Tuesday, December 2nd, 2014

The Three Ages of Boss Rule by Stephen Eide

[ Steve Eide is a Senior Fellow at the Manhattan Institute and also runs its fiscal policy oriented web site Public Sector, Inc.. After seeing Pete Saunders’ piece on the three generations of black mayors in America, he sent me the piece below with the same three generations structure, but talking about political boss rule, using Hollywood as a point of departure. It’s a great piece I’m delighted to get to share – Aaron. ]

Between roughly the Civil War and World War II, most American cities were at some point dominated by a boss and his machine. The term “boss” referred not only a powerful politician, but one who acquired, held and exercised power outside the channels dictated by law. Progressive reformers fought the bosses for control of American city government for over a century. The Progressives ultimately won, or, at least, the bosses lost.

All this is well known. What is less well known is that the entire history of bossism is contained in three films: Martin Scorsese’s Gangs of New York (the origin), Preston Sturges’ The Great McGinty (the peak), and John Ford’s The Last Hurrah (decline).

Gangs of New York: How Tammany Hall Civilized New York City

Gangs of New York (Gangs) takes place in New York City during the Civil War. Its plot concerns the war between Irish and nativist gangs for control of lower Manhattan. Both lose, leading to the rise of Tammany Hall, whose innovative manner of conflict resolution laid the foundation for modern New York. The ward heelers replace the warlords and the rigid identities of immigrant and nativist are dissolved. That’s how New York was tamed.

The film’s most memorable character is Bill the Butcher (Daniel Day-Lewis), the nativist gang leader bent on keeping the Irish down. A primitive man, Bill resembles Homer’s Cyclops in that he has only one eye and maintains his political authority through the open threat of violence. He’s the sometimes ally of Boss Tweed (Jim Broadbent), who functions as Tweed’s liaison to the slums of lower Manhattan.

In Gangs’ moral order, Boss Tweed represents progress. Tweed’s understanding of progress means thievery on a grand scale (rigging contracts for a new courthouse vs. exacting tribute from pubescent pickpockets) and bringing the Irish into the fold. Tweed tells Bill that to rely purely on violence is crude and inflexible, and he vows that Bill won’t last if he doesn’t adapt. Bill is less greedy than Tweed, and more principled in his own (bigoted) way. He’s ferociously independent, but also fatalistic. Bill knows that Tweed is right that his days are numbered. Nonetheless, he will go down fighting.

But the debate between Bill and Tweed is really a side show. Gangs’ main action concerns the struggle between the Irish and natives. The Irish are if anything even more primitive than Bill. They live in torch-lit caves, they are vengeful and as bigoted towards blacks as Bill’s crowd, and they reject the Civil War. Unlike Bill, the Irish have a bright future, but they, too, have bitter truths to learn. They seem to think that they can be New Yorkers without also being Americans. They are wrong. Scorsese asserts this by making the film’s climax not the 1863 draft riots themselves but the Union Army’s brutal suppression of them. The Army forces the Irish to submit to the legitimacy of the Civil War, and, by extension, the unconditional obligations implied by American citizenship. (Nation-building, 19th-century style.) Becoming American means becoming an American citizen, and citizenship implies renouncing the right to pick and choose among one’s obligations, and not least during times of crisis. Scorsese is slightly less clear about what becoming less Irish and more American will mean for the Irish than he is about the nativists’ education. But, at bare minimum, it means that they too will have to become more tolerant and capable of solving their conflicts through politics instead of violence.

Tammany did not itself vanquish the gangs (which were real by the way-see Herbert Asbury’s Gangs of New York (1928), on which the film was based, and Tyler Ambinder’s Five Points (2010)). That task required guns and muscle. But, in providing a ready-at-hand political alternative to the gangs, Tammany answered the question what next?

What is the purpose of city government? It is not only to provide basic services such as education and street-cleaning, but to manage conflict. Government is much more than just a fee-for-service arrangement. Humans tend to disagree about the true and the good, which produces conflict, which we need politicians to manage for us by means of persuasion, intimidation, flattery, deal making, and so forth. Politics will always be with us and we will always need politicians.

