Kudos to Portfolio magazine writer Ryan Avent for challenging the flawed consensus among economists about the government’s role in declining post-industrial cities.
We published a New York Times article several weeks ago from economist Edward Glaeser who that said migration away from Rust Belt cities was healthy in terms of economic efficiency. Any special government aid to Rust Belt cities such as Detroit would only delay necessary economic mobility.
This is how the argument goes: basically, the faster people leave Buffalo and Detroit and Ohio and Indiana and their high unemployment rates for growing areas with lower joblessness, the better for everyone, because unemployment is an inefficient use of resources. This has been the general consensus among economists.
But Avent argues that economists overlook the obvious hitch that building new cities and mothballing old ones isn’t exactly an efficient way to operate. Avent remarks on the downward spiral that we’ve seen occur in many of our cities. People move away, the tax base shrinks, but infrastructure and the need for social services does not, leading to budget crises that further weaken the city. He even goes so far to suggest that the government should take a Keynesian approach to the rise and fall of cities–basically pump money into suffering areas, stimulus style.
Furthermore, cities are more complex than a single industry these days, he says.
But even if we consider the economic costs of mass migration, I think we underestimate the extent of the inefficiency involved. People who leave the Detroit area for, let’s say, Houston, not only leave behind a perfectly good home and a neighborhood that took generations of investment, they leave behind families, civic organizations, professional organizations and all kinds of important personal ties. The loss of these intangible assets could not be qualified and it is largely borne by the individual who may not have the economic and social capital to rebound and contribute the way they once had.
I think it’s easier on the East and West Coasts to take the stance that the problems in Detroit will solve themselves through the market. But in reality, it’s not that simple.