequences.

Mr. Olsen is executive director of The Manhattan Institute’s Center for Civic Innovation.