The urban party machines excelled at managing conflict. If we believe that honest, rational debate will be inadequate to resolve most conflicts, then something else will be necessary to prevent government from being rendered completely impotent and to minimize the potential for violence. In most functional democracies, that “something else” has been a party system. Centuries of political experience strongly suggest that a democracy requires some form of organized mediation to recruit and vet candidates for office, and then, when in office, provide them with the support they need to be effective. “Parties are as natural to democracy as churches to religion (James Q. Wilson).”

Scorsese seems to understand these virtues of boss rule, while remaining aware of its corruption and vulgarity. Gangs argues that boss rule was an improvement over what came before: the gangs were just as corrupt, more violent, less enlightened, and, most crucially, pettier. Modern New York for Scorsese is, above all, a great city. Tweed was not a great man, but, according to Scorsese, Tweed’s political system provided the conditions for New York’s future greatness.

The Great McGinty: Bossism Ascendant

The Great McGinty (McGinty) takes place in an unnamed American city sometime in the first half of the 20th century. Its plot traces the title character’s (Brian Donlevy) rise from the soup line to the governorship by means of his skills at repeat-voting, fighting, bullying, carousing, wisecracking, bid-rigging and spending public money wastefully. “The boss” (Akim Tamiroff) gives McGinty his initial break and then directs his rise. McGinty chafes under the rule of the boss, and hilarity, and McGinty’s downfall, ensue. The third major character is McGinty’s wife (Muriel Angelus), his moral guide, who bucks him up to reject the boss.

McGinty depicts boss rule at its height, when it seemed almost the natural form of American city government. Sturges gives us the fully-developed specimen. All of the essential features of Progressive age city politics are in evidence:

First, the boss was often not the mayor. Of the 20 municipal bosses surveyed in Harold Zink’s City Bosses in the United States (1930), 19 held some public office of some kind, but only two were mayors. There was no reason for the boss himself to be the mayor, since it was a ceremonial position with no real power. The office now known as the “strong mayor” did not become common until well into the 20th century. Progressive reformers strengthened the office of mayor by wresting fiscal and administrative authority away from the local legislature and lengthening the term of office. This left no choice to the boss but to become mayor. What few bosses have emerged to dominate urban politics since WWII have all been mayors. Examples include Richard Daley pere, Philadelphia’s Frank Rizzo, and Newark’s Sharpe James.

Second, Machine politics was genuinely democratic in the sense that it enabled men to rise from exceedingly humble beginnings to positions of high authority. In this respect, a real life equivalent of McGinty would be Harry Truman, who owed his career to Tom Pendergast, the notorious boss of Kansas City.

Third, the lines between reformer and boss could be sometimes blurry. McGinty is first elected as a reform candidate (“Down with McBoodle! Up with McGinty!”). Wise bosses were highly sensitive to public opinion. They sometimes had to run candidates who were just distant enough from the machine to be considered graft-free. This practice was known as “perfuming the ticket.” Problem was, such candidates did not always stay in line when they got into office. Sometimes they chafed like McGinty did.

Fourth, women hated grafters. The Progressive-era movements for women’s suffrage and municipal reform were practically indistinguishable. Women getting the vote dealt the bosses a grievous blow.

McGinty is a satire and therefore anti-boss. Sturges certainly expects us to like McGinty, the boss and the gang, and McGinty does eventually redeem himself by breaking with the boss (on top of earning the love of a good woman), but to say that his deep engagement in machine politics required redemption implies that bossism was a rotten system. The audience’s proxy is McGinty’s wife. She loves him, but she certainly doesn’t love his politics.

At the same time, Sturges depicts a world in which bossism as such is not seriously under threat. No fundamental structural reforms are at hand, just the occasional defeat at the polls and visit to the hoosegow.

