The Dependent City Revisited

The Political Economy Of Urban Development And Social Policy

Paul Kantor

• Publisher: Taylor & Francis
• Year: 2019
• eBook ISBN: 9781000315851
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Here is a book that makes sense of the L.A. riots, homelessness, tax giveaways, and the other big urban issues that are back in the national spotlight. In this streamlined and updated new edition of his classic book, The Dependent City, Paul Kantor now focuses on economic development and social welfare policies to reveal the key dilemmas of American urban politics. Returning to a political economy theme, Kantor explores how city governments have struggled to escape and accommodate the reality of their economic dependency in the policies that they've pursued. Revisiting cities across the nation, Kantor finds not only that they have become more dependent but also that the character of this dependency has changed and deepened. Exploring local regimes in the Frostbelt and Sunbelt and in suburbia, he finds that they frequently act more like captives of big business rather than as representatives of citizens. Local attempts to promote social justice increasingly run up against a wall of economic dependency created by federal policies and business power. This book signals how American cities can find ways of overcoming this dependency by working together with states and the federal government to promote healthy, democratic urban politics. The Dependent City Revisited is an accessible, provocative supplement for a wide variety of courses in urban studies and political economy as well as stimulating reading for anyone who is interested in understanding America's urban mosaic.

1
The Dependent City and Urban Politics

Urban Dependency: New York Style

"It was the one time Bob Wright seemed really annoyed with me," New York City's mayor, Edward I. Koch, later admitted.¹ At 6:00 AM on a June morning in 1987 the mayor had jolted Robert C. Wright, the president of the National Broad-casting Company (NBC), out of his bed with a telephone call. The reason: deep fears at city hall. Mayoral aides had become convinced that the city was losing the battle to keep NBC from leaving New York, so Mayor Koch called to persuade Wright to consider some parcels of city real estate for the network's headquarters.

For two years New York City and state officials engaged in protracted arm-twisting and dealmaking with NBC executives after the corporation announced that it was looking for a new home and was considering a number of sites away from the city, particularly one in nearby New Jersey. After thirty-three years in prestigious Rockefeller Center in midtown Manhattan, the network found these headquarters antiquated and said that there were cheaper sites outside of the city where they could update their broadcast facilities. But from city hall's perspective, NBC's threat to move put at risk four thousand jobs, millions of dollars a year in city tax revenues, and New York City's reputation as the world's leading communications center. If NBC left the city, other broadcasters might follow. Little wonder that the mayor's commissioner for finance and economic development later described the experience as "two years of high anxiety."

Yet by the end of December the mayor and NBC had struck a deal that they portrayed as a victory for both sides. NBC would renew its lease at Rockefeller Center and would modernize its facilities there. In return, the city would provide NBC, a subsidiary of General Electric, with a package of assistance that included a tax break estimated to save the network at least $72 million in real estate taxes over thirty-five years and would provide the company with $800 million in bonds that were exempt from city and state taxes. The deal also provided that the city would freeze land taxes, forgive part of the city's commercial rent tax, and free NBC from paying city sales taxes on at least $1.1 billion in new machinery and equipment it needed to update its production operations. In all, the package amounted to more than $97 million in tax incentives from city and state over the next thirty years.

The Reality of Dependency

That a major city government essentially bribed one of the richest business corporations in the United States to stay at one of the world's most elegant business addresses may seem curious. Yet this peculiar use of public funds has little to do with corruption in government. Indeed, the NBC deal has since been rivaled by other cash and favor giveaways to brokerage houses, banks, developers, professional baseball teams, and other major corporations by Mayor Koch's successors, David N. Dinkins and Rudolph W. Giuliani. The latter two even criticized each other during the mayoral election campaign for not doing enough for business. Dealmaking of this kind also has little to do with ideology; Mayor Koch was a conservative Democrat, Mayor Dinkins was a liberal African-American, and Mayor Giuliani is a conservative Republican. On cutting city business development deals all of them have acted similarly.

