Thursday, November 17, 2016

A Tale of Two Cities

Guest Blogger

Lee Fennell

For the Symposium on Richard Schragger, City Power: Urban Governance in a Global Age (2016).

Where does a city’s power come from?  What does it consist of?  How can it best be deployed? These questions lie at the heart of Rich Schragger’s intriguing and powerful (pun intended!) new book.  In this post, I will suggest that we cannot understand city power without recognizing that the term “city” carries two very different meanings. Both of these meanings relate tightly to Schragger’s analysis, which can be usefully cast as navigating the space between them.   

First, a city is a legal entity, a municipal corporation.  On this meaning, a given metropolitan area contains not just one city, nor even one city and “its suburbs” but rather many cities clumped together in close geographic proximity.  This vision of the city emphasizes multiplicity and local autonomy, and it lies at the heart of Charles Tiebout’s hypothesis that residents shop for jurisdictions much as they shop for other products, choosing the jurisdiction in which they will reside from the smorgasbord of nearby local offerings. The city, on this account, is a product, a choice, a basis for sorting. 

Second, however, a city is a magnetic force, a place in which agglomeration economies and diseconomies are constantly generated.  When ordinary people (as opposed to local government law scholars) refer to cities, they often mean metropolitan areas more broadly, using the central city’s name either as a popular identifier or synecdoche for the area as a whole, or as the city that exerts centripetal force over the metro area.  Either way, this idea of the city emphasizes connectedness, interdependence, and the attraction of urban centers. It explains why people are choosing to cluster together geographically -- for employment, idea generation, social interactions, education, shopping, entertainment, and more.   

These two versions of the city, “the legal city” and “the magnetic city” coexist in some tension (as do the sorting and agglomeration processes with which they are respectively associated, as David Schleicher has argued).  The legal city gets its market-segmenting power from the state. The magnetic city gets its power from market forces that compel people and firms to cluster together in urban centers.  These two source of power often operate at different scales, and they face different threats.  The magnetic city may draw people to a metro area, but they will settle in a legal city that offers a particular package of taxes, amenities, land use policies, and so on.  So strong is the power of the magnetic city that residents and firms might accept certain personally disadvantageous policies—such as redistribution in favor of others—in order to enjoy large agglomeration benefits.  But the magnetic city is not a political entity, or at least not one with jurisdiction over the entire area in which agglomeration economies can be enjoyed.  Multiple legal cities offer the chance to unbundle the experience of agglomeration from certain related costs, including redistributive ones. 

This may be changing.  One way to understand the resurgence of the central cities is that the kinds of agglomeration benefits that are most important today may have less to do with proximity to physical production centers (to which one might commute) and more to do with consumption of experiences and production of ideas (that might require a more immersive presence in a particular portion of the urbanscape).  If this were so, the power of the magnetic city might be leveraged to achieve social goals that have eluded fragmented local governments. 

There are some obstacles, however.  One is the politics that influence land use policies and can impede growth.  As Bill Fischel has hypothesized, suburbs are politically dominated by “homevoters” who are keenly focused on protecting the value of their homes, and whose risk aversion about their single largest asset may cause them to reflexively oppose even positive value gambles on growth. They may also be inclined to suppress housing supply to increase the value of their own homes.  Finding ways to reduce the stakes that homeowners have in their homes is one alternative.  Others might be housing policies that operate at a regional level to override supply constraints, or broader land use reforms to counter the antigrowth forces that can dominate even within central cities. 

Another obstacle that Schragger usefully underscores is the differential mobility of certain individuals and firms relative to others.  The magnetic city has a firmer hold on some of its citizens than others.  Beyond that, people may develop their own personal ties and networks that embed them in the community and make mobility less attractive. Efforts to attract and retain firms and residents can unravel if the core sources of attraction in the city, such as employment opportunities, flee or fail to enter in the first place. There is a great deal of path dependence here, as Schragger emphasizes: agglomeration builds on itself, as do failures of agglomeration. 

How to overcome these challenges to city magnetism?  Here, we might seek insight from some of the work now being done on the nature of agglomeration—and especially the role of interacting clusters of firms in generating benefits (see, e.g., here, here, and here).  Of course, clusters cannot form unless there is both the physical potential for complementary uses to assemble together, and a land use regime that permits those complementary land uses at appropriate densities. In other words, there may be a certain lumpiness to city magnetism, and a stickiness that impedes its realization.  Addressing that stickiness may require rethinking land use controls, and perhaps even the nature of property rights.

Empowering cities to leverage rather than undermine the attractive force of agglomeration is a core challenge that is becoming increasingly pressing.  By illuminating how and why city power matters, Schragger’s timely book offers an important entry point into this crucial enterprise.

Lee Fennell is is Max Pam Professor of Law, Co-director of the Kreisman Initiative on Housing Law and Policy, and Ronald H. Coase Research Scholar at the University of Chicago. You can reach her by e-mail at lfennell

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