The Last Hurrah: Ciphers Ascendant

The Last Hurrah’s protagonist Frank Skeffington (Spencer Tracy) is based on Boston’s James Michael Curley. We know this because of the many details drawn directly from Curley’s eventful life and career: Skeffington’s longstanding feuds with his city’s Cardinal and with the bluebloods, his personal dislike for FDR, his uxoriousness, his considerable charm and rhetorical skills, and the fact that he’s an old man running yet again for mayor in a predominantly Irish New England city. Skeffington’s final campaign forms the plot of Hurrah. Its events transpire in the mid-20th century, contemporaneously with the film itself (1958) and the book on which it was based (by Edwin O’Connor, published in 1956). Skeffington loses, to a young, upwardly-mobile Irish American put up by the local WASP establishment. Times have changed since Skeffington entered politics in the late 19th century. TV and radio have replaced flesh-pressing and spontaneous, street-corner oratory. The city is wealthier, and some of that wealth has reached the Irish, Skeffington’s traditional base. Their wealth has made them less resentful, rendering WASP-baiting demagoguery less effective than it used to be. Skeffington is aware of these changes, but he’s still convinced that one last victory is in his grasp. He believes that all it will take is a mix of charm, intimidation, patronage and loyalty, but events prove him wrong.

Skeffington’s is a personal machine. Bosses created machines, not vice versa. All urban machines depended on the leadership from a strong boss. We see this in the fact that we tend to refer to most of the important machines by the names of the boss who gave them life and influence (Pendergast, Hague, Crump). Tammany Hall, which did manage to last a long time and transcend the leadership of individual bosses, was the exception, not the rule.

And in that he controls the machine and not vice versa, Skeffington may be said to be his own man, the genuine article. He may be a bit of a grafter, but, in Hurrah, he’s not the candidate beholden to special interests. That would be McCluskey, Skeffington’s nebbish opponent. The film argues that, for all their faults, decline of Skeffington and his like heralded a more inauthentic form of politics. (The phrase used in Hurrah the novel is “a generation of ciphers.”) Politicians would thenceforth be packaged, handled and promoted like so many different brands of soap. The backlash against scriptedness and inauthenticity we see in the appeal of candidates such as Herman Cain and Ross Perot. These are not great men, but, in that authenticity is surely a condition of greatness, the decline of Skeffington’s ways portends the decline of greatness in city politics.

That’s the bad news. The good news is that Hurrah depicts the last stages of unity and reconciliation projected by Gangs. The subtitle of The Last Hurrah could be The Revenge of the WASP. Skeffington finds himself fighting against both the new Irish middle-class and old money Protestants. His moment seems to have been a blip, a brief transition phase in American urban history. By the film’s conclusion, history has come full circle and ethnic conflicts are resolved in a way that could never have happened while blueblood-baiters like Skeffington remained in power.

It’s somewhat difficult for the audience to appreciate how Skeffington could have lost to McCluskey. Based on what we are shown, the latter seems like a total boob. But we’re not the voters. To the increasingly affluent second and third generation Irish-Americans, Skeffington comes off as uncouth, just as he always did to the WASPs. They want a mayor that mirrors their conception of themselves: young, well-educated (in a conventional sense), nicely (not nattily) attired, and untainted by unsavory connections and loyalties.

In their classic study City Politics (1963), Edward Banfield and James Q. Wilson argued that this trend was general among ethnic voters in the American city at mid-century. Yes, Jews still preferred to vote for Jewish candidates, Irish for Irish candidates and so on, but:

[t]he candidates must not be too Polish, too Italian, or too Irish in the old style…[N]owadays, the nationality-minded voter prefers candidates who represent the ethnic group but at the same time display the attributes of the generally admired Anglo-Saxon model. The perfect candidate, then, is of Jewish, Polish, Italian, or Irish extraction and has the speech, dress, manner, and the public virtues-honesty, impartiality, and devotion to the public interest-of the upper-class Anglo-Saxon (p.43).

According to Hurrah, the Progressives were far less consequential in bringing down the bosses than two other factors. First, New Deal social welfare programs devalued the soft and hard currencies with which the machines purchased the immigrant vote (this thesis is advanced more explicitly in the book than the film). Second, the rising tide of prosperity produced the lace curtain Irish, who were wealthier, younger and less angry than their parents and grandparents who had composed Skeffington’s base. There are Progressives in Hurrah, who provide important leadership and money, but this was a battle that they had been waging for decades. Why did they prove more successful at this moment? Because the Irish were ready to move on.

Conclusion

Gangs, McGinty and Hurrah set the standard not only because of their combination of historical accuracy and artistic merit, but because they are actually about politics. David Simon’s The Wire is probably the most highly-regarded recent treatment of city politics. But Simon doesn’t take politics seriously. The Wire holds that the real life of the city occurs in society, not government, and that politicians and their policies and institutions cause more problems than they solve.