Further, New York City is not unique. Such uses of public resources to attract jobs are undertaken by local governments all over the United States on a scale that sometimes actually dwarfs deals made in New York City. For example, not long after NBC's chief executive agreed to stay in New York City after all, the tiny village of Hoffman Estates, Illinois (population forty-five thousand), provided 786 acres of free land and more than $61 million in subsidies for site preparation, sewers, and other improvements in order to get Sears Roebuck and Company to move its corporate offices from downtown Chicago to this suburb located thirty miles west of the Windy City (New York Times 7/23/89:R-5). And when cities team up with state governments they often become the high rollers in the game of trying to get jobs for dollars. The cities of Minneapolis-St. Paul worked with the state of Minnesota to strike a thirty-year, $838 million bargain in 1992 to keep Northwest Airlines in its Twin Cities hub (Economist 1/4/92:27).

The reality is that cities cannot survive economically without the jobs, dollars, and tax revenues that these businesses can provide. Consequently, local governments scramble to compete with each other for this capital investment, and they fear the consequences of losing—the empty stadiums, vacant office buildings, weed-covered parking lots, closed plants, boarded-up stores and malls, lines of unemployed human casualties, and, of course, higher taxes that arise from shrinking tax rolls. In effect, cities are highly dependent on private investment decisions.

The Social Implications of Dependency: Homeless in New York

This dependency on business raises disturbing questions about the political capacity of local governments to shape their social and economic development. The New York City that spends millions each year on enticing business corporations is the same city famous for its pothole-ridden streets, overcrowded classrooms, ill-maintained parks, noisy subways, dangerous streets, and sprawling ghettos that house the nation's largest poverty population. Although paying businesses to stay put is supposed to eventually help everyone by making the city richer in tax dollars, why are these benefits not yet apparent? When cities like New York give privileged treatment to businesses, does this diminish the resources and attention that it gives to the city's other pressing social needs? Is there a trade-off between jobs and social justice? Must cities that seek to promote their economies sacrifice doing much to serve those, such as the poor, who are secondary to that objective?

The social side of the dependency conundrum is illuminated by New York City's struggle against homelessness. As NBC's chief executive shook hands with Mayor Koch on their agreement on that cold December morning, the famous art deco Rockefeller Center building complex that housed NBC was also visited by numbers of homeless men and women. As usual in cold weather, they were seeking the warmth of the complex's sidewalk heating grates and protected doorways.

The sad reality is that although New York City cannot survive without the dollars and jobs of business, it does not need homeless people in order to prosper. Perhaps that is why corporate executives, not homeless shelters, get an early-morning phone call from a busy mayor. Indeed, the record of most U.S. cities in addressing the homeless problem is most inadequate, as Chapter 8 details. Most major cities do not provide programs of shelter entitlement for homeless people: They rely on charitable and non-profit groups to provide shelter on an ad hoc basis. In recent years, some cities, like Washington, D.C., have actually reneged on promises to provide shelter. Thus, a look at how New York treats its homeless is suggestive of the obstacles that even the most generous and resourceful U.S. city governments face.

Mayor Koch had reluctantly expanded the city's shelter program after the state mandated that local officials were obligated to shelter individuals who declared themselves to be homeless. But his successor, Mayor Dinkins, did not accept Koch's harsh, judgmental attitude toward many of the homeless; he pointed out that the city's policy of sending thousands of homeless into barracks-style shelters and seedy hotels was inhumane and inadequate. As New York City's first black mayor, he expressed strong sympathy for the disadvantaged. To underscore his commitment to the poor, on inaugural day the mayor-elect reserved a viewing stand next to the stage in City Hall Park for scores of homeless people who came in tattered clothing—from subway platforms, steam grates, armories, prisons, and other city shelters—to see the man they viewed as an ally take office.

Once in office, the new mayor quickly changed the city's homeless policies: He announced that homeless families would be moved out of shelters and "welfare hotels" into permanent housing and that the entire shelter system for single homeless people would be upgraded. Families that previously were required to live for a year in hotels were to be moved within just a month or so into shelter-style apartments or into permanent housing.

Yet within less than a year Mayor Dinkins abruptly began to change his policies as a result of a huge growth in homeless people seeking city-assisted housing. The city no longer required long stays in shelters, so ill-housed families—from New York and probably elsewhere—began showing up at city offices seeking a shortcut to the subsidized, affordable housing being provided to homeless families. The sudden increase so swamped the city's capacity to house families that the head of the city office for the homeless reluctantly began to place more families with children in hotels again; eventually she resigned in exaspiration.