Aside from the 2004 Gangs, most of the first-class filmmakers and writers in our own time tend to look past city politics. No one makes movies like these anymore. Perhaps the triumph of the Progressive vision of municipal reform made city politics less colorful. Hurrah portends a future of McCluskeys. But the problem cannot be purely for lack of material: there is nothing McCluskey-esque about Rudy Giuliani, Baltimore’s William Donald Schaefer, Philadelphia’s Ed Rendell and Providence’s Buddy Cianci. All made great copy, and yet they seem to have been largely overlooked by our more serious poets, filmmakers and novelists.

 

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Topics: Urban Culture

Tuesday, April 22nd, 2014

Want to Empower Cities? Reform Binding Arbitration by Stephen Eide

[ Many urbanists such as myself have argued cities should be given more power. Today Steve Eide, who runs the Manhattan Institute’s Public Sector, Inc. site devoted to local government finance, talks about one such element of empowerment: eliminating unfunded mandates in the form of binding arbitration rules – Aaron. ]

Local governments dominated domestic policymaking in 19th century America. In general, government was quite small, but most of the services that were provided, such as public education and road-building, were the responsibility of city and town officials.

The Brookings Institution and the political theorist Benjamin Barber have recently advocated for a return to something like the 19th century arrangement. They believe that, at a time when DC and many statehouses seem so corrupt, petty and ineffectual, if we want better policymaking, we should want it to be more locally-directed.

The American people on the whole seem sympathetic: According to a poll published in April, 63% of the American public has a “favorable” opinion of local government, putting it almost 40 percentage points ahead of the federal government (28% “favorable”).

To empower cities and expand their policymaking role, they must first be liberated them from harmful mandates. That should mean binding arbitration reform. Recent events in Scranton, PA and Boston, MA make clear what a nuisance this policy is.

Many blue states grant public safety unions the right to seek an independent arbitration process when negotiations with management hit an impasse. Officially, as the unions are apt to emphasize, this process must exist in order to prevent police or fire from going on strike.

But as the Empire Center pointed out in an analysis of binding arbitration in New York, strikes by public employee unions are illegal anyway and even unions without access to binding arbitration almost never strike.

Binding arbitration laws increase unions’ leverage because the settlements are consistently pro-labor. As Boston mayor Tom Menino put it, “Public safety unions have no reason to negotiate with us in good faith and settle contracts voluntarily because arbitrators have proven that they will always give them more.” Late Detroit Mayor Coleman Young said: ”Slowly, inexorably, compulsory arbitration destroys sensible fiscal management.”

Arbitrators base their settlements on what unions have received in past contracts, or what other unions in nearby communities have received, much more than what a city can afford. The Empire Center found that from 1974-2012, for unions outside of New York City, unions with access to binding arbitration saw their salaries increase almost three times faster than unions without it.

Scranton, PA’s internationally-notorious labor woes began in October 2011, when the PA Supreme Court ruled that the city honor the terms of an arbitrator’s $17 million award to public safety unions, a substantial sum for a community of 76,000 with a $100 million operating budget. The following summer, struggling to find a way to pay for the settlement, Scranton’s mayor reduced all employees’ salaries to minimum wage.

The city eventually secured a bank loan to keep it temporarily afloat, but fiscal chaos reemerged last week when a judge demanded the city come up with the now $21 million+ still owed to the unions, threatening even to allow unions to seize city assets if other revenues can’t be found.

Scranton is poor and broke, having been in Pennsylvania’s Act 47 program for distressed cities for over two decades. Last summer, the city’s parking authority defaulted on bond payments. Scranton demonstrates the insanity of allowing arbitrators to award settlements based exclusively on their definition of what’s fair while giving, at most, token consideration to what’s affordable.

Boston’s experience with binding arbitration demonstrates how flagrantly undemocratic the process is. Last week, a Boston arbitrator awarded the Boston Police Patrolmen’s Association a 25% raise over six years, a value of $80 million.

The patrolmen’s award follows an even more outrageous 21.5%, five-year raise to the Boston firefighters union forced on the city in 2010 by the arbitration process. The origins of that $100 million plus increase lay in the Boston Firefighter Union’s resistance to random drug testing. Since drug testing affects conditions of employment, the firefighters demanded a pay boost to agree to it. Anything less would have been leaving money on the table.

AAA-rated, and in possession of $68 million in collective bargaining reserves, Boston, unlike Scranton, will be able to pay for the police settlement, if at great inconvenience. The larger question for Boston is, can one imagine a less democratic process to shape fiscal policy? In this extremely liberal, pro-labor city, everyone seems to be against this settlement-the City Council Speaker, the mayor (“unreal“), both mayoral candidates, and both newspapers-and yet it or something close to it will likely go into effect.

Binding arbitration is supposed to be “binding” in the sense that the parties must accept the settlement, but it’s really cities that wind up being bound. Wages, normally thought of as operational expenses, turn into legacy costs. Unions drag out negotiations for years, as the old contract with its guaranteed pay bumps stays in effect, and once employers settle up, it’s to pay employees for work they performed years ago.

Legally, cities will always be the creations of state government, never “nation states” of their own, and we’ll probably never see a full return to 19th century conditions. But small victories matter. Urbanists genuinely interested in giving cities’ more autonomy should target for reform those mandates now held in special contempt by local officials. This could be done either by revoking public safety unions’ right to pursue binding arbitration, or imposing, as New Jersey did, a firm cap on awards to ensure their affordability.

This post originally appeared in Public Sector, Inc. on October 2, 2013.

Thursday, July 25th, 2013

Cities Need More Fiscal Supervision By State Governments by Stephen Eide

[ When it comes to local affairs, I’m typically in favor of more devolution of powers to local governments, especially larger ones. On the other hand, Detroit’s bankruptcy shows that local government can easily make a hash out of things. Stephen Eide makes the case for why states should exercise more not less fiscal supervision over cities – Aaron. ]

Four years after the end of the recession, cities’ fiscal outlook remains unpromising (discussions here and here, esp. 53-6). Spending on healthcare and pensions continues to rise faster than revenues, crowding out spending on basic services. Though Detroit-style insolvencies will continue to be rare, without reform, they will be more common than in the past. To strengthen budgets, states should exercise more fiscal oversight over local governments.

This is not a popular idea. For one thing, local government is Americans’ favorite form of government, consistently receiving higher favorability ratings than state and federal government (way higher in the latter case). If we take voter turnout as a rough measure of familiarity with government operations, then we must surmise that American’s widespread admiration for local government is based largely on ignorance. Perhaps if people voted in mayoral and school board elections as regularly as they did in presidential elections, city hall would be as unpopular as Washington. But, as things stand, David Brooks and the public as a whole now seem to regard local governments as those least in need of reform.

Another obstacle to increased oversight is that states don’t want the job. Too often, states are content to pass the buck to local decision-makers. They actively avoid aggressive oversight, which tends to be high-risk and low-reward. State interventions provoke resentment from local officials and produce few new friends. Interventions stabilize budgets; they don’t turn cities around or return them to glory. That may take decades, if it happens at all. Oversight is thankless work, which is why, from New York City in the mid-1970s to Detroit at present, state governments put off intervening until the last possible moment.

Finally, state governments are hardly the model of fiscal competence. They have run up massive pension and retiree healthcare deficits, they are dominated by special interests, and their tax systems are outdated and shortsighted.

But if increased state oversight were an easy sell, we would see more of it. The logic begins at the extreme: insolvent cities clearly need more oversight. Cities become insolvent because of incompetence and a lack of political will. States then must step in to provide expertise over fiscal and administrative functions and/or the will to make difficult choices through a control board or receiver. Since cities are the legal creations of state government, states have an indisputable right to intervene, and they also have a duty to do so. Whether state taxpayers realize it or not, they have potential exposure to local distress, through increased borrowing costs for other municipalities within the same state (“contagion”). Even municipal bankruptcy requires state action—no city can declare bankruptcy without being authorized to do so by its state government.

Most states don’t have general intervention systems in place, which define, in advance, how to manage distress from its earliest warning signs all the way through to bankruptcy, if necessary. Most interventions are executed by means of ad hoc legislation. More states should adopt general intervention laws similar to Michigan’s Public Act 436. Even when a small city falls into distress, it typically requires a major policy response from state government. Events can move rapidly, leaving little time for deliberation; an a priori articulation of the powers state authorities have to address distress will minimize controversy and enable the strongest response.