Grasping for a way to slow the surge of families seeking shelter, the administration reversed course. It reverted to requiring families to stay for a year in shelters before they could qualify for public housing and it reduced the subsidized housing available to them. A chastened Mayor Dinkins said, "its like trying to plug the holes in a dike, only you've got 10 fingers and 22 holes." Yet because of the city's guarantee to shelter anyone on demand, the number of homeless people continued to grow. Offices where families applied for shelter were often overwhelmed with emergency cases, forcing as many as one hundred families to spend nights in the offices because the shelters were full. In a lawsuit brought by advocates for the homeless, a state court found Dinkins's deputy mayor and other officials in contempt for failing to place families promptly. A mayoral commission eventually advocated that, among other things, officials should take a more hard-nosed view of their responsibilities and provide shelter only after those demanding it can demonstrate that they have no other housing options. (Mayor's Commission on the Homeless, 1992). Bedeviled by tight budgets, loss of jobs, and swelling demand for shelter, Mayor Dinkins concluded that New York City could not afford to become a magnet for the homeless. When Republican Mayor Giuliani took office in 1994 he promised to continue Mayor Dinkins's priorities.²

Even though recent New York City mayors have acted as if New York cannot not live without business, they also have acted as if the city cannot care for so many homeless people. This compels us to confront a stark reality: The mayors' choices on issues of economic and social justice are not entirely matters of governmental decision. City governments are tied to the dynamics of the private sector in any effort they may undertake in order to shape the community's social and economic destiny. Cities are not sovereign, they are dependent. The ability of business and people to come and go, to invest, or to move quarters elsewhere is a constant constraint on how city halls manage their social and economic development.

We are compelled to consider the specific political consequences of this dependency. New York City officials found it is easier to give away millions to a wealthy corporation than to extend aid to the homeless. The pursuit of a footloose business corporation was rewarded by securing a valued taxpayer; extending shelter to the homeless was rewarded by attracting more homeless people whose care precipitated a fiscal shock. Does this mean that city dependency renders local governments incapable of meeting the needs of all of their citizens? Are they only capable of serving the advantaged? Are local politics a waste of time for the poor? At stake in the answers to these questions is the potential of city politics for achieving social justice.

My contention in this book is this: The capability of city governments to democratically shape their economic and social development has seriously declined. This capability has varied considerably in the past as a result of constant restructuring of America's urban political economy. In recent decades, however, a potentially explosive dilemma has emerged: Although local political systems have become more open to community wishes, dependency on exterior economic forces increasingly has undermined their ability to act responsively on issues of economic and social development. That is, the modern city has become politically democratic but economically dependent. I suggest that this dependency is not inevitable but is, in reality, a political choice. It is the culmination of decisions made by local, state, and federal officials in responding to the economic challenges of urban America. Finally, I conclude that it is possible for citizens and officials to empower local government to achieve social and economic justice. But all efforts to achieve this must take into account the dilemma of dependency if they are to succeed.

Urban Political Economy and City Dependency

In order to reveal how city governments can shape their destinies it is essential to understand how they are linked to the workings of the larger politico-economic order, that is, the political and economic context within which local public authorities act. We can then identify how political forces in urban communities interact with private and public actors outside of cities in making critical policy choices.

Past approaches to the study of urban policy have not been very sensitive to the complex links between local politics and the urban exterior of public and private power. Writers in the pluralist tradition of political science have been inclined to view city politics in terms of political coalitions of interests—be they elite or broad-based—that dominate the urban community (Hunter, 1953; Dahl, 1961). Consequently, they describe urban politics by way of theories that focus on the internal interest group pressures, especially the competition for political power, in making governmental policy choices. The difficulty with this approach is that it says little about how and when local political decisions are limited or facilitated by impersonal forces—such as investment activities—from outside local political systems. Efforts to extend this perspective to take into account the larger context of city governance have begun, but these theories remain very much embedded in the tradition of group politics (C. Stone, 1989; Logan and Molotch, 1987; cf. Horan, 1991; Kantor, 1987:Ch.1).