A general intervention system will require an early monitoring system. New York State comptroller Thomas DiNapoli recently established one; California’s Bill Lockyear would very much like to. Of course, treasurers and comptrollers have little real power. All they can do is raise awareness of the problem. If shame won’t suffice to restore solvency to cities, Governors must get involved.

States should require stronger local fiscal management practices. Of highest priority is multiyear planning. Most localities don’t project their costs and revenues out beyond the coming fiscal year. To give themselves, taxpayers, and the media a clearer account of their fiscal health, local governments should develop and publish plans of at least 4-5 years. States should also consider placing tighter restrictions on reserve balances, debt, and taxes. As the case of Detroit illustrates, high taxes in a poor city is a policy catastrophe. Massachusetts allows its local governments to tax businesses at a higher property tax rate than individuals. Since businesses don’t vote, this power has been grossly abused by poor cities and should never have been granted in the first place.

One useful oversight model is the North Carolina Local Government Commission (LGC), an obscure state agency with something of a cult following in public administration and public finance circles (here, here, and here). The LGC must sign off on all local debt issuances, making North Carolina the only state with this responsibility. It actively monitors property tax collection rates and other fiscal indicators and will not allow localities to issue any debt if their fund balance (reserves) drops below a certain point. Although it has the authority to intervene aggressively, it almost never has to, operating mostly through a milder, advisory role. Ratings agencies regularly cite the LGC’s effectiveness as a factor in granting strong credit ratings for both state and local governments in North Carolina. That’s the clearest evidence that cities benefit from stronger state oversight-their credit rating go up and borrowing costs go down.

As I have argued elsewhere, cities do deserve more autonomy over some functions, such as labor relations. Cities’ most significant fiscal problems are rooted in personnel spending—chiefly pensions and health benefits for active and retired employees—and any way that states can increase local management’s leverage over labor will help provide budget relief. This is obviously most urgent among blue state cities.

But more autonomy won’t be enough, for the simple reason that we can’t trust that all local officials would use their enhanced bargaining leverage. States’ attitude should be “trust but verify”—empower local officials inclined to do the right thing, and pressure those who aren’t.

To sum up, local budgets now have little margin for error. While it would be appropriate to increase local autonomy in some areas, there is little evidence for the view that broad-based mandate relief alone would produce broad-based budget relief. Flawed as they are, states are the only entity in a position to strengthen fiscal management and transparency norms. For the age of austerity, we need more state supervision.

Stephen Eide is a senior fellow at the Manhattan Institute’s Center for State and Local Leadership and editor of PublicSectorInc.

Tuesday, May 7th, 2013

Worcester v. Providence: Is Downtown Revitalization the Sum of Urban Revitalization? by Stephen Eide

Worcester, MA and Providence, RI invite comparison for at least four reasons. They’re the same size (pop. ~180,000), they share the same history of deindustrialization and urban decline, they’re only 40 miles apart, and they’re different, which makes comparison stimulating and worthwhile. By most any fiscal or economic measure, Worcester outperforms Providence. But because of the so-called Renaissance, the revitalization of downtown Providence throughout the 1980s and 90s, Providence has attracted far more attention among urbanists and the national media than Worcester. There has never been a Worcester Renaissance.

So which city is the true urban success story? That depends on the extent to which one believes that downtown revitalization is the same as urban revitalization.

Renaissance

Providence is a destination city able to boast of its tourism, arts, culture and “18-hour day.” Rare for an old, cold, mid-sized former milltown, the New York Times travel section has done two features on Providence in the last five years. Providence played a starring role in an eponymous television show (NBC, 1999-2002) somewhat similar to the role that the revitalized New York City played in Sex and the City. This all would have been unimaginable in the 70s, at the peak of the deindustrialization era, but, throughout the 1980s and 90s, Providence underwent a renaissance. The most notable elements of the Providence Renaissance include uncovering and moving two rivers, relocating a railyard, the construction and rehabilitation of several major retail and commercial facilities, historic preservation, and WaterFire, a public festival that attracts thousands to the city on summer evenings. (For the full account of Providence’s revitalization, including a series of terrific “before and after” pictures, see Francis Leazes and Mark Motte’s 2004 book Providence, the Renaissance City.) No one could claim that the success has been total; both the local economy and city budget remain under strain. But there are many other former milltowns which would do anything (indeed, have done everything) to imitate Providence’s success.


Financing of Select Major Providence Renaissance Projects, 1980-2000
Project Completed Approximate cost Primary financing
Capital Center (Railroad and river relocation, Providence Station, highway interchange, and Waterplace Park) 1981-1987 $169 million Federal
Union Station (parcel 1) 1989 $80 million Mixed private-public
Convention Center/Westin/ garages 1994 $290 million State
Providence Place/garage 1999 $465 million Mixed private-public (land; sales tax rebates/abatements)
Courtyard by Marriott 2000 $16 million Private-public (abatements)
Source: Leazes and Motte, Providence: The Renaissance City


Like Worcester. Worcester’s efforts at downtown revitalization have been unrelenting, and not totally unsuccessful, which has enabled local boosters to believe, at any given moment during the last 30 years, that the Worcester Renaissance was at hand. The most notable project now underway is “City Square,” which involves the demolition of a dead mall in the center of downtown. This is an event of tremendous symbolic significance, as many locals attribute downtown Worcester’s decline to the construction of the mall in 1971. In place of the mall will emerge a new medical center, seven-story office building, and other projects still in the planning stages. City government is thrilled. But, if anything, City Square demonstrates the limits of the Worcester development model, which relies almost exclusively on local investment. The project began under the direction of a Boston developer, but stalled after the developer encountered financing difficulties in the wake of the 2008 financial crisis. To the rescue came a local insurance company and its public-spirited CEO. Predictably, local officials hailed the benefits of local ownership, but they all missed the point. Worcester is simply not wealthy enough to rely on local capital to bring back downtown. Had a Boston developer scored on a project in Worcester, it would have set a powerful precedent for others to follow. At this point, even if City Square succeeds, many outside developers will likely view the local CEO’s “white knight” intervention as at least partly philanthropic.

By contrast, throughout its renaissance years, Providence had access to a key source of outside investment: state and federal grants. This access was in turn due to the city’s enviable position as a “city state.”

The City State

Providence enjoys a statewide profile unlike that of any other American city. In addition to being the capital, it’s the only large (100,000+) city in the nation’s smallest state. Only three other cities in Rhode Island have over 50,000 residents. 17% of Rhode Island’s population lies within Providence’s borders. (Worcester composes less than 3% of Massachusetts’ population.) The Rhode Island statehouse overlooks downtown Providence. Throughout Rhode Island’s modern history, the vast majority of statewide officeholders were either from Providence, went to school there, and/or got their first break in Providence city government. Providence’s comeback would never have occurred were it not for the massive state and federal aid that backed the projects that formed the core of the Renaissance.

Worcester has always lacked statewide clout. Most of the Massachusetts public, even the most politically-engaged among them, cannot name one Worcester politician. True, that could be said of all Massachusetts cities, which dwell in the shadow of Boston, the state’s capital and commercial center. (Everyone in Massachusetts knows who Tom Menino is.) But even when measured against its peers, Worcester underperforms in state politics. Despite being the state’s second-largest city, the only statewide officeholders Worcester has produced since 1900 have been two lieutenant governors. No governors, no Senators, not even a state treasurer or auditor.

When the Joint Center for Urban Studies at MIT and Harvard issued a report on Worcester’s politics in 1960, it described Worcester as a large city with a small-town feel. Still true. Worcester is well-managed. The local government is competent and honest. There have been no noteworthy political scandals in recent times. But there’s no denying that the city has long suffered from a deficit of political talent, and that this has hindered revitalization.

Benchmarking Worcester and Providence

On the other hand, because it’s in Massachusetts, not Rhode Island, Worcester possesses and enormous economic advantage over Providence. Massachusetts’ economic record of late has been respectable. Rhode Island is the only New England state whose economy has not adapted to post-industrial times. It resembles Michigan or upstate New York more than Connecticut or Massachusetts.