Others have sought to emphasize how the economic context of cities drives local politics. Neo-Marxists argue that class struggle dominates conflicts at all governmental levels in capitalist societies. The state, including the "local state," is expected to mainly serve the interests of the bourgeoisie in a struggle to control and repress the workers (Fainstein et al., 1987; Castells, 1977; Harloe, 1977; Tabb and Sawers, 1978; Katznelson, 1981). Alternatively, public choice theorists view cities as creatures of markets: They believe that cities tend to act as businesses that seek to maximize economic growth (Tiebout, 1956; Buchanan and Tulloch, 1962; Bish, Ostrum, and Ostrum, 1973; P. Peterson, 1981). Although both approaches place local politics within the context of capitalism, they tend to oversimplify this relationship by looking at local politics as only an economic process; they discount the importance of citizen choices in making public decisions (Kantor, 1987; Kantor and Savitch, 1993).

My approach is decidedly eclectic and draws to some extent on all of these theories. Yet it goes beyond them to show how the interaction of politics and economics is central to urban social and economic development. By focusing on the interplay of democratic institutions, markets, and intergovernmental forces we are able to see the evolution of urban dependency since the beginnings of the Republic and gain a perspective on the challenges ahead.

Let me begin by observing a simple truth about the history of the United States: Democracy and capitalism are the two most enduring properties of our governmental order. Consequently, cities in the United States may be viewed as part of a liberal-democratic political economy in which there is a division of labor between market and government. The system is "liberal" in the sense that it is a market society where economic decisions are ultimately driven by price mechanisms. (Dahl and Lindblom, 1965:Chs. 6 and 7; Lindblom, 1977; Alford and Friedland, 1985: 428). The political economy is democratic because the exercise of public power is placed in the hands of a state where decisions are ultimately subject to popular control, particularly through elections and interest group activities.

Yet these two different systems of control are interdependent. For government, the workings of the market are of crucial import because some acceptable level of economic performance is required for preserving public order, obtaining governmental revenues from which programs can be financed, and generating political support (since citizens are apt to reward politicians during "good times" and punish them during "bad times"). Consequently, officials at all governmental levels are motivated to promote their economies by inducing business investment and performance (Elkin, 1987; Lindblom, 1977; Schumpeter, 1942; Dahl, 1961, 1971).

For business, the governmental sector is important because the state can offer inducements to enhance business growth and to limit business risks. This may be done through state intervention in the form of laws, regulations, assistance, and, more fundamentally, by the protection of private property and basic economic freedoms that permit the market to function smoothly (Macpherson, 1965; Lindblom, 1977).

Thus, in this type of political economy public officials are constrained to reconcile their responsiveness to the citizenry with the promotion of their economies. These dual social control processes create a tension for government that is inherent in this type of political economy. How government manages this tension is by no means automatic, however. Public policy choices do not simply reflect popular sentiments or market pressures because the use of public authority must be organized by specific political institutions and governing regimes. Because cities are invariably junior partners within a larger intergovernmental system, they do not stand alone. Higher-level governments may utilize their authority and resources to regulate the tensions of market and citizenship. Political mediation of these tensions is also achieved by the formation of particular regimes—governing coalitions of public and private actors—that are necessary for making and implementing decisions (C. Stone, 1989).

Therefore, we must focus on the dynamic interplay of all these dimensions of the liberal-democratic polity—markets, popular control systems, and the mediating roles played by intergovernmental structures and governing regimes—to understand the course of urban development.

The City and Capitalism: The Market Connection

The position of cities in a market economy is different from that of higher-level governments. As we already discussed, city governments cannot impose much control over the movement of people and wealth across their borders (Tiebout, 1956; P. Peterson, 1981). Although differences between the economic systems of cities and the federal government should not be exaggerated, cities lack the ability to regulate capital movements, to control immigration by issuing pass...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• List of Tables and Illustrations
• Preface
• 1 The Dependent City and Urban Politics
• 2 The Emergence of the Dependent City: Mercantile Democracy
• 3 Industrial Democracy: The Independent City
• 4 The Postindustrial Political Economy: The New Dependent City
• 5 Urban Entrepreneurship: The Mainstream of Community Development
• 6 The Politics of Decline and Conversion: Central Cities
• 7 Growth and Dependency: The Politics of Suburbia and the Sunbelt
• 8 The Governmentalization of Inequality
• 9 Can Dependent Cities Redistribute?
• 10 The Future of the Dependent City
• References
• About the Book and Author
• Index