Within Massachusetts itself, Worcester is no pace-setter, but a “Gateway Municipality,” a legal term designating a remedial class of cities that lag behind the rest of the state in measures of income and education. (Gateway municipalities are eligible for special economic development assistance.) But when Worcester’s economic advantages are combined with its superior record of fiscal management, it becomes very unclear why Providence, and not Worcester, should be considered the comeback city.


Table: Benchmarking Worcester and Providence
Worcester Providence
Peak monthly unemployment, 2008-present 10.5% 15.4%
Median monthly unemployment 2008-present 8.6% 13.1%
Median household income $45,846 $38,922
Zillow home value index $161,800 $131,100
Median total annual crimes, 2005-2010 (property and violent) 7,914 9,557
Median annual murders, 2005-2010 6 15
Credit rating (Moodys, S&P, Fitch’s) A1,A-,AA- Baa1,BBB,BBB
Pension system funding ratio 68% 32%
FY12 General fund balance + $25.5 million - $11.4 million
Considered Ch. 9 municipal bankruptcy recently? No Yes
Source: BLS, American Community Survey, Zillow, FBI, Providence and Worcester’s annual financial reports

Urban Revitalization and Downtown Revitalization

To what extent is urban revitalization downtown revitalization? Downtowns play an outsized role in shaping cities’ reputations to outsiders and natives alike. Regardless of how much of a city’s downtown is taxable private property, downtowns are best-understood as parks, public property. Downtown serves as the geographic equivalent of 4th of July and Memorial Day rituals. You can’t compel people to participate in these rituals and find them meaningful, but their complete absence would signal the complete absence of national pride. Similarly, cities whose downtowns languish usually lack civic pride.

Urbanists grasp the basic civic importance of a commonly-accepted physical center, but they sometimes oversell the economic benefits of downtown revitalization. There can be backlash. Downtown revitalization sometimes fuels downtown vs. neighborhood tension. Was it all for the tourists, or to satisfy some mayor’s “edifice complex”? Did residents benefit at all? Small businesses such as restaurants, boutiques and art galleries are crucial for downtown revitalization. But businesses that small (50 or fewer employees) with no ambition to grow will do little to strengthen the broader metro economy. The holy grail of urban economic development policy is an abundance of good jobs for workers of all levels of skill and education. Heavy manufacturing used to provide such jobs; boutiques and coffee shops do not. Nor, for that matter, do hotels and convention centers.

Maybe downtown revitalization has nothing to do with economic development. The standard justification for the use of taxpayer money to support private development in downtown is that these funds stimulate private investment. Officially, government is making a bet on taxpayers’ behalf, whose success may be judged through tangible fiscal and economic benefits such as a net increase in tax revenues, lower taxes for homeowners, and more jobs for area residents. But perhaps taxpayers are willing to spend this money because they are ashamed of the decrepit state of downtown, and they want it to come back. If downtown is a de facto public park, public expenditures on downtown revitalization may be justified simply for the sake of itself, even we are talking about tax breaks for Starbucks and luxury condo developers. It’s still a bet—all development is a bet—it’s just that the definition of success is different. Free market advocates denounce all forms of public subsidy for economic development, but the public should be allowed to speak for itself. To many citizens, sprucing up downtown is at least as justifiable as improving parks that they haven’t heard of and never visit.

But this argument that public money should be spent on downtown revitalization to boost civic pride would be easier to swallow were it not for the sneakiness of public subsidies for redevelopment. Most subsidies are tax expenditures, which are inherently less transparent than direct appropriations, even though the budgetary impact is the same. Communities want curb appeal, but seem unwilling to pay for it, or, more precisely, accept the fact that they are paying for it.

Conclusion

What do the people want? What’s possible? Everyone wants jobs, growth and good schools, but also a pleasant downtown. The second goal seems to be more realistic than the first set of goals. How many former industrial cities’ unemployment rates or SAT scores exceed statewide averages? Worcester may outperform Providence, but that’s not setting a very high standard. Perhaps the possible, not the ideal should define standards for urban success. If so, then the conventional wisdom is accurate, and Providence does deserve to be more closely studied and more highly regarded than Worcester.

Stephen Eide is a Senior Fellow at the Manhattan Institute and editor of the blog Publicsectorinc.org, where this article originally appeared.